Coach K inc.

Follow the leader–not basketball–is the name of the game that runs up the score for Mike Krzyzewski.
By Jerry Shinn

Inside the student center at Duke University’s Fuqua School of Business, 300 men and women mingle, munching sushi and sipping wine, bottled water and the occasional beer. Even at $1,600 a pop for two days of lectures and discussion, more would be here if the school didn’t limit attendance.

Herded from the reception into an adjacent room, they hear Fernando Aguirre’s keynote speech, Leading with Heart, Guts and Brains. The CEO of Cincinnati-based Chiquita Brands International is good, but he’s just the warm-up act. The star of the fifth annual Fuqua School of Business & Coach K Leadership Conference, without a prepared text, nails it with the finesse of a J.J. Redick jump shot. Mike Krzyzewski thanks American Express, CNN, MassMutual, the Kenan Institute for Ethics and other conference sponsors. “A value system,” he says, “is what makes everything work.”

And everything is working for Coach K. Many, not just Duke fans, believe he is the best college basketball coach ever. If he stays a few more years — he’s 60, has a bad back and has had both hips replaced — he could accumulate the stats to support that claim. CBS Sports announcer Jim Nantz calls him “one of the great leaders, motivators and humanitarians of sport.” But he’s more than a coach. He’s also special assistant to Duke President Richard Brodhead and a faculty member at the Fuqua school’s Coach K Center of Leadership and Ethics. Robert Steel, a senior director of Goldman Sachs and chairman of Duke’s board of trustees, calls him “an icon of leadership.”

In making such a name for himself, he has built a brand. Call it Coach K Inc. Highly marketable, it brings in millions each year, but its value, both to the man and the school, can’t be counted solely in dollars. If its stock were traded on Wall Street, it would be a blue chip. A royal-blue chip.

College basketball fans know him by sight, but no one else, seeing him here, would guess he is a celebrity. He is not physically impressive, particularly given his usual working environment, the world of young giants. He wears a conservative business suit with a dark tie. His hair is slicked into a black, close-fitting cap. He is not movie-star handsome. But on stage his personality, illuminated by what the audience knows about him, is charismatic.

Opposing fans criticize him for barking obscenities from the sidelines, but on occasions such as this his comments are larded with softer words like “trust,” “caring” and “heart.” He shows a sense of humor, and when he directs it at himself, it lubricates everything else he says. Aguirre concludes his speech by noting that he is Mexican and adding, in an ambiguous attempt at humor, that he looks like a Mexican. When Krzy- zewski takes the microphone, he says, “I’m Polish. I don’t know what we’re supposed to look like. Usually we’re drunk and we’re bowling.” The audience laughs, and he adds: “To have a Polack and a Mexican start it off — what could be better?”

For many, "Coach K is the face of Duke University."

After that, he doesn’t sound so pompous when he makes pronouncements that begin, “As a leader, I ...” That is not to say he doesn’t take himself seriously. Clearly he does — more seriously, perhaps, than any basketball coach ought to be taken, by himself or anyone else — particularly in an academically respected school of business, surrounded by people with Ph.D. or CEO attached to their names. But this audience, professors and chief executives included, takes him seriously, too.

Why? It all starts with basketball. He owns the National Collegiate Athletic Association record for 30-win seasons — with nine — and for NCAA tournament victories — 68 — including three national championships. Going into the 2006-07 season, his teams had won 753 games — beating opponents 75% of the time. By the time he is 65, if he maintains anything close to that percentage, he will surpass his former archrival, UNC Chapel Hill’s Dean Smith, now retired. The only person ahead of Smith is Coach K’s mentor, Texas Tech’s Bobby Knight. Given that he is seven years younger than Knight, Krzyzewski could catch him. The only record probably out of reach is John Wooden’s 10 NCAA championships at UCLA.

But he already has left Smith, Wooden and other coaches far behind in building lucrative avocations on a foundation of basketball success. Nicholas Didow, a professor at Carolina’s Kenan-Flagler Business School who specializes in sports marketing, compares him to Martha Stewart for the way he has extended his brand. In a TV ad for American Express, Krzyzewski spells it out: “I don’t look at myself as a basketball coach. I look at myself as a leader who happens to coach basketball.”

Other coaches offer summer basketball camps for youngsters, but Krzyzewski also has the K Academy, where adults pay $10,000 for four days of basketball instruction from him and some of his former players. Proceeds go to the Duke Basketball Scholarship Endowment.

Other coaches have written books on basketball, and a few — including Smith — have tried to apply hoops lessons to business. But Krzyzewski’s 10 books, most co-authored with professional writers, would crowd a library shelf. They include two on Duke’s championship seasons and two on leadership and success. Two were written with the help of Donald T. Phillips, a prolific author of books on the leadership secrets of such people as Greg Norman, Vince Lombardi, Martin Luther King Jr., Abraham Lincoln and the Founding Fathers.

Other coaches host local or regional radio shows, usually during basketball season, where they talk about their team’s performance. But Basketball and Beyond with Coach K airs weekly to a national audience on XM Satellite Radio and includes interviews with business executives and dialogues and monologues about leadership.

Other coaches are motivational speakers. But Krzyzewski, according to Time magazine, can command $100,000 per appearance. He also is a television pitchman for companies including American Express, Chevrolet and Allstate. Some competitors have criticized the commercials, not because of the financial benefit to him but for their promotional value to his basketball team. That hasn’t stopped them from following suit. Carolina’s Roy Williams, for example, began appearing in a national ad for Coca-Cola this year. But again, Krzyzewski was the clear leader. The NCAA says it has no authority to bar that kind of activity. That leaves Duke’s administration as the only entity monitoring Coach K’s outside activities. And Duke is unlikely to close any doors on his visibility or outside earnings.

Krzyzewski notes that the companies he hawks contribute to some of his favored causes, among them the Emily Krzyzewski Family Life Center in Durham, named for his late mother, Duke University Medical Center’s research on children’s diseases, the leadership conference and the V Foundation for Cancer Research, which he helped establish after the death of former N.C. State coach Jim Valvano. He has said he doesn’t do anything just for money, but few if any other college coaches bring in as much of it as he does.

Duke doesn’t release financial details of employee contracts, but credible estimates put the value of his — including salary, travel and other expense allowances and deferred compensation — at about $1.5 million a year. His Nike shoe contract is worth several million dollars, and he probably earns another $1.5 million in personal-appearance fees, plus what he gets for the commercials and other endorsements. That is why, when asked about the potential difficulties of coaching a bunch of millionaire professional players on the U.S. team that will compete in the 2008 Olympics, he could reply, “Well, I’m a millionaire, too.”

How did this happen to someone who grew up the son of an elevator operator and a housekeeper in Chicago, was educated to be an Army officer and has spent most of his life teaching men in their late teens and early 20s to play a game? How did a man with no professional degree, no business experience and no record in government or public affairs come to be recognized as one of the nation’s authorities on leadership?

A lot of it is based on ability. As a boy in a place where there were no organized team sports for kids, he wanted to play, so he became the organizer — the leader — in his neighborhood. He credits his U.S. Military Academy education with further whetting his skills. At West Point — where he was a star under Knight — they don’t just teach you to be a soldier; they teach you to be a leader of soldiers. He says his experiences as a young officer, from 1969 to 1974, also provided lessons. He coached several service teams and spent his last two years in the Army as coach of the U.S. Military Academy Prep School team at Belvoir, Va., before resigning as a captain.

He says he's "a leader who happens to coach basketball."

Then there’s ambition. Not just ambition, but the audacity to recognize that for him being the best basketball coach might not be enough. When Douglas Breeden, dean of the business school, approached him in 2003 about taking a faculty position, he didn’t say, “No, I’m not qualified,” or “No, coaching is a full-time job, and I don’t have time for that.” He decided to go for it. Recalling Breeden’s proposal, Krzyzewski told his leadership-conference audience, “I get chills thinking about it.”

When American Express and General Motors asked him to appear in TV commercials, he didn’t say, “No, it might irritate my fellow coaches. It might look like crass commercialism.” He decided it was not only an opportunity to make money but to lift college basketball — Duke basketball — into the context of more important matters, such as leadership and the pursuit of excellence. And he recognized an opportunity to direct corporate philanthropy toward the university and his favorite causes.

Didow says Krzyzewski “has leveraged success in sports into a bigger-than-life phenomenon.” He has done so “apparently very willingly and intentionally” and “seems more eager to do that than the Dean Smiths and John Woodens.” The marketing professor adds that much of the money from Coach K’s ventures has been used for philanthropic purposes and that all of it, commercial as well as altruistic, is probably easier to earn at a private university such as Duke than at a public university, where there might be more constraints on a coach’s outside activities.

Then there’s the fact that Krzyzewski and Duke complement each other’s aspirations. He wins the right way. During his tenure, the National Collegiate Athletics Association hasn’t come close to sanctioning the school for rule violations. His players graduate at a rate much higher than at most places. But that might not matter if his teams did not win a lot more than they lose. Duke has strived to build an academic reputation comparable to Ivy League universities. But unlike Ivy League schools, Duke wants and needs success in big-time college sports.

It builds name recognition and sustains the loyalty — and generosity — of prosperous alumni. But nobody is going to spend the kind of money it costs to go to Duke if a degree from there doesn’t count for something in the corporate or professional world and in civic, social and cultural status, no matter how many championships its teams win. Duke means to have it both ways, something few private universities have achieved, and Krzyzewski is proof that academic excellence and basketball championships are not mutually exclusive. For many people, Didow says, “Coach K is the face of Duke University.”

That makes him perhaps the most important person there — and administrators, trustees and faculty critics know it. After Brodhead arrived from Yale to become president in 2004, his first crisis was the Los Angeles Lakers’ effort to lure Krzyzewski to the National Basketball Association with a multimillion-dollar offer. Brodhead wooed him, even standing with students outside Cameron Indoor Stadium to chant “Coach K, please stay!”

Given Brodhead’s Ivy League background, some on the faculty saw this as a betrayal of academic priorities. But Brodhead is unequivocal in his endorsement of Coach K. “He is a teacher both on and off the court and a genuine university citizen whose work on leadership has greatly enriched the programs at Duke’s Fuqua School of Business.” When the new president faced a subsequent crisis — sexual-assault charges, now largely discredited, against members of the Duke lacrosse team — Krzyzewski offered advice to the administration and helped craft a policy governing the behavior of scholarship athletes.

So his bosses not only permit but provide opportunities for Krzyzewski to be more than just a basketball coach. Having his name on a department and on programs and conferences gives the Fuqua School a promotional advantage. In fact, his contribution to the business school probably is more promotional than substantive. Reading his books on leadership and hearing him speak, you will find little that is innovative. Asked about that, he acknowledges he is espousing principles that have always guided successful leaders. But hearing it from a different source, he says, can add value.

Some 40 years ago, communications theorist Marshall McLuhan declared, “The medium is the message.” In the case of Coach K, the messenger is the message — as well as the perfect metaphor for Duke’s image of itself. And why not? Sports are probably second only to war as a source of metaphors. In Krzyzewski, the metaphor “is made flesh and dwells among us.”

The theme of the conference is Seeking the Edge. On opening night, he talks about “the busiest year of my life” and his crowded agenda, including coaching the U.S. team in the world basketball championships. If you’re a leader, he says, you must go beyond your comfort zone and do new things. That’s how he keeps his edge. But it also is possible to extend too far beyond a comfort zone, Didow says. “Like Martha Stewart, he will face the question of how widely he can spread his brand.”

One of the things that people like about him is his candor. There is little false modesty, but few signs of the other kind, either. Can too much pride destroy its source? Can too much success outside the comfort zone make the comfort zone less comfortable? Can too much attention to the theory of leadership interfere with the practice of leadership? He says no. “Actually, it helps immensely … being with other passionate people and sharing ideas. It helps me become a better leader.”

Still, the foundation of his credibility is built on and depends on basketball success. He may be “a leader who happens to coach basketball,” but if his teams start winning fewer than 20 games a year, would he still be “an icon of leadership?” Yes, Didow says, because the brand is so established. The only thing that could seriously damage it, he says, would be some sort of scandal or misconduct, personally or in the basketball program.

Some might argue the point. It has been 14 years since Duke won back-to-back national championships — Coach K is one of only six coaches and the only one from the Atlantic Coast Conference ever to do it — and five years since its last NCAA title. Since then, ACC rivals Maryland and UNC have won it. Despite end-of-season rankings of No. 3 two years ago and No. 1 last year, the Blue Devils failed to make it out of the Sweet Sixteen either time. Then his U.S. team, filled with NBA stars, lost to Greece in the semifinals of the 2006 world championship.

None of that nor the ACC losses his team has suffered this season mean he is losing his edge as a coach. But as college hoops moves toward its March Madness climax with other teams seizing the spotlight traditionally reserved for the Blue Devils, some analysts might be tempted to lower their short-term rating on Coach K Inc. Still, given the youth of this year’s team, the talent he has signed for next year and the long-term performance of its principal, only a fool would want to short those shares.