I'm thrilled to be back. This is a fantastic place. Congratulations on your new campus. So now that we can no longer say at
Harvard we have a beautiful campus to offset our bad weather
because you've got both. >> [LAUGH]
>> But it's a pleasure to be here and I did meet Peter Simp by the way. Peter has an excelent new book out called
Little Bets that he wrote on his own. Talking about the importance of how
real innovation should take place in organizations. And making small bets instead of betting
the farm on one large R and D program. But I've had, it's interesting,
I see myself as a leader but the last ten years I haven't led anything. But I'm really excited about having
a chance to work with leaders like you. And I've decided to devote myself for
this period of my life to that. Because we've gone through what I would
call a rough patch in leadership. When I was at Medtronic,
we had the wind at our backs. That was the 90s,
when leaders were looked at as heroes and things were going our way. Innovation was popping up all over. We did innovate some major new medical
therapies at Medtronic for heart failure. And minimally invasive cardiac surgery and
Parkinson's and Cerebral Palsy and back pain and a lot of very,
very exciting things. But the thing I think I'm proud of as
Medtronic is we set a metric of saying instead of looking at our market cap,
our stock price, or revenues or profits. But how many people were
restored to full life and health, which is a mission at Medtronic. And we finally got it
down from a minute and a half, to the time I joined the company. Until the time I left down
to one every three seconds. So today, while we're sitting here
one of every minute that goes by, every 20 people being restored
by Medtronic product. And to me that's what it's all about. Because so many companies have lost sight of why
they went business in the first place. They lost site of their mission and
their purpose. In fact, I wrote an article recently for fortune talking about
leadership's lost decade. Because it's been a very rough
patch I think for leadership. And this is my generation, the fact, when
I left Medtronic it was about the time that we had the dot com decline,
but we also had Enron and WorldCom. And it wasn't just those
companies with corruption, it was the hundred companies that had to
restate billions of dollars of earnings. Because they had cooked the books and
destroyed a lot of truly great companies. Some of which are coming back,
like Xerox and Bristol Myers. But it was my generation of
leaders that led to that. And so my hope is that your generation of
leaders is going to do things differently and not get all caught
up in playing the game. I think we also got caught up on
a lot of flawed economic theories, the idea of shareholder
value maximization. Which morphed to short term
value maximization and destroyed much of the pharmaceutical,
the American pharmaceutical industry. because people were playing
the short term game. And the perfect market theory and
principal agency theory, and fortunately these theories we have
now realize the flaws in them. With the meltdown in 2008, which for
you must have come as a real shock. But I think it was actually
an appropriate awakening of what it takes to build great companies. And so
that's what I'd like to talk about today. In many, many cases,
I think the real essence of the problem was that we got caught up
with the leader as hero. And we tried to find a rock
star to run our companies. We often went outside to people
who didn't know the company. Didn't know the business. And boards honestly were choosing
the wrong leaders for the wrong reasons. They were choosing people more for
their charisma than their character. More for their style than their substance. And more for
their image than their integrity. Well, if you choose people for
things like image and style and charisma, why are you surprised
when you don't get people with integrity? And that's who we had. We put way too many leaders put their self
interests ahead of their institution. And to me, that's the greatest sin. I've never owned my own company. I suppose if you've owned your own,
you can do what you want to. Although, most people own their own
company have a very long term view. But I feel like you'll always have
to put the organization first. And anyone who doesn't do that and
rises to a high position, takes advantage of their power,
has really failed as a leader. And I think, so
many of these leaders failed. So, how is your generation
going to do it different? That's what I want to challenge you today. What kind of leader
are you going to become? And how are you going to
use your leadership gifts? So I have three questions for
you to think about. The first of all, is what kind
of leader do you want to become? And underneath that is, where do you find
the passion to lead in the first place? That's the first question. I just want you to reflect on this
because I'll come back to each of these. The second one, how are you going to
develop yourself as a leader? Leadership is like anything else,
you have to practice it every day. You don't just show up in a leadership
role at age 45 and think you can lead. I had my first opportunity to lead
an organization, [INAUDIBLE] Industries. That started the consumer microwave
oven business back in 1970, when I was 27 years old. Someone bet on me at a very young age and
I made a lot of mistakes. But I tell you,
it was a fabulous experience. You learn by having those experiences. You don't learn just by studying other
people's experience or studying textbooks, you learn by actually doing it. And so,
how are you going to develop yourself? If you're going to be a great athlete, you
certainly wouldn't play in the World Cup if you didn't practice every day or
ride in the Tour de France. Nor would you try to play the cello
at Carnegie Hall unless you practiced every day. Well, leadership is the same thing. So, I just urge you to get in to
leadership roles as soon as possible. And constantly be processing your
leadership, I'll talk more about that. And the third question,
most important of all, how are you going to make
a difference in the world? What do you want to do
to impact the world? We've seen many leaders right
in this geographic area, where people are doing it every day. How are you going to impact the world? Rather than giving yourself over to
somebody else telling you what to do, how are you going to make that impact? Because we desperately need
contributions of leaders. The complex problems we have today like
global peace, global health, education, the environment, energy policies,
healthcare cannot be solved. It cannot be solved by any one company,
one individual, any one sector. We really need people, collaborative
leaders who can bring people together, to really make a difference in the world. So that's the challenge I
want to give you today. So let me talk about how I think
leadership is going to be different in your generation. Because I think what I grew up with
was a hierarchical view of leadership, I didn't have that view but
that's what was visited on us. It came out of the two World Wars, the Great Depression, we thought
General Patton was some kind of hero. The all powerful person on top,
we venerated those leaders. And I think today, as a result, a lot of leaders created hierarchy,
bureaucracy, rules and regulations. You don't want to work in
those kind of organizations. I don't know any young leaders
today that want to work in that, in fact most have rejected that notion. And I think that's a good thing. You had knowledge workers working for you. And I used to say to people,
middle managers, if the people working for you don't know more than you do,
then you've got the wrong people. You need to get some new people. Because you want to have more talented
people around you than you are, in every single position. But I think the most important thing is,
in organizations today, we fooled ourselves by saying,
people are only interested in money. That may be true in some sectors,
that may be true at the top. But I can tell you, served on the board
of Target stores, 350,000 people. People make a dollar or
two over minimum wage. I can guarantee you, it isn’t just
about money, it’s about meaning, it’s about the purpose. Think about your work. You’re going to spend more time at work
than you do anything else in your life. More time with your families,
more time with your leisure time, probably more time you will sleeping. Don't you have the right to
have a meeting at your work? Doesn't everyone who works
in the organization? People are not just gnomes or
cogs in a wheel. You need to think about how
do you provide that meeting? At Medtronic, the most significant
thing we did is every December, we got all of our employees together. Minneapolis employees, as many you could
get into a large atrium auditorium. Not fancy like this, just a big
atrium area about 3, 4,000 people and these days 25 or 30,000 people watching
around the world and on web streaming. And we brought in six patients. And these six patients told their story of what it had meant to
have a Medtronic product. The doctors came with them and introduced
them, but they didn't tell the story. And it was a very impactful experience. I'll never forget the first one I went to. 5 people came up,
1 of them was a man in his 50s. Who had intractable back pain and
he failed five surgeries. And he actually said, I was an alcoholic,
drug addicted, anything to stop the pain. And then, he said,
then I got your stimulator, and he actually broke into tears. He said, it took my pain away. I just realized back last March, for the first time what it
was like to be pain free. First time in ten years. Then, a young boy came up who
is the same age as my son Jeff, 18 years old from Pittsburgh,
but there the similarities end. He described it like he had
cerebral palsy from birth. Every year he had surgery. Finally, at 16, he denied future surgery. His body got very rigid and stiff, his motions quite spastic,
he had to pull out of a mainstream school. And then, he smiled and he patted his
belly and said, then I got your pump, it's my friendly ally. Which put an older drug directly into
his spinal column, and it restored him. It didn't take away his cerebral palsy,
but it gave him life. And he said, now I'm back in mainstream
school, I got rid of the wheelchair, I can walk in arm braces. His speech patterns are corrected,
I'm going to college next year, got a girlfriend. He wasn't correct,
he wasn't cured but he had a life. And that's when I got what
Medtronic really does, it was about the mission of the company. And that mission can apply to
any organization you work in, it can apply to financial services
organization, it can apply to a consulting firm, certainly it can apply with all
the high tech companies around here. So I'd like to describe 21st century
leadership in 4 words, very simply. Align, empower, serve, and collaborate. Let me describe briefly what
I mean by each of those. The toughest job a leader is
not getting the numbers right. I dare say any half dozen
of us could go off and figure out how to get the numbers right
for just about any company in the world. All you have to do is cut 20% of the
staff, reduce someone else's salary 10%, get rid of bonuses, cut the R&D 30%,
cut the marketing 20. And I'll guarantee you
the stock price will go up. That's what's happening at
Pfizer right now, real time. But you want to have a company,
if you do that. The toughest job of leadership is getting
people aligned around the mission and values of the company. And how else can it be? Think about it. What's the hardest job we have? Running a global company. You got people all around the world
that are raised in different cultures. You're expanding quickly in Brazil,
or in China, or in India. And you have to convince
people that your mission and your values are really essential
to the future of the company. You can't run multiple
value systems in a company. You can have different norms but
you have to have one value set. So that people can work collaboratively,
all around the globe. The second thing, is leadership is not
about exerting power over other people. That's a very old fashioned notion. The most popular course at Harvard
used to be power and influence, now no one takes it. It's about having the capacity to empower
other people to step up and lead. And I'll guarantee you, an organization
of empowered people from top to bottom will out-compete a tops down
power-based organization every time. Think about where you want to work. And so,
are you that kind of empowering leader? I remember visiting a company,
a Medtronic company, out in Southern California in Irvine. They make heart valves. They take pigs' hearts and about one out
of every ten pigs' hearts produce a valve that can be used to replace a failed
human aortic or mitral valve. And this was heavily backlogged. Took 18 months to train new workers. A lot of newly immigrated
immigrants from Southeast Asia, and I met the top worker in the facility,
a woman named Trin. She was from Laos. And so,
she had all her tools on the bench. I said Trin, I'm trained as an industrial
engineer, tell me how you do your work because we need to accelerate this,
make it more of a science than an art. She wouldn't look down at her bench. She said, Mr. George,
let me tell you something. My job is to make heart valves
that save someone's life, and if I do that job well,
a lot of people can be restored. She said, I make 1,000 valves a year,
I make the quality decisions here. We've got a manual, but my criteria,
is that valve good enough for my father, my husband, or my daughter? And if it's not, it doesn't get by me. She said, for you,
99.9% quality is considered very good. But if one of the valves I make fails,
someone's going to die, and I could never live with that. So every one of those 1,000
valves has got to be perfect. But she said, you know what I think,
Will, when I go home at night? I'm thinking about those 5,000 people who
are alive and well in the world today, because of the heart valves I made. Now, this woman has no direct reports. Do any of you doubt that
she's an empowered person? She's actually an empowered leader, because she's the one that
people go to for quality advice. She's the one that does
the training in the facility. So leadership today is about having people
like Trin throughout your organizations, to empower other people to step up and
lead. That's the only way we're going to
have great organizations. The third thing is,
leadership is about service. It's not to serve the shareholder,
it's to serve the people, the customers, the patients, the clients that you serve,
that's what it's about. It's not serving the shareholder, and if you don't get that, your company
will never create shareholder value. If you get that, if you create better
products, and any company today that can't make a product that offers better value,
better technology, better innovation, or better services than their competitors
eventually go out of business. Look at General Motors,
it took 50 years to go out of business. But it was sure as you can stand here, they had to go out of business
before they could get it right. Because they didn't understand
whom they were serving. The fourth thing is,
leadership is about collaboration. And the new model is,
how do we have a collaborative model? Sam Pomasano is one of the pioneers
that IBM did this about seven years ago. And he changed IBM away from a hierarchy
model into a fully collaborative model. And he's totally transformed that company. And they've done extremely
well in that time period. Because it's about global collaboration. They get compensated on what
kind of collaborators they are. So I think the great organizations and
the great leaders, of which I hope you'll be one, understand
how to align people around mission values, how to empower other people to step up and
lead. Recognize that leadership is about serving
your customers and serving your employees. And finally, it's about collaboration. And I think in that is the essence of the
kind of leaders I hope you'll become and will think seriously about becoming. I wrote a book as was mentioned,
True North, with Peter Sims. We interviewed 125 leaders,
many of them from the West Coast. And my colleague said, Bill,
I hope you'll finally crack the code. Are great leaders made or born? What are the characteristics
of successful leaders? You know what, 123 people we talked to,
no one wanted to talk about that. You know what they want to talk about? They wanted to talk about who they were. They wanted to talk about
their life stories. Where their passions came from, and they wanted to talk about really
difficult times that they'd face. I remember talking to Dick Kirachewitz
who was a graduate of this school, the most successful commercial banker for
20 years. And Dick was saying, I didn't learn
leadership from Stanford Business, I learned it from a little
town in western Washington. In a sawmill town, he said, I learned
two things that were really important. I learned it at the corner grocery
store and on the athletic field. He was a very good quarterback,
by the way. But he said, if you had 11 quarterbacks
on the team, you'd lose every game. He said, at Wells Fargo, everyone that
worked for me had to be better than I was. And the second thing he said,
I learned At the corner grocery store it was all about the last 3 feet
between you and the customer. We've lost site of that in healthcare
the last 3 feet between the doctor and the patient. That's where the relationship in
every organization takes place. And if you don't get that, you probably
won't create a great organization. And you probably won't be able to
sustain success over the long term. But about 85% of the people told us that
they've experienced very severe crucibles in their life. One of them was Dan Vasella,
who I got to know well, a CEO of Novartis. Dan was born as a sickly boy, and
not born, but was sickly as a child. He had spinal meningitis and tuberculosis, which in the 1960s were very
life threatening diseases. He went into a hospital and then
a sanitorium and he spent 12 months there. His parents who lived nearby with
good public transportation never visited him once. And he was scared. He said that every week they would
come in and do a spinal tap. He thought that they
were trying to kill him. No one told him what was going on and
he would scream. And then he said,
a new physician came in and he explained this whole procedure to
me and walked me through every step, treated me like an adult and he said,
can I help you make this less painful and he said, yes, don't hold me down
like an animal like you were. Just hold my hand and he did and he said,
it didn't hurt, so I gave him a big hug. But Dan's problems didn't end there. He had one sister die of cancer, another sister he was very close to died
in an automobile crash when Dan was 12. When he was 13,
his father died in heart surgery, and his mother went to work in a distant town
about, and came back once every 3 weeks. And here this 14 year old boy was left
home alone, he joined a motorcycle gang. He got a lot of drinking,
a lot of fighting. Finally, at 18 he came out of this, he said,
I want to make something out of my life. I want to be like that compassionate
physician, that's why he went to medical school and eventually when he became Chief
Resident at the University of Basel and decided, I think that I can serve
more than one person at a time. And that's when he went to work
in the pharmaceutical business. Now, I can guarantee you, of all
the people in the pharmaceutical business, he's the one that has the most compassion
for patients, and is really deeply concerned about these issues because
of that Syrian crucible experience. I wrote him about a friend of
our son who's having a severe healthcare issue right now, Dan wrote
him back, never even met the young man, probably never will on a Sunday afternoon,
took time to explain the entire disease. That's the kind of compassion that
we need to have in leaders today but see it came out of that
crucible that he had. Now, I don't have a dramatic
story to tell you like Steve Jobs did in his commencement address here. Or like Howard Schultz does when
he wrote about in True North. But I came from a middle to
upper middle class family. My father, I thought,
was a good consultant. He thought he was a failure. I'm the only child of older parents,
he was 43 when I was born. He said, son, I'd like you to
become the leader I never became. And so, here, I'm an eight year old boy. He's already telling me, son, you could
be president of the Coca-Cola company. He's even naming the company and
he said, if that doesn't work, you can go to work at Procter & Gamble. That's a really great company. Be head of that or you could work at this new computer
company on the East Coast called IBM. Well, of course, I didn't know what these
companies were and I drank Coca-Cola, but I could tell you it was pretty heavy
tip to lay on an eight year old kids. But lo and behold, I'm in high school,
junior high joined the lots of organizations and
I never selected to lead anything. I am never head of an organization,
never elected student council. I'm a good tennis player, never elected
captain of my tennis team, finally, my senior year of high school I
said to heck with it, I ran for president senior class
which I nominated myself. Guess one other guy, and I was sure
I was a better leader than he was. When the votes came in,
I lost by a margin of two to one. So you can see the kids in my high
school didn't appreciate what a great leader I was. >> [LAUGH]
>> So to escape myself, I used to say, I went to Georgia Tech
because of great weather. I wanted to play tennis, a great
academic school to learn engineering. But the real reason was I wanted to
go somewhere where no one knew me. But I hadn't learned at that point
is wherever you go, there you are. You may change venues, but
you take yourself with you and I did. And I was eager to get ahead, and so
I was going to lead everyone, so I ran for election six more times at Georgia Tech,
lost all six, so now I'm zero for seven. So it's pretty clear no-one
sees me as a leader. The very best thing that happened to
me is some seniors at Georgia Tech took me aside and said, Bill,
no one's ever going to work with you, much less be led by you, because you're so
ambitious to get ahead, you're moving so fast, you know take time for other people. Don't take time, I'll tell you that so
I can blow it to the Solar Plexis. I thought, I'm never going to
be the leader I want to become. And so, I took their advice and
put my own self-help, leadership program together,
talked to a lot of people who rejected me. And eventually had another leadership
position to the college and graduate school, and
I went to Harvard Business School. But I came out of school and
started the year to get ahead. I joined Layton industries, thinking,
I can move ahead quickly in this company, spent ten years there,
then I joined Honeywell. And seeing here's an opportunity to
run ultimately a great global company. And I had the privilege of being president
of Honeywell Europe in my late 30s. Came back and
I was given a series of turnarounds. And I've always thought of myself
as a builder, a grower of things. I know how to turn businesses around but
that's not where my heart is. But we got the first set of turnarounds
done, it was like a huge bureaucracy. It was a two step promotion,
worst promotion I ever got. Be careful about your
promotions because this one had I was a sector head with three groups,
nine divisions, different business. I've always loved being engaged
with customers and employees. Well, we were chasing numbers and
there are huge turnarounds. I'd spend all of my time doing that, of
course, with laying off a lot of people. And so, I got that one done. They gave me a second set of turnarounds. And I got that one
happened pretty quickly. Then, the third set came along. Aerospace and Defense business
which important business, but not where my heart is. >> [LAUGH]
>> And so, found 500 million in
defense contract overruns. Had to write that off,
which in those days was real money. And then, one day I'm coming home. It's a day like today in the fall,
Minnesota, where the leaves are turning. By this time, Penny and
I had been married 16, 17 years. She has a good job as
a consulting psychologist. Our sons Jeff and
John are going into high school. We have a lot of friends in Minnesota. I'm one of the two leading candidates,
not the leading candidate, to be the next CEO of Honeywell when they
make the decision in four or five years. I look at myself in the mirror and
I'm miserable. You ever had that flash in the mirror,
you see yourself as you really are. Not like narcissistic looking in this
pool saying, how beautiful I am. But what's happening is I've always
seen myself as a valued senator leader that I was losing it. That I was playing the corporate game. That I was even wearing
cufflinks which I don't wear. Nothing wrong with cufflinks but
I was trying to impress everyone. Say, just the right thing at the right
time, not showing any passion because I knew I was a passion free company, and
just kind of be buttoned up, be the man. Well, I went home and told Penny that. You know what she said? She said, Bill, I’ve been trying
to tell you that for a year. You just refuse to listen. See, it’s always the person closest to
you that sees you as you really are. And she saw through my blind
spots which I had plenty of. I don’t have any blind spots,
so I had a lot of blind spots. So I have a men’s group, I went to
them the next day, and they said, you've turned my [INAUDIBLE] down three
times to become president of the company. Why?
Rick said, well, it's not a really big company,
it's a midsize company. But I did get up the courage. I called Earl Bakken the founder,
because I had to turn it out by four or five months before. I say, is the job being president chief
[INAUDIBLE] number two job still open? And it was,
I remember spending three hours with Earl. He didn't even interview me. All he did was talk about
the mission of the company. I did take the job. I remember walking in
the door as I first did. Never been in the building. I felt like I was coming home. What an odd feeling. Coming home to a place
you've never been before. You ever had that feeling? Where you're coming in and you say,
here's good people I can work with. I can learn a lot from them and
we can really make a difference and I can tell you honestly guys, it was
the best decision of my professional life. Had the best 13 years there and
everything has happened since that time back in 1989 has opened up because of that
and it was a wonderful time in my life. But if I had not gone through
that searing crucible, that difficult time all the way back
to high school, and I hope you can see the linkage here of kind of repeating
some of those same mistakes. But becoming real and becoming authentic
and finding I could be myself and be successful and
not the guy that wore cuff links but the person that could just be real
really was a fantastic thing. So let's talk about how are you
going to develop as a leader. because I think that's really important,
I think you want to start with your life story, your difficult times, and
where do you find your passion to lead? And it's having that self awareness. We've had these myths that the smartest
person makes the best leader, it is indeed a myth. Anyone with an IQ over 120,
which all of you have. The differentiating factor in leaders is
not IQ but EQ, so emotional intelligence. Dan Goldman's written about that, they
have the research data showing this now. That that's the differentiating factor. And it starts with your self awareness,
knowing who you are. I teach some at and John Rice,
the vice chairman comes and he says, you know you want to get ahead. These are all the hard charges and chiefs,
and you want to get here, ahead here. You need to let management
know who you are. He said, no I don't think
you understood what I meant. You need to let them know
who you are as a person. Not what you want them to think you are. Not trying to impress them,
not what we want you to be but who are you and
if you can lead for that solid, authentic core, you will have not just a
better life you'll be a far better leader. But to do that you have to have
a level of self awareness and that's easier said than done. The oracle Delphi told us 4,000 years
ago know thyself, how do you do that? Well I think there's no substitute for
experience. That's why I say the first
thing get experience early. Best leaders in my classroom
are military vets, you know? And they come someone like Morris Sullivan
who is running logistic missions for the Marines at age 22 and
23 and had to go to Fallujah. Actually got the real experience,
but you got to have the experience. But then it's not just enough to have it. GE gives people a lot of experience,
but they never stop the process. They're moving so fast, they keep repeating their mistakes
in every job they move into. So what you want to do,
is you have to process. You need some form of reflective or
introspective process. So think about, what do you do? I happen to meditate 20
minutes twice a day. There are many things you can do. You can go for a jog,
you can take a long walk, you can have someone close to you,
like my wife, Penny, that you can talk to. You can pray. But you need to have some way
of processing in your life, what's going right, what's going wrong. Steve Jobs had a wonderful statement. He said, I look in the mirror
every morning, and say, Steve are you doing today
exactly what you want to do? The answer's not going to be yes everyday,
but if it's no too many days in a row, you need to change what you're doing and
do what you want to do. As I always say to the MBA's,
never sell your soul to the man, you know. You gotta be your person. And I think the third thing is,
have people, a group of people around you I think you heard that the leadership perspectives
course here started with small groups. I got that idea from a group of MBAs,
two from here, three from Harvard, one from Duke. I asked him how do you want to
develop yourselves as leaders? And we decided that small groups, and this
was very threatening to the HPS faculty I can tell you, could be more impactful
than having faculty members participating. So we now have the course where we've
had 15 hundred people go through. And small groups, six-person
groups including 400 executives. We even do it in a week
in exec-ed programs. This came out of a men's group I've had. Those are the people I want to talk to, about you know I've had meets every
Wednesday morning from 7:15 to 8:30. After 36 years, let me tell you something, the most important things I've ever
done to develop as a leaders because these people know me inside-out
where I was coming from. A few years ago my wife
Penny had breast cancer. I went to talk to them because Penny and
I were having a little dance. I was the rational person who
was going to solve the problem. You know cancer is the one
problem you can't solve. And so
she thought she was going to die and I was saying, no you'll be fine and
here's the data. And in fact I presented this data and
she would say, don't give me your damned
data with me you know it says it's 80% chance to be non-recurrent
said for me it's a hundred or zero. But I went to my men's group and
they said Bill, you're in denial because remember
that your mother died of cancer your fiance died 18 months later three
weeks to the day before the wedding. You just can't think
that penny might be gone. They were right, I had that blind spot and
I couldn't see that. So who's that group in your life? Who is that group of really close people? Who would you go to? I guarantee you,
I use Facebook and Twitter a lot, I'll guarantee you you're not going to
put it on your Twitter account that you just got fired from your job or
had a life threatening illness. Or having difficulties in your marriage. But who would you talk to? Who are those people? Because I think you need
those in leadership. We had 36 CEOs come back to Harvard for
a reunion of our CEO program, and we talked to them all individually. You know what they said
the biggest threat, the most significant problem they had? Loneliness, leadership is lonely
unless you have people around you. That's why I wrote the new book,
True North Groups, to talk about how you can have a group in
your life, someone you can really talk to. I tell you it's the best way to
develop leaders that I know of. Much better than all these programs out
there that are trying to cultivate you to the GE, or the McKenzie, or
the Proctor and Gamma model. Because it allows you to be authentic and
be who you are and people around you can help you stay on track and
stay true to what you believe in. The other thing I think is
important to your leadership is that you have an integrated life. I remember back in my 30's I had anything
but that, I was flying all over the world, I had two kids at home, plenty working. You know and, you know I was one person
at home and a different person at work. And I finally went to an offsite seminar, I said you gotta take all
these walls down in your life, decompartmentalize your life, and
just be the same person everywhere. You're never going to have
perfect balance in your life, but you can be, maintain the integrity
of being the same person, and not trying to pretend you're
something different than you are. So think about your
leadership development. How are you going to
develop your leadership? What kind of leader do you want to become? And then we get to the third question,
okay? And that's the most
important question of all. How are you going to use your leadership
gifts to make a difference in the world? At the end of the day, what are you
going to say that's really important? What's the purpose of your leadership? I hope it goes beyond just making
a lot of money for yourself. Yes, you'll pay off your debts,
I guarantee you will. I hope it goes beyond just trying to
achieve a title or something like that. I hope it will really be something
that you can leave that makes the difference in the world because you
have that ability, that's why you're here. That's why you're chosen to come here. Look at all people that
come before you and the difference they've made in the world. Look at this gift from this Bob King, I was just given a gift here to
study poverty and entrepreneurship. Think about what people can do to
make a difference in the world, and what are you going to do? Think about that,
because I really want to challenge you. And I want you to think about it this way. Okay, you're at the end of your life. Okay, you probably don't
want to think about that. The good news is you're 97 years old,
so you've led a long life. Bad news you've got three hours to live,
and all your adult children
are gathered around. All of your grandchildren have come in. I am thinking of my favorite granddaughter
Dillon who is four years old, and she looks up at you and says Grandpa or Grandma what did you do to make
a difference in the world? What are you going to tell her? I hope you don't tell her you made so much money she never has to work
a day in her life like you did. >> [LAUGH]
>> But I hope you will tell her what's
really important in life because that's the legacy you're leaving. But don't wait until then. You leave that legacy every day. Robert F Kennedy once
said when he was alive, few will have the greatness
to bend history itself. He happened to be in South Africa where
Nelson Mandela did indeed bend history. But most of us never will, I know I won't. But he went on to say but each of us can
commit ourselves to a series of actions to make this world a better place. And the sum total of all those actions
will write the history of this generation. Well, it's my hope that your generation
will really make a difference and lead better in a different way. A more authentic way, a more sustainable
way and create great companies. My colleague Michael Porter
wrote an article last January in Harvard Business Review
called Creating Shared Value. What's the value for society your
organization's going to create? We can think of lots of examples of people
that do that, organizations that do that. But how are you going to make
a difference in your leadership? Margaret Mead I think said that well, never doubt the power of a small
group of people to change the world. Indeed, it is the only
thing that ever has. I'd like to close by saying when you leave
this world, the only thing you can take with you is what you'll leave behind that
I want to challenge you today to say, what do you going to leave behind that
will make this world a better place. Thank you very much. >> [APPLAUSE] >> Okay, let's open up for questions. To whoever gets to ask the first question,
got a book to sign for you. [LAUGH] Who would like to
ask the first question? Thank you. >> Hi, thanks for that amazing talk. When you're running a company
like Medtronic, which is so devoted to human health but
also committed to shareholder value, how do you balance those two when
they might come into conflict? And I'm thinking, for example,
of the JBJS issue that was earlier this year about Journal
of Bone and Joint Surgery. >> Right.
>> It was all about spine surgery being sort of questionable value. >> Right.
>> And Medtronic's role in spine surgery. >> Yeah, and
what my successor's successor, Omar Ishrak did is he set up
a whole study to study Yale, which is known as a medical school that's
not very favorable towards industry. But yeah,
I think bad things are going to happen. You cannot run a company of any magnitude
and not have bad things happen and have challenging issues. And I think the real issue is,
how do you deal with it? When it comes to you like
this Penn State fiasco. Bad things happen in organizations,
but how do you deal with it? Do you step up to it and
say we're going to do the right thing. We're going to pull that
product off the market, we're going to study it objectively, we're going to fund whatever it
takes to get the root cause of that. You don't go into denial like
Merck originally did it in Vioxx. You've got to deal with the problem and
say, what's the right thing to do? And I think, yes, and I'll tell you the
best way to destroy shareholder value is to have a quality problem or
have an organization that's in denial. because you may get through
the short-term, but you won't get through the long-term. We do have to make the numbers. We had to make the numbers at Medtronic. But what you always want to do is make
sure you're investing in the long term. If you make the numbers by sacrificing the
long term to make the numbers look good in a short term,
that will come back to bite you and you won't have a company in the long run. That's the General Motors story,
the Sears Roebuck story. I can give you lots of other examples, more recent ones that are real tragedies,
okay? We've seen one right next here,
my role model company for 30 years. You know what it was? Hewlett Packard. I met Dave Packard once,
I'll tell you he and Bill Hewlett knew how to run a company. Very egalitarian, everyone matters. You could go up and talk to him anytime. They're wandering around the labs. Then somehow with 300,000 people they weren't able to find any
leaders from within. Don't ask me how you can take
an organization with 300,000 people and not find one person to lead it. So they went outside, and
then they did it again, and again and again with a quite
dysfunctional board of directors. And I'm not trying to rip on them. I'm just saying if you don't keep focused
on those long term issues, if you abandon what got you there, the HP way, and
you don't stay true to your values, if Metronic ever abandons the idea of
restoring people to full life and health. But, honestly, that's where real
shareholder value is created. The only reason we create all that
shareholder value is because we did good value for patients and
we could charge fairly for it, and people got excited about it. Employees don't get motivated
just by trying to get stock. At least I found they didn't get
motivated by trying the stock price up. So, thank you for that question. Other questions, yes sir. >> Thank you so much for your talk. The concept of authentic leadership that
he mentioned really doesn't with me, and I was wondering if you have thoughts
on how to balance learning and transforming your leadership style with
staying authentic at the same time? >> Staying? >> Authentic. Authentic
>> Yeah. >> And transforming and
learning as you go [CROSSTALK] >> See I think we're growing, we're blooming, we're a planet. If I'm from India or I'm from China or
I'm from Minnesota and I deny who I am,
then you're not authentic. We grow from that point of view. You grow from your strengths and
great leaders there, I just had a program with
Malcolm Gladwell and Tom Banshee here but the whole idea of building on your
strengths and managing your weaknesses, but you've got to build on what makes you
really good and you may have weaknesses. You want to have people around you
who can supplement those weakness. Say you're not great in finance you
want to have a great financial officer. I went to Medtronics and I can tell you
I didn't know anything about medicine or medical technology. I knew a lot about technology,
but not about Medtronic. I went up and gowned up and saw 700
procedures the time I was with Medtronic. I used to come out here
to Stanford hospitals and work with doctors, some of the great
work that a guy like Tom Fogerty or some of the great cardiac surgeons here,
or cardiologists. That's where I learned the business. But I wasn't trying to sell anything. But I think you have to build on that
base and learn what you don't know and recognize. You know I learned from
seeing all those procedures? I learned what I didn't know and
how much I didn't know. And if you're Larry Summers,
former president of Harvard and Obama's failed at economic adviser. If you know everything about everything,
I guarantee you you're going to fail. So it's important to recognize what you
don't know and then build around that and manage your weaknesses,
not try to exploit them. You manage your weaknesses by
having people around that can complement, offset them. Yes sir. Or ma'am, I was looking at the line. >> [LAUGH] It seems like for leaders, there's often a tradeoff between
being likeable and being respected. Do you agree that that is a trade-off,
and how do you manage that? >> Yeah, this is a classic
Machiavellian question, right? Should I be liked or respected? I'll tell you,
you have to make hard decisions. Don't make decisions just on being liked,
okay? But I think you want to be likeable. You want to be kind and
thoughtful to people and that's how you get the most out of them. But you have to make hard decisions. Sometimes you have to terminate
people that have worked for your company for a long time. Sometimes you're doing them a favor,
because they're in the wrong job. So you have to make those hard calls. And I think in the end, if you do that
with humanity, and caring, in the end, you will be respected and
you'll get the results. And so I think these are very tough. If you lean too heavy to the being liked,
you'll avoid conflict. And in the end you won't
have any introspect because you didn't make the hard call. So, business is about hard decisions and there's no way you can be in business and
not have to make hard calls. But if you duck them or you start doing them for what makes you
look good, particularly to the media, that's the sure sign that you're
about ready to go down the drain. And you see people get caught up a lot, Donald Trump type figure,
it's all about them. And when that happens, sell the stock. Thank you for the question. Yes, sir? >> Hi, you mentioned earlier in your
elections how you kind of lost touch with the people around you and
kind of building those relationships. So, when you were in a leadership
position at a large organization, how did you maintain that philosophy, even
though you may be so far away from kind of the, You know the people that were
the last three feet from the consumers. >> Stay in touch with those people. >> Or even kind of the lower part
of the people in your organization. >> I know.
The only way to do it is to stay in touch. I mean we all ate in
the same cafeteria together. I would go in to sit down at
a table of a group of people. Be in touch. Wander through the labs. Go out and work with your sales people and
drive up and down here. Go and see that customer out in
Northern California that hates you, be in touch with
the people doing the work. We have way too much administration,
too many layers. You should never have fewer than
about 15 people working for you. The idea of this layering, we gotta get rid of all these
detailed layers of administration and put the emphasis on people doing the work,
the innovators, the quality people. The people that know how
to serve a customer. The people that can build
a business in a country. Those are the people that, and so
yeah, it takes a lot of travel. I travel all over the world, all the time,
because you gotta be in touch with people. And you're always talking
about the mission or values. You sound like a broken record, but
you never stop talking about this, because that's where people resonate. You get to their hearts, their passion. And I think that's the only
way you can do it. If you get caught up in the head shed, and
you see companies are very hierarchical. I love the campus setting for companies. We tried to do it at Metronic,
made a company out here have it. You go to New York,
you see them all in these skyscrapers. They don't even talk to
the person one floor below them. So they get too caught up in sitting
in a board room looking at numbers, and they lose sight of
the essence of the business. I can tell you that people I know are down
in the trading floors in financing. And Bob Ulrich, CEO of Target for 14
years, he visited two dozen stores a week. Howard Schultz did the same
thing at Starbucks. You gotta be out there with the troops. I think that's the only way you
can really know the business. Because if you lose sight of that, that's
why Howard recognized Starbucks was losing it and
he went back into full-time leadership. because he saw they were getting too
bureaucratic and getting away from it. And the company was going down the drain. So thank you for the question. Yes?
>> Thanks a lot for your talk. As we look out, and most of us
are picking our careers for the future. How do you think or
what do you think about balancing, picking an organization where you
have a really strong mission? And really strong alignment with
their mission vision versus picking an organization where you might get
better training or something like that? >> Depends on what kind of
training you're going to get. You've have pretty good training here. You know I'm serious. I mean you're not 18 years old. You've had pretty good training and
I think you want to look for an organization to give
you a chance to go do it. Throw you out there. In business my son is up at
UCSF I was with him this weekend. He's in his mid 30s and
he's still a resident, a fourth year resident in head and
neck surgery. He's training under one of the great
head and neck surgeons of the world. But medicine is different. Business isn't like that. Best thing that can happen to you is
somebody bets on you and says, okay, we want you to go run Pakistan for us,
or we want you to go run, you know, we want you to go to run Austria. But just having the experience of
being away and getting that leadership experience, and because I think that's
where you learn about yourself and you really have to test
yourself against that. And I think that's what really matters and
how you build yourself. So training programs sound good. I'm not high on them. I have to tell you, I think most of them
are acculturation, trying to get you into the GE culture so you'll be a part of
that until you can be a great GE leader. Except you may not be
the leader you want to be and you may not spend the rest
of your life there anyway. And that's why a guy like
leaves GE very successful and he fails Home Depot because he's
trying to apply all that GE stuff. I'm not against GE, I'm just saying
I think the model is flawed. The model should be, any leadership development program
should be about who you want to become. And people that do that well,
like a General Mills, do it really well, because they are focused on that. So, thank you. Yes, sir. >> Thank you for your time. In light of the fact that
Steve Jobs denied his daughter and. Took credit for other people's ideas. Do you believe that he was
an authentic moral leader? >> Steve Jobs, it's really risky now we're calling
him the greatest leader of all time. because he like the rest
of us had a lot of flaws. I think he perhaps was the greatest
innovator of the last, he was in my opinion the greatest
innovator in the last 50 years. He did amazing things. But he learned the hard way, if you listen to his Stanford
commencement address in 2005, everything, he spent all this time working until
now this is all laid out there. He actually learned from his failures. He learned from failing and
getting fired at Apple. He learned what it was
like to be an orphan. Yes, he had difficult times,
yes he had parental issues. Yes he had family issues, because some of
those came out of his own family of origin into his family of choice. And so,
he had a lot of learning to do, but the good news is he processed and learned. And he went off and created Pixar. He learned from those experiences and so when he came back to Apple and so called
Act 3, he was ready to do it much better. But he still could be a jerk, in fact, Ron
Johnson who created all the Apple stores, came from Target, I knew him at Target. He came to our CEO,
he's now the new CEO of JCPenny, and he said Steve knew he
had these characteristics, these flaws and he lacked emotional
intelligence so he surrounded himself so all the people around him at Apple had
high levels of emotional intelligence. Johnny Ive and Tim cook and Ron Johnson
and that's the way he off set that so that gets him the confidence. But I think he did it
really well in the end and you can see in the results but
it took time. By the way he didn't spend any time
worrying about stock market or getting stock price up it
took care of it's self. >> Yes
>> High, you spoke about empowerment, and I just wanted to know how you empowered
people in an industry where there's so many procedures-
>> Yes, terrible. >> And everything has to be
done by the book and all that. >> It's horrible. Every board I'm on is all these,
we're reviewing regulation and all. Now, I think, you have to do
all that stuff, so to speak. You have to meet the FDA, you can't put drugs out that
don't meet the requirements. You have to comply with the regulations
and the financial service and you have to comply with
the regulation in the energy industry. You must do it,
you must have the discipline so you don't have a incident in the gulf like
BP did, you must do all those things. But I think really empower people finding
out what they're really passionate about, and giving them a chance to do it. Picking out people who want
to make a difference and putting them in jobs to go do it. Go start a venture,
you want to go do this? I met a young man that had,
born with a terrible face malformation, and
he actually had it cut in surgery. Now he's taken up this feat
of pediatric oncology. To help people just like himself,
he's following that passion. You know he shouldn't go off and
go to work for Meryl Lynch you know? And I'm just saying you want to follow that line of what you
can do to make a difference. So, thank you. Yes sir. >> I was very interested on how you spoke
of aligning public and private interests. There's a new corporate legislation
passed on B corporations in California, Vermont, Maryland, about using the power
of business to create public benefit without getting sued by shareholders for
not making profit their primary motive. Do you think this is a trend that will
expand to the rest of the states? >> Yes, I refer to Porter's article,
that's what Porter says. Business has been fighting society for
the last 30 years, we need to get aligned. We're chartered by society. Society gives us our charter. We should,
that should be the primary thing, is how do we create value for society? And then we create value. So if you're an energy company,
you have to create value for society. If you're a healthcare company,
if you're a financial services company your job is to finance other
people to start up companies. I was over at Center Hill
a few minutes ago, they're helping people get started
with total greenfield ventures. So we have that obligation. And then from that,
we earn shareholder value. It's not the other way around. If you start with the shareholder value,
you wind up putting yourself out of business, and
you'll eventually be bankrupt. But I think it's a very good thing. And I thought also we're going to elude
to, I think one of the things that's happening now is Social enterprises that
are nonprofit or for profit are also coming together much closer so that people
really get that in the nonprofit world. But I think that those are also
coming much closer together. I think you see many of the emerging
companies really understand what they're about and how they can and
we need to create the demand. I think this idea of carving up the pie,
I hate what's going on in the income disparity
in the country, I just can't stand it. But there's only one way around it,
we gotta expand the size of the pie by giving more people opportunities,
more people create companies, more people get financing,
get things started and get it going. That's the future of this country,
and probably of the world. Yes sir. >> Thank you very much for
a wonderful lecture. My question is a little bit philosophical, I think I completely agree
with you to be authentic. But my question is when
you are looking for a job and
you find you have lots of interests and actually you are sent here with A, I was
sent here with B, I was sent here with C. You find that you are sent here with a lot
of things, you have a lot of interests but finally, you should choose just one,
how to manage it? >> I think that's a discernment, that's a
reflection and introspection, think about where it is you want to devote yourself
and where can you make a difference? And where are the opportunities? Somebody's way maybe blocked over here? I think that's part of why you're here. This is an opportunity for a transforming
experience, and I hope that ten years from now, you'll look back on this and
say this was a transforming experience. It's an opportunity to
really think about that. Don't take the highest paying job offer. We just had my 40th reunion
at Harvard Business School. I can tell you the people that took
the lowest paying jobs are the ones, in the end, that did the best financially. The highest paying kind of flattened out. I think you want to focus on,
use this as an opportunity to really think through what do you want to do and
you may not hit it at first. Look at me, it took me forever to
get to the right place for me. There's no right place for all of us, but
there may be a right place for you, but it may take you a while to get there. I always used to say to people,
if you hate your work, quit. Don't spend your whole life going
through life sleepwalking through life, living somebody else's desires. Thank you. >> [APPLAUSE]
>> Thank you very much. >> Thank you. Can I just, one minute. Can I have one minute? I wanted to go back and
quote you something, the best advice. You mentioned Steve Jobs. The best advice he ever gave me, it actually shows a high level
of emotional intelligence. He said and this is really the essence
of everything I've been trying to say, don't spend your whole life
living somebody else's dream. That's what I was doing with my father,
I had to be my dream and not his and I didn't even realize
that it was so inculcated in me. The second thing is, don't let the noise of other people's
opinions drown out your inner voice. Listen to your inner voice,
that's the question you're asking. Don't let other people tell you what to
do, you gotta decide what you want to do. And third, most important of all,
follow your heart and your intuition. If you do that,
you'll have a very full life and you'll really make a big
difference in the world. Thank you.
[APPLAUSE]
