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our guest today is Raj Gupta former CEO of Rohm and Haas and we're going to talk
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with him today about his book eight dollars and a dream my American Journey which he wrote with said havely joining
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me in this conversation is my friend and colleague magazine who oversees the Wharton Center for leadership and change
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management Raj Mike thank you so much for joining us today on knowledge at Wharton thank you thank you Raj perhaps
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to just start out with a very brief question what inspired you to write this book well you know I have two daughters
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who married late and then we had three grandsons Warner of period of two years three years and what my daughters one
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day out of the blue came to me and said dad he we have lived an interesting life
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all around the world and these kids are so young I don't know what stage he will
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be in by the time they're teenagers would you mind documenting family history so that's how the project
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started is it writing the family history then you know by the time I got to the age of 22 and came to the United States
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it became difficult to separate growing up in u.s. raising a family finding my bearings at
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work so and then it grew into something about living in England living in France
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living in Asia and raising these two daughters living in different cultures did dealing with different people
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so it became a mult amalgam of the professional experience the personal journey and the family life and as they
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got into it you know it became apparent that just my telling the story is not sufficient and that's where we added
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this another dimension to this is to have people who have spoken or have dealt with me at different times in my
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life my mentors lead director sandy moves my predecessors my board colleague in Jack crow
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and above all was really having my two daughters and my wife speak on their own behalf and that is totally unadulterated
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and in fact it was a great insight for me hearing from them as well so it started off as a family history and it
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developed into something that now you see as a book and we thought about you know who will be the audience for this
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book and in fact it wasn't clear but it's like a personal life story was it a
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business book or was it something else so it is pretty much story as it was lived from my childhood growing up in
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India to adult life and of course life post-retirement so Raj in the book you make a very compelling case for the life
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course that you've been on the personal as you've just described it as the
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result of many people that you came to know many people that influence who you are beginning with the course with your
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parents and thinking about then the professional side of the book you became chief executive a Roman House a very
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large specialty specialty chemical company acquired by Dow Chemical later on and as you embarked on a career in
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business and management and ultimately leadership if you could describe a couple people that have been especially
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influential maybe personal maybe professional in shaping the person that you are and then had to be as you ran
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Roman Haas so let me actually start with my parents because to me both my mother
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and father in the unique way had tremendous influence and 6of was born over seven years between 1944 and 1951
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and the two things I take away from growing up in that family it was actually counterculture in India one was
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living an honest life my father was a civil engineer building dams bridges and canals and the graph was pervasive but
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my father now were accepted one rupee or bribe in his life and the second thing was
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counterculture to me was respecting everyone irrespective of what position they occupied in the society whether
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they were higher-ups or the servers or the cleaners or the driver they treated everybody with respect and those two
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things have were stuck with me all my life and the third thing I would say I carry wave from my mother in particular
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was the notion that you work hard and you work honestly consequences are beyond your control
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except what comes as a result you know so so I think those are the things that go back to my family and my parents and
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an adult I would say you know I was very fortunate to work in an organisation Roman has nearly 40 years and it was a
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true meritocracy you know irrespective of where he came from what your background was and how you spoke your
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English you felt like you were part of his family and treated as equal and you had an equal opportunity to contribute
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so the fact I was given an opportunity to go work in England which in fact in itself was a unique experience in late
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70s and early 80s then moving on to France and then coming back to England and then going living in Asia for five
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years the opportunity that company provided me were absolutely unbelievable and I would say you know during that
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career there were three or four people at aromatase who were instrumental in shaping me and believing in me more than
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I believed in myself one was the CFO who recruited me Fred Schaefer the second one were my two predecessors Larry
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volson was CEO before me for 10 years and before him means Greg Lee he was the first non-family CEO for 20 years those
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four individuals really had an incredible impact on me and the one last one was dr. basil Vassiliou who was a
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Greek who was headed up Europe for Roman has a unique individual but those four had an enormous impact on
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me in shaping my what would you sing aloud from one of them that is that I kind of a lasting influence on who you
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are and what your style has been so you know I learned things that I wanted to practice and I also learned things which
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I didn't particularly care to follow so he learned both the good and the bad and
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so you know from Mary vos and I learned something which was maintaining your composure and calm demeanor under stress
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and be a good listener than always presenting yourself as the person in charge and I think to me that was a
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search serve me very well during my career with dr. Vasily who was a kind of fighter street fighter a very smart man
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but always controversial I think you know I certainly learned that you can have brilliant ideas but you also need
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to figure out how to best present them and get consensus around them so Raj just to then take that forward in time
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we're all the product of our parents or friends maybe a college or a high school
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teacher along the way but as you became chief executive in 1999 of Roman ha so it was a job you hadn't done before you
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had not been a chief executive before so while you brought many qualities such as
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staying cool under fire from some of the mentoring you had you also had to master
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a very challenging job so just thinking about the first maybe the first 12 months what did you have to learn that
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you didn't already have in your weapons or skill your skill repertoire set on
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becoming chief executive officer well I can think of a number of things first of
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all you know we transform the company from a midsize specialty chemical company largely organically grown to
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investing six billion dollars of cash to buy three companies and rapid session modern international Rodell and
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Leonel we went from 10,000 employees to 23,000 employees over theta one quarter we went from zero dead to over four and
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a half billion dollars in debt and we had completely new leadership team at the top and so I think it was a task
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bigger than I thought for sure and you know I think the way I approached this was number one to make sure that I got
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to hear from the board each of the board members and met with them individually to understand what they liked about the
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way we worked and what we could improve on to make sure they knew me and they felt I had access to them and they had
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access to me so what you actually went to meet with each of them individually yes I did I went out where they were
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located and went out and spent a couple of hours with each one of them they of course knew me I knew them but it was
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always sitting in the boardroom and occasional dinner as a group so this to me was extremely helpful and certainly
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well as we managed our way through the challenging times for the first couple of years the second thing was right
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after we made these acquisitions everything that could go wrong did go wrong we had 64 ERP systems information
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was late in coming business was declining currencies were going the wrong way and we had a new
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management team in place so very quickly you know it said you know rather than trying to do everything what are the two
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or three most critical things that we need to focus on and that was to get right people in right jobs number two
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was to manage for cash and number three that we are not just in business for another six months or a year we need to
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invest in our future and that was globalization in Asia and investing in technology and innovation and those are
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the four pillars that we really focused on for first two or three years after I became CEO to get the company through
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the crisis in a shape that became very successful after that I was really struck by what you said about
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hitting a crisis as a result of these acquisitions with some of the research that they have seen shows how easy it is
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to destroy value after acquisitions and a lot of mergers do not work out with that reason how did you gather your team
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around a strategy that would ensure that the mergers that you had entered into would build value rather than destroy
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value well wish I could say they were all successful you know and I do agree that more and more data show that large
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complex mergers destroy value rather than create value having said it's separating companies into spin codes
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which are more focused and the vestiges of underperforming businesses always add
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value so acquisition is a tricky game and most of them really fail in my view because of people issues less to do with
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the business logic or strategy because you know smart people make decisions about with businesses fit what is it
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fair value and you do a lot of one work on that before you do that position and once you do that in my view that's when
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the hard work begins and it is the people side of the equation if it's not handled right is when things really fall
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off the cliff and the second thing I would say is timely information if you don't have information to manage a
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complex new company you really are fighting a rearguard battle I mean those are the two things I would say strategic
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logic culture all of that you can define a front but getting these two pieces right in terms of how would you manage
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who are the right people and you have the information that's really sure that
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you are tracking the vision of the strategy reason for which you made those acquisitions and what kind of people
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issues did you face and how did you Givaudan so you know there two or three different parts to this one is you know
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you always find individuals who are very successful in building and growing when
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they're faced with a tough challenge of a shrinking market shrinking margins at
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turnaround situation that's a different skill and so a lot of people you know
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when you have a lot of tailwind behind you and things are going well and their growth oriented mindset and all of a
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sudden they're faced with this it's hard for them to kind of recognize that first
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or they think they can get past that and then most important how to navigate your
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way to cut the cost manage for cash and really much more operational focus so that's that's one thing the second thing
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I would say is just the demeanor of the people and that's goes back to staying
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calm under stress you know when you are under extreme change situations where rapid action is required you see two
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kinds of individuals generally ones who kind of dis panic and they're trying to
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push buttons in many different funds and the other who kind of stake figure out what the right priorities are and just
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focus themselves and the whole organization on making sure that key things happen and not get troubled by or
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disturbed by the noise around them right just to turn to a career phase that followed your service at Roman Haas and
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onine you helped engineer a sale of the company to gal chemical and a new year since then you've served on a number of
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very prominent boards of directors including Vanguard group the manager of a almost 5 trillion dollars in assets
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these days Tyco International that had gone through a wrenching restructuring our Konica spinoff from Alcoa
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hewlett-packard that when you were there went through a breakup into it's now two
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separate parts and thinking about your role on these several different boards maybe the question comes down to this
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what makes for a really good independent non-executive member of a board of directors great question Mike
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you know first of all I've been very fortunate that post-roman has I've had
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the opportunity to serve on boards of leading companies in different industries so I've consider myself very
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fortunate I think one of the most important requirements were aboard well first of all it's not a part-time job
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anymore instead it's a job that requires a lot of time not only meeting during
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the board's sessions but also outside of that project I can intervene on Netta in
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surveys of some of these firms that consult with boards conduct they often say that a director on average will
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spend about 200 hours 200 hours per year in their service as a non-executive director that's always seemed very high
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to me is that a correct figure do you think I would say a normal course of time today in the u.s. corporation it's
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a pretty reasonable figure and you know having been involved in some of these transformational companies that you just
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mentioned Tyco and iconic and Hill it Packard and even Delphi they have taken a lot more time with a
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night out so so it's definitely but I think the most important thing I think
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about the board member is having an independent mindset it is so important and associated with this is what I call
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critical thinking that means there nah and the last thing I would say is having the courage to ask the tough questions
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the first is to have independent mind of course that's based on experience second
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one is critical thinking that means they're always looking at things from outside in in a very objective manner
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and the third one is to have the courage in a group setting even in the face of a
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very strong CEO to ask the tough questions I've got the same question on another aspect of what you do as a
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non-executive director you don't do it often but when you do it yet you have to
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get a right and that is to pick a CEO successor it's often said that's the biggest decision
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that the board makes and having made quite a few of those what in your own experience defines the kind of person
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you would like to be a CEO successor coming in assuming that the company is doing well so not at not a triage moment
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but a normal moment what makes for a great CEO candidate well then I've sort
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of gone through some great selections and that's not some great selections you
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know my preference at least based on my experience is it is by far like there's
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no doubt is the most important job that board does and frankly board only gets to do it hopefully every five to ten
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years and if they get it wrong the consequences are usually negative and if they get it right it's transformational
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in a positive way for the organization so picking the right person is extremely critical if we have a good succession
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process in place having an internal candidate in my belief is always better than an external one and especially an
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internal one who is an insider outsider somebody who knows the organization knows the businesses but always looks at
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their organization from the outside external point of view and that's the objectivity that's very important not to
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be mired in what you know and what you're told from inside the second thing maybe it's a overstated word is learning
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agility and skills you know the business world is changing so fast that's what I
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find fascinating across industry the common threads and themes but folks were always willing to learn and adapt is a
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very important skill the third one I would say is surrounding themselves with people smarter than them and sometimes
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getting out of their way as well you know this human side of the equation to me is perhaps the strongest trait a
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leader should have because in today's world there everybody is a great strategy there's plenty of money
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available the sole differentiator three successful organizations and not so successful if the leader leadership
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at the top and the leadership team broadly if you get that right idea it makes a whole lot of difference see that
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links me to one of the things that I found most member of about your book which is reflections towards the end of
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your book and one of them that really touched my heart was where you talk about the importance of leaders learning
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to balance a healthy ego with humility I wonder if you could give some advice on
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how CEOs can do that and how you manage that balance in your own life I'm glad
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of that the asset question I'm I'm a revealer maybe this is just me or my
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nature I I think humility opens you to a lot of good input from outside because if you
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are approachable and humble people will tell you what they like about you and what they don't like about you and I
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think you know when you get rise to these senior very high positions it's so
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easy to surround yourself and always hear how great you are and that to me is a big danger for most leaders and so I
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think it's and on the other hand you know having self-confidence and a healthy ego is an important part of
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demonstrating about your confidence and self-belief that you have and that's
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very important as well I mean it's not because if you want to be decisive you
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have to trust your instincts you have to have ulti ego on the other hand I think
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if you are also humble and available for a conversation and open feedback it just
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makes you a better person and a better leader one last last so Raj the title of your book I've always found very
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interesting because it really references your your what you had in your pocket a few
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dollars when you arrived in the US and thinking back to that faith at early phase in your life and speaking to
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people let's say of about the same age those maybe in their teens 20s and 30s
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given the wisdom that you've acquired by serving on boards given to wisdom that
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you acquired is by serving as chief executive what advice would you have for people who have a few dollars in their
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pocket they're in their early 20s but they one day would like to have an impact on the world akin to the impact
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you have had I know the even having a belief in yourself is an important asset to have and not limiting yourself most
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of us limit ourselves you know and rather than somebody else telling you one of the great lessons I learned when
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I was here as an immigrant in her early years all my Indian friends who were near my age and similar family
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backgrounds they would tell me occasionally that you know we will never become managers you know we are
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engineers or we assigned this and that thought we will be technicians technical experts but will never become leaders or
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managers and for whatever reason I'm so glad I have the chance to get out from
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United States and live in a different environment and shared that notion and over time I think belief in yourself is
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so important and the other thing I would say is working in an organization that you feel will give you a fair chance you
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know it because organizations have their own culture selecting the right organization you work with and then
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having belief in yourself that it's going to be a fair place for me to make and realize my potential if you get that
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combination I think sky's the limit for most of us and Raj Mike thank you so
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much for joining us today acknowledge it Horton thank you very much thank you thank you my pleasure
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