/ Spring2020/Issue 98

John Hennessy’s higher learning

The former Stanford president and current Alphabet chair distills leadership lessons from a long career in the heart of Silicon Valley.

The Inside the Mind of the CEO interview series explores a wide range of critical decisions faced by chief executives around the world. For more insight, see PwC’s CEO Survey.

A version of this article appeared in the Spring 2020 issue of strategy+business.

It would be difficult to imagine someone more wired into the culture at the nexus of technology and higher education than John Hennessy. A computer scientist who joined the faculty of Stanford University in 1977, he started a highly successful company, MIPS Computer Systems, in the 1980s. He rose up through the academic ranks at Stanford, and then served as president from 2000 to 2016 — a period during which companies founded by university alumni took the tech world by storm. Marc Andreessen, cofounder of the venture capital firm Andreessen Horowitz, dubbed him “the godfather of Silicon Valley.” After stepping down from the presidency, Hennessy returned to the classroom, and, naturally, engaged in new ventures. He wrote a book on leadership, Leading Matters: Lessons from My Journey. And he became the non-executive board chair at Alphabet, the parent company of Google, where he has helped manage the recent leadership transition as founders Larry Page and Sergey Brin stepped down from their executive posts.  And, backed with a US$750 million endowment, and fueled by $400 million from Nike founder Phil Knight, Hennessy created the Knight–Hennessy Scholars program, which aims to instill a culture of leadership among an interdisciplinary group of graduate students. In his office in Denning House on the Stanford campus, Hennessy, 67, spoke with strategy+business about the similarities — and crucial differences — involved in leading high-performance organizations in the realms of education and technology.

S+B: You describe your path to becoming president of Stanford — a pinnacle of educational leadership in the U.S. — as a somewhat accidental journey.
HENNESSY:
I loved being a professor. I also loved being an entrepreneur; I could have done either one and probably been perfectly happy. I discovered partly as a by-product that I liked actually leading an organization. In much of academia, the administrative side is considered the dark side. When I took the job as chair of the computer science department, it was out of a good citizenship obligation; everybody has to do it, it was my turn. And I discovered initially that I liked creating opportunities for faculty and students. The one real turning point for me was when President Gerhard Casper asked me to move up from being dean of the engineering school to be provost in 1999, to replace [future U.S. Secretary of State] Condi Rice, who was stepping down. I was really unsure. Being a dean was a great job: 220 faculty, you could be hands-on. When you get to be provost of an institution with 1,500-plus faculty, it’s very hard to have that kind of familiarity with what everybody’s doing. You have to deal with humanities, law, and education, and with doctors who are seeing patients. It’s a mind-stretching exercise. But Condi gave this speech where she talked about the importance of higher education, and how it transformed her family and their life. And it just struck me as a calling. This was a really important role, and great universities need great leadership.

S+B: You talked about taking the post of provost as your Rubicon. What exactly were you leaving behind?
HENNESSY:
Two things. One is there was some feeling that it was easier to go back to being a professor, an academic in the normal sense, from the dean’s job than from the provost’s job. Also, a dean is still allowed a little time for continuing to pursue research or teaching. The provost’s job is full-time. So I was leaving behind my academic connections and my roots, and the thing I loved, which was being a teacher and being a researcher.

S+B: Universities are very large enterprises; Stanford has an annual budget of about $5 billion. And although people study leadership on campus, it seems like there is almost no management training for university leaders. Did anybody ever have a conversation with you about how to be a leader in an educational setting?
HENNESSY:
No. In fact, a lot of what I learned about management was in the time I spent in the Valley when I was on leave, starting my first company, MIPS Computer Systems. I learned it in real time. One of the things that I did as president, as a result, was to build the leadership academy, where we bring in faculty and staff on the administrative track who will be future vice presidents and deans, and help them develop leadership skills. It covers everything from getting a communication coach, to solving difficult problems, to dealing with difficult conversations. It has produced many leaders who’ve gone on to important roles in the university.

S+B: In Leading Matters, you wrote that when you became provost, you were only 47. Can you talk a little bit about the dichotomy between how age and experience are treated in the university, where seniority really matters, and how they are treated in Silicon Valley, where youth is always served?
HENNESSY:
Leadership is a challenge whether it is at a company or in an academic setting. Young people are often great at constructing a vision, and talking about the vision. They often don’t have any experience in dealing with the hard parts. I was having a discussion with Bill Gates when he was still at Microsoft, and we were talking about what was really hard about the job. He said, “It’s not the technical issues, it’s not the numbers; it’s the people issues.” And I think that’s where experience is absolutely crucial. To coach somebody who reports to you, who has great potential but is not living up to that potential — that’s a really hard thing to do well, so that you don’t either destroy the person or mislead them. That’s a skill that you grow over time, and lots of times when we catapult people who are very young into leadership positions, they don’t have those skills developed yet.

S+B: One big difference between academia and the corporate world is lifetime tenure. Leaders in the corporate world can always threaten to fire people if they don’t get with the program. But university leaders can’t, right?
HENNESSY:
You certainly have more of a stick in the corporate world than you have in the academic world. But my observation is, in both settings, that people respond a lot more to inspiration, to being challenged to do something really great. And that produces the highest-level performance. If you have to use the stick, you’ve already lost some level of productivity and accomplishment that you could have gotten out of your team.

S+B: In your book, you talk about humility as an essential trait for leadership. But the institutions you’ve been associated with — Stanford, Google — aren’t exactly regarded as humble. So how did you experience humility in your journey?
HENNESSY:
That’s not the kind of humility I really mean. [To me,] humility means, “Don’t think you’re the smartest person in the room. Don’t think you have all the answers.” You’re willing to engage others, you’re willing to respect the knowledge and expertise that your colleagues have. And you recognize that it’s a team effort that will do great things. To some extent, it comes naturally in a university. I’m an avid reader, I’m interested in a lot of topics, but believe me, there are thousands of undergraduates who know more about — pick a field — than I know about it. I always thought of my fellow faculty members as colleagues. And my job was to help make them successful. And that’s what the job of a CEO is. The job is to help make the employees at the company successful.

S+B: Companies have lots of stakeholders — the board, customers, shareholders, etc. — whose needs must be considered. And so do universities: trustees, students, alumni, research funding organizations. How apt is the governance analogy between a university and a corporation, and where does it break down?
HENNESSY:
Certainly the cornerstone of it is that your stakeholders are more than any one group. Universities are, by their nature, more focused on the long term than corporations. Corporations have to balance the long term together with the short-term results and the view of Wall Street. The flip side is that for a university, reputation comes first. It’s very hard to recover from reputational difficulties. For corporations, reputation is very important, but it’s one of several key factors. The place the analogy probably really breaks down is that it’s much harder to quantify in the university how you’re doing with these various communities than it is on the corporate side.

S+B: Many CEOs step into their leadership role at a time of crisis or when a turnaround is needed, and find the experience to be a crucible. What was the big problem at Stanford when you took over in 2000?
HENNESSY:
I didn’t have an immediate crisis. We certainly had some issues, though. Our hospitals had serious problems. But by my nature, I’m not a caretaker kind of leader. So I wanted to set an ambitious agenda for how to make Stanford better. And I think early on, we realized that there wasn’t enough cross-disciplinary collaboration, which was going to become increasingly necessary if we were going to tackle really big problems, such as inequality, global conflict, or climate change. So we wanted to change the nature of how the universities and faculty thought about interdisciplinary collaboration. It worked because there was a lot of bottom-up planning and engagement of faculty around the vision.

S+B: Your book highlights several things you didn’t do — for example, you didn’t pursue a satellite tech campus in New York. Why are these choices relevant in the context of a conversation about leadership?
HENNESSY:
What people probably don’t understand is that if you look at the core operating budget, which is the piece of the budget that’s controlled and allocated by the leadership at the institution — after you cover inflation expenses and increases in financial aid, you have about a 1 percent annual increase in the base budget. So you have to think carefully about any new activity. When we planned the Stanford Challenge fundraising campaign, we were initially targeting $4 billion. When we went across the university and said, “Tell us what you need,” the total people asked for was $12 billion. As one of my trustees said, “That’s a wants assessment, not a needs assessment.” You have to focus. If we do something, will it really enable a university to move into a position where it can make a larger contribution to the world? There were some trustees who were really nervous about the New York campus thing from the very beginning and thought, “That’s a bridge too far.” And in the end, I concluded that I couldn’t make it work.

S+B: Another one of the things Stanford didn’t do, which you write about, was significantly expand the undergraduate class size.
HENNESSY:
That was not my decision. Both the provost and I thought the moral argument [for expanding it] was strong enough that the answer was, “Let’s figure out how to do it.” Some of my faculty colleagues thought, “Well, we should make the Stanford experience perfect first.” I thought, “Well, the Stanford experience is an A. Maybe it’s not an A+ yet, but it’s an A, all right.” And that seemed good enough to me. Others took the view that even if you did a moderate expansion, it wasn’t going to make that big a difference because it would be 100, 200, 300 kids more a year. I said, “Well, you’re not thinking like somebody whose kid’s applying to college.” But we’re marching down that road at a slow pace, primarily because we’re a residential undergraduate institution, and the rate at which we can build residences turns out to be the limiting factor in expanding. I think it is the right thing to do, and we at least got enough expansion done that we could make a slight increase in the number of international students without decreasing the number of American students.

 
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S+B: Do you think it’s a systemic failure of the elite U.S. schools that they keep their first-year classes so small even as the universe of potential students grows?
HENNESSY:
The private universities have not responded to the growth in the number of high-quality students who are available. And we’ve shoved it on the public universities, which are now under enormous financial pressure. We probably have about 7,000 undergraduates right now. If we were to take it to 8,000, it would be fine. I don’t think it would change anything.

S+B: You were president in a period when students at Stanford were dropping out to form companies like Snapchat and Google.
HENNESSY:
Wait — let’s get rid of a few myths. It’s not true that lots of people drop out to start a company. It is especially not true for undergraduates; almost every single undergraduate finishes their degree. Someone may start something during the summer or after graduation. There are cases like Larry [Page] and Sergey [Brin], and [Yahoo founders] Dave [Filo] and Jerry [Yang] before that, where, as graduate students, they stumbled on some really great technology, and before they knew it, they had a road map to start a [successful] company. And that’s perfectly fine. When a student says, “I want to be an entrepreneur,” I say, “Fine. First go get some technology because that’s what makes a great company.”

S+B: You’re not alone in saying that you read a lot of biographies for guidance on how leaders conduct themselves. But not many mention Ulysses S. Grant as a source of inspiration.
HENNESSY:
Grant’s public image is: great general, terrible president. And by the way, also an alcoholic. But he largely tamed the alcohol problem, himself, through exerting a lot of self-control. I think his image gets distorted by the fact that he had one fatal flaw: He trusted people who said they were his friend too much. And he put in positions of power people who betrayed his trust. But he also was an incredible defender of the rights of African Americans to be citizens in this country in the aftermath of the Civil War.

S+B: Many of today’s undergrads were raised to learn that all the systems of power are unjust and corrupt. They want action on climate change, inequality, and more, and they want it immediately. As the leader of a university, how do you temper their idealism with the sense of what is possible?
HENNESSY:
In order to play this role appropriately, you need to build a sense of trust and have them believe you’re a rational human being who’s trying to think through complex decisions with different constituencies. I would go and visit each freshman dorm every year, and just have a sit-down, and have a discussion. I’d start by saying a little bit about my background and my educational experience, and then respond to whatever questions students had, and talk about how we think about these problems. The one thing I generally push back about is that it is not the job of the university to take a position on various political issues. I can’t, as the leader of the institution, speak out on a topic on which there are a diversity of opinions within the university community, unless it’s germane to our very existence. We spoke up about the DREAM Act, because we had Stanford students who were Dreamers. Fossil fuel divestment is a good example, because it doesn’t solve the problem. We made a decision to divest from coal, because our view was that coal is extremely damaging, and it’s no longer necessary. But it’s a tricky territory.

S+B: CEOs appear to be terrified of millennials, who are now the single biggest cohort in the workforce. They seem to have a different set of attitudes about capitalism, about work, and about what they expect from work. Based on what you’ve seen of kids coming through college in the past few decades, do managers need a fundamentally different approach?
HENNESSY:
I think they [millennials] are fundamentally good people. They care deeply about these problems. I think they have a sense of impatience, but a sense that has not grown out of unreasonableness. It’s grown because we’ve conveniently ignored various things, whether it’s the growth of inequality, or climate change issues, or a criminal justice system that needs reform. What we need to do is figure out how to put that energy and activism and willingness to fight for something together with a little bit of wisdom that comes from experience, and try to merge the two. So that’s what we do at Knight–Hennessy; we bring in these brilliant young people, committed to leadership as service, committed to making a difference in the world. We try to bring them together with people who’ve made positive change in the world, and help them learn something about wisdom and patience.

S+B: Most university ex-presidents are content to go back to teaching or writing. Why did you decide to start this program?
HENNESSY:
After stepping down as president, I was convinced by one of my colleagues that I wouldn’t be happy with just [joining] three or four boards and doing a little teaching. I had become increasingly concerned about the growing leadership void. And not just in government. [I was concerned about how we behaved on] the corporate side, the whole way we behaved in the financial crisis, and in some cases on the nonprofit side. And since I’m a lifelong educator, I thought maybe I could bring together a cohort of extremely capable, smart people who are dedicated to a different vision for how to be a great leader, and provide them with a great Stanford graduate education, but also provide them with the opportunity to develop their leadership and collaborative skills, and hopefully produce people who 20 years from now will really do great things. Today, they’re MBAs, JDs, Ph.D.s, MDs, and master’s degree students who get their tuition [covered] and a stipend for their living expenses. There were 51 in the first class in 2018, the 2019 class has 68, and we’re on a slow trajectory to 100 in a class.

S+B: Given all the challenges surrounding trust and privacy that have come up with the rampant spread of technology, do you think we need to infuse our STEM education with more study and appreciation of the lessons of the humanities?
HENNESSY:
I am absolutely a believer in the liberal arts education. Some of the most valuable courses I had were not the technical courses, but courses in philosophy and logic where we addressed issues about truth and ethics. It’s one of the reasons that Stanford has an ethical reasoning requirement for every student. These classes are actually taught around the university by different groups of faculty according to the field. I tell students that the purpose of ethical reasoning isn’t to solve all of your ethical dilemmas for the rest of your life. The course gives you a framework for dealing with ethical issues that will arise in your career. I think there’s some tone-deafness sometimes, which needs to be [addressed]. The tech industry has grown in scale and influence probably far beyond what it ever anticipated. Remember, our roots are that we built products for businesspeople and other techies. And now we build products that everybody uses and that affect their lives every single day. This reach comes with a whole new set of responsibilities. And I think whether it’s privacy, cybersecurity, or dealing with hate speech and walled gardens, we’re not yet where we need to be.

S+B: You’re the chair of Alphabet. What’s your main responsibility?
HENNESSY:
I’m a non-executive chair. So my primary function is to organize and run the board meetings, and serve as a conduit between the board and the management team. It’s an extremely complex company with 100,000 employees that’s still growing at a very fast rate. And that’s probably what makes leading it really difficult, and really challenging. One of the great things Larry and Sergey did is say from the beginning, in the founders’ letter, “We’re running this company for the long term. We’re not running it for the short term.” And that’s what we try to think about at the board level.

S+B: There is something of a backlash against the power of algorithms and artificial intelligence [AI], and the companies that profit from them. Is it justified?
HENNESSY:
Look, algorithms aren’t infallible in that they guarantee the right answer every time. Neither are humans. Take driving. Humans are actually OK as car drivers, but they’re not so good when they’re under 25 or over 70. Or when they’ve had a drink, right? In all those cases, I think there’s no doubt that a self-driving car can probably outdrive a human 90 percent of the time. A million people die in car accidents a year. Cut that in half; that’s an enormous accomplishment. Or take medical diagnosis. We have lots of errors or delays in correct medical diagnosis. Lots of unnecessary tests get done. There are lots of situations where patients are given a therapy that doesn’t work for them and [their doctors] don’t realize it until later. These are places where I think we can bring technology to bear. But it doesn’t mean we necessarily want to eliminate humans from the equation. If the algorithm that mines tons of data says I have a really serious disease that’s potentially fatal, I actually want to sit opposite a doctor and talk about that. We’ve long had this dream that there’s a big role for technology in education. But it’s not to eliminate that personal inspiration and motivation that teachers supply. It’s to amplify the teacher’s ability. I like to think about AI as amplifying human capability, not as replacing it.

S+B: Would you agree that technology has often developed and then rolled out more rapidly than the regulatory system can cope with?
HENNESSY:
Absolutely. Copyright law in the U.S. looks like it’s written in the 1800s. And it can’t reform itself to catch up to the digital age, so it puts on Band-Aids and rubber bands to hold the thing together. A regulatory framework can’t evolve as fast as the technology does. How we solve all these issues, whether they’re related to privacy, or systems that we deploy somehow, is going to require some really nuanced handling so that we don’t deprive people of the potential positive impacts of technology.

S+B: Upskilling has now become a mantra. Can you talk a little about the role of upskilling at a university like Stanford, where, after all, people don’t necessarily have to add to their skills once they have tenure?
HENNESSY:
When you think back about giving tenure to somebody, you ask two questions. One, are they clearly already a leader in the field or well on their way to becoming a leader in their field? And two, is their reputation as a leader in the field the most important thing to them in their career? Because if it is, they’re going to want to maintain a sustained record of contribution over time. And I think that model has worked out well.

Humility means, ‘Don’t think you’re the smartest person in the room. Don’t think you have all the answers.’”

But it’s different for STEM people, for example, than for historians. Most historians write their great work when they’re in their 50s and 60s, not when they’re in their 30s or 40s. Most STEM people, on the other hand, do their great work in their 20s, 30s, and early 40s. In the university there are lots of mechanisms that encourage you to keep your skills up to date, like sabbaticals and research grants. I think companies are now seriously realizing that they need to do more of those things. The place you really can see this is in the machine learning explosion. We haven’t yet educated many students in this new technology, so we’ve had to build up opportunities for people to move into this field. At Stanford, many years ago, we thought of part-time education as primarily focused on getting people master’s degrees. Today, it’s a certificate — three courses in machine learning, three courses in cybersecurity and blockchain — that can allow people to upskill themselves broadly across the field. And I think we’re going to have to continue to do that. The AI revolution’s going to force us to.

S+B: Do you teach?
HENNESSY:
I do. I’m teaching a freshman seminar. It’s called “Great Discoveries and Inventions in Computing.” It’s sort of a survey of all the interesting things that have happened in the computing field over time, from hardware to software, and I’ve got 16 bright-eyed, bushy-tailed students.

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