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>> Speaker 1: I'm thrilled to be back at Stanford.
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When I say back at Stanford, I didn't study here.
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In fact, I do not have an MBA as you'll spot very quickly.
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But I have been here before and it really is just a great place.
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I also had the chance of spending the weekend here and to get to know some of you.
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So to those of you that have had the chance to meet over the weekend, could I just say thank you.
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You've given me a great welcome, give me a great feel for the place.
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I have to say, I think you guys really are lucky to get to spend two years here.
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Now what I'd like to do with you this morning is to give you some perspectives on leadership.
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That's a topic you've been talked at a lot, I'm sure, and I hope you thought a lot about.
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But I want to give you some perspectives.
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I've chosen the word perspectives quite deliberately.
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I'm not going to talk about my personal leadership story.
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It'd be a very short presentation indeed if I did.
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But I want to talk to you about what I've observed in the many leaders or purported leaders that I've worked with over the last 35 years.
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So this is perspectives on leadership based on what I've seen and what I've heard. Not just in business.
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I've worked with people in the not for profit sectors and the public sector a little bit as well, and also for outside business world.
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So it's really some general thoughts on leadership and what I hope to do.
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What I hope to do is I hope to give you some insights on what it takes to be a good leader, whether that's in business or in your personal life or whatever.
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Some insights on leadership and as it's a business school, maybe one or two things that you could do to improve your own personal leadership skills.
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So that's my hope that if at least 20% of you leave is saying I could do something with that, that would be really great.
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I'll talk for about 25 minutes and then I'll thread open to Q and A anyone to ask about what I said, what I didn't say about the world at large.
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Please just prepare your questions and I'd be thrilled to have the chance to get involved in that.
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Now before I start, let me just provide a few comments that I think frame the topic of leadership before I get into what I think that makes for a great leader.
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Just some contextual comments.
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Firstly, leadership is a non hierarchical concept.
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In my view, it's a non hierarchical concept.
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People often confuse positions of leadership with the exercise of leadership.
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There are many people who are leaders who in my view are not leaders at all.
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They happen to be in leadership positions.
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And there are many people who are not in positions of leadership who exercise leadership.
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Try and think of it as a non hierarchical concept.
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It's independent of a position.
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There are some organizations that recognize it.
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The military is very good at recognizing this.
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They know that a sergeant or a platoon leader is a leader.
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Organizations tend to be less good.
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They assume that the more senior you are, the better the leader you are. And it is not true.
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So when I know this is called the view from the top.
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And Dean, perhaps have a suggestion from you.
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I think that leadership needs to be viewed from the bottom, from the middle and the top.
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So maybe the next course you do have view from the bottom.
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As a thought I jest, but I think it's important you look at leadership through many lenses. And good organizations.
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People are leaders at all levels, including secretaries, right up to the chairman.
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So it's a non hierarchical concept.
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There are many CEOs in China I've worked with that in my view are not particularly good leaders.
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And there are many people who are never recognized as good leaders, who are very good leaders.
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And I'd like to focus on what I think are the good leaders.
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So that's point number one by way of context, non hierarchical.
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Second point I'd like to make is that leadership is a multifaceted concept.
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It can be defined in a number of different ways.
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Most people think about business leaders or military leaders, but just step back and think.
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You can be a ringleader, you can be a gang leader, you can be a thought leader, you can be a fashion leader.
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These are all leaders leadership.
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And one of the things I get uncomfortable about sometimes at business school is that leadership is often channeled through a very narrow prism.
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But remember, lots of different types of leadership and it's very important that they can be very valuable.
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To me, one of the great developments of the last 20 years has been the emergence of the geek as a leader.
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And to me it's a logical consequence of the move to the knowledge economy.
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As we move to a knowledge economy, you're going to have a lot more geeks as leaders.
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So I think there are numbers of different ones.
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And if you think about leaders and leadership, don't just dismiss the geeky nerdy guys in the corner as not leaders.
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Some of them, I promise you, will surpass all of you as leaders.
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Same with fashion, same with social.
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So leadership is a multifaceted concept.
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When you talk about leadership, I think it's very, very important to talk about what sort of leadership are you thinking about.
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So it's non hierarchical, it's multifaceted.
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And then the final point I'll make before I get into my views on what defines leadership, as you step back and think about it, is it is contextually driven.
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Now, you'll all be told this about context, but you cannot look at leadership in the isolation of the context that you're in.
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If I focus on the business world, if you're leading a company in the high tech industry or the food industry, your challenge is completely different.
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If you're trying to lead McKinsey or the graduate School of Business or a medical faculty or a regiment, your leadership task is completely different.
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If you're trying to lead a group of Japanese people or people from Brazil as opposed to a group from Silicon Valley, your leadership task is completely different.
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You have to understand context to understand leadership.
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This can be true within the same industry.
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If you are working with we're in Silicon Valley, a big high tech company.
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Leading a high tech company whose heritage is in Korea or Taiwan is completely different from leading a high tech company whose heritage is in Silicon Valley or Munich, even though they may be making exactly the same products.
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So context is all when you think about leadership.
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And I'll come on to what I think that means for the development of one's own leadership skills.
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So some framing comments about at least one person's view on leadership is it's non hierarchical, it's multifaceted, and it is context driven.
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I have a view on leadership is that it cannot be defined by characteristics.
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Most of the books and most of the talks you'll get will tell you about what great leaders are.
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They're good listeners, they're authentic, they're dynamic.
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And my view on that, having watched for 30 years, is maybe, I've worked with some great leaders who listen appallingly.
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In fact, most of the good leaders I've worked with listen appallingly.
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Some are not very authentic.
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I'm not sure I can understand what authentic means, but I think they're not very authentic.
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If I've got it right, some people have no vision at all and don't believe in it.
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I talked to one brilliant CEO who reminded me of the very good point.
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He said the line between vision and hallucination is very small indeed and I don't like it.
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Great leader, great leader.
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So I think generalizations about leisure characteristics I personally think are interesting but not very helpful.
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And they're also not very helpful.
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You get people telling you how to be a great leader and you just say, well, I'm not like that.
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Does that mean that you can't be a great leader?
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The answer is no, it does not.
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You have to define it in your own terms around you and your organization.
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So my view is that leadership is best explained by what.
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What leaders actually do.
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And remember, I'm not talking just about business leaders.
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It could be personal leaders.
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Parents in some ways are leaders.
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Think about that, parents have more influence over people than virtually anyone.
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I want to talk about what leaders actually do.
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And in a sense I'm trying to define leadership from the perspective of the followers.
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Sometimes I think it's when you're trying to define something, look at it through a different prism.
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Just like it's often easier to explain explain success by looking at mistakes, sometimes it's easier to think about leadership by terms of followership.
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And I think, and this is my synthesis and you may think it's rather sad commentary on my last 30 years.
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When I look at the effective leaders that I see, I think that they all, whatever that walk of life, do five things. They all do five things.
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I'd just like to go through the five things that they do.
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Not that they are not what they say, but they actually do in the eyes of their followers.
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Number one, all leaders set a direction.
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All leaders set a direction.
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It might be a vision, it might be a culture, but they set a direction.
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They might write it down.
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They might have a big plan which has got McKinsey slides in it saying this is our strategy.
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It might be just articulated, it might be never said.
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In family businesses, they're often never said.
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But there is a direction.
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And if you ask most people in the company, they will be able to tell you what that direction is, what the beliefs of the company are. All leaders do this.
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They can do it a number of different ways.
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Don't get hung up on technique, focus on the direction.
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You might want to put straight strategy, vision.
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You fill in the dots for yourselves.
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But to me, I use the word direction.
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People in the organization know where they're going.
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They may not like it, they may not approve of it, they may disagree with it, but people in the organization know where the company is going or where the organization is going.
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So one thing that leaders do, in my view, is they set a direction.
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The second thing that leaders do, all leaders do, in my view, is that they initiate stuff.
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Leaders don't just manage the status quo.
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Now sometimes initiating stuff can be stopping things happening.
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Some of the worst failures of leadership personally and in observation was in the.
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com boom and bus when not Anaphila stopped things, things that we knew were wrong happening, that's initiation.
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Going against a trend can be initiative.
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But usually leaders start things.
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I don't confuse this with entrepreneurship.
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It can be entrepreneurship. It's initiating things. They Initiate change.
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They want to do things in pursuit of that direction.
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And I don't think, as I look back on the effective leaders that I've worked with, all of them have initiated things.
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A lot of not effective leaders have talked about initiating things.
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They talk about change, beware of leaders that talk about change all the time, by the way.
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They spend more of their time talking about it and doing it often.
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But real leaders initiate stuff.
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So initiation, initiative, starting things, innovate is part of that.
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It's different from innovation.
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We might want to talk about that.
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But they initiate things.
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So that is characteristic number two.
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Set direction, and then you initiate things usually around that direction.
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The third thing that leaders do, and I always emphasize this to MBA students, because typically very brilliant MBA facades are bad at this.
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Leaders sustain momentum around those initiatives. They stick with them.
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This is why you often read, when you read books around leaders or lectures on how to be a great leader, you hear the word tenacity, determination, bullheadedness, obstinacy.
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That's at the extreme of sticking with it.
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But practical leaders I've worked with, there comes a point when this is another fine line.
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When obstinacy becomes lunacy.
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There is a point of that.
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And as you know, a lot of very strong leaders do go into the lunacy phase of obstinacy. They stick with things.
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And typically, something I observe that MBAs are very bad at doing, they say, that didn't work I'll try something else.
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This is the danger of an entrepreneurial mindset.
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You don't stick with things, but entrepreneurial leaders stick with things too.
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So sticking with things, sustaining momentum, including through bad times, I think is a really, really important part of leadership.
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And you all know, even observation will tell you there are always things that are going to go wrong.
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And the real leaders, they stick with it.
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The wise ones know when to stop. We can talk about that.
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But in the end, the characteristic of leadership is sticking with things.
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Direction, initiative, sticking with it.
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The fourth thing that all leaders do in some form or another, in my view, is that they motivate others to do what they want them to do. They motivate people. I used to say inspire.
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And then I realized from observation, I was putting my own value judgment on motivation.
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I happen to think, like many of you, that being inspired is an incredible form of motivation.
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I've had to conclude that actually it's not true to say that all leaders, inspire.
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There are a number of techniques of motivation.
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We've got nothing to do with inspiration at all. Greed is one.
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Some leaders are very effective at using greed as a motivator. Fear is another. Manipulation is another.
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Encouragement is another.
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There are various techniques to motivation.
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It's quite important for you not to impose your own moral values at this stage on what works.
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The point I'm making is that great leaders motivate people to do things and the really great ones think what will motivate those people to do it.
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How you harness those motivations and you get them consistent with the value set of a company is a huge issue in its own right.
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So you can't just say, I know Bill, money's his thing, I'll give him bonuses.
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I know Jane, she's got a strong social conscience.
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I'll let her indulge her not for profit instincts.
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You can't run an organization by motivating everybody differently and how you harness that.
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But in the end, all leaders think a lot about how do I motivate my team and my people to get what I want done or what I believe needs to be done done.
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Motivation of the team selection is a part of it.
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Appointments is a huge part of it.
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It's a motivational team who you appoint.
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But I just like to leave this idea of motivation, not inspiration.
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Even though I think inspiration can be an incredibly powerful motivational technique for very talented, well intentioned people.
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Not everybody, sadly is like that.
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I say some of the most effective leaders I have seen, I don't necessarily like it and I certainly wouldn't necessarily want to spend my dinners with these leaders.
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They are brilliant at manipulating.
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So just try to avoid forming judgments on people at this stage I'm just talking about what makes her effective leaders.
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And then the final point, the final characteristic, at least I see it of leaders is that all leaders, whatever their sector, lead by example.
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They may not think about it, they may not talk about it, but they do it.
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Whenever they say something or they do something, people notice.
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In organizations, people are bus watchers.
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It's just a human instinct to just look up.
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You may not like what you see, but people watch and they listen and they watch what people do and they listen to what they say and they look for the difference.
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And all the work you'll have done there's a huge amount of academic research on this is, is that people, they watch and they look and they listen and then they see what the differences are and that's what the example >> Speaker 1: That's the example.
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When people get up and bang on, we're a values driven organization, we really believe that.
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And then at the next meeting you get beaten up because you missed your budget by 2%.
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That's what people notice and it's exaggerated by the talk.
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People do not take examples from what they hear.
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They take the examples from what they see and what they observe in terms of human behavior.
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So all leaders lead by example.
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Now some pressures on that.
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When you are in a leadership position, it means that whatever you say or do becomes an act of leadership by example.
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But all leaders do that and the thoughtful ones think about that all the time.
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One of the best, in fact the best talk I've ever heard on leadership, which covers all the five points and the non contextual point.
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And it was an impromptu one.
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It was by a given, it wasn't a speech.
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It was a talk by a non commissioned officer, a sergeant in the British army who'd been in Iraq and then in Afghanistan.
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He was a private in Iraq and he'd become a sergeant by Afghanistan.
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And he talked about leadership.
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This is from the bottom [INAUDIBLE].
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And it was the best controlled experiment.
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He'd worked with five different officers, three of whom he thought were great and one of whom he thought was truly terrible.
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He talked about his own leadership experience and it was absolutely mesmerizing.
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I mean, he's a very bad talker, but it was mesmerizing in terms of content.
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But what he absolutely was saying was the leadership by example of what people do, particularly under fire, literally under fire is what you remember.
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Just remember that as well.
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You think about leadership by example.
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All of you when you leave here will be watched as leaders.
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And it's what you do and what you say and the difference between the two that people actually notice.
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So let me recap before I conclude my talk.
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I've tried to give you some framing comments on leadership about its non hierarchical, it's multifaceted and it's shaped by context. Do you think about that?
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And then I have five thoughts on what I believe defines what leaders do.
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They set a direction, they initiate stuff, they stick with it, they think hard about motivation and they know that they always lead by example, whatever they do and they say.
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And I think that framework and we can talk about in the Q and A, I think can hopefully help define what is a good leader.
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Now I just want to conclude, I'm looking at the time, but let me just.
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This is a business school, so I probably should finish with some tips and suggestions on how you as individuals can become, if you want to, can become better or more effective personal leaders.
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And I think what I'm going to say is true.
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Not just for your careers.
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And I imagine all of you are going into entrepreneur, consulting, tech.
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Some of you hope to be going to academia or the public service.
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Maybe some of you are going to focus on being a parent.
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And I hope this will be relevant to all of you, every single one of you in this room.
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About some tips on how you might become a more effective personal leader.
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This will only resonate with you if what I said in the last 20 minutes has.
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If not, look at your Blackberries.
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Now is a good time to do that.
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The first thing that I think you can do is spend a bit of time thinking about the context point.
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I mean really thinking about it.
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By context, I mean when you join an organization, understand its history, its crises, its people, its culture, its values.
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Most of us spend more of our time complaining about our context than we do thinking about them.
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Generally great leaders don't complain very much.
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Great leaders generally don't complain. And they don't blame.
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They're thinking, they're saying, I'm not going to do that again.
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But just think about your context before many of you will be frustrated by your first jobs. You will be. It's just part of it. I was.
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But instead of getting too frustrated, just think about it. Why is it? Why is it?
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And often it's a lack of understanding the context of that organization.
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What are the goals of the founders?
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What are the goals of this organization?
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What are they trying to do?
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What are the things that have scarred them?
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Why did they do something so idiotic?
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If good people do something idiotic, they're probably not doing something idiotic is my general observation.
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There's a reason spend time understanding the context.
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That often means spending time understanding the history, the history either of the founders or the organization itself.
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So that'd be tip number one. Spend some time on that.
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Secondly, gotta be careful about this at a Stanford GSP audience on this because you get a lot of this.
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I know, but this self awareness stuff is important. It is important. You can take it too far.
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I mean, you can spend too much time analyzing yourself.
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When you get caught at dinner talking to somebody who's going to the shrink for the last year, the most boring evening you'll ever have in your life.
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You learn more about people than you ever want to know.
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But nevertheless, the self awareness stuff is really, really important.
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Not just how do you look at yourself and see yourself that's important too.
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But how do others see you as a leader? Think about it.
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I'm a great believer in 360 degree feedback and feedback from others, but I'm not very impressed by how people use this feedback.
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They tend to take criticisms as something they've got to deal with and praise is something they got to do more of. Not true, not true.
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If you're a leader and you get a feedback and I saw this a lot of my consulting career, really good guy, high standards, but really tough on teams doesn't give credit enough.
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Don't necessarily be less tough on teams and give more credit.
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If that what makes you a leader and motivates your teams, maybe it's the right thing.
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So think about the feedback or you get great fit, lovely person to work with.
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Really super, always look to work with him.
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And that's all the feedback is.
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There's some orange light, sir.
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Are you pushing people hard enough?
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Are the quality standards half now?
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So when you get feedback, don't just take the pluses and say, well, I must correct the minuses.
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That is not the way that great leaders operate.
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They say, how does that feedback link to my leadership impact profile?
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I'm not saying ignore the criticisms and I'm certainly not saying don't bask in the glory of praise if you get it.
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But think about it in terms of so what, so what?
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So that's tip number two, self awareness in a leadership context, not just as a human being.
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Thirdly, leadership skills.
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I think leadership can be taught a bit.
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I think it can be learnt a lot and I think it can be experienced a lot.
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Let me talk about what can be taught and learnt through coaching or through the classroom or through colleagues.
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And they are usually what I call classic leadership skills.
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Communications would be one.
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You can learn and practice how to be a better communicator.
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Strategic planning is another.
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Team building is another.
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There are some leadership skills that you can develop. EQ is another. There are some skills.
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So when you get your feedback you say which skills can I get taught or can I practice? So think about that.
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There are some other skills and this is tough for MBA types and consulting types.
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I think I would say this because when you get to my age you start saying things like this.
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But I believe it can only be learned through experience.
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I think it's very, very different, maybe through reading and studying, but through experience.
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And this is the bugbear of people in a hurry.
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And these skills are skills like judgment, diplomacy, statesmanship, cultural sensitivity.
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It's very, very hard in a classroom setting or a peer group setting to learn these skills. I mean, if you.
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If I take diplomacy, which I think is going to be an increasingly important leadership skill in globalizing business.
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Unless you've been to a lot of countries, made a fool of yourself in a number of different cultures.
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Seen other people get it right and get it wrong, been and lived in three or four different places, quite hard to get that sort of learning.
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And that takes time, as I said, and that's the enemy of most MBA trainees, time.
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But there are some skills that I just do think that experience is really important.
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And I urge you to think about that because particularly of those of you whose careers will not get off to a rocket like start, and it will be a third of you and it will be difficult for you.
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Don't give up on that, that could be the making of you, could be the making of you.
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And for those of you will be most of you whose careers get off to a rocket start, don't get seduced by that either because that could be the breaking of you as well.
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So just think about the experiential skills of leadership, I think that's a really, really important factor of it.
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So skills that can be taught, think about it, skills that can be done, final point, which is not a tip to do it, but it's a request.
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It's a request because I think as stanford grads or potential grads, either in the summer or the summer after, I do think you have a bit of an obligation.
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And one thing I absolutely believe about leadership is that it can be nurtured, it can be nurtured.
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And this is, I think one of the responsibilities of leadership is to nurture leadership in others.
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There are some institutions that do it really well, but most do not, they think about it, we think about it in terms of ourselves.
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So as you get into positions of influence, when you can actually deal with potential leaders, think about nurturing leadership.
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What do I mean about that one, give people everyone, everyone you work with.
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And I'm talking about your assistant, I'm talking about your peers, I'm talking about everyone.
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Give them a leadership opportunity, and that does not mean a bigger model to run necessarily, it doesn't mean a bigger responsibility or a bigger salary.
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Give them a leadership opportunity where they can exercise a different, go back to my five part framework, give them an opportunity.
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It's amazing the payback you get, and the really great leadership organizations, not the great leadership leaders.
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The great leadership organizations are one that really, really focus on giving everyone leadership opportunities.
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You've got to accept that some people will not be able to take those opportunities and some people fail, that's part of it, you've got to give opportunities in a very, very thoughtful way.
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The second one is encouragement, encourage people, it's an obvious point.
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All of us like encouragement, and anybody says they don't care about it is lying.
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We, we all like it, but it really does make a huge difference, it only makes a difference if it's accompanied by challenge.
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Most companies, there are quite a lot in the US like this, which are what I call great job cultures, great job, Joe, great job, Jane.
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They're not usually very strong leadership cultures because if the challenge isn't there and the standards aren't there, the encouragement can diminish an organization.
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So with encouragement, clarity comes challenge and standards and pushback, you see this in parenting in particular.
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It's a very difficult, I don't know if we have anybody who's a mum or dad here.
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But that balance between encouraging your children and pushing them very, very important tasks.
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I believe this is true for organization, this is combination of setting the standards, challenging, criticizing, and encouraging.
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Something for you to think about, I think it's really, really something important.
27:37
So if I could just leave sort of 4 thoughts before I shut up and thread open to just questions.
27:44
Think a lot about your context, think about yourselves as leaders, not just in terms of feedback.
27:51
Think about building your skills through teaching, coaching, learning, reading, and through experience.
27:57
And then finally think about your obligation to nurture leadership in others.
28:03
I will stop there, I hope one or two things I said resonate, if not, this is your chance to correct me, so thanks.
28:09
>> [APPLAUSE] >> Speaker 2: Hi, thank you for the talk, one of the most interesting things, >> Speaker 1: Can you just say who you are and what first year, second year, slow.
28:30
>> Speaker 2: My name is John Zhang, I'm a first year here.
28:33
So one of the most interesting things about business school has been talks like these.
28:37
Where we kind of learn heuristics about what makes a good leader, so thank you.
28:44
But I just had a question about your framework, one of the things that I noticed, and you said something kind of interesting.
28:49
Which was that you shouldn't impose kind of moral judgments on the decisions that people make in the way that they decide to motivate other people.
28:59
That kind of goes against a heuristic that I've learned about leadership, which is that leadership should be.
29:08
Should come from a place of kind of good or ethical morals or judgments, so, how do you kind of bring those?
29:20
Because, I think I look at the framework and a lot of it is consistent with kind of people who have political leaders of infamy, for example, yeah, so that's my question [LAUGH].
29:36
>> Speaker 1: It's a great question, and if I implied that there isn't, well, I don't believe it, there isn't a role for moral and ethical leadership business, I think it's wrong.
29:46
My point was when you look at what leaders do, some of them are not ethical people are not moral, and you should observe that.
29:55
I think that is not the sort of leader that any of you, many of you, any of you I hope in this room would ever want to be or would ever want to work, and I wouldn't.
30:03
But my point was that when you're cold bloodedly analyzing leadership, you've got to look at what they do.
30:09
Now let me just take an example, I came from an organization which likes to start itself and is a values driven organization.
30:16
Not in a superior way, just like a lot of Johnson and Johnson I work with is a values driven organization, and everybody says, well that's very good and all the rest of it.
30:25
But the best book on a values driven organization I've ever read is about was around the Salomons trading floor in the 1980s.
30:34
And that was a values driven organization, and those values were horrible, horrible, but they were effective for a time, and that was the point.
30:44
On the time there was no ethical value, they had a, you eat what you kill, the guy who earns the most money is the top God promoted, that was our values.
30:53
And my point was that worked as a leadership organization for a bit, but it wasn't sustaining.
30:57
And the real leaders, which they didn't see, didn't add an ethical judgment.
31:00
So what I was trying to say was, just look at what makes this organization work and then say how am I going to change it and do I want to be part of it?
31:08
And I absolutely agree with you, I would never work, and I hope nobody in this room would ever work with an organization that doesn't have good moral and ethical principles.
31:16
But prepare yourself for the fact that there are some effective leadership organizations that do not or have different ethics and morals from what you have, just leave it at that, thank you. >> Speaker 1: Question.
31:28
>> Speaker 1: So I think it's a really crucial part of leadership or leadership, but don't prejudge until you know what the context is, is it ladies first or right left. >> [LAUGH].
31:39
>> I'm not sure we'll get to the right, we'll go over here.
31:42
>> Speaker 3: Hi, thanks for coming, I'm Omer first year, as someone comes from an organization who seems to value MBAs a lot or an MBA degree and doesn't have an MBA himself.
31:53
I was wondering what you think are the benefits and maybe setbacks an MBA has.
32:01
Well, I could say having heard Mia's non MBA talk, you're probably better able to judge that than I am.
32:07
I don't think it matters in a sense.
32:09
I mean, McKinsey's a big MBA.
32:11
>> [LAUGH] >> I think it matters.
32:15
Let me just say why, which is not to say I don't think an MBA doesn't matter because I think MBA is incredibly valuable and I'm a passionate proponent of MBAs, by the way.
32:24
I am of all tertiary education.
32:27
Well, let me just say, for example, when I was at McKinsey, everybody thinks McKinsey's an MBA school.
32:33
Under 50% of McKinsey people have MBAs, under 50%.
32:37
So we hire a lot of MBAs, more than anybody. And 35% now have PhDs.
32:44
So it's not an MBA, I think MBA, and the key is the talent. The key is the talent.
32:52
Always the talent, the talent, the talent.
32:54
And, and the truth is that a lot of very motivated, high talented people do MBAs.
32:59
They do, I mean, this is just in this room.
33:01
I know I don't know hardly any of you.
33:03
I just know there's an awesome amount of talent here.
33:05
That's why firms like mine are here primarily.
33:09
I don't want to be rude, Dean, but it's not because you're Stanford MBAs, because you're just really talented people and you're here. And that's point one.
33:17
The second thing is I think MBAs and also a JD or being a medicine or an engineer adds a discipline and a network in a social. Which is irreplaceable.
33:26
I think it is irreplaceable, you know that and I've seen that over the weekends. It adds a lot of value.
33:31
And thirdly, I think this is less true now than it was when I was young.
33:35
It teaches you techniques and skills that you need in business.
33:39
Now I say that because I've noticed a lot of MBAs now have a consulting background or been in a hedge fund or investment banking and they know a lot of stuff where they come.
33:47
And I would imagine this is a challenge.
33:49
When I was young, when I joined McKinsey, I did not know what discounted cash flow was.
33:55
It would have been nice to have had an MBA before I had to go through that hell of that first year, but you could do that.
34:01
So I think for some people, and I hope some of you, the technical skill's important, the network is important.
34:06
The chance to have tertiary education, get the discipline that is really really valuable.
34:10
But do I fundamentally think that MBAs acquiring BAS will change your life? No, I do not. That gives you a favor.
34:20
>> Speaker 2: Hi, my name is Vicki Slavin.
34:21
I'm an MBA one and I spend three years at McKinsey.
34:24
As a caveat to my question, one of the things we've been learning about in strategy classes is the difference between management and leadership.
34:31
Management being setting targets and helping people meet them and some such things and leadership is inspiring others.
34:36
Would you characterize the work that McKinsey does and other consulting firms as management or leadership primarily?
34:45
>> Speaker 1: Well, I wouldn't recognize the difference.
34:47
I think it's very difficult to lead effectively without managing and it's very difficult to be a very good manager without at some point leading.
34:54
So to say management without is performance and assessment.
34:58
And how can you do that and not do that in a motivational.
35:00
So I think it's a bit of a bogus dichotomy.
35:04
Personally, I'm probably going exact opposite of what you've been taught in your classes.
35:09
I think at some point in a business organization at least, and I'd certainly see this, and if you want to see the truth of this, go and work in the not for profit sector or the social sector where you see leadership and no management.
35:19
And it's usually a disaster, a complete disaster in leadership terms.
35:23
So I think leadership and management are inextricably combined at some point.
35:28
And really good management organizations always have some leadership capacity.
35:36
It's a long question, I know what you're saying.
35:38
I think when it comes to consulting, I don't know, I think people make say a lot of faff about consulting and business.
35:46
I think they're much, much more senior.
35:48
And in the end, what you're trying to do is you're trying to get stuff to happen.
35:51
That's what you're trying to do.
35:52
And you can do it independently or dependently.
35:56
So I think that's much, much less different, which is why a lot of consultants very seamlessly go and work for big organizations or entrepreneur now. It's no big deal.
36:05
So I think that the differences between careers are grossly exaggerated.
36:11
When you're in the goldfish bowl of an MBA class, you're trained to pick on differences and then magnify them.
36:17
I would say this is one of those examples. That's my personal view.
36:26
>> Speaker 3: Thank you for the opportunity to hear about your experiences.
36:32
Put yourself in a New York City courtroom.
36:35
District attorney of New York comes up to you and says, do you have any reason to believe Rajat Gupta is Guilty. What would you say?
36:45
>> Speaker 1: I've known Rajat Gupta.
36:47
This is in connection with the Galleon case.
36:50
Obviously very distressing for people at McKinsey and anybody who knew Rajat Gupta.
36:55
I've known Rajat for many, many years.
36:56
I like him a lot and I seen him do a massive amount of good things.
37:01
I don't know what happened on the legal side, I do not think he is a bad person.
37:07
I seen him do too many good things.
37:09
Whether stuff happened, this is all subs, I don't know. We'll have to see.
37:13
But I will defend and I do as Rajat as a person, what he did, I will defend absolutely.
37:19
Has he done some inappropriate things?
37:21
He doesn't look very good and that's obvious.
37:24
So that's my answer to that.
37:26
>> Speaker 4: Hi, my name is Josiah Filler, I'm an MBA one.
37:28
Thank you for speaking to us.
37:30
My question has to do with a balance between kind of for profit interests and also social goals.
37:35
I think a lot of us came to the GSP because we have lofty social aspirations, want to change the world, but also we're hampered by this desire to establish ourselves professionally and be successful in that realm.
37:45
As somebody who's done a really good job of balancing both, but skewed, it seems more in the for profit sector.
37:50
But then it had tremendous impact on both.
37:53
Any guidelines, recommendations for how we can do that for the next 10, 20, 30 years and when it makes the most sense to kind of jump into the social realm to have the most impact?
38:03
>> Speaker 1: Well, I think you're saying it.
38:04
I'm not sure I have had as much impact I'd like on social problems.
38:09
Again, I personally wouldn't frame it the way that you have.
38:12
I think if you want to change the world and do good for the world, you can do it through the private sector or the public sector or the social sector.
38:19
And on the whole, I think more good, more progress on social problems has come through the private sector than the not for profit sector.
38:27
So good intentions go back to my leadership framework.
38:29
Good intentions is not the same thing as impact.
38:32
And when I see the appalling waste and incompetence in Africa, where I spend a lot of time in India, I would challenge that.
38:42
Do not assume that because you want to be a hedge fund manager or go into consulting an I banker that you cannot and are not doing social good, I think it's grossly arrogant for people to say that.
38:53
And do not assume that because somebody works for a non profit they are really good people who want to do good. Do not assume that.
39:01
And I've seen it, I have.
39:03
If you are running a big company or running a successful private equity firm, you build companies, you earn a lot of money, you pay a lot of taxes, and you spend time nurturing leadership, you're doing good.
39:15
So don't get trapped by to do good you've got to be in the social sector.
39:18
And if you're in private equity you're a bad, it's just not true.
39:22
In my observation, I personally, I'm more of a parable of the talents type of person and I'm very interested in social problems.
39:30
I believe that the big problems of the world are now in the social domain.
39:34
And I think the social sector has a role to play.
39:37
I think the private sector has a huge role to play as well, and I think government does too.
39:40
That's why I'm trying to get at that work.
39:43
But let me just bore you for two minutes.
39:45
The Parable of the talents those of you with some Christian religious backgrounds will know this is a story about encouraging someone to do what they are good at.
39:56
And the best example I know is a friend of mine at McKinsey when I was at McKinsey who was Was a director in the Italian office of McKinsey and he was really, he looked like an Armani model.
40:05
Immaculate suits, yellow Porsche.
40:07
He sort of made you sick when you looked at him to do that and he was a really nice guy too, which made it even worse.
40:14
And he had a very, very strong social genuinely.
40:18
He was always agonizing with guilt.
40:21
He said, I have so much money and he said, I want to do that.
40:24
And he said, on the other hand, I love my suits and I love my Porsche and, and a lot of us go through that dimension.
40:31
And anyway, he couldn't stand anymore and he resigned.
40:34
He said, I'm going to set up, I'm going to go and work for a charity in Madagascar.
40:39
He had a thing about Madagascar.
40:42
He said, I'm going to go and devote myself to an orphanage in Madagascar, which he used to go to every summer for his holiday. That's what he did.
40:49
He didn't go to Sardinia, he went.
40:51
So he's a guy very, very strong social conscience.
40:54
But if you saw him, you'd say a hedgey, if ever I saw one.
41:01
Now the point was, what do you do with that?
41:03
And I remember this is a brilliant piece of leadership.
41:06
The managing partner in Italy I also knew very well because this guy talked to me a lot. What did you do?
41:12
And I said, I don't know, I said, you seem in a muzzle.
41:14
Why don't you take a few weeks off and think about it?
41:16
It wasn't getting anywhere.
41:18
But the managing partner said to him, he said, Leonardo is his name Leonardo?
41:25
He said, is this the best thing you can do?
41:27
He said, I've watched you and you are a brilliant consultant and financier and I don't know if you'd be a very good orphanage manager.
41:39
Why don't you do what you're good at and give your money to people who can build an orphanage?
41:45
And that's what he's done.
41:46
He stayed at McKinsey, he's very happy.
41:49
He's got two Porsches now and he gives practically all his wealth.
41:53
And the orphanage has 1400 people now who had the biggest impact on social society.
41:59
If he'd gone there and been a well intentioned social worker, doing great things, maybe feeling good about it and talk about impact.
42:07
Now go back to leadership impact. What did he do?
42:09
I think he's had more impact.
42:11
So I applaud you and encourage you for your instincts, but think hard about how can you have the most impact on social problems and in your context of yourself is my point.
42:21
So remember the story of Leonardo and the Porsches and the Madagascar. >> Speaker 2: Thank you.
42:27
>> Speaker 3: You've been here for like 10 minutes.
42:31
>> Speaker 2: Mr Davis, thank you very much for coming.
42:33
My name is Peter Passo, I'm a second year here.
42:36
My question is more along the lines of the personal costs and sacrifices required to be a great leader.
42:42
And so when you see these great leaders, where have they gone?
42:46
Where has it gone well in managing the costs and sacrifices of leadership and where have they done poorly?
42:53
>> Speaker 1: This is a great question and we could talk about radio.
43:04
And this is a bit generational.
43:06
When I was starting off, work was by far the dominant thing.
43:09
It was mostly male oriented, so I.
43:11
This is a classic, by the way.
43:12
I notice when you talk about work, life balance and the pursuit of happiness, you get people like me to come and talk, you don't.
43:18
You really want 35 year olds who are wrestling with this problem to talk to you about how they coping with it.
43:23
So I'm not saying either I or my generation's about another tip.
43:27
Get somebody who's a young partner at Goldman Sachs, who's got three kids and a husband who's a corporate lawyer to come and talk about work, life, balance.
43:35
It's a lot more useful having people like me talk about it.
43:38
I have to say this is my experience, but certainly for entrepreneurs, certainly for entrepreneurs, they don't really get the question. They're obsessed.
43:50
Work is life, that thing is their life and their families are just around that.
43:56
And they can have very good families, by the way.
43:58
So I have to say that you do not want to hear this, but it's my observation, the truth is a lot of great leaders don't really get the question. That's slightly.
44:07
We are slightly obsessive. Not a good answer.
44:10
It's just, I'm just giving it as I see it.
44:12
So at some point, and this is particularly true for entrepreneurs, particularly true for entrepreneurs, the question is almost.
44:19
I don't get where you're getting.
44:21
For those of you, those of us, those of you that really think about trying to juggle the balls and it's particularly true when children come along.
44:29
I think for most people and it's not just mums, by the way, it's true for dads too.
44:33
That's a really defining thing about how you're going to make it work. I don't have any.
44:38
I don't know, I just don't know the answer.
44:40
I've seen so many people go through this.
44:42
I think in the end, sort of muddling through is not bad. Money really helps.
44:46
If you can throw money at the problem and get a couple of nannies in the driver, it helps. Don't laugh at it. No, it helps.
44:56
If it really doesn't help deciding who is going to take the primary burden doesn't have to be the woman, is one, doesn't have to be you trying to get in careers that are more flexible.
45:05
But I think in the end it's segment of one stuff, muddling through.
45:08
The only thing that I would say is, and I saw a lot of this at McKinsey, particularly with women, very able women who loved the firm but couldn't make it work.
45:17
And all the rest would leave is that don't assume because you adopt for a different work life balance that you will suddenly be more fulfilled.
45:26
And the truth is, in a sense, all of you, all of us are cursed.
45:31
We're cursed by ability and ambition and education.
45:34
And you can't just switch it off.
45:36
You can't just switch it off.
45:38
And I think in the end you've just got to decide for yourself a balance of fulfillment and life and its segment of oneself, but not get too neurotic about it.
45:47
And if you get too neurotic about it, I think the worst thing you can be there is not fulfilled.
45:51
If you are trained to be a leader, trained to be a multi billionaire, trained to be the best techie in the world, you've got to do what you got to do.
45:58
And I think most families adjust to that.
46:00
If you're talking about family, work, life balance and there's personal interest, you just got to muddle through.
46:05
It's a very, very long answer.
46:06
That's one thing that does get easier as you get older and it's much tougher.
46:10
And I remember this when you're 25 or 30, when you're older and when I was elected the managing partner of McKinsey, my wife spotted before I did.
46:21
She said, this is going to be a tough six years and then she said, that's okay, the next six years could be for you.
46:28
The next six years after that will be for me.
46:30
That's a way of muddling through and it was.
46:33
And she said, you've got to do it.
46:34
And I said, look, I got it and I knew, I knew I was going to be gone, all I was.
46:38
And she said, that's okay, I understand you, you've got to do it.
46:41
And boy, am I paying back now. She said, no, no.
46:43
>> [LAUGH] >> The trouble is I do know that when you're 27 you say, joney, for the next six years it's going to be, it don't work.
46:51
I know that you negotiate in three months chunks when you're 27.
46:55
I know that it's not very.
46:59
I think there's no answer.
47:01
I just, you've got to, you've just got to recognize my point about self awareness.
47:05
You are high achieving people and if you suppress that, if you suppress that, bad things will happen and you see it with high achieving moms.
47:14
I gave it all up to look after my children.
47:17
They're often doing a lot of other stuff just because they're not working. Same with men as well. Sorry, long answer.
47:24
I'm basically, I don't know, just figure it out.
47:26
>> Speaker 2: Thank you very much.
47:26
>> [LAUGH] [APPLAUSE] >> Speaker 1: I'll just do one last question, is that all right?
47:34
And then we'll break for lunch.
47:35
>> Speaker 3: My name is Kamal Naji. I'm an MBA too.
47:38
My question is regarding your country, the UK as you know, it's probably going to go into recession over the coming few months.
47:45
And in your role advising the government, what are your solutions for both the private and the public sector in order to prevent the UK from going to recession?
47:54
And do you think it's preventable? What's going to happen?
47:57
>> Speaker 1: Certainly not by me.
48:04
I think the next year is so much in the control of the financial markets, so I think Europe is going to have a very, very difficult period.
48:12
My own view is that the credit crisis in Europe hasn't caused the current problems, they've exposed them, and these problems have been building over 15 years, we sort of knew it, but it's now very, very clear.
48:26
And when you've had a 15 year problem that's exposed, you do not solve it in two or three years.
48:30
You know that you understand better than I do about imbalances and rebalancing.
48:35
And all this recession, it'll be what it will be, I think there's going to be a lot of grief in Europe in the next two to three years.
48:42
My view is, and I'm saying in the government, look beyond it, and I have nothing to offer now about how you manage through a recession, fiscal stimulus, all the rest, it's very, very tricky, look beyond it.
48:53
What are you going to do that will take it forward?
48:56
And then I think you go back to the fundamentals of productivity, innovation, encouraging enterprise, all those sorts of things.
49:04
So the role to any I'm training is on productivity innovation, getting into sectors, encouraging the country to move into sectors we're offered, it's nothing to do with the next two to three years.
49:13
I think that's really not very solvable.
49:17
The one thing I am working on is civil service reform and public sector, a huge issue in the Western world is public sector productivity.
49:26
And productivity leads to growth, you know that, I know that, most people don't get it, they think that productivity is about cutting jobs, but productivity and growth are the same thing fundamentally.
49:36
When your public sector is 50% of GDP, which it is in most European countries, you have to get it as productive as the private sector, and there's a huge task on that doesn't mean less jobs necessarily.
49:48
I mean if you take the health sector, the productivity could increase by 30% easily, and all those people could be re employed in the health sector for greater output.
49:58
So the thing that I'm focusing on is productivity in the public sector, Civil service reform, using some of the skills, you've got to be careful, it's a very different mindset in the sector and really get it.
50:10
But public sector productivity is going to be huge, and when people say to me, my final comment, the biggest problem in the Western world is greed, it's not, it's entitlement.
50:25
Entitlement is the biggest single problem we have to challenge that in the public and in the private sector.
50:32
Thank you for the question, thank you very much. >> [APPLAUSE]