Q: Is there a core question that has guided you through your career?
Curiosity about how big, complex systems work, both in the worlds of defense and international business, has shaped my career.
Over the last few years, it struck me that in both business and war, technology was looming larger and larger, measured by how much money is spent on it, the consequences if you get it wrong, and the effort required to understand it. Where a few decades ago you might’ve left technology out of an operations study, that would be inconceivable today, either in defense or a multinational. We think of Walmart as a big box retailer, but it’s also a technology organization; they’re trying to bash in Amazon’s head online.
I think technology leadership is a big gap in MBA programs. If you went back to 1965 and looked at how finance was taught, it was not very sophisticated; it got much better because of research by economists and business school professors. Today, there’s a need for more sophisticated technology management and leadership. There’s demand for people to develop and implement new technologies not just for the sake of innovation but with a deep understanding of strategic need and an ability to focus on developing technologies and combinations of technologies that deliver on that need.
“What you won’t read about in the Wall Street Journal or the Financial Times is how much money is wasted on technology.”
There are so many pitfalls in technology spending. I’ve done consulting projects for large banks. What you won’t read about in the Wall Street Journal or the Financial Times is how much money is wasted on technology. Once one department gets permission to spend on a new platform, all the other divisions want it too, out of jealousy. They’re only beginning to realize they’ll go broke if they keep making investments on that basis.
Q: What are the other key strategic issues facing business leaders?
Roughly from the 1990s to 2015, the name of the game in big companies was to build an efficient cross-border supply chain. Then governments started to see the implications. Global companies have been getting away with murder on the tax front through all kinds of tricks, like booking profits through Ireland. Governments were really upset about that. In the same timeframe, people were looking at the military implications of the U.S. becoming reliant on Chinese telecommunications equipment—for example, 5G, which is an industry sector that Huawei dominated. More recently, we’ve seen antitrust being used against the chip industry, really for national security reasons more than market monopoly reasons.
So, global business leaders, people who knew how to build a cross-border value chain, were suddenly attracting a great deal of regulatory, antitrust, and political interest. They’re being attacked by Republicans and Democrats. Both Donald Trump and many Democrats are extremely negative on Facebook, Apple, and Google. Those companies don’t know what to do. They’re being sued in 15 or 20 countries all the time. They’d like to turn it all over to the legal department, but with the political issues that would be a big mistake because the legal department will treat it as a legal issue.
I’ve been talking to these people; I find their views of this moment naive. The companies have a very narrow view that comes out of electrical engineering, networks, and computer science, which is how they got to where they are. I think that the rise of populism in the United States was in response to the excesses of big business over the past 25 years. Big business is never all that popular in the United States, but its power probably reached an all-time high in recent years.
The power of big businesses is an enormous issue in the European Union. It’s what drove Brexit. Most people think that was a crazy decision, but you can’t win this on a logical basis.
It’s so important for democracies to address these issues. But it’s also important in China. In many ways China models its economy on Japan. Business runs Japan. I can see a scenario where big business supplants the Chinese Communist Party over the next few years.
Business leaders need to recognize the implications arising from populism and an increasingly alienated workforce. If managers pull back and don’t work as hard because they don’t align with the company anymore, it’s going to be very damaging.
Q: Do you see that happening?
At one time GE and IBM were among the most admired companies in the world. People were really proud to work at either one. They were companies with high morale and charisma. That’s an extremely powerful resource, and erosions in that area are quite significant. I do think we’re seeing the erosion in today’s high-morale, charismatic companies—Facebook, Apple, Google, Netflix.
The questions of power, politics, and values are important for companies and countries. Yale SOM is a natural locus for working on understanding this whole raft of fascinating issues.
Q: How far back have these questions interested you?
When I was 12 and 13, my hobby was electronics and ham radio. I’d take the back off a radio or television and switch around the tubes to find out what would happen—I’m lucky I didn’t kill myself. I liked both the technical side of it and the political part of listening to international shortwave broadcasts, where each country puts out its own set of lies about what’s going on.
I also talked to hams overseas. Today, it’s so easy to imagine having a friend in another country that you send emails to. But in that era, it was revolutionary that you could talk to somebody overseas by radio.
Q: Where was this?
I grew up in the suburbs west of Philadelphia. My family was an upper middle-class family partaking of the success that generation had after World War II. It was a very stable and safe environment with lots of opportunities for those who were curious and willing to work. My Baby Boom generation was the first that went to college in such large numbers. We didn’t have the term “first-generation student” because almost everyone was including me.
Q: I imagine going from safe and stable suburban Philadelphia to college in New York in the late ’60s and early ’70s was something of a change.
Yes, there was an upheaval in the United States in the late 1960s and early 1970s, and Columbia was very much on the extreme cutting edge. For me it was energizing and empowering because we forced the United States government out of the Vietnam War, which was a major accomplishment. What I’m saying is controversial in all kinds of ways, but that was my sense of the time.
The other thing for me was that I loved the academic parts of college. I had great teachers. It was exciting. I studied operations research, which uses a lot of statistics and mathematical models to study big, complex systems. I was very fortunate to pick that as a major. Like many decisions when you’re 19, it was somewhat random.
Q: Coming out of college, what did you do?
Well, I had to earn money. It wasn’t hard to get busboy jobs, so I was, briefly, a damn good busboy. But I also had a girlfriend I wanted to marry. To get that life started, I applied for and got a job with a consulting company that did work for the Pentagon and for the military. And, in 1974, Nanette and I were married. Forty-seven years later, we’re still happily married.
Again, there was a fortuitous element; the job opened up a world to me I never knew existed. We were doing extremely interesting projects. I would wake up in the morning eager to get to work.
Q: Eventually you sought out a job at the Hudson Institute.
Herman Kahn, a larger-than-life strategist, left the RAND Corporation to found the Hudson Institute in 1961. It became one of the most prominent and respected think tanks for the era. He had several books. I read him even in high school. I thought he was one of the most interesting people I’d ever come across. In 1971, as I was graduating, the New York…
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