The Exchanges

Q So in a broad brush over multiple decades, I guess, at Harvard Business School before going to Apple U, what did you choose to study, right? The idea of business history, I suppose, is a big one.

A It is a big one. There were two things. First, there's the survey. What's the master narrative of business history in the United States? And that was provided by one of my two wonderful mentors, a man named Alfred D. Chandler, Jr., And the master narrative was the coming of management. Prior to 1840, approximately, in the United States, it was a nation of small businesses. Owners knew other owners, workers knew other workers, owners knew workers, and there was perfect information. Basically, it was the world of neoclassical economics. And when the railroad revolution took place, beginning in the late 18 forties and very strongly in the 18 fifties, That's when you began to get managerial hierarchies. With that came a whole host of issues, such as agency problems and all the rest of it. That's the master narrative of business history. That story, the story of the coming of management, of people who, who made major decisions with regard to allocating resources, but who had a very small percentage of equity in the corporation. Then how did the labor movement In the early 20th century, respond to the coming of big business managerial enterprise to the United States, and how did the government respond? And that was the course that I taught. My own personal interests have always tended toward biography. So, 20 years ago, I wrote a book called Giants of Enterprise, which was essentiall…

AI assessment note: “There were two things. First, there's the survey... personal interests have always tended toward biography”

Q What do you think these charismatic leaders do that others that lack charisma don't?

A First of all, they're courageous. Secondly, they have an idea of where they want to go. Thirdly, they're not imprisoned by the past. Robert Noyce, who was Intel employee number one, said, and Intel used to have this printed on t-shirts, don't be encumbered by history. Go out and do something wonderful. And these are people who weren't encumbered by history. They were people who, who thought, not what can't I do, but what might be possible? The whole story of gorilla glass and the bringing of glass to the phone. Wendell Weeks, who was running Corning, which had been making glass since 1851, told Steve Jobs he couldn't get it. And Steve Jobs worked with Wendell Weeks long enough so that he wound up with glass on that phone. They walk through walls. They do things other people thought were impossible.

AI assessment note: “First of all, they're courageous. Secondly, they have an idea of where they want”

Q What did you find over your years there?

A It was fascinating. First of all, I found that unlike the tenured professoriate at a university, if you didn't deliver, you were out. And it was that simple. Secondly, the company during the period that I was there, 2010 to 20 18, was exploding. So it was fascinating to be with a company that was growing so fast and trying so much to create the future. And thirdly, I was there on October fifth, 20 11, which is a day I will never forget. That's the day Steve Jobs died. The whole world took notice. And that, by the way, was the stimulus for the writing of this book. Although I wasn't going to write one while I was at Apple because I had a job and I was busy. But when I retired in 2018, I thought, you know, I ought to go back to this. Because there has never been in American history a reaction to the death of a CEO the way the country, and indeed the whole world, reacted to the death of Steve Jobs. I mean, there were people, Ted, you may remember this if you were walking past an Apple store, who bought bouquets of flowers and put them in front of Apple stores. This had never happened before, and this was so remarkable. Being an historian, I've read histories of funerals of business executives going all the way back to the early 19th century. Believe me, this was unique, and so the question in my mind was, why did this happen? And the answer that I came up with was that Steve Jobs …

AI assessment note: “First of all, I found that unlike the tenured professoriate at a university”

Q management tech, request a demo at ridgeline.ai. And now, back to the show. You used the word innovation before, and in that transition period, right, Lee Iacocca turned around a car company, but Sam Walton and Mary Kay Ash created new businesses. What is it about the time that's passed since post-World War II that had this necessity for innovation and charismatic business leadership that may not have existed previously?

A There's a collection of essays called Does Technology Drive History? I'm not sure the answer is yes, but the fact is technology was changing very quickly. The computer had an impact on the world that people could only imagine back in the mid 19 sixties when the IBM three 60 was first introduced. So the computer made possible a whole bunch of innovations which people began to sense And we're either going to grab for or not. Iacocca, in many ways, was a backward-looking CEO. I mean, he saved a company that there really wasn't any room for anyway. But other people began to look at the old way of doing things and realize that, you know what, this isn't working. Other countries are doing better. Look at Michael Milken, for heaven's sakes, for all his faults. He weaponized a whole new class of investment in junk bonds. Which made possible the raids of the 19 eighties, and the raids of the 19 eighties also pushed change because you couldn't manage Robert Mercer, who was the CEO of Goodyear when he was being raided by Sir James Goldsmith, couldn't manage that company the way Harlow Curtis managed General Motors in 1955 when raiding General Motors would have been utterly unthinkable. So the market for corporate control is new, and the rearrangement of the stakeholders Between either the workers and the managers and the shareholders and the customers became very powerful in the 19 eighti…

AI assessment note: “the computer made possible a whole bunch of innovations which people began to sense”

Q So after so much time in that very special environment, what was it that led you to leave and move on to Apple University?

A Well, part of it, frankly, was personal. My late beloved first wife died of ovarian cancer. I was fortunate enough to get a second chance. I remarried a number of years thereafter, and it just, it seemed to me that with the remarriage, it was time for a change. I certainly didn't want to live in the house that I had lived in with my first wife, with my second wife, you know, it didn't make any sense. Then Apple came along out of the blue. And said, you know, we're starting something called Apple University. Why don't you come out and interview? And they were willing to pay for the flight. So, you know, I didn't want the job because when you're tenured at Harvard, you can't be fired no matter how dumb you are. So, and in a business, it's not that way. If you don't perform, they get rid of you. I mean, it's like horrifying. So I went out and I had a set of interviews that I will never forget. The first interview was with someone who told me all about his house on Lake Tahoe. And so, okay, you have more money than I do. Okay, next. So the next interviewer came in and told me all about her house on Lake Tahoe, and it was kind of the same thing, so, but they paid for it, and I was perfectly happy. The third interviewer was Tim Cook. He didn't say that. He came in and said nothing, and it was very intriguing that he was comfortable with silence. And so I was looking at him, and I was…

AI assessment note: “it seemed to me that with the remarriage, it was time for a change.”

Q How did we get from there to here?

A We got from there to here for a couple of reasons. I tried to lay out three phases. The first phase is basically the age of administration, where the CEO is the chief mechanic of the corporation, and his or her job, although in those days was almost always him, his job was to keep the company running and to keep it with half of the U.S. auto market. By the 19 seventies, I choose the year 1975 almost randomly, was after the first oil shock, it was the year we lost to Vietnam War. By the 19 seventies, I'll put it this way. The swinging sixties had morphed into the sobering seventies. The United States was no longer hegemonic. Japan and Germany had come back. They had products on, on global markets, very successful products. Toyota had come up with a new way of producing automobiles, which eventually conquered what the Japanese called the automobile kingdom, which was the United States. And so we were no longer on top. Our, Governmental system was in disarray. We had Nixon forced from office in 1974, Gerald Ford, who was the only president who was not actually elected. He was appointed vice president, then became president when Nixon was ejected. And as he said, I am a Ford, not a Lincoln. Well, that's not a charismatic statement. And then Jimmy Carter was his successor, very fine man, in my opinion, but not a terribly successful president. And in his malaise speech, Carter said, …

AI assessment note: “We got from there to here for a couple of reasons. I tried to lay out three phases.”

Q These particular charismatic leaders, do you think this is innate to the individual? Is this sort of in a nature versus nurture question? Is it the person or people who require charisma in their roles able to become more charismatic?

A I think if they're not, you wind up with companies in trouble. Andy Grove was a very charismatic business leader, but his successors were not, and look at Intel today. So are charismatic leaders born or made? I think Steve Jobs was born. I don't think you can study to become Steve Jobs. I would say the same about Elon Musk. But that said, I do not believe that charisma is digital. I don't believe that you either have it or you don't. Because I've seen enough people be coached. I don't think there's a major executive in this country today that hasn't had media coaching. And I think that if you have media coaching, and you are coached, and you are conscious of the need to lead in an inspirational and aspirational way, you can have an element of charisma about you. So I think it can be learned if you understand its importance.

AI assessment note: “So I think it can be learned if you understand its importance.”

Q You said charm, guile, brilliance, and cruelty. What aspect of cruelty comes to charismatic leaders?

A They feel that their mission is so important that We're saving the world. We're transforming the automobile. We're landing on Mars. I mean, you name it. That they have the right to be cruel to people who are not performing to the specs that they think they deserve. They feel that their goals are so lofty, and that they themselves are so vital to the future of the human race. My mother used to talk about people who love the human race, but hated every individual. There's a certain truth there. That I don't have to care about you. You're getting in my way, and my way is to reinvent something that needs to be reinvented, or to land on Mars, which is what Musk talks about, that sort of thing. You hear charismatic people described in a lot of ways, but you rarely see the word nice associated with them, and that's one reason why. They can be cruel.

AI assessment note: “they have the right to be cruel to people who are not performing to the specs”

Q I'm curious as we look out from here, there's so much buzz now about, say, blockchain technologies, Web And decentralized organizations, which feels like it's a potential shift away from the necessity of the charismatic leader. And I'm curious, you've been sitting in and around Apple and Silicon Valley for a while. What are you seeing in terms of where charisma will take us from here?

A Well, first of all, let me say that I'm a mere historian. That's all I ever claimed to be. So I am very bad at predicting the future. I'm very good at predicting the past. You know, as I told you, the, the war of 1812 started in 1812. I'm right again. One of the advantages is you're never wrong. I think that the need for charisma is actually going to increase, not decrease, and here's why. The people who are going to create whatever it is that's coming down the pike are going to be knowledge workers, and they're going to have to be really smart. If you look at the people who I've had the pleasure and privilege of working with and just interacting with, these people, they're just unbelievably brilliant. Think about the camera in a phone, and think about what it means to mass produce a camera in a phone, and so I had the pleasure when I was at Apple of interacting with the Hardware and the software people who did that camera. These people are as smart as anybody, anywhere. And so, I think that for them to follow a leader, a Steve Jobs, you gotta have charisma. I don't see it diminishing. As a matter of fact, if I may, let's switch to politics just for a split second. There's no question that Trump, for a segment of the population, is a charismatic figure, and Biden, who is someone I frankly admire as a human being, is not a charismatic figure, and he's paying the price for that n…

AI assessment note: “I think that the need for charisma is actually going to increase, not decrease”

Q So did you ever have thoughts of being in the business world?

A I discussed it briefly with my father. This is when he said the line, it's very cold out there. He also said, hammer strike, anvil bear, which I took to mean that it's very important to know the difference about whether you are the hammer or the anvil, and most people in business are the anvil, and when you're the anvil, you've got to take a lot of punishment, and since he was, I think, a protective man, He wanted me to find a safe haven, and that was not in the business world. So to be honest with you, Ted, I don't think I would have been a successful business executive. I don't think that's who I am. This fits me like a glove, and I'm very comfortable having spent my life doing this.

AI assessment note: “I discussed it briefly with my father.”

Q We have this strong interest in the current economic environment in a little bit of a more holistic approach to The purpose of business. So shareholder capitalism matters, but maybe isn't the only thing anymore. The environment's important. Social interests are important. Do you think the nature of a charismatic leader will shift as a result of that?

A That's what they're saying. Now let's watch what they do. But Satya Nadella, who's the CEO of Microsoft, and who is a very interesting individual, has said that we have to be involved in this because if we're not, the future is very much in peril. And I think that, especially with a political system seemingly as dysfunctional as it, as it seems to be, business leaders are going to have to step up and broaden the Their own definition of charisma. These people are globally known. Everybody in the world knows who Jeff Bezos is. They've got to broaden their definition of charisma, and my hope is that they stop competing for the America's Cup, and they stop shooting rockets in the air, and they realize that we've got to make planet Earth work, or we're all going to be in trouble. And my hope is that that's where they turn their attention, and you and I are going to find out together.

AI assessment note: “business leaders are going to have to step up and broaden their own definition of charisma”

Q You mentioned the idea of master narrative, and I'm curious, when you've gone to teach, is there some master narrative in your head that you're trying to impart on your students?

A There's an old saying that planning is vital and plans are useless. In the Harvard Business School classroom, that is the truth. I don't think there's anybody in the history of the school who ever planned a class more carefully than I did, and when I walked in there, I tried to throw the plans away and just let things happen, get the students to interact in ways that I wasn't expecting and that they weren't expecting, because when that happens, two very important things take place. One is I'm a firm believer in participant-centered learning, by which I mean that you, Ted Seides, are more likely to be impacted and to remember something that you've figured out yourself than something that somebody else has told you. So that's one thing. And the other is you never really know how students are going to interact with one another, and you want to let that happen in real time. And if that happens, they're not going to fall asleep on you. So I guess one of my major goals was to keep the students awake.

AI assessment note: “I tried to throw the plans away and just let things happen”

Q of Steve Jobs and certainly Elon Musk, there's another side to them that you hear about. You hear about how difficult of a person Jobs was. There are a lot of skeptics of Elon Musk and his audacious aspirations. How do you think about the prospects of a charismatic leader and what they need to do to be successful in the path from having the vision to making it happen?

A Well, the definition of, if you will, going back to our earlier conversation, of charisma is, if I go running down the street stark naked saying that I and I alone can save the world, And there are like thousands of people running after me saying, yes, it's true. Richard can save the world. I'm charismatic. If I go running down the street naked and say, I alone can save the world, and there's nobody running after me, they're going to take a butterfly net and put me, you know, in an insane asylum. So one thing that charismatic leaders have to have are followers. And the creation of followers, it's a mutual relationship Is very subtle, very difficult, and very segmented. Musk is a good example, and so is Jobs. Some people who are charismatic to X number of people are not charismatic to Y. Some people are bitten by the bug and others aren't. But basically, the charismatic leaders that I live in Silicon Valley, that I see around here, are people who make believers out of skeptics. That's what they've got to do.

AI assessment note: “are people who make believers out of skeptics. That's what they've got to do.”

Q sort of a digital, that was a zero, and maybe Steve Jobs has been a one. But in most of that spectrum, you're somewhere in the middle, trying to create what will become the one. What happens as a charismatic leader works their way through just having a vision and having followers to either Creating the product that does change the world, change a market, capture market share, or doesn't?

A Well, first of all, let's talk for a moment about Elizabeth Holmes. She's a perfect illustration of the fact that charisma is dangerous. Fake it till you make it is a saying out here, and I guess all over the world now, but she was faking it forever because that product never could have worked. There was a physician at UCSF, University of California, San Francisco, who, when told about the Edison machine and the tiny little blood draw that you got from the prick of a finger that was going to enable you to do X number of blood tests, said, I would be less surprised if these people told me they were time travelers who had come back from the 25th century than that if this device could ever actually work. So she was faking it, but she would never make it, because that device never would have worked. Other companies, Microsoft is famous for vaporware. In the early years, I should say, certainly not now. Marketing products that had not gone through the formality of being created. You have to really believe that you're going to be able to make it. And I guess Elizabeth Holmes made a believer out of herself. She made a believer out of a lot of investors. But there was no way in the world that thing was ever going to work. That was like Bernie Madoff saying, fake it till you make it. I mean, you, you fake it until you can't fake it anymore. That was her problem. But otherwise, there's a…

AI assessment note: “She's a perfect illustration of the fact that charisma is dangerous.”

Q So it's probably not a stretch to say that success and charisma isn't necessarily inextricably linked. So I'm curious, what are the situations of when and why a company effectively requires a charismatic leader?

A It requires charismatic leader, in my opinion, in a crisis. I met with Jim Burke, who was the CEO of Johnson & Johnson, when Tylenol was poisoned in the 19 eighties. And crisis turned him into a charismatic leader. So crisis can produce that, but also opportunity. When you see the Blackberry, you remember the Blackberry? I'm sure it was called the Crackberry. People were so attached to it. And you realize that it's actually kind of ugly, and that Steve Jobs always believed that technology alone is not enough. The marriage of technology and the humanities lead to the results that make our hearts sing. And so he created the iPhone, which is beautiful. People thought, by the way, it was going to fail. Steve Ballmer, who was the CEO of Microsoft in twenty-oh seven, thought it was going to fail because since it didn't have a plastic keyboard, It wouldn't be an effective email device. Well, he was wrong. Jobs was able to think different, and because of his success with the iPod and the iTunes store, no investors were upset with his thinking different, and there was a freedom that came from, I think, the moving of the center of gravity of innovation in the country from places like Dayton, Ohio. Think about Dayton, Ohio. It's where National Cash Register was headquartered when it was an innovative company. It's where the Wright brothers Grew up first in flight. The center of gravity of…

AI assessment note: “It requires charismatic leader, in my opinion, in a crisis.”

Q If someone was leading an organization and wanting to become more charismatic, what have you learned in the process of studying these charismatic leaders about how someone could go about doing that?

A First of all, don't be afraid to ask. Don't be afraid to push. Don't be afraid to dream, and dream big dreams. Moreover, be bold, because if you're not going to be bold in your industry or in your company, whatever, somebody else is going to be, because that's the world we're living in now. And I also think that what Sam Walton said is true. You can learn from anybody. So learn, keep learning, and ask yourself, what are my strengths and weaknesses? What can I build on to make myself more effective As an actor or actress in this world, by the same token, where am I weak? And so where can I find a partner who can shore up the weak part of me and make me more effective? By the way, there's a article in the Harvard Business Review in 20 10 about how to be charismatic. Look at that. There are plenty of people willing to give you advice, but it takes a certain courage to In the immortal words of my father, it's very cold out there, and if your courage leads you astray, you'll wind up running People Express, which, to the best of my knowledge, doesn't run anymore. But that was the product of a dream. Sometimes dreams don't come true. Really, in a certain sense, you've got to figure out, what kind of life do I want to lead? What kind of person do I want to be? Jobs was a special person. He gave the Commencement speech. The last time I looked on YouTube, it had been viewed by well over …

AI assessment note: “there's a article in the Harvard Business Review in 20 10 about how to be charismatic.”