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Transcript of remarks by Donald R. Keough at The Fuqua School of Business MBA-Daytime Program Graduation Ceremony, May 10, 2003

Donald R. Keough is Chairman of Allen & Company, and Former President of The Coca-Cola Company.

May 09, 2003

Thank you, Dean Breeden for that generous and thoughtful introduction. Faculty, distinguished guests, family, friends, and finally … members of the MBA class of 2003. To this last group I say congratulations.

What a class! It housed trained pilots -- civilian and military, Olympic athletes, world cup skiers, playwrites, professional singers, former advertising executives, gymnasts, doctors of veterinary medicine, dentists, track coaches, internationalists -- look at those flags behind me. And one-third of the class comes from outside the united states. A very special group on a very special day.

You made it. Now, however, before you can move on to the next phase of your lives, you must undergo two things: Pay your Duke bills … the Bursar is in the hall ready to take your money and the last grueling hurdle here at the Fuqua School of Business – the Commencement Address.

Like you, I’ve heard Commencement Addresses before. And, like you, I can’t remember a single thing from any of them.

However, they all seem to meet certain requirements … like an obligatory reference to your own days in school. Well, I went so long ago we didn’t learn Latin … we were speaking it.

And the Commencement Address should also create the impression that the speaker is something of an intellectual. This can usually be accomplished by a reference to Kafka, even if you have never read any of his works.

The Address should also provide some advice. I have some. And above all, a Commencement Address should be to the point.

Someone said that being a commencement speaker on a day of celebration like this is a little like being the body at an Irish wake. People think you are necessary for the proceedings, but you’re not expected to say very much.

I shall be mindful of that admonition. After all, I recognize that I am the only thing standing between you and your walk across this stage.

So, let me get to the point.

These seem like rather troubled times in the world of business, don’t they? Some of you might be sitting here saying to yourselves, “I am so unlucky to be stepping into the business world at this time.” And I know that job hunting is tough right now.

Well, the truth is, you are definitely entering a business environment that didn’t exist when you entered the MBA program here at Duke and Fuqua.

The economy is soft. People are restructuring, downsizing. Unemployment is higher than it’s been in years. The Dow Jones Average hasn’t even come close to bouncing back to its high, and the NASDAQ is still a ghost of its former self.

Meanwhile, former-celebrity CEO’s are hiding in closets and under desks. Corporate boards are re-examining what they’ve done over the last 20 years, desperately searching for what their role really ought to be.

It’s grim out there. The other day I was leaving my New York office when I noticed a panhandler sitting on a box in front of the Fifth Avenue Presbyterian Church across the street. He had his hands out, calling after passersby, “Change, change, change.” A man in a business suit walking by replied, “I’m trying. I’m trying.”

From every sector of our society today there are calls for business to change its ways. It seems there’s a dark cloud over everybody in everything from AOL to Xerox. Everyday there are new questions about creative accounting, insider trading, irrational exuberance, infectious greed, executive perks, excessive compensation, etc?

When you began your MBA studies, if you entered “corporate governance” in Google, you got a handful of hits. A few days ago it was more than a million. I think every professor at every business school including Fuqua has written or lectured on the subject.

Not to mention the hyper-excited television coverage. That sideways Enron “E” has been shown so many times, I think it’s become a series. Indeed this past January, Mike Farrell starred as Ken Lay in the CBS Docu-drama entitled “The Crooked E.”

And politicians have been having a splendid time. They may not know what they’re for, but they’re foursquare against these excesses in the business community, whatever they might be.

Oh, by the way, I want to report that in the midst of all this, I’ve noticed “Run, Hillary, Run” bumper stickers are beginning to appear in New York. Democrats put them on their rear bumper. Republicans put them on the front.
The purveyors of gallows humor are having a field day. One wag noted that astrology was invented so accounting could be a more accurate science.

A wealthy businessman wrote to the IRS: “I have been unable to sleep knowing that I have cheated on my income tax. I have understated my taxable income and have enclosed a check for seventy-five thousand dollars. If I still can’t sleep I'll send you the rest.”

And still, after all this time, all Jay Leno or David Letterman have to say is “Martha Stewart” and they’ve got a laugh. But it’s not funny.

Not when you read the polls. Directors and senior officers of corporations today are ranked just below used car salesmen. Depending on the poll you read, seventy to ninety percent of the American public view business leaders as dishonest, greedy, and untrustworthy. Just a few years ago they were at the top of the polls.

That’s the reality of the environment you’re stepping into, so it’s natural you might think that it’s really an unfortunate time to be marching out there with your great background and with a brand new MBA from this great institution in hand. You might think that.

But let me tell you, you’d be wrong. This is really the perfect time to be entering the business world. And you all will be there, trust me. Periods of dislocation are also periods of tremendous opportunity.

In the 2oth Century, for 54 of those 100 years the market was flat or down. But, during the wild, boom years from 1982 to 2000 … the longest bull market in history … when MBAs were hiring ON; they were frequently talking to people who already thought they owned the world.
They didn’t need help. They didn’t need new ideas. They didn’t need anybody.

And think about it … back a few years, say you had joined up with one of the then-high-flying firms, who were you to come in and tamper with this big, successful enterprise? All the balloons were rising, and your only job was to keep them full of air!

Well, now … now it’s different. There are senior executives of firm after firm looking for new ideas, desperate, in fact, for new solutions. There are top executives looking for good leaders who have strong moral compasses … who know who they are and what they stand for … and what they won’t stand for!

Many businesses in this country lost their way. And you have a wonderful opportunity. You can help them find their way back!

How might you do that? Well, first let’s look how the bull wrecked the china shop in the first place.
Looking back, the excesses of the 1990s actually had their origins during the stagnant 1970s, when companies tried to get stocks to move up a little bit. When they finally did begin to move, gradually many businesses began to move, too. In the words of one business school professor, they moved from “managerial capitalism to investor capitalism.” Control over the corporation shifted from basically managers focused on the business to charismatic CEOs and CFOs who focused on increasing share price over all else. Now!

CEOs were on the covers of mainstream magazines. They became corporate rock stars.

Things were not always like that. Let me take you back to the stone age.
In my first 20 years in The Coca-Cola Company the prevailing management view was: “The shareholders own the company. We run it for them. We will report the facts good or bad on a regular basis. We are focused on building long term value over time.”

Our annual report was about six to eight pages with no pictures. The idea of a picture of an executive in an annual report was anathema. The Company hired PR people to keep executives’ names out of the paper and Coca-Cola's name in. The product was the star.

All our Chief Financial Officer had to say was, “Read the numbers. We’ve done pretty well by our shareholders and we don’t answer casual questions.” In other words, he simply didn’t talk to Wall Street. He let the numbers talk.

Okay, it was carried it to a fault and the Company finally did have to open up a bit more. I remember the first time we invited analysts to a meeting in the late 70's. They were the giddiest group I’ve ever encountered … 150 or more.

Most companies were like this. They didn’t visit with the “Street” much, if at all.

But then in 1982 the bull market began. And it raged for 18 years. During that time, most companies let the analysts into the hall. Then occasionally into their living rooms … the kitchen. And finally they woke up one day and found them in their bedrooms.

The analysts were no longer there just to see how we were doing. They were there with sweet pillow talk, suggesting what we might do to make the numbers even better.

It happened to company after company.

In my time, up until the great bull market, CFOs were basically smart, tough, and mean. Their basic responsibility was to test every dollar, coming and going, to see if it was real. If it had been gold they would have bitten it.

Bringing good news was not their function. They were the truth tellers. They didn’t gild anything.
You could always count on the CFOs to tell the CEO the unvarnished truth, good, bad, or indifferent.

But as the stock market began to soar … and as we let the “Street” into our bedrooms … SLOWLY but surely the office of the CFO became a profit center … an important profit center. “I need another five cents this quarter," said the CEO. "Find it.”

CFOs became strategic planners and managers of investor relations. And many began to fiddle around. CFO in some companies began to mean “Chief Fiddling Officer.”

Over time, instead of being the guardians of the transparency and the fiscal integrity of the corporation the CFOs were the new celebrities of business and the celebrities on the “Street” were the analysts.

And the analysts became more and more important to the economic health of the investment bankers. Many analysts became enablers.

Everyone did. Corporate managers, investment bankers, analysts, lawyers, directors … indeed individual investors … virtually everyone in many companies was focused on that one goal: to increase the price of a company’s stock. Now!

It was a time when every recommendation was a “buy.” If someone said “hold,” that meant “run for your life.”

Virtually everyone was swept up in a drive for short term earnings, and while some people just closed their eyes to what was going on, many more convinced themselves that what they were seeing was just fine.

Just think. We had youngsters with backwards baseball caps going around asking for tons of money telling us what their “burnrate” would be. Burnrate? In my day, we called that losing money. But, they got their funds. And they burned them.

The velocity of business accelerated tremendously during these boom years. Tremendous speed, one of the chief characteristics of high technology, tends to blur the moral senses.

What one was doing one day was over and done with so quickly that it didn’t seem to matter. On to the next deal. Who cared if all the numbers didn't quite jibe? That was yesterday’s news anyway.

Add something else. Complexity. Some companies said, “What we do is so technically advanced, so complex that even our own customers don’t understand what they’re buying.” How about derivatives?

Consider … during the last phase of the stock market bubble in 1999/2000, 1500 companies went into the fiction business. They reported pro forma earnings – what their earnings would have been if bad things had not reduced them … bad things like taxes and debt and interest.

At a recent gathering Warren Buffett announced that that morning on the golf course he’d played quite well. He had shot a pro forma 72. He restructured 18 putts!

Shareholders, the Street, the press … many wanted to hear those wonderful pro forma scores. And where there’s a demand … well, someone will come along and supply it, even if it’s smoke and mirrors.

In assessing what happened, we must be careful to distinguish between fraud and simple business failure. Risk is inherent in our system. Remember new Coke? I'd like to tell you about it but I was on vacation at the time.

Unfortunately, we had 18 years when many investors thought there was no risk. And many came to believe that there shouldn’t be. That they had a God-given right to get rich.

Now that people have learned that the stock market is not a sure thing that never goes down … and now that scandals have come to light … we all face the daunting task of rebuilding public confidence in our very economic system. The Fuqua School of Business will play a major role in making that happen and so will each of you.

Trust must be restored. And you can help to do it.

Things are broken. You have a wonderful opportunity to help fix them.

And that leads to the advice part of what I have to say to you. As you move into this changed world … this world that I believe is eager to right itself … there are four little guidelines that I’ve adhered to and that you might find helpful.

Guideline number one … question. Be a questioner all the time. Probe, dig, get the facts and then go further and deeper.

When I was with Coca-Cola and people brought me good news on top of good news it always made me a little nervous. I always had an itch. “How come things look so good?” I said. “How come we’re so lucky? What’s out there we should be tending to right now? If everything’s coming up roses, aren’t there thorns we should be watching out for?”

And never, ever be afraid to ask a dumb question. I was always asking the really dumb questions. People would look at me, “There goes Keough again.”

The only dumb thing about any question is lacking the courage to ask it. I figure, if I don’t understand this idea, this set of numbers, this proposal, this whatever … if it’s a good idea, then it won’t hurt to clarify it further … or, if it’s bad idea, let’s find out now.”

One more kind of question you should never be afraid to ask … that’s the second question. Too often people are satisfied with the first answer they get. Don’t be. Ask more. I honestly don’t think any significant decision should be made on the basis of a one-page executive summary. Warren Buffett reads eight to ten hours a day.

You know what? A good share of the troubles of the last several years would have been avoided if people had simply asked more questions at Enron, at Tyco, at WorldCom, etc, etc, etc.

My second little guideline is … trust your convictions and be true to them. Or as Mark Twain put it, “Always do right. This will gratify some people and astonish the rest.”

A group of children were lined up for lunch in the cafeteria of a Catholic school. At the head of the table was a large pile of apples. The nun had put out a note that read: “Take only one. God is watching.”

Moving through the line to the other end of the table, there was a large pile of chocolate chip cookies. A little boy wrote a note: “Take all you want. God is watching the apples.”

Peter Drucker says there is no such thing as business ethics. There is ethics, period! Ethics is doing what’s right when nobody is watching. Ethics, according to Potter Stewart, the late Supreme Court Justice is “knowing the difference between what you have a right to do and what is the right thing to do.”

You and I know that ethics, basic values, moral imperatives … these are not just little jokes or slogans that you have engraved on the company paper weights. Values are the foundation of this great university … of a great company … of civilization itself. What we value … honor, honesty, fairness, justice, duty, charity, forgiveness, the rule of law … this vast collection of precepts defines what we are.

You have all spent time in your lives and the last two years examining and evaluating these ideas. And you will continue to examine and evaluate throughout your life as you are confronted with the need to make moral decisions. I urge you … do not abdicate this duty. Do not be afraid to make moral decisions.

A point in every direction is the same as no point at all. So do not be afraid to stand up for your convictions. In an ambiguous world, we must seek to create our own clarity.

When you’re running an enterprise of any kind, you can consult with all the lawyers and accountants and consultants you want … ultimately you have to base your decisions on your own instincts and values.

The statesman and educator James B. Conant said, “Behold the turtle. He makes progress only when he sticks his neck out.” Being a leader often means going against the entrenched iron constraints of the usual practices and conventional wisdom. It means having the courage to fight for your beliefs.

My third guideline is … have passion … be passionate.

Several years ago, the playwright, Neil Simon, was discussing what he felt best expressed the theme of this own life, and he concluded it was best expressed in one word … passion!

He said, quote, “Passion is the force that has governed and motivated all my energies. Without it, life seems to me rather bleak and dismal.” He, of course, is in the “arts,” but believe me, that simple truth pertains to all fields of endeavor. It has been central to my life. It is why I am here today. I am not running for office. I am not being paid. I am passionate about what I believe about our economic system … about how lucky America is to have each of you assuming leadership.

You may be a man or a woman … young or not so young--age 24 to 49. You may be searingly intelligent or just above average like all the rest of us. You may be tall, thin, fat, rich, or poor … it doesn’t matter what you are. In the recipe for a happy life, the one ingredient you’re going to need if you want a life of achievement … a life in which you feel fulfilled … the one essential ingredient is passion … passion for what you do … passion for friends and family … passion for life.

You know, one of the tragedies that befalls some people who have had a fine education and studied the masters and wandered around the halls of the intellectual elite in a great educational institution is that if they’re not careful they can become extremely cynical. They can become obsessed with the flaws and weaknesses in their fellowmen and women and in society in general.

We’ve seen the consequences of greed and blind ambition. But, we cannot let pessimism rule as our primary lens on life. I know jobs are scarce, but your attitude should be positive. Go to work. Get a job. Forget about title and high pay. the only place it is crowded is at the starting gate. Seize responsibility and you'll be a winner.

I have a friend who is an architect. He says, “I can take the newest building built by the finest builders anywhere in the world, and if you give me a camera and various lenses, I can make that building look like it is about to fall down.

" Because I will find five or six or eight modest imperfections, focus on them, and convince you that the entire structure is about to topple.”

I urge you … don’t allow others to focus the camera of your life for you.

As I stand here, looking out at 342 graduates--remarkable men and women-- who have worked hard to reach this day … who have already achieved great success and who are now ready to move on … I ask you to do this … search for and seek out the good and the true and the beautiful in people because it is my belief that these qualities represent 95% of mankind.

A poet put it this way: “With all its sham and drudgery and broken dreams, this is still a beautiful world and many strive to live up to high ideals.”

I’m not advocating lunacy, here. We can’t stick our head in the sand and pretend that this is the best of all possible worlds. This is not the best of all possible worlds. We can make it better. You can make it better.

But … and this is my final guideline … you have to believe that you truly can make a difference.

When is a good time to begin a new career … to start a business … to take a chance on the future … to do something bold and daring?
Well, if you’re a pessimist, never! I once had the privilege of meeting Helen Keller. Blind and deaf she had all the credentials to be a pessimist. But she wasn’t.

Instead, she said, quote, “No pessimist ever discovered the secrets of the stars … or sailed to an uncharted land … or opened a new heaven to the human spirit.”

Yogi Berra put it another way: “When you come to a fork in the road, take it!”

I have one final bit of advice. Keep your brain soaking.


I view the human brain as a kind of sponge. It goes through a long period when its main function is to soak up knowledge and skills and lots of different stuff. I’m sure a few of you who are doctors are cringing at my materia medica … but I go on … Then, we step out in the world with that sponge pretty full and we begin to squeeze it.

It’s our turn now to impart information and wisdom to others and we squeeze our brains to retrieve that stuff that was put in there.

Now, what happens to some people is they keep squeezing that sponge … keep using the information that was put there. And one day, there’s nothing left. It’s all dry and hard. Yes, like a dry sponge.

They’re giving the same lectures, writing the same words, applying the same solutions to new problems. They walk around forever locked in that time warp when their brain was filling.

There is an alternative. Keep replenishing that sponge. Throughout life keep doing what you’ve been doing here at Fuqua. Keep signing up for new courses.

I don’t mean that you literally have to take courses, but approach the whole world as this wonderful, limitless curriculum from which you can continue to soak up the new enriching juices of life.

And as you chart your way after leaving here, heed the words of Albert Einstein: “The world we have created today has problems which cannot be solved by thinking the way we thought when we created them.”

Be a questioner. Trust your convictions. Be passionate. Believe you can make a difference. Keep soaking that brain. And, oh yes, along the way, try to have fun.

Remember, success in life is not a destination but a journey, and may the fates of the winds and the seas make yours a pleasant one … full of joy and promise.

You know what? I'd trade places with anyone of you … even up … right now. Get it on!