These help me giving him
a warm Georgia Tech welcome.

So to speak of Mr David link staff.

Thank you.

For his on what's great to be here.

It's great to be here this week and
not not last week

you all have been through a bit and
I actually skate from Washington with

we had snow I think two nights ago and
then last weekend as well so I'm not sure.

Washington is any better
prepared than Atlanta for

kind of snow we're having this winter.

But thank you.

Our cash for the introduction.

And thank you Terry.

And Bob for
inviting me to to Georgia Tech.

I've never been here before and

I look forward to spending
a few minutes with you.

So you can see the topic ethical
capitalism who cares or who should care.

And let me start this way.

Why do you want to go into business.

Why do you want to be a capitalist.

So you can read on the Internet.

Dozens of articles and
pronouncements on unethical capitalism.

Further there are surveys done year
after year on the views of the public

toward the business executive.

And last I checked we were at ad or
near the bottom on the trust scale

less than ten percent that's lower than
used car salesman and politicians.

So why do you want to go into business.

Now there are some clear positives.

In fact capitalism is the most remarkable
system mankind has come up with for

creating wealth increasing productivity
and raising both the standards of

living and quality of life for millions if
not billions of people around the world.

If individual freedom is your thing.

Capitalism is for you.

As it is a system that encourages and
rewards the development of new ideas.

Deliveries technologies and offerings.

As well as innovative new business models.

In fact you can look at all.

Intrapreneur ship as the art of
turning problems and opportunities and

ultimately solutions.

Yet the challenges we face
today not just in Georgia and

not just in the United States but

around the world are raising
serious questions about capitalism.

While the quality of life for many is
raised the pressures an impact felt at

the bottom of the pyramid is dehumanizing.

The extremes of economic and
social inequality are widening.

And hope for the have Les's as well as
the have nots is being squeezed out

there are real questions
about whether our society or

any society can continue to prosper with
such inequities and perceived unfairness.

If these attributes
are hardwired to capitalism and

what does it say about capitalism.

Of these and related factors force us to
confront the question of the ethics of

capitalism is it an ethical and
in the end who should care.

This is the topic I want to
probe the this afternoon and

my hope is that I can
share my comments and

then we can engage in in some Q. and A for
as long as you're willing to continue.

So let me start by just touching the age
old question of what do we mean by

ethics and there are hundreds if not
thousands of books on the topic.

It's been discussed and debated for
at least twenty five hundred years.

And one way to look at it is to consider
the idea of ethics from two perspectives.

What we accomplish and what we do so.

First what we accomplish.

There are many brilliant thinkers who
define ethics around what is accomplished

people like David Hume and John Stuart
Mill or two they represent more value to.

Terry school of thought on ethics where
the ethical judgment is derived by

considering the consequences of actions.

Personally I struggle with this approach
as it seems to me to be the first step

on what can be an extremely slippery slope
where you can argue that the ends justify

the means and just because
a desired outcome is achieved.

Why is that ethical yet
we live with a philosophy every day.

Think of the coach of the volleyball
team who challenges her players to

do whatever it takes to win in business.

The goal is often a simple
as just making money.

And the assumption is that anything goes.

As long as as long as it is not illegal.

Or for some as long as they're not caught.

And yet the pursuit of self-interest
has led to huge systemic failures

that of her millions of people.

If you adhere to this approach to ethics.

It begs the question Who sets the goals.

The desired ends.

And it is one thing to make money for
yourself or for your shareholders.

But then who is responsible for
preserving a system that is fair and

avoiding the assumption of
irresponsible systemic risk.

We saw this problem in the financial
meltdown of the last decade.

We also saw two hundred fifty years ago

in the overgrazing of public lands in
England that became known as the cause.

The tragedy of the commons in both cases
disaster resulted from the pursuit

of individual self interest because no
one felt a responsibility for the system.

So this approach to ethics
totally depends on the morality

of the desired outcome is it fair and
for whom.

And if we accept the good
that if we accept

that the goals are just then we
can begin to understand Gandhi's.

That there is no difference between
means and ends this idea is imbedded

in the idea of teleological ethics which
states that the means are the ends

in the process of becoming the means or
the ends in the process of becoming.

It can be a bit circular but
also can be helpful or

helpful way of thinking in that it forces
us to see the connection between means and

ends to look at ends and means as
extension or precursor of the other.

So I'll come back to this point shortly as
it offers a way to think about the role we

need tappable ism to play
in our society but for now.

It opens the door to consider
the second approach.

I outline and

that of considering ethics from the
perspective of our actions or what we do.

So this approach by of considering
ethics by what we do rather than what is

accomplished is most closely associated
with our stall in his notion of virtue.

Aristotle was very clear on what
constituted a virtue and defined it as

the mean between two extremes each of
which would be considered a vice and

example is courage which taken
to one of can be cowardice and

to the other recklessness.

Another is compassion which to want to
stream can be obsequious forming and

to the other a cruel cold hearted ness and
this approach originated not only with

the Greeks but also can be seen in China
at about the same time when the thinking

of Confucius was later embraced in the
thirteenth century by Thomas Aquinas and

became a key part of
Middle Age Christian orthodoxy.

And today you may recognize it is
the root of the Golden Rule which is so

prevalent in many cultures and
societies around the world.

And in the US today.

I think this emphasis on actions
rather than accomplishments

tends to form the basis of for.

Work.

And living a life of virtue acting in
court in accordance with a clear sense

of what is right and wrong is the core.

Is at the core of
the idea of character but

to be blunt thinking or
knowing without action is not enough.

There is absolutely no ethical grounding
unless one follows thought with action.

So I would go so far as to argue that
knowing what is right or wrong and

not acting in accordance with that
knowledge is the ultimate character flaw.

Confucius Confucius said it
best to know what is right and

to fail to do it is
the worst form of cowardice.

Yet we see this situation
in business all the time.

And you as young people launching into
your business careers or engineering

you will face this dilemma repeatedly of
being asked to do something that you feel

is wrong yet worry that if you don't do it
your career prospects will be jeopardized.

Because of the reality of this kind of
situation I urge you to look at the work

of Dr Mary Gentilly who is focused
on how to give voice to values.

In the business environment.

Finding your voice sounds easy but
amidst the pressures of going along.

It can be immensely difficult.

So our style I believe recognizes
fundamental frailty of what it means to be

human by arguing that people need
to have that you ate virtues.

Through repetition.

One could make virtuous living a habit and

minimize one susceptibility
to temptation and

today we might call this the development
or the strengthening of conscience.

Now with this conceptual
framework of ethics as a backdrop.

How do we then consider
the ethics of capitalism.

So let me state up front where
I come down on this issue.

My.
My bottom line is that capitalism

is neither ethical nor
an ethical it is absolutely neutral.

It's like baseball or eating and both
can be performed in unethical ways but

that does not make the game or
dinner unethical.

It is the people who practice
it who can act either morally or

immorally and to blame the system is to
avoid looking at ourselves in the mirror.

Now to state the obvious.

Capitalism delivers the most value

to all of us when it is present
when it is practiced ethically.

When was the last time you went into
a restaurant and had to prepay for

your meal.

How often are you billed for
services already rendered or

for a product that's
already been delivered.

Trust is a foundation we must
preserve in our capitalist system.

Yet it is easily eroded.

If we find that we don't trust the actors.

Trust is essential and today trust
in capitalism is being challenged.

I think of three areas that we must
address first is the appropriateness of

the benefits that accrue to the top
executive compensation is an obvious

example Second is the plight
of those being left behind and

third the broader question
of sustainability.

Whether we are so caught up in our own
near term self interest that no one sees

it is their responsibility to protect and
preserve the system and

what links these three concerns
together is a moral one.

And it's a question of fairness.

So just look at what we've
seen in the United States and

around the world these last few years.

Switzerland proposed
curbs on executive pay.

And the European Union took up caps
on bonuses in the United States we

saw Occupy Wall Street movements and long
unemployment lines across the country.

And then with the last economic recovery
statistics showed that the top one

percent received more than one
hundred percent of the economic gains.

And what do these factors
reflect about our society today.

And if you are unemployed or
not part of the what top one percent.

How do you feel about it.

So there are some who argue that
by getting out of the way and

letting business pursue the profit
motive with minimal interference.

And most certainly minimal government
regulation is the best way forward.

This thinking has been the doctrine
of such people as Milton Friedman and

for many years and for many has its roots
in the eighteenth century writings of

Adam Smith in his inquiry into the nature
and causes of The Wealth of Nations.

It was Smith who famously noted that
man I quote intends only his own gain.

And he is in this as in
many other cases led

by an invisible hand to promote an end
which was not part of his intention

Smith showed how the division of labor at
the pin factory would lead to stunning

increases in economic productivity
this thinking took the name of

less a fair capitalism which argues for
minimal government involvement because

an unintended byproduct of the pursuit
of individual self-interest would be

a greater improvement of society than if
the government had actively directed it.

Yet even Adam Smith didn't fully buy it.

And in The Wealth of Nations
the part people don't read.

Smith went on reflected on the unintended
consequences of the division of labor and

he noted the man whose life is spent
in performing a few simple operations

becomes as stupid and ignorant as it is
possible for a human creature to become.

The.
Uniformity of

his stationary life naturally
corrupts the courage of his mind.

Smith goes on to say but
in every improved and civilized society.

This is the state into which
the laboring poor that is

the great body of the people
must necessarily fall.

Unless government takes
some pains to prevent it.

So this is Adam Smith not Karl Marx and
even Adam Smith recognized the a morality

the a morality not immorality a morality
of capitalism and the critical need of

society through government to
set rules and minimum standards.

So I find it highly ironic that Smith
today is considered the champion of

those who argue for minimal or
no government interference in business.

People actually ought to read all of
Adam Smith before they cite him as

their intellectual godfather.

The problem with this thinking
is that the goal being sought

is one measured only in terms
of economic productivity.

But is this the kind of society
in which we want to live.

And where is the moral
of the of this approach.

So my point is this if we are to live in
a democracy where individual citizens

collectively will determine the kind
of society in which we are to live

than one cannot ignore the impact
on individuals all individuals

of what is clearly a highly efficient and
productive economic system.

If we are not committed to democracy and

find another form of to tell
a Tarion government desirable.

Then the impact of the economic system
on the individual may not be of concern.

In this case people may simply
be viewed as economic inputs but

we have chosen to be a democratic society.

So a problem we face today
is that the two major air.

Engines of our society capitalism and

democracy are not in sync
what we have what we have not

adequately done is fully consider
the link of a neutral system capitalism.

On the people it touches and

the consequent impact it has on
the basic values of democracy.

And let me offer a new way to
think about these challenges.

One that views capitalism not as
a stand alone and separate system but

as a fully integrated part of
the fabric of our democratic society.

It's rather simple and combines the the
ethical focus on both ends and means.

In this approach.

We don't start with capitalism or

look at the economic system which would be
the means but instead we begin with a more

fundamental examination of the kind of
society in which we want to live the NS.

I fully expect that we would all agree
on the desirability of economic growth

productivity and a high quality of life
for as many people as possible but

what else what non-economic values and
characteristics are important

to us that we are willing to take steps
to nurture protect and preserve them

the way we asked this question provides us
with the moral foundation of our society.

So with this initial understanding
we can then ask a question as to

what kind of economic
system will get us there.

What are the means that in turn
are the ends in the process of becoming.

What are its characteristics.

We can then focus on the more difficult
topic of what is different in our vision

society from the present and how do
we get there from here it is in this

context that we can best consider what we
should be able to expect from business.

So what do we do.

Let me suggest five.

By dressing will help move us to achieve
the necessary realignment of business with

the longer term needs and
goals of society first.

We've got to move away from
the notion of shareholder primacy.

Today corporate purpose.

Has been hijacked by the notion of
shareholder primacy that the purpose of

the corporation is to maximize profit for
shareholders this

year was never the intent of corporate
law which granted certain protections and

recognition that a corporation would
contribute for the betterment of society

not just its shareholders and
it is not corporate law today

we need to recognize that a corporation
has an obligation to many constituents

first and foremost its customers
that customers you don't exist.

In fact the economic investor
the shareholder really stands last

after the company has addressed
the needs of customers employees and

in many cases it's communities second.

We've got to confront the disease
of short termism in recent

years the pressures on corporations
to belittle as much as possible.

Now.

Has intensified and no C.F.O. or C.E.O.
of a public company wants to explain

why they missed their earnings projections
and then see their stock collapse.

The problem is that we have become
caught up in what Roger Martin

the retired dean of the Rothman School
of Business at the University of Toronto

what Roger calls the expectations game.

The need to meet investors'
expectations at just about any cost.

And this pressure leads
to a short term focus and

short term decision making were were
quarterly performance is more important

than the long term health
of the company and

an interesting point to note
is that in my view a joy.

Rushing what I call this
disease of short termism

actually helps address the conflict and

tension between a shareholder and a
multi-stakeholder view of the corporation.

If companies were to take a longer view
the interests of the shareholder and

other stakeholders begin to align.

A key condition for

this alignment though is that a company
defined its financial objective

as building sustainable long term value
rather than maximizing short term profit.

A third.

I think we've got to rethink
cost accounting definitions and

performance metrics our
current accounting system was

developed at the time of the industrial
revolution over two hundred years ago.

It was established for
companies that manufacture products and

it has not kept up with the key business
with the way business is involved.

It is focus is it is a forced fit for
service companies and

simply cannot adapt effectively for
knowledge based businesses.

It makes absolutely no sense for

the acquisition of a services company
to be largely recorded as good will

simply because our system doesn't
have asset categories that apply.

For them or long our current accounting
methodology is ignore costs that society

can no longer nor such as pollution
other environmental damage and

other downstream effects and

as a result the definition of
profit is fundamentally flawed.

If we stay with our current
cost recognition system and

if you assume that you get what you
measure it should be no surprise

that companies don't address costs and
issues that by their metrics simply

don't exist and
we need to rethink what we call cost and

ensure that we are accounting for
the true impact of business.

Fourth.

We should establish long
term investment incentives.

We can expect businesses
suddenly take a long view.

The market pressures are too intense.

Yes we'll see examples and we do see
examples of in light leadership but

we needed to be in everyone's
interests to take a longer view.

So if the market forces of capitalism or
a river.

We are foolish to try to stop it.

However we can redirect it.

And one straightforward change that I
support is to redesign capital gains taxes

were example.

And make it markedly more progressive
meaning a very high tax if

an investment is held and liquidated in
a short period of time climbing to zero.

If an investment is held for five or

seven years or more with this kind
of incentive the market will see it

in its own economic interest to
become more of a long term investor.

And finally fifth.

I think we've got to revisit the role the
responsibilities in the operating model of

boards of directors and I'll leave this
point to the end because I think it

may be the most important and
it's certainly the area where where

media traction can occur and
many boards have fallen into

the trap of believing that their primary
role is one of ensuring compliance.

This was this saw even greater emphasis

after the passage of Sarbanes Oxley
legislation a decade or so ago.

But this role while necessary is
insufficient and board needs to be

boards need to be spending more
time looking forward not backward.

The role of the board is to ensure
that purpose vision and core values of

a company are in place to engage around
matters of strategy and direction.

And then to give the C.E.O.
and the executive team the time and

space to engage in responsible
balanced decision making.

By understanding the nuance.

Says of a couple of companies strategy and
how it must play out over time.

Boards are better able to establish
the appropriate performance metrics

that will indicate indicate
both progress and success.

And thereby hold that they're able to hold
the C.E.O. accountable for performance.

But in performing this role.

Boards or more boards are more
able to help C.E.O.'s counter

the short term pressures of
the pressures of the market and

to ensure the companies do not make
short term accommodating decisions

that are not in its long term interest
as responsible contributors to society.

If this work cannot be done at one or

two day long quarterly board meetings
than companies should consider changing

the board operating model to enable
it to properly perform its job.

What right do we have to deplete critical
natural resources for today's consumption.

Ignore what will be available to
a needed by future generations.

Tell me why short term profit that drives
this kind of behavior is good for society.

What right do we have to
process raw materials and

create products in such a way as to cause
irreparable harm to the environment

contribute to global climate change and
potentially cause irreversible and

negative impact on the health of
the earth for all future generations.

Tell me what kind of cost accounting
methodology is allow us to ignore these

costs are good for society.

And went right to managers not founders or
creators.

But managers have to profit at the level
of tens and hundreds of millions of

dollars for simply managing and at times
failing to manage well it doesn't matter

which an enterprise the responsibility for
which they are interested.

Tell me why such extreme
allocations of benefits or

in the face of poverty and inequality are.

Good for society.

The new construct that I propose allows
us to take into consideration such

moral issues as we think about the kind
of society society we want to have

the kind of economic system that can
get us there in the kind of behavior.

Metrics and

leadership we need from our business
leaders as the key drivers of the system.

My point is this capitalism as
practiced in the United States today

is unsustainable.

It is destroying other important values
of society is ignoring the realities and

tradeoffs of the global community in which
we live and with which we must coexist.

It is time that we as
a society explicitly consider

the values we treasure that we will put
off limits off limits to market forces.

This point was best aided by Arthur oaken.

The economic advisor advisor
to President Johnson

in his nine hundred seventy five book
equality in efficiency the big trade off.

He noted society needs to keep the market
in its place given the chance it

would sweep away all other values and
establish a vending machine society.

I believe that unless we
address these issues.

Capitalism is practiced today runs
the risk of falling under its own weight.

A system that is seen to be unfair
where the people in control or

seem to benefit at the expense
of increasingly large number

numbers of people being left behind
will rapidly lose its legitimacy.

The public will not accept a business so

conveniently called
unintended consequences.

Legislators will be pressured to pass laws
and businesses will find the playing field

for business to be further and
further constrained.

Already we are seeing it happen twice
in the last fifteen years when we

witness major corporate
failures of respond.

Ability.

We got added regulation.

We saw with Sarbanes Oxley following the
fall of Enron Arthur Andersen and M.C.I.

World Com and

we saw it with Dot Frank following
the financial meltdown of a few years ago.

Society simply will not stand by and allow
companies to continue to profit profit for

themselves in the short
term when the costs are so

damaging to society in the long term.

So it seemed clear to me that it is
in the best interests of business and

therefore business leaders to exercise
a more responsible longer term leadership.

And be seen to be doing
something about it.

It's what Alexis de Tocqueville called
self-interest rightly understood.

The wrong thing to do is to ignore
the issue use our corporate lobbying

strength to push off any kind
of undesired legislation and

only fall into line when new laws
on the books force us to do so.

This kind of approach is not
the leadership we need from the business

community.

As Leo strong at the time he was vice
chancellor of the Delaware courts and

today as of three weeks ago he's now chief
justice of the Delaware Supreme Court.

Commented referring referencing
the tragedy of the commons.

We don't have time to really learn
the lessons of the eighteenth century.

So what's interesting to see is
that other notable organizations

are reaching the same conclusion.

The Aspen Institute business and
society program.

The advisory board of which I chair

has been addressing
the problem of short termism.

The Committee for Economic Development
which I'm a trustee has just launched

an initiative on sustainable capitalism
just the fact they have to use

the adjective suggests that
capitalism is not sustainable.

The World Economic Forum in Davos
just a few weeks ago had a panel.

Ethical capitalism.

The Brookings Institution has been
reexamining the topic of corporate purpose

and the Center for
high ambition leadership in Massachusetts

is working with C.E.O.'s and boards in
examining the role responsibilities and

focus of boards of directors.

Further we're seeing increasing examples
of far sighted leadership at U.S.

businesses.

Take a look at the values and
the more than two decade performance

of Henry Schein take a look
at back in Dickinson

recent studies completed by Harvard
Business School and Babson College.

Confirm that companies that take
a more socially responsible Long View

outperform their peers my own experience
and building Veridian is that having such

clear values attracts talent which in
turn can provide a competitive advantage.

So if you believe as I do that capitalism
the system is by definition neutral.

Then you must return to the human actor.

To each of us to you.

Each of us must start with
our own personal values.

If you don't know what you stand for you
have no basis for ethical decision making.

None of us have the luxury of just
living our life without thinking.

And the need to really think to set
priorities to know what to fight for and

know when to walk away so
kick in at different times for each of us.

But at some point it does kick in.

I urge you not to allow
yourself to just go along.

Allow yourself to be outraged.

Allow yourself to be passionate a ball
above all believe in something and

set moral standards for not only your
own behavior but for the community

in which you want to live and the society
which you want to leave to your children.

So I have four children two of
whom are ice hockey players.

Wayne Gretzky is arguably the greatest
hockey player of all times.

He gave interesting advice to young hockey
players which was to play other sports and

do all the things that develop different
facets of coordination and skill.

His point was that it takes more than just
hockey skills to be a great hockey player.

The same can be said about business.

Don't just study and practice business
read a novel and Bracy humanities

have to tell you that in my experience as
a C.E.O. when I have needed an accountant

there been many to choose from
when I needed an engineer.

There's been many to choose from.

But when I'm looking to promote
someone to the executive ranks.

I look for
something else not technical expertise but

judgment critical thinking
emotional intelligence compassion

the ability to connect with
employees values that are a trust

essentially skills of leadership so
embrace the humanities listen

to music do the kinds of non-business
things that put you in the shoes of other

human beings will sharpen your
own thinking about your values.

Will Make You A Better Person.

And ultimately a better leader.

So Bob all my advice you is don't
accept the status quo get involved

create networks of similar
thinking students and

young professionals of
other business schools.

And push back on your professors who teach
you that discounted cash flow analysis

is the right or
only way to perform investment analysis.

We need to challenge these
holy grail concepts and

you are the leaders that matter.

And you've got far more runway than I.

So in closing to
the question of ethical can.

As in who should care.

We all need to care.

More is at stake than capitalism itself.

It's too easy to blame the system.

And I urge you to see it as a problem
that you can do something about.

Any morality in our society
including in our economic system

must come from the standards of
behavior of us human beings.

And here knowing what is right and
wrong is simply not enough.

As a German philosopher good just
stated knowing is not enough.

We must apply willing is not enough.

We must do.

So make it personal.

Because in the end it is.

What kind of society.

Do you want to leave your children.

But send so that question and then unleash
the extraordinary power of new of a new

capitalism that balances society short and
longer term interests.

The measures and accounts for
the real cost of its activities and

which is fundamentally fair and

doesn't in appropriately profit
the few at the expense of the many.

In the end we all must care.

We need to look to ourselves and expect
a more responsible leadership from it.

So from from business practitioners.

If we want to live in an ethical and

moral society those values and
practices must come from us.

Whether we're businessmen politicians
athletes students engineers or

simply as citizens.

And for me.

Values based leadership is the only
form of sustainable leadership.

And I think ethics based capitalism is
the only form of sustainable capitalism.

So thank you

thank you.

So I'm happy to take questions.

Yeah.

If you have any.

Well.

David thanks to kill
the Georgia Tech today.

I guess one question I would have there
were guards guarding managerial counting

or cost accounting and the fact that
business is ten to probably profits but

social cost I think that's
what you're referring to.

Are you sort of suggesting that things
like carbon taxes should become reality.

To force business to recognize the.

The impact they're having on the
environment whether whether carbon taxes

is the answer.

Something has got to be able to
account for the costs that business.

Imposes on the environment.

So that's one that has gotten
traction around the world.

So you know it may not be perfect.

We should have we should at least enter
the engage in the discussion to see what

else there might be but something like
that needs to be part of the equation.

You know I mean I'm not
I'm not an accountant so

I'm not sure I get me some of these may be
out there but I mean depletion of natural

real other natural resources we should
look at how that's accounted for.

You know I I'm not sure what other what
other methodology is but I don't feel

we've had that discussion amongst
people who are other than on the fringe

of carbon taxes I think come has has
made its way into the mainstream but but

for the most part we haven't
had that discussion.

You know.

Yeah yeah.

Thank you for
that Mr Lane stuff for your speech

you talk today I just want to ask you a
question you talk a little bit more about

like the like the work that your company
ended its consulting services like with

the Department of Defense look OK you
did with them so you know it's funny.

I'm a history major and somehow I
end up running technology companies.

But task and Verde as well.

Was involved.

And Virgin was sold and so it's now part
of General Dynamics task is continues as

an independent company but it's doing
to the high end systems engineering for

for the intelligence of
the defense community.

So you know when when when you think
about how we the satellite system for

example that that that
the intelligence community uses

someone had to design that somebody had to
come up with the architecture for that.

And that was done with the government and
then the government turns around and

contracts to you know
the big aerospace primes for

the defense problems to build it.

But it's a really around the design and

architecture of complex systems that
are involved in either the collection or

the processing or
the analytics of data developing.

Secure cloud cloud computing or
cloud architectures things like

data analytics the whole cyber
security field is a big one.

So that's the kind of work and
then then and

then and then just good good solid
engineering of some of these systems.

I have a question what are your
thoughts on four benefit firms that

are using capitalism and
the desire for profit

as a means to create positive societal
impact you talk of the big corporations.

Yes Yes You know the course I mean.

So I like the I like what motivates it.

But here's where I have trouble.

I mean number one I don't
think it's fully tested.

So it's on the books of a lot of
states but I think I think what will

be interesting is to see whether whether
it stands up to hostile takeovers and

all that kind of stuff or
we're the whole body of corporate law.

Weighs in.

But I think I think it's saying.

Something really important that people
want to create these and that they're

being very clear about their purpose being
more than simply making maximum dollars.

Now where I have trouble with
that also is that I don't want to

I don't want to see the B.
corpse go that way.

Which which then tacitly or
effectively allows a sequel.

To not and

I think I think I think we should expect
the same thing of the sea corporation.

So so you know I'm all for
the the idea the movement if you will but

I'm not willing to let the c
corporations off the hook.

You know.

Well hello.

My question builds upon the previous
answer the question you asked and

my question is despite being and

under this fight having an undergraduate
degree in history how if you

don't meet the challenge just leading up
how you took the technological workforce.

Well OK so you know the curious thing
is that employers are all human beings.

They're people and I think I think I
think whether you're an engineer or

an accountant or or
a marketing executive I mean

at some level you're motivated
by the same sorts of things.

So you know to me leadership leadership
is something which first of all has to

come from you and me.

Otherwise it's not authentic and
I think that you can

you can lead you can lead people of all
sorts of you know training and education.

Regardless what you're what
you're what you're what your

own training is I mean there are you
know there are companies that are run by

I think General Dynamics
is run by a lawyer.

You know you've got you've got all sorts
of people who who end up running companies

so I think being a history major and
being in my early career was in finance.

I did investment banking venture
capital work for about four or

five years until I realized I was
on the wrong side of the table.

And I wanted to build companies
not just support them.

But you know it.

We all find our our path and I just don't
think that there's any any one recipe or

any one path for for leadership.

OK.

I just want my questions
a little more I'm back here.

Where are you.
I don't see very bad but

my question is more on
the philosophical side so.

You know that ethical based decision
making for forward projections from

a business standpoint I think societal
standpoint makes the most sense but

it's awfully hard to do that when
governance tends to be reactive

in how they treat the business so you have
some crisis and then they passed some law.

So it almost seems like if you want to
create an ethical business structure and

ethics as itself people based on
societal interpretations of things.

How do you propose that you do this
without some sort of fluid movement

of the governance because you really can't
separate government from capitalism right.

I agree capitalism is neutral but

you know you've seen economists argue that
the government sign on a cattle society

will evolve from Democratic to you know
socialism to some sort of communism back

to some sort of other but
I mean a few a few reactions one is.

You know it it it.

It's a few years before we get the laws.

You know that follow events but you know
what we're dealing with right now is not

a healthy environment which is which is it
we're dealing with an environment where

people don't trust business and
therefore something's going wrong.

It's because business did it and

there's you know we've lost
having the benefit of the doubt.

But I think the ultimate
answer to your question is.

I mean I'm in Washington and
we've got some huge national issues and

you know what the voice of
the business leader is largely absent.

And it's because they've got lawyers
advising them keep your head down.

If you get out there and you start
talking about this stuff you're going to

get shot off you're going to annoy you.

Shareholder and all that kind of stuff.

Well this is this is you
think that's leadership.

So I think I think the answer to
the question has got to be that we need

we need two things One is we need
a bit more courageous leadership

on the part of business executives and I
mean all through the answer is you do it.

One company the time.

And then secondly this is why
I think boards of directors.

I tend to fall boards of directors
almost more than anybody else

in sort of the process that we've been
through the last ten years or so because

because a board of directors has got to
hold the C.E.O. and team accountable.

But but the board of directors at
the minute there's a shareholder that's

putting pressure on the company
the board the boards or caving and

what we need is for the boards to be so
grounded in the company purpose and

strategy and understand the stuff that
they they are in a position to push back

on the shareholders and you know why why
we haven't even gotten into the discussion

of why is it the share or who holds
a stock for twenty years is treated no.

No better than somebody who bought
the stock last Thursday and

intends to sell it in a month and
that's a whole nother conversation but

the point is there comes a point where you
need to push back on the shareholders and

I think I mean this is why talk about
trying to create the create create

the time and space for a C.E.O. to be able
to balance short and long term decisions.

So I think of boards got more involved
in this business leaders started to

be more proactive in helping
address these issues.

You can start to rebuild
trust in business and

then and then you know at the end
of the day they're still going to

be legislation passed or something but
hopefully it's more responsible.

I think we've got to regain we've
got to regain being seen as well and

productive not simply near term self
interested parties at the table.

Well you know.

I was wondering if you could elaborate
a little bit on the role of corporate

lobbying because a lot of
the a lot of the changes that.

People.

Well the many people who as
we said distrust in business.

Many of the changes that they would
like to see sometimes get stopped in

the political conversation
Sure do this kind of corporate

interference and I was just
wondering if you could throw out.

Yeah I mean you know I think lobbying
lobbying has gotten out of control.

I've had elected officials tell me that
our system is one of legalized bribery.

You know this is this is these
are their words not my words.

But if we have too much money in politics.

Where the whole Citizens United case
I think was incredibly irresponsible.

And you know what we've got is
this notion that that business.

You know the big companies you
know pass and have a lobbyist but.

But big companies feel that they don't
they play by their own rules and

that they can get legislation change when
they need to and things like that and

they put incredible amounts
of money into this.

I think it's out of control and
it's not good.

And I.

I really like you see us as if
you're speaking to leaders now but

and I think your prescriptions are really
great ground floor long term steps for

millennia to take as they
enter the working world.

But they're very long term X.
and for entry level workers it's going

to take at best a generation to affect
this change that you're talking about.

So what can these students in this
room do to help enact these changes.

Until they become leaders or
if they never become leaders.

Well I say that's a good question and and

honestly I think it may well take
hopefully not a generation but

a lot of years actually get there or
something a little bit of black holes

tipping point we're nowhere near the
tipping point but but you'd be surprised.

I mean I was surprised at the number of
organizations out there that are beginning

to look at this again not
fringe organizations but

pretty serious mainstream organizations.

You know Harvard Business School
had the initiative why

don't you probably know
more about this effect.

It's going well beyond our budget
which is about business over.

Where there are students
at different schools that

are caring about this the big corporations
as a as a force is another example.

So I think it's like a garden you got
a lot of seeds have been planning and

they're all sort of beginning to
show some show some results here but

you know the I think you've got you won't
get anywhere unless you start to talk

about it and and in Bob's class A We
talked a little about the process of

interviewing I mean I my feeling is
that you all you know you're probably

thinking about who's going to hire me
how I got to get a job Connelly's lousy.

And all that but don't don't underestimate
the fact that companies want good people.

And what you can do through even through
the interviewing process is start

to shape the conversation you want to
ask them about the company values and

where does the company come down
on ISSUES sustainability and

how do you balance long or short term.

These are not the kinds of
questions that most first

interview candidates ask but why not.

You got the attention through this process
of probably more senior people than you

will see in the first two or three
years of your of your working career.

So you know part of part of my
vices be brave get out there.

You may find something that you're nuts
but I can tell you something if you go.

If you were to take a job at a call.

But I like that you're not going to be
that you're not going to we're happy

you're going to leave us
probably sooner than later.

So make sure that food is there as I
think I think is just you know find

find your way to get your voice heard
on whatever issues important to you

because because it is it is about
starting the conversation and

getting more people engaged
in the last question of it.

It's easy when you have the protagonist
in the Verney in case of.

I don't value on value so
can you summarize for

us that situation of the acquisition of.

The radian that the barriers
that you faced in trying to put

the you on values and
the courage that you as C.E.O.

that you had to demonstrate to bring
a resolution you can live with.

So how many of you are familiar
with the bridge in case

of Harvard Business School case.

So I mean the short story I mean this
is you know I built a company we grew

to a little over a billion
dollars We took it public.

And my philosophy is largely we're
here here but it's one of being very

clear about corporate values
a commitment to align corporate values

with the kind of values that that normal
human beings want so that you don't.

When you go to work you don't have to
park your personal values at the door and

to really talk about it and act that way.

And I think over time we were known as
a company that attracted the absolute

best in the field and
people would stay with us.

Even when perhaps they had job
offers that would pay him twenty or

thirty thousand dollars more some worlds.

So it was it was a whole philosophy
based on the multi constituent not

the single shareholder model and
when you're doing national security.

Work.

I guarantee you you don't want
the companies that are doing national

security work to be more concerned
about their profit than their mission.

And so that was what Virgin was and so and

we had a culture that
built up around that.

So when we were reported in play.

The question was do we sell or
do we do we say no.

And at the end of the day there are four
companies that were coming after us price

kept going up and it reached a level
where it was the highest price based

on a multiple of earnings and all that for
any for any company in this in this.

In this space that had ever been
offered and so the question then is how

does the board turn that down and
we ended up selling and I think you know.

In the way and I don't think this
is a cop out here but but but

I really did have to think hard about
about what the right thing to do was but

once you're public it's not your decision.

You know you're you're now there is a
fiduciary which is why I got interested in

what's corporate law really say.

But what the the bigger decision was
almost going public which is could we take

the could we take a company that had been
built up on this around these values and

could we was a room at the table for

the public shareholder which who
had a very different set of values.

That's one where I took a few walks
around the block to really think about

cut I continue to run the company

as a public company in the way that
we built it as a private company.

And I shared in the class of a you know
part of my answer was I was going to go

on the often and to on the road show and
talking to investors and

every every pitch I gave started
with these are our values.

This is our vision.

This is this is how I run the company.

And to lead with that and
make sure they understood that

because if they didn't buy into
that I didn't want to as investors.

So that that's kind of weird but but
the real issue is that I think in.

Well actually one's got to separate
the the ongoing operating entity.

From those points in time where you have
to work where you're making an economic

control decision.

And so you know in in that sense.

I could run the business in a way that
was true to the values and such but

then we were forced to kind of
deal with this moment in time

when it was about who's
going to own this company.

And that was that was very hard but

I think from a fiduciary
Sam point we had no choice.

And that there's a whole lot of discussion
behind that we can get into but

it was hard because the buyer
kind of took it apart and

the Verde in the bill and
we all felt strong about is.

It's just now sort of knows where it is.

Part of General Dynamics but
they reorganize about six times.

So I'm really not sure where it is thanks
very much David thank you so much.