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our guest today is Raj Gupta former CEO
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of Rohm and Haas and we're going to talk
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with him today about his book eight
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dollars and a dream my American Journey
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which he wrote with said havely joining
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me in this conversation is my friend and
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colleague magazine who oversees the
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Wharton Center for leadership and change
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management Raj Mike thank you so much
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for joining us today on knowledge at
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Wharton thank you thank you Raj perhaps
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to just start out with a very brief
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question what inspired you to write this
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book well you know I have two daughters
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who married late and then we had three
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grandsons Warner of period of two years
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three years and what my daughters one
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day out of the blue came to me and said
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dad he we have lived an interesting life
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all around the world and these kids are
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so young I don't know what stage he will
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be in by the time they're teenagers
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would you mind documenting family
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history so that's how the project
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started is it writing the family history
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then you know by the time I got to the
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age of 22 and came to the United States
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it became difficult to separate growing
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up in u.s.
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raising a family finding my bearings at
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work so and then it grew into something
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about living in England living in France
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living in Asia and raising these two
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daughters living in different cultures
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did dealing with different people
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so it became a mult amalgam of the
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professional experience the personal
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journey and the family life and as they
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got into it you know it became apparent
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that just my telling the story is not
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sufficient and that's where we added
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this another dimension to this is to
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have people who have spoken or have
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dealt with me at different times in my
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life my mentors lead director sandy
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moves my predecessors my board colleague
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in Jack crow
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and above all was really having my two
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daughters and my wife speak on their own
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behalf and that is totally unadulterated
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and in fact it was a great insight for
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me hearing from them as well so it
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started off as a family history and it
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developed into something that now you
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see as a book and we thought about you
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know who will be the audience for this
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book and in fact it wasn't clear but
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it's like a personal life story was it a
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business book or was it something else
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so it is pretty much story as it was
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lived from my childhood growing up in
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India to adult life and of course life
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post-retirement so Raj in the book you
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make a very compelling case for the life
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course that you've been on the personal
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as you've just described it as the
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result of many people that you came to
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know many people that influence who you
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are beginning with the course with your
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parents and thinking about then the
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professional side of the book you became
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chief executive a Roman House a very
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large specialty specialty chemical
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company acquired by Dow Chemical later
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on and as you embarked on a career in
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business and management and ultimately
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leadership if you could describe a
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couple people that have been especially
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influential maybe personal maybe
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professional in shaping the person that
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you are and then had to be as you ran
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Roman Haas so let me actually start with
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my parents because to me both my mother
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and father in the unique way had
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tremendous influence and 6of was born
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over seven years between 1944 and 1951
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and the two things I take away from
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growing up in that family it was
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actually counterculture in India one was
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living an honest life my father was a
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civil engineer building dams bridges and
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canals and the graph was pervasive but
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my father now
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were accepted one rupee or bribe in his
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life and the second thing was
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counterculture to me was respecting
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everyone irrespective of what position
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they occupied in the society whether
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they were higher-ups or the servers or
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the cleaners or the driver they treated
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everybody with respect and those two
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things have were stuck with me all my
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life and the third thing I would say I
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carry wave from my mother in particular
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was the notion that you work hard and
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you work honestly consequences are
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beyond your control
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except what comes as a result you know
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so so I think those are the things that
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go back to my family and my parents and
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an adult I would say you know I was very
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fortunate to work in an organisation
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Roman has nearly 40 years and it was a
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true meritocracy you know irrespective
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of where he came from what your
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background was and how you spoke your
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English you felt like you were part of
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his family and treated as equal and you
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had an equal opportunity to contribute
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so the fact I was given an opportunity
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to go work in England which in fact in
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itself was a unique experience in late
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70s and early 80s then moving on to
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France and then coming back to England
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and then going living in Asia for five
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years the opportunity that company
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provided me were absolutely unbelievable
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and I would say you know during that
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career there were three or four people
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at aromatase who were instrumental in
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shaping me and believing in me more than
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I believed in myself one was the CFO who
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recruited me Fred Schaefer the second
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one were my two predecessors Larry
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volson was CEO before me for 10 years
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and before him means Greg Lee he was the
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first non-family CEO for 20 years those
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four individuals really had an
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incredible impact on me and the one last
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one was dr. basil Vassiliou who was a
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Greek who was headed up Europe for Roman
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has a unique individual
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but those four had an enormous impact on
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me in shaping my what would you sing
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aloud from one of them that is that I
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kind of a lasting influence on who you
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are and what your style has been so you
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know I learned things that I wanted to
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practice and I also learned things which
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I didn't particularly care to follow so
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he learned both the good and the bad and
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so you know from Mary vos and I learned
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something which was maintaining your
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composure and calm demeanor under stress
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and be a good listener than always
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presenting yourself as the person in
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charge and I think to me that was a
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search serve me very well during my
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career with dr. Vasily who was a kind of
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fighter street fighter a very smart man
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but always controversial I think you
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know I certainly learned that you can
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have brilliant ideas but you also need
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to figure out how to best present them
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and get consensus around them so Raj
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just to then take that forward in time
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we're all the product of our parents or
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friends maybe a college or a high school
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teacher along the way but as you became
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chief executive in 1999 of Roman ha so
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it was a job you hadn't done before you
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had not been a chief executive before so
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while you brought many qualities such as
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staying cool under fire from some of the
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mentoring you had you also had to master
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a very challenging job so just thinking
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about the first maybe the first 12
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months what did you have to learn that
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you didn't already have in your weapons
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or skill your skill repertoire set on
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becoming chief executive officer well I
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can think of a number of things first of
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all you know we transform the company
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from a midsize specialty chemical
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company largely organically grown to
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investing six billion dollars of cash to
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buy three companies and rapid
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session modern international Rodell and
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Leonel we went from 10,000 employees to
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23,000 employees over theta one quarter
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we went from zero dead to over four and
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a half billion dollars in debt and we
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had completely new leadership team at
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the top and so I think it was a task
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bigger than I thought for sure and you
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know I think the way I approached this
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was number one to make sure that I got
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to hear from the board each of the board
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members and met with them individually
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to understand what they liked about the
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way we worked and what we could improve
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on to make sure they knew me and they
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felt I had access to them and they had
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access to me so what you actually went
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to meet with each of them individually
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yes I did I went out where they were
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located and went out and spent a couple
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of hours with each one of them they of
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course knew me I knew them but it was
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always sitting in the boardroom and
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occasional dinner as a group so this to
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me was extremely helpful and certainly
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well as we managed our way through the
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challenging times for the first couple
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of years the second thing was right
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after we made these acquisitions
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everything that could go wrong did go
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wrong we had 64 ERP systems information
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was late in coming
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business was declining currencies were
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going the wrong way and we had a new
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management team in place so very quickly
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you know it said you know rather than
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trying to do everything what are the two
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or three most critical things that we
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need to focus on and that was to get
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right people in right jobs number two
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was to manage for cash and number three
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that we are not just in business for
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another six months or a year we need to
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invest in our future and that was
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globalization in Asia and investing in
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technology and innovation and those are
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the four pillars that we really focused
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on for first two or three years after I
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became CEO to get the company through
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the crisis in a shape that
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became very successful after that I was
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really struck by what you said about
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hitting a crisis as a result of these
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acquisitions with some of the research
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that they have seen shows how easy it is
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to destroy value after acquisitions and
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a lot of mergers do not work out with
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that reason how did you gather your team
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around a strategy that would ensure that
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the mergers that you had entered into
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would build value rather than destroy
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value well wish I could say they were
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all successful you know and I do agree
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that more and more data show that large
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complex mergers destroy value rather
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than create value having said it's
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separating companies into spin codes
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which are more focused and the vestiges
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of underperforming businesses always add
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value so acquisition is a tricky game
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and most of them really fail in my view
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because of people issues less to do with
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the business logic or strategy because
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you know smart people make decisions
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about with businesses fit what is it
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fair value and you do a lot of one work
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on that before you do that position and
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once you do that in my view that's when
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the hard work begins and it is the
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people side of the equation if it's not
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handled right is when things really fall
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off the cliff and the second thing I
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would say is timely information if you
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don't have information to manage a
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complex new company you really are
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fighting a rearguard battle I mean those
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are the two things I would say strategic
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logic culture all of that you can define
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a front but getting these two pieces
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right in terms of how would you manage
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who are the right people and you have
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the information that's really sure that
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you are tracking the vision of the
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strategy reason for which you made those
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acquisitions and what kind of people
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issues did you face and how did you
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Givaudan so you know there two or three
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different parts to this one is you know
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you always find individuals who are very
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successful in building and growing when
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they're faced with a tough challenge of
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a shrinking market shrinking margins at
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turnaround situation that's a different
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skill and so a lot of people you know
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when you have a lot of tailwind behind
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you and things are going well and their
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growth oriented mindset and all of a
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sudden they're faced with this it's hard
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for them to kind of recognize that first
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or they think they can get past that and
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then most important how to navigate your
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way to cut the cost manage for cash and
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really much more operational focus so
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that's that's one thing the second thing
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I would say is just the demeanor of the
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people and that's goes back to staying
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calm under stress you know when you are
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under extreme change situations where
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rapid action is required you see two
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kinds of individuals generally ones who
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kind of dis panic and they're trying to
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push buttons in many different funds and
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the other who kind of stake figure out
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what the right priorities are and just
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focus themselves and the whole
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organization on making sure that key
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things happen and not get troubled by or
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disturbed by the noise around them right
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just to turn to a career phase that
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followed your service at Roman Haas and
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onine you helped engineer a sale of the
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company to gal chemical and a new year
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since then you've served on a number of
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very prominent boards of directors
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including Vanguard group the manager of
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a almost 5 trillion dollars in assets
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these days Tyco International that had
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gone through a wrenching restructuring
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our Konica spinoff from Alcoa
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hewlett-packard that when you were there
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went through a breakup into it's now two
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separate parts and thinking about your
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role on these several different boards
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maybe the question comes down to this
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what makes for a really good
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independent non-executive member of a
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board of directors great question Mike
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you know first of all I've been very
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fortunate that post-roman has I've had
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the opportunity to serve on boards of
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leading companies in different
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industries so I've consider myself very
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fortunate I think one of the most
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important requirements were aboard well
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first of all it's not a part-time job
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anymore instead it's a job that requires
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a lot of time not only meeting during
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the board's sessions but also outside of
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that project I can intervene on Netta in
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surveys of some of these firms that
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consult with boards conduct they often
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say that a director on average will
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spend about 200 hours 200 hours per year
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in their service as a non-executive
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director that's always seemed very high
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to me is that a correct figure do you
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think I would say a normal course of
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time today in the u.s. corporation it's
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a pretty reasonable figure and you know
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having been involved in some of these
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transformational companies that you just
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mentioned Tyco and iconic and Hill it
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Packard and even Delphi
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they have taken a lot more time with a
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night out so so it's definitely but I
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think the most important thing I think
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about the board member is having an
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independent mindset it is so important
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and associated with this is what I call
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critical thinking that means there nah
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and the last thing I would say is having
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the courage to ask the tough questions
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the first is to have independent mind of
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course that's based on experience second
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one is critical thinking that means
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they're always looking at things from
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outside in in a very objective manner
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and the third one is to have the courage
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in a group setting even in the face of a
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very strong CEO to ask the tough
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questions I've got the same question on
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another aspect of what you do as a
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non-executive director you don't do it
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often but when you do it yet you have to
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get a right
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and that is to pick a CEO successor it's
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often said that's the biggest decision
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that the board makes and having made
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quite a few of those what in your own
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experience defines the kind of person
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you would like to be a CEO successor
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coming in assuming that the company is
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doing well so not at not a triage moment
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but a normal moment what makes for a
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great CEO candidate well then I've sort
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of gone through some great selections
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and that's not some great selections you
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know my preference at least based on my
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experience is it is by far like there's
00:18:24
no doubt is the most important job that
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board does and frankly board only gets
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to do it hopefully every five to ten
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years and if they get it wrong the
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consequences are usually negative and if
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they get it right it's transformational
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in a positive way for the organization
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so picking the right person is extremely
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critical if we have a good succession
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process in place having an internal
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candidate in my belief is always better
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than an external one and especially an
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internal one who is an insider outsider
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somebody who knows the organization
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knows the businesses but always looks at
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their organization from the outside
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external point of view and that's the
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objectivity that's very important not to
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be mired in what you know and what
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you're told from inside the second thing
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maybe it's a overstated word is learning
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agility and skills you know the business
00:19:24
world is changing so fast that's what I
00:19:25
find fascinating across industry the
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common threads and themes but folks were
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always willing to learn and adapt is a
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very important skill the third one I
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would say is surrounding themselves with
00:19:39
people smarter than them and sometimes
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getting out of their way as well you
00:19:45
know this human side of the equation to
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me is perhaps the strongest trait a
00:19:50
leader should have because in today's
00:19:53
world there everybody is a great
00:19:55
strategy there's plenty of money
00:19:57
available the sole differentiator
00:19:59
three successful organizations and not
00:20:01
so successful if the leader leadership
00:20:04
at the top and the leadership team
00:20:06
broadly if you get that right idea it
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makes a whole lot of difference see that
00:20:12
links me to one of the things that I
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found most member of about your book
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which is reflections towards the end of
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your book and one of them that really
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touched my heart was where you talk
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about the importance of leaders learning
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to balance a healthy ego with humility I
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wonder if you could give some advice on
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how CEOs can do that and how you manage
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that balance in your own life I'm glad
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of that the asset question I'm I'm a
00:20:42
revealer maybe this is just me or my
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nature I
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I think humility opens you to a lot of
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good input from outside because if you
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are approachable and humble people will
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tell you what they like about you and
00:21:00
what they don't like about you and I
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think you know when you get rise to
00:21:04
these senior very high positions it's so
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easy to surround yourself and always
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hear how great you are and that to me is
00:21:13
a big danger for most leaders and so I
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think it's and on the other hand you
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know having self-confidence and a
00:21:22
healthy ego is an important part of
00:21:24
demonstrating about your confidence and
00:21:27
self-belief that you have and that's
00:21:30
very important as well I mean it's not
00:21:31
because if you want to be decisive you
00:21:34
have to trust your instincts you have to
00:21:35
have ulti ego on the other hand I think
00:21:38
if you are also humble and available for
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a conversation and open feedback it just
00:21:46
makes you a better person and a better
00:21:48
leader one last last so Raj the title of
00:21:54
your book I've always found very
00:21:55
interesting because it really references
00:21:57
your your
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what you had in your pocket a few
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dollars when you arrived in the US and
00:22:03
thinking back to that faith at early
00:22:06
phase in your life and speaking to
00:22:08
people let's say of about the same age
00:22:10
those maybe in their teens 20s and 30s
00:22:13
given the wisdom that you've acquired by
00:22:16
serving on boards given to wisdom that
00:22:18
you acquired is by serving as chief
00:22:19
executive what advice would you have for
00:22:22
people who have a few dollars in their
00:22:24
pocket they're in their early 20s but
00:22:26
they one day would like to have an
00:22:28
impact on the world akin to the impact
00:22:30
you have had I know the even having a
00:22:37
belief in yourself is an important asset
00:22:40
to have and not limiting yourself most
00:22:43
of us limit ourselves you know and
00:22:46
rather than somebody else telling you
00:22:48
one of the great lessons I learned when
00:22:50
I was here as an immigrant in her early
00:22:53
years all my Indian friends who were
00:22:56
near my age and similar family
00:23:00
backgrounds they would tell me
00:23:01
occasionally that you know we will never
00:23:04
become managers you know we are
00:23:07
engineers or we assigned this and that
00:23:10
thought we will be technicians technical
00:23:12
experts but will never become leaders or
00:23:15
managers and for whatever reason I'm so
00:23:18
glad I have the chance to get out from
00:23:20
United States and live in a different
00:23:22
environment and shared that notion and
00:23:27
over time I think belief in yourself is
00:23:31
so important and the other thing I would
00:23:34
say is working in an organization that
00:23:37
you feel will give you a fair chance you
00:23:41
know it because organizations have their
00:23:43
own culture selecting the right
00:23:46
organization you work with and then
00:23:49
having belief in yourself that it's
00:23:50
going to be a fair place for me to make
00:23:52
and realize my potential if you get that
00:23:54
combination I think sky's the limit for
00:23:56
most of us and Raj Mike thank you so
00:24:00
much for joining us today acknowledge it
00:24:02
Horton thank you very much thank you
00:24:05
thank you my pleasure
00:24:08
for more insight from knowledge at
00:24:11
Wharton please visit
00:24:13
warden occupancy d you
00:24:19
you
