29/08/2014 Talking Business with Linda Yueh

RB back at nine with the latest news.

Now on BBC News, Talking Business with Linda Yueh.

Welcome to Talking Business with me, Linda Yueh.

Whether they call it a CEO, or another title, these bosses are the

ones who try to keep their firms and themselves ahead of the competition.

So, what does it take to be the boss?

Talking to us today about being the boss are three business leaders.

Dominic Barton, managing director at consultancy McKinsey and Co.

In three decades, he has risen to the top of the world's most

Martin Gilbert, Chief Executive at Aberdeen Asset Management,

one of the fastest`growing firms in the world who manages more than

And John Rice, chairman and CEO of General Electric,

he is charged with growing the global business of one of

Welcome to all of you. And Dominic, I'm going to start with you.

The big question, what does it take to make it all the way to the top

I am not sure, which is not the answer you may want to hear.

But I think people have to trust you, people have to believe that

you take risk, that you are a builder,

That you want to make a difference and you have some sense of purpose.

In our firm, you are elected, not appointed, so it is a nonpolitical

No`one knows why... But that is my sense of doing it.

You want to take risks to build something.

OK, Martin, you founded your own firm.

So that puts you at the very top. But what keeps you there?

People now ask me if I'm going to retire and I made this terrible

blunder by saying that I would retire as soon as Alex Ferguson

And he retired a week later! The Manchester United manager.

Now I have found a CEO in the US who is 92, he is my role model.

It is such good fun. Why would you retire?

It is your hobby when you have grown it to the size we have.

John, for an organisation like GE, one of the top ten biggest companies

in the world comic what does it take to make it

To the point that Dominic made, it is not always clear, it is

You work hard, you do what you say you were going to do.

And there is a certain amount of luck.

You have to be at the right spot at the right time.

But I think the point about being the boss is to recognise

It is about influence, it is not about telling people what to do.

It is about helping teams figure out better ways to do things

and then supporting their efforts to do that.

It is never really telling people what to do.

And I think that is something which from

I think the bit about luck is very important.

I was lucky enough to be lucky enough to be in a law firm when we

Aberdeen asset management and was one of the three founders.

The other thing about luck, I would say that we did some work

in an organisation where cohorts of people ` we saw some move faster

And the strange thing is that the more successful cohorts have more

It is a strange thing to say that, but that is the case.

It is better to try and fail the never to try at all.

If you don't try, the business becomes moribund

If you take more bets, you will get more hits.

That takes leadership, that you have an organisation where

So, John, what kind of leadership traits would you identify

The teams in GE that we support want to know that we are in their corner.

review, you are not just there to turn pages

and be briefed, you are there to help determine where they need help

And as soon as they figure that out, it becomes

much easier to lead because they come and they are open about

And you can work together to figure that out because in the end,

It is never about one or two people or a handful of people at the top

of the organisation making all the decisions.

In this world, it is going completely the other

The people at the top make a few key strategic

decisions but they rely on people around the world to make decisions

I believe that this idea that there was one person on a white hat

on a white horse saying go this way is not the case.

In my organisation if I said I was the boss,

In my view, there are at least 1,400 leaders.

I think the thing that I think is critical

One of my favourite articles I've ever read, just the title,

it was by Alison Richards, Vice`Chancellor of Cambridge

University and it is called high ambition.

And I think it is getting an organisation to aspire.

And there are times when I think when you have to absorb

things, there may be other people driving it and other

But when things don't go so well, you had better be prepared to absorb

Speaking of running things, I can't tell but notice I am

When do you think that is going to change?

When will we see some women in charge, Martin?

I think on the boards now we are seeing many more.

But the real issue is the lack of women coming through in management.

In accountancy, there is a great example where more than half

of the intake of women and yet less than 10% of finance directors are

women. So there is something going wrong on the way up.

And that really needs to be corrected because

when that is corrected, there will be this surplus of people

And it is management we need, not women on boards.

I just want to say quickly, there needs to beway more,

A GE exec in the past. She talks about line roles.

She said you have to run the plants, you have to be there.

What about when the plant blows up, you

That mindset, you need to look at that.

Fund management is a great occupation.

More than half our grads coming in are women.

They make better fund managers, you will be pleased to know.

I just want to squeeze in a quick one, which is,

I am going to do this going round. John?

I really worry about our global footprint.

We operate in 60 countries, 60 countries we sell more than $100

So we have a lot of things to worry about everywhere in the world.

Everywhere we are has a jobs programme, every country

expects us to be an investor with a conscience and we have got to figure

that out in terms of where we put people, the global talent, where

do we put our manufacturing facilities, where do we put our

And the world is changing at such a great pace.

What we do in headquarters is totally different today and will be

You can feel when things are going well, you want to be relevant.

We want to be pre`eminent and respected.

Do you exercise before you go to bed?

But this world is moving so how do you keep making sure that

we are on the very forefront of what we are doing.

You can't tell until you are not there.

That is why you have to keep the pressure up on that side.

You have to be anxious in a constructive way.

Losing any of our top fund managers because all we have are the best

And someone doing something stupid and not telling us

If they don't, it just compounds and gets bigger.

The other thing for everybody is speed.

It is not even enough to know that you have the right strategy,

it is are you going to go fast enough?

And you can't go so fast that you break the wrong things.

But speed today is a dimension that everybody has to have.

Global footprint of what is happening around the world,

can you give us a sense as to where you see some of the challenges of

You are stepping back from financial services at GE and talk through what

these challenges are and why you changed your strategy?

Well, we are still going to be in financial services but

But still when you look at the size of our financial

they will be substantial but more concentrated and more focused.

But everything else we have done is to organise a portfolio

Because we see a world where 1.5`2 billion

people lack health care and clean water and electricity.

Pushed by social media where people compare

and they don't like the comparison. They go to their government and say,

If the government can't, there is a change.

We saw that in the Arab Spring, we are seeing it

So for us, the demand for infrastructure today, even with the

macro GDP rates down a little bit in the last year, is still strong.

The question is financing ` the financing that

used to come from Europe precrisis now doesn't come from there.

There are still pools of capital that want to be connected

So one of the big challenges we have is facilitating that.

Martin, this is really a big change in the financial sector

Do you think that changes you have seen are now making it less

likely there will be another crisis in the future?

I think it is more or less likely, if that is the correct discretion,

I think that in my judgement, repealing Glass Steagall was

a big mistake because it allowed domestic banks to enter investment

I'm totally in favour of separating investment banking

And to a certain extent, that has happened by regulation.

We live with regulation. We don't complain about it.

It raises the barriers to entry for fund management.

It is almost possible to set up a new bank now.

John mentioned there infrastructure emerging markets.

A bit more regulation in the West, maybe things in little bit slower.

Dominic, what are you advising clients

Are emerging markets the place to really push for expansion?

Some people might say it looks risky?

One of the things we are looking at...

The economic weight and power of the world is shifting dramatically

We will have 2.2 billion new middle`class consumers

That is a thousand times larger than the industrial revolution

It'll drive a lot of the infrastructure requirement.

$57 trillion of infrastructure and these are very big opportunities.

Martin, you stayed away from

China in terms of investing, so you don't agree with Dominic that the

I think emerging markets are a good place to be to invest your money.

But you won't invest in China, the biggest market?

And one of the great fallacies of investing is that economic

growth leads to the ability to make money.

We would love to invest money in China but we can't the quality

That is because there is a lot of government involvement

Whereas oddly enough, India, despite the infrastructure issues and

the political issues, we find some very good companies to invest in.

It is a matter of just finding the companies.

We would love to invest more in China but they have to get

corporate governance correct and the more open to investors such as us.

John, do you think that China is a good prospect for the future, or do

For us, China is the second largest economy in the world,

Enormous market, so for us, we would be crazy if we didn't go to China.

There are risks, there are risks in lots of countries,

The answer is the risk of not going to do business in China

is greater than the risk of doing business in China.

That being said, Martin's point about transparency,

foreign direct investment is going to flow to places where investors

get transparency and a reasonable risk`adjusted return

so that countries that have more of that will get them more investment.

The countries with less of it will get less investment.

Half of the world's wealth is still in the US.

It is absolutely the place for fund management.

If you want to raise assets or manage assets on behalf of

John, you have a global business, trying to grow

Is the recovery good enough in the US and the West to grow?

You have to reallocate resources at times.

But you also have to take longer term views about investments.

When you are investing plant and equipment around the world,

you have to be thinking about the next 20 or 30 or 40 years

So you have to be able to balance short`term and long`term.

We just bought a company based in Italy in our aircraft engine

business that is very strategic, has lots of employees

in Italy who are really good at what they do and they will help us grow.

Both these guys are long`term in their thinking in those situations.

A large part of the world does the company quarterly things.

Especially in fund management, there's a terrible

If only people would think long`term.

Our turnover is 10%, but if you are turning over 100%, it is costing you

3% or 4% in transaction cost but people don't realise, just

buy good companies and hold them. Take the long`term view.

Speaking of leadership, global companies, it sounded like me that

How many hours and evenings and early mornings have you spent

on the phone in different parts of the world?

Definitely, it is really a 24`hour job.

Even when you are sleeping, the problems are still piling on.

You have to resist the temptation to look at your BlackBerry!

I keep it in a different room. I bet your wife makes you!

But I think the thing we have to do is... Many headquarters locations

What we have got to do is get everybody that

location to realise is that there are a bunch of time zones

And share the wealth or share the pain of the late`night phone calls.

So for me, I live in Hong Kong, and I am on the receiving end of some

of these but I'm also at a point in my career where I can push back.

The average person in Asia in our company spends three or four

nights a week on the phone, after working hard all day.

The average person in the US does not, typically.

Because the only time zone that counts is the one the

customer is in. You can't run your company based on the clock at

headquarters. And that is a change that a lot of companies are making.

I am going to get you to tell me, how many hours a night do you sleep?

Five or six. What about you? I would say five to six.

Yes. I am based in Singapore. My headquarters are in Britain.

That is all we have time for for on this week's Talking Business

Thank you very much to my panel, Martin Gilbert,

A brilliant discussion on how to be a boss.

And thank you all very much for watching and I hope you will join me

next week for more Talking Business with me Linda Yueh.

We still have a few heavy showers around but through the night

tonight, we will see pressure rising so the shallows. To clear way. That