Managing Through Adversity

us once again is Michael Ainslee. He's former chairman of Lehman Brothers, former chairman presidency of Southby's. His memoir came out just about a year ago. It's called The Nose for Trouble and was written about the corporate crossroads and challenges that he faced. Michael with us, Back with us. He's on the phone in Florida. Also with us, Howard Anderson, who founded the Yankee Group, which was sold to Reuters. He's co founder of Battery Venture Capital. He's invested in

hundreds of high tech companies. He's professor and senior lecturer at Brown University and teaches a class on managing through adversity really timely. He is on the phone for Vermont and the two of them, by the way, classmates at Harvard Business School, delighted to have you both. I've got to say, I already know I'm not gonna have enough time with the two of you, but UM, looking forward to it because, as I said, it very timely. So

let's get to it. Professor Anderson, let me start with you your classes about managing through adversity, and safe to say, we've got a lot of that going on in our world right now. You look at it, though, is like when a company is facing something that really threatens its very existence. UM, tell us more about what you delve into in your course and how you think about it

the context of today's world. Boy, do we have adversity now? Yeah, the way I think about it, it's not just missing a little quarterly numbers, or somebody cooking the books in Japan this week, or a product that has to be recalled. It's something so fundamental. Um. For example, nine eleven was

a terrible thing for all of this. One of the companies that we had invested in was a company called Akamai, And not only did the world stop, but the founder was on one of the planes that augured in So not only do they lose their business for a while, and it was a startup that was worth several billion dollars. The customers stopped buying FBI and CI I needed them to continue what they're doing. At the same time, the whole company was an enormous morning. That's adversity, right, It's

something on a whole other level. Well, Michael, come on in on it, because right like you understand, you know whether or not that company can go forward for so many different reasons. When you look at what's going on in kind of our environment right now politically, business wise, in terms of the threats that the pandemic has created for for some businesses, or the stresses and strained how do you see it and how do you see adversity kind of in today's environment. Thanks Carol, it's great to

be back with you. It seems like since I first talked with you a year ago that we've been in adversity on steroids ever since. Uh. I hope I'm not due to that, but uh I think the uh the key early, the key decision maker has to be honest and direct and open very quickly, very early. A timely response to a crisis is critical, and you look at that. I think some of the responses in the political environment right now of c e O s making decisions about

political support. Uh, these are things that have to be made overnight, literally in an immediate time frame. Well that's a really good thing because we've seen companies really step up quickly. Although some would argue, you know, you know what changed, and obviously we know what changed. It's what happened that first week of January. But it is the timeframe, Um, Howard, let me bring you back into this, is that the time frame that people are making this decisions, especially when,

as you say, they're facing adversity. There's just they don't have the time like they had before. Sometimes that's true, Carl, but not always. Let's take a look at Kodak for a moment. Kodak owned the film market, of the amateur film market was theirs, and they kept hiring chemical engineers because Kodak was at its essence, a chemical company until these crazy things called semiconductors came in and then you

needed electrical and electronic engineers. It took five to eight years, but they went from a nifty fifty company, as Wall Street would describe them, to bankrupt. So that was five or six years, but they never really caught the change, and they kept doing the same thing again and again, and the world was a different place. So who won that game? Where you could make an argument? Apple? Did

Kodak come soon? Afterthought? Michael, I want to ask you, or let me actually, Howard, let me start with you. If you were teaching a class, or you are teaching and you want to use what you do about managing through adversity and apply it to let's start with social media, what would you say? And I don't know whether their existence is at risk, but I do feel like there's some really big questions when it comes to social media

and their influence and power right now. You know, one of the things is that every company hits advertity sooner or later. Uh. In terms of some of those companies, it's come a little bit later. But think about the relationship between the government adversity that we talked about in COVID one. We played with things that weren't true. We had a charismatic leader and he went too fast and not fast enough at the same time. So social media

makes everything go faster. It used to be if you had a problem with the product, you told your neighbor and maybe your what's its Now? You can write a message on a social network and ten thousand people know

it the next morning, right, It's pretty powerful. Well, so, Michael, how do you see in terms of social media and kind of how they managed through some of the adversity and special especially coming off of what happened that first week of January and you know, the breaching of the capital and the use of social media, whether it's used by the president or others to really kind of band together. Well, Carol, I think the heads of those companies made some very

smart and quick decisions to eliminate access to their platforms. Uh. There was a real threat to the existence of our democracy and and uh it would I can't imagine what tomorrow would be like with this inauguration had they not taken down many of those of individuals, not just the president, but many others, many Q Andn's and others. Uh. So I think they made quick and wise decisions. Do I

think they're in trouble with with terms of regulation or breakups? Yes, I think there is there is an excessive amount of power and control there and I think there's uh they need to be thinking about how they how they navigate that that process, because to me, it uh, it's it's not only likely, it's probably in the public interest from my point of view. Professor Anderson, how do you think that those social media companies have been able to kind

of skirt adversity for so long? Because you know, they've been around for a while now, Um, I mean not as long as maybe a company like Kodak where they had established themselves. But I do wonder how they've been able to do it. Is it a case of regulators not being able to kind of keep up with what

they're doing? Carol, It goes back to a T and T. If you want to know, when a T and T got started, people would sue them because someone said something be ad on the phone and they went to the regulators and they said, look, we're just a pipeline here. We don't have any specific thing to say. No, no, that's okay, we're live though. Go ahead, Um, Carol, I got to help my wife right now. And the car just went off the road. We have a lot of snow up here. Oh no, please, of course, please please

please go take care of your wife. You're in good hands. No, no, no, I hope I hope everything's okay. No, Oh, my gosh, Um, I hope everything's okay. Real life adversity, you know, this is kind of what the last I feel like twelve months have been like. Unfortunately. So, Michael, Carol, something I've been thinking about is how does President Biden come in

and and handle this COVID crisis. Uh. I have a lot of family and friends in the state of North Carolina and the governor, Governor Cooper there has been an exemplary leader in this crisis. He has been on the on the TV daily, He's had clear and very timely responses, scientifically based responses, and the government and the state of North Carolina has done a very good job of managing through this crisis. He's a role model that I hope

Biden will look to well. And it's interesting too, because I was going to ask you listen, Michael, you and I have talked, and I know when Jason was here, we would talk around, you know a lot of different big macro issues, whether it was racism, division, you know,

deep gaps in our society. And I do think I wonder how you know, we're talking about adversity, and I feel like there is so much adversity right now in our government, to the point where, you know, how many conversations have we all had over the last couple of weeks about, you know, is our democracy safe? Will it make it? So? You know, we talked about a company being at risk in terms of its existence, and I do feel like that's what the kind of conversations we've having.

How do we manage through the adversity that we're seeing on the political front? Ear of view? Can we in your view? Because I feel like there's still an awful lot of division there. There's clearly a huge amount of division. Um, I'm really glad that Joe Biden is our new president. I think he's he brings a moderation, a sense of of uh of optimism, and a a willingness to talk and to listen. And that's what we've got to do.

We've got to you know, we cannot let the the extremes of either party take control or else were we probably don't have a big bright future. So I hope that that President Biden will will listen to the moderates in his party, will not go extreme in terms of a lot of things that were talked about during the campaign. Uh, and will begin to to bring back. You know, one of the things I'm in urged about is that Mitch McConnell has has started talking about the mistakes that were

made last week. He's been very critical of President Trump this week and as as recently as the last couple of hours. Uh. And and that is a form of honesty that I think is very positive. Yeah, honesty would be a good thing in transparency on all of this. Michael, thank you so much. And I'm sure you'll talk with Howard and and I do hope everything works out okay and that his wife's okay. Michael Ainslee, thank you so much.

Former chairman of Lehman, former chairman presidency of Southby's. And he was joined by Howard Anderson over at Brown University