How bold visions can be crafted and executed even in the face of challenges and opposition.

Focusing on the powerful interplay between vision and courage in leadership, Tina Seelig and John Hennessy examine how bold visions are crafted, refined through feedback, and brought to life despite significant challenges. Examples like the Stanford Challenge and responses to financial crises highlight the importance of committing personally to a vision, understanding and balancing different types of risks, and acting decisively when it matters most. These insights offer valuable lessons for leaders seeking to navigate complex environments and drive meaningful change.

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Chapters:

(00:00:00) Introduction

Host Tina Seelig introduces the episode’s focus on vision and courage in leadership, setting the stage for the conversation with John Hennessy.

(00:00:45) The Stanford Challenge: Vision and Execution

The creation and strategic planning behind the Stanford Challenge.

(00:03:04) Tackling Big Challenges at Stanford

The major initiatives and global challenges tackled by Stanford.

(00:04:00) Community Support and Vision Alignment

The role of community and alumni in shaping and supporting Stanford's vision.

(00:05:16) Academic Work vs. Entrepreneurship

The journey of moving academic work into real-world entrepreneurship.

(00:08:01)  Leading Through Financial Crisis

Managing the 2008 financial crisis at Stanford and the leadership decisions involved.

(00:10:42) Opportunities in a Crisis

The benefits of decisive action during a crisis and how it positioned Stanford for future success.

(00:13:40) Risk-Taking in Leadership

The nuances of risk-taking in leadership, and approaching different types of risks.

(00:15:16) The Importance of Complementary Risk Profiles

The value of surrounding oneself with people who have different risk perspectives in leadership.

(00:16:30) Political Advocacy and the DREAM Act

Supporting the DREAM Act, highlighting the political and ethical considerations involved.

(00:17:33) The Vision Behind Knight Hennessy Scholars

The inception and development of the Knight Hennessy Scholars program.

(00:20:46) Lessons from Historical Leaders

How historical leaders have influenced John’s leadership style.

(00:23:39) Episode Takeaways

Four key lessons for listeners from this episode.

(00:24:14) Conclusion

Welcome to Leading Matters, a podcast from Knight-Hennessy Scholars, a

multicultural and multidisciplinary graduate fellowship program at Stanford

University that focuses on leadership.

I'm Tina Seelig, your host and executive director of Knight-Hennessy.

Throughout these six episodes, I'll talk with John Hennessy about his experiences

in different leadership roles, including as a faculty member, entrepreneur,

president of Stanford University, and founder of Knight-Hennessy Scholars.

John.

Tina.

Today, we're going to focus on two important aspects of our leadership

model at Knight-Hennessy Scholars.

Those two are vision and courage.

That is the ability to develop really clear goals, sometimes in the face of

opposition, or challenging execution, or sometimes even the risk of failure.

I've seen you lead the university as president for sixteen years and have

always been incredibly impressed with your willingness to take really big bets.

For example, as soon as you came into office, you crafted this

really bold vision of the Stanford Challenge and took it on the road.

In fact, you called the whole road show Leading Matters, which was an

inspiration for the name of this podcast.

I'm curious, can you tell us a little bit about how the

Stanford Challenge came to be?

Who and how you created the vision?

How did you go about bringing it to life?

The Stanford challenge was first and foremost, a strategic plan for the

development of the university over, say, a ten to fifteen year period.

But it was also a vision that we could garner support from alumni and friends so

that we could do something really powerful and transformative in the university.

The Stanford Challenge was created over a period of time.

With both some bottoms up thinking that bubbled up from the faculty

in the university, things they thought we should be doing.

And some top down guidance, too, in terms of what we thought would

make a compelling set of goals and objectives for the university.

So we kind of combined both of them as we went along, and we were driven by an

observation that Stanford had reached a point in its evolution where it could

think boldly about what it might done.

We had finished a big campaign focused on undergraduate education that really

solidified both financial aid and the quality of our undergraduate program.

So we began to think about how do we take this incredible set of

schools here, all ranked in the top few in the country in their fields.

And really leverage that broad capability to reach and begin to

address the really big problems that society has and be problem

solvers with respect to those issues.

So what were the big challenges you took on?

First and foremost was thinking about the environment and sustainability issues.

But we also thought about issues about globalization and what was happening

in the world and peace and security.

The rise of democracy around the world and how do we ensure that.

We thought about issues in healthcare and biomedical technologies.

And then we had another direction that came up actually from

the faculty planning group.

Which was to invest in the arts in a big way.

Stanford had never made a really large commitment to the arts of the scale of

what our East Coast competitors had done.

We thought maybe this is the time to do it.

And I knew that we had some alumni and friends that were enthusiastic

about doing something there.

So if we could craft a vision we could really elevate Stanford's

position with respect to the arts.

That's a really interesting point you bring up, is that these things had

to actually happen with support from the community, whether it's alumni

or other generous community members.

How big a role did they play in having a vision that they shared?

We started by formulating what we thought was a rational plan, working

largely with the deans of the schools and these interdisciplinary

faculty planning committees.

Then we began to shape that.

I wrote a thought paper as often to try to coalesce a vision.

I find when you have to write a paper and may only be three,

it was four or five pages.

But it forces you to really think about what your vision is and to be a little

more concrete than you would otherwise be.

So I wrote that and then we started to circulate that first with a small

group of trustees and former trustees who were close to the university.

And then with a larger group, we did a series of events, mostly in

people's houses over dinner, where we talked about the vision and we

shared it with them and got feedback and saw what people thought about it.

And so you hone it that way so when you roll it out to tens of thousands

of alumni, it's really well thought out and it's tested by that process.

I was fortunate to get to go on the road show, the Leading Matters road

show, to a number of the destinations.

And I can tell you that at the end of each one, I personally was moved

to tears seeing this vision and also seeing these incredible stories of

students who are working on these really, really impactful projects.

I know that it still sticks with me.

It was such a powerful messaging about what the university could do and the

impact it could have on the world.

Speaking of impact and transformative, you've been an

academics your entire career.

And most academics think of the fruits of their labor as research

papers that get measured, bought in impact by the number of citations.

But you have not stopped there.

You've been involved with spinning a number of companies out of the university.

Either as a founder yourself and also supporting other colleagues

as they've spun out startups.

Can you talk a little bit about that vision?

How do you craft the vision to say, I'm not going to just look at this work as

something that's an academic endeavor, but something that actually is going to

turn into a company with real products that we're going to sell to the world?

The first time around, when I did this with a company that was named after our

Stanford project, which was called MIPS, I was a bit of a reluctant entrepreneur.

I actually thought publish the papers.

The results were so stunningly good that five graduate students could build

something that was better than what industry was building with teams of fifty,

sixty, a hundred engineers working on it.

We initially thought people will pick this idea up and they

didn't, there was a reluctance.

It probably had the extra difficulty that it obsoleted their existing products.

So they were, there was a little bit of not invented here

syndrome operating as well.

And they could see what I would call, it was an academic prototype

so they could see the shortcomings.

We thought the shortcomings were small.

This was an academic prototype.

We knew how to fix those kinds of issues.

So in the end, we decided to start a company to prove this.

And that was a powerful learning opportunity.

I wish I knew more about entrepreneurship.

I wish I had taken some of the courses that you've taught, Tina, uh, before I

did it, because we made a lot of mistakes along the way, but the technology

was so good and so far ahead of what was happening in industry that that

took us through a lot of mistakes and foibles that we made along the way.

Right.

And you took a couple of years off, didn't you?

I did.

I took about eighteen months on sabbatical.

And then I was back on a one day a week consulting thing.

And I spent a couple of days a week during the summer.

I became the Chief Scientist, it was a great title.

Nobody reported to me, but I could represent the company and

where the technology was going.

Both the example of the Stanford Challenge and spinning out these

companies are examples of seeing and seizing amazing opportunities.

But we both know that in leadership positions, you know,

problems bubble up to the top.

And sometimes the vision has to come in response to a big challenge.

And I think back to 2008, where the university was faced with a real

huge financial crisis after that financial meltdown on Wall Street.

And it was fascinating to see how you and your team address this.

Can you tell us a little bit about what happened and, you know, give us a peek

inside your office and the conversations that were happening and how the decisions

were made in response to this crisis?

Well, you're right.

It was a big financial crisis.

We lost about thrity percent of the value of the endowment, which at that

time was somewhere in the range of seven or eight billion dollars, vaporized.

A large amount of our cash portfolio, also our cash vaporized at the

same time, which was a buffer and also our earthquake insurance.

So the provost and I immediately concluded we needed to do something.

And we actually got a lot of support from our trustees because many of

them had been in business, were used to these kinds of setbacks

and knew they had to be addressed.

There was more reluctance across the rest of the university because our view was

we've got to cut budget, which means we're probably going to have to do layoffs.

We decided to stick to a couple of core principles.

We decided not to cut student financial aid because this was

a crisis time for many families.

And in fact, just the opposite happened, our financial aid needs went up.

Because lots of families lost one of two jobs, for example,

if both parents were working.

And we decided not to cut any faculty positions, although we froze all

faculty hiring for a period of time.

And then we had to figure out how to get the rest of it to work.

And we had to ask the staff to do a bunch of layoffs and early retirements.

But we spread it out, we let each unit make the decision themselves

what was the best way to get a ten percent reduction in their budget.

There was some initial resistance, but what it did for us is it got us

through this dark period very fast.

So we emerged a year later, our budget was in good shape.

And as the endowment began to rebound, we could go out and hire again, while

many other institutions that had not acted and instead just kind of decided

to coast, found themselves hampered for another three, four, five years while

they had to wait for recovery to occur.

There's the famous quote, a crisis is a terrible thing to waste.

And I wonder, are there things that you could do during this crisis that you

would not have had the political capital to do during quote unquote normal times.

Where you could have made some decisions that you now could execute that you

wouldn't have been able to do before?

It's very hard to do a layoff in a university and have a reduction

in force in a university.

So getting people to align and agree to do that was key.

The first thing we had to do was convince them of the depth and the

critical nature of the problem.

We made a decision, the provost and I, to cut our salaries by ten percent.

And we asked all the deans and vice presidents to take a

five percent salary reduction.

That sent a message to them, we're not kidding, this is serious.

And by cutting our salaries, we can save a few jobs in that.

The second thing we had to do was we had to do a series of events around campus.

Starting with the academic Senate to explain to the

faculty why this was necessary.

But then do a set of town halls, work with the various schools so that they

could do this in the way that would have the least impact on their program.

And get the budget aligned.

And in the end, it took a few months, but we got it done.

I actually felt that we were a better running university

once we had taken that step.

And so the crisis actually helped us.

And then we could rebound and we could reposition things.

And I remember when we got to the end of it and things began to get better, they

said, well, now give us back our money.

I said, no, I'm going to give you money, but I want you to tell me

what you're going to do new and different that makes it interesting.

So you can reposition what you're doing in that process.

Now, I love the fact that you dove right into the center of this problem,

as opposed to sort of waffling and just being anxious and making little

salami tactics of little tiny changes.

And you really drove into the middle of it as opposed to avoiding it.

Did you have any experiences that set you up to be able to

make this really hard decision?

Yes, absolutely.

We had a financial crisis at MIPS, the company I started early on.

We had to do a layoff of a third of our staff.

So much more difficult but we realized that doing it quickly,

think of this as a dark tunnel you're going to have to go through.

Because of course people are going to lose their jobs and things, where you

want to get through that dark part as quickly as possible and emerge to the

other side where things are better.

And I really learned that in a startup environment where you don't have a choice.

You've got to do it, right?

It was make it, or the company was going to die.

So in the context of the university, we said, let's do this quickly.

In fact, we made an announcement, made the announcement sort

of at the beginning of April.

And we said, by June, everybody has to identify how they're going

to make their budget cuts and begin doing them by the summer.

And that really helped us get through it quickly and then reposition

the university going forward.

It was really impressive.

Having been there and seen this, it was really executed beautifully.

In my classes, I teach a lot of sessions about risk taking

and failure and resilience.

And I often ask the students, are you a risk taker?

Some of them raise their hands.

Some of them don't because they think that risk taking is binary, that you're

either a risk taker or you're not.

But then we start parsing it and I help them understand that risk

taking is actually much more nuanced.

There are really different types of risks.

There are financial risks and social risks and emotional risks and physical

risks and ethical risks and political risks and intellectual risks.

When you think about yourself as a leader, what type of risks do you

feel most comfortable taking and which are you kind of uncomfortable taking?

When I think about taking risk, I immediately think about what is the

reward in regard to taking this risk.

There are some risks I don't take, are very hesitant to take

reputational risk or ethical risk.

Because I think those can have long lasting damage to an institution

or a group you're leading.

Financial risk.

Take financial risk.

We take financial risk.

I would say to the endowment management group, I'm willing to take

more volatility in terms of how the endowment is performing if you can give

me better returns over a long time.

Because over the long term, then I can invest that and I can live with if we

get a sudden downturn, that's larger than expected and we have to do a budget

reset, we'll figure out how to do it.

I'm playing for the long term upside in that case.

Do you find that it's really important to surround yourself with people

with complementary risk profiles so that you balance each other out?

So that you have some people who are not financial risk takers who say,

hey, hey, hey, here's a downside.

Let's consider this.

I do.

So I like to have people who tell me about that.

And the people who do, for example, the university budget don't like

this kind of volatility as much.

But I'm playing for the longterm.

I want to know that five years from now, I'll be able to do something

that I couldn't possibly have done had I been more conservative

during that other period.

I also used to look, I mean, certainly the general counsel of

the university, right, as a lawyer.

The lawyer's job is to bring all those risks forward to you.

And most of the time I would agree with the general counsel and occasionally I

would say, no, we're going to take this risk anyway because there's something

more valuable here that we're after.

I'm curious if you've taken any significant political risks.

Thinking back in my memory, you were really active in supporting

the DREAM Act, which certainly had political ramifications.

Help us understand what the DREAM Act was and why you were so passionate about it.

The DREAM Act was a movement, which hopefully would have eventually

led to legislation that would have given people who came to the US

undocumented as children access to permanent residency and eventually

even citizenship in the United States.

We became concerned about, and saw its growing importance, as Stanford started

to see more undocumented students among its undergraduate population.

And we became worried that we were going to educate these incredibly talented

students who would often overcome incredible hardships only to see their

future career frustrated because they couldn't remain in the United States.

And this was a country for many of them.

This was the only country they had known.

They had come to the US when they were three, four, five.

So we felt very strongly about it and we worked hard to try

to get Congress to pass it.

We got positive hearings from both sides of the aisle, but getting

a piece of legislation they could agree on turned out to be very hard.

So I have great regard for the people who can get things done in politics

because I think it's extremely difficult.

John, when you left the presidency, you weren't done.

And you really wanted to continue to have an impact and then created the

vision for Knight-Hennessy Scholars.

How did that vision come to life?

And what sort of risks did you consider when you started

thinking about this new endeavor?

Well, the initial thoughts would go back to a very brief sabbatical I took from

the presidency of about three months where I did some travel and I spent a lot of

time reading books on higher education.

Many of them talking about the failure that higher education had

not solved a number of key problems.

And I became increasingly concerned with the issue of leadership around the world.

And we had seen deadlock in Congress, we had seen the failure of the Arab

Spring, we had seen the financial crisis you mentioned, things where

I really think we didn't have the quality of leadership that we needed.

So I began to think about what could we do as an educational institution,

as a university, to create an opportunity to develop better leaders

that would address these complex challenges we face around the world.

And that was the very beginning.

I then began to socialize it with the provost and the deans and

again, wrote a thought paper.

It was called Project S and that was the name of the project at the time.

And I circulated it to a few small number of trustees, people that I had

close relationships with the chair of the board was then Steve Denning,

for which Denning House is named.

That was kind of the beginning.

And then the key moment was on a trustee retreat.

It would have been my last retreat.

It's 2015 and I was getting ready to leave the presidency.

I took it to the trustee retreat and I gave a presentation after

dinner and said, here's the vision.

You know, we need better leaders around the world, Stanford could really do this.

We could build on the strengths of our graduate programs, which are

incredibly strong and distinguished and really do something that was unusual.

The trustees were incredibly enthusiastic about it.

So we knew that we had an idea that people found really compelling.

Did you see any risks in it?

I mean, what were the potential gotchas?

The biggest gotcha was we needed a lot of money to make this happen.

And we wanted to create a program that would be in perpetuity.

Because we saw a lot of the value would be having students over many years and

being able to build a network of alumni scholars over time that could really

strengthen and learn from one another.

So we needed to do something that had a very strong endowment as its base.

We needed a gathering place to really try to build community

and make community work.

So we had to figure out a building and a location for a building that really

kind of was centric in the campus.

All those pieces had to get solved and luckily, I knew some people

and starting with Phil Knight, who were really enthusiastic about the

challenge and were willing to make the investment and making it happen.

I love that you were using all of your entrepreneurial skills

here to bring this to life.

Absolutely.

Absolutely.

No, because really and truly this was going from, you know, zero to one, right?

This was going from just a vision and a short paper with some ideas to

all of a sudden materializing this beautiful building and this community

and all of the programs that we offer.

As we come to a close on this episode, I wonder if you can share any insights that

you've gotten from leaders in history.

I know that you're such a history buff.

When you've had really difficult problems to solve or even opportunities to

take on, are there historical figures that you look to for inspiration?

Certainly, I mean, I look at the changes that people have

been able to make in the world.

I mean, as you know, I'm a big fan of Abraham Lincoln, and I think

his determination to halt the spread of slavery and eventually to

extinguish it was really remarkable.

And he seized the opportunity.

When the union won the battle of Antietam, he decided to issue

the Emancipation Proclamation.

His cabinet was absolutely opposed to him issuing that.

But he saw an opportunity to make a change that would really

improve the world in the longterm.

And he grabbed it.

Another person I think has an absolutely amazing story is Sara Josephine Baker.

She became a doctor at a time when there were not many women doctors.

And she really was responsible for implementing pediatric

public health in New York City.

This was a time when parents would regularly lose twenty-five percent of

their children to infant mortality.

And she campaigned for this.

She fought tooth and nail for it.

The establishment was opposed to her, didn't want to let a

woman leader come in and do this.

And she fought tooth and nail and she dramatically overpaid her time.

She saved tens of thousands of lives of young people by improving the

quality of public health and teaching young mothers, how to care for and

take care of their children better.

These kinds of people are really inspiring.

You look at what Martin Luther King did for this country.

And he was initially a reluctant leader because he realized being a

leader in the civil rights movement could be dangerous and would take

him away from a fairly comfortable life he had as a pastor in what had

formerly been his father's church.

And he realized that if he embraced leadership in the civil rights movement,

it would be a difficult road to hoe.

But he also became convinced that that road would be transformative and certainly

he changed our country for the better.

Well, it's clear that these leaders really did have an impact on you and

I am giving a bet that your leadership is gonna go down in history, too.

There are four key takeaways that I've taken from this conversation.

First, craft a vision and then get input and feedback from

others in order to refine it.

Second, be willing to personally commit to your vision and to

demonstrate that to others.

Third, you need to understand your risk profile, what type of risks

you're willing to take, those are not.

And surround yourself with those who have a different profile so that

they can complement your perspective.

And finally, in a crisis, take the time to figure out what the right thing

to do is, and then act decisively.

Thank you so much for joining us on this episode of Leading Matters.

Please follow and like us wherever you listen to podcasts.

And stay engaged with Knight-Hennessy scholars through

social media @Knight-Hennessy and on our website KH.Stanford.edu.