Servers offered trays of bresaola canape and seared rare tuna, but the people–not the hors d’oeuvres–were the draw. They came last week to welcome a new chief executive officer to a town that takes its business networks seriously. They gave up seats on early commuter trains to meet Motorola Inc.’s Edward Zander in the Chicago Club’s oak-paneled lounge, a room where 26-foot ceilings are grand enough to contain the loftiest ambitions.
“This is a ritual,” said Exelon Corp. Executive Vice President Pamela Strobel. “This is one of the entry points for knowing who’s who.”
“For a guy like me, this is the cat’s meow,” said lawyer Manual “Manny” Sanchez, who had joined an intimate VIP reception before the larger event.
Motorola’s new CEO shook hands with at least 250 well-wishers, made a brief speech and mingled before slipping out shortly after 7 p.m. to catch a business flight to Boston after a 13-hour workday.
“My hand hurts, ahhh, my golf swing,” he joked amiably after standing 50 minutes in a receiving line.
In Silicon Valley, his home for 17 years until he joined Motorola in January, the buzz is about networks that mint money by creating new public companies like Google Inc., the valley’s latest entrepreneurial sensation.
Google’s founders met at a party for incoming graduate students at Stanford University. A professor offered the pair an introduction to their first investor, an executive at Sun Microsystems Inc., where Zander also worked.
Sitting on his porch in Palo Alto, the investor wrote them a check for $100,000 to incorporate, the first of two investments. His stake will be worth hundreds of millions when Google goes public.
Sociologists call these interactions “social capital”–the myriad networks and social norms and values that make people more productive.
Zander’s reception was a uniquely Chicago brand of social capital. The event was his initiation into an executive community that operates as efficiently as Silicon Valley’s entrepreneurial engines, though to different ends.
In a room lined with oils of the city’s 19th and early 20th Century business leaders, executives reached out to embrace the newcomer and enlist his loyalty. It is hoped he will become one of them: a willing donor of money and time to civic and charitable causes.
“In his own best interests and the interests of the company, we will see him joining things,” said Motorola Senior Vice President Patrick Canavan.
For the 1,700-member Executives’ Club of Chicago, the event’s sponsor, the reception was a coup of sorts. The club’s chief executive, Kaarina Koskenalusta, and her board effectively brokered their members’ introduction to an important new leader. And Zander accepted an invitation to join the club’s board, effective July 1.
His predecessor, Christopher Galvin, and his father, Robert, belong to another club. The 1,500-member Economic Club of Chicago shuns publicity. Founded in 1927 to “aid in the creation and expression of an enlightened public opinion,” it functions as an informal feeder to the clout-heavy Commercial Club of Chicago.
That club and its elite subgroup, the Civic Committee, do the heavy lifting on important matters like marshaling support to expand O’Hare International Airport.
Nexus of relationships
But stressing the clubs’ differences misses the point. Successful strivers belong to more than one, if not all of them. Together, they form a nexus of relationships that further their members’ individual interests while throwing off larger benefits.
“At a profound level, civic virtue and social capital do matter,” Robert Putnam wrote in the best-seller “Bowling Alone: The Collapse and Revival of American Community.”
In Chicago, it’s no accident that invitation-only clubs play a big role. Sociologist Ron Burt said the closed groups, much like the merchant guilds that sprang up during the Middle Ages, facilitated the city’s rise as a commercial hub in an era when trade was difficult.
The clubs provided access to information, a cohesive spin on that information and a social milieu for developing bonds of trust that go beyond commercial transactions. They established a code and a price to be paid for bad behavior, namely, a damaged reputation.
Today, they provide a powerful base for getting things done.
“These clubs span what in other cities are disconnected pockets of activity,” said Burt, Hobart W.Williams professor of sociology and strategy at the University of Chicago’s Graduate School of Business. “Relative to the disorganization of a great many cities, Chicago is in many ways a village.”
Members-only groups make it easy to coordinate quickly, but they also can become ingrown and slow to recognize new ideas. At the same time, executive networks are harder to maintain in an era when fewer executives finish their careers in one place.
Boeing Co.’s former CEO, Phil Condit, was welcomed from Seattle three years ago at a reception similar to Zander’s. No sooner had he picked Boeing’s spots on Chicago’s civic map than he was out of a job last fall.
Bank One Corp.’s Jamie Dimon, another civic booster, is poised to leave for New York after the bank’s merger with J.P. Morgan Chase & Co.
Modernization needed
“There is an issue with turnover,” said Adele Simmons, vice chairwoman of Chicago Metropolis 2020, a Commercial Club project to tackle issues from urban sprawl to quality education.
“We need to think about how to involve more of the leaders of companies that are not publicly held and to understand how the city works today as opposed to 20 years ago,” she said.
As recently as the 1980s, civic life was dominated by big public firms led by executives who served on one another’s boards.
Corporate buyouts and headquarter relocations have scattered companies, while shareholder reforms reshaped boards. Executives travel more and are pressed for time.
At the Chicago Club, a business dining club and traditional venue for events such as Zander’s reception, general manager Frank Stover sees the impact.
The 135-year-old private establishment has occupied the brownstone building at Michigan Avenue and Van Buren Street, its third clubhouse, since 1893.
When the roof of the original building collapsed during a remodeling in the 1920s, it was considered a “catastrophe” that would have “killed or seriously injured a large part of Chicago’s business leadership” if it had occurred on a weekday, the club’s history notes.
Today, most of the 1,200 members are out-of-towners who use the club’s 35 guest rooms. Fewer in-towners drop in for a meal, but they use the club for business meetings. Leisurely dining is a thing of the past.
“You’ll have 30 minutes to serve a three-course luncheon,” Stover said.
Few tarry to enjoy the ambience. There is so much brass on the doors and stairwells that Joe Archie, one of five housemen, spends most of his time polishing.
All that brass was shining brightly for Zander, who glanced at the oil portraits on the walls and asked, “Who are all those people?” (The Chicago Club’s early presidents.)
His reception was in the club’s lounge, a room the size of an elongated softball diamond, book-ended by massive limestone fireplaces with andirons the size of tall children.
“I love these events, said Executives’ Club member Roger “Biff” Ruttenberg, a principal in real estate work-out firm Atlas Partners. “Nobody turns their shoulder even if they don’t know who you are.”
Lines formed wherever Zander stood. He pulled his wife, Mona, over to meet Playboy Enterprises Inc. Chief Executive Christie Hefner.
Across the room stood James O’Connor, retired chairman of Exelon’s predecessor, Unicom Corp., and the city’s unofficial mentor to new executives on civic matters. He has chaired every major civic board in town.
His advice to newcomers: Choose something where you can make a difference, something you will enjoy and that will be good for your company.
He has offered to be a sounding board for Motorola’s chief.
“Our hope is that he will be very thoughtful in whatever he decides to be involved in,” O’Connor said. “It’s important to take some time and think it through.”
