good evening good evening welcome very very much for this segment of conversations where i'm pleased and honored to welcome to the program mr harold geneen and mr johnny of course was the long term president chairman in finding our founding force behind in phenomenal growth of international telephone and telegraph desperation at the time but there was probably more logical in them than you realize and yeah just moving moving from some challenge to challenge and you going to set very high challenges for yourself in order to be able to move beyond the kind of course of mediocrity people think of you as being tough for me whatever i don't think we're ever tough you you put it very well we set high standards and we tried to stay with them and that meant if you couldn't make them easily and write a little harder you helped everybody make them but you didn't relax those standards so that's the difference between being tough by the way and being demanding you're demanding for everybody don't you have to yourself that might be the difference between the quality of leadership that you also talk about in the book that the leader is one who will be able to do that without having to necessarily crack the whip you can set an example of how that's a very serious point my mining area point point in the book really you don't accomplish things by directing and scaring people you work with them and why they i had a very very simple kind of explanation of my feeling about it you sort of get in the boat and grab an oar you don't just yell at them but the truth to matter is if you will reach out to help people do their job and they have a feeling of confidence that you're going to have some loyalty both ways and you support them because it's a you're a part of their problem too it is partly your mistake as well as theirs and if you have to get out of one it's partly your problem to get out as well as to many people seem to be people in terms of yeah you're absolutely right not only that these else surprised themselves as well as you is what they will reach out and be able to do and that's one the pride in them and then i'm on the sort of challenge begins to make reality to them yeah you've made you've made the business of managing and the question of management in your book management of course a matter of great concern but it would be a lesson for living in many aspects of life whether a billion questions of business management they are s sense is a very important relationship which takes place largely am thinking of companies where you have groups of people everybody at that company you know has careers and ambitions and things they want to do  and as part of that they're calling and doing the things you want them to do so in a sense they're expecting you to help them and you're expecting them to do the job which helps heal and help your overall purpose role but you know to do that kind of a job you share there's nothing for their careers so the leadership in that respect is sort of solely yours got to make a lot of decisions about where you go you got point out the goal there are the standards as we put them through and they'll go for him but if you don't do it intelligently it is going to work that well so they have a right to demand of you a sense of leadership in the real classical sense of where to we go home and it has to be successful or you don't have an answer and i just want to add i've said that but everybody talks about like everything else it's more seen against than actually follow you know but let me follow what we did in our case which is a little unique and i don't think it's been really used by many people i'd say of any company you have what we call the divisions and now the divisions are the places where you make your money where you have your problems where you meet the competition where your face to face with the reality of the world well right now if you have a company that has one exactly like all right and he's right there and he makes the decisions and everybody knows why and they're all familiar but now let's change that a little bit now we've got a company with ten of these divisions and they're way down here now you have the classical daisy chain that all these corporations have we have a group executive of the supergroup executives an executive v p in an office of the president and everything else that goes with it lots of administrative you know you know all kinds of things and so these things go filtering up there and  something to protect their turf and by the time he gets up to the top guy which takes to the north and i'm out of time he gets a kind of condensed filtered i may be biased version of what is happening then he has to make a decision press without all the facts he'd like to  have this kind of filler down i hope it meets whatever they thought the facts were what it gets down there and that's the way you run an ordinary company you know that can be some problems almost and i'm going to come around the real problem is what happens to the momentum of the vitality of the company  it and sent it up directly to me and i mean one thing wasn't that they sent it to me the important thing was nobody could tamper with it nobody had a chance to filter it change it or do anything with it they know and i'm processing all i don't think process at all it came up just exactly as they wrote it you know whatever they wanted to say and they covered all the things we wanted them to cover now to dish into that we had a lot of staff people who are experts in engineering marketing manufacturing just you know engineering all the things you need to know and they had the right to go in any of these divisions look at anything offer their comments and make a report but they had to go over it with the guy in charge of that particular bill awake before they took it any further so that's that way there was no secrecy when i got in the open plus the fact he might have something to say that would change their view or he may say you're right i'll go do it all those things happen to you know then we invented a guy that you know nobody's ever heard of an industry before we call him a product difference between the guy i was running and you know if you were running a division and you just hire forty war sales but then you made a big speech and you put out a budget that was forty percent higher and put a wing on the plan and the sales didn't come through you're the last guy that wants to admit it ten or later at night throwing all the stuff on the table always ideas people's opinions of what was happening what was happening what should be done and we thrashed him out on ourselves right there now let me tell you what was  are as a problem you know if you had a street corner accident a couple of funders god and the right guy standing on the corner that's right absolutely and that's a very simple problem i'm sure now what do you think happens if you have tens of millions and put it on a better way to put it is we did fifty eight quarters in a row where we went ten percent or more ahead of last year in other words compound on earnings per share not total and us and you know that's fourteen and a half years and you they took over our companies and then we had our get paid we don't get paid at all the problem and then we had a lot of a lot of earnings over in europe where we were operating but they were considered sort of overseas earnings and but ninety five percent of our stockholders are here in the good old us but when was going to feel comfortable buying our stock as long as that was true and that's obviously my reaction so we said early as an objective that we wanted to learn at least half our case profits over here have to develop and we wanted to have again a kind of a quality factor that you were seeking and so then we made that decision and the only way we could do it was to grow in the us and we had very little in the u s we had more vice presidents in the u s than anywhere in the world but we didn't left and it was pretty tough cuts right in our in our own pace and feel now overseas we probably the rest of the world we're probably thirty thirty five percent of the whole industry and that's where our business was said that international character might fill a nice more nicely now as we come more and nothing all this so far we gradually polish together what i want to say is we took the european company from about three hundred million in sales to about eight billion and we didn't acquire very much over there this was all done by internal first of all from a quality or an approach standpoint the justice department and those days at least one lot is by two of anything so we bought one of everything and i've got to get back to this group and that those meeting we got to the morning to ten that night going over our problems and beating them down getting decisions changing the bad ones and so on and hang in there till you get the answer that's exactly right now add to that that we flew over the following week and went to europe and did the same thing with a g meetings and in eighteen years we probably i never thought about it this way we probably spent nine whole years of long days sitting in meetings beating at our problems with the whole company in there and that of our earnings per share against all the other companies on the stock each year and in those days we didn't have inflation on the stock market was basically flat from sixty three on them and very it was only a handful of happened i got it i just get a lot and i still don't get a lot of letters and these people talk and they refer to that period as one of the more rewarding or the most rewarding on exciting periods of their life you know why because they were growing up they were growing they're learning they're meeting a challenge of the same kind of creative operation they can be extremely creative and what you do with and for other people and in a way it's tremendously constructive thing and see if you want to look at the coal is what keeps our society going and you know we get it if we get meetings with a hundred fifty people and they're all watching you and you're talking to them and they're arguing with you believe me you had to know what you were talking about you couldn't do it by proxy you were there right on scene in purcell mode so you had to do your homework  work maybe not work you begrudge you doing the job but it's work you know and i'm not sure everybody wants to do that homework and that's why everybody says you're a workaholic and although i don't know what they mean what i just mean the again the thing that would set you apart from i suppose any thing that makes me money not the first three but you still you know what i want to really get around to it was i'm just thinking a normal competitive business you know and everybody's out there for the same reasons they're all competing you know if you're trying to motivate a group of people and successful one you hear about there's two or three that weren't but now and he took that risk willingly and he'll take it over again or maybe gets older he was booked out people in corporations and traded some of that reward for less risk on home and this is true truth the matter is if you have a wonderful invention here tomorrow morning i use that word it won't be an adventure be something you did you know huge contracts or whatever they can reward you in a certain manner over and above what you normally get that you can't pay this guy the kind of rewards of that you have there's a kind of a feeling that if you're performing it'll come out in the water slowly you'll move up faster you get bigger bonuses and so on so it's it's a different kind of a reward and it's a different kind of person who says  of i'd rather share some of the reward in the sense of being she says secure and in turn i won't take these risks i've got a family i've got other things to do so these are the compromises that people make that doesn't part of the time i don't play golf all the time driver but but that's that's you the temperature getting at now within the corporation i'm sure you can do a lot of things to to incentivize and get people to initiate ideas within a of these things so what we did is i go back now as you begin to get this total picture we sort of created an atmosphere where the management was down and you if you think of a football team oh and you got the line right behind you got what you call  ok right that was the top of the company as well as all the guys in between down there not those filtering there's a sub to what i call the daisy chaining now that's what we did and everybody felt like they were part of you know basically we had like controls they're equal yeah twenty five hundred people that were talking directly rotated people so we had more room so we were probably reaching eighty ninety percent of our total management group of roughly four thousand people almost once a month practically all of them were gone and why because we got on a plane and went over there and sat with the management and heard their problems and answered accordingly because i found if you were on the end of a phone here from two thousand miles away and somebody had a problem and needed an answer believe me the answer you gave over the phone was probably going to be a lot colder than a lot less understanding and a lot more negative than you would give him when you are sitting there talking about no politics you're talking about a goals that you all want to reach and anybody in between that is not going to go i said you know if you don't get out of that job you're hurting my career and you know it's your job to take those guys out and get them out all right  have management as a responsibility in an ultimate sense to the to the stockholders in the traditional sense in the sense of management right and i wonder i wonder if pharms if there's a there's a movement generally seen in business circles and business economic development the american economy where more and more of the you one thing his interest is going to be very intense of the owns much of that company and his questions are going to be a lot different now you've got to remember i'm not trying to put the matter of integrity or more interest on the part of a drug to just because he owns or doesn't own st my opinion this is a personal by now to keep the management's interest and that of the stockholders parallel movement in the early days we had stock options and if you wanted to exercise them you bought the stock and you had the whole of for a minimum i think was three have to invest this money and that was done to make it easier for the management to hold large amounts of stock in creating a sense of it's good and i and i like everything is nothing perfect but you have separated the long term interest of the stockholders in the long small point and there's pluses and minuses on most of these things you know i was just wondering in broad general terms about not only the general question of if we if we if we look at our economy and it's increasingly technology which is being able to be in a certain sense who might be investigating methods for increasing ownership of technology maybe even as an instrument of income distribution in the future pattern if you can understand how things will be the technology is really possible for so much of the creation of the well and it's advances which had bought largely been developed out of the military i think yeah and they did at that time so they wanted it shared with the public that sort of thing you're talking about in the broad sense yeah now you might say aesop's and stuff are basically an approach to having the workers or workers of people in the company has got it work well yeah no no no more and more stake in the company or you can have you get to some of these corporations where the ownership group might be able to move into people that are in traditional transfer payment groups and so forth as an alternative way of distributing that i have got no i don't go there i think i have a capitalist society have a private property holding is a way of distributing income rather than in the steel business for several years and you know it makes you think you know because it says that somehow or other we've either lost our market because we're not competitive to people overseas or something has changed in unique accomplishment detroit as it might have been sixty eighty years ago and they work hard and it's it may sound a little odd but their standard of living is or as lower than ours they all go to work and eight cylinder car home they may oh no that isn't the question a lot of that gets back to this whole thing i'm talking about where you go into a company company after company and the thing is so structured that everybody is well intending but they just aren't we are using is our standard model for industry in general isn't that good home you know people have to be able to have a sense of you use the term very very well in the book or is it ok to perform to measure up to performance while you have to have a belief  that you do you tend a business like of the business or do you think it is appropriate to take a broader view of the world economic questions they are participating conferences make statements or help take you know a view of systems you an example out of my own experience i'm about i was in the steel mill we we got involved in something called operations research team that was the current phase and this was sort of where you you figured out how to really add it up to step back from the trees and wise and they were going to solve all of the world in order to come to that solution you know that doesn't work you know so let me reverse this is what we do and what we did people say well you didn't do any long range planning you know all right and i believe a lot more because i'm not sure that they've set the realities when you get there i tell you you can hardly stumble over something or find a problem or an opportunity without sitting down and almost immediately sit standing up projecting where it might them but at that point in your trying to get some sort of a realistic business though you had well so many quarters of continuing growth and so when you know the company kept taking on new divisions and kept acquisition you to make a decision of what acquisitions you were going to make out of the possibility well to grow and they had they had products and they had customers who bought their products that when you buy a company you by a great bargain if it's any good at all you know you've written off all the mistakes as a new company will make they've made them all read them off so you're buying a really good bargain if they have a good product you have some customers and then we felt that with our approach we gave them proof that we might take our technical people and improve the product make new ones and move smooth their products into different fields and it was marketing you know these are all things you brought to bear on a nucleus that was already operating and somewhat proving that you might be able to take basically the approach to managing and apply that to a great number of different kinds of activities and have  worked with the basic idea of the managing of this or else agent was called for i don't know i mean that was like outside managing i mean you know you're acquiring a new company you would be just like almost coming from a vision from outside of it the way it had been done make it run better and make hundred fifty companies finally something of that order we paid about six billion for and they're probably worth double at twelve billion today but most important we didn't have a lot of money we bought practically all of those companies with a very small made that stock good ok and that was what the mice with it and then we brought them all into a group with a single common goal much as we had done and that's all comes out in the earnings but i want to tell you that's a lot different than taking a company and just growing its earnings on we had to assemble it by a ious and make the iou good so we had a kind of a triple problem now that's what we did and why i say what we did in the talk about the book i said did you marry the first girl you met and he said no what i did i got out as people don't take all the risks without looking in and sorting things out a little bit you know so basically i think you're saying diversification is a proper way to operate on now there's a theory that seems to be around now that says if it's a little bit complicated it can't be managed and therefore you should sell it and get rid of it and you know come down to just one line well of course that's what made the steel companies and that's what want two hundred fifty companies six billion dollars by pledging our paper making it good same thing on a small scale smaller scale so you find a good company that people want to sell and they're getting older and want to retire it whatever you buy it you borrow the money on the company raise a little bit put it together go in and make the company run certain run into some of the people involved information technologies artificial intelligence robotics and some of these kind of things that mr nesbitt and others would call the information technologies that are supposedly the path to the future in the kind well that you see this is where you come back to the point i was making before if you want to be in the technical field of what they call high tech you know where that is exactly you're going to stay right up in the foot on the edge of the curl of the wave and you serviced millstreet right and they keep growing growing growing in the technology isn't going to change that rapidly i'll go on and nothing is going to make it go up too fast or drop to things you've got a chance to get time to do the things you can do you know so all i'm saying millions or hundreds of millions of dollars we probably saved by not getting into computers on a broad basis but only on the bases where they fit in with our chronic zone and i can look around see the examples i can rack up a couple billion dollars in other companies loss along ok basic premises of good management and a great deal of the ideas of what makes up a good manager really has to do with a sense of integrity for leading a good responsible life that can move beyond the mediocre and if i may say so mr green here opinion has been against