A second brief video:
A brief talk in April 2017 to business undergrads on what they should know about computing is here.
A third brief video:
So nice to see you all. It's a great honor to be here, and I've spoken to many of you at length in my class. So I thought I might channel someone older and richer than me. Many of you have heard of David Rubinstein: he's the founder of Carlyle Capital, and he made about 100 million last year. I just read today that Carlyle is doing quite poorly this quarter, but I'm sure his compensation will not go down. He recently gave a fascinating interview at Davos, where he said that the secret to success in business is critical thinking, but the formula for critical thinking is not STEM (Science, Technology, Engineering, Mathematics); it's actually H = MC, or Humanities is equal to More Cash. So I wanted to spend some time talking about what he meant by that, or what I think he meant by that.
If you think about it, the whole notion of business arises from the human propensity to truck and barter. And this understanding, this human condition, I think, is the key to understanding business. The better you understand the human condition, the better a businessperson you will be. And there's nothing better than great literature to help you understand the human condition of business.
To see what I mean, suppose you are doing great at work, things are going well, and then you see this idiot, a totally evil, totally stupid person just skate right past you in promotion. How do you deal with that,? How do you cope with that? One person who thought about this extensively was Shakespeare. I don't know how many of you have read King Richard III. How does it start? King Richard is very upset that he's ugly. He says he was cheated by nature, sent into this world before his time, ugly, deformed; he says hot chicks don't like him. He doesn't say "hot chicks," but he says, "I lack love's majesty to strut before a wanton ambling nymph." Then he says, "Since I can't be the fair lover I'll be an awesome villain." And he really understands evil; he understands that all of you and me have a little bit of evil in us. He knows how to manipulate that, and so he's a ferociously effective leader, completely negatively though.
And so that play taught me about vindictiveness, the shape of vindictiveness, the shape of evilness, and I think it really informed me about the nature of my own vindictiveness and the vindictiveness I've encountered in others.
Another of my favorite plays is Merchant of Venice. In the opening scene, Salarino tells Antonio, "Oh my god, what will happen if the ship sinks?" And Antonio, very poignantly of course, says, "Well, you can't think of the risk of one ship. You have to think of how the ship correlates to the rest of the portfolio." And that's when I understood what the Capital Asset Pricing Model meant. Seriously, the play gave a color to CAPM that I had never experienced before.
Later on in the play, there's this huge drama between Portia, Shylock, Antonio, etc., and it's full of racism, and sexism, and anti-Semitism, and love, all horrifically comingled. But the setting is one of shareholder-bondholder conflict of control. And think about it: all this stuff you see today, hedge fund activism, or the Clippers - NBA ownership hassles, it's basically the same activity. So Shakespeare's play, even today, informs me of how to think about business.
Another of my favorite writers is Plato. He wrote luminously. One of my favorite dialogs is Gorgias. Gorgias is a teacher who is very, very, very popular; students love him, and this is 2,500 years ago, by the way. So Socrates, who was Plato's protagonist, says he needs to find out what Gorgias does, and so he goes and watches, and says, this is all crap. "You're just teaching buzzwords and rhetoric." So Gorgeous says, "Well, rhetoric is very important for leadership because you have to convince others." And Socrates says no. "What the leader needs to understand is truth, and truth is bitter, and you have to understand it through lot of self-reflection and bitterness and trial by fire." And so the whole dialogue is a rumination on education and leadership. I was so moved by this dialog that I poured a huge amount of bitterness in my class, as you all can remember. And it was not fun: you were not happy, I was not happy, nobody was happy.
But two weeks ago a former student came, and we met in Madras Masala. He's at McKinsey now, and he said that he once had a very difficult consulting engagement and they didn't have any idea on how to proceed. So he had the same sinking feeling of bitterness that he had had in my class. And that's how memory works: he remembered my class then. At that point, he realized what he had to do. And what he had to do was to give a very bitter solution to the client. And the client absolutely hated it, but six months later the client came and said that that was the right thing to have done. So Plato 2,500 years is relevant today. Plato was telling you that what you learn in Candyland you don't remember in the battle; what you remember in battle is what you learn through like hard trial by fire. So I encourage you all to have as many trial by fire moments as you can, and as few Candyland moments as you can. You only remember Candyland when you are later on eating a cookie.
So this point you may say well, "What the hell, if you look at recruiters, they want us to have analytical skills. They need us to be good at numerical analysis." It's my contention that students have a lot of difficulty in understanding numerical issues because they don't understand the final purpose to which these numbers are put, which is to understand the human condition. And the better you understand the human condition, the easier numbers will become. And I actually experimented this point. A student, maybe 10 days ago, sent me a Wall Street Journal article which looked at how business leaders think. These people, these professors, put all this neuro-imaging technology on these top business leaders. What would happen is that these business leaders would receive all these numbers, but the part of the brain that was active was the emotional part! So the business leaders were able to take the numbers and think about the human condition automatically in their brains. What was amazing is that this semester I taught an elective, and all my students were able to achieve that level of sophistication. I was amazed!
For example, one of the first things that I did was that I gave them all the McKinsey cases, and I said, "Don't use buzzwords; don't use any of that stuff. Write about your deepest, darkest fears about these cases." One student said, "I've never been to a third world country. I can't do the globalization case." And another student said, "I'm so emotionally close to education I that can't put the distance between myself and the tough choices that the case requires." Your colleagues, your friends said this. Drew said, "I don't give a shit about bottled beverages, so I can't even concentrate on the case."
But what is happening along the way is that people are learning how to think. And I can give you plenty of examples, where as they progressed this way, their analyses, their thoughts about the world, and their ease with numerical issues improved tremendously. My final example is that I threw a whole bunch of bank data at them at one point. Deposit rates, interest rates, bank loans, all this stuff. And I said, "Use this data to help the bank manager." Because the students understood the human condition of the bank manager, they knew what kind of statistical analysis to run on the data. Once they got the results, they knew how to attach a narrative to the data. And the final presentation was amazingly harmonious in its comingling of data and numbers, stories, pictures, with each group taking the same data and giving a different theme, a slightly different theme like riffs on a musical score. It was one of the most melodious things I had ever seen for 50 minutes.
So what I did I was to take all these presentations and send it to my doctoral advisor, because the data had come from my doctoral dissertation. And he looked at the presentations, he's the MBA Dean at Stanford University in California, and said, "Venkman," that's what he calls me, "It's remarkable that your students have taken the raw data and reshaped it into compelling narratives." And when I heard that, I got very angry, really angry. You know why? I was a student for four goddamn years and not even once he said that to me. And do you know why? Because I was a high-end analytical tool with no understanding of the human condition of business. And I think that's what Rubinstein meant when he said that the secret to business success is H = MC or humanities is equal to more cash.