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Secrets of great second bananas (Fortune, 1991)

October 13, 2013, 6:22 PM UTC

Editor’s note: Every Sunday Fortune publishes a favorite story from its magazine archives. This week, FORTUNE displayed Facebook’s COO Sheryl Sandberg on the cover as one of the Most Powerful Women in business. In this week’s Sunday throwback, we take a look at a story from 1991 highlighting a few other powerful no. 2 executives. 

Reporter Associate: Andrew Erdman

101113_classic-11 Keough (right) with Goizueta at a Palm Springs resort.

ROBERTO GOIZUETA, now celebrating his tenth anniversary as chairman and CEO of Coca-Cola Co., still recalls the evening of February 14, 1980, as a crucial moment in his career — and in the history of the company. Edgar M. Bronfman threw a birthday party for then Coke chairman J. Paul Austin at Manhattan’s Four Seasons restaurant, and afterward the Goizuetas and their friends the Donald Keoughs repaired to the King Cole Bar at the St. Regis hotel. ”Our wives were talking in one corner,” Goizueta says, ”and Don and I began talking about who was going to succeed Paul.” Unbeknownst to either of them, the imperious, isolated Austin was suffering from both Alzheimer’s and Parkinson’s diseases, personal tragedies that largely explained Coke’s paralysis. As Keough remembers the conversation, ”Roberto and I said, ‘Look, nobody knows how this is going to work out. The two of us are quite compatible, and we have different skills. So let’s sleep at night. Whoever comes out on top, let’s put the other one to work immediately.’ ”

Was Keough, the marketer, disappointed when Goizueta, the financial strategist, got the top job? ”I don’t know that I would call it a disappointment,” he says, ”but I was confronting a reality. I said, ‘Congratulations,’ and Roberto said, ‘We’re going to be partners.’ ” Today the 64-year-old Keough is also celebrating a tenth anniversary — as Coke’s president and chief operating officer. Goizueta, 59, has persuaded him to stay on beyond customary retirement age.

The early Eighties were not happy times at Walt Disney Co., where top management found itself battling major shareholders. In 1984, Walt’s nephew Roy Disney, backed by the Bass brothers of Fort Worth, sought new leadership for the rudderless Burbank, California, corporation. To be specific, his faction wanted Frank Wells, the former vice chairman of Warner Bros. Inc., to take the Disney helm. Wells, a shrewd Hollywood lawyer and dealmaker, wanted the job. But Wells stressed the necessity for finding creative talent to complement his skills and suggested going after Paramount Pictures wunderkind Michael Eisner. Recalls Eisner: ”They were vague about the job, and vagueness makes me nervous. So I said, ‘I have to be the CEO.’ There was about a second’s delay, and Frank said, ‘I agree.’ ”

President Wells and Eisner came aboard as partners, which meant both reported to the board — and everybody else reported to both of them. ”That’s in the by-laws,” says Wells, ”but we’ve never looked at it since. After about six weeks in the job, I said to Michael, ‘Look, if the titles had come out the other way, I’d change them to what they are now.’ And I meant it.” At Capital Cities/ABC Inc., there was never any wrestling over the CEO title. Tom Murphy was the boss, and Dan Burke — lured by Murphy away from his Jell-O account at General Foods in 1961 and sent without any instructions to run an Albany, New York, TV station — knew it. But for the better part of the two decades in which Burke served as Cap Cities’ president and COO, everyone else in the company knew who their boss was, who ran the company while ”Murph” was out looking for the next acquisition or lobbying in Washington. On payday, says Burke, ”Murph would struggle to see that I got what he thought I should, and then he’d take five or ten or 20 thousand dollars more, just for appearance’s sake.” When Murphy, 65, decided last year to hand over the CEO post to Burke while remaining chairman, Burke says, ”he told me he wanted to make less than me, but not too much less.”

Keough, Wells, Burke. Call them the Great Second Bananas of U.S. business: strong-willed, independent operating executives who passed up the glories of the top job — each has turned down other offers to be CEO somewhere else — and instead pursued the hands-on running of some of the best-performing, most challenging big companies around. In every respect they have transcended the ”me-too-ism” of the typical chief operating officer, a figure that Goizueta calls ”the forgotten executive.” But their virtuoso performances have still gone largely unnoticed in the rave reviews awarded to their better- known CEO partners. Behind some great men, their careers would seem to say, stand . . . other great men.

Says Warren Buffett, chairman of Berkshire Hathaway Inc.: ”I guess a significant number of CEOs don’t want the No. 2 guy to be very close because it’s no fun being on top if nobody’s on the bottom. Because the CEO dispenses all favors, his biggest problem is to avoid being treated like God. Second is to avoid thinking he is God.” Buffett himself avoids such misconceptions with the aid of vice chairman Charles Munger, a longtime colleague he uses as a sounding board on big decisions (see box for other examples of second bananas). Buffett’s portfolio favors companies that worship at the altar of 20% or better annual growth in shareholder value; he holds his two largest stakes in Coke and Cap Cities. At both, he says, ”it’s like having Ruth and Gehrig in the same lineup. You can’t walk one to get to the other, so they both hit a lot of homers. Murph and Dan are interchangeable. And Don and Roberto really are a case of two plus two equals five.”

WHY don’t we see more Great Second Bananas? Because of the fears that often drive people who become CEOs. Says psychologist Harry Levinson of the Levinson Institute, a Belmont, Massachusetts, management training firm: ”If they rise for compensatory reasons, because they have some insecurity they’re hiding, it becomes apparent in the desire to overcontrol. But if they build themselves on the models of successful fathers, they’re not much threatened by rivalries, so they’re not afraid to have strong people around them.”

Says Eisner: ”There are two kinds of executives — those who feel they are enhanced by having a strong No. 2, a strong staff, and strong people, and those who feel they look strong by having weak people. I think the latter situation is very much more common, and by the way, in the end it clearly doesn’t work.” Murphy agrees. ”I always tried to hire the smartest people I could possibly get to work for me,” he says, ”and that’s why I hired Dan. If you hire mediocre people, they will hire mediocre people.”

The 1980s featured lots of CEO autobiographic hagiography, from Chrysler’s Lee Iacocca, Gannett’s Al Neuharth, Apple Computer’s John Sculley, and others. It was pretty exciting reading back then but maybe is not so relevant today to challenges like trying to meet a budget, motivate a sales staff, or bring in a complicated overseas project on time — precisely the kinds of specialties that Keough, Wells, and Burke excel in.

The Second Bananas seem to love the work. And the pay, including stock options, isn’t bad. Wells had one year in which he made $51 million. Keough has pocketed as much as $6 million annually, placing him ahead of most CEOs on lists of the highest-paid executives. Burke has had to settle for a mere $2 million or so.

Here is a look at what they do to earn the money:

Keough, who spends about half his time on the road, is nearing the halfway mark of a particularly long business trip. The previous week he wined and dined McDonald’s executives in Palm Springs, California. This week he is in Switzerland. After landing in Zurich in his Gulfstream IV, he climbs into a car for the 90-minute winding drive to Davos, where he is scheduled to speak to the World Economic Forum. He has arranged to visit Swiss customers along the way, about eight restaurants and grocery stores.

101113_classic-21 Wells (left) and Eisner in front of the 20-foot versions of the Seven Dwarfs that hold up Disney headquarters.

Keough is sort of a human bowling ball, not so much because he is stout of shape but because of his impact wherever he lands. It is hard not to be knocked over by his cocked smile, his jet-engine voice, and his touchy-feely nature. Some people can’t look at you when they talk to you; Keough not only can’t seem to keep his eyes off you, but is constantly slapping you, rubbing your back, or embracing you. Somehow he can say things to customers that few others could say with any credibility. Like, ”Hey, guys, isn’t this one beautiful meat counter they’ve got here?” Big smile. Why, uh, yeah, Don, it sure is.

That’s the Don Keough customers know. Then there’s Don Keough, president of Coca-Cola Co., symbolic ambassador of U.S. capitalism and stem-winding stump speaker. This Keough — having just announced a $450 million investment in what used to be East Germany — is in Davos to give international businessmen advice on how to do business in Eastern Europe. ”We were global before global was cool,” he says, warming his stuffy audience with tales of the wine business in Yugoslavia and advertising in Czechoslovakia. ”Think long term,” he says. ”Be on the ground. Avoid arrogance.” This is the man who once did play-by-play TV commentary on football games and who won a scholarship to work as an intern at an Omaha television station, where he met his buddy Johnny Carson.

The next morning, beginning at 7 A.M. Keough time — which means 6:55 — Coke’s European division presidents line up to face off with Keough the chief operating officer, the role he believes plays to his greatest strength: ”I’m the operator,” he says. ”I understand the numbers, and I understand what it takes to get them. Roberto and I agree on what we’re going to do, and there aren’t any more conversations about it. It’s my responsibility to deliver those numbers.” He is free to fine-tune the internal dynamics of the company. ”Underneath my sales ability and motivational ability — if I have those — is a pretty hardheaded view of how the business ought to run around the world,” he says. ”I love to run this damn company, and I get my kicks out of our reaching our potential in every single element of the business.”

Each Coke executive enters Keough’s Davos lair armed with spreadsheets and transparencies. The COO still wears his hail-fellow grin, but somehow it has turned greedy; he wants it all. ”Isn’t our cost-per-can too high in this plant?” he asks one president. Then he tells another, who has warned that competitors are on the move, ”You’ll never spend cheaper money than stopping them in their tracks.” Next is a matter tied in to Goizueta and Keough’s most significant strategic decision — forcing old-line bottlers to either adopt Coke’s aggressive sales mind-set or break with the company. This policy has earned huge profits in the U.S. and abroad by giving Coke more control over its most important sales arm. Asks Keough of a divisional president who is trying to persuade one particularly recalcitrant bottler to do it Coke’s way or quit: ”How far away are we from a contract, and what can I do to help it along?” Make no mistake: Keough is the enforcer of the strategy.

Savvy Coke execs study Keough’s body language; if he taps his thumbs on the table, he is irritated. He in turn watches his executives, literally and figuratively. His scrutiny, he says, ”forces them to focus. I believe a company this far-flung and multicultural has to have, at the highest level of the business, hands-on management where you can go in and feel the hot breath of the company and evaluate everyone’s performance.”

Underlying his authority is the ultimate reality that Goizueta is always the boss. Keough says the CEO has never had cause to test that reality. ”We’ve < gone our separate ways under a single strategy,” he says, ”and when there was ever the slightest fundamental disagreement as to the way to turn, we just didn’t do it.”

Their biggest success: diet Coke, which will sell a billion cases this year. Says Keough: ”We had tried to bring it out earlier, and it was stopped at the level of the CEO ((when Austin was running the company)). So we were ready to do it, and I hadn’t been in the chair about an hour when I said, ‘Is it time to go?’ and Roberto said, ‘Go.’ He didn’t even ask the board.”

101113_classic-31 In 30 years, Burke (left) and Murphy of Capital Cities/ ABC have “never disappointed each other,” Burke says.

Their biggest black eye: New Coke. Soon after public outrage made it clear that Coke had a potential disaster on its hands, says Keough, ”one of us, probably Roberto, called a lunch in our little dining room. The first course hadn’t arrived when we looked at each other and said, ‘What the hell are we doing?’ We moved with the speed of light ((to bring back old Coke)). You know, there wasn’t a voice raised during that whole period. We did get in an argument with our associates over what to call it, though. Roberto and I wanted the name ‘classic,’ and they wanted ‘original formula.’ We won, and we were right.”

Their most adventurous decision: Columbia Pictures Entertainment, which Coke bought in the early Eighties, ran without much success, and sold for a big profit to Sony last year. To paraphrase the pair’s own post-mortem: We bought it together; we sold it together.

Did offers to become CEO someplace else ever tempt Keough? ”For about three years I couldn’t go anywhere without somebody pulling me off in the corner and saying, ‘We’ve got an opportunity you can’t refuse,’ ” he says, comfortable now on his plane, flying from Zurich to South Bend, Indiana, where he is chairman of the board of trustees at Notre Dame. ”But I’ve never second- guessed any of that. I’ve had all the psychic income I can handle in this job, and I’ve done very well in every other way. I knew this was my job, being president of Coca-Cola Co. If that isn’t enough to satisfy your ego, you’ve got a problem.”

If you were casting someone to play Clint Eastwood’s lawyer, you might pick Frank Wells, and, in fact, Clint Eastwood once did. Tall, thin, rangy, and bespectacled, the 59-year-old Rhodes scholar and Stanford law school grad is at once very Hollywood and very anti-Hollywood. In a city where the ”perk” ranks only behind designer water and seared tuna fajitas, Wells still can’t stand to have his name on a parking space.

Steven Ross, chairman of Time Warner Inc., which owns the publisher of FORTUNE, says he dubbed Wells ”the company socialist” during Wells’s presidency of Warner Bros. Inc. because of his dislike of corporate hierarchy. A favorite Ross anecdote: Wells, angry about all the reserved parking places at the studio, had a huge NO PARKING sign painted on the pavement at the prime location and cruised looking for a spot like everybody else. One day, on the sly, Ross had the sign repainted RESERVED FOR FRANK WELLS. While Wells was inside the building raging about it, Ross had the pavement repainted again to say NO PARKING. He then accused Wells of having let this particular obsession snap his mind. Today Wells finds the joke funny, but he still declines a preferred space.

Wells is perhaps most famous for having quit his Warner job at age 50 to spend a year climbing the highest mountain on each of seven continents. These days, though, his mornings begin at 5:30 with about an hour of running laps at a track near his home. Over a Beverly Hills breakfast of Ultra Slim-Fast, rice cakes, and cottage cheese, he races through five newspapers before convening the first meeting of the day, at his home, around 7:30. At one such meeting he tells a candidate for the post of Disney general counsel: ”You should be warned. I sometimes forget that I’m not our chief lawyer.”

All-day meetings, four days a week. That’s how Frank Wells manages the complex string of businesses that are Walt Disney Co.: the studios; the Disney Channel; theme parks in the U.S. and abroad, with all their associated businesses — real estate, construction, hotels, restaurants, and corporate sponsors; consumer products, including mail order and retail; publishing; and a fledgling record company. Just as Eisner tracks any creative implications these businesses might have on the Disney image or its characters, Wells knows the details of every budgetary dispute, contract negotiation, legal problem, or personnel issue.

A short car-phone-conversation-filled drive to the Burbank studio and the meetings continue, usually in Wells’s office across a reception area from Eisner’s. The two men, both well over six feet tall, tower above most of their colleagues, and they both talk about 120 mph. The place crackles. Eisner, like somebody’s younger brother constantly interrupting his siblings’ efforts to do their homework, is in and out of Wells’s office about 30 times a day. What do you think of this? How about if we did that? Would this work? Good, because I already did it. As Wells says, ”For Michael, I make life easier. For me, he makes life more fun.”

The meetings reflect his and Eisner’s management philosophy. Says Wells: ”It isn’t some boss presiding over everything. It’s just a fight to find the right idea. If we have any culture at Disney, it’s that the best idea wins.” Says Eisner: ”Frank is a great devil’s advocate. I mean, he will ask the questions nobody ever thought of, and he will take the opposite side of everything. But he is a dealmaker, not a deal breaker, and that’s very unique for a lawyer.” Says Steve Ross: ”Frank makes things happen, and he loves to negotiate. Anything, anytime, anyplace. Also, he thinks he’s 100% right on everything, and he thinks he’s 100% honest.”

Today’s meetings cover a broad agenda, but first comes the single biggest issue on Wells’s plate these days: Euro Disneyland, scheduled to open in April 1992 outside Paris. Wells is obsessed with the project, which he visits once a month. ”We are committed to ourselves and to our investors and to the French government to spend between $3 billion and $4 billion and open this thing on time,” he says. ”You go over budget on this, and it could cut awfully deep into the company, into its net worth. So I have given myself what the MBAs call an MBO, a management by objective, to open that thing on time and on budget.”

Hence his question to a colleague, ”Excuse me. Excuse me. Can you conceive of a situation where you won’t be panicked with this budget?” Quickly he moves on to an issue requiring a financial commitment to one of Disney’s participating partners, ”Excuse me. We’ll pay a $50,000 premium for that up until opening day.” At issue now is who will redecorate the window at Disney’s London store on Regent Street. ”Excuse me,” he says to one manager attempting to pass it off to another division, ”Nice try. But you have to do it.” Later in the day he meets with construction managers, who report that everything is going fabulously. ”Okay. Okay,” Wells says, ”give me one negative thing. I only care about the negative things.” Then, flipping through a thick report, he asks, ”Where does it say in here whether or not we’re on budget?”

One meeting flows into another, with as many as a dozen managers in his office at one time. Eisner pops in and shoots down a book proposal to the new publishing division on grounds of taste. Wells, the devil’s advocate, reminds Eisner that he hasn’t always been so high-minded: ”This from the man who produced Joy of Sex” — the movie, that is. No decision — including whether to build a fence or a wall around Disneyland’s Splash Mountain — seems too small to bring to Wells. Says one Disney executive: ”The whole key to this company is that everybody’s a hands-on manager. Frank reviews everything we do, and I mean everything.” Says Eisner: ”Frank’s door is always open. Frank has them coming in and out of there. I don’t want my door open. You know, I’m not Walt Disney. I need, I want to go home at night, and I want to sleep at night. I don’t want to fly to Japan. Frank loves that. He gets on a plane, he’ll go anywhere. He’ll fly through the night, he’ll fly overnight. He doesn’t care.”

Wells, a Democrat, has dabbled in politics and been talked up as a candidate for California governor or senator. He says only that he plans to serve his full current contract with Disney, which runs through December 1994. With his largess from Disney stock, he has given $10 million to endow Environment Now, a new foundation, and he shows signs of becoming as obsessed with that cause as he once was with mountain climbing. Has he found fulfillment as a Second Banana? ”It’s so much more fun to run a successful company than it is to be CEO or anything else of a company that doesn’t work,” he says. ”It’s not even close.”

Dan Burke has just returned from his first Super Bowl as CEO of the company broadcasting it, in the middle of a war that’s giving ABC a great name for news coverage but costing it a fortune. To say he had a lousy time is an understatement. The sponsors, the parents of the kids in the halftime show preempted by ABC News, and apparently everybody else got hold of his hotel phone number and used it a lot to complain. Burke won’t go into details, but he’s clearly feeling pretty beat up as he sits down to lunch in the company cafeteria with Tom Murphy, his close friend, paddle tennis rival, neighbor, and chairman. Murphy, by the way, had a great time at the Super Bowl. Would it have been different had Murphy still been CEO and Burke COO? Says Murphy: ”No way. Dan always took care of that stuff.”

Technically Burke, 62, is no longer a real Second Banana; he finally got the brass ring. But the style he and Murphy adopted in building their little radio and TV operation into a media giant has always been so spare that it’s difficult to notice much difference. Has the exalted title of CEO changed Burke’s life? ”Well, not much,” he says, ”because around here it’s not really perceived as very exalted. Make no mistake about it, Murph has always been the boss. But he never was any Sun King.” These two executives have been at it so long, they finish each other’s sentences, jokingly blame all mistakes on each other, and laugh their way though most crises. Notes Buffett: ”It works great. But you can’t ordain something like this. It depends a lot on personal chemistry.”

Murphy and Burke, both Harvard business school graduates, never had a five- year plan or a strategic planning department. But their company has outperformed most competitors in broadcasting and publishing. Burke says, ”We sit everybody down in the dark once a year and show them what they said they were going to do for the year and what they actually did. Then we look at what they say they’re going to do next year. It’s sort of compelling to know that a year from now you’re going to be back in that same slot.”

Burke, who compares running a company to being the Wizard of Oz because ”nothing is ever what it seems,” doesn’t believe his own or Cap Cities’ publicity, and he’s sure to be equally skeptical about this article’s conclusions. But he does believe that the candid approach he and Murphy take to their managers works. When they first took over ABC in 1986, he recalls, the corporate culture was nervous. As he told an assembly of managers at the time: ”It would be logical to assume that having just spent $3.7 billion on ABC, we have a careful blueprint describing everything we’re going to do, and that we have a plan for how each of you will fit in. That’s logical, but it isn’t the case.” His door was open, he said, to anyone with an idea for ”making this wagon roll faster.” Two days later an ABC veteran came to his office and said, ” ‘You should sell the ABC headquarters building, and we’ll build you a new one next to Phase II on 66th Street.’ I said, ‘What’s Phase II?’ And he said, ‘It’s a $70 million building we’re just finishing for news and sports on 66th Street.’ So much for due diligence. Anyway, we built it, and here we are.” Burke and Murphy are on the tenth floor of the 22-story building because, Burke says, they didn’t like the ”Kremlinology” of the old ABC building, where top executives occupied the top floor.

Burke says he and Murphy ”have never disappointed each other” and in 30 ! years have disagreed on only two things: whether to split Cap Cities/ABC’s stock, and the size of the corporate jet. They didn’t split the stock, Murphy’s victory. But because planes scare Burke and he wanted a big one, Murphy gave way and they got a Gulfstream II. If you listen carefully to Burke and Murphy, Wells and Eisner, and Keough and Goizueta, their stories begin to sound like reflections on really good marriages. Interestingly, all six of these executives have been married to their current wives for a long time. Says Andrall Pearson, a Harvard business school professor who himself functioned for 15 years as a strong second to PepsiCo’s Donald Kendall: ”What you’re talking about is the rarest of the rare. You have to have a lot of respect for each other. The CEO has to decide what he’s going to let the other guy do, and leave him alone.” The real merit of second-banana-ism boils down to a cliche: Two heads are better than one. This is one situation, maybe the only one in corporate America, where synergy actually works.