(Archived Content)
I am honored to have been invited to speak with you today. I can remember when I graduated from Harvard College, a long time ago, and then spent three days at Harvard Law School before dropping out. At that time, I never imagined the world in which I would be living in the decades to follow, partly because of my limited experience and partly because of the immense and unpredictable changes that lay ahead.
Most of you have experienced far more of the world as you graduate from the Harvard Business School than I had when graduating from Harvard College. But I would still give long odds that because we live in an era of unprecedented dynamic change, your experience in the decades ahead will turn out to involve much that you have little or no sense of today.
No one has ever charted just how wrong graduation speakers are about their predictions of the future, or how little heed graduates pay to the advice offered in graduation addresses. Having said that, today I would like to offer a few observations based on my experiences for your consideration as people who have a broader set of opportunities and options than most Americans about how you conduct your lives.
I will divide this discussion into two segments: Your professional lives first, and then your contribution as citizens.
Let me quickly add that speaking to you from my own experience is a bit awkward for me, partly because I don't like to talk about myself and partly because I am acutely conscious of the role of chance in the outcomes of life. I remember talking once long ago with a legendary Goldman, Sachs senior partner about an investment position that turned out well for reasons we had not expected. He said he would rather be lucky than be smart. He came from the old school of trading room management, where the principle technique was yelling, and his admonitions often implied that I had better be lucky because that was my only choice. In any case, I said I disagree, and that you need to be both. As I look at my own life, and the lives of many others I've known, I believe that intensity in your professional life is a commonality amongst those for whom worldly matters have turned out well. But anyone who has done well will, if they're honest with themselves, have little difficulty identifying various points in life where chance played a critical role -- and that should lend both to appropriate humility about their own success and to their advice to others about the conduct of life. That said, I will nevertheless offer my own observations.
I still well remember after starting work at a law firm in New York -- I eventually did graduate from Yale Law School -- a very successful New York lawyer advised me that intensity in your work is a requisite for success. But he went on to say that you shouldn't wear blinders and should be willing to take chances. It didn't take terribly long before I realized that practicing law was not what I wanted to do. At the same time, I had kept my eyes on the world around me, and had become somewhat intrigued by something I knew nothing about: the then-vastly less visible world of investment banking. So, after a number of investment banking firms had turned me down -- in those days, the idea of a lawyer working as an investment banker was viewed as somewhat odd-- I found a job at Goldman, Sachs in an area I'd never heard of: risk arbitrage.
So, I figured I'd try and if this didn't work, I would try something else. That was the beginning of 26 years at Goldman Sachs. And, while 26 years at one place might seem rather narrow, I found that exactly the same principles applied inside a firm: do your best with the utmost focus, but also reach out for opportunities to get involved in other areas and to expand your role. In later years that was the advice I always gave to people who came to work at Goldman, Sachs -- do your job to the fullest, but also seek out opportunity to broaden your experience and knowledge. And I still think that approach will serve you well.
As I spent those 26 years at Goldman Sachs, I also learned a valuable lesson about the importance of people. The management literature today emphasizes that people matter; that businesses are built on the ideas and energy of employees; that managers can only be as successful as the people who work with them. Thus, to say that people matter will not sound revelatory to you. But people matter even more than you think.
After a few years at the firm, I had developed extensive experience in the highly technical field of risk arbitrage, and I was able to use that to get involved in other areas of my firm's business. Then the partner I reported to retired, and I remember one of the firm's senior partners coming to me and saying that so far, I had only needed to be good at what I did, but now I had a whole new and different challenge of learning to help lead the broad range of people who were going to look to me for leadership. I quickly discovered that relating to those who worked around me and trying to help a large number of people work effectively with each other was an enormous, complex and time consuming undertaking, but also one that was extraordinarily interesting and rewarding. In later years, as I participated in decisions about peoples' careers, I have so often been struck by how many individuals who were very good at what they did seemed relatively tone deaf to the people around them, which limited both the careers of the individuals involved and the contributions they could make to their organizations.
You learn a lot more by listening than by talking, and you accomplish a lot more with people by stressing their strengths as well as helping them focus on their shortcomings. Also, the more opportunity and credit you give to those working with you -- and the more authority and recognition they have, the more they are likely to accomplish and the better that is for you. And finally, listening respectfully to the ideas of others improves your own understanding and leads to better decisions. I don't know what the textbooks on management say, but these thoughts that I picked up from others as I struggled to learn how to manage have always seemed to me a pretty good primer.
I can remember when I first talked to then-President Elect Clinton about the possibility of being part of his administration. He said that he was looking for people who not only had experience and skill but who also worked well with others so that the total would be greater than the sum of the parts rather than less than the sum of the parts. He wanted to avoid what he felt too often occurred in administrations, where vast egos focused on shoving each other aside rather than on working together to solve problems. As I said a moment ago, having been involved in a great number of decisions about promoting or not promoting people, I'm absolutely convinced that you can distinguish yourself more and do better for yourself -- as well for others by doing your job well, and working effectively with others -- both peers and those junior to you -- than by trying to elbow others aside.
Another thought that comes to mind is one that I learned intellectually in college and law school, but then internalized as a matter of financial life or death on Wall Street: Decisions are about probabilities; not absolutes. One of the brightest people I knew in my time on the Street was an arbitrager who had great confidence in his views. Once, on what was, in fact, an extremely attractive investment, he ignored this fundamental lesson, and committed on a vast scale to a position that he treated as an absolute rather than a high probability. Matters took an unexpected turn, and he ended up bankrupt. That is a lesson for everything that I've ever seen, whether it be an investment decision or a judgment about a major national policy issue. If you can internalize a probabilistic mindset and live by that discipline, you'll be well prepared for the uncertainties and complexities of life and your undertakings. Alternatively, if you think in terms of absolutes and see things in black and white, sooner or later you'll fall over a cliff, most likely sooner.
Let me turn now and make some observations about another realm: your role as public citizens.
And here, two things come together to suggest a course of action: number one, your country needs you, and number two, you can do well by doing good.
You are leaving school to enter the workforce at a time when our country is doing very well. But we also face enormous challenges that must be met if we are going to continue to be successful 10 or 15 years from now. I can remember an interview I had with a well respected European magazine toward the beginning of this Administration. After the interview, the interviewer said that our economy was very strong right now but that in 15 or 20 years we would be a second tier economy. I said that I didn't agree, but asked why he thought that. And he said, "Two things. Your public schools and your inner cities."
In many ways, he was right.
These are challenges that we must meet now if we are going to be productive and competitive in the global economy in the years and decades ahead. Many of you may feel relatively immune from these matters, but I believe that our economy will fall far short of its full potential for all of us -- no matter where we live or what our incomes may be -- unless these challenges are met. Just think of the difference it would make in social costs and in productivity if our public school system was strong and if the residents of our inner cities and distressed rural areas were successfully equipped to enter the economic mainstream. As graduates of the Harvard Business School, you are among the most privileged members of our society, and whatever your vocation may be, our country needs the privileged to spend time on the central issues of our society. Each of you can contribute to facing these issues -- for example, with respect to the specific challenges I just mentioned, by personal involvement as a mentor for inner city kids or through working to enlist your employer in the many practical programs to help support public schools in individual communities. And I would argue that by pitching in, you not only help your country, but you can directly help yourself.
A relatively senior figure on Wall Street said to me years ago that many of the most important business relationships he had were with the people he met through his other activities. He had found that his business and non-business lives fed each other to the benefit of both. And you will find that beyond the business value outside involvement can provide, your life will gain entirely new dimensions that are interesting and enlarging, and thus are their own reward. In my case, for example, in the early 1970s I participated in meetings in the 28th Precinct Community Council in Central Harlem. From the police officer who ran these meetings, I gained a different perspective on the lives of our urban poor, a perspective that has stayed with me ever since.
I strongly believe that in some fair measure our country's future will depend on enlisting its most gifted and best trained in the great issues of the nation. Hopefully, the country will continue to be fortunate enough to have some such people in public service, but in most cases it means people who are energetically involved in the private sector also spending some time on the public challenges to our well-being.
Moreover, everything I've said applies at least equally to those of you from other countries, especially those from developing nations, in going back to your home countries. Over the past 10 or 20 years, I have worked extensively with developing countries and with countries transitioning from Communism, and I can tell you from my own experience how great the needs and the opportunities for people with the training and skills you now have.
With that in mind, let me turn for a moment to the interdependent global economy. In that global economy, the economic well-being of each nation is enormously affected by the economic well-being of the rest of the world, and that will be even more true in the years and decades ahead. Moreover, American engagement in the issues of the global economy, such as trade liberalization, promoting growth and reform in developing nations, and dealing with the issues of financial instability, such as the Mexican crisis in 1995, the current Asian crisis, and reform of the architecture of the global financial markets, is absolutely critical to fostering prosperity in the United States and around the globe.
Yet, based on the experience of my five and a half years in this Administration, I have become deeply concerned -- and I can tell you the President very much shares this concern -- that public support for forward looking international economic policy may be waning at a time when our country's economic, national security and geopolitical interests require just the opposite. For example, as I speak here this afternoon, the United States lacks fast track trading authority and our trading partners are moving forward on new trading agreements without us; we have failed to pay our arrears to the United Nations, and if we fail to pay by the end of the year, we will lose our vote in the General Assembly; and we have failed to approve funding for the International Monetary Fund at a time when a sufficiently funded IMF to deal with potential crises is critical to our economic and national security interests and the rest of the world is waiting to fund once we do.
I often speak to business groups, and say to them that the business community is uniquely situated to address this critical problem. Business has lived this new world of the global economy, understands its opportunities and benefits, and has the resources to convey that understanding to the American people. You will have the opportunity to be part of businesses around the country, and even in the early stages of your career, you can help urge your companies to play the role that I believe only business can play in building the absolutely requisite public support for a robust international role for our country.
At a recent meeting of finance ministers from the Pacific region, one Minister asked me how the world was ever going to deal with the immense challenges of the new global economy and new global financial markets if the world's major economy was going to shrink from its appropriate role. You have an extraordinary opportunity to help us get back on the right track.
Let me conclude with a comment about government and public service. It has become fashionable among some to denigrate public service, and to denigrate government. I believe that the well-being of our country requires just the opposite. Whatever your views may be on the appropriate role of government -- and that is a reasonable debate that has gone on for as long as we have been a republic -- there is no question that there are functions central to our well-being that only government can perform, and that our country benefits mightily from attracting and retaining outstanding people in public service. Thus, I believe that our country's well being requires that each of us, especially those in positions of influence as many of you will be, respect those in public service, manifest that respect in every way possible, and reject the denigration of public service.
Moreover, speaking for myself, the opportunity to apply my 26 years of Wall Street involvement in economic issues, markets and the global economy to the public policy issues of our nation has been an extraordinary experience. I had always wanted to spend some time in government if I could do so in a meaningful way, partly because I wanted to contribute more broadly and partly because I wanted to see how the world worked from the perspective of government. I would urge all of you to give thought to that possibility yourself at some point in your career, and to involve yourself in our nation's political life in one way or another.
Graduation speeches tend not to be long remembered. But the feelings of pride that families have in their graduating students, the feelings of gratitude that students have for the help of their parents and families, and the feelings of respect that departing students have for those who taught them these feelings should never go away, and, in fact, should intensify over time.
I hope you have an opportunity to thank your families and teachers for what they have done to lead to this special day. And, then, that you can go on to fully realize -- for yourself and your country -- the great opportunities that this day and all that led up to it give you.