Issue link: http://www.e-digitaleditions.com/i/58912
"Whenever I see people with a number of moves on their resumes, immediately red flags go up. How long will they stay?" You also view globalization as an integral part of Legg Mason's strategy, and you've noted that Brazil is an especially important market for your future plans. Why? Today, South America is like the U.S. was 30 years ago—the banks do everything. There are no conflicts of interest. But we think that these things will change over time, and we need to be anchored in that market. If you look at the future of the world right now, you look at China, then India, and then Brazil. They are the three most logical countries in the world that have the capability, the resources, the population, and the land mass to become the next world powers. Do you see areas such as Africa at the end of this development? One of the keys to making a country's economy work is to have a stable government. The problem in areas like Africa is the instability of various governments. As the governments get more stable—and South Africa, which seems to be pros- pering, may be the first—more investment will go to Africa. Parts of that continent have incredible natural resources. But it comes back to the rules. Without stable gov- ernments, there won't be long-term development because companies are afraid of the rules. China is currently coping with that issue. In China, certain areas have no laws. Or, if there are laws, officials can change them anytime they want to. Businesses don't want to see that. Most businesses are saying, "Show me the line, tell me what the rule is, and I'll comply with it. But don't make it gray." Do you think business students are graduating with sufficient understanding of the complexities of the global economy? Business schools are doing more and more to place students into the world that exists now, but there's only so much they can do. Business schools have to teach the fundamentals, but it's difficult for a business school to take a student much farther than that. Once students have learned the basics, then they have to enter the workforce and learn the business. Even then, it will take a good ten years before they'll know enough about the business for a company to let them be the ultimate decision makers. I know that you're looking to your own retirement in the next couple years, with Jim Hirschmann soon to take over as CEO. When a CEO has been with a company since its inception, shaping it over decades, many worry about what happens to that company when its CEO 20 BizEd SEPTEMBER/OCTOBER 2006 steps down. How have you planned for Legg Mason's continued success when you're no longer leading it? The top people here have been here for a while, and they've been running parts of the firm for some time. They have a strong knowledge of the company, what we do, and how we do it. They know that we'll be dealing with governments all over the world, with pension funds all over the world. In our current status, we're as global as anybody. Jim's knowledge of the global side of the business is 20 times greater than mine. He has lived it; he travels the world. You know, I go to New York every six or seven days, but that's how often Jim goes to Hong Kong or Singapore! Jim represents the new kind of manager who truly understands what globalization is about in the asset management busi- ness. A CEO today has to be prepared to live that kind of a life. And a CEO who's retiring has to find someone with the skills to handle the challenges that are coming. Do you know you can move on when the company has evolved beyond you? If the company's going to move forward, you have to. With the Citi deal, for instance, more than once I just walked away thinking, "I'm not going to do this." For me, going through this swap, at this stage of my career, was not a good idea. But the fact was, the deal had great potential; I had to pay attention to it. It solved a lot of issues at one time. I had to think, "If I want to set the company up for the future, where is it going to go?" It needs to be dealing with markets all over the world, and it needs to be recognized as a world leader. We had to have the horses to win. We had to have the systems, compliance, and legal infrastructures to make the company work all over the world. I knew we could build the company by degrees over five or six years. Or we could take the opportunity with Citi. With this deal, that part of the plan was already done. You've been with the same company throughout your career, through all of its incarnations. Most students today will be at several companies over the course of their careers. They shouldn't be. They should try to get into one company and stay there. That's an unusual view, given the rate of change in today's market. You know, people almost always hurt themselves with too many moves. They're usually going after more money. But after they make, say, four moves, they look back and see