Last week in San Francisco, Knowledge@Wharton High School teamed up with PwC to present its second financial literacy seminar for high school educators. The theme of Day 1: Leadership. Former Charles Schwab CEO David Pottruck, who is now a Wharton professor, sat down with Knowledge@Wharton High School to discuss leadership from the inside out.…Read More
by Diana Drake
Last week in San Francisco, Knowledge@Wharton High School teamed up with PwC to present its second financial literacy seminar for high school educators. The theme of Day 1: Leadership. Former Charles Schwab CEO David Pottruck, who is now a Wharton professor, sat down with Knowledge@Wharton High School to discuss leadership from the inside out.
Below is an edited version of the transcript.
Knowledge@Wharton High School: It gives me great pleasure to introduce David Pottruck. He has been a coach and a teacher all his life. As the CEO and leader of Charles Schwab, he helped build Schwab from a $50 million revenue company to a $5 billion revenue company over 15 years. Along the way, he won many accolades, including Morningstar’s CEO of the Year Award in 1999.
But if you ask Dave, he claims that his success was due to the things he learned as a wrestling coach at his alma mater, the University of Pennsylvania. After leaving Schwab, Dave started teaching seven years ago here in Wharton’s MBA program, where he has won two teaching awards as the students’ top-rated faculty member. David has also taught corporate executives in the Wharton Executive Education Program, as well as PhD students in Penn’s Graduate School of Education. Dave has authored the business bestseller titled Clicks and Mortar, which reached No. 8 on The New York Times bestseller list and was No. 5 on Amazon. He is currently working on a new book that will be published next year.
Today, Dave is chairman of the 21st century corporate training company called CorpU. CorpU aims to deliver what they call “hybrid learning” that encompasses online delivery of educational content combined with social interaction among a peer group of attendees combined with real-time educational sessions. CorpU’s clients include Coca-Cola, MasterCard, Aetna, Schwab and the World Economic Forum, to name a few. Finally, Dave wants all of you to know that he is honored to have the opportunity to spend time with you this afternoon. Please welcome, David Pottruck.
David Pottruck: Thank you, Mukul.It really is an honor to be here with all of you. I have great admiration for the work that you do. So, thank you for the opportunity.
KWHS: As a wrestling coach at UPenn, you learned things and developed capabilities that you say helped you when you became the CEO of Charles Schwab. What were some of those things?
Pottruck: I had the opportunity when I was at Penn to be a football player and a wrestler. Then when I went on to get my MBA, I became the assistant wrestling coach. That experience taught me a few things. Now remember, I had just wrestled the year before and now I’m the coach. I’m getting a brand new perspective on what it’s like to try to help athletes raise their game to a higher level. These are the things that I learned that stayed with me in business.
No. 1: I learned a new definition of what it meant to work hard. I always thought as a wrestler that I was working hard. I wasn’t working hard enough because there’s someone else out there somewhere in the country working harder than me. And they’re going to beat me. So, suddenly you have to raise your game in terms of understanding that the world is intensely competitive. I’m not training to beat the average guy; I’m training to beat the best guys in the country. If I want to be an All-American, I need to be able to beat the best guys in the country. That means every time I step on the mat or every time I sit at my desk to do work, I’ve got to believe that I’m the hardest working guy in the company or I’m the hardest working guy on my team or the hardest working guy in my weight class.
No 2: Very few guys go through their careers as wrestlers and are never beaten. Almost everybody loses. You have a bad day. You lose to a guy you should have beaten. That’s the worst thing of all. That’s what really affects your confidence. You know you should have won but you didn’t. But life is about resiliency. Life is about coming back from those disappointments. We all have disappointments. And sometimes, especially if you have a leadership position — and I was lucky enough in my career to be the manager of a bunch of managers; the leader of other leaders — we have to find the wherewithal to get past those disappointments, to get back out there, to find our confidence and keep going forward in the face of what sometimes is very tough disappointment.
No 3: I learned that you’ve got to set goals really high. You have to have the confidence and the courage to set really high goals and then strive like hell to meet them. But it’s really hard to do that. Everybody wants to set the bar they know they can jump over. We all do that. Come on, we all know that there are times we want to put the bar [lower]. But if you put the bar [high], the likelihood of this level of performance is slim to none. And so, the only way to get that highest level of performance is to set a bar so high you’re not sure you can get there. And then you have to gather everyone around you to bring their very best every day to the wrestling room, to the office, to the classroom — their best. Then try to take that best and accomplish great things.
KWHS: Based on what you said, what do you think are the most important attributes of a leader? And even more significant, are these things that are in-born? Or can they be taught?
Pottruck: You don’t become a leader by having the loudest voice. You don’t become a leader by jumping in front of everybody and saying, “Let’s charge up the hill.” I think great leaders are people who are trustworthy. You have to be worthy of being followed. And you have to be able to be trusted. This comes from two things — competence and connection. You need both. You can’t not be competent and be a leader. No one is going to follow someone who doesn’t know what they’re doing. So, you have to have the competence to do your job. The trouble is that so many people in business and in the world of academia — so many people in all walks of life — get promoted on their competence. And then they get into a job of leadership, and they don’t have the ability to also connect.
That ability to connect is what inspires people to want to do their very best. We talk so much in business school about motivation. We take classes on how to be a motivational manager. I know you’ve all taken psychology because at one point I was an education major at Penn and I took introductory psychology. They trained me that motivations are about behavior and rewards. We all remember Maslow — behavior and rewards. Well, let’s face it, I know for a fact that whether you are a good teacher or a great teacher, your financial rewards are the same. So, therefore to do your very best is not about motivation that comes from some external source. It’s about your own ability to motivate yourself and your own ability to inspire your students. The difference to me between motivation and inspiration is that motivation is about behavior then rewards, and inspiration is about purpose. It’s about trying to do something great because you want to be a part of something great. You want to accomplish something you can be proud of — not because there are rewards that are external, [but because] there are rewards that come from your heart.
KWHS: You’ve been a leader for a long time — at Charles Schwab and you are also a leader at CorpU. In all these years of exercising leadership, what has been the biggest leadership challenge that you ever faced? How did you overcome it? And what did you learn from it?
Pottruck: I think that early in my career I was very focused on competence. I wanted to be really good at what I did, and I worked hard at it. I started out in my business career in finance. I worked a little bit at technology. And then I made my way to marketing. I was really good at marketing and I loved it — I loved advertising, I loved promotion, I loved ringing the cash register and I loved every time we made a sale. I could measure that I had done something successful. I worked hard at becoming a world-class marketing executive. I was really focused on this competence part and much less focused on the connection part. It was hard for me to get beyond myself to focus on the connection part, which is often about listening, not about talking. It’s about asking others to make a contribution. It’s about inspiring other people to want to contribute to the dialogue. I was so busy telling everybody what to do to show them how smart I was, have them all be so excited to work with such a genius, that I wasn’t spending any time getting their best ideas, trying to show them how important they were, giving them a chance to express the best of themselves. You can call this humility and good listening skills. [I had to get] my own ego out of the way and become someone who led from the middle rather than someone who led from the front. I think that was my greatest challenge.
The way I learned this was that I had a boss who was pretty tough on me. He gave me a performance review one time and told me that I had issues with my colleagues. I was so busy working on my own stuff that I wasn’t even aware that I had these kinds of problems. At the same time, I was in the process of getting divorced for the second time. So, I was going through some therapy trying to understand why I had this wife selection problem.
I’m about six months into my therapy and my therapist says to me, “Well, I have some good news and some bad news.” I said, “Oh, really? What’s the good news?” She said, “Well, I actually don’t think you have a wife selection problem.” I said, “Well, what’s the bad news?” She said, “I think you have a husband behavior problem.”
I found out that the problems I was having at home were the problems I was having at work. They were all around collaboration, shared authority, shared responsibility and listening skills. These were the things that I needed to work on to get better.
KWHS: You made a great point about connections. And when you think of this from the perspective of a high school teacher, it’s all about connecting with students. So, the question then is, how important do you think it is for high school teachers to be leaders? And why?
Pottruck: If I come back to that model of competence plus connection, I have no doubt that all of you are immensely competent in your subject matters. And I’m sure that many of you are fabulous at connecting, as well. But in my experience, I think that’s where sometimes teachers fall short. Maybe because they don’t understand that connecting is an important part of the job. This is what I call leading from the middle instead of leading from the front. Leading from the front is about “Follow me.” So many of you are too young to remember the actor John Wayne and all the movies he was in. But he was always [saying], “Come on, guys, we’re going to take the hill, follow me.” That was a macho style of leadership. I subscribe to a different model — a model of leading from the middle where you’re not in front. Maybe someone else is in front and you’re trying to inspire the group to want to accomplish something great. I think this is one of your greatest challenges — to inspire your students to set goals that are so high, to strive, to understand the purpose behind why they learned some of the things they learned. I think oftentimes they don’t get it. I know I never did. I was a really good student in high school. I look back and I’m not sure where my motivation in high school came from. I was actually the first student from my high school to ever attend an Ivy League school. Only 25% of the students in my high school class went on to college – 75% didn’t. I would say of the 25% that went to college, half went to community college, half went to four-year schools. I didn’t come from a very well-educated community.
I’ve been asked many times, “Where did you get that inspiration to strive to the Ivy League?” And I don’t even know. I have no idea where that idea came from. But I wish I could say I had teachers who saw that spark in me, who believed in me and inspired me to reach higher. That’s what I think could be in some ways the most valuable and rewarding part of your job. I’m sure that more than half of the people in this room know this allegory — a story that teaches a lesson. Two guys [are] walking along the beach after a big storm and thousands of starfish have washed up on the beach. The guy reaches down, picks one up, throws it back into the water and his friend says to him, “What are you doing? There [are] thousands of starfish on this beach. You can’t make a difference.” He says, “Made a difference to that one.” I love that story because that’s what we do. We make a difference one at a time.
My wife and I have the privilege to be involved charitably with foster kids. And the reason why we’re involved with foster kids is I think nobody has a tougher deal, no one’s gotten more abused in some ways than foster kids – through no fault of their own. Their parents, for whatever reason, gave them up, had them taken away by social services, and they go from foster home to foster home in this horrible system that we have. Some 70% or 80% are on their way to the penal system, but some small percentage has this vision of making a life for themselves. We try to help those men and women succeed. That’s where I feel like we’re making a difference, one at a time. That’s the part that I see as so incredibly exciting about what you do.
KWHS: Why don’t we look at the problem from the point of view of the students now? Students today are growing up in a world where it’s not easy to get jobs. Youth unemployment is at record levels, not just in the U.S. but all over the world. In your view, what are the kinds of skills that high school students today will need to succeed when they grow up and graduate? What can teachers do to nurture those skills in students?
Pottruck: That’s such a great question. I look back on my high school education. I was trying to do well as a high school student because I wanted to go to college. I didn’t have any career ambitions. There wasn’t a single white-collar worker on the street I lived on — not one. There were 30 houses on my street and one parent went to college. He was a teacher, and he was the closest we had to a white-collar job. He wore a suit and tie to work or a sport jacket every day. [The rest] were factory workers, bus drivers, policemen, firemen and so on. I had no role models when I was in school and I wanted to go to college. I never thought about the skills I was developing in the classroom. Nobody ever put it into context for me that I was learning communication skills. I was learning grammar. I wasn’t thinking that I was learning how to communicate. Writing papers was learning how to express myself in a persuasive way. Learning how to do critical thinking and critical analysis to look at a problem, break it down, analyze it, come up with solutions — I never understood that these were skills. I thought of myself as passing tests. I thought of myself as getting grades. I never had the context.
When I look at the people I’ve worked with, it’s all about critical thinking. It’s all about looking at a problem and understanding how to dissect the problem into the contributing factors that make the problem what it is. Everyone wants to jump into solving the problem. Wait a minute. Let’s define the problem first. Let’s figure out all the contributors, all the things that we have to attack, then let’s figure out how we get to a solution. I’m not taking English. I’m taking communications and I’m learning how to communicate. I’m learning how to be persuasive, communicate verbally, communicate in writing, learning how to listen, learning how to give feedback. These are incredibly important skills.
I have dinner every year at Penn in Philadelphia with all the students I’ve gotten to know. I always stay in touch with them. So, this past year I had dinner with Penn students. They were all in the College of Liberal Arts — we call it at Penn the College of Arts and Sciences. So it is not the Wharton School of Business, but rather the College of Arts and Sciences.
We’re having dinner. I [asked] them, “So, how many of you expect to get a job working for a company when you graduate as opposed to becoming a teacher or going to work in the government or a nonprofit? How many of you expect to go to work for a company — a for-profit company?” Every single one of them raises their hands. I said, “Okay, how many of you have taken one accounting class?”
Nobody raised their hands. I said, “Let me ask you a question — if you were going to get a job with that company in Italy and you plan to be in Italy the next 10 years, would you learn Italian?” “Well, of course we’d learn Italian,” they said. I said, “What do you think the language of business is?” The language of business is numbers. It’s accounting. If you don’t understand assets and liabilities, if you don’t understand profit and loss, appreciation schedules and amortization — if you don’t get these concepts, you can’t speak the language of business. Everybody today is watching their budgets, watching their numbers, accountable for outcomes that are usually measured in dollars and cents. If you don’t have accounting, you’re at a huge disadvantage. You don’t speak the language. You’re an American in Italy and you don’t speak Italian. They looked at me like, “Why didn’t anybody ever tell us this?”
I was at a conference earlier this year on educational innovation. We talked about how we prepare our students in high school or college for job interviews, or we don’t. How do you get a job? How do you prepare your résumé? How do you get summer internships that help you learn something to polish your résumé? How do you give a good impression in an interview? How do you answer questions? What’s the objective of the interview? What are you there for? Are you there to pour your heart out and answer every question as honestly and thoroughly as you can? Or are you actually there to create some impression with that interviewer of who you are and why you’re special?
“Oh, yeah, I guess that’s the reason I’m there for the interview,” they said. But nobody tells you that. How do you dress? How do you carry yourself? Why aren’t we teaching students these things as part of a broad education of being successful in life? I don’t know.
KWHS: I’m going to ask you one last question since you brought up educational innovation. CorpU is at the forefront of innovating. Innovation is going on everywhere. You hear about MOOCs [Massive Open Online Courses]. You hear about all kinds of things going on. What’s happening with education or innovation, and what is it going to mean for teachers and students?
Pottruck: I happen to be lucky enough to be on the board of Intel. I know everyone in this room knows what Intel is. I had a meeting this morning at Intel’s headquarters down in Santa Clara, [Calif]. We were looking at the latest laptops and tablets that are coming out. By a show of applause, tell me if this would appeal to you. No more passwords? Do you like that idea? No more passwords?
[The computer] looks at your face with the camera, and it says to you — you hear it — “State your name.” Say, “David Pottruck,” and now you [have access] to everything that you have. Like that idea? That could happen this year.
Some of the new things that are coming out make it so easy to do everything. What I’m excited by and what I think is going to be at the leading edge are things like the flipped classroom, [a teaching model that inverts traditional teaching methods, delivering instruction online outside of class and moving homework into the classroom]. It makes so much sense. I’m a professor here at Wharton, and I don’t really enjoy giving a lecture I’ve done eight times over eight years — the same one-hour lecture. I’d rather have students watch it. Now, they’re never going to watch an hour. So, we break it into five- or ten-minute segments. We’ve created these videos, and we’re going to use those to replace some of my lectures. In class, we’ll do more problem solving, more case study discussion, more discussion of the specific problems they have — maybe some role-plays, things that they can’t do as well on their own. We start changing the classroom from homework is class work and classwork is homework.
In your world, not every student has a tablet or a computer, so it can’t quite get there yet. But we’re not far away. We’re going to come out with tablets this year that cost $150. It won’t be an Apple tablet — that’ll still be $500. But it might be from Samsung or some other company you know well. Will they do everything that a $600 Apple tablet does? No. But it will be something that everyone in the classroom [can use]. Today the biggest buyer of iPads is the education market. Still, we have millions of students who don’t have them. Suddenly when they get to be $99, $149, we can find a way to get every kid to have one.
How about textbooks that are now Ereaders, where you tap on a word and you get to a website with rich information, maybe into a video or some other information. Or you don’t know a word — you tap on the word, it gives you a definition of the word for our English as a Second Language students.
Where this is going is beyond exciting. I’m involved with a guy who is the sponsor of an educational innovation summit. It’s called the Education Innovation Summit. There’s more creativity in the summit than in the naming of the summit. But in any case, he started it four years ago with Arizona State University in Phoenix. The first year, there were 200 attendees at the conference. The second year, there were 400. The third year, there were 800. This year, there were 1,400. That’s how this field is starting to grow. I love going to the presentations of the start-up companies that are doing new things. How many of you know what Quizlet is? Okay, a lot of you. So, I had this presentation from this 23-year-old young man who gets up in front of the room and says, “I’m the founder of Quizlet. Let me tell you something about how I founded this company. I was struggling with French my sophomore year in high school and I’m very technical. So, I decided that instead of creating flash cards for myself, I would create electronic flash cards — let’s call that a study aid — electronic study aid. My grades went up in French. So I offered this to my classmates. Boom. Their grades went up. I showed it to my teacher. She loved it and started creating her study aids. And this became a company.”
So, Quizlet is now a company with all kinds of study aid apps on it that [help] you learn different subjects. Most of them are user-generated content. There’s not a department with 2,000 people trying to create study aids, but people creating them for themselves and posting them. I don’t even think they make money. I don’t think they charge. I think it’s just typical user-generated content. “I did it because it was fun. I’m contributing. I’m making a difference in the world.”
I heard all kinds of ideas like this. And I was like, “You know, if I had any hair it would be on fire.” It’s so exciting! Your jobs will change. I see much less rote lecturing and telling. I see that moving to your lecture or someone else’s. How hard is it to film yourself, post it on YouTube and let your students watch it? And if they don’t get it the first time, they can watch it again and again until they do get it. That’s how Khan Academy started. Khan was trying to help his nephew and his niece with math problems. As I look around the room, most of you have many years ahead of you. You’re going to see some exciting changes. And I don’t know how you’ll feel about all of them — whether some of them will threaten you. They will require you to embrace new ideas. Some of you will do that with great excitement. Others will maybe do that kicking and screaming. But I encourage you to embrace it because it’s going to happen. And it’s better off if you get on it and learn how to do it and learn these things, than to try to be resistant and upset. Because it’s going to happen — it’s inevitable.
It’s just like when I was at Charles Schwab and we were doing trades with phone calls and suddenly the Internet exploded. Nobody wanted to call their brokers. Who calls the broker anymore? You just enter the order. Suddenly, we had call centers with thousands of people wondering, “Oh my God, what’s going to happen to my job? And what does that mean for our cost structure? How do we change?” We could have dragged our feet and become the next Borders or the next Tower Records, or we could jump on it and turn it into something good for our company, which is the choice we made. Not an easy choice, a hard choice.