April 25, 2025 • 32 mins
This week, former Treasury Secretary Lawrence H. Summers and UVA’s Barbara Perry compare President Trump’s first 100 days in office with his previous term and those of presidents past. Later, how does a company balance its heritage with its future?
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:22):
This is Wall Street Week. I'm David Weston bringing you
stories of capitalism this week. What it takes to keep
a company on track or get it back on track
when it's wandered off. The tale of two very different companies,
the Mars Company and global power giant Ennel, and their
particular take on stakeholder capitalism. But we start with the
(00:43):
milestone this week of the first one hundred days of
the Trump administration, moving fast and breaking things. But where
does it all lead? We ask our special contributor Larry
Summers of Harvard.
Speaker 1 (00:56):
From a financial point of view, President Trump vowed to
do new things, and we have something new, the American
capital flight trade. It's a major pattern in markets when
the president does something consequential and new. We see four things.
(01:17):
Stocks go down, bonds go down, the dollar goes down,
and gold goes up. The signature is very clear. It's
revulsion against American assets, Foreigners less willing to put money here,
Americans more eager to diversify out of the country. It's
(01:39):
something that we saw a little bit of during the
Carter administration, but it's basically not a pattern in the
United States. It's a totally common pattern in what wags
joke are submerging markets, emerging market countries that get themselves
in trouble, as Argentina has many times, as Airdowan's Turkey
(02:03):
has in recent years. Most of us didn't ever think
that this would become a pervasive pattern in the United States.
So from an economic and financial point of view, there
is something very new, and of course it accumulates over time.
And so if you look at the combination of stocks, bonds,
(02:27):
and the dollar, this has probably been the least successful
one hundred days of a new president since the Second
World War. And that's what That's a verdict that's not
being rendered by any individual. That's not a verdict that's
being rendered in a partisan way. It's just reflecting the
(02:51):
judgment of markets.
Speaker 2 (02:55):
Larry, we saw them a couple of weeks ago, the
effect on stocks, bonds, and the dollar because of tariffs,
and there was a suspension of course for ninety days
for negotiations. This week we've seen it. It appears with
regard to Chair Powell and remarks about possibly terminating his
regime as a Chair tell us about that, will the
(03:15):
markets keep President Trump from moving? On? Chair pow.
Speaker 1 (03:19):
Things change, but they stay the same. When the president
of a country looks like he is driving events, and
he is driving events in an ill considered populist direction
against the wisdom of all economics, then bad things happen.
(03:45):
That's the response to the tariffs, That's the response to
the FED bashing. That's the response to the indications of
fiscal responsibility. That will come to be the response to
the undermining of the rule of law.
Speaker 2 (04:03):
The tradition of keeping score on a president's first one
hundred days began with FDR when the country was in
the depths of the Great Depression. Barbara Perry is a
presidential historian and professor of governance at the University of
Virginia's Miller Center.
Speaker 3 (04:18):
If you view FDR Franklin Roosevelt as a modern president,
most of us in political science.
Speaker 4 (04:23):
And history do.
Speaker 3 (04:24):
And what he referred to in July of that nineteen
thirty two presidential campaign against Herbert Hoover the incumbent, was
that he would start working with Congress in their first
hundred days together at the r said action is what
he would give them, and so he up till I
would say, now under the second Trump administration, was viewed
(04:46):
as having the most activist and the most successful administration
in the first hundred days, passing through Congress fifteen pieces
of New Deal legislation. So first thing that FDR did
was go on radio and give his first fireside address,
which is also part of that one hundred days, to
calm the people, to say, here's how banking works, here's
(05:08):
what I'm going to do. Here's the legislation I will
pass through Congress to regulate that, and then I will
also have regulations for business and housing and farming to
try to lift us out of this great depression. So
he not only starts the concept of those first hundred
days and judging particularly by legislation that's passed, what is
(05:29):
successful what's not in a first hundred days, and then
we end up applying that to all first hundred days
of the rest of the president's up till now.
Speaker 2 (05:37):
I'm struck, Barbara, with the fact that it was a
focus on legislation, a one hundred day agenda to work
with Congress. I'm not sure how much that is left anymore.
It seems like the president's doing much more on his
own because they've been mailed so far. Has that been
a gradual shift or was it more abrupt?
Speaker 3 (05:55):
I think that the current administration has had an abrupt
change in the substance of these executive orders, and by
the way, has surpassed FDR, who signed ninety nine executive
orders in his first hundred days, and even up to
getting to the first hundred days for this second Trump administration,
(06:18):
he had signed ninety nine to one hundred already. So
by the time we get to the official one hundred
day mark for Trump, there will be well over one
hundred executive order signed.
Speaker 2 (06:28):
Looking back through history with that benefit, what were the
most consequential first hundred days obviously nineteen thirty three that
you mentioned with FDR, which other ones were particularly consequential
as we look back on it.
Speaker 3 (06:41):
I'll give you another of John Kennedy, something very consequential
in his first hundred days that he really wasn't responsible for,
and that is the invasion of the Bay of Pigs
at Cuba, trying to upend the dictatorship of communist Fidel Castro,
who had aligned with the Soviet Union, our mortal enemy
and the Cold World War. And the word most often
(07:02):
used for that invasion is fiasco. But something that's important
to remember as well as some political scientists historians say
about the first hundred days is what style of president
and presidency does this president portray? And in the case
of Kennedy, he went before the public, he went before
the press, and he said, after the Bay of Pigs,
(07:24):
I will do a study. I will have an expert
panel to see what went wrong here. I am the
responsible officer of this government, and therefore I take full
responsibility for the failure of this invasion. He had come
into office with a seventy two percent approval rating. It
jumped almost ten points up to eighty three percent because
he took responsibility. So sometimes those consequential first hundred days
(07:48):
are not so much about what's happening with Congress. But
I would say, what's happening in the world, what's happening
at home and the economy and foreign affairs, in wartime
situation and doreidence make a correct decision or in we
look back in history, is at a fiasco.
Speaker 2 (08:05):
Bubba looking back through history? Is there a correlation in
general between how consequential the first hundred days is and
the rest of the four year term. I mean, they
might make mistakes, might not make mistakes. Style. As you said,
certainly we learn from but in general, if it's consequential
its first hundred days, does that mean something for the
rest or can it be very different?
Speaker 3 (08:24):
Well, let's take FDR and also a president before this
modern concept of one hundred days the first hundred days,
and I'll take Lincoln and even George Washington. They are
always listed by scholars, political scientists, historians, is the greatest
presidents of the United States. If you have a good
first one hundred days, it's very unusual to have then
(08:48):
an absolutely catastrophic presidency. I would say in the case
of Donald Trump's second first one hundred days, and as
most people know who study history, he's only the second
president to have a sexecond non consecutive term. He's off
to a consequential start in disruption and somewhat chaos, both
(09:08):
in how the government is perceived by the people, but
also how the United States is perceived abroad, particularly with
issues of tariffs and alliances and NATO, etc. So we
don't know if this will port a successful presidency or
if this disruption and chaos of the government and of
(09:29):
our standing in the world could lead to failure. We'll
have to wait and see up next.
Speaker 2 (09:36):
Every week seems to bring another story of a successful
company losing its way. But what about those that don't,
or that having strayed, find their way back to what
made them great to begin with. We look at the
Mars Company and Ennel, two major global companies, and what
they share in the way they do their business. This
(10:08):
is a story about heritage. How a company's heritage can
help it succeed, return it to success, or put it
at risk when it is left behind.
Speaker 5 (10:17):
Without the unabsolute reputation, the safety and consistency, you simply
can't compete.
Speaker 2 (10:24):
And that's why everybody's worried about Boeing. Boeing is just
the most recent and glaring example of a once great
company stumbling, in its case by losing its core edge
in engineering.
Speaker 6 (10:37):
I'm an aerospace engineering Back in the day, I actually
worked for Boeing. That's where you went if you wanted
to work on airplanes. You couldn't go anyplace else, you
really couldn't. That's not the case today.
Speaker 2 (10:47):
Ron Epstein is a former Boeing engineer who now covers
aerospace and defense for Bank of America. He watched as
his former employer lost its way It's far from the
only one, but there are also companies that over many years,
kept their momentum or even regained it after a stumble
or two.
Speaker 7 (11:08):
IBM turns one hundred and fourteen this year, one hundred
and forty in the technology industry. Think about companies that
have lasted a century in the technology industry. They're hard
to find because of the nature of technology.
Speaker 2 (11:20):
Sam Palmersano spent much of his career at IBM, rising
to become chairman and CEO. He attributes IBM's long term
success to a deep commitment to innovation.
Speaker 7 (11:32):
The Watsons defined that it was about the future and
about innovation, and that that's where you should drive. You
should drive innovation.
Speaker 2 (11:39):
The Business School at Yale University has created a program
to study what separates the companies that succeed over the
long term from those that don't. Some may find the
results surprising. They take us back to that notion that
has become known as stakeholder capitalism, although many of the
CEOs don't it new at all.
Speaker 8 (12:02):
We've interviewed more than one hundred and seventy five chief
executive officers as to the practice of this concept of
stakeholder capitalism.
Speaker 2 (12:13):
John Iwada spent thirty five years at IBM, where he
worked closely on innovation and strategy with Sam Palmasano. He
is now an Executive Fellow at the Yale School of Management.
Speaker 8 (12:25):
One of the things we learned in these interviews is
that most of the CEOs felt this wasn't really a
departure or anything new, and some of them said, this
is sound business practice, or it's a return to sound
business practice, especially if you think about the long term.
Leading a corporation or an enterprise for the long term,
(12:48):
there are short term pressures or expectations that sometimes get
in the way of making investments or decisions that may
not pay off for many quarters or even years, so
you have to think about that. You may think about
non financial commitments to employees, to society, and those are
not standardized, those are not accepted measurements and metrics, and
(13:12):
so those are soft or squishy, and other factors that
come into play here.
Speaker 2 (13:17):
I want to learn from his CEO interviews of the
challenges leaders face in trying to bring together disparate parts
of the company and disparate interested parties, and the key
role of purpose in weaving it all together.
Speaker 8 (13:32):
CEOs like every executive comes up through a business or
through a professional career in a vertical finance or R
and D or sales, and when they get into the
CEO chair, as Sachia Nadella Microsoft said it some years
ago in an interview, is then you realize just how
(13:52):
multi constituent or how many stakeholders the enterprise actually has.
You have shareholdergy of government, of course, you have customers
and employees, you have suppliers, and you have to have
these relationships with all of these constituents. The question is
do you manage them piecemeal or do we think of
(14:13):
this more holistically. A lot of the CEOs described sometimes
they use air quotes, this management system almost an operating
system for the company that is based on common definitions
of the firm. Some of them say, there are three
questions that you have to ask and answer why, what
(14:35):
and how? Why do we exist? Which turns into the
purpose of the company. What do we do, which is
the strategy of the company? And how and that's the culture.
How are we going to show up?
Speaker 2 (14:47):
A well known company that has put purpose and values
at the core of its operations since its founding is
the Mars company in business since nineteen eleven.
Speaker 8 (14:57):
Mars is more than one hundred years old, very successful
for a long time, and as we began to talk
to management at Mars and members of the Mars family,
we learned that they were going through what we would
refer to as a founding moment. And why because for
much of Mars history, members of the Mars family led
(15:20):
the company and worked in the company. But the reality
today in the future is very few members of the
Mars family, perhaps no members of the Mars family will
be in management or even work in the company.
Speaker 9 (15:34):
The principles and the values are at the heart of
who we are.
Speaker 2 (15:39):
Victoria Mars is the great granddaughter of founder frank Seymars.
She has been on the board for nearly twenty years,
three of them as chair.
Speaker 9 (15:49):
My grandfather had very strong principles and values, and these
principles and values I grew up with without actually no
that I was growing up with them. So when we
talk about the Mars principles, we're really talking about the
family values that have existed since the beginning. And as
(16:11):
the company got larger and it was more and more
difficult for the family, specifically at that point my father
and my uncle to be around all the associates. To
be able to talk about the values and to be
able to talk about how we do business, they decided
it was time to write them down. The five principles
that were actually written down and defined in the early eighties. Quality, responsibility, efficiency,
(16:36):
mutuality and freedom have been our principles since the beginning
and they are the foundation of everything we do within
the business.
Speaker 2 (16:47):
Times change and businesses evolve, something the Mars Company has
certainly done. But as much as the Mars Principles may
be updated every few years, the fundamentals do not change.
Speaker 9 (17:00):
So they haven't changed. They've just been updated to be relevant.
Management helps us and supports us and clearly obviously implements
them in our business. But any changes to them, any
tweaks to them, anything from the colors to the script
to the words, belongs to the family.
Speaker 2 (17:19):
A company having principles is one thing. Putting them to
use in everyday decisions, not to mention big strategic decisions
is something else.
Speaker 10 (17:28):
Entirely, it's not a checklist, but it comes up in
conversations when we make decisions, and I think that are
two things. One is this aligned with the purpose of
what we're trying to deliver here, whether it is overall
from Mars. You know, the kind of company that we
are trying to deliver today is well set up for
the world we want tomorrow.
Speaker 2 (17:50):
Klass, our guard is the Mars Chief financial officer and
like all members of management, not a member of the
Mars family.
Speaker 10 (17:58):
Five principles come up. Certainly as a fact check. You know,
this doesn't feel like in line with the five principles,
Well why not? And you know, and sometimes they're not
all equal in every decision. Are we really delivering quality?
Are we really directed by the consumer? Or is this
mutual to the stakeholders around us when we may make
(18:19):
decisions around renegotiating certain things or whatever. You know, are
we true to the stakeholders around us?
Speaker 2 (18:26):
The Mars principles underlie the values of the family, but
the family also believes it makes the company more successful.
Speaker 9 (18:33):
Overall, the principles and the values help us be proud
of this company. We do believe that utilizing these principles
helps our associates make the right decision, the decisions that
create the concept of a win win. We are all
going to succeed together versus let me win and let
(18:56):
me see you fail. So I really do believe that
utilizing these principles has helped us be successful in business.
Speaker 1 (19:03):
It helps us.
Speaker 9 (19:04):
Recruit good people and keep good people. It helps us
earn trust with government, It helps us earn trust with
our associates, It helps us earn trust with communities where
we work. So to us, yes, it does make a
difference and helps us be successful.
Speaker 2 (19:22):
The Mars Company is at its base a family company,
a global, highly successful one, but nonetheless a family endeavor,
which may give it advantages in pursuing its principle based
business strategy, but they can also come with some challenges.
Speaker 10 (19:38):
There no doubt many public companies with a long history
that also has a very great story to tell. We
believe we have our own story and our unique vision
for the future, while respecting that long term success is
also built on continuing to have healthy short term performance,
if you want to call it. That is an ingredi
(20:00):
and that live well in our context with the way
management is set up, with the commitment also of our
owners to take a long term view and you know,
leave a lot of capital for reinvestment in the company
and set some objectives both financial and non financial objectives
(20:22):
that really enables us to do the things that we're doing.
Speaker 9 (20:26):
When people used to ask me and say, you know,
what is your biggest fear, what is your biggest worry,
My response usually is it's not the business. The business
really can function very well on its own. It's managing
a family. So part of being able to be a
(20:47):
family business, to continue to be a family business requires
a lot of energy and effort into working with the family.
We have been having annual Fai family meetings for over
twenty years. Our family is continuously there because we're connected
to this business. We're joined at the hit by this business.
(21:10):
So having the family functioning well and having the family
and being able to manage through conflicts that come up,
which of course will come up in every family, and
being able to work towards a common outcome and common
goals takes a lot of work.
Speaker 2 (21:28):
The Mars family continues to work hard at pursuing the
goals and values it has established since the beginning of
the last century. But could a similar approach succeed in
a publicly traded company in a very different business. And
that's where we turn. Next to the second biggest power
company in the world and how it moved forward by
returning to its basic purpose. Mars Company has enjoyed a
(22:01):
very long and successful history as a family company, pursuing
the family's values even as it expanded around the world
and into new businesses. But the Yale Project learned from
its one hundred and seventy five CEO interviews that Mars
shares some approaches with large publicly traded companies in very
different industries. One of them is the Italian power giant Ennel,
(22:22):
whose CEO redirected it for a new age by taking
it back to its simple roots. Like other CEOs looking
to move their companies forward, Staracci studied the future of
his business, and, like so many others, concluded it laid
in technological changes in the very business of power.
Speaker 4 (22:42):
The company was already a pretty large revenues big and
it was heavily indebted because of the expansion we had
in the preceding years. It had let's say, a cash
conversion problem, so there was a lot of revenues that
didn't really come up with a lot of cash, and
(23:02):
growth was a little bit stalling. It was a company
that had to deal mostly with managing that given the
size it had. The issue was we needed to restart growth.
But more than that, we needed to, let's say, give
clarity about the sustainability of future revenues to the debt markets.
(23:27):
You know that that in itself, you know, the size
of a debt is a function of the size of
the revenues that you can generate to serve the debt.
So there was a little bit of an issue at
what was the future of the company going to be?
So we had to actually decide what was the trajectory
of the company, sell it to our shareholders and also
(23:49):
to of course the whole market in a way that
it was understandable, solid, robust enough to withstand potential shocks,
and of course more generative of cash flow. Basically, that
was the issue we had to deal with, and that
clearly had to do with the time and how much
time did we have to do that, and also what
(24:10):
kind of pockets of value creation we have left We
had in the company that were not didn't we didn't
really tap well enough.
Speaker 2 (24:18):
As you determine the trajectory for growth and for a
revenue going forward, how did you find the trajectory that
you settled upon.
Speaker 4 (24:27):
Basically, we said, where is the technology going? You know,
because you can you can ignore technology for a while,
It's okay, but at the end of the day, it
always catch up with you. So where is the utility
sector and the industry that is with it, where is
it going? And what forces are changing these technologies? And
(24:49):
we saw at that time we had seen it before
with any green power. I should say that there was
a major change in the technology of generating electricity, namely
that renewables were becoming competitive, had become already by twenty fourteen,
competitive with thermageneration by enlarge in many parts of the world,
(25:11):
and we were not active enough in that space. And
that space was going to be where value was going
to be created in a major way in the next
few years. So we said, how do we catch this train,
how do we jump on it? And what can we do?
Speaker 2 (25:30):
And was that driven by a revenue stream that you
saw out there because of technological change?
Speaker 4 (25:35):
I think the revolutionary thing about renewables at that time
the people didn't understand. I think we were maybe the first,
the first that understood it consciously and nothing consciously, you know,
we actually got and studied and really came with a
conclusion that shifting our generation from thermogeneration to renewables, we
(25:57):
would increase double the abita margin, so the amount of
money we would make with the same kilobataur And that
was a major aha moment, if you want, We said, okay, well,
let let's do it, because there's no time to get
to be lost here. And to do that, we had
to basically completely change our operating model at developing plans
(26:19):
and at thinking about generation going forward.
Speaker 2 (26:23):
For Staracci, identifying renewables as the growth opportunity for Anna
was the first step. But to get there with the
growth it promised required the company to move fast, faster
than it had ever done in the past.
Speaker 4 (26:37):
Imagine, this is an industry that worked before with a
time horizon of five to ten years. So you started
investing in something and that whatever it was a power
plant or anything else, it would start generating revenues five
or ten years after. And we said we shortened that
to three year maximum. Okay. That was a major shock
(26:57):
for most people and those that were impact they were
basically the development people, you know, and we said, scrap
all the stuff that does not stay in this three
year time horizon, and that accelerated a lot dur the
circulation of the cabinet I mean Capita started working a
lot earlier than before, and that gave us the momentum
(27:18):
we needed to really kick start the whole thing. I
should say it took six months to explain over and
over more than one time this logic, but after that
everybody got it, and I would say, in a few
years we were working at two years not three, so
with further strength shortened that time. That was a major change.
Speaker 2 (27:43):
After some initial resistance, and all employees embraced the new
direction because of the opportunities it presented them. But ironically,
Storacci sees this new direction as really a return to
the basics of what gave rise to the company in
the first place.
Speaker 4 (28:00):
The pushback was basically a different one was the fact
that we had, say, a very limited number of very
large investments with which we thought we would continue to
grow the company, and applying these three years' role, we
would cut the investment size a lot. So the renewable
energy projects had smaller, much smaller sizes. So people said,
(28:24):
how can we grow because this project are so small,
And the answer we gave them is, well, you have
to multiply the number of projects. So instead of having
say twenty projects, you're going to have two hundred or
maybe four hundred, and that was a major shock because
to manage two or three hundred projects at the same
(28:47):
time was something a company had never done before. I
think at the end it was exciting for people. They
needed something and they loved at the fact that they
could go at it numerous times, many more times than
they ever dreamed.
Speaker 2 (29:02):
And every corporation has a culture. Did the culture change
under your leadership?
Speaker 4 (29:07):
No, it did not. Actually, what happened is that we
needed to declutter the cultural space in a way. So
you know, utilities have a very deep culture and very
simple one, all of them. I mean, they're all the same.
(29:27):
You know, the semantics are important. A utility is useful
to people. That's why it exists. And most of the
utilities were formed in the past to electrify a space
that didn't have electricity, so people got pride in bringing
light to places that didn't have it. That is, the
culture of utility is useful to people, to people or businesses,
(29:51):
but in a way to society. The rest of the
stuff that over the decades were thrown at utilities is noise.
So what we had to do is declutter all this noise,
throw it away and say, guys, we are here for
one very simple purpose or not. And everybody agreed to that,
(30:14):
and that, I can tell you was surprisingly identical across geographies.
There was zero difference from Russia to the US, from
Latin America to Africa, including Europe, it was exactly the
same feedback. Everybody said, that's us exactly we want this,
So it was super easy. I just had to eliminate
(30:34):
a lot of say, substrata and stuff that were thrown
out at the utility over the years.
Speaker 2 (30:42):
So in a sense, you were not fighting with your heritage,
you were returning to it exactly.
Speaker 4 (30:47):
We had to go back to it. You know, we
had a purpose statement and that was like five sentences
glued together and you can read through them. Who wanted
to add something and nobody said no so much so
it was a super comp stuff and we just said,
you know, this doesn't matter. What are we for here?
I mean, we are useful to society, that's our purpose.
(31:08):
So we created a very nice purpose line that was
a cent open power. We empower sustainable progress, that's it.
And everybody immediately identified in that. So we didn't really
have to invent anything. We had to remove stuff.
Speaker 2 (31:26):
The term stakeholder capitalism has become somewhat controversial, a potential
distraction from the basics of running a for profit business.
But whether you're a global power like no or a
global family business like Mars, those who actually run the
businesses find it to be pretty basic, and even some
(31:46):
of the most troubled businesses are embracing some form of
this stakeholder capitalism, as the relatively new CEO of Boeing,
Kelly Ortwerg, recently told Congress.
Speaker 5 (31:58):
Boeing made serious steps in recent years, and it's unacceptable.
In response, we've made sweeping changes to the people, processes,
and overall structure of our company. While there's still work ahead,
these profound changes are underpinned by deep commitment from all
of us to the safety of our products and services.
Speaker 2 (32:20):
That does it for us. Here at Wall Street Week,
I'm David Weston. This is Bloomberg. See you next week
for more stories of capitalism.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:22):
This is Wall Street Week. I'm David Weston bringing you
stories of capitalism this week. What it takes to keep
a company on track or get it back on track
when it's wandered off. The tale of two very different companies,
the Mars Company and global power giant Ennel, and their
particular take on stakeholder capitalism. But we start with the
(00:43):
milestone this week of the first one hundred days of
the Trump administration, moving fast and breaking things. But where
does it all lead? We ask our special contributor Larry
Summers of Harvard.
Speaker 1 (00:56):
From a financial point of view, President Trump vowed to
do new things, and we have something new, the American
capital flight trade. It's a major pattern in markets when
the president does something consequential and new. We see four things.
(01:17):
Stocks go down, bonds go down, the dollar goes down,
and gold goes up. The signature is very clear. It's
revulsion against American assets, Foreigners less willing to put money here,
Americans more eager to diversify out of the country. It's
(01:39):
something that we saw a little bit of during the
Carter administration, but it's basically not a pattern in the
United States. It's a totally common pattern in what wags
joke are submerging markets, emerging market countries that get themselves
in trouble, as Argentina has many times, as Airdowan's Turkey
(02:03):
has in recent years. Most of us didn't ever think
that this would become a pervasive pattern in the United States.
So from an economic and financial point of view, there
is something very new, and of course it accumulates over time.
And so if you look at the combination of stocks, bonds,
(02:27):
and the dollar, this has probably been the least successful
one hundred days of a new president since the Second
World War. And that's what That's a verdict that's not
being rendered by any individual. That's not a verdict that's
being rendered in a partisan way. It's just reflecting the
(02:51):
judgment of markets.
Speaker 2 (02:55):
Larry, we saw them a couple of weeks ago, the
effect on stocks, bonds, and the dollar because of tariffs,
and there was a suspension of course for ninety days
for negotiations. This week we've seen it. It appears with
regard to Chair Powell and remarks about possibly terminating his
regime as a Chair tell us about that, will the
(03:15):
markets keep President Trump from moving? On? Chair pow.
Speaker 1 (03:19):
Things change, but they stay the same. When the president
of a country looks like he is driving events, and
he is driving events in an ill considered populist direction
against the wisdom of all economics, then bad things happen.
(03:45):
That's the response to the tariffs, That's the response to
the FED bashing. That's the response to the indications of
fiscal responsibility. That will come to be the response to
the undermining of the rule of law.
Speaker 2 (04:03):
The tradition of keeping score on a president's first one
hundred days began with FDR when the country was in
the depths of the Great Depression. Barbara Perry is a
presidential historian and professor of governance at the University of
Virginia's Miller Center.
Speaker 3 (04:18):
If you view FDR Franklin Roosevelt as a modern president,
most of us in political science.
Speaker 4 (04:23):
And history do.
Speaker 3 (04:24):
And what he referred to in July of that nineteen
thirty two presidential campaign against Herbert Hoover the incumbent, was
that he would start working with Congress in their first
hundred days together at the r said action is what
he would give them, and so he up till I
would say, now under the second Trump administration, was viewed
(04:46):
as having the most activist and the most successful administration
in the first hundred days, passing through Congress fifteen pieces
of New Deal legislation. So first thing that FDR did
was go on radio and give his first fireside address,
which is also part of that one hundred days, to
calm the people, to say, here's how banking works, here's
(05:08):
what I'm going to do. Here's the legislation I will
pass through Congress to regulate that, and then I will
also have regulations for business and housing and farming to
try to lift us out of this great depression. So
he not only starts the concept of those first hundred
days and judging particularly by legislation that's passed, what is
(05:29):
successful what's not in a first hundred days, and then
we end up applying that to all first hundred days
of the rest of the president's up till now.
Speaker 2 (05:37):
I'm struck, Barbara, with the fact that it was a
focus on legislation, a one hundred day agenda to work
with Congress. I'm not sure how much that is left anymore.
It seems like the president's doing much more on his
own because they've been mailed so far. Has that been
a gradual shift or was it more abrupt?
Speaker 3 (05:55):
I think that the current administration has had an abrupt
change in the substance of these executive orders, and by
the way, has surpassed FDR, who signed ninety nine executive
orders in his first hundred days, and even up to
getting to the first hundred days for this second Trump administration,
(06:18):
he had signed ninety nine to one hundred already. So
by the time we get to the official one hundred
day mark for Trump, there will be well over one
hundred executive order signed.
Speaker 2 (06:28):
Looking back through history with that benefit, what were the
most consequential first hundred days obviously nineteen thirty three that
you mentioned with FDR, which other ones were particularly consequential
as we look back on it.
Speaker 3 (06:41):
I'll give you another of John Kennedy, something very consequential
in his first hundred days that he really wasn't responsible for,
and that is the invasion of the Bay of Pigs
at Cuba, trying to upend the dictatorship of communist Fidel Castro,
who had aligned with the Soviet Union, our mortal enemy
and the Cold World War. And the word most often
(07:02):
used for that invasion is fiasco. But something that's important
to remember as well as some political scientists historians say
about the first hundred days is what style of president
and presidency does this president portray? And in the case
of Kennedy, he went before the public, he went before
the press, and he said, after the Bay of Pigs,
(07:24):
I will do a study. I will have an expert
panel to see what went wrong here. I am the
responsible officer of this government, and therefore I take full
responsibility for the failure of this invasion. He had come
into office with a seventy two percent approval rating. It
jumped almost ten points up to eighty three percent because
he took responsibility. So sometimes those consequential first hundred days
(07:48):
are not so much about what's happening with Congress. But
I would say, what's happening in the world, what's happening
at home and the economy and foreign affairs, in wartime
situation and doreidence make a correct decision or in we
look back in history, is at a fiasco.
Speaker 2 (08:05):
Bubba looking back through history? Is there a correlation in
general between how consequential the first hundred days is and
the rest of the four year term. I mean, they
might make mistakes, might not make mistakes. Style. As you said,
certainly we learn from but in general, if it's consequential
its first hundred days, does that mean something for the
rest or can it be very different?
Speaker 3 (08:24):
Well, let's take FDR and also a president before this
modern concept of one hundred days the first hundred days,
and I'll take Lincoln and even George Washington. They are
always listed by scholars, political scientists, historians, is the greatest
presidents of the United States. If you have a good
first one hundred days, it's very unusual to have then
(08:48):
an absolutely catastrophic presidency. I would say in the case
of Donald Trump's second first one hundred days, and as
most people know who study history, he's only the second
president to have a sexecond non consecutive term. He's off
to a consequential start in disruption and somewhat chaos, both
(09:08):
in how the government is perceived by the people, but
also how the United States is perceived abroad, particularly with
issues of tariffs and alliances and NATO, etc. So we
don't know if this will port a successful presidency or
if this disruption and chaos of the government and of
(09:29):
our standing in the world could lead to failure. We'll
have to wait and see up next.
Speaker 2 (09:36):
Every week seems to bring another story of a successful
company losing its way. But what about those that don't,
or that having strayed, find their way back to what
made them great to begin with. We look at the
Mars Company and Ennel, two major global companies, and what
they share in the way they do their business. This
(10:08):
is a story about heritage. How a company's heritage can
help it succeed, return it to success, or put it
at risk when it is left behind.
Speaker 5 (10:17):
Without the unabsolute reputation, the safety and consistency, you simply
can't compete.
Speaker 2 (10:24):
And that's why everybody's worried about Boeing. Boeing is just
the most recent and glaring example of a once great
company stumbling, in its case by losing its core edge
in engineering.
Speaker 6 (10:37):
I'm an aerospace engineering Back in the day, I actually
worked for Boeing. That's where you went if you wanted
to work on airplanes. You couldn't go anyplace else, you
really couldn't. That's not the case today.
Speaker 2 (10:47):
Ron Epstein is a former Boeing engineer who now covers
aerospace and defense for Bank of America. He watched as
his former employer lost its way It's far from the
only one, but there are also companies that over many years,
kept their momentum or even regained it after a stumble
or two.
Speaker 7 (11:08):
IBM turns one hundred and fourteen this year, one hundred
and forty in the technology industry. Think about companies that
have lasted a century in the technology industry. They're hard
to find because of the nature of technology.
Speaker 2 (11:20):
Sam Palmersano spent much of his career at IBM, rising
to become chairman and CEO. He attributes IBM's long term
success to a deep commitment to innovation.
Speaker 7 (11:32):
The Watsons defined that it was about the future and
about innovation, and that that's where you should drive. You
should drive innovation.
Speaker 2 (11:39):
The Business School at Yale University has created a program
to study what separates the companies that succeed over the
long term from those that don't. Some may find the
results surprising. They take us back to that notion that
has become known as stakeholder capitalism, although many of the
CEOs don't it new at all.
Speaker 8 (12:02):
We've interviewed more than one hundred and seventy five chief
executive officers as to the practice of this concept of
stakeholder capitalism.
Speaker 2 (12:13):
John Iwada spent thirty five years at IBM, where he
worked closely on innovation and strategy with Sam Palmasano. He
is now an Executive Fellow at the Yale School of Management.
Speaker 8 (12:25):
One of the things we learned in these interviews is
that most of the CEOs felt this wasn't really a
departure or anything new, and some of them said, this
is sound business practice, or it's a return to sound
business practice, especially if you think about the long term.
Leading a corporation or an enterprise for the long term,
(12:48):
there are short term pressures or expectations that sometimes get
in the way of making investments or decisions that may
not pay off for many quarters or even years, so
you have to think about that. You may think about
non financial commitments to employees, to society, and those are
not standardized, those are not accepted measurements and metrics, and
(13:12):
so those are soft or squishy, and other factors that
come into play here.
Speaker 2 (13:17):
I want to learn from his CEO interviews of the
challenges leaders face in trying to bring together disparate parts
of the company and disparate interested parties, and the key
role of purpose in weaving it all together.
Speaker 8 (13:32):
CEOs like every executive comes up through a business or
through a professional career in a vertical finance or R
and D or sales, and when they get into the
CEO chair, as Sachia Nadella Microsoft said it some years
ago in an interview, is then you realize just how
(13:52):
multi constituent or how many stakeholders the enterprise actually has.
You have shareholdergy of government, of course, you have customers
and employees, you have suppliers, and you have to have
these relationships with all of these constituents. The question is
do you manage them piecemeal or do we think of
(14:13):
this more holistically. A lot of the CEOs described sometimes
they use air quotes, this management system almost an operating
system for the company that is based on common definitions
of the firm. Some of them say, there are three
questions that you have to ask and answer why, what
(14:35):
and how? Why do we exist? Which turns into the
purpose of the company. What do we do, which is
the strategy of the company? And how and that's the culture.
How are we going to show up?
Speaker 2 (14:47):
A well known company that has put purpose and values
at the core of its operations since its founding is
the Mars company in business since nineteen eleven.
Speaker 8 (14:57):
Mars is more than one hundred years old, very successful
for a long time, and as we began to talk
to management at Mars and members of the Mars family,
we learned that they were going through what we would
refer to as a founding moment. And why because for
much of Mars history, members of the Mars family led
(15:20):
the company and worked in the company. But the reality
today in the future is very few members of the
Mars family, perhaps no members of the Mars family will
be in management or even work in the company.
Speaker 9 (15:34):
The principles and the values are at the heart of
who we are.
Speaker 2 (15:39):
Victoria Mars is the great granddaughter of founder frank Seymars.
She has been on the board for nearly twenty years,
three of them as chair.
Speaker 9 (15:49):
My grandfather had very strong principles and values, and these
principles and values I grew up with without actually no
that I was growing up with them. So when we
talk about the Mars principles, we're really talking about the
family values that have existed since the beginning. And as
(16:11):
the company got larger and it was more and more
difficult for the family, specifically at that point my father
and my uncle to be around all the associates. To
be able to talk about the values and to be
able to talk about how we do business, they decided
it was time to write them down. The five principles
that were actually written down and defined in the early eighties. Quality, responsibility, efficiency,
(16:36):
mutuality and freedom have been our principles since the beginning
and they are the foundation of everything we do within
the business.
Speaker 2 (16:47):
Times change and businesses evolve, something the Mars Company has
certainly done. But as much as the Mars Principles may
be updated every few years, the fundamentals do not change.
Speaker 9 (17:00):
So they haven't changed. They've just been updated to be relevant.
Management helps us and supports us and clearly obviously implements
them in our business. But any changes to them, any
tweaks to them, anything from the colors to the script
to the words, belongs to the family.
Speaker 2 (17:19):
A company having principles is one thing. Putting them to
use in everyday decisions, not to mention big strategic decisions
is something else.
Speaker 10 (17:28):
Entirely, it's not a checklist, but it comes up in
conversations when we make decisions, and I think that are
two things. One is this aligned with the purpose of
what we're trying to deliver here, whether it is overall
from Mars. You know, the kind of company that we
are trying to deliver today is well set up for
the world we want tomorrow.
Speaker 2 (17:50):
Klass, our guard is the Mars Chief financial officer and
like all members of management, not a member of the
Mars family.
Speaker 10 (17:58):
Five principles come up. Certainly as a fact check. You know,
this doesn't feel like in line with the five principles,
Well why not? And you know, and sometimes they're not
all equal in every decision. Are we really delivering quality?
Are we really directed by the consumer? Or is this
mutual to the stakeholders around us when we may make
(18:19):
decisions around renegotiating certain things or whatever. You know, are
we true to the stakeholders around us?
Speaker 2 (18:26):
The Mars principles underlie the values of the family, but
the family also believes it makes the company more successful.
Speaker 9 (18:33):
Overall, the principles and the values help us be proud
of this company. We do believe that utilizing these principles
helps our associates make the right decision, the decisions that
create the concept of a win win. We are all
going to succeed together versus let me win and let
(18:56):
me see you fail. So I really do believe that
utilizing these principles has helped us be successful in business.
Speaker 1 (19:03):
It helps us.
Speaker 9 (19:04):
Recruit good people and keep good people. It helps us
earn trust with government, It helps us earn trust with
our associates, It helps us earn trust with communities where
we work. So to us, yes, it does make a
difference and helps us be successful.
Speaker 2 (19:22):
The Mars Company is at its base a family company,
a global, highly successful one, but nonetheless a family endeavor,
which may give it advantages in pursuing its principle based
business strategy, but they can also come with some challenges.
Speaker 10 (19:38):
There no doubt many public companies with a long history
that also has a very great story to tell. We
believe we have our own story and our unique vision
for the future, while respecting that long term success is
also built on continuing to have healthy short term performance,
if you want to call it. That is an ingredi
(20:00):
and that live well in our context with the way
management is set up, with the commitment also of our
owners to take a long term view and you know,
leave a lot of capital for reinvestment in the company
and set some objectives both financial and non financial objectives
(20:22):
that really enables us to do the things that we're doing.
Speaker 9 (20:26):
When people used to ask me and say, you know,
what is your biggest fear, what is your biggest worry,
My response usually is it's not the business. The business
really can function very well on its own. It's managing
a family. So part of being able to be a
(20:47):
family business, to continue to be a family business requires
a lot of energy and effort into working with the family.
We have been having annual Fai family meetings for over
twenty years. Our family is continuously there because we're connected
to this business. We're joined at the hit by this business.
(21:10):
So having the family functioning well and having the family
and being able to manage through conflicts that come up,
which of course will come up in every family, and
being able to work towards a common outcome and common
goals takes a lot of work.
Speaker 2 (21:28):
The Mars family continues to work hard at pursuing the
goals and values it has established since the beginning of
the last century. But could a similar approach succeed in
a publicly traded company in a very different business. And
that's where we turn. Next to the second biggest power
company in the world and how it moved forward by
returning to its basic purpose. Mars Company has enjoyed a
(22:01):
very long and successful history as a family company, pursuing
the family's values even as it expanded around the world
and into new businesses. But the Yale Project learned from
its one hundred and seventy five CEO interviews that Mars
shares some approaches with large publicly traded companies in very
different industries. One of them is the Italian power giant Ennel,
(22:22):
whose CEO redirected it for a new age by taking
it back to its simple roots. Like other CEOs looking
to move their companies forward, Staracci studied the future of
his business, and, like so many others, concluded it laid
in technological changes in the very business of power.
Speaker 4 (22:42):
The company was already a pretty large revenues big and
it was heavily indebted because of the expansion we had
in the preceding years. It had let's say, a cash
conversion problem, so there was a lot of revenues that
didn't really come up with a lot of cash, and
(23:02):
growth was a little bit stalling. It was a company
that had to deal mostly with managing that given the
size it had. The issue was we needed to restart growth.
But more than that, we needed to, let's say, give
clarity about the sustainability of future revenues to the debt markets.
(23:27):
You know that that in itself, you know, the size
of a debt is a function of the size of
the revenues that you can generate to serve the debt.
So there was a little bit of an issue at
what was the future of the company going to be?
So we had to actually decide what was the trajectory
of the company, sell it to our shareholders and also
(23:49):
to of course the whole market in a way that
it was understandable, solid, robust enough to withstand potential shocks,
and of course more generative of cash flow. Basically, that
was the issue we had to deal with, and that
clearly had to do with the time and how much
time did we have to do that, and also what
(24:10):
kind of pockets of value creation we have left We
had in the company that were not didn't we didn't
really tap well enough.
Speaker 2 (24:18):
As you determine the trajectory for growth and for a
revenue going forward, how did you find the trajectory that
you settled upon.
Speaker 4 (24:27):
Basically, we said, where is the technology going? You know,
because you can you can ignore technology for a while,
It's okay, but at the end of the day, it
always catch up with you. So where is the utility
sector and the industry that is with it, where is
it going? And what forces are changing these technologies? And
(24:49):
we saw at that time we had seen it before
with any green power. I should say that there was
a major change in the technology of generating electricity, namely
that renewables were becoming competitive, had become already by twenty fourteen,
competitive with thermageneration by enlarge in many parts of the world,
(25:11):
and we were not active enough in that space. And
that space was going to be where value was going
to be created in a major way in the next
few years. So we said, how do we catch this train,
how do we jump on it? And what can we do?
Speaker 2 (25:30):
And was that driven by a revenue stream that you
saw out there because of technological change?
Speaker 4 (25:35):
I think the revolutionary thing about renewables at that time
the people didn't understand. I think we were maybe the first,
the first that understood it consciously and nothing consciously, you know,
we actually got and studied and really came with a
conclusion that shifting our generation from thermogeneration to renewables, we
(25:57):
would increase double the abita margin, so the amount of
money we would make with the same kilobataur And that
was a major aha moment, if you want, We said, okay, well,
let let's do it, because there's no time to get
to be lost here. And to do that, we had
to basically completely change our operating model at developing plans
(26:19):
and at thinking about generation going forward.
Speaker 2 (26:23):
For Staracci, identifying renewables as the growth opportunity for Anna
was the first step. But to get there with the
growth it promised required the company to move fast, faster
than it had ever done in the past.
Speaker 4 (26:37):
Imagine, this is an industry that worked before with a
time horizon of five to ten years. So you started
investing in something and that whatever it was a power
plant or anything else, it would start generating revenues five
or ten years after. And we said we shortened that
to three year maximum. Okay. That was a major shock
(26:57):
for most people and those that were impact they were
basically the development people, you know, and we said, scrap
all the stuff that does not stay in this three
year time horizon, and that accelerated a lot dur the
circulation of the cabinet I mean Capita started working a
lot earlier than before, and that gave us the momentum
(27:18):
we needed to really kick start the whole thing. I
should say it took six months to explain over and
over more than one time this logic, but after that
everybody got it, and I would say, in a few
years we were working at two years not three, so
with further strength shortened that time. That was a major change.
Speaker 2 (27:43):
After some initial resistance, and all employees embraced the new
direction because of the opportunities it presented them. But ironically,
Storacci sees this new direction as really a return to
the basics of what gave rise to the company in
the first place.
Speaker 4 (28:00):
The pushback was basically a different one was the fact
that we had, say, a very limited number of very
large investments with which we thought we would continue to
grow the company, and applying these three years' role, we
would cut the investment size a lot. So the renewable
energy projects had smaller, much smaller sizes. So people said,
(28:24):
how can we grow because this project are so small,
And the answer we gave them is, well, you have
to multiply the number of projects. So instead of having
say twenty projects, you're going to have two hundred or
maybe four hundred, and that was a major shock because
to manage two or three hundred projects at the same
(28:47):
time was something a company had never done before. I
think at the end it was exciting for people. They
needed something and they loved at the fact that they
could go at it numerous times, many more times than
they ever dreamed.
Speaker 2 (29:02):
And every corporation has a culture. Did the culture change
under your leadership?
Speaker 4 (29:07):
No, it did not. Actually, what happened is that we
needed to declutter the cultural space in a way. So
you know, utilities have a very deep culture and very
simple one, all of them. I mean, they're all the same.
(29:27):
You know, the semantics are important. A utility is useful
to people. That's why it exists. And most of the
utilities were formed in the past to electrify a space
that didn't have electricity, so people got pride in bringing
light to places that didn't have it. That is, the
culture of utility is useful to people, to people or businesses,
(29:51):
but in a way to society. The rest of the
stuff that over the decades were thrown at utilities is noise.
So what we had to do is declutter all this noise,
throw it away and say, guys, we are here for
one very simple purpose or not. And everybody agreed to that,
(30:14):
and that, I can tell you was surprisingly identical across geographies.
There was zero difference from Russia to the US, from
Latin America to Africa, including Europe, it was exactly the
same feedback. Everybody said, that's us exactly we want this,
So it was super easy. I just had to eliminate
(30:34):
a lot of say, substrata and stuff that were thrown
out at the utility over the years.
Speaker 2 (30:42):
So in a sense, you were not fighting with your heritage,
you were returning to it exactly.
Speaker 4 (30:47):
We had to go back to it. You know, we
had a purpose statement and that was like five sentences
glued together and you can read through them. Who wanted
to add something and nobody said no so much so
it was a super comp stuff and we just said,
you know, this doesn't matter. What are we for here?
I mean, we are useful to society, that's our purpose.
(31:08):
So we created a very nice purpose line that was
a cent open power. We empower sustainable progress, that's it.
And everybody immediately identified in that. So we didn't really
have to invent anything. We had to remove stuff.
Speaker 2 (31:26):
The term stakeholder capitalism has become somewhat controversial, a potential
distraction from the basics of running a for profit business.
But whether you're a global power like no or a
global family business like Mars, those who actually run the
businesses find it to be pretty basic, and even some
(31:46):
of the most troubled businesses are embracing some form of
this stakeholder capitalism, as the relatively new CEO of Boeing,
Kelly Ortwerg, recently told Congress.
Speaker 5 (31:58):
Boeing made serious steps in recent years, and it's unacceptable.
In response, we've made sweeping changes to the people, processes,
and overall structure of our company. While there's still work ahead,
these profound changes are underpinned by deep commitment from all
of us to the safety of our products and services.
Speaker 2 (32:20):
That does it for us. Here at Wall Street Week,
I'm David Weston. This is Bloomberg. See you next week
for more stories of capitalism.
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