Taking Calculated Risks on Game-Changing Ideas

At the closing session of the 2015 ULI Spring Meeting in Houston, two local icons—landmark real estate developer Gerald D. Hines and James A. Baker III, who served in three presidential administrations and was secretary of state under President George H.W. Bush—talked about leadership and perhaps its most crucial ingredient, the willingness to take bold risks and run with game-changing ideas.

Hines, who erected many of the buildings that helped establish Houston’s visual identity, recalled a moment in the early 1970s when he turned to the late architectural iconoclast Philip Johnson—whom he had initially dismissed as “a crazy man”—to solve what seemed like an impossible problem. Pennzoil wanted a new headquarters building on a site on Louisiana Street in downtown Houston, but could only commit to occupy 150,000 to 200,000 square feet (14,000 to 18,600 sq m) of space. Hines ran the numbers but could not figure out a way to make a conventional 55-story office tower profitable. After rejecting Johnson’s initial four designs, the two men took a flight to New York, during which the architect startled Hines with a radical solution.

“Gerry, just a second building,” Hines recalled Johnson telling him. To the developer, that seemed utterly insane—nobody had ever put up two office towers on a single lot that size in Houston before. That is, until Johnson sketched it out for him. “He drew two trapezoids in counterpoint, ten feet apart,” Hines recalled. “He said, ‘This is how to do it.’ So I checked it out. Since they were only 36 stories, I could build them at 30 percent less cost, and I could park triple the number of cars under them.”

A more risk-adverse developer might have rejected Johnson’s idea, but Hines decided to go with it. And ultimately, the gamble paid off. New York Times architecture critic Louise Huxtable lauded Pennzoil Place as a visionary masterpiece that not only remade Houston’s skyline, but also “successfully marries the art of architecture and the business of investment construction.”

“It put us on the map,” said Hines, in his typically understated manner.

Baker, for his part, recalled the first Bush administration’s effort in 1991 to bring Israel and its Arab neighbors to an unprecedented high-stakes peace conference. “We had credibility with the Arab states after kicking out Iraq,” he said. “I thought the time was right to bring them to the table to talk peace.” Baker said that he sought the counsel of former President Richard Nixon, who advised him not to do it, describing the Arab-Israeli dispute as “a graveyard for secretaries of state.” In addition, Baker said he was opposed by the administration’s National Security Council. But in the end, he was able to gain the support of President Bush himself, and the conference was held.

In the end, the two sides met in Madrid in October 1991, in a conference that marked the first conversation between Israel and all of its Arab neighbors in four decades, according to a BBC News account of the event. Though the U.S. Department of State’s official history notes that no major issues were resolved, Baker said the effort had a “modicum of success” in reducing tensions between Israel and Saudi Arabia and other nations.

“I think the saying ‘No risk, no reward’ is absolutely true,” Baker said. “You have to be willing to take risks to accomplish things. I don’t think anybody can be an effective secretary of state unless he or she is willing to fail.” He lauded present Secretary of State John Kerry for similarly making an effort to broker an Israeli-Palestinian peace agreement in 2013–2014, even though it was ultimately unsuccessful. “That’s the risk you take,” Baker said.

Baker, paraphrasing the late historian James MacGregor Burns, described leadership as a “commitment to values and fighting for them.”

Hines said that that while the obligation of a leader is “just do the right thing,” it was important to recognize nuances as well. “The right thing in development can be a lot of things,” he elaborated. “It’s the way you perceive your building as part of the function of that city, and what you’re adding or subtracting from the city. That’s the quality we’re seeking in our [real estate] leaders.”

On the international front, both speakers believed that present U.S. tensions with China would not disrupt longer-term business and political relations between the two nations. Hines, who said that he first visited China in 1978 when his company was awarded a major building project in Beijing, lauded the economic progress made by the Asian nation, and the successful effort “to take 500 million people out of poverty.” Baker predicted that the United States and China would continue to be “strong competitors” who would work together on some issues. “That doesn’t mean there won’t be strains in our relationship, but we’ve got areas where we can cooperate,” he said. “My view is that we need to cooperate with China where we can, and manage our differences where we can.” He said that he believes that Chinese officials share that outlook as well.