This page contains headlines and below this is a more detailed summary of his lecture.

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1 Sir Andrew Witty Creating Long Term Sustainable Value The Pears Business Schools Partnership Annual Lecture Sir Andrew Witty is the Chief Executive of GlaxoSmithKline (GSK), awarded a knighthood in the 2012 New Years honours list for services to UK Pharmaceuticals and the Economy. This page contains headlines and below this is a more detailed summary of his lecture. Sir Andrew Witty made a strong case for business to better connect with society and its values and to reap the financial and business benefits of doing so. Leaders need to understand where business intersects with society and that organisations are just a collection of individuals with their own values. We must remember the essence of what it is to be human over the last years there has been a loss of trust and organisations have been dehumanizing. There has therefore been a loss of values that are important to people and these need to be brought back into business. Leaders should feel fortunate to have been given power over people. Yet this brings great responsibility and leaders at every level should regularly look in the mirror. Whether leading 1, 10 or 100,000, leaders should not slip into their role. They should be deeply reflective about what is it that I am going to do? Money should be bottom of the list. Do good things and good things will come. Under Andrew s leadership, GSK have cut prices by 75% in areas where drugs were not affordable and given away intellectual property to stimulate research and ceased animal experimentation. You have to be clear what you stand for and reflect society. You should focus on the long term perpetuate things and be a custodian. The shortterm focus of so many companies and leaders is a mistake. It is better to be fired for something you believe in than lead your company to disaster. Engage with and listen to others even if you don t agree with them. Everyone should set the agenda not just the CEO. Trust is the fundamental test - not like. And you gain this through actions. Employees and customers see through words and spin. Everyone has the potential to be a great leader. In your world you can make a big difference. So don t pretend it is not your problem. Don t underestimate the pressure on major shareholders for sustainability. There is a correlation between effective CSR and income growth. Expose people so they have empathy with customers and those delivering at the sharp end. Our next senior leaders spend time living and working in abject poverty in Kenya. And finally. Every day step back, think, reflect and set your agenda.

2 Sir Andrew Witty Creating Long-Term Sustainable Value Sir Andrew Witty is the Chief Executive of GlaxoSmithKline, awarded a knighthood in the 2012 New Years honours list Sir Andrew Witty made a strong case for business to better connect with society and its values and to reap the financial and business benefits of doing so. He was clear that great leadership was about understanding where business intersects with society, when he delivered the annual Pears Business Schools Partnership Lecture at Cranfield business school in January He suggested that the secret was to maintain at a corporate level the essence of being human. To remember that organisations are merely a group of individuals, each with their own values. He believes that over the last years there has been a loss of trust and a drift to dehumanize companies, culminating in a loss of values that are important to people. We have to bring these values into our leadership. Realise that individuals never lose them and that they are sometimes suppressed or overwhelmed by the agenda of others. We have to focus on bringing these back and recognising them. We really need to help build self-confidence in everyone. Leaders have power and he felt very fortunate to have been given power over people. Yet this was a great responsibility and one that means leaders should regularly look in the mirror. There has been a drift to dehumanize companies. All leaders, whether running a team of 10 or being fortunate to lead over 100,000 employees should ask themselves, What am I going to do? To be deeply reflective and think about how they can take aspiration to opportunity so don t slip into the role without being clear on what you want to stand for. He was clear that money should be bottom of any list. Good things will happen if you do good things. It is quite simple - you will make money if you look after your customers and if you are in step with society, including treating your employees as individual members of it.

3 Money should be at the bottom of the list. If you do good things then good things will come. So as CEO you have to talk the right language and this does include incentives, though these should be about rewarding the right behaviours. So if people do the right things but don t get the results they should be rewarded and people getting results in the wrong way shouldn t. For GSK, he has focused on making some significant changes since becoming CEO in 2008, and ones that have really been at the centre of society; Becoming the first pharmaceutical company to cease all animal experimentation; Giving free access to intellectual property in areas of research that have been neglected; Cutting prices of drugs in developing countries and particularly Africa by 75%; Maintaining discoveries and to sell where needed at not for profit prices; Encouraging every employee to take 1 day per year to work in a charity of their choice as well as the more usual matching any charitable donations; Moving to a position where the company is now perceived as a global leader in philanthropy; Allowing employees to take 6 months out to work at a charity of their choice; Successfully changing the focus to longterm and challenging individual behaviours to ensure they are in step with society. Quite an achievement in his four years as CEO. When he started out many of his senior team thought he was out of his mind and he needed all his drive and focus to push these changes through. What appears very important to him is that companies drive substance not spin and that it shouldn t just come from the CEO. People across the business should drive the agenda. He believes the short-term focus of many companies to be a big mistake. The most important thing for him is to ensure that on his watch, a company with origins over 200 years old will still be going strong in another 200 years. Leaders are increasingly being challenged by the fact they might go wrong. Yet he says you have to be clear what you stand for and follow your own path. That you should engage with and listen to others, even if you don t agree with them. Since his appointment he has regularly held open sessions with individuals and teams across the globe with the only rule being that senior management are not present with him. Individual responsibility is very important and as CEO he had an important role in taking responsibility for setting the tone for everyone he was able to influence. Trust is the fundamental test not like. Do your people trust you? And this is gained through the actions you take employees see through words very quickly. He highlighted an example of a family business versus the public sector and how important was the need to embed commitment and to be a custodian. Even though he acknowledged the sometimes difficult relationships in larger family businesses and particularly in later generations when the numbers of people involved grew, it was their job to perpetuate the business. For him this is lost in the public sector

4 and also in many private companies, where it is all about the short term. The need for long-term focus was, he acknowledged, partly driven by GSKs products. For example one project involved taking eleven vaccines and combining them into one to be given to children. This took twelve years to complete and involved 588 quality control tests. Despite this he is adamant that in all companies, taking a long-term view always brings a better overall financial performance in any time frame. So as CEO, with an average tenure of 3 years, how do you address the shareholders desire for short term fixes? He acknowledged the pressure, though suggested it was much better to be fired for standing up for what you believe to be right, rather than leading a company to disaster. Why does this all matter in the current economic situation? He is not of any particular political persuasion and spoke as an economist. For him you cannot run an economy that is either 55% public sector or service only. You need balance and this is what has been lost in our recent history. We must inspire the next generation to be better and enter the private sector and with a focus on manufacturing. We have lost sight of balance, though he believes the next generation has a great deal more of it in general they care about the environment, the third world, animals and are opinionated. As CEOs and employers we need to speak their language. They are cynical about spin and check facts and we need to be substantively engaged on their agenda. Without this what is the chance of getting our brightest and best into our businesses? What is the chance of the next apple being British? We need people to take the time to be thoughtful and as a leader you should be very thoughtful about this broad agenda. Look in the mirror and conclude you can make the difference. Everyone has the potential to be a great leader. In your world you can make a big difference. So don t pretend it is not your problem. Be restless and ask, What is the most you can do? Are there more places to challenge? The more successful you are the more challenging you will become. Keep surprising yourself. For example, he asked if we knew that one third of everything GSK make, sells in India? Yet when he was running that side of the business, the Indian operation was in a mess. If you walked into any office, the people were not engaged if they were horses, their ears were down and backs hunched. Financial performance was poor. He appointed a new leader. It was the only change made and within one year the performance changed dramatically. Walking into a building saw people actively engaged (their ears were up) and financial performance turned about and rapidly grew. The business was transformed. So don t ever say you are not enough. One person can change the World. Look in the mirror and conclude you can make the difference. Accept responsibility for what it is and do the most you can do and on the broadest front. You can choose to be a victim in life or take responsibility. Look to make the

5 right moves in business. When China built their telephony infrastructure they used no poles (straight to mobile). So think how you can change things? If you want to move far travel as a group. Coming back to the UK economy, he felt it is ridiculous that we sell more to Ireland than China and we really need to reposition. He sees the period from as the defining era for global economics and believes that the biggest growth and opportunities may come from Africa. There is an old African saying that if you want to move fast then travel alone and if you want to move far travel as a group. On the 30 th June he is co-hosting with Bill Gates a day in London for the top 12 drug companies to look at how together they can work on some of the global health issues. He then returned to the theme of being a longterm CEO and challenged others to stand up to the board. He provided a few tips. Never allow an unexpected outcome to sneak up on the board or major shareholders Don t underestimate the pressure on major shareholders for sustainability There is a correlation between effective CSR and income growth Make a sustainable mindset part of your everyday conversations. To include - Growth and diversification - Greater product value - Simplification - Empowering people - Intersection with Society Very important to him was the need to start meetings with a check back to the company values. He also believes that employees need to be really engaged. He has 18 talented people work for 6 months (revolving) within his close office to learn about the business. The 30 people most likely to hold the next very senior appointments undergo development unlike many traditional companies. Included in this is spending time in remote outposts, such as living in abject poverty in the slums of Kenya for a week. For Andrew it is absolutely key that all his executives know just what it is like to be working at the bottom of the pyramid and with the people who need GSKs products. The purpose is to expose people so they have empathy with the business and with the customers. It builds loyalty to the company that is off the scale. Recruiting people with academic excellence and who have attended Harvard or other top business schools is great but they have no knowledge or empathy for what the business is really about. We need to instil this in them. He finished by saying that he was very proud that he had started at GSK straight from university on their graduate programme. It showed to everyone what was possible. When he was offered and accepted the job of CEO, he was immediately asked to start signing documents. He asked them to wait for a minute he just wanted to spend some time thinking about what this meant and what sort of CEO he would be. He encourages this of everyone. He didn t want to be the guy who given the opportunity to do more, didn t. Every day step back, think, reflect and set your agenda.

6 Sir Andrew Witty Brief Biography Andrew became CEO of GlaxoSmithKline on 21 st May 2008.He joined Glaxo in 1985 and held a variety of roles in marketing and sales within the UK. He has worked in the company s International New Products Group, both in respiratory and HIV/infectious disease fields and has been involved in multiple new product development programmes. He has also worked in South Africa, the USA and Singapore, where he led the Group s operations as Senior Vice President Asia Pacific. While in Singapore he was a Board member of the Singapore Economic Development Board, the Singapore Land Authority and in 2003 was awarded the Public Service Medal by the Government of Singapore. In 2003 Andrew was appointed President of GSK Europe and joined GSKs corporate executive team. He was awarded a knighthood for services to the economy and the UK pharmaceutical industry in the 2012 New Years Honours list. He has served in numerous advisory roles to Governments around the world, including South Africa, Singapore, Guangzhou China and the UK, where he is currently a member of the Prime Minister s Business Advisory Group and is the lead non-executive director for the Department of Business. Andrew is the President of the Pharmaceutical Industries and Associations, a position he took up on the 1 st January He was appointed as a Board member of the INSEAD Business School in January 2011.

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