CEOs make decisions — that is their job. Every decision, however, does not carry the same weight. Many are routine; some are significant. A few — a rare few — are momentous. These decisions determine not only the trajectory of the firm for years to come, but also, most likely, define the CEO’s career and establish her or his legacy. Harlan Steinbaum, former chairman and CEO of Medicare-Glaser, one of the largest retail pharmacy chains in the U.S., calls such decisions “defining moments.”

Steinbaum’s own defining moment came during the 1970s when he and his partners decided to buy back their company from the conglomerate to which they had sold it. Before the sale, Medicare-Glaser, which was founded by Steinbaum’s father-in-law in 1923, was a successful chain of drugstores and pharmacies, but it faced increasing competition from rivals such as Walgreen’s. Hoping to compete more effectively as part of a large, well-capitalized company, Steinbaum and his partners in 1972 sold the company to Pet, a conglomerate listed on the New York Stock Exchange. Soon, however, Steinbaum realized that bureaucratic red tape and an aversion to risk threatened to stifle his former company’s entrepreneurial culture. At the risk of taking on significant debt, he and his colleagues bought back the company in a leveraged buyout — but they also set it on track for future growth and success that it could never have hoped to enjoy as part of Pet.

Motivated by his own experience, Steinbaum decided to explore similar defining moments of other CEOs. The results of his efforts have been compiled in an insightful volume titled, “Tough Calls from the Corner Office: Top Business Leaders Reveal Their Career-Defining Moments.” Those featured include the CEOs or former leaders of companies such as United Airlines, ESPN, Enterprise Rent-a-Car, Time, and Monsanto, among several others. Some of their narratives relate to challenges in making career choices. Others describe situations involving finding new business opportunities, or business partners, or deciding to let go of a project or a job. Not all defining moments have a positive outcome. As Steinbaum notes, “Sometimes our most significant learning experiences come from our failures, not our successes.”

Steinbaum recently spoke with Knowledge at Wharton about his book. An edited transcript of the conversation appears below:

Knowledge at Wharton: Your book is about the career-defining moments of top business leaders, so let’s start with the most basic question: What is a career-defining moment?

Steinbaum: A career-defining moment is the most important decision that a business leader makes in his lifetime, a decision that defines him as a business person and has the greatest impact on his business life. Sometimes you don’t know it’s your defining moment until you look back over your entire career. At other times you might know it immediately because it’s a result of a crisis or some monumental success.

Knowledge at Wharton: How does a defining moment differ from the countless, very important decisions that a CEO or indeed any business executive may be called upon to make?

Steinbaum: A defining moment has the greatest impact on a person’s company. As such, the risks are usually greater, the potential downsides — if there’s a problem — are usually greater, and the rewards are usually greater.

Knowledge at Wharton: Could we explore this theme by looking at your own experience? Your defining moment came when you were chairman and CEO of Medicare-Glaser, which is one of the largest retail pharmacy chains in the U.S. Could you tell us that story?

Steinbaum: We were a privately held company and we were growing rapidly. We needed funds with which to grow. We had a number of choices, one of which was to go public. While we were considering that option, we had an offer from Pet, a conglomerate on the New York Stock Exchange, to buy our company. We felt that that was the answer to our growth problems because they had the resources to finance our expansion plans. Shortly after Pet acquired Medicare-Glaser, I became a group president and had responsibility for six of their 17 operating divisions. From that vantage point, I had the opportunity to look at management firsthand and how they made decisions. They were very risk averse. As a matter of fact, their culture was one where they would manage problems as opposed to solving them.

My partners and I realized that if we could re-acquire our company, we could implement our growth plans better ourselves. That became my defining moment, approaching Pet with the idea of buying our company back. Needless to say, it was a very tough and prolonged negotiation, but in the end we did re-acquire our company through a leveraged buyout. It was the most important decision I ever made. The result was that our company grew and prospered and we had an impact on the industry itself.

Knowledge at Wharton: How much did the company grow after you took it back from Pet?

Steinbaum: We developed the first chemically-based drug interaction database in the country. This would allow a pharmacist to notify a patient who was on more than one drug if a drug he or she was taking could react with another and adversely affect them. We also started to open health care stores and pharmacies. We formed a network of drug stores throughout the country where people could get prescriptions filled if they didn’t have a store in that area. We got very heavily into mail. We formed a joint venture with Santos, which is an HMO headquartered in New York. The result was a company called Express Scripts, which is today the second-largest pharmaceutical benefit company in the country. It fills prescriptions for more than 50 million people today.

Knowledge at Wharton: Turning now to the other 39 CEOs whom you interviewed for your book, how did you go about selecting them?

Steinbaum: Some of them I knew. I knew their backgrounds and that their stories were fascinating. Others were referred to me. After talking to them, I found that they had compelling stories that could provide lessons to be learned by the reader. I felt that these lessons would be invaluable to anyone who was interested in getting into business, or if they were already in business, allow them to move further in leadership roles.

Knowledge at Wharton: Some of the CEOs told you were about career decisions that they made. Could you give us some examples?

Steinbaum: Well, consider Bill Rasmussen, the founder of ESPN. Bill had been the communications director of the New England Whalers hockey team, and he had just gotten fired because they had had a bad season; they literally got rid of everybody. Bill and his son Scott wanted to get involved in doing sports broadcasting in Connecticut. They had a couple problems. One, they had no money. And they had no way of broadcasting the television programming into people’s homes.

Bill borrowed $9,000 on his credit card to start ESPN. He made a deal with RCA to rent what they call a transponder, which was a device that would allow him to broadcast into people’s homes. The reason he was able to do it was he wouldn’t have to pay them until 120 days after he signed the contract. His defining moment came when he made the decision to start a 30-minute sports program called Sports Center. That’s what put ESPN on the map. They were able then to strike a deal with Anheuser Busch for $1.3 million to advertize their products. And the rest is history. ESPN went on to become a dramatic success.

Then you’ve got Sanford (Sandy) McDonnell, the former chairman and CEO of McDonnell Douglas, which is now part of Boeing. His uncle ran the company; it was a one-man-rule type of business. When Sandy took over, he felt that he wasn’t capable of making all the decisions alone. He needed other management people with him. So he sought advice from a number of people who talked to him about becoming much more professionally managed. So he moved McDonnell Douglas from a one-person-rule into a professionally managed company. That was his defining moment because he was able to build participative management. It was just a real good decision because it got people involved who had a lot of skills but who previously were not able to implement them.

Knowledge at Wharton: Apart from career choices or career decisions, what other defining moments did the CEOs tell you about?

Steinbaum: Take Richard Mahoney, who was the CEO of Monsanto. Its core business was in trouble and he had to reposition and refocus that company. Monsanto was in the chemical and petrochemical business, and those products became commodity items. Richard developed, through a long-range plan, the ability to get into agriculture, pharmaceuticals and life sciences. In my opinion, that was probably the greatest transformation of an American company in the history of business. It was just that impactful.

Knowledge at Wharton: Over the course of a career, how often might a person be called upon to make these defining decisions? Did any CEOs have to do it more than once?

Steinbaum: Some of them had more than one defining moment decisions. It was a question of which was the most important. Shelly Lazarus is the former CEO of Ogilvy & Mather Worldwide, one of the world’s largest public relations and advertising firms. Her defining moment came when she went back to work after the birth of her third child. It continued when she became the chairman of Ogilvy Direct. [Ogilvy Direct, now called Ogilvy One, is the firm’s direct-marketing arm.) Her final defining moment came when Ogilvy & Mather had been acquired by a British company. It was a hostile takeover, and the morale was terrible. The company was having all kinds of problems. Lazarus was asked to take over managing that business, which she did — and she turned everything around and grew that company. She was able to do that as a result of the various steps that she went through to get to that point.

Knowledge at Wharton: I’m glad you mentioned Lazarus. You interviewed both men and women leaders for your book. Did you find any gender-based differences in the ways they identified and dealt with their defining moments?

Steinbaum: No. Most of the women CEOs had families, and they were able to be good mothers and spouses and at the same time run their businesses in a very professional and hard-hitting way. It was very, very impressive.

There’s another CEO by the name of David Stewart who is chairman of World Wide Technology. David started with absolutely nothing. He worked for Federal Express; he was their top salesman. David was extremely religious and relied on the Bible and relied on God to make decisions, business decisions. That helped give him the strength and the courage to strike out on his own. Today he owns and runs the largest African-American owned company in the country — and the most profitable one, I might add. He is a man of deep conviction.

Knowledge at Wharton: Do all defining moments lead to successful outcomes? Or do some of them involve failure?

Steinbaum: There’s an example in my book of a company called Falcon, run by Frank Jacobs, who’s an honest, honorable man. His business [of making furniture for restaurants] was doing well, but he had an opportunity to make an acquisition, a competitor called Shelby Williams. Unfortunately, just as he made the acquisition, the economy went into a recession.

Jacobs also — and he readily talks about this — didn’t do the amount of due diligence he should have. As a result, he didn’t have the infrastructure in place [to handle the merger well] and a number of other factors came into play. Jacobs ended up losing the company as well as his personal wealth. But what an incredible learning lesson for him! Today he has started another company. It’s based in China and he’s doing fine. He got up off the floor, he never complained, and he took full responsibility for all his decisions. Quite a man.

Knowledge at Wharton: Of all the stories you heard from different CEOs, which one surprised you the most and why?

Steinbaum: I heard an interesting story from a man by the name of Joseph Plumeri. Plumeri today is chairman and CEO of Willis Group Holdings, the third-largest insurance brokerage firm in the world. He was born on the east side of New York and went to New York Law School. He went to school in the morning to learn the academic side of law, but he needed a job in the afternoon to learn the practical side and also to support himself. The first day of class, he went looking for a job with a law firm.

Plumeri had heard that the really good law firms had three names. So he walked into a building, looked up at the directory and saw three names: Carter, Berlind and Weill. He went upstairs and said to the receptionist, “I’d like to apply for a job.” So she sent him down the hall to see a Mr. Weill.

Plumeri walked into Weill’s office and Weill said, “What can I do for you? Please sit down.” Plumeri said, “Well, I’d like to apply for a job. I go to New York Law School in the morning. I want a job in the afternoon in a law firm to learn the practical side of law.” Weill said, “Well, what makes you think you can learn the law here?” Plumeri said, “Well, this is a law firm, isn’t it? You have three names.” Weill chuckled, and Plumeri was very embarrassed. He sat down on a couch, sort of sank down. As he stood up to leave, Weill said, “No, sit down. You interest me.” They spoke, and Weill offered him a part-time job.

Plumeri’s first office was a closet, literally a closet. His first job was going to get people’s lunch, to get their laundry, to get their cleaning. And Weill turned out to be the legendary Sanford (Sandy) Weill, the person who built Citigroup and Travelers Primerica.

Plumeri’s defining moment came when he walked into a brokerage company looking for a job in a law firm. It’s the most important decision he ever made, because here’s what happened. Eventually Plumeri went on to become CEO and chairman of Travelers Primerica Financial, with responsibility for 150,000 brokers. He also became president of Smith Barney Shearson, and then Shearson Lehman Brothers. He then became chairman and CEO of Citigroup North America, with 450 retail branches. And now he is chairman and CEO of Willis Group Holdings. Plumeri’s advice to people is, “Just get up off your duff, go out and do something. Go play in traffic. You never know what’ll happen. Look at what happened to me.”

Knowledge at Wharton: What advice would you give to a business executive who has to make a career-defining decision? What is the best way to get it right?

Steinbaum: The best way to make a defining-moment decision is to study all the facts, learn everything you can about the circumstances you’re in, the pros and cons, the cost-benefit analysis, and then make your decision. It’s really got to be thought out.