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Time	Speaker	Text
00:00:06	>>	JACK WELCH, WHO RAN GENERAL ELECTRIC 14 YEARS, SPEAKS AT THE UNIVERSITY OF MIAMI. HE WAS INTERVIEWED BY DONNA SHALALA AND TALKS ABOUT RUNNING A LARGE CORPORATION AND CONTEMPORARY BUSINESS AND POLITICAL ISSUES. THIS IS JUST UNDER AN HOUR. [APPLAUSE]
00:00:34	>>	WELCOME TO THE FINAL PLENARY SESSION OF THE GLOBAL BUSINESS FORUM. FIRST, I WANT TO CONGRATULATE THE DEAN. THIS WAS NOT MY IDEA AND NOT MY EXECUTION. SHE AND HER TEAM, WITH SOME OF THE SENIOR MEMBERS OF MY ADMINISTRATION, PUT THE WHOLE THING TOGETHER. SO LET'S THANK BARBARA. [APPLAUSE]
00:01:08	>>	WELCOME TO THE FINAL PLENARY OF THE GLOBAL BUSINESS FORUM. IT IS MY PLEASURE TO INTRODUCE TO OF THE GLOBAL GIANTS. OUR SPEAKER LED ONE OF THE PREEMINENT COMPANIES THAT DATES BACK TO THE LATE 19TH CENTURY AND TODAY IS ONE OF THE WORLD'S LARGEST CORPORATIONS. HIS -- ITS FOUNDER, THOMAS EDISON, WOULD BE HERALDED AS ONE OF THE GREAT INVENTORS OF THE MODERN AGE. OUR SPEAKER ENJOYS A COMPARABLE REPUTATION FOR HIS INNOVATIVE MANAGEMENT STRATEGIES IN HIS LEADERSHIP STYLE. JACK WELCH SERVED AS CHAIRMAN AND CEO OF GE FROM 1981 TO 2001. HE BEGAN HIS CAREER WITH GE IN 1960, AND IN 1981, BECAME THE COMPANY'S EIGHTH AND YOUNGEST CEO. S CEO OF J. -- OF GE, HIS MANAGEMENT SKILLS ARE LEGENDARY. HE RAN G. LIKE A SMALL, DYNAMIC BUSINESS, ABLE TO CHANGE AS OPPORTUNITIES AROSE. THE COMPANY IS OF TREMENDOUS GROWTH AND EXPANSION UNDER HIS LEADERSHIP. FOR STREAMLINING OPERATIONS, ACQUIRING NEW BUSINESSES, AND ENSURING THAT EACH BUSINESS WAS THE BEST IN THE FIELD, THE COMPANY EXPANDED DRAMATICALLY FROM 1981 TO 2001. DURING HIS TENURE, MARKET CAPITALIZATION ROSE TO FOUR HUNDRED BILLION DOLLARS. IN 2000, HE WAS NAMED MANAGER OF THE CENTURY BY FORTUNE MAGAZINE. SINCE LEAVING GE, JACK HAS BECOME A LEADING AUTHOR. HE AND HIS WIFE, WHO JOINS US TODAY, AND WE ARE DELIGHTED TO HAVE YOU HERE, WROTE THE INTERNATIONAL -- WROTE TO INTERNATIONAL BESTSELLERS. IN 2001 HE WROTE AN AUTOBIOGRAPHICAL BOOK THAT REACHED NUMBER ONE ON THE NEW YORK TIMES BEST-SELLER LIST. THEY ARE POPULAR COLUMN "THE WELTERWEIGHT" IS PUBLISHED BY THE NEW YORK TIMES SYNDICATE. PLEASE WELCOME A MAN -- PLEASE WELCOME JACK WELCH. [APPLAUSE]
00:03:41	>>	WHAT A NICE CROWD.
00:03:47	>>	HERE ARE THE GROUND RULES. I AM GOING TO ASK THE INITIAL QUESTIONS, AND THEN WE WILL OPEN IT UP TO THE AUDIENCE. YOU MUST GO TO THE MICROPHONES, BECAUSE C-SPAN WOULD NOT BE HAPPY IF YOU DID NOT GO TO THE MICROPHONES. LET ME BEGIN WITH THIS QUESTION. A WEEK FROM NOW, PRESIDENT OBAMA CALLS YOU INTO HIS OFFICE AND SAYS, MR. WELCH, I HAVE NEVER MANAGED ANYTHING IN MY LIFE. [LAUGHTER] NOW HE TELLS US. WHAT SHOULD I DO IN THE FIRST 100 DAYS? [LAUGHTER] [APPLAUSE]
00:04:45	>>	THAT IS SOME QUESTION. I THINK HE IS OFF TO A GREAT START. I THINK WHAT YOU WANT TO DO IS BUILD A TEAM. WHETHER HE HAS A TEAM OR NOT IS A QUESTION, BUT HE SURE HAS SOME STARS. WE ALL RECOGNIZE AND UNDERSTAND THEM, AND YOU MELDED THEM INTO A TEAM. YOU WANT TO SEE THEM ALL PULL TOGETHER AND TRY TO GET US OUT OF THE DITCH WE ARE EN.
00:05:20	>>	LET ME PURSUE THAT A LITTLE BIT. IT OCCURRED TO ME THAT THE CHALLENGE IS NOT THE TEAM OF RIVALS BUT THE TEAMS OF THE TEAM OF RIVALS. THEY ARE THE PEOPLE MOST LIKELY TO CUT EACH OTHER UP. YOU'VE HAD A LOT OF EXPERIENCE IN YOUR CAREER WITH BUILDING A BROADER TEAMS AND THE TRAINING PROGRAMS FOR THEM.
00:05:42	>>	WE WROTE A COLUMN ON THIS. THE BIGGEST CHALLENGE THEY ARE GOING TO HAVE IS THE TEAM OF THE LEADERS, AS THEY VIE FOR ATTENTION. ONE OF THE PROBLEMS IS A LOT OF PEOPLE EQUALLY POWERFUL WITH THE CABINET OR IN THE WHITE HOUSE. SO WHO GETS THE PRESIDENT'S HERE IS A GAME THAT YOU KNOW BETTER THAN I KNOW. GETTING THAT YEAR -- YOU HAVE IT SUMMERS AND YOU HAVE A PARTNER. I THINK THEY HAVE WORKED TOGETHER FOR YEARS. THEY WANT TO GET THE CREDIT FOR POLICY X OR POLICY Y. THE WAY YOU DO THAT IS TO SET A STANDARD. THIS IS THE CULTURE WE ARE GOING TO HAVE. THESE ARE THE BEHAVIORS THAT WE ARE WRONG TO REWARD. BAD BEHAVIOR, WHETHER IT BE LEAKING OR SPIKING UP SOMEBODY ELSE'S IDEA, IS PUNISHED IN PUBLIC HANGINGS. THEY HAVE GOT TO BE TAKEN TO THE WOODSHED PUBLICLY AND PITCHED OUT OF THERE. IF YOU DO NOT SET A STANDARD OF BEHAVIOR IN YOUR OWN ORGANIZATIONS, ONCE WE MAKE THE DECISION WE ARE GOING, THAT IS A VERY KEY ISSUE. I THINK THAT A LEADER CANNOT -- HE MUST TAKE EVERY CHANCE TO TEACH BY EXAMPLE THAT HE POSSIBLY CAN. THOSE WHO COOPERATE MUST BE HERALDED, AND THOSE WHO BACKSTAB MUST BE PUNISHED.
00:07:27	>>	LET ME PURSUE THAT. HOW YOU AVOID THE PROXIMITY PROBLEM? THERE IS A WHITE HOUSE STAFF WHO SEE HIM EVERY DAY. YOU HAD A LARGE, DIVERSE ORGANIZATION. YOUR MEDICAL GUYS WERE OUT IN MILWAUKEE. HOW DID YOU MAKE SURE THAT THE PEOPLE WHO HAD OFFICES CLOSEST TO YOU DID NOT DOMINATE YOUR AGENDA?
00:07:54	>>	I MADE SURE THAT THE STAFF'S BACK WAS NOT TO THE FIELD, AND THEIR LIPS TOWARDS ME. KISSING UP IS A VERY POPULAR GAME AT HEADQUARTERS. WE ALL KNOW IT. WE ACTUALLY TOOK OUR STAFF PEOPLE, AND I USED TO MEET WITH THE ASSISTANCE OF THE TIME. THE ASSISTANCE FOR WORRY ABOUT JOB SECURITY AND OTHER THINGS. I SAID YOU CANNOT ALWAYS GUARANTEE YOUR JOB SECURITY BY LOOKING AT THE PHONE LOG. IF ALL THE PHONE CALLS ARE COMING OUT FROM YOUR STAFF PEOPLE, THE LAWYER, THE FINANCE PERSON, IF THE PHONE CALLS ARE ALL GOING FROM HEADQUARTERS A FIELD, THE BOSS IS VULNERABLE. IF THE CALLS ARE COMING IN FOR HELP BECAUSE YOU ARE A PERSON THAT CAN HELP, AND YOU ARE WORKING TO MAKE THAT BUSINESS -- HEADQUARTERS IS NOT MAKE OR SELL ANYTHING. ALL THEY ARE IS OVERHEAD. THE WHOLE OBJECTIVE IS TO GET THEM TO WORK TO FACILITATE THE GREASE OF MAKING THE COMPANY WORK IN THE FIELD, WHERE THE PEOPLE ARE THERE REALLY DO THINGS. CULTURALLY, WE MADE IT VERY CLEAR WITH THEIR JOB WAS. THEIR JOB -- MY FIRST WEEK IN THE JOB, THE HEAD OF OUR AND BECAME AN -- THE HEAD OF R & D CAME IN AND GAVE ME A STACK OF PAPERS. HE SAID THESE WILL PROVE THAT YOU READ THE BOOKS.
00:09:40	>>	I SAID SHOW THEM. WE DO NOT WANT THEM.
00:09:44	>>	THEY ARE ALWAYS KISSING UP AND GOING AFTER THE PEOPLE WHO DO THINGS.
00:09:48	>>	DO YOU THINK THAT -- HOW MANY ASSISTANCTS DID YOU HAVE AT GE? DO YOU THINK HAVING TOO MANY ASSISTANCE IS PART OF THAT PROBLEM?
00:10:07	>>	I GUESS EVERYBODY WAS MY ASSISTANT. [LAUGHTER] I DID NOT VIEW IT AS -- TECHNICALLY AND HAD AN ASSISTANT AND A HELPER. I COULD CALL ON ANYBODY ANYWHERE.
00:10:31	>>	IN MANY OF YOUR WRITINGS, YOU HAVE TALKED ABOUT THE ROLE OF HUMAN RESOURCE MANAGERS AND HOW CENTRAL YOU THINK THAT IS. YOU HAVE SAID YOU THINK IT IS THE NO. 2 JOB IN THE COMPANY. IN MOST ORGANIZATIONS, IS NO. 4 OR NO. 5.
00:10:45	>>	OR WORSE.
00:10:47	>>	CAN YOU TALK A LITTLE BIT ABOUT THE ROLE OF HUMAN RESOURCES IN TRAINING?
00:10:52	>>	LET'S TAKE A FOOTBALL GAME. LET'S TAKE THE DOLPHINS. WHO DO YOU THINK WOULD BE THE MOST IMPORTANT? THE ACCOUNTANTS, OR THE HEAD OF PERSONNEL? WHO IS GOING TO FIELD A TEAM? THE IDEA THAT IN BUSINESS IS NOT A GAME, AND YOU DO NOT WANT TO FIELD THE BEST TEAM IS NUTS. THE PROBLEM IS, HUMAN-RESOURCES IN MOST COMPANIES BECAME PICNICS, BIRTHDAYS, PARTIES, AND NONSENSE. RATHER THAN BEING REAL PLAYERS WHO ARE IN LEADERSHIP DEVELOPMENT, WHO ARE CHALLENGING YOU, WHEN YOU WANT TO GIVE IT TENURE TO SOMEONE, YOU HAVE A CERTAIN BIAS BECAUSE YOU HAVE BEEN HANDLED BY THE PERSON, DESPITE YOUR GREAT JUDGMENT. WE ARE ALL HANDLED. IT IS NICE TO HAVE FRESH EYES GIVING YOU A VIEW OF HOW YOU ARE BEING HANDLED. AND WHO IS WHAT AND WHO IS WHERE IN THE ORGANIZATION. I THINK THE IDEA THAT HANGING AROUND WITH A BORING ACCOUNTANT IS MORE IMPORTANT THAN HANGING AROUND WITH A PERSON WHO IS GOING TO PLACE PEOPLE IN THE JOBS IS SICK. I THINK THE REASON WHY IT -- IF I ASK THIS CROWD HERE, RAISE YOUR HAND IF YOU THINK YOU ARE A PEOPLE PERSON. I WOULD GET 100%. AND THEN IF I ASK YOU, HOW MANY OF YOU CAN CALCULATE A DISCOUNTED RATE OF RETURN? FEW HANDS GO UP. LET'S BE SURE TO WEAR COMFORTABLE. WE ALL KNOW HOW TO DO HUMAN- RESOURCES. WE ARE ALL PEOPLE PERSON'S, BUT WE ARE NOT SURE HOW GOOD OUR FINANCIAL SKILLS ARE.
00:12:52	>>	I THINK WE FACE THAT ALL THE TIME. IT IS ONE THE MISSING LINKS. THE BIGGEST SHOCK I HAVD WHEN I LEFT CHEEK -- WHO IS THE NUMBER TWO MOST POWERFUL PERSON? IF YOU GO TO 9% OF BUSINESSES IN AMERICA, THEY WOULD SAY THE CFO. RIGHT NOW, THE CFO IS GETTING THE MOST ATTENTION, BECAUSE WE ALL NEED CASH NOW. IN GENERAL, YOU WANT THE HUMAN RESOURCE PERSON TO BE BY YOUR SIDE. IF YOU FEELIELD THE BEST PLAYERS, YOU WIN.
00:13:46	>>	OUR FOOTBALL COACH SAYS THAT HE RECRUITS ATHLETES, NOT PARTICULAR PEOPLE FOR PARTICULAR POSITIONS, EVEN THOUGH THEY PLAYED A POSITION IN HIGH SCHOOL. DO YOU THINK THAT IS THE RIGHT STRATEGY?
00:13:57	>>	I TOTALLY BELIEVE THAT. YOU WANT PEOPLE WITH LEADERSHIP SKILLS. YOU WILL HAVE A JOB -- WE TRIED WITH ATHLETES OVER A DECADE TO BUILD OUR OWN ULTRASOUND BUSINESS IN MEDICAL DIAGNOSTICS. WE PUT OUR ATHLETES THEN ONE BY ONE, AND WE FAILED AND FAILED. THEN WE GOT A GUY FROM BANGLADESH OVER ULTRASOUND. HE LOVED IT. WE PUT HIM ON THE JOB, AND WE CREATED A $1.5 BILLION BUSINESS IN SEVEN YEARS.
00:14:41	>>	SO YOU DO NEED SOME SKILLED PLAYERS.
00:14:44	>>	YOU NEED A MIX OF SKILLED PLAYERS AND ATHLETES.
00:14:49	>>	LET'S SEE WHAT QUESTIONS OUR AUDIENCE HAS FOR YOU. WHERE ARE THE MICROPHONES? LET'S GET A MICROPHONE OVER THERE. THERE ARE MICROPHONES DOWN HERE ON THE FLOOR.
00:15:01	>>	PLEASE COME DOWN.
00:15:05	>>	BACK TO THE HUMAN RESOURCE QUESTION. AS EVERYONE KNOWS, YOUR MANAGEMENT STRATEGIES HAVE BEEN ACCLAIMED FOR YEARS AND WIDELY RECOGNIZED AND APPLAUDED. ONE OF THEM, IF I RECALL CORRECTLY IS, WHEN IT COMES EVALUATION TIME, THE BOTTOM 10% OF THE PERFORMERS GET CUT AND GET FIRED AND THEY GO. I AM WONDERING IF YOU STILL AGREE WITH THAT, AND WHY, OR IF YOU HAVE CHANGED YOUR MIND?
00:15:33	>>	I AGREE WITH THAT MORE THAN EVER. LET ME GIVE YOU A FRAMEWORK AROUND THE QUESTION. WHEN YOU RUN INTO A FINANCIAL SHOT -- I HAVE ALSO BEEN CHALLENGED ON NO. 1 AND NO. 2. LOOK WHAT HAPPENS WHEN A FINANCIAL SHOT HITS A COMPANY. WHEN THINGS HAPPEN FAST, WHETHER IT IS PERSONNEL OR LINES OF BUSINESS, LIKE WE HAVE SEEN IN THIS PAST YEAR, GOLDMAN IS SURVIVING, MORGAN STANLEY MAY BE SURVIVING. THE OTHER GUYS ALL FELL OVER LIKE GRAPES IN THIS GAME. YOU HAVE TO BE ABLE TO FEEL YOUR BEST TEAM. WHAT HAS BEEN PRACTICED WRONG BY SOME WHO HAVE TAKEN THE CONCEPT IS THAT IF YOU DO NOT HAVE A CANDID APPRAISAL SYSTEM WHERE PEOPLE ARE TOLD BETWEEN EYES WHAT THEY ARE DOING WELL AND WHAT THEY NEED TO DO TO IMPROVE AND WHERE THEY STAND -- IF THAT IS NOT CONSTANTLY DRUM THEN, IF IT IS NOT A WAY OF LIFE -- IF YOU ARE IN A COMPANY THAT HAS ONLY APPRAISALS -- HAS PHONY APPRAISALS AND SAYS YOU ARE PERFECTLY QUALIFIED FOR THE JOB, THIS DOES NOT WORK. PEOPLE COME IN WITH INCH-THICK APPRAISALS FOR 20 YEARS. IF YOU ARE STRAIGHT WITH THEM, AND YOU RUN A BUSINESS WHERE THERE ARE NO SURPRISES -- LOOK WHAT IS HAPPENING NOW ACROSS THESE COMPANIES. PEOPLE ARE BEING CALLED IN ANNOUNCING 5000 LAYOFFS. PEOPLE ARE SAYING, WHY ME?
00:17:21	>>	THE BOSS IS SAYING, YOU ARE NOT THE BEST. YOU ARE NOT THAT GOOD. AND THEY LOOK AT HIM AND SAY, BUT I HAVE BEEN HERE 30 YEARS. WHAT DID YOU TELL ME? YOU LOOK LIKE A REAL COURSES ASS DOING THAT. YOU DO NOT GO IN AND CUT THEM. YOU TELL THEM, BY NEXT YEAR YOU WILL NOT BE GETTING APPRAISED YEAR. FIND A JOB ELSEWHERE. THE EARLIER YOU DO IT, IF YOU CAN DO IT TO THEM BEFORE THEY ARE 35, IF YOU KNOW THEY ARE NOT GOING TO FIT, THAT IS THE KINDEST AND OF ALL. THE WORST THING IS TO TAKE SOMEONE IN THEIR 50'S AND GIVE THEM A SURPRISE. AND GIVE THEM A SURPRISE WHEN THERE ARE BAD MARKETS. THAT IS THE CRUELTY. THE KINDEST FORM OF MANAGEMENT IS EVALUATING PEOPLE AND TELLING THEM WHERE THEY STAND. NONE OF YOU IN THIS ROOM HAVE THE RIGHT TO RECALL THE MANAGER IF YOU HAVE ANY EMPLOYEES WORKING FOR YOU THAT ARE WONDERING WHERE THEY STAND. YOU HAVE AN OBLIGATION TO EVERYONE OF THEM TO LET THEM KNOW EXACTLY WHERE THEY STAND. I USED TO HAVE FOUR APPRAISALS A YEAR, EVERY THREE MONTHS. IT WAS A SHEET OF PAPER. HERE'S WHAT I LIKE ABOUT WHAT YOU ARE DOING, AND HERE'S WHERE YOU NEED TO IMPROVE. EVERYONE KNOWS WHERE THEY STAND. I BELIEVE IN IT MORE THAN EVER. I BELIEVE THE FIELD THE BEST TEAMS THAT WAY. I BELIEVE IT IS THE KINDEST FORM OF MANAGER.
00:19:07	>>	IN G, YOU HAD TO MAKE VERY TOUGH DECISIONS. SOME OF THEM ARE NOT TOO POPULAR.
00:19:12	>>	A LOT OF THEM.
00:19:15	>>	WHEN YOU DO THAT, DO YOU FEEL ALONE AT THE TOP? WHAT KIND OF PRESSURE DO YOU FEEL? ARE YOU SIMPLY FEELING THAT THE BUCK STOPS WITH YOU?
00:19:27	>>	THAT IS A GREAT QUESTION. NO ONE DOES THIS THING ALONG. YOU HAVE FRIENDS. WHEN I BECAME CHAIRMAN OF GE, I HAVE PROBABLY 30% OF THE COMPANY BEHIND ME. I WAS 44 YEARS OLD. THEY HAD BEEN IN A STABLE SITUATION FOR ALL THESE YEARS. WHAT THE HELL IS HAPPENING HERE? BUT I WAS NOT ALONE. MY FRIENDS AND I KNEW WHAT WE WANTED TO DO. YOU ARE NEVER ALONE. THIS IDEA OF A CEO'S ALONE, THAT IS HOGWASH. YOU HAVE MORE FRIENDS THAN YOU NEED OR WANT. EVERYBODY IS HANGING AROUND THE. [LAUGHTER] IT IS A POPULAR MYTH. WE HUNG AROUND TOGETHER, ALL OF US THAT WORKED THICK BUDGET WORKED TOGETHER, PLAYED TOGETHER TO. IT IS NOT A FORMAL HIERARCHY.
00:20:34	>>	DO YOU SEE ANY REASSURING SIGNS IN THE ECONOMIC CRISIS THAT WE ARE GOING THROUGH NOW?
00:20:40	>>	LET ME SAY THIS. WE ARE IN UNCHARTED WATERS. ANYBODY WHO TELLS YOU THEY KNOW WHAT THEY ARE GOING TO DO RIGHT NOW, DODGE THEM. BECAUSE WE DO NOT KNOW WHAT IS GOING TO WORK OR NOT WORK. I HAPPEN TO THINK THAT THE FIRST SECTION OF THE TOP WORK BETTER THAN THE MEDIA IS GIVING THEM CREDIT. WE ARE IN FREE FALL IN THE MARKETS. SPREADS WERE INCREDIBLE. LIBOR WAS 500 BASIS POINTS. MORTGAGES WERE AT 7%. WHAT IT DID WAS, IT CANNOT MARKET DOWN. IT STABILIZED THE SYSTEM FOR A WHILE. LIBOR IS NOW WHAT -- IS NOW 110 BUSINESS POINTS. AND MORTGAGES MAY BREAK 4 PERCENT OVER THE NEXT SIX MONTHS. HOME AFFORDABILITY HAS NEVER BEEN BETTER. ON ONE HAND YOU HAVE CRASHING PRICES, WHICH IS NOT SO GOOD. ON THE OTHER HAND YOU HAVE MORTGAGE RATES THAT ARE VERY LOW FOR QUALIFIED BUYERS. IT IS THE BEST IT HAS BEEN IN 50 YEARS, THE COMBINATION OF BORROWING COSTS AND HOUSING PRICES. THERE ARE SIGNS, BUT THE REAL ECONOMY, NOT THE FINANCIAL ECONOMY, IS NOT ACCELERATING DOWNWARD, BUT THERE IS NO SIGN OF LIFE YET.
00:22:05	>>	HOW MUCH OF IT IS PSYCHOLOGICAL?
00:22:10	>>	YOU CAN ASK 10 PEOPLE IN IT IS AND ANSWERS. IF YOU ARE LOSING ITS -- IF YOU ARE LOSING YOUR JOB, IT IS NOT TO PSYCHOLOGICAL. THERE IS A LOT OF JOB LOSS THAT IS REAL.
00:22:23	>>	WHAT SHOULD PRESIDENT OBAMA SAY IN HIS INAUGURAL ADDRESS ABOUT THAT PIECE?
00:22:32	>>	I AM SO IMPRESSED BY HIS STARTS. NO ONE WANTS HIM TO SUCCEED MORE THAN I DO. BUT HE HAS GOT TO START PROTECTING HIMSELF WITH IT GETTING WORSE BEFORE IT GETS BETTER. ROOSEVELT DID NOT DO THAT. THIS COUNTRY NEEDS A BOOST. EVERY TIME HE GOES ON TELEVISION, LIKE HE DID TODAY IN OHIO, AND TALKS ABOUT HOW BAD IT IS GOING TO GET -- I UNDERSTAND PROTECTING HIMSELF FROM EXPECTATIONS. BUT EVERY TIME HE DOES THAT, THE MARKET SHAKES. CONFIDENCE IS SHAKEN. PEOPLE ARE LOOKING FOR SOMEBODY THAT WILL TAKE US OUT OF THIS THING.
00:23:11	>>	AND THAT IS WHY HE WAS ELECTED, TO TAKE THE WHOLE COUNTRY OUT OF A LOT OF THINGS.
00:23:19	>>	RIGHT, AND I AM IN LOVE WITH WHAT HE HAS DONE SO FAR. I LIKE HIS PICKS, WITH A COUPLE OF EXCEPTIONS. [LAUGHTER] NOT HIS ECONOMIC PICKS. HIS HIGH-LEVEL PICKS, I LIKE THEM ALL. I LIKE HIS FOREIGN POLICY PICKS. I LIKE THE STATE DEPARTMENT AND ALL THESE JOBS. I AM A LITTLE MORE CONCERNED ON THE ENVIRONMENT AND LABOR, FROM A BUSINESS PERSON'S STANDPOINT.
00:23:53	>>	AS A YOUNG PERSON, I HOPE TO CULTIVATE MYSELF TO BE A SUCCESSFUL BUSINESS PERSON. GOING ALONG WITH THAT, I WAS WONDERING WHAT PERSONALITY CHARACTERISTICS WOULD YOU TRY TO DEVELOP FOR SOMEONE MY AGE TO BECOME SUCCESSFUL IN BUSINESS?
00:24:17	>>	SOME IMPORTANT THINGS I HAVE SEEN PEOPLE SUCCEED WITH -- ALL KINDS OF PEOPLE SUCCEED, BUT IN END, THERE ARE SOME UNIVERSAL CHARACTERISTICS. ONE, YOU HAVE TO ENJOY THE SUCCESS OF THOSE THAT WORK FOR YOU. THE FIRST MANAGEMENT JOB YOU GET, YOU HAVE TO UNDERSTAND THAT YOU ARE NO LONGER THE PERSON RAISING YOUR HAND WITH THE ANSWER. YOU ARE NOW THE LEADER. YOUR JOB IS TO UNDERSTAND YOU WILL GET PROMOTED ON THE REFLECTED GLORY OF YOUR PEOPLE. YOU HAVE TO GET TURNED ON BY GIVING RAISES TO PEOPLE. YOU HAVE TO GET TURNED ON BY SEEN THEIR SUCCESS. YOU HAVE TO GET TURNED ON THE OTHER GROWTH, AND YOU ALSO HAVE TO DIFFERENTIATE. YOU WILL TAKE CARE OF THE GOOD, AND YOU WILL MOVE OUT ON THE WEEK. NO ONE RESPECTS THOSE TO CARRY ALONG THOSE WHO ARE NOT CARRYING THEIR WEIGHT. YOU HAVE TO BE ABLE TO BE GENEROUS OF SPIRIT. THE OTHER THINGS ARE OBVIOUS. PLEASE MARK, THE OUTSPOKEN, THE RISK-TAKING, AND ALL THAT. THERE IS A TRADE THAT I SEE IN WINNERS. THERE REALLY REVEL IN THE JOY OF THE TEAMS THEY BUILD IN THEIR TEAM'S SUCCESS. IT IS A BIG DEAL, AND PEOPLE AND NOT TALK ABOUT IT ENOUGH.
00:25:52	>>	CAN YOU ADDRESS WHAT HAPPENED UP IN CANADA WITH THE BANKRUPTCY OF NORTH TEL? WHAT IS YOUR ASSESSMENT OF THAT?
00:26:01	>>	I DO NOT KNOW ENOUGH ABOUT ITS. I WOULD RATHER BE A WEAK MANAGER AND A GREAT INDUSTRY THAN BE A GREAT MANAGER AND CRABBY INDUSTRY. [LAUGHTER] LET'S JUST BE SURE WE UNDERSTAND THAT. MIKE DID A GOOD JOB IN A LIMITED ROLE. MOTOROLA STOLE HIM. HE WENT TO MOTOROLA AND TURN AROUND THEIR CELLPHONE DIVISION AND THEN DID NOT GET THE TOP JOB THERE. THEN HE WENT ON TO NORTEL. IF YOU LOOK AT ALL THESE HARDWARE PEOPLE IN THIS INDUSTRY, THEY HAVE ALL HAD DISASTROUS TIMES. I NOT FOLLOW THE INDUSTRY THAT CLOSELY. I CANNOT COMMENT MORE THAN THAT. MIKE IS A FIRST-CLASS PERSON, A GOOD MANAGER, AND HE DID NOT MAKE AT NORTEL.
00:27:07	>>	FIRST OF ALL, THANK YOU FOR COMING TO OUR CAMPUS. I APPRECIATE THAT SHE TOOK TIME OUT OF YOUR BUSY SCHEDULE TO BE HERE. AS A RECENT MBA, MY QUESTION TO YOU IS, YOU HAVE HAD AN ILLUSTRIOUS CAREER AND THAT WE HAVE LEARNED ABOUT IN CLASS. WHAT IS ONE THING YOU KNOW NOW THAT YOU WISH YOU COULD HAVE TOLD YOURSELF BACK AT THE BEGINNING?
00:27:34	>>	THERE IS A LONG LIST OF THINGS I WOULD NOT HAVE DONE. [LAUGHTER] IN GENERIC TERMS, MISTAKES COME WITH THE TERRITORY. I MADE SOME BAD ACQUISITIONS AND SOME BAD HIRES. THE BIGGEST THING I WOULD DO OVER AGAIN, I WOULD MOVE FASTER ON INSTINCT. I WOULD NOT BE SO AFRAID OF BREAKING GLASS. HOW MANY TIMES IN LIFE HAVE YOU SAID, I WISH I HAD TAKEN SIX MORE MONTHS BEFORE DOING THAT. MOVING ON A PROGRAM -- IT REALLY DOES NOT HAPPEN. IT IS THE ABILITY TO GO AT THE RIGHT TIME AND GO FASTER, THAN HANGING ON FOR THE LAST PIECE OF DATA TO CONFIRM THE DECISION. I THINK IT WOULD HAVE MOVED FASTER.
00:28:34	>>	WHAT IS YOUR CONCERN -- OBAMA HAS APPOINTED A LOT OF INTERNAL PEOPLE, AND OBVIOUSLY A VERY PRO LABOR PERSON. IN THE CONTEXT OF THE ECONOMIC CRISIS, WHAT WOULD BE YOUR CONCERN -- BLARING ON MORE CALLS FOR BUSINESS JUST AT THE POINT IN WHICH IT HAS TO BE SLIMMER AND MORE NIMBLE?
00:29:09	>>	THE IDEA THAT THE SECRET BALLOT IS TAKEN AWAY. NANCY PELOSI WAS ELECTED IN ITS INTERIM CISCO BY A SECRET BALLOT. SHE WAS ELECTED SPEAKER OF THE HOUSE WITH A SECRET BALLOT. AND NOW WORKERS CANNOT HAVE A SECRET BALLOT TO CHOOSE WHETHER THEY WANT A UNION OR NOT? THE IDEA OF A BUNCH OF PEOPLE GOING HOUSE-TO-HOUSE, SAYING ASSIGN THIS CARD AND JOIN THIS UNION? THERE IS NO "NO," THERE IS JUST A "NOT GET." THE IDEA THAT WE ARE EVEN CONSIDERING IT -- YOU CAN CALL YOUR FRIENDS AND TELL THEM THAT. [LAUGHTER] [APPLAUSE] IT IS SO UN-AMERICAN AND SO WRONG. UNIONIZATION HAS GONE TO 7% FOR A REASON -- PEOPLE DID NOT WANT A UNION. THE ONLY PLACE A UNION HAS WORKED AS A NON-COMPETITIVE INDUSTRIES. GOVERNMENT, HEALTH CARE, UNIVERSITIES -- RELATIVELY NON- COMPETITIVE.
00:30:29	>>	TO BE FAIR, THEIR ORIGINAL UNION MOVEMENT --
00:30:35	>>	MY FATHER WAS A HEAD OF THE BOSTON ROAD UNION. MY MOTHER WOULD SIT AT THE KITCHEN TABLE AND TAKE THE NAMES OF SCABS WHO HAD CROSSED THE LINES. THE IDEA -- THE CURRENT SYSTEM ALLOWS BAD MANAGERS. I WILL TELL YOU MY OWN EXPERIENCE. EVERY TIME THAT WE HAD A UNION ELECTION, NOT 90% OF THE TIME, WE INVARIABLY FOUND THE COURSES HORSE'S ASS RUNNING THE ELECTION. WE FIXED UP THE ABUSES THAT WERE THERE, AND WE NEVER HAD ONE UNION ELECTION LOSS IN 20 YEARS. THERE ARE BAD MANAGERS, BUT THERE IS AN ELECTION TO TAKE CARE OF THAT. ADJUSTOR NOT THINK GIVING AWAY THE SECRET BALLOT HAS ANY JUSTIFICATION. EVEN GEORGE MCGOVERN IS PART OF THE ADS NOW. ON THE ENVIRONMENT, I AM JUST AFRAID THAT WE WILL DEAL WITH TOO MANY ISSUES, GETTING THE CART AHEAD OF THE HORSE, BY DEALING WITH TELLING DETROIT WHAT TO BUILD, CHANGING STANDARDS RAPIDLY, IT IN A MARKET THAT THEY ARE NOT FAST ENOUGH TO ADAPT TO, AND CREATING MORE JOBS LOST AND MORE BAILOUT NECESSITY. WHAT AM I WORRIED ABOUT? ON CARD CHECK AND LABOR, AND THE ENVIRONMENT, AND DOING TOO MUCH, TOO FAST, IN THIS ECONOMY.
00:32:25	>>	CAN YOU COMMENT ON HOW, AS A LEADER, AT TIMES YOUR OWN PERSONAL VALUES MAY CONFLICT WITH THE DECISION THAT NEEDS TO BE MADE FOR THE CORPORATE OBJECTIVE, AND CAN YOU GIVE US AN INSTANCE? CAN YOU GIVE US AN INSTANCE AS A LEADER WHERE YOUR OWN PERSONAL VALUES HAVE BEEN IN CONFLICT WITH THE COLLECTIVE CORPORATE MISSION, OR THE ACTUAL DECISION THAT HAS HAD TO BE MADE, AND CAN YOU GIVE US AN EXAMPLE OF HOW YOU HANDLE THAT?
00:32:59	>>	I CANNOT THINK OF ONE OR MY PERSONAL VALUES WENT AGAINST -- I WOULD NOT DO IT. I ABSOLUTELY WOULD NOT DO IT. THERE IS NOTHING I WOULD EVER SAY. I WOULD NEVER SAY HERE IS A PROJECT THAT I DO NOT BELIEVE IN -- GO DO IT, AND THEN SAY ITO DO SO. THAT IS THE WORST. [LAUGHTER] THERE ARE A BUNCH OF CEO'S THAT LIKE TO DO THAT. IF YOU RUN A COMPANY, YOU REPRESENT THE BRAND, YOU REPRESENT THE COMPANY. YOU REPRESENT ITS VALUES. THE LAST THING YOU WANT TO DO SOMETHING THAT GOES AGAINST WHAT TO BELIEVE MEN, VALUE WISE.
00:33:49	>>	LET'S TAKE SOMETHING THAT DOES NOT INVOLVE VALUES, BUT JUDGMENT. ONE OF THE CEO'S OF YOUR COMPANY MAKES A DECISION THAT IS NOT QUITE THE WAY YOU WOULD MAKE IT. WOULD YOU STILL BACK THEM UP?
00:34:02	>>	IF THEY MADE THE CASE FOR IT. I HAVE DONE THAT 1000 TIMES. WE DID ROUGHLY 250 ACQUISITIONS A YEAR. YOU COULD NOT POSSIBLY KNOW ALL THE DETAILS OF ALL THOSE ACQUISITIONS. BUT WE ALWAYS STARTED OFF WITH NO, WE TAKE THE DEAL. THE PRICE IS TOO HIGH. GET OUT OF HERE WITH THAT DEAL. THAT IS HOW WE STARTED. AND NOW THE PASSION AND THE BLOOD IN THE PERSON'S EYES -- IF THEY SLIP OUT OF THE ROOM, THAT DEAL WAS DEAD. THE PERSON WHO CAME BACK IN POUNDING THE TABLE -- YOU GAVE THEM THE DEAL. THAT IS THE DEPTH OF JUDGMENT IN SOME OF THE SMALLER DEALS. THAT IS ALL YOU CAN GO ON. IF YOU BELIEVE IN THE TEAM AND THE TEAM'S PASSION FOR THE IDEA, THEN YOU GO WITH IT.
00:35:15	>>	CAN I GET YOUR OBSERVATION ON MANAGEMENT TRAINING IN THE FINANCIAL-SERVICES INDUSTRY? DID THEY NOT PAY AS CLOSE ATTENTION TO MANAGEMENT TRAINING AND OVERSIGHT AS SOME OF AMERICA'S BEST CORPORATIONS? THE THEY PROMOTE PEOPLE BASED ON THEIR SUCCESS, JUST MAKING MONEY, AS OPPOSED TO WHETHER THEY CAN SURPRISE PEOPLE, OR RABBIT TRANSPARENT ORGANIZATION?
00:35:40	>>	COMPENSATION AND INVESTMENT- BANKING HAS BEEN A PROBLEM FOREVER. I MADE AN FORAY INTO INVESTMENT BANKING. THAT COMES AT THE TOP OF THOSE MISTAKES TO ASK ABOUT. WE HAD A CULTURE OF SHARING, OF TAKING CARE OF YOUR ASSOCIATES, CANDID APPRAISALS. THE CULTURE WAS MY BONUS, MY BONUS, MY BONUS. GET OUT OF THE WAY. WE WANT TO TALK ABOUT MONEY. AT GE, YOU MIGHT GIVE SOMEONE A $100,000 BONUS AND THEN SAY THANK YOU SO MUCH, NICE JOB. WE HAD A GOOD YEAR. YOU GIVE SOMEONE $8 MILLION. SOMEONE AT BEAR STEARNS JUST GOT $9 MILLION, AND HE DID NOT DO AS WELL AS I DID. THE NUMBERS ARE STAGGERING. THAT IS NOT TRUE OF EVERYBODY. INVESTMENT-BANKING IS HIGHFLYING. THE OTHER THING THEY DON'T DO IN BANKS -- THE BANKS HERE IT MIGHT HAVE A DIFFERENT SYSTEM. IN THE BANKING CHANNELS, RETAIL HAS A CERTAIN PAY SCALE. INVESTMENT BANKING HAS A DIFFERENT PACE SCALE. THERE IS VERY LITTLE CROSS TRAINING ACROSS FUNCTIONS IN BANKING. THE PAY SCALES ARE SO DRAMATICALLY DIFFERENT, DEPENDING ON WHAT YOU DO. IN INDUSTRIAL COMPANIES, THE PAY SCALES IN GENERAL ARE PRETTY CLOSE, YOU CAN MOVE PEOPLE WITH EASE ACROSS BOUNDARIES. THAT MAKES IT A LOT EASIER TO TRAIN. THAT IS WHY THE CEO'S IN BANKING DO NOT HAVE A LOT TO CHOOSE FROM. THAT IS WHY JAMIE DIAMOND STANDS OUT SO MUCH.
00:37:52	>>	YOU HAVE TALKED ABOUT THE IMPORTANCE OF BUILDING A GREAT TEAM OF MANAGERS. AS BOTH CHAIRMAN AND CEO, CAN YOU TALK ABOUT MANAGING THE DUAL EXPECTATIONS OF BOTH, BUILDING A TEAM INTERNALLY BUT ALSO YOUR BOARD OF DIRECTORS AND STOCKHOLDERS?
00:38:13	>>	WE WROTE A COLUMN THIS WEEK, MY WIFE AND I, WHICH WE EXPECT TO GET SOME BRICKBATS ON. THE COLUMN BASICALLY SAYS, GET REAL ABOUT BOARD OF DIRECTORS. GET REAL ABOUT WHAT THEY CAN AND CANNOT DO. MOST BOARDS OF DIRECTORS, WHETHER IT BE FROM MCDONALD'S, WETHERBEE CANNOT FROM COKE, THE ART LIVING THEIR OWN COMPANY EVERY DAY. THEN THEY FLY IN 48 BOARD MEETING. IMAGINE FLYING INTO A GLOBAL BANK AND REALLY UNDERSTANDING THE BALANCE SHEET, THE TRADING, AND ALL THOSE THINGS. IT IS RIDICULOUS ON ITS FACE. SOMEBODY HAD TO SAY IT, SO WE DECIDED TO SAY IT. IT IS STUPID. GOVERNMENT EXPERTS SAY WHERE IS THE BOARD? THERE WERE NOT WALKING ROUND WITH CALCULATORS, SEEING WHAT TRADES WERE GOING ON. THE BOARD DOES HAVE RESPONSIBILITIES, TO HIRE AND FIRE THE CEO, TO BE SHORT THAT THEY UNDERSTAND THE MISSION, THAT THEY CHALLENGE THE CEO'S STRATEGY, BUT IT IS MUCH MORE STRATEGIC THAN IT IS OPERATIONAL. THE IDEA OF A CHAIRMAN AND CEO SPLIT, WHICH SOME ADVOCATES, ACTIVISTS LOVE -- THAT CHAIRMAN GENERALLY IS A BUSY PERSON, AND DOING OTHER THINGS. THEY COALESCE THE OPINIONS OF DIRECTORS. I THINK THAT IS FINE. A CEO HAS TO MANAGING BOARD, THE COMPANY, AND THE PEOPLE, AND DOES NOT BE THE MANAGEMENT OF A ONE DAY A MONTH WONDER, FLYING AROUND AND BOTHERING YOU. [LAUGHTER] IT IS A VIEW. THAT VIEW IS COUNTERED BY GOVERNMENTS EXPERTS WHO WILL SAY THEY HAVE NO IDEA WHAT BOARDS REALLY DO. ALL OF YOU WHO ARE ON BOARDS KNOW HOW MUCH TIME IS SPENT ON THE BOARD VS. YOUR OWN COMPANY.
00:40:45	>>	I AGREE WITH THAT, ACTUALLY. [LAUGHTER] [APPLAUSE]
00:40:58	>>	BIG COMPANIES LIKE GE JUMBLED POLICIES, GUIDELINES, AND COMPLIANCE. I AM WONDERING IF YOU WILL COMMENT ON HOW TO STAY COMPETITIVE ON TRYING TO ENFORCE THOSE GUIDELINES AND POLICIES.
00:41:15	>>	IT IS EASIER FOR BIG COMPANIES THAN SMALL COMPANIES. WHEN YOU THINK ABOUT SARBANES OXLEY AND ALL ITS REQUIREMENTS, A BIG COMPANY MIGHT COST $10 MILLION. IT IS AN AWFUL BURDEN, BUT THEY CAN AFFORD IT. I WORRY MORE ABOUT THE SMALL COMPANIES TO HAVE TO COMPLY WITH SOME OF THE SAME BURDENS AND DID NOT HAVE THE RESOURCES AND THE TIME TO DO IT, AND THEREFORE DID NOT GET LAUNCHED TO THE SAME EXTENT AND NOT HAVE THE SAME CHANCE AT BEING GLOBALLY COMPETITIVE AS BIG COMPANIES DO. I AM NOT FOR MORE RULES AND COMPLIANCE, BUT I THINK THE ISSUE IS NOT SO MUCH BIGGER COMPANIES AS IT IS SMALL COMPANIES. DID YOU HAVE ANOTHER QUESTION?
00:42:05	>>	I WAS JUST SAYING ESPECIALLY IN EMERGING MARKETS. WHEN PERHAPS YOU ARE THE ONLY ONE TRYING TO COMPLY WITH HIGHER STANDARDS.
00:42:17	>>	I THINK THAT GETS TO ANOTHER POINT. THERE'S A LOT OF ARGUMENT WHEN PEOPLE GO TO EMERGING MARKETS. WE HAVE TO PLAY BY THE EMERGING MARKET RULES, NOT BY OUR RULES. THAT IS A BAD IDEA. IN THE END, I REMEMBER CALLING FOR YEARS IN INDIA AND NOT GETTING BUSINESS BECAUSE THE FOREIGN PRACTICES ACT MADE IT VERY CLEAR. IN THE AND, WE BECAME THE GOOD HOUSEKEEPING SEAL OF APPROVAL. THE PEOPLE IN THE GOVERNMENT FELT BETTER GIVING US THE ORDER, BECAUSE THEY WOULD NOT GET CHALLENGED. YOU HAVE SEEN THESE BRIBERY CASES BLOW UP. ALL EUROPEAN COMPANIES THAT HAVE BLOWN UP. BRIBERY IS A SHORT-TERM ORDER. PLAYING BY THE LOCAL RAHM -- RULES IS A LONG TIME LOSER. STAYING WITHIN THE ETHICAL STRATEGIES IS THE WINNER. A PERSON RUNNING A LARGE GERMAN COMPANY ONCE TOLD ME, YOU ARE SO LUCKY. BRIBERY USED TO BE LEGAL IN GERMANY. IT USED TO BE A TACTIC, ACTUALLY. UNTIL 1999, FACILITATING PAYMENTS WAS A TAX DEDUCTION. HE SAID YOU ARE SO LUCKY, BECAUSE IF DONNA IS MY SALES MANAGER, AND I AM RELEASING TO HER $1 MILLION TO BRIBE, AND SHE IS SUPPOSED TO GIVE IT TO YOU, YOU WILL GIVE US THE ORDER -- WHAT IF SHE KEEPS HALF OF IT? SO YOU DO NOT KNOW ON YOUR OWN EMPLOYEES WHO IS " -- WHO HAS INTEGRITY AND WHO DOES NOT. IN MY STAFF MIDEAST, I DID NOT KNOW WHICH OF MY OWN EMPLOYEES WAS HONEST. -- IN MY STAFF MEETINGS. GERMANY READ THAT CULTURE OF 31999. THAT IS WHY THEY HAVE SUCH TROUBLE GOING FROM THE LAST 10 YEARS TRYING TO CLEAN UP.
00:44:27	>>	A LOT OF THE PEOPLE WHO SPOKE IN THE LAST COUPLE OF DAYS TALKED ABOUT INNOVATION, SHIFTING TO INDIA, CHINA, AND AMERICA LOSING SOME OF THAT INNOVATIVE EDGE. WHAT IS YOUR VIEW OF THAT?
00:44:41	>>	I DO NOT BUY THAT. YOU ARE OBVIOUSLY GETTING MORE INNOVATION IN INDIA AND CHINA AS THEY DEVELOP THEIR ECONOMIES AND ALL THAT. WHERE DOES THE BILL WILL COME FROM? -- WEARS THE GOOGLE COME FROM? WHAT NEW COMPANIES HAVE SEEN COMING OUT OF CHINA? YOU ARE SEEING BETTER DEVELOPMENT, ENGINEERING. WE STILL HAVE HERE THE GREATEST CENTERS OF INNOVATION. EDUCATING RATE PH.D. IS AND THEN ONLY GIVING SO MANY VISAS AND THEN SENDING THEM HOME -- THAT IS PLAIN DUMB. PERHAPS YOU CAN TALK YOUR FRIENDS ON THAT TOO.
00:45:43	>>	THAT PERSON IS YOUR FRIEND, TOO. [LAUGHTER]
00:45:50	>>	I AGREE. I DO NOT BUY THAT. AND I DO NOT BUY THESE NUMBERS OF ENGINEERS, 8 MILLION ENGINEERS. IF AN AUTO MECHANIC IN CHINA -- IS WAY OVERSTATED. THEIR CULTURE IS ONE OF FOLLOW THE LEADER. THE PEOPLE ARE HIGHLY ENERGIZED, A HIGHLY DEVOTED TO THE BOSS, BUT THE BOSS RULES. YOU ARE GETTING ONE IDEA THERE -- THE BOSS'S IDEA. IF YOU LOOK AROUND THE WORLD AND YOU SEE THE IDEAS THAT ARE COMING OUT NOW IN THIS RECESSION, I DO NOT KNOW HOW MANY OF YOU MIGHT HAVE SEEN THIS IDEA OF ELITE RESORTS WHERE THE GUY HAD ALL THESE ROOMS AVAILABLE IN THAT CARIBBEAN. HE WAS NOT HAVING BOOKINGS, SO HE SAID, I WILL TAKE YOUR STOCK VALUED JULY 1, 2008, AS CREDIT FOR DAYS ON YOUR VACATION. HE SOLD $10 MILLION IN 48 HOURS. HE GIVES YOU $40 FOR THE ROOM CREDIT AND HOLDS THE STOCK AND HOPES IT COMES BACK. IT IS A BRILLIANT IDEA. HE HAD AN EMPTY ROOM WITHOUT IT. NOW HE HAS A LOW-PRICED STOCK AND A CHANCE TO GET IT ALL BACK. SUSIE AND I HAD LUNCH YESTERDAY WITH THE PEOPLE WHO RAN A BANK ATLANTIC FROM FORT LAUDERDALE. THEY TALKED ABOUT AN IDEA THAT JUST CAME OUT. ONE OF THEIR BRANCH MANAGERS CAME UP WITH AN IDEA TO BANK NFL PLAYERS. HE KNEW AN AGENT WHO HAD A FEW PLAYERS. HE STARTED OUT IN THE LAST SIX MONTHS WITH FOUR OR FIVE, AND HE IS NOW UP TO 75 NFL PLAYERS, BANKING AT BANK ATLANTIC. IT IS AN IDEA THAT BUBBLED UP FROM THE BOTTOM. WE HAVE A RENTAL CAR COMPANY. WHEN TECHNOLOGY WAS A NEW JET ENGINE, A YOUNG GUY IN OUR CHICAGO OFFICE CAME UP WITH THE IDEA OF A SPRAY THAT MAKES THE CAR SMELL NEW. THAT IS A TECHNOLOGICAL BREAKTHROUGH. IT GIVES US ANOTHER TWO MONTHS OF RENTING CARS. THEY SMELL NEW, EVEN THOUGH THEIR NINE MONTHS OLD. THAT IS WHAT IS HAPPENING NOW. YOU DO NOT DO THAT IN CHINA. THESE ARE IDEAS THAT ARE BUBBLING UP ALL AROUND THE BUSINESS. YOU ARE SEEING IDEAS AND INNOVATIONS THAT ARE NOT MAJOR BREAKTHROUGHS. THEIR INGENUITY OF PEOPLE. IN THESE TROUBLED TIMES, THEY ARE DOING REMARKABLE THINGS.
00:49:00	>>	MOST UNIVERSITIES HAVE PLACEMENT CENTERS WHERE STUDENTS GO TO INTERVIEW FOR JOBS. WE HAVE SOMETHING CALLED A LAUNCH PAD, WHERE A STUDENT CAN WALK IN AND GET SUPPORT AND FIND OUT WHAT IS NECESSARY TO START A NEW COMPANY. MOST OF THE PEOPLE WHO ARE COMING TO THE LAUNCH PAD, WHO HAVE IDEAS THE WANT TO TRANSLATE INTO NEW COMPANIES, ARE NOT BUSINESS MAJORS. THEY ARE FROM ALL THE OTHER DISCIPLINES. SOMEDAY I WILL SHOW IT TO YOU.
00:49:30	>>	ISN'T THAT GREAT?
00:49:34	>>	AS A VISIONARY AND LEADER TO SO MANY OF US, CAN YOU SHARE WITH US WHO WERE YOUR MENTORS, AND THE TACTICS IF YOU HAD DIRECT CONTACT WITH HIM, HOW THEY PUSH YOU AND HELP YOU SUCCEED? AS I WILL GIVE YOU A FUNNY ANSWER TO THIS. I DON'T THINK ANY OF YOU SHOULD HAVE A MENTOR. A MENTOR MAY BE THE DUMBEST IDEA THAT NEVER CAME DOWN THE PIKE. [LAUGHTER] THAT ME TELL YOU ABOUT A MENTOR. ASSUME THAT I JOIN A COMPANY, AND I GET A MENTOR. AND THE MENTOR IS A JERK. EVERYBODY DOES NOT LIKE THE MENTOR. ALL THE SUDDEN I AM TAINTED WITH SADDAM MENTOR. WHAT YOU WANT TO DO AS A YOUNG PERSON, YOU WANT TO HAVE A NOSE FOR KNOWLEDGE. I LIKE THE WAY THIS PERSON SPEAKS. I LIKE THE WAY THAT PERSON MAKES PRESENTATIONS. I LIKED THE WAY THAT PERSON MEETS PEOPLE. AND YOU HAVE TO BE IN SATIABLE, READING VORACIOUSLY. THERE IS A TIP EVERYWHERE. EVERYONE IS A TEACHER. YOU CANNOT HOPE ON TO MAKING YOURSELF SOMEONE ELSE. YOU WANT TO MAKE YOURSELF AN AMALGAMATION OF THE BEST IDEAS YOU CAN PUT TOGETHER WITH YOUR PERSONALITY AND YOUR STYLE THAT MAKES YOU COMFORTABLE IN YOUR OWN SHOES, TAKING SOME OF THE TECHNIQUES YOU HAVE SEEN EVERYWHERE. THE MOST IMPORTANT THING IS FOR YOU TO GET COMFORTABLE IN YOUR OWN SHOES. YOU WILL LIKE WHO YOU ARE EVERY DAY, AND YOU LIKE WHAT YOU ARE DOING, NOT SOME OTHER PERSON.
00:51:28	>>	I HAVE WORKED IN IT TO VERY LARGE FINANCIAL ORGANIZATIONS MOST OF MY CAREER. MY EXPERIENCE HAS BEEN THAT MOST PEOPLE IN A JAR -- IT IS NOT A CHOSEN CAREER. THEY STARTED IN ANOTHER SLOT AND KEEP ON PROGRESSIVELY GETTING PROMOTED. IN MOST COMPANIES, YOU DO NOT FIND THE BEST PEOPLE MIGRATING TOWARD THE H.R. DEPARTMENT. HOW DO YOU CORRECT THAT PROBLEM? MAYBE ONE OF THE CORRECTIONS IS DEVELOPING A PROFESSION IN HUMAN RESOURCES. THERE HAS TO BE ANOTHER MECHANISM PUT IN PLACE.
00:52:09	>>	I DON'T KNOW HOW THE MBA PROGRAM HERE IS, BUT AT THE SCHOOLS I HAVE BEEN INVOLVED WITH, H.R. IS THE BOTTOM OF THE TOTEM POLE. OPERATIONAL MANAGEMENT IS THE BOTTOM OF THE TOTEM POLE. THE STRATEGY GURUS ARE THE HEROES OF THE DEPARTMENT. DISRUPTIVE TECHNOLOGY TEACHERS ARE HEROES. WHAT IS DISRUPTIVE TECHNOLOGY? HUMAN RESOURCES IS GIVEN SHORT SHRIFT. THERE IS LITTLE TRAINING ON HIRING AND FIRING. THERE ARE VERY LITTLE CASE STUDIES ON THAT AND MOTIVATION. THAT IS WHAT YOU DO AS A MANAGER, YOU HIRE, FIRE, MOTIVATE, WEED OUT, MAKE CHOICES, DIFFERENTIATE, AND GO AFTER SOME THINGS AND NOT OTHERS. HE DO NOT DO THAT SITTING AROUND THE ROOM WITH A STRATEGY BOOK. THE IDEA HAS TO COME FROM THE CEO. IF THE CEO DOES NOT BELIEVE THAT BUILDING THE TEAM WITH THE BEST PLAYERS WHENCE -- IF I -- I HAD A GREAT PLANT MANAGER. HE KNEW THE GAME. HE WAS NOT SKILLED IN WHAT THE BENEFIT PLANS WORK. THAT WAS NOT IMPORTANT. WE HAD BEEN OF ITS PEOPLE DOING THAT. HE WAS KILLED IN WHAT MAKES THE LEADER. THAT HAS TO COME FROM THE TOP, OR ELSE YOU ARE DEAD. THE SCHOOLS HAVE TO CARE ABOUT THAT AND TEACH IT, AND THEY DO NOT IN MOST BIG SCHOOLS.
00:54:09	>>	THE VAST MAJORITY OF PEOPLE IN THE AUDIENCE TODAY ARE BYPRODUCTS OF GRADUATE AND UNDERGRADUATE EDUCATION. MANY OF THEM ARE FROM SCHOOLS OF BUSINESS. A LOT OF TIMES IN BUSINESS SCHOOLS HAVE BEEN SEEN AS INNOVATORS AND LEADERS, BUT ON THE FLIP SIDE IT LASTED FOR POTENTIALLY CAUSING SOME OF THE PROBLEMS ARE BEING TOO SLOW TO INNOVATE. I WILL HAVE THE OPPORTUNITY TO CHEER CONFERENCE LATER THIS YEAR THAT WILL BE ATTENDED BY MOST OF THE BUSINESS DEANS AND PROGRAM LEADERS OF BUSINESS SCHOOLS. WHAT MESSAGE WOULD YOU GIVE TO THOSE INSTITUTIONS ABOUT WHAT WE NEED TO DO DIFFERENTLY TO ADDRESS THE CHALLENGES THEY CURRENTLY FACE US?
00:54:58	>>	LET ME GIVE YOU A VIGNETTE IN SEE IF THIS WORKS. I TEACH A FULL TIME COURSE AT MIT. THIS YEAR WAS THE GREATEST YEAR TEACHING I HAVE EVER HAD. WE TOOK THE SYLLABUS AND PITCHED IT. [LAUGHTER] TODAY WE HAD THE TOP. WE HAD CONGRESS DEBATING. EVERY WEEK WE HAD SOMETHING THAT WAS A LEARNING EXPERIENCE. SHOULD WE BAIL OUT DETROIT OR SHOULD WE NOT? WE WRESTLED WITH ALL THE DIFFERENT POLITICAL SIDES TO IT. WE FINALLY HAD THE PRESIDENT OF THE UNIVERSITY SHOW UP. WE HAD BEEN COMING IN. 95% OF THE CLASS WAS STILL -- OF THE FACULTY WAS STILL TEACHING THE COURSE AND STARTED IN SEPTEMBER. HOW COULD YOU TEACH A BUSINESS COURSE IN THE FALL OF THIS YEAR AND STAY ON YOUR SYLLABLES, WHEN THE WORLD IS TIPPING UPSIDE DOWN? ALL THE THINGS THAT WENT ON THIS FALL -- THINK OF IT. THINK OF WHAT YOU COULD TEACH. YOU COULD TEACH POLITICS, HUMAN RELATIONS, UNION. YOU COULD HAVE OF THE CONVERSATION ABOUT THE DYNAMICS OF THAT. WHAT WOULD YOU DO IF YOU THERE? WAS IT RIGHT OR WRONG? THERE WERE SO MANY TEACHING MOMENTS THIS YEAR. WE TALKED ABOUT IT ON AND ON. YOU COULD NOT STOP. HOW COULD YOU GO AND TEACH DESTRUCTIVE TECHNOLOGIES IN THIS ENVIRONMENT? [LAUGHTER] [APPLAUSE]

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