Full text of today's "Do Not Be Afraid of Failure" speech at the World Economic Forum fellowship graduation
GRADUATION
World Economic Forum
Global Leadership Fellows
June, 2009
The Global Leadership Programme is dedicated to developing the next generation of world leaders; well-rounded professionals who feel equally at home in the public and private sectors. As the world becomes increasingly more interconnected, the once well-defined line between these two sectors continues to blur, making it difficult for any one organization to act effectively in isolation. To succeed in such an environment, organizations – both private and public – must often align numerous stakeholders so as to most efficiently approach problems, develop strategies and capitalize on opportunities.
Do Not Be Afraid of Failure
Many congratulations for being selected for this extraordinarily important leadership program; many more congratulations for finishing the program with great distinction. This is not the end of your life, it is the beginning. This is probably the last time that you will complete a life segment along lines that earn universal approval – from society, for teachers, from parents, spouses, and even yourselves. Here on in, you are on your own. You can enjoy your success without being imprisoned by it only if you commit to the life time search for personal meaning.
I start my search with Gaughin’s magnificent panorama of life with the simple captions – D’Ou Venous Nous? Que Sommes Nous? and Or Allons nous? A large print is on the wall behind my computer – probably once a day, I reflect on the reality that nobody – Albert Einstein, Ludwig von Beethoven, Michelangelo or Bill Gates – has been able to answer any one of those questions. It is humbling, but it provides necessary perspective. The only reality any one will ever know is the reality within us. It is not readily accessible.
Now let’s talk about the work. In one way or another we all want to contribute to a process of wealth creation that will enhance the living circumstances of the residents of planet earth. You are emerging at one of the most interesting/challenging times of recent history. Francis Fukuyama published “The End of History” in 1992, styling the fall of the
Within this framework, we have all been involved in the struggle to affect, influence, reform “market place” values. Speaking for myself, I am sad about the failure of my efforts –but, and this is important, I am neither discouraged nor diminished. In most important areas, we have not been able meaningfully to modify the autocracy of the chief executive officers over the last twenty years. Power does tend to corrupt and absolute power corrupts absolutely. What we had thought was a global harmony of democracy and the market places turns out to have been merely a new iteration of the struggle for power. We have now come to the End of the End of History.
The prolix Judge Richard Posner illumines: “but although the financiers bear the primary responsibility for the depression, I do not think they can be blamed for it – implying moral censure – any more than one can blame a lion for eating a zebra. Capitalism is Darwinian. Businessmen take risks (mostly within the law) the promote their financial interests; it would make no more sense for an individual businessman to worry that because of the instability of the banking industry his decisions and those of his competitors might trigger a depression than for a lion to spare a zebra out of concern that lions are eating zebras faster than zebras can reproduce”[1]
One result today is that the market place no longer has colorable legitimacy as an ethical guide. From this point forward, we can and should expand focus our efforts on government. In virtually every agency and cabinet position, there now are responsible officials who share our concerns for holistic capitalism. The new challenge is to introduce legitimate standards and enforcement by government without destroying the innovating genius of a free market system. Specifically, we should take advantage of this rapid change to focus our energies on international accounting systems. This is where the leverage is – we can, with collective effort, hope to begin the process of expanding traditional accounting so as to place values and costs on normative conduct. Institutions – in contrast to individuals – need to have a quantified language of accountability – we have all heard “You can manage what you can measure.” It still amazes me that so little energy has been devoted to improving an accounting language, derided by all for its miscorrelation with human wealth or welfare. We need at the least to have a business system that reflects the external costs of its functioning on society; we should have a system that places reward on human creativity. Only when this task is substantially completed can we feel that corporate functioning – the pursuit of wealth - is compatible with human welfare.
Do you have confidence in your own ability to separate the sacred and the profane? Let’s listen to a conversation with Charles Munger, the octogenarian/ partner sage for Warren Buffett. [The interlocutor is Joseph Grundfest, professor at Stanford].
“How and why do you think economists have gotten this so wrong?”
“I would argue the economists have not been all that good at working concepts of good and evil into their profession. Nor do they understand, at all well, the economic consequences of bad accounting.”
“In fact they’ve made a profession of driving value judgments out of the subject.”
“Yes, they say it’s not economics if you think about the consequences of good and evil, and good and bad business accounting. I think what we’re learning is that when you don’t understand those consequences you don’t have an adequately skilled profession,,,, If you totally divorce economics from psychology, you’ve gone a long way toward divorcing it from reality.”
While mathematics, game theory and economics have done much to illumine certain problems – it is beguiling to fool oneself that the achievement of numerical objectives actually is a positive personal accomplishment - ultimate answers must come from the subjective side of your brain. You will need, always, to hear and to trust your “feeling” senses in coming to conclusions and making decisions. Machine driven processes may appear to have earned billions of dollars for the gifted speculators, but, as of yet, we have not taken into account the “external costs”. The balance that you will have to achieve is – taking sufficient risks to allow creativity and increase in productivity without unacceptable external costs for society. There will be mistakes in pursuing this course; there will be failures.
You incarnate the new – the needed. The past decades have had a destructive impact on the influence of “professions” as a civilizing force in societies. The characterization of lawyers and accountants, among others, as professionals has wilted in the face of the pressures of a financially dominated system. The failure of business schools to graduate “professionals” has become conventional wisdom. A few HBS students have begun the long path back with the MBA oath to which some recent graduates subscribed. A professional is many things – but one thing above all, she is a fiduciary, an individual who holds his client’s interest above all others and exclusive of any self interest.
Listen to the former Chief Justice of the
The separation of ownership from management, the development of the corporate structure so as to vest in small groups control over the resources of great numbers of small and uninformed investors, make imperative a fresh and active devotion to [the] principle [that “no man can serve two masters] if the modern world of business is to perform its proper function. Yet those who serve nominally as trustees, but [are] relieved, by clever legal devices, from the obligation to protect those whose interests they purport to represent; corporate officers and directors who award to themselves huge bonuses from corporate funds without the assent or even the knowledge of their stockholders; [and] financial institutions which, in the infinite variety of their operations, consider only last, if at all, the interests of those who funds they command, suggest how far we have ignored the necessary implications of that principle. The loss and suffering inflicted on individuals, the harm done to a social order founded upon business and dependent upon its integrity, are incalculable.
You hold out the hope of being the first “global fiduciaries” - professionals whose commitment to the sustainability of humankind on earth is a transcending informing energy.
My own work has been as an “idea entrepreneur”, so I can personally guarantee you a rewarding life – but one that one will be replete with conventional failures. Failure is a growing experience allowing individuals with the education, motivation and character that you all have to push beyond the limits that the comfortable life affords. I believe that such a life is the only way for human beings to spend their time on earth in a meaningful way.
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