Thank you Dean Levin. Ladies and gentlemen, the year was 1969, and I was contemplating my future. My father’s advice was clear: “Go and get a real job.”
He meant a job in industry. British Petroleum had sponsored me as an undergraduate, and paid me to work there during the vacations. But I was much more interested in pursuing academic research. And in any case, industry was frowned upon inside the ancient walls of the University of Cambridge.
So I told my father: “I do have a real job. It’s called research.”
And with apologies to members of the faculty here today, my father replied: “No, I mean a real job.”
So I relented, agreeing to join BP on the condition that they send me to the United States, and on the assumption that I would only be there for a year or two before returning to Cambridge.
As it turned out, I found myself two hundred miles north of the Arctic Circle, working in Point Barrow, Alaska. This was not quite what I had in mind. But this didn’t stop me from staying at BP for more than a year – indeed, for a career there that would span more than four decades.
Fast forward to California in 1997, when I joined the board of directors of Intel. The company’s CEO at the time was the late, great Andy Grove, who was one of my greatest mentors and inspirations. Like me, he had Jewish relatives who had fled the horrors of mid-century Europe. And like me, before he became a businessman, he trained as an engineer.
Andy once told me that as an immigrant who spoke terrible English, he chose to study engineering because he thought it was the only subject in which his examiners would assess him fairly.
In other words, Andy believed engineering to be a rational subject. Will the bridge stay up, or fall down? Does the computer program work, or does it crash? With no room for value judgements, there would be no room for prejudice or bias.
But even with the best of intentions, we build our human biases and flaws into the fabric of our creations. We forget that the technologies we introduce into the world will have unpredictable effects on the lives of real people.
For example: opioid painkillers can relieve suffering, but can also cause addiction. Hydrocarbons lift people out of poverty, but their use is dangerously altering the Earth’s climate. And new levels of connectivity have made it possible to communicate with anyone, anywhere, at any time – but may have destroyed privacy.
These innovations are all the products of engineering, but their impact on society is determined by the way in which they are used.
So Andy Grove was only half-right. Engineers cannot be assessed through rationality alone, because everything they do involves a value judgement, and a choice about whether and how to innovate.
And in any case, I soon learned that no engineered solution is complete unless it results in something practical that humanity and the market want.
This naturally led me into business, and here, to Stanford.
I arrived here when almost every businessperson was obsessed with shareholder value theory. This told us that the duty of business leaders was to make as much money as possible for their shareholders, without going to jail. It reduced business to a mere process, an object of rationality. And it contributed to the damaging impression that companies are driven by self-interest, and indifferent to the needs of those around them.
Stanford helped me understand why that theory was incomplete. Guided by an incomparable faculty, I saw that business could not be conducted in isolation from society, public policy and human feelings. Business turned out to be a wonderful weave of numbers and people.
Like engineering, it was about much more than mere rationality.
So where does this leave you as business leaders?
It certainly makes your job much more difficult. You cannot simply muddle through by managing the status quo. Business is about much more – much more – than administering the advent of the inevitable.
It is about exercising judgement. And it is about putting people and society at the heart of every decision you make.
These were my ambitions as a CEO. There were moments when I succeeded, and moments when I failed. I want to share two of those moments with you this afternoon.
The first took place here at Stanford.
On a scorching hot May morning in 1997, I delivered a speech in the Frost amphitheatre, in which I became the first Big Oil CEO to acknowledge the link between anthropogenic carbon emissions and climate change.
I announced our decision to go beyond analysis to seek solutions and take action. We committed to invest in the development of alternative fuels and energies. And we pledged to advocate and advance big global solutions, such as a carbon tax.
That speech opened BP up to attack from all directions. Environmental lobby groups thought we had not gone far enough, while the American Petroleum Institute said that BP had ‘left the church’. But within a decade, the oil and gas industry had stopped denying climate change, and BP had led the way.
This strategic shift was the product of almost a decade of listening, debate and persuasion. We spoke to President Clinton; Governor George W. Bush; NGOs such as the Pew Center; and the world’s leading scientists and experts. One of my closest confidants was Mike Spence, then Dean of this school, who provided a valuable sounding board.
And we spoke to BP’s employees, who of course were also consumers, voters, and parents, concerned about their families’ future.
By taking a lead on climate change, we changed the way people thought about BP. We attracted a whole new group of leaders who would never have considered a career in the energy industry. And we created the foundation of a successful renewable and alternative energy business.
We focussed on developing relevant solutions to new challenges. We put people, society and the environment, as well as shareholder value, at the heart of our business.
Two decades later, I regret that there is still much to do. The probability of an existential threat to humanity is rising. Renewable energy is supplying a growing share of global energy demand, but it will not replace fossil fuels, certainly not in my lifetime, and possibly not in yours. This means that we must use technologies such as carbon capture and storage to take the carbon out of hydrocarbons.
We know how to do this. We have all the technologies we need. It is now a question of getting the right policies, the right behaviours and the right incentives, so that solutions can be deployed globally at scale, and at an ever-decreasing cost.
Above all, it is a question of harnessing the power of business to deliver what is good for society.
So BP’s experience with climate change was, I believe, an example of successfully changing direction. We ‘leaned in’ to a great upheaval in science, engineering and behaviour, which is still taking place.
But in my personal life, in one very important area, I failed to keep up with the pace of change.
My mother, an Auschwitz survivor, gave me two pieces of advice. The first was that when the going gets tough, the majority always hurts the minority – so it’s better not to be a member of a minority.
The second was not to tell anyone your secrets, because they will surely use them against you.
This advice was born from her own painful experience. Applied to my own life, it meant that I chose to keep my sexuality a secret.
It was easy at first. I had two lives, a private life and a work life. It was exciting, a bit like being James Bond, with a legend and a reality.
In some respects, this painful separation taught me something. I was good at reading people, and sensing danger.
But as I rose up the ranks in BP, I became more recognisable, and this behaviour became riskier. I was enmeshed in conservative corporate and political cultures, and was worried that any disclosure would damage business relationships. So my work became my life, and BP became my extended family.
When my mother died, I lost my closest companion, and became very lonely. I foolishly thought that rather than openly seeking a partner, it would be safer to find one secretly online. That was my first mistake, and it was followed by several further serious errors of judgement. I was outed by a British newspaper, and decided to resign from BP.
As CEO, one of my primary responsibilities was to lead through inclusion. That means creating teams in which everybody has a stake in the future. It also means instilling self-belief in people, and demonstrating to them that they can be included while being themselves. The ways in which our workforce changed while I was CEO suggested that we were doing something right.
But the practice of inclusion is so much easier when you have role models who demonstrate that it is possible to succeed while being yourself. By remaining in the closet, I failed to be a role model. When it came to personal and authentic leadership, the world around me had changed, and I had not recognised that change.
These big experiences demonstrate two things.
The first is that we do not have to be passive when faced with a world which makes us feel lost and powerless. There are things we can change, even if it takes time.
On climate change, public debate has shifted dramatically in the past twenty years. It has shifted because people said what they believed, and worked hard to convince others. I am proud of having been part of that process, and I only wish it had moved more quickly.
Attitudes to being gay have changed too, because people stood up, and had pride in themselves and in who they are. I regret not being one of those people sooner.
My second conclusion is that being different is a strength. Business, and indeed any other walk of life, is not populated by robots programmed to think and act in a standardised way. A successful business is a company – a group of different people with different experiences and skills, led in an inclusive way, who come together for a common purpose.
Difference is what the world expects of every Stanford GSB graduate. It expects you to challenge norms rather than to obey them. It expects you to be yourselves, and to shape and reshape the world, rather than to conform to its expectations. It expects you to think deeply, act boldly, and dream widely, for these are the qualities of great leaders and great organizations.
Ladies and gentlemen, on behalf of all Stanford alumni, I congratulate you, and wish you a wonderful day of celebration.