 Ladies and gentlemen, good morning, and welcome to another session of the Leaders' Room with Iklim. As many of you know, the Leaders' Room is where we invite prominent, eminent, thought-provoking global leaders and have powerful conversations with them. And many of you have been with us on previous iterations of the Leaders' Room, so welcome once again. Those of you who are with us for the first time, welcome to the Leaders' Room. It is indeed a privilege today to have someone as distinguished as our guest speaker today, Dr. David Schmidtline. Having him in our midst is indeed an honor. He is the Dean of the MIT Sloan School of Management since 2007. Now his list of accomplishments is very, very impressive and very, very long, but I'm going to take a few pieces of that and share with you anyway. I'm sure you've read the detailed bio. Prior to his appointment at MIT Sloan, Dean Schmidtline served at the Faculty of the Wharton School of the University of Pennsylvania from 1980 to 2007. While at Wharton, he was the Ira A. Lipman Professor of Marketing. He also served as interim dean in 2007. Dean Schmidtline received a PhD and MFIL in Business from Columbia University and BA in Mathematics, Magna Cum Laude from Brown University. His research assesses marketing processes and develops methods for improving marketing decisions. He is widely regarded for his work, estimating the impact of the firm's marketing actions, designing market and survey research and creating effective communication strategies. As I said, the list is very impressive and very long, but bear with me for a few more minutes. Dr. Schmidtline has served as a consultant to a whole host of international companies, including American Express, American Home Products, AT&T, Bosch & Lomb, Ford Motor Company, Hewlett Packard, Johnson & Johnson, Pfizer, Revlon, Time Warner, and many others. He has over 40 publications in leading journals in marketing, management, economics, and statistics. He serves on the governing board of the Indian School of Business, the International Advisory Board of Lingnan University College of Sun Yat-sen University, the Board of the School of Management, Fudan University, the Board of Trustees of the Conference Board. He has also served on the World Economic Forum, Global Agenda Council for Marketing and Branding, and he has been a visiting professor in the Faculty of Economics at Tokyo University. Ladies and gentlemen, these are just some of the accomplishments of someone who has distinguished as Dean Schmidtline. So without further ado, please join me in welcoming Dean Schmidtline to the podium. A round of applause. Rajiv, thank you so much. That was very thoughtful, very kind, very comprehensive. You know, it is wonderful to live a long time. You get asked to do a lot of different things and your resume grows. Governor Zeddy, Deputy Governors Eunice and Ibrahim, leaders within the EECLIF Leadership and Governance Center, leaders within the public and private sector in Malaysia who have done so much to create and sustain economic development in this country. Thank you very much for a chance to spend a little bit of time with you today. I'm honored to be able to be with you. I look forward, I hope, to some thoughts or examples or questions that you may have. I would like to take a few minutes to give you some ideas that may stimulate some thinking on your part, that I hope might even lead you to do some things differently going forward. And as I said, that might potentially lead you to share some thoughts or ask some questions in some time a little later on. I've watched the development of the business climate, the economy here in Malaysia, along with others around the world and in the United States with a great deal of interest and a great deal of respect and certainly a great deal of optimism for the time ahead. Others who know much more about macroeconomics than I do also share that optimism. I think it's clear that in a time of great change and certainly great risk and great opportunity, Malaysia's benefited in the public and the private sector from individuals who have had the vision to seize opportunity. But I've also had the discipline, financial discipline, discipline in operational efficiency in order to work through the elements of challenge and to take great advantage of the opportunity. I had the great honor and pleasure to spend a little bit of time with Governor Zeddy in Washington DC about two weeks ago. And we discussed the role of education in economic development, some of the needs and opportunities in this region, which I know are important to all of you and are certainly important to me. Separately, Governor Zeddy has called publicly for a new generation of leaders. People eager to make a real difference within a continually changing environment. Governor Zeddy, we at MIT share that same vision. We are working to develop those leaders and the remarks that I'd like to offer you today relate to leaders of learning organizations in an age of change. This focus on change, on a learning organization and on the role of leadership is natural for my school, MIT's Sloan School of Management. We are a mission-driven institution and our mission is quite simple to develop principled, innovative leaders who improve the world and to develop ideas that improve management practice. It's a dual purpose, ideas matter at MIT if they're useful, if they're practical, if they help the world. And we are also very much about people but not just leaders who make a difference in the world. We're very serious about the elements of principle. We believe, as you might expect from MIT, that innovation is a key, not only to business opportunity but to what society needs from enterprises. And we believe that we need leaders who are committed to improve the world, not only to improve their own personal circumstances. This mission statement was developed at MIT for the Sloan School almost 15 years ago now and it was unique when it was developed. I regret in some ways to tell you that it's not so unique now because many of the other leading schools have adopted in the years since a rather similar mission statement. But I'm here to tell you that we take that mission very seriously and we organize our faculty and our programs around the dedication to fulfill that mission. If I can tell you just a little side story, there is another leading school whose mission statement was also simple. It was develop leaders who make a difference in the world. And for almost a year, the faculty of that institution debated whether to change the mission to develop leaders who make a positive difference in the world. I would say it's true that they felt that the insertion of the word positive was not a small change. At the end of the year, the faculty rejected that proposal. That's not for them. You know, it can sound a little bit like just telling people what they want to hear. Of course, the world wants people who would make a positive difference in the world but it's more than that. When you look at the selection process in large firm governance now, choosing someone who is not only able to drive the next quarters financial results but who is able to give voice to the social purpose of the firm, why the world needs this company is not only increasingly important but it's increasingly valued by the boards making those kinds of decisions. And we need to develop leaders who meet that kind of criterion as well as the quarterly financial results and the driving of innovation sorts of criteria. I go into rooms quite often, highly educated people, and I ask them a little bit of a provocative question which I won't ask you today. And that is, what do you think of finance? Do you think we need more finance or less finance? Now you know what a lot of people tell me. They say, finance is a big problem. We need less of it. Okay. Later in a conversation I ask them, what do you think about the importance of bringing capital to the places that it can be productive and make a positive difference? Do you think we need more of that or less of that? I say, absolutely. This is one of the key problems in the world. We absolutely need more bringing capital to the right places. And then a little later I ask them about risk and the need to manage risk and in particular in society to bring business risk, financial risk to people who understand that risk and are willing to bear that risk for a price. Do you think we need more of that or less of it? Every hand is up, more of it. Those are the two functions that finance is supposed to fulfill. It's not that they don't want the finance function but they don't believe that the institutions fulfill the function. That takes us back to this role of leadership. What kind of leadership is valued by an increasingly cynical and anxious society that seems sometimes to swing in a pendulum between criticizing public sector, criticizing big companies for whatever perceived ills they experience. So, as I said, today I would like to say a few words about leading the learning organization in an age of change. You might well ask what I know about that subject and that would be a fair question. I have had opportunities to serve as a faculty member as received mentioned for about 25, 27 years and have served as dean now for MIT Sloan School. This is my seventh year as dean. One of the wonderful things about that service is the opportunity to be with business leaders, to share with them some of the leading ideas and to see their reactions to them and to see what challenges they feel they're experiencing in their own lives and with their own companies. That's very much similar to what happens here at E-Cliff of course. So, some of what I would like to share with you is a bit of a distillation, a reflection and synthesis of some of their perceptions. Two days ago in Beijing I had the good fortune to be in a private meeting with the president of China and about 20 of the CEOs of the largest companies around the world, Ford, Nissan, Pepsi, Coca-Cola, Blackstone and others. And their sense of what the world needs from them has been changing very dramatically and that's part of the foundation for some of the thoughts I'd like to offer you. As Rajiv nicely mentioned, I also said as a trustee of the conference board which is sometimes described as the leading convener of large company CEOs around the world. So let me take the three pieces that I'd like to touch on in reverse order and say just a little bit about an age of change and offer some suggestions about what that means for companies. Say a few words about what I and many of my colleagues mean by the concept of a learning organization and then talk just a bit about leading that kind of organization. So every other day you open the newspaper and have someone use the phrase this is an age of change, transformation, much of that discussion is about change in the economic environment, the business environment from the outside in, changing technology, change in the public policy environment, change in social norms, change in the way consumers communicate with each other, all changes from the outside in. That's great, companies struggle increasingly to deal with that element of the age of change. But I think that there is a compliment to that sense of change that doesn't get enough attention. And that's the change in an organization from the inside out. At MIT, we talk a lot about a sense of purpose for the Institute broadly that could be described simply as invent the future. MIT is not a university, it's not designed to create deep thoughts that sit on a shelf in a library. If the Institute doesn't generate a positive future it does fail to do its job. And it's the outcomes, not the ideas that it takes a responsibility for. That's why MIT needs a school of management. Because organizations are the only way that ideas change the world. So well-functioning organizations of a certain kind are crucial if the world is going to get what it needs from companies. And it doesn't just need products and services. It needs innovation that changes the balance in society toward a more sustainable, equilibrium, social and economic future. And they don't just mean environmentalism here. But I mean a sense of the provision of goods and services in new ways that can be sustained going forward. What is it within an organization that creates that inside-out change? Honestly, almost everything we teach, almost everything companies do that they call management is antithetical to that. If you look at what management really entails, in marketing, what do you do in management? You do pricing of current products. You get communication programs to be efficient. You do an ever more micro-segmentation of the consumers that you serve. In operations, the push is always for efficiency, for ever tighter supply chains. These aren't the kinds of innovations from the inside-out that the world is looking for. Even in strategy, the push to be clear about core competencies, about five-year strategic plans tends to work against big innovation coming from within continually transforming organizations. So much of what you experience and much of what schools of business teach dampens innovation. It doesn't support it. In spite of what we like to say to the contrary. It's also the case that we manage what we measure. So the elements of management that we just talked about are easy to measure. And they become the things that we pay attention to. They become, even worse, the concerns of the CEO and the other leaders of the firm. This leads in lots of organizations. To a sense that if you can just get those measures of management processes set in the right place, the organization will succeed. Market share, unit costs, inventory levels, contribution margin, yes, perhaps percent of sales from new products, financial ratios come together in a dashboard and you know many boards ask the company for such a dashboard as the key indicator of effective management. One of my colleagues at MIT is a professor by the name of Jay Forrester and among the things he is visibly known for in the last 10 years is that he hates dashboards. Think if you will and this is his language for it about a business that's complex. So maybe we won't think of an automobile dashboard. Maybe we'll think of a large airliner dashboard, a 777. And there are a lot of dials. Is it the case that if we set those dials to the right place, real companies in the real world sail on to the horizon profitably? You know the answer is no. Real CEOs know that the answer is no. And they know that the more that you focus on that characterization of management, the more in fact you're likely to run into some very serious trouble. Again, this is Jay's language. If you think about what a real company is like and fine, you want to imagine that you're in the cockpit of a Boeing 777, it's like sitting there with all those dials, having someone call you up on the radio and say, by the way, the runway turns out to be only half as long as you thought it was. Sorry about that. And so you have the opportunity to redesign and rebuild the plane in the air with the tools you happen to have and the people that you happen to have. And by the way, we're running out of fuel. What kind of leadership, what kind of organizational structure deals with those elements of change? So big change from the outside in and big change that the world expects from companies from the inside out. Not much of what we talk about in management really deals with that. Now let me say a few words about a learning organization. Learning sounds good. Learning often comes from data or information. So you might well think that a learning organization is one that collects a lot of data, does a lot of analysis and makes a lot of management decisions coming out of those data. In fact, you've seen an explosion of management education programs that are focused on identifying big data, coordinating, collecting, synthesizing, analyzing big data and using it in business decisions. You know, I was recently with the CEO of one of the largest beverage and food companies. And he was talking about how they've been learning so much from the presence of big data. He's like, great, what are you doing? He talked about their having about three dozen big data listening centers that they've built around the world, 30 to 45 locations. Each of those centers focused on absorbing all of the information that the center can find from that region's environment. Managing and analyzing literally terabytes of data a day and feeding the analyses of those data into company decisions and in particular, because this was an expensive project, company decisions that come right back to the CEO. So I said, great, what are some of those decisions that are coming out of this company's use of big data? He said, really important stuff. We've found that we've had some product quality problems in certain local markets and this lets us go in and deal with that quality problem right away. Okay, that's good. Also on occasion, we find that there are stock out issues at the retail level and we're able to deal with those issues. Again, almost on a real-time basis and that's great. I said, what else are you doing? He said, well, we've been able to take our markets and segment them even more finely so that we can customize communications even better. Is that a learning organization? In fact, it's an organization that is taking this overwhelming volume of data and becoming absorbed, almost literally, with the tactical elements of efficiency that it allows the organization to do well, that it almost requires the organization to attend to because of the amount of money that was spent to create the big data centers in the first place and it's distracting the CEO from the concerns about big innovation, societal purpose, dragging the CEO into a consideration of efficiency because so much money was spent. I said, are there major bet the company new ideas that are coming out of this? And he said, yeah, probably. I don't think so. So what do we mean by a learning organization? First, it's an organization that commits itself to the continuous learning of its members to not only enable but insist that they drive big change in the organization itself. And second, it's an organization that commits itself to enough softness in the organizational structures that it will be malleable to the energy that's unleashed by developing individuals. And almost no big companies do that. Almost no big companies at least do it well. There are some though. So again, some elements of this understanding, complex systems, developing people with respect to their ability and their drive, an organization that is flat enough where you can challenge the calcified mental models that have arisen, a company that has not necessarily pre-specified core competencies, but a vision that's shared and seen as worthwhile and those individual learnings brought into team settings where they can make a bigger difference. Those companies tend not to be product focused. They tend not even to be technology focused. They tend to be project focused with the expectation that the needs of a project stem from creative, innovative assessment of opportunity and will lead to changes in the way the organization is structured in order to pursue those opportunities. One of my favorite examples I would suggest to you of a company like this, and many of you know this firm, is the CP Group in Thailand. So its leader, Kon Danin Chiravanat, talks about yes, a strategy for this firm, but here's the strategy. As you know, they are a firm that produces food products. More recently, they also do real estate and telecommunications. And a lot of their growth has been in China as with many other firms. They could define themselves around food and agricultural and feedstock technology. And they're very good at those things. They could define themselves around sectors and consumer markets, but they don't. Here's how they define their purpose and their strategy under that purpose to do all and only what China cannot do for itself. So their business in China that relates to food products is not an attempt to enter on the basis of cost. It is an attempt to enter on the basis of quality and a very successful one, but quality in a certain sense. Quality that is assured by the perception of the brand in a setting in which consumers don't trust inspection of food products in China itself. What is the society and the public sectors perception of such a firm? Do you want those imports or do you not want those imports? Well, actually they represent for the leadership of the country, something of a pressure release valve from social issues that have arisen around food quality or perceptions of food quality. This is a very strong example of an insight into doing for China, what at least now, China has not been able to do for itself. The it isn't production of food. The it isn't even necessarily production of high quality food. The it is the assurance of the production of high quality food. So the mantra in this firm with that as the strategy is to see opportunity first. Individuals and their training relates to that function. How do you train people, empower people, educate people, have people learn in the ways that they will see these kinds of opportunities first? That's a learning organization. If I may let me give you another example. This is my only US example. I try not to use too many American examples when I'm not in the United States. There is a company that was created, launched its first product in the United States in 2007. It's a food product company also. And it makes a brand of yogurt. Everybody knows yogurt. The company's name is Chibani. And the company went from a pure startup to dominating that market. So the number one producer by 2012. So in five years, in a market that's about a billion dollars, they went from zero to the number one position. And Hamdi Ulokaya, who's the CEO, incidentally became a billionaire along the way. When he was asked by a friend of mine recently. So you've done this amazing thing with this particular style of yogurt. That's called Greek style yogurt. You've done this amazing thing with this yogurt. Where does your passion for yogurt come from and what was your insight into this product and this opportunity? Now Hamdi is actually a Turk. He's not Greek. He doesn't really have a passion for Greek yogurt. In fact, he said, I don't even like yogurt at all. Here is the explanation for the launch of this firm. He said, what we're about is understanding that the quality of many, even most, of the packaged goods available in the United States is poor. And many Americans who travel abroad understand that the quality really is rather poor and are willing to pay for better. What led us to the yogurt business is two simple facts. First, well, besides the fact that the quality of yogurt was bad. Two, so the first besides that simple fact is that people buy a lot of it. And the second, it's a high margin product. That's all we care about. They're efficient producers. They've built a huge plant. But their expansion has nothing to do with yogurt. Their next products have nothing to do with yogurt. They are all about settings in the United States in which people frequently buy a high margin product that we all know is not, in fact, such a high quality product. And he said, I've got another 10 examples. We intend to take over the shopping cart. What I look at is the shopping cart. What is in the shopping cart that's no good? What that kind of perspective on the organization does is it pushes you and your people to be a learning organization because of the sense of what your purpose is. You need, then, people who identify those next opportunities of that kind. So let me turn now to the question of... Oops, I didn't mean to do that. I'm sorry. Well, that's actually a good slide. I should probably do this there. So let me say a few words about leadership. When you think of great leaders, you tend to think of, I think, leaders of rapid growth, recently successful technology-based companies, Steve Jobs, Marissa Mayer, and so on, effective leaders who drive this kind of change from the inside out, who create learning organizations, are, I think, as I just suggested, they can be found in all kinds of sectors. In Korea, it would be natural to think that the smartest, most energetic young people want to work for Samsung, LG, and so on. That's not true. They want to work for a credit card company that's operated by a car company. Hyundai Card is the place in Korea where young people want to work because of the character of leadership. Ted Chung, who is the leader of this division, the CEO of the division, has turned upside down the sense of what a credit card is, what the symbolic purpose of paying for products is, what kinds of social networks exist and can be created around buying, using, disposing of products and services. And it's that sense of the understanding of partly technology, partly symbolism in consumption, and partly, yes, the functional benefits that people seek from credit that's led his firm to go in a very short time from almost nowhere to the second largest volume credit card in Korea. You know, they have a card, the purple card, that you have to be relatively wealthy to acquire and you can't be old. If you're over 35, they won't give you the card. And there are clubs that they've created where you can only pay using the purple card. And I have to tell you, some of us in the room would not be admitted, although a few of you would probably. The point is not that that particular youth-oriented strategy is a one-size-fits-all panacea, but a sense of a willingness to create an organization that is very dynamic, that reinvents itself, that stimulates its people to find the next insights that will enable that transformation. The willingness to consider what kinds of experiences for those leaders will push them in that direction. Hyundai Card has a strategic partnership with the Museum of Modern Art in New York that goes well beyond sponsoring MoMA activities. They do joint convening to bring together artists and architects and designers and craftspeople with Hyundai employees to stimulate that activity. And they actually run a design center where they develop new products and services within Hyundai Card for other organizations in Korea that are not competing in the credit card business because they want to be the best in understanding technology, function, and symbolic design and how those come together. That they view as the business that they're actually in. You can imagine, some people do imagine that these kinds of individuals as leaders that we've been talking about are like, you know, gold nuggets that lie in a riverbed and you just look through the water, you look through the water, you hope to find those individuals and pluck them out. At MIT, we believe, and we believe that we have the data to support the idea that you can develop many of those elements of leadership, at least if you start with the right individuals. So I'd like to close and then take comments or questions by spending a few minutes around selection of individuals who have the capacity for this kind of leadership and development of this kind of leadership within those people. Some of what I'm going to say stems from talking with other business leaders, stems from my own experience, and stems from our experience at MIT Sloan with respect to selecting and developing leaders. But I'm also mindful that with our friends here from E-Cliff, there is a great deal of expertise in this room with respect to choosing and developing leaders. So it is with some trepidation, but some enthusiasm that I offer you a few thoughts about this. And let me start by talking about selecting people who have the potential to develop as these leaders. So this is not selecting people who are already those gold nuggets. These are people who have the ability to become that. What do you need in order for that to be possible? When we select students for our MBA program, that is very much the question that we ask. I told you at the outset, principled, innovative leaders who improve the world, it would be great to just find those people than I guess we could just put a stamp on their forehead. We do believe, and I'll suggest in a few minutes, that we think we can develop that kind of leader, but we have to select people for which that development will work. It doesn't work for just everyone. About 15 years ago, like many of the other leading schools of management, we selected new students based on two kinds of criteria. One had to do with academic achievement, high test scores, high grades, and so on. And the second had to do with the connection between experience to date and professional aspiration. In other words, what have you been doing and how is this program going to take you to what you want to be as a professional? Academic experience, connection, sorry, academic demonstrated capabilities and the connection between experience and aspiration. And all the other leading schools did something very similar. And we weren't satisfied with our, if there are alums in the room, we love all of our alums, but we weren't really satisfied with the randomness in the student population that those kinds of criteria produced. So you know that MIT is a place that likes data and likes analysis. We also weren't satisfied with the idea that was proposed by some, that we look at individuals within our community who over a three- or five-year period after graduation had made the most additional money, had gotten the most, you know, high-paying or prestigious jobs. There are a lot of factors that lead to that. And our interest was really in the much longer term. Who over a 25, 30, 40-year professional life makes a huge difference in society is a principled, innovative leader who actually improves the world. And so as judgmental as it was, the school went out to a group of its alumni leaders who it judged to have been those kinds of people over a working life. And through a series of depth interviews with those individuals, came to a sense that something was missing that was important in the selection process. And the thing that was missing and the thing that was introduced into that process is sometimes called behavioral skills. But let me tell you very specifically what I mean. Actually, I can't tell you too specifically because then I would tell you the interview questions that we use, and I'm not supposed to do that. But I can tell you the dimensions of behavioral inclination that we decided to pursue. The first dimension is a willingness to take a risk for a purpose greater than yourself. Does someone demonstrate? Does someone easily describe a setting in which that person chose to take a risk for a purpose greater than herself or himself? I mean, people take risks all the time with respect to personal opportunity. You could go to a casino and do that. That's not what we're talking about. That was one element that we saw in the kinds of leaders that we had produced that we wanted to produce more of. The second connected characteristic, having done that, having taken that kind of a risk, is this an individual who's inclined to reflect on that experience after the fact? Reflect on the risk-taking. What did the person learn from doing that? Do they think they changed in some way as a result of the experience? That malleability, adaptability, willingness to engage in a thought process where you will change yourself was again something we saw in the leaders in our community that we didn't always see in a general population. These characteristics, as you can imagine, are not the sort of thing that one easily assesses by checking a box on an application form. Have you ever taken a risk that went beyond yourself? Yes. You know. So when the school committed itself to this kind of selection, it had to also commit itself to training a set of professional interviewers who would, through depth interviews with applicants, assess those kinds of criteria, not just by asking a question like the ones I mentioned, but by probing. And it is, unfortunately, remarkably often the case that someone can't give you three or four sentences. They can give you one sentence, and when you ask what else, tell me something more about that, they've got nothing. Those are not the people we're pursuing. So I think it's perhaps intuitively appealing that those criteria would be valuable. I hope, because I would like you to think of something you weren't thinking of already today, that it isn't necessarily what was obvious to you about the thing or the things that you might focus on in choosing people that have this capacity. Let me be clear about something else. This isn't, these are valuable characteristics I would suggest to you, but they're not characteristics that necessarily make you a great leader. They are, though, characteristics that allow you to benefit from the kinds of experiences that we offer in our program to try to develop those leaders. The kind of foundational element that you need if someone's going to benefit from what we offer. What we do in leadership briefly at MIT Sloan is two kinds of things. First, we focus on leadership skills. Leadership skills within what we, as Rajiv knows, the four capability kind of framework focuses on, first, making sense of the environment, sense-making, understanding the competitive context, understanding the context of opportunity, understanding the systems that one operates in. Governor Zeddy, if I can maybe make a little bit of a leap, an element of integrated thinking, I think. That's one skill, and there are ways to develop that skill. A second skill is relating the capability of individuals to build the social networks, teams that can be effective once a leadership goal is identified in pursuing that goal to successful conclusion. That's relating. A third is vision, or if you like to turn it into a verb, visioning. The ability to see the future, to imagine what is not in evidence now. And again, there are tools to help people develop themselves in that regard. And fourth, inventing a skill-based approach to translating a vision into a specific operational set of actions. So sense-making, relating, visioning, and inventing. Our students, when they come to our program, do a self-assessment, and to some degree an assessment from the outside, as to where they stand with respect to those kinds of leadership skills. We have, of course, modules that help them develop those skills and some exercises and so on. That's all great, but you know, how does that relate to the selection criteria we just talked about? I want to suggest to you it doesn't relate very well. Skills, important, but in the realm of leadership, especially the kind of leadership we've been talking about this morning, traits also matter. And traits are much more controversial with respect to the realm of developing leaders. Narayana Murthy, founder of Infosys in his autobiography, is asked about courage, and he says, first, one word, courage. Courage is not sense-making. Courage is not relating. Courage is not visioning. Courage is not inventing. Courage is not a skill. Courage is a trait, at least as we tend to think of that. And so the kind of leadership development that we wish to pursue has two pieces, skill development and a consideration of traits. Let me be clear, when I talk about traits, courage, resilience, optimism, empathy, cooperativeness, open-mindedness, humility, selflessness, honesty, hardworking. Many organizations try to select on these traits and develop the skills. The reason they try to select on the traits, which are hugely important, I think everyone in the room would agree that those traits are hugely important. The reason they choose to select rather than develop is out of a notion that traits, because of what the word means, are hardwired in, either at birth or during adolescence. Once you're an adult, you're either courageous or you're not. You're either honest or you're not and so on. It's actually why there is a great deal of frustration sometimes in autobiographies of great leaders who talk about traits, because for any of us in the room, we look at that great leader and we say, well, you know courage, yeah, but do I have courage? I either do or I don't. Listening as wonderful it is to Narayana Murthy doesn't make me more courageous. In fact, it doesn't. That's honestly true. So the most important thing that I would like you to take away from the remarks I offer you today is research in psychology in the last 15 years that shows that the idea that traits are established either at birth or in adolescence is false. It's just not true. If you look at the data, which took people about 100 years to get around to doing, at the extent to which traits vary during a person's time in adulthood, they vary substantially and in many cases dramatically. So we're not hardwired as either courageous or not courageous. As either honest or not honest. As either having empathy or not having empathy. What then, if you're a school of management, do you do to train someone to be humble or to train someone to be courageous? And the first thing you notice is that it's not like marketing or finance or accounting or operations where with a certain level of basic knowledge you can kind of force someone to learn operations. You sit them in a room, you tell them, tell them, tell them, tell them, and then they can take a test and they know operations. You can't do that with humility. You can't do that with cooperativeness. What you do need is the willingness, actually the enthusiasm of the individual to change. The person has to want to develop those characteristics quite apart from any requirements that a school or a company places on those individuals. Experiences can allow someone to develop those characteristics and some of those experiences are uncomfortable. We offer, for instance, a global entrepreneurship lab course in which our students go to unfamiliar settings in developing economies with low infrastructure settings, working with tiny organizations on existential threats to their existence in very bad hotel rooms by design. And what people come out of those experiences with is sure a better understanding of marketing and finance and so on, market entry, technology management, but more importantly they come out of those experiences with a sense of themselves, with greater resilience, with the ability to diagnose unstructured complex settings, the ability to go in and listen well to organizations and individuals and to empathize with their challenges. Those experiences can change someone. The other thing that we've seen, this is a point I said earlier but I want to emphasize it here, the other thing that we've seen is that that kind of experience has to be optional, has to be elective. One of our peers mandated two years ago that kind of experience for all of its students and it didn't work. Jack, those students said, another box to check. The fact that it was required undermined its ability to work. So to come back to our selection story, why do we choose on the behavioral characteristics that we do? We want to choose people who will choose those experiences. They have to make it voluntary. If we don't pick people who absorb risk, we're willing to take risk and who are willing to reflect on those experiences, we won't develop the kinds of leaders that we're trying to develop. Finally, and by the way, this is not just us. Dominic Barton, a friend of McKinsey, he's the managing director, managing partner, talks about McKinsey working with leading companies who are pursuing the development of the next CEO. Designing exactly these kinds of experiences for people who would like to take on those kinds of responsibilities. The last thing I would just say, our time is too quickly coming to close, maybe not for you but for me, is that I think that some of these ideas have a relevance in the context of leadership in Asia, but I defer to all of you in that regard. We certainly have students from Asia, we have students who go back to Asia, we've seen success of our alumni in the region, but among the very exciting future developments that we hope to be part of is a better sense of the what and how of leadership in Asia and also I think equally importantly, why, what is the kind of role that a leader in organizational settings is expected to fulfill in Asia. Our good friend Victor Fung leads an institute in Hong Kong, the Fung Global Institute, that is very much interested in trying to codify some understandings around elements of, if you will, this is perhaps not the best way to put it, but leadership with Asian characteristics and as some of you know, Bank Nagara alumnus Andrew Shen is involved in that effort as well. I hope to have many opportunities to come back and see many of you in Malaysia. We hope to continue to have opportunities to learn about leadership in this region and I thank you very much for your kind attention this morning. Thank you.