Stanford Graduate School of Business
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Ernest C. Arbuckle Award 
Acceptance Speech by Sir John Browne, Sloan 1981

March 6, 2001

Dean, Ladies and Gentlemen,

Thank you for that tremendous introduction, and thank you for this award which means more to me than any words can express.

I've always loved Stanford, from the moment I first came here in 1980. It's been a place of great significance in my life — a source of great inspiration and pleasure, particularly the pleasure of lasting friendships.

I never dreamt back In 980 that one day I could be standing here, being given this award.

I'm very honored and very grateful.

I want to thank all the many, many people who are responsible — the people who've organized this event tonight, and the people, some are here, some not, who've helped me and whose help has changed my life.

Perhaps I can focus on just four or five of them.

Mike Spence, who in many different ways at different times has taught me what leadership means.

Jim Patell, who gave me the finest grounding in performance and standards.

Mark Wolfson, who taught me the magic of accounting.

The late George Leland Bach, who taught me about the balance needed in business.

And Mike and Gini Savage, who came to my graduation twenty years ago, as surrogate parents, just after my father had died and my mother had returned to England.

Thinking back to that time reminds me very much of my own parents, and in particular my mother, who was an honorary member of the Stanford class.

She died last year, but I can't help thinking how much she would have loved this occasion because she enjoyed being here at Stanford just as much as I did.

Coming back made me reflect on just what I learned here, and what I've learned from the 10 years I've spent in the U.S. during my working life.

They are lessons that I think I can only really explain to you by showing how they apply in practice — how they affect my working life now.

The first, perhaps, is that than in any institution, in any walk of life, the crucial thing is trust. Here in the U.S., in particular, that trust is not based on your background but on a track record of performance and on an ability to speak plainly — to confront difficulty and even conflict rather than hiding behind ambiguities and what is now called "spin."

I think of that lesson as we work out how to deal with challenges that are now inevitable for any major company working on the global stage.

One of the consequences of the process which is loosely called globalization is that companies have now become larger in scale and reach. Of course, the comparison is imperfect but the 20 largest companies in the world, including BP, now have a market capitalization which is greater than the gross national product of all but 20 members of the United Nations.

That means that people think we have power and, of course, in some ways we do — but nowhere near as much as some people think.

If you have power to any degree you are automatically under scrutiny, and different groups want you to use your power in specific ways.

A company in our sector faces many challenges of this sort. Should we explore in environmentally sensitive areas? Should we work in countries where society is fragile and where human rights are not as secure as we like to think they are In the US or Europe?

Such challenges are inevitable and, of course, they are legitimate in an open society. But how should a company respond?

Clearly we can't respond to every such challenge. We'd soon find that someone, somewhere would oppose everything we were doing. If we responded we'd end up doing nothing. We can't allow ourselves to be a battering ram for social change or have our activities subjected to individual litmus tests by people who are very sincere, but who have no authority to make decisions for society as a whole.

Equally we can't Ignore the challenge. That would be arrogant and counter productive.

What we have to do is to demonstrate from a track record and from continuing performance that we can meet our own standards of care in everything we do. When we say that we believe It is possible to work in a sensitive area, and that our presence contributes to progress we are asking people to take our word, and to trust us.

If we fail, we limit our own future.

So trust is the first lesson.

Closely linked to that is the second lesson I learned, first here, but then again and again as I've worked in different places in the U.S.

That second lesson is the Importance of enduring values as the basis of an open and a successful society.

There are a number of those values but the one that struck me as the most important was the sense of meritocracy.

To me that is the spirit of Stanford and indeed of America as a whole.

By that I don't just mean that an elite and fittest succeed, through an endless Hobbesian competition.

What I mean is that a society works when the progress of an individual or institution is determined by their performance — when there is an honesty in the system which leaves no room for corruption.

I do believe that is the secret of the success of the United States and of many institutions in this country, including the great universities.

When you have real standards performance rises. Where you don't have that degree of honesty and genuine meritocracy, standards fall and then performance falls because there is no incentive for the best people to strive to raise the standard.

I think that matters in companies as well as countries and I think 't clear that it is that sort of honest, open meritocracy at all levels of society which is most needed in some of the places around the world where it is hardest to do business.

I'm thinking, for instance, of the countries which used to live under communism, a system which was probably the polar opposite of meritocracy. Some countries have achieved a dramatic change; others still need a restoration of values — because that is the key to releasing talent and encouraging investment.

The third lesson I learned was about the importance of optimism — the importance of believing that tomorrow can be better than today.

There is still in the U.S. the spirit of the frontier — a restless, progressive forward movement which is hard to describe but impossible to miss when you see it in action.

Earlier today I gave a talk on environmental issues. I don't want to repeat that — not least because it went on too long — but that area is an illustration of the importance of this sense of possibility and optimism.

There are real environmental challenges, including climate change, which are unproven but where there is mounting evidence of serious problems.

Denial is the wrong response. But so too is despair, because there are many things we can do.

Technology is moving on, and so thanks to globalization is the spread of knowledge. There is no place better than Stanford to understand the potential of technical progress and the momentum for change which can be created when you link the drive of business with path-breaking scientific research.

That Ink has been at the heart of economic and social progress for the last three hundred years.

The continuing progress of technology and knowledge means that we don't have to accept a trade off between economic growth and a clean environment.

Denial and despair both represent a triumph of pessimism. The reality is that people want both growth and a clean environment — and the challenge for governments and companies is to give them that choice.

And I believe we can. It is possible to reduce emissions, to change the fuel mix, to improve air quality. But it will only happen if we believe it is possible.

So trust founded on enduring values and optimism.

The next is a belief in people.

I learned a huge amount here about people — about behavior and character; about the magic of difference, diversity and unpredictability, which is at the heart of real progress; about the fact that it is people who make the difference between an ordinary institution and something special.

I could quote many instances, including of course this school, which is a prime example of the positive difference which can be made by great people.

But the one I choose is the question mergers.

The cliché which has become unchallenged is that there is no such thing as a merger of equals. Any merger is always a takeover.

Well, that is often the case. But having lived through a series of mergers I think there is another conclusion to be drawn which is that a takeover if it is just a transfer of assets from one owner to another, with the people left behind and laid off, is always going to be suboptimal.

That sort of merger may produce great savings and a very successful business. But it will be suboptimal because the new company will lose the talents of those who go.

I think the great challenge of our recent mergers and takeovers has been to establish not just a singularity of purpose and identity and process — making one new company — but also, and at the same time, to combine the different teams with their diverse qualities and experience to produce something special.

And that is beginning to pay off. In areas such as the Middle East and China — our areas of focus for the future — we couldn't have made the progress we have in the last year without the combination not just of assets but of talents which came from our various mergers.

Four lessons, and of course many more I could have mentioned.

And in the combination of those factors lies the conclusion. Because the most important thing I learned here, which I'm reminded of every day, is that management has to be holistic. Everything matters — technology, governance, inspiration, and performance. That is what George Leland Bach taught me.

And that is why I love Stanford — because this is the crucible in which all those elements come together. For me that is what the word university means.

I have a vague memory that when I first came here I thought I knew it all.

I have a very clear memory that by the time I left I had realized that I knew almost nothing — nothing about Rodin, nothing about war and revolution and peace, nothing about literature. And for me that process of teaching you what you don't know, that is what a great university is all about. 

Ladies and gentlemen, it was a wonderful privilege to be here 20 years ago,, and a great honor to be invited back tonight.

I used to think that awards were given at the end of one's career. That seems to be changing.

In the British Film Awards, which were announced the other day, the prize for Best Actor was given to a young man of 14 who has only made one film — Jamie Bell, the star of Billy Elliott. One of the judges said they had made the award to encourage a potential talent to do even greater things.

That seems to me the right spirit in which to accept this award.

Thank you very much.

Arbuckle Award Introduction

John Browne Delivers von Gugelburg Memorial Lecture on the Environment



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