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I thought what I would do today is share a little bit about some of, really some of the stories about my growing up, how I approached managing my career.
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I understand that's one of the things that you tend to be interested in these discussions.
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I'd like to share a little bit only briefly about some of the lessons I learned on strategy, business strategy, but that may stimulate some of the things that you want to talk about.
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And then I'm very pleased to see the way in which Dean Jos and the rest of the faculty have tuned the curriculum and in particular the focus in on management leadership.
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And I want to spend a few minutes sharing some of the things that I was lucky enough to learn about management and leadership from the people that I got a chance to work with over the years.
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Now, for me as Dean mentioned, it started in Nebraska.
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This is an aerial photo of our family farm I grew up in that house right there.
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And my family had been farming in Nebraska since 1854.
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I think originally, when our family came into the United States, we were involved in another type of agricultural production, or I should say a sideline of agricultural production.
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We were involved in moonshine whiskey in the Virginia area.
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And these days I like to say we're kind of back to our roots in a certain sense, because after all, an ethanol plant is just a larger version of that technology.
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Now we're not involved at all in ethanol plants directly.
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Wouldn't be my advice to you on your investment strategy, but I will say it's been very good to be corn farmers in being able to supply the alternative energy, market and growing corn and feeding cattle.
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We have about 3,000 acres of corn and soybeans, and we also feed a little more than 5,000 head of cattle a year.
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We do soil conservation work for other farmers.
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But the real reason I put this up is more to talk about the values that I learned growing up on the farm.
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And it's one of the things I want to encourage all of you on.
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It's a very important thing as you are managing or leading in the businesses or entities that you're going to be responsible for in the future.
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It's a very important thing for you to think about your values, because it's your values that shape a lot of what's important to you as a manager or leader, and also then sets the tone for the environment that you're responsible for.
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And I feel incredibly fortunate that I had these experiences growing up on the farm.
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One of the first things you learn when you grow up on a farm is work ethic.
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I learned to drive a tractor when I was age 7, I started working in the fields when I was age 9.
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And pretty much either in the weekends, weeknights, the summers, actually all the way through graduating from college I worked on the farm.
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Most kids you probably are good representatives, you went and got great internships at companies.
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I went back to Nebraska and worked in the fields during the summer, that was the way of life for me and my family.
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Another thing that I think was a great value that I learned growing up on the farm is to have a passion for what you do.
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One of the things that you quickly learn when you're on a farm is you're responsible, you're responsible for living things.
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It may be the livestock that you're carrying for the cattle or the hogs, or it may be the crop that you're trying to keep alive in the midst of a terrible drought, but you have that responsibility, and it puts a certain.
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It creates a certain sense of value or a value that's associated with that.
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In addition, I hope, like you, I had great parents.
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My parents, my family members, were great role models for me.
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I was the youngest of five children.
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And one of the things that correlates with this passion for what you do is that my mother, I think best epitomized a sense of competitiveness.
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It wasn't so much about whether I was doing better than the other guy, it was about whether I was being the best that I could be.
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Alice Raikes kind of had a bit of an iron fist in the Raikes household and that was the expectation, that was the tone that was set.
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And so to have that sense of internal competitiveness being the best that I could be, combined with that passion for what you do.
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I look back today and I say, I'm so thankful that I had those kind of role models in my life and that those were the values of the tone that was set for me as I was growing up.
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Another thing about growing up on the farm, I went to school in a little town called Ashland.
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It's seven miles away from the farm and about 2,000 people.
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And one of the things, of course you hear about small communities is everybody knows your business that's one of the things that they talk about.
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But there are some real positives to growing up in a small community like that.
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And one of the most important is the sense of values that you instill as a neighbor.
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You don't do a lot of business on the basis of legal contracts, you do business on the basis of a handshake.
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Your neighbor expects you that you're going to live up to your word, and similarly, you expect that they're going to live up to theirs.
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And so those values of honesty and integrity and that sense of community.
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One time, my brother was stricken with an aneurysm we couldn't get the crop in, this was in June, so it was really late in the planning season.
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I was leading Microsoft North America at the time, and I went to see Ballmer and I went to Bill, and I said, I'm sorry, but I gotta go back to Nebraska I got to go back home.
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Now, I had no idea what I was going to do, but there was that sense that we needed to somehow get this crop in.
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And when I got to the farm, the first person that met me was a guy named Jerry Nugent.
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He's one of our neighbors, and he had his own troubles, but he said, you tell me what I and my hired hand can do to help you.
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Now, that's a sense of community.
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And when you're in the workplace, in the work environment, or here at the business school.
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When you're in a situation where you've got some challenge, you hope that your neighbor steps up and is willing to help you.
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And similarly, they hope that you step up and are willing to help them and that's something I think is very important.
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So, as I said, for me, it does start here.
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It starts growing up on the farm, getting instilled or having these values instilled at an early age.
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There are a number of others that I think are important, but we don't have enough time today, or at least not until the Q and A to talk about.
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It's important to have a good sense of humor.
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It's important to have good stewardship, conservative nature, and spending.
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The importance of education as a way to open up opportunity.
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These are all values that I learned in my early years.
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And again for you, I hope, what it does is it encourages you to think about your own values and how you carry those values as managers and leaders in your organizations.
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Now, from the farm, as Dean mentioned, I went to Stanford, my father was a bit of an unusual farmer.
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He was actually He trained as a chemical engineer and perhaps for that reason he didn't think it was important for me to get an agricultural education.
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He thought it was more important for me to get a business education.
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So I was remarking to my wife's here with me and one of my daughters is a junior here at Stanford and I've got another daughter that's visiting this weekend with her friend.
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And I was remarking that the thing I remember most about visiting Stanford as a senior in high school, it was December, it was 10 below zero in Nebraska, and we drove up Palm Drive and it was 70 degrees.
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And I turned to my mom and I said, I want to go here.
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>> [LAUGH] >> And so that's what I did.
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My dad thought it was important for me to get a business education.
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He said, stanford, this is a true story.
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He said, Jeff, Stanford has the best business school in the country.
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You ought to go to Stanford.
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And I got here as an undergraduate and found out there's no undergraduate business school [LAUGH].
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So much for college planning.
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I mean, so I kind of scratched my head and I thought I was pretty good at mathematics.
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So I decided to go into the engineering field.
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And as was mentioned, my dream was to prepare myself to go work for the U.
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S department of Agriculture and Ag Policy.
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So that was my focus on engineering economic systems.
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And also there was a group here called the Stanford Food Research Institute.
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So most of my economics was involved in agriculture and agricultural policy.
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And I like to tell the folks at the Gates Foundation, I just took a 30 year detour in working on Ag policy because a funny thing happened.
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My brother is 15 years older and he was a professor at Iowa State in Ag policy or actually in agricultural economics.
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And he had come back to run our farm.
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And I hit upon the idea of buying this Apple Computer to help my brother run the farm.
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And because I'd always been working on the farm, I'd never done any job interviews.
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So when Apple Computer came onto campus, I said, well, I'll get some experience doing a job interview.
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And six months later I was head of VisiCalc, which was the spreadsheet, the first spreadsheet.
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It preceded Lotus 1, 2, 3 and Microsoft Excel.
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So I became the head of VisiCalc for Apple Computer.
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Now, there's another important value or another important moral of the story that I want to share with you that really I attribute to my father.
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My father had trained to be a chemical engineer, but my grandfather was going under during the depression and my dad stayed to help save our family farm and he never left he viewed it as an incredible opportunity.
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And if there's anything I learned from my father, and I learned a lot of great things from my father.
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One of the most important was that it was good for me to have a plan, but it was important to be open to opportunity.
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So I want to encourage you all to think about that.
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It's good for you to have a plan.
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I'm sure right now, just like I was thinking I was going to go work for the USDA.
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I'm sure you've got a plan and you should pursue that plan.
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But if the opportunity opens up, be open to the opportunity.
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That's one of the things my dad taught me that I think was very important.
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And it served me incredibly well in life.
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So I enjoyed my time at Apple Computer.
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I learned two or three really important things.
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One of the things I learned was that I love software. I'm getting behind here.
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I was joking that I was going to use slides because or PowerPoint, because that's not traditional here, apparently for view from the top.
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But since I'm the guy, I'm sorry to tell you this, but I'm the guy who caused Bill to choose to use PowerPoint or do PowerPoint as part of Microsoft Office.
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Thought it was important that I use PowerPoint today.
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>> [LAUGH] >> Now [COUGH] at Apple Computer, I learned two or three really important thin number one is that I learned that I love software.
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Software was this amazing thing.
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It was such this malleable intellectual property.
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People would come to me with what they considered to be really tough spreadsheet problem.
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And I'd stay up all night trying to figure out how I could get the spreadsheet to do a pert chart or something like that.
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But the thing that was really magical is when you come in the next morning and you demonstrate to that person that you were able to use the spreadsheet to solve their problem, their eyes light up.
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That was the magic of software.
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And that's really what captured me.
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I found my passion with software.
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The other thing I really learned at Apple Computer was that if you want to do great software, you got to do it at a software company.
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The hardware companies tend to think of the software just as a way to sell the box.
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And that definitely characterized Apple Computer.
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And so Steve Ballmer called and had me go down to Chef choose in Mountain View for lunch and had all these great plans.
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Microsoft at the time was probably 60 or so people.
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And a few months later, I went to work for Microsoft and it had Microsoft only had 100 employees.
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Steve Jobs called me up yelling at me, telling me about how Apple or how about Microsoft was going to go out of business.
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No joke, he was convinced Microsoft was going out of business.
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And I was crazy to want to move up to Seattle and work for that software company.
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I never did it for the financial reward. That wasn't the thing.
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There were 100 employees.
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Steve Jobs telling me the company's going to go out of business.
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That's not what I cared about.
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What I cared about was the work of creating Microsoft Office.
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To me, that was just an incredible thing to be a part of.
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And I will say the third thing, if you're interested, that I learned at Apple Computer was about stock options [LAUGH].
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So financial rewards came along with it, but it wasn't the focus.
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And I know that probably now that the environment is different, you're probably a little bit less focused on this issue anyway.
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But there's been a history around here in Silicon Valley that people are always off trying to become the young multimillionaires.
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And I worry sometimes that what ends up happening is you compromise the satisfaction that you'll get in your life from doing what you really care to do, what you really love to do.
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And so one of the things I really want to emphasize to you, that's important.
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Find what you really are passionate about and pursue that.
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I want to just quickly touch on some of the things at Microsoft.
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I was very lucky, obviously, to start at the company when there were 100 employees.
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Trish actually started at Microsoft when they were 75.
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She ran marketing communications.
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This actually is her last project, the Microsoft logo.
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And so a little family trivia note there.
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We're also the first Microsoft couple.
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We're the first couple to meet at Microsoft and get married.
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There have been a few who followed in our footsteps, [LAUGH] notable ones that I work for.
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And it was a tremendous time for us.
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I started at the company when there were 100 employees.
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I left when there were 91,000 employees.
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I think it went up to 95.
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I think it's headed a little back toward 91.
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But amazing opportunity for me.
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I didn't really have a A career management approach.
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Now, that's one thing I know you probably all think about.
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A lot of times I get questions, how do you think about your career?
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Really, simply, here's my suggestion.
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Do what you love to do and something that's valuable to the company.
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If you can do that, you'll probably do very well.
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For me, for my first 10 years, it was building Microsoft Office.
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And then Bill asked me to take on Microsoft North America.
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And ultimately I succeeded Steve in running worldwide sales, marketing and services.
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And I thought it was a little crazy, but I enjoyed it and it was important to the company.
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So I'm not a big believer that you've got to worry a lot about all the details of career management and that sort of thing. Be open to opportunity.
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But keep in mind that you should do something you enjoy doing and it's valuable to the company.
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And if you do that and do it really well, your career tends to take care of itself. That's my own opinion.
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A few other things I want to share with you about growing up at Microsoft.
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One of the people that really influenced me tremendously is a gentleman by the name of John Shirley.
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And I want to share with you the John Shirley test.
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John was our president from 1983 to 1990.
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And I really, really looked up to John.
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I thought he was an amazing individual.
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But I want to tell you one small anecdote that really helps to epitomize John, and it's the John Shirley test.
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Early on, we had some problems in manufacturing.
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And at that time, manufacturing was a big part of how we got our revenue because software was packaged product. So I sat in a meeting.
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John called the meeting was in his first month as being president, and he smoked a pipe and he kind of said, what about this? What about this? What about this?
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He just kept going around the room asking questions.
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And after about an hour of doing this, John leaned forward and he said, okay, now this is what we're going to do.
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Now, it turned out what John described as what we call the build order system, the way in which you have the intersection of manufacturing sales in product marketing to determine how much product that we should build.
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But that wasn't the important lesson that I learned that day.
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What I learned is that great leaders not only manage through their people, they not only do a good job of coaching and supporting their people, but they know when they need to roll up their sleeves and get in and make something happen.
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And that is the essence of the John Shirley test.
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About four or five years ago, Steve Ballmer and I were having a debate about our CFO opening.
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And I was absolutely convinced that Steve was headed down the path of hiring somebody that wouldn't pass the John Shirley test.
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And so I went toe to toe with Steve on this one.
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And I offered to Steve that I would personally do the reference checks on the individual that he wanted to hire.
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Sure enough, I knew some people who knew the individual, and I called him up and one of them was quite vocal.
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That guy, he never gets a darn thing done.
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And so we hired the other guy, and I'm thankful we did.
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Chris Liddell is the kind of chief financial officer that our company really needed.
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He's the guy who can manage through his people, but he knows how to roll up his sleeves and get things done.
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And so that was one of the things that I learned there.
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I just want to tell one other story about leadership and management that I learned at Microsoft, but it actually wasn't at Microsoft.
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Trish and I are part owner of the Seattle Mariners baseball team.
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And over the years, we got to know a guy by the name of Lou Piniella.
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Lou Piniella is now the manager of the Chicago Cubs.
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Manager means he's kind of the coach on the field.
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But one night I'm talking to Lou at spring training, and I'm asking Lou all kinds of questions.
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Lou, what makes a major league pitcher versus a minor league pitcher?
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Lou looks and he says three things.
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Number one, locate the fastball. Number two, avoid walks.
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Number three, get great lateral movement on the breaking pitch. Interesting.
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I said, Lou, how do you do the lineup?
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Okay, number one, got to have on base percentage.
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Number two, on base percentage with the ability to move the ball to the right hand side, so on and so forth.
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What makes a starter versus a reliever? Four things.
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What makes, just the whole night, it was two things, four things, three things.
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Now, if you're a baseball fan, you know that Lou Piniella has the reputation of being a very emotional guy to the point that people think he's not analytical.
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Lou is very analytical, and in fact, he represents one of the most important elements of leadership that I've learned.
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And that's that ability to take the complexity of the world around you and reduce it to its essence.
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I learned early on I used to do our MBA recruiting during the 1980s for Microsoft.
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And one of the things I really looked for with product marketing people that I was hiring out of Stanford Business School was that ability to take the complexity of the product.
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The complexity of the market environment and the complexity of the competition, and really reduce that to its essence in the form of a positioning statement.
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And the way I would do it actually is I would do it in terms of how the MBA candidate presented themselves as a product.
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What was their personal positioning statement, how did their brochure represent the key evidence points?
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But it really comes down to that ability to reduce things to their essence.
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And over the years, I thought, well, that makes great marketing.
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But what I learned later is it makes great leaders, people who have that ability.
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It's not that you should ignore the complexity or the nuances, but to lead others, you have to be able to reduce that to its essence.
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So my final question to Lou that night was probably the most instructive.
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I said, Lou, what makes a great manager?
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I referenced a guy named Dick Williams who had been fired from the Seattle Mariners, but earlier in his career he had won two straight World Series for the Oakland A's.
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I said, come on, Lou, a guy like Dick Williams gets fired, what happens?
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What makes a great manager?
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Lou stopped for a second and he said, five things.
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Said, number one in baseball today, and this is 1996 or seven, but still, I'd say it's true today.
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He says, you have to be able to get along with people.
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The manager may oftentimes make one tenth of the highest paid player.
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So you're not going to be able to influence people by being an autocrat.
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You have to be able to get along with people.
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He said, number two, you have to be able to help your players perform near their peak day in and day out.
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What is it that they can do?
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What is it that you can do as the manager to take somebody who is on a roll, an Edgar Martinez who's on a great hitting streak, and keep them going.
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And what is it that you don't do that will take them out of that situation? So number three, PR.
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Lou, PR, public relations? He said, sure.
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He says, look, the players read what I say.
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If I say the right thing, it sends them in the right direction.
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If I say the wrong thing, it sends them in the wrong direction.
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Number four, game strategy.
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I said, Lou, come on, the average fan is not going to believe that At number four is game strategy.
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I mean, they think you're integral to making the lineup, the pitching changes, so on and so forth.
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This one Lou kind of got animated, you see him when he's throwing the bases.
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>> [LAUGH] >> Says, look, damn it, I don't field for those guys, I don't pitch for those guys, I don't hit for those guys, they're on the field, I expect them to perform.
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That's a very interesting point, he holds people accountable.
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That's really what's important in that context.
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And number five, getting along with the front office.
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He says, come on, those guys make the player trades, they give me the talent, so on and so forth.
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Well, about six months later, I was running Microsoft North America at the time.
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I realized, what Lou taught me was what makes a great manager and a great leader.
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Now, let's say, you're running a sales organization.
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You better be able to get along with people, you should be able to help them perform near their peak.
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You need to be a good spokesperson, both internally and externally.
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You better be good at sales strategy and coaching your people on sales strategy, and holding them accountable.
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And you better be able to get along with the engineering department, the services department, so on and so forth.
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So there's another lesson there.
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You'll learn a lot about management and leadership from a lot of different people in your life, and be open to that.
25:29
So let me wrap up here and say a little bit about my first dream job and transition to my next dream job.
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So I had an incredibly amazing opportunity for 27 years to pursue my passion for software, and in particular, how technology could really change the world in positive ways for people.
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But also along the way, I learned that I love working with really smart people who are very passionate about what they do.
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And if you think about it, my next dream job, being the CEO of the Gates foundation, is very much the same.
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We use the power of innovation, the power of science and technology and systems thinking, to really try and change the world in a positive way.
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And our mission is to all lives have equal value.
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And what we want to do is we want to enable the ability for people to have these kinds of opportunities, to have healthy and productive lives.
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And for me, it's truly a dream job because I get to work with a lot of very smart, passionate people who are very committed to changing the world.
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So, in short, as I go into the Q and A, the thing I want to emphasize to you is I've had an amazingly lucky set of opportunities.
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For the past three decades, I was fortunate to have an amazing role as we witnessed the transition to a global information based economy.
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And I see the incredible opportunity for effective philanthropy as a way to now change the world in a whole other set of circumstances.
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But throughout I've had the opportunity to work with outstanding people who are very passionate about what they do.
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The kind of thing that I see here at Stanford Business School.
27:27
And so with that, I say thanks very much and I'd love to take your questions and comments, thank you.
27:32
>> [APPLAUSE] >> Speaker 2: Hi.
27:37
>> Jeff, my name is Beatrice.
27:39
I actually previously worked at Microsoft, so it's wonderful to have you here. >> Thank you.
27:44
>> Speaker 2: I have a question specifically about Bill and Melinda Gates Foundation.
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Based on my knowledge, it currently doesn't sponsor for profit social ventures and mainly focuses on nonprofit.
27:58
But I believe a lot of the social ventures could potentially have even bigger impacts, because of sustainable models.
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So we'd love to hear your thoughts.
28:06
>> Speaker 1: Yeah, of course, there are a couple of things we actually do make investments or grants, I should say, in entities that are for profit.
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For example, we have made some grants to Monsanto Corporation to help us in agricultural development, in adapting crops for Sub-Saharan Africa.
28:33
Now, as you probably know that the US tax code and the oversight or regulation of foundations, is such as you have to be very careful about how you invest in for profit entities, because the purpose of having the funds in the foundation is for its charitable purposes.
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But it is possible to make those kinds of relationships and not only do grants, but also to do what are called PRIs, Program Related Investments.
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And we look at both of those opportunities. Thanks, Beatrice.
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>> Speaker 3: I'm wondering if you could speak to the differences in leadership and management styles in a non profit or NGO setting as opposed to a for profit setting.
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And I understand that the regulations about how money flows are different, but what about leadership and management?
29:25
>> Speaker 1: Well, as somebody who's five months into it, I probably should say, or emphasize the obvious, which I may not be the best expert at this point in time.
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One of the things I came into this role thinking that I had to be very sensitive, very attuned, very aware of the differences between philanthropy in the private sector.
29:49
And I have to admit, if anything, I've been struck by the fact that there are less differences even than I realized.
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I'll give you an example.
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One of the things that kind of surprised me is that the foundation or philanthropy has competitors.
30:08
You go into business and of course, Microsoft has competitors and you think about that.
30:14
But in philanthropy, well, yeah, it turns out you do.
30:17
You have those people, those institutions, those entities that will fight against the very change that you feel is necessary in order to accomplish the positive change.
30:30
And it's probably most epitomized for me in a meeting I was in even before I started.
30:36
We were talking about our education strategy, the Gates foundation, and what needed to get done.
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And everybody was talking about risk management.
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How are we going to manage the risk because there's a lot of concern, wow, we may rub some people wrong.
30:49
And finally I just said, what are we going to do to win?
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People kind of got excited, yeah, what are we going to do to win?
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Because there are times where you really have to say, yeah, we've got to track those people who are the opponents of our ideas, who are going to fight against them, so on and so forth.
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So to be honest, at this point in time, if anything, I have felt that there's a little bit less of a difference than perhaps I anticipated.
31:22
But there clearly are things that are different.
31:24
Let's take capital allocation framework.
31:27
In business, you do have the benefit of concepts, return on investment in a fairly consistent way to do comparisons in terms of return on investment across your business.
31:40
But on the other hand, saving children's lives through better immunizations versus helping 150 million smallholder farmers in Sub-Saharan Africa and South Asia triple their income, so they can get out of poverty versus having kids, more kids in the United States States graduate from high school and be ready for college.
32:03
The capital allocation framework problem is more complex, is more challenging.
32:10
At the Gates Foundation, I think you have a little bit of a free capital problem.
32:14
You have to really remind people that the funds of the Gates Foundation are a small drop in the bucket compared to what's really needed.
32:23
And so we'll only succeed through partnerships.
32:25
But if the Gates Foundation employees view themselves as very, this is a big foundation, then perhaps we're missing out on the opportunities to leverage partnerships that are necessary for us to have greater impact.
32:38
So there are some things that definitely float through my mind, but I've been struck a little bit by the fact that there's a lot of consistency, takes good leadership and management. Thank you very much. There in the back.
32:49
>> Speaker 1: You actually just spoke to the question I [INAUDIBLE].
32:51
>> Speaker 1: Great, super, we have a hand here and a hand there.
32:54
He has a microphone, that gives you precedent.
32:56
>> Speaker 2: [LAUGH] >> Hi, my name is Michael Ovadia.
32:59
Yesterday, Brian Trailstedt from the Acumen Fund came and spoke with a few students and mentioned the challenge that any foundation has in really taking on big, audacious goals.
33:09
Such as eradicating malaria due to lack of scale, with the one exception being the Gates Foundation.
33:15
So I'm curious, what are some of the two or three largest and perhaps most audacious and bold goals that you've set?
33:23
What are the prioritization criteria, the process you went through to make those decisions?
33:28
And to your point around still having to leverage partnerships, how do you go about creating that systemic change?
33:33
So how do you actually build an ecosystem of researchers, nonprofits, SMEs, etc, around those goals to really create the change you're looking for and build leverage?
33:43
>> Speaker 1: Great, we're going to cover those topics over my next three lectures here.
33:47
>> Speaker 1: [LAUGH] >> Michael has a great set of questions, I won't do it justice, but let me give you at least a little bit of a picture.
33:57
One of the things that I've become very convinced of, and I think this will be heartening to all of you here at Stanford Business School.
34:04
Is that a very important part of what the Gates Foundation has to do is to have great strategies.
34:09
And I think a lot of times, smaller foundations, they have a lot of talented folks, but perhaps they're not of a scale where they have the discipline of really articulating strategies.
34:22
So for our 22 initiatives, which you mentioned, some of them eradicating malaria, eradicating polio, dramatically reducing the prevalence of HIV/AIDS, taking on tuberculosis.
34:35
Getting kids to graduate from high school and be college ready, there are 22 of those initiatives.
34:44
And one of the things that we have to do is we have to make sure we have very, very strong strategies, strategies that are based, first of all, on an opportunity map.
34:54
Opportunity map is a concept that I used at Microsoft in terms of thinking about where we had various business opportunities, but it applies in the world of philanthropy.
35:05
I'll give you a very good, simple example.
35:07
In the 1960s, there were about 100 million or so births in the world, and about 20 million kids died.
35:17
Now there are about 135 million births in the world, but there are 10 million kids who die.
35:23
So we made a lot of progress, but there are still 10 million children under the age of 5 who die. 3.
35:29
7 million of those kids die in the first 28 days of their life, okay?
35:35
That's called neonatal mortality.
35:38
And almost all of those are in the developing world.
35:43
So there's an opportunity map for you.
35:45
If you look at what happens in the developed world, almost no kids die.
35:50
Less than 1% of the deaths are in the developed world.
35:53
And if you look in the developing world, you have 3.
35:55
7 months, there's an opportunity.
36:00
76% of those deaths are due to the combination of sepsis, preterm birth, and birth asphyxia. So what can we do?
36:12
What is our theory of change that will take that on and make that happen?
36:17
So essentially what I'm doing is I'm just taking you through good strategy development.
36:21
What's the opportunity map?
36:22
What's the theory of change?
36:24
What's our theory of action?
36:25
What's the solution leverage? What's the cost model?
36:28
So these are the things now that I'm working with the team when they do a strategy.
36:33
And the difference between theory of change and theory of action is partner leverage.
36:38
How are we going to leverage partners?
36:40
One of the things people don't know about Microsoft is that part of Microsoft's success is that there are 750,000 companies in the world who make a business out of Microsoft's business.
36:52
So I learned very early on the importance of partner leverage.
36:56
That's actually a very important part of how Bill thinks about things.
37:00
He's brilliant when it comes to business models, and where's the leverage in the business model?
37:05
And big part of it is understanding how to build the ecosystem.
37:09
So we have to do the same thing.
37:11
We have to understand, what's the theory of change?
37:13
What's our theory of action?
37:15
What's the partner leverage?
37:19
If we figure out how to solve the problem in a certain percentage of the world, what's our ability to extend that to other parts of the world, that solution?
37:28
Leverage, and so, those are the fundamentals.
37:32
Thanks very much, Michael. Okay, please.
37:35
And then there's a hand up over there, one here, one here, yeah.
37:39
>> Speaker 3: So you mentioned the meeting about the strategy to win in education, could you tell us a little bit about what that strategy is or how you see it shaping up?
37:48
>> Speaker 1: I can tell you a little about it.
37:49
I want to be careful, I'm not an expert.
37:51
And a good way to learn more about US education is to read some of the research of Tom Kane, K-A-N-E.
37:59
He's a Harvard professor who's actually now joined the Gates Foundation.
38:05
I'll just give you a little tip of the iceberg.
38:07
Initially, we put a lot of emphasis on the structure of schools.
38:13
The theory being that big schools were less likely to succeed as compared to small schools.
38:18
So how can you take big school schools and really make them have a smaller feel?
38:27
We actually spent money taking big schools and creating multiple schools within the same school building.
38:34
And we learned some things.
38:35
And this is part of, I think, what's going to be characteristic of effective philanthropy, is to make sure that we share our successes and we share our failures.
38:45
And effectively what we learned is, yes, structure can make a difference, but at the end of the day, it's really what happens in the classroom, its teacher effectiveness.
38:54
We benefited from an unusual circumstance that occurred in LA, LA decided, I think there was some law, maybe it was local, maybe it was state, to reduce class size.
39:04
And the net result was they decided that what they needed to do was they needed more teachers.
39:10
And so, they were going to accept teachers that didn't have a teaching credential.
39:14
In addition, because they were doing that, they were going to do a longitudinal data study to track the performance of the students over years.
39:21
And what they found is that the teaching credential makes exactly zero difference.
39:29
Didn't matter whether the teacher had a credential or not.
39:32
What mattered was whether they were an effective teacher.
39:35
Now, it also didn't matter, believe it or not, whether they were in a high-income school or a low-income school.
39:41
If you had an effective teacher in a low-income school, they would get a grade and a half worth of performance in a year.
39:49
And if you had a bad teacher in a high-income school, they would get a half grade of performance in a year.
39:56
So in a nutshell, the work That Tom Kane and others learned from that specific incident really shaped our focus on teacher effectiveness.
40:07
And in particular, we're big believers in data.
40:10
Bill likes to say teaching or education is really just like a big human resources management system.
40:16
You know, what you really want is you want great data, and you want to make sure that you know which teachers are effective, which teachers aren't.
40:24
You want to be able to identify the effective teachers so that other people can learn from those effective teachers.
40:30
If you're anything like me, you can look back in your educational career and you can say, wow, there was this person, Chuck Niemeyer.
40:38
He was my biology teacher, and he really made a difference for me. He was a great teacher.
40:44
Now, how many other people know that Chuck Niemeyer was a great teacher, and how many other teachers have learned from what Chuck did? Really?
40:50
Well, the system is not designed to do that today, and we've got to get it there.
40:55
And that's why, as part of the stimulus package, there's $250 million that's associated with educational data as part of the stimulus package, because we've got to get to a point where we can identify what's the performance of students. You know this.
41:09
In business, what gets done is what gets measured.
41:15
And unfortunately, our educational system hasn't been that way.
41:18
And there will be people who will fight against that.
41:21
There will be people who will fight against the idea that we should compensate teachers for better effectiveness, you know, that we should have differentiated pay.
41:32
And so we'll have to take on some of those battles.
41:34
Thanks very much for your question.
41:36
Okay, you've got the microphone. So now you have press.
41:39
>> Speaker 2: So at what point in your career did you decide that you were going to make a transition into the nonprofit space?
41:45
What did you do to prepare or didn't or not prepare?
41:49
And what advice would you offer us if we decide right now that we would like to have a second career in a nonprofit?
41:57
>> Speaker 1: It was much more serendipitous than that.
42:01
Trish and I have been very committed to community service and philanthropy for a long time.
42:08
We both benefited from early exposure to Bill's mom, Mary Gates.
42:12
She was a tremendous leader in our community.
42:15
She was a board member of United Way nationally.
42:19
Bill's dad ran the United Way campaign, et cetera.
42:22
And so Mary got Tricia involved with the Boys and Girls Club of Kirkland Redmond.
42:29
And so we got involved in philanthropy early in our careers.
42:32
And frankly, our parents were great models.
42:35
I mentioned Alice Raikes.
42:38
Alice Raikes, my mom, she was quite a leader in the community.
42:42
And so we grew up, both of us grew up with that expectation that giving back to the community was an important thing to do.
42:51
The reason I decided that it was time for me to leave Microsoft was frankly that I was thinking about the future of Microsoft and then also my own future.
43:03
Steve is absolutely the right guy to lead Microsoft and I don't have CEO ITIs.
43:08
And so it was more that that who's going to be that next generation of leaders who are going to lead Microsoft.
43:16
And I felt like I'd had a good seven or eight years as president of the business division to help coach some of those people.
43:23
And at some point in time, what you have to do is get out of the way and let the new generation lead.
43:28
And I thought I might do some stuff in global agricultural work. This is a true story.
43:35
I'm sure it's going to sound, you know, like I'm making it up, but I thought maybe I'll get lucky enough to teach business school.
43:47
Bill Meehan, who's here, gave me a set of binders about some of the work that he was doing. And I was intrigued.
43:54
So I was thinking, maybe I'll teach business school, maybe I'll do global agricultural development.
43:59
About that time, Patty Stonecipher announced her retirement.
44:03
And so, you know, this incredible opportunity came, came in.
44:09
I guess it's another extension of the Ralph Raikes principle.
44:11
You can have a plan, but it's good to be open to opportunity.
44:15
So as much as anything, you know, the truth is if it weren't for my close relationship to Bill and Melinda, their trust in me, I wouldn't have this opportunity.
44:25
I mean, you know, if it's the Joe and Sally Smith, you know, 40 billion or 30 billion dollar foundation, I'm not the obvious candidate, you know, so. Thanks. Thank you. Okay. Microphone? Yeah, go ahead.
44:40
>> Speaker 3: Hi, my name is Jane Chen.
44:41
I graduated from the business school last June and now I'm starting a nonprofit organization making low cost baby incubators for developing countries.
44:48
So you spoke earlier about neonatal mortality and I'm wondering what the Gates foundation is doing to address this problem.
44:53
>> Speaker 1: Yeah, our belief that the key on neonatal mortality is to significantly increase the preparedness and density of frontline health work workers.
45:03
You know, for a lot of the part of the world where you have neonatal mortality, they just don't have access to facilities for, you know, so the birth is going to occur in a home.
45:16
And so what you have to do is you have to have frontline health workers that you have a model of a certain number of interactions and delivery, then of both preventative and curative interventions, both during pregnancy, at birth, in the first 28 days and then in the next month to 24 months. By the way, I said 3.
45:37
7 million deaths in the first month. There's another 3.
45:40
7 million deaths in the next 23 months.
45:44
So you get to about seven and a half million deaths in the first two years of life.
45:49
So the key thing that we're trying to do is to be a catalyst to get northern Nigeria, Ethiopia and the states of Udhar Pradesh and Karnataka in India to invest in the training and preparation of frontline health workers.
46:06
As well as to take some of the health interventions that are used at referral level facilities and adapt them and create some new interventions that these frontline health workers can deliver in the home or community setting.
46:23
And we think if we do that, we think we can have an impact of perhaps as much as 50% of a reduction on the neonatal mortality.
46:33
And so what we're trying to do is we're trying to scale that in the three geographies we're working, that would represent about 16% of the global burden in neonatal mortality.
46:47
And we think those very same models would have enough leverage to solve potentially as much as 30 to 50% of the world's problem.
46:56
So that's what we're trying to do. Just remind me of the.
47:00
I'm flexible on my schedule, but am I going to get the hook? Last one.
47:05
Can I say a few words after? Okay, great.
47:15
At the end of the day, it's your show. Okay, who's got the mic?
47:18
I don't actually know who's got the mic? There you go.
47:21
>> Speaker 2: This is kind of more, I guess, a little different question.
47:24
You'd spoken about learning from failures.
47:27
I guess one question I asked, what is maybe your most spectacular failure?
47:32
And what did you learn from that?
47:36
>> Speaker 1: Gosh, I'm trying to think of which ones I should pick.
47:41
Very early on, we made a mistake in our strategy at Microsoft on applications.
47:47
My first job was to be the product manager of Multiplan.
47:51
And Multiplan was a great spreadsheet and it had this characteristic that could run on any micro computer. It ran on the TI99. 4A.
48:00
Home computer ran on a Xenix or a PDP 11 mini computer and all the Ms, DOS computers, and the thing I learned very quickly was the fact that we ran all those computers didn't really matter.
48:13
At the end of the day, the customer makes the decision on what's the best software product for the computer they own, and on January 20th, 1983 there was a seminal introduction that totally changed my thinking.
48:24
It was called Lotus 123, Lotus 123 didn't run on all the microcomputers, it ran on exactly one, the IBM PC, but it was the best spreadsheet on the IBM PC, and so basically I learned you can work as hard as you want.
48:42
But if you don't have the right strategy, you won't succeed and you better move very quickly to change the strategy, second one I'll touch on briefly, when I was running Microsoft North America.
48:55
When I came in, I was really kind of a product guy, not a sales guy, so I had to learn to be a sales guy, and my predecessor, he'd been very successful as a sales, you know, leading the sales organization.
49:06
So I thought, well, I don't really need to change anything, I just, you know, need to, that was a mistake, you know, what it did was it caused me to be slow, to really roll up my sleeves, get in, understand.
49:17
And fortunately I had a bit of a, a mini crisis in the business that caused me to just throw out that thinking that everything was okay and get into it, but for that first nine months, I really feel like I made a mistake.
49:35
In not rolling up my sleeves and getting in, and even if things were in good shape, you always learn, so the thing I did when I came into the Gates foundation is I spent my first 45 days meeting with people.
49:51
I met with every member of the leadership team, the top 40, I met my directs at least multiple times, I was gathering information, forming a view of what needed to get done.
50:02
I wasn't going to take my nine month break as I did, I want to end up by sharing with you two or three things that I think will be helpful to you as you take on your next career.
50:15
The first I call work balance, and it's one of the things that I saw a little bit of Microsoft I see clearly at the Gates foundation, and the thing that I want to share with you.
50:29
It's important to keep in mind that every job is going to have the things that you like and the things you don't like, and you have to have that perspective when you grow up.
50:39
On the farm, what everybody wants to do is drive the tractor, okay, that's the cool thing to do, hey, today I get to drive the tractor [LAUGH] There are those days, and turns out there's a lot of them.
50:53
Where what you have to do is scoop hog manure, and that's just the way every job is, and sometimes I find, especially for younger employees, they kind of forget that you've had this great experience on campus.
51:06
And you're so excited and you get into your career and you just think everything's going to be fun, just remember, some days you get to drive the tractor, some days you'll have to scoop some hog manure.
51:15
And if you have that kind of a perspective, what helps you is then you look forward to those days when you get to drive the tractor, and over time, you get good at designing your job.
51:26
The way you approach your job so that you maximize those things that you love to do the most, I hate being in the office dealing with people issues, that's the hog manure for me.
51:37
What I love to do is I love to be out in my old job visiting customers or in this job visiting grantees and the people they serve and really getting close to the impact that we can have.
51:48
But I recognize that it just comes with the territory, so just keep in mind that perspective, work, balance, second thing I find, and I really feel it's important to share this with you because I saw it all the time.
52:00
At Microsoft and I see it at the Gates Foundation, you're a bunch of type A overachiever, over ambitious, passionate people, and that is absolutely terrific, there's nobody I'd rather be working with than you.
52:14
But the thing is, a lot of times you come into a new role and you just, you think, okay, I've always been successful, I just want to do it all, and that's a formula for failure.
52:24
Because what you learn is that if you try and do it all, you're not going to do anything very well, so repeat after me, use your good judgment to set the right priorities and make the right trade offs.
52:41
You know, pick the four or five things that are going to add the most value and really focus in on them and do them really well, and that means you will trade off number seven, eight, nine, ten.
52:53
But that's okay, because if you try and do those two, you'll probably compromise the value you get from the top five, so just remember, use your good judgment to set the right priorities and make the right trade offs.
53:05
That level of focus, it's a little bit related to What I said, it's a corollary, it's not the same, but it's corollary to what I said earlier about leadership, really understand the essence of things.
53:18
And then you'll know where to focus your energies, the last thing I want to say springs off the second item, and that has to do with work life balance, and I found over the years that people would get to a point.
53:32
Where they say, I've been working so hard at Microsoft, or I've been working so hard at the Gates Foundation, I just don't have a good work life balance.
53:40
And I remember this guy Phil who worked for me, he ran microsoft project, and Phil was very intense, he used mechanical pencils, kind of like this gentleman right here.
53:53
But this gentleman's not quite like Phil because the way Phil would do it is in the one on one. [Sound].
54:01
What was he doing, he was breaking the lead, every line, I mean, Phil was just highly tuned, and you know Phil, I said, Phil, I said, okay, he came to me and said, he's got to get work life balance.
54:15
I said, what are you going to do, he says, well, I got to work less, I said, phil, I don't think that's going to work, It's not because I wanted him to work more or even as much as he was working.
54:27
It's because he had no strategy, what are you going to do, Phil, you going to watch tv, I don't think so, that's not Phil, so the thing that I tell employees and the thing I want to tell you about getting work life balance is.
54:41
Use your good judgment to set the right priorities in your personal life and make the right trade offs, your number one priority should be your family, that can be tough to do, Tricia will tell you that.
54:55
But I never, my assistant never scheduled me to travel on the first day of school because I wanted to be there when my kids went to school, I wanted to be able to go with them when they were young.
55:10
And have that experience and go home, have dinner with the family, go to the school meeting or the church meeting or whatever it is, but you have to prioritize those things.
55:22
Number two, I would especially emphasize with the Microsoft employees is community service thing, I would tell them, and I'll tell you is your company, your organization won't be nearly as successful.
55:35
If it doesn't have the support of the institutions in the community that provide the education system, the healthcare system, and the other things that help your family, your neighbors and your friends.
55:47
And so in some respects you have a responsibility to invest back in the community, it's part of your own organization, being successful, number three, pick something fun for me, Cornhusker football.
56:02
I probably go to three or four games a year, or maybe it's my golf game or the travel that we do with the family, pick those things in your life that you really enjoy and prioritize them.
56:15
Now, the net result is you'll work fewer hours, but I don't know about your manager, I don't worry about that because I know you'll be more efficient in how you use your time, you'll be more effective in how you use your time.
56:29
Probably even more important, you'll be healthier, you'll be happier, and you're more likely to have a long and successful career, and if you can have a career as long and successful and as fun as my own.
56:43
That's the best thing I could wish for you, so with that, I say thanks very much and I look forward to seeing what you do [APPLAUSE] Thank you.