Hi, I'm Lori Rosenkopf, I'm the Vice Dean and Director of the Wharton Undergraduate Division and I'm also a Professor of Management there. My guest today is Scott Mills, who is the Executive Vice President and Chief Administrative Officer at Viacom, and he's also a Wharton grad. There's a lot of debate over whether big, established companies can be entrepreneurial. On one hand, people say there's so many opportunities because of all the resources to pursue all sorts of innovative activities, but on the other hand, lots of other folks say that they're stifled by that very fact, that they're big and that makes them inertial. What's your perspective? >> So, my view is that there are absolute challenges inherent in the structure of large corporations, to supporting and driving entrepreneurship and innovation. But those challengers are pretty well known. And as a result, companies that have really focused on entrepreneurship and innovation have a made a lot of progress in figuring out ways to address those challenges. Challenges are scale and hierarchy and infrastructure and compensation systems and culture and risk tolerance and all of those things, and they're pretty well documented at this point. And companies that have really decided that innovation and entrepreneurship are a critical part of the future growth are spending a lot of time working against addressing those challenges, so they can really unlock more innovation and entrepreneurship. >> You are very involved with talent management, that's one of the key pieces of your job. Is everyone equally entrepreneurial? Do you look for that specifically when you're hiring or is it something that you can inculcate once a person gets here? How do those two parts mesh? >> It's a great question. So first of all, not everyone is equally entrepreneurial. Entrepreneurialism and the orientation towards being an entrepreneur is a pretty rare thing. It is actually, if you think about it, elementally, it doesn't align with the majority of the human condition, right. Humans want certainty, they want stability, they want consistency, they want structure. These are all the things that actually run contrary to the entrepreneur, right? The entrepreneur is driving change, they're challenging the status quo, they're taking tremendous risk. Lots of upside, but equally lots of downside. So one of the things in a corporate structure is to recognize that you need a multitude of capabilities and behavioral attributes across the organization for the organization to be successful. A quick aside, this may not survive this process, but a quick aside was we had one of our Chief Accounting Officers in one of our divisions, went through assessment at one point, and they came back and they said, I need to talk to you about this personal assessment I just went through as part of my professional development. And he said, well, the personal assessment says that I need structure and I need consistency, and I need predictability, and I need reliability, and I need accuracy, and I need all these things. And that makes sense given who I am, and so I think maybe I shouldn't work for a media company because the media business is not predictable and it's not certain and there's lots of change and what have you. And we said, yes, but you're an accountant, right? We don't want our accountants to be creative. We don't want our accountants to drive change. We want our accountants to be predictable and consistent and accurate. And the moral of that story was your personality is perfectly suited to the job that you have, right? As opposed to you being fearful that your personal assessment actually evidence that you shouldn't be in media, your personal assessment, evidence that you absolutely should be an accountant. And in the media business, we need our accountants to be buttoned up and consistent and have those attributes. Equally, they are parts of our business, the people who are in our biz dev front, the people who are innovating in our ad sales division, the people who are running our product development groups, where we absolutely need entrepreneurial spirits. We need people who are excited and stimulated by challenging the status quo. People who love change. People who find consistency boring. People who like to collaborate. What we see, particular in a corporate structure, but I think it's true. I created a digital startup before at one of the earlier stages in my career. >> Mm-hm. >> And one of the things that I found to be really critical when you're building a startup company is first and foremost that you have to be very thoughtful around the people that you bring into that organization. They have to be people who can embrace the nature of that environment, right? It's dynamic, it's fluid, the roles aren't clarified, the people have to contribute, people have to collaborate. They have to have a high-tolerance for risk, otherwise they'll go crazy with the cycles that you can go through in those businesses. Are you going to run out of funding? Will this next round work? What's the valuation that round? Your equity, your net worth spikes and plummets. And so, what we found, and what I found in that situation, is that you needed people who really like to collaborate, who had a high tolerance for risk, who love the idea that they were driving change, who love the idea of creating something new and original. And so, for those particular positions where that's a critical attribute, those are a critical set of attributes in our company, we look for those attributes. And what you find is, you can find them in some people because some people are a hybrid, right. Some people have this, they're passionate champions for change. They love challenging the status quo and they have a fairly high risk tolerance, but they don't have that risk tolerance, [COUGH] excuse me, that you necessarily see in a pure, external entrepreneur who's comfortable saying, well, I've gone bankrupt three times but I'm perfectly fine going bankrupt again, because I believe in this kind of journey. There are people who say, well, I'm not sure I have that much risk tolerance, so I'd rather be entrepreneurial in a structure that gives me a little bit of a floor, even if I'm forfeiting a bit of my upside. >> You talked about biz dev, business development, we should spend a little time on that, because sometimes established companies can develop these ideas and run with them internally. >> Right. >> Other times you just need to find it outside and somehow bring it in. So maybe you can talk a little bit about how you do that. >> Right, right. And our view is we look at all of the different approaches to building new branches of our business and expanding our business. So, there are lots of things where we say, we could build this internally, we can develop this internally. We have the expertise, the capability, infrastructure, etc. There are lots of instances where we say, there are either businesses or sectors that we think are very valuable, where [COUGH] the most efficient path for us to enter those businesses or to enter those sectors is through acquiring a third party company. And so, we are pretty much agnostic with respect to our approach with the idea being that we should just be as smart about how we do it as possible. Interestingly, from an acquisitions perspective, we've been most successful is where we buy businesses that are already in the exact line of business that we're in. So [CROSSTALK] in fact, right. [COUGH] But intriguingly, that's how I got to Viacom. I was working at a privately held media company, a cable network's business. Viacom acquired us, and the acquisition was perfectly seamless. There were no cultural challenges, the business worked perfectly, it was just absolutely a seamless acquisition. >> We just did an acquisition last year where we bought the second or third largest broadcaster in the UK, Channel Five and that acquisition has gone fabulously. And so when we acquire things that are in our core business, generally for us, it goes extraordinarily well. And I was thinking about, well, why is that? And I think first and foremost, it's because those businesses are all anchored in a similar set of values and competencies and capabilities. They're all anchored, all of these cable networks, all of these television networks are anchored in this model that has at its center, the primacy of content and creativity and then this idea that you've got these monetization mechanisms around that. And so culturally and operationally and strategically, everything we do has perfect aligned line with that. Where we've been more challenged is when we buy businesses that are not in our core and I think it's always challenging, because one, they're not in our core and they're always at the margin, because our core businesses are so economically robust. They throw off giant margins, the grow. Our machine can kind of just integrate them in a heartbeat and create extraordinary value from day one. And when we buy businesses that are not exactly the same, it's a little bit harder. They don't scale, as well. Kind of the outcomes are a little bit less certain, the organization doesn't really understand them or appreciate them as well. And then a lot of the entrepreneurs, even with these businesses that we've acquired, we typically don't need the primary owners to stay in the cable businesses or in the television businesses owned by them. Bob Johnson created BET Networks. Bob Johnson is off doing fabulous things elsewhere today and BET Networks has thrived in his absence, because we've such competency in that business. We need Bob to stay, but it's a great management team that's there. In other spaces that are nearly as aligned with our core competencies, we really do need the kind of the founding entrepreneurial people to stick around in the business, because they were the thing. They were the kind of the secret sauce in that business. And in general, I think it is challenging for lots of large established companies to acquire fast growing entrepreneurial companies and get the entrepreneurial founders to stick around. And so when they don't stick around, then you have this issue of how do you keep this business going? How do you keep that business thriving? So, it's been an interesting dynamic for us here. We've been extraordinarily successful when we buy business that are right within our wheel house and we've had a more varied results when we buy things that are less directly adjacent. >> Makes sense. Are there common mistakes that big companies make that keep them from being as innovative as they ought to be? >> I think there are common challenges that big companies have. All of those things, generally are not well-aligned with supporting innovation, supporting creativity, supporting changing the status quo, supporting kind of you know rapid failure, high-risk tolerance, supporting rapid dissemination of information and collaboration. All of these things that really drive innovation. Having said that, I think large companies are really smart and they recognize this as being true. So what they then do is they work to figure out how do we support innovation and creativity and entrepreneurship in our organization, recognizing that we've got these natural, structural challenges and I think you absolutely can do it. One, you bring in people for whom it's absolutely native to take risk, challenge the status quo. People for whom it is native to collaborate and share, people for whom it is native to think differently. People for whom they say, well, it doesn't matter that we've done it this way all for a long time. And then they take those people, and we do this, and you give them directional mandates. You say, I would like you to create, develop something in this space. I'll give you resources. I'll give you a space within the work. We'll give you a kind of corporate mandate with a little bit of protection to help you navigate the complicated systems here and we'll support you in this undertaking. And so it's hard to do, because again, that undertaking does bump in to all of people who have these important day jobs and are managing these important businesses. But over time in success, I think we get better at it and then we have really fabulous outcome. >> And where do you locate these slightly protected groups? Are they right next to a particular business or are they sitting very separately like the old traditional R and D facilities that were just doing whatever they would do. Bell Labs, Google X, these sorts of places. >> So the interesting, we've got two models running right now in our shop. So we do have a lab model, because we wanted to see what would come of it. Like a very, very small lab model that's doing interesting things kind of across Viacom. But then equally, what we recognize is that, because the foundation of our company, it's anchored in creativity. We live and die by the quality of the content that our creatives make and the creative expertise, which with our marketing people figure out how to engage people to have them consume our content. Whether it's on television channels, whether it's on mobile devices, whether it's in movie theaters, whether its for SVOD. So we're a company that's founded in creativity and so the issue is if you then say, an innovation is really, it's the sibling of creativity. It really, Innovation and creativity are highly correlated. And so one thing we recognized is that we couldn't say to the company, okay, there's this small little group of people that are responsible for innovation and everybody else just has to toil away at their day jobs. Because everybody's like, well, I am creative, that's why I came here. And so to acknowledge and support that, what we do is we create opportunities for people who are working on traditional teams to actually kind of focus and contribute to innovative projects and then we celebrate those projects when they come to fruition. A person in one of our group, I thought this was really fabulous. A person in one of our groups was observing the way we were delivering content and they had this idea that there was a way to do it that was much more innovative, and they were a technologist. And they kind of mentioned it to their boss, and their boss said, well, why don't you take a little time and kind of develop that concept out? And he went off and he prototyped it and really worked on it. We now have a patent pending for this particular technological execution that this guy conceived in the context of his job as being responsible for technology working very, very closely with a content team, then he shared this with the content team. And they think it's brilliant and it will now, I think unleash a whole new wave of content development in this very important area of our business. And so as to opposed to taking this guy and sticking him off in a lab, he stayed in his core business. The value of that was the idea was born of his closeness and his understanding of this business that people were running. He kind of saw this thing and said, I see what you're doing, I really understand technology. I can see how technology can help you do what you're doing better. So, it was a real win in that space. So we kind of dual-path it. If we have a lab that is responsible for thinking of really innovative out of the box things, but we leverage the creativity in all of our people and encourage them to really drive innovation in areas where they see opportunities. >> Some companies portray a value of dedicated time. So, you mentioned the person who was given permission by their boss to go and work We'll have to decide on something else, 15% time, 20% time. It sort of depends on the company. Is there anything like that at Viacom, or is this more case by case for you? >> It's much more case by case. And the other thing is, we thought about that. And what we decided was it's very hard as our business evolves and as we ask all of our extraordinarily valuable employees to do more and contribute more, it's very hard to then say, well on top of that, we're going to peel off 20% of your time for you to purely do innovation. So one of the things with respect to this innovative lab that we've created is, the people in that lab, 100% of their time is dedicated to innovation, so you don't have to have people trying to figure out, had to do that 80/20. And then the other thing is, we do think innovation is part of the, because creativity is part of our DNA here that what we encourage people to do is when you have an innovative idea, when you have visibility into something that you think could create value in the organization is that you then share it with people so that you can then get buy in for it, and then we can resource it so that we can kind of pursue that concept. And so then, as opposed to people knowing I have 20% of my time, if someone comes up with a very clever idea or an interesting thing that we should explore, they get to go to their leadership and say I have this really compelling idea, the leadership says that's awesome. I will resource it and that may be giving you more time and shifting some of your work to someone else to explore it or bringing in more resources to help you develop it, and that's the way that we support it. >> So let's get a little more personal. How do you come up with your ideas? Where do they come from? What do you do when an idea hits you? >> So, for me, my ideas are generally born of the fact that I'm always thinking about our business. It's just the nature of you if you're in the space and that we live in a business [COUGH] that is extraordinarily dynamic. The one thing that's true about media, it's constantly changing. And a truth about a driver of change in the media business is technology. Technology has always been this extraordinary catalyst that creates change. And that change creates lots of upside opportunity, and it creates lots of risk. And if you just look at the history of media, there have been technological evolutions that have created out sized opportunities and some risks for companies. And then there are whole new set of businesses built around that technological evolution and then there's a new technology and a whole new set of businesses. So [COUGH] what I'm constantly doing is thinking about, well, how do technologies that we have visibility into today, or even technologies that might be created in the future just based on your understanding of it, how might they change and impact the media business? And what are the implications? What are the implications for a company Viacom at large, or what are the implications for any particular brand we might have? And so I'm constantly thinking about that and then when you have an idea, my approach is that for any person in any business, the most important thing is to surround yourself with extraordinarily smart people. And so what I do is I spend, after I have an idea and I work it through in my head, I then go share it with this array of smart people that I have to have them really push against it, like push back on it, see if they can break it, see if they can find some fatal flaws in it, really inspire people to push against the idea. And then refine it based on that, right? So if they're really smart, they'll think of something you hadn't thought of, they'll contribute something. I always say one of the things I've loved about working for really talented people is they can always add something to whatever I've come up with. And then, from that point, then I think, depending on what organization I'm in, because I've had lots of different roles and different organizations. Then I think, okay, now I've pressure tested my idea, I have to sell it in, I need to get buy-in in the organization. And so I then put the role of my talent management job. You put the hat on that says, I understand the culture of my organization. And so how do I sell them this concept given the culture of the organization? I know XYZ is going to have this set of issues, let me have those issues addressed. I know PDQ is going to process it through this lens. So how do I present it in the most favorable way in that lens? I know that the business is trying to address this issue. Does this concept address that issue? And so sell it in throughout the organization in that way. And get the green light, put a team together, and chase it. So it's fun when you get to do it. >> And ideas must also be thrown at you in lots of ways. So what kind of a suggestion box do you have? >> [COUGH] So ideas come at us all the time and we really work hard to inspire people to come up with ideas all the time. In part, and I always say people, you should constantly challenge us as leadership of the company. You should be giving us ideas that make us uncomfortable, right? That's success. When you give us ideas that we go ooh, we hadn't thought about that. Ooh, it really, ooh maybe it does run, push towards the edge of the boundaries, right? But that's what we should be seeing from our people. So what we typically do when people come up with ideas is we'll try to very positively assess them, right? Not every idea is an awesome idea. We try to very positively assess them. And then if we think they have merit, we'll resource them so they can get explored further, they can get developed out a little bit. And then when those ideas come to fruition, we really spend a lot of time celebrating them because we want to signal to the organization that we support people generating ideas. Getting those ideas in front of the right people, and then the organization will ultimately support those ideas. And the kicker, I think, is how you respond to people when they present those ideas. If you say, well people have thought of this before or this isn't your job or you say, you're out of your lane, you'll shut it down and you don't ever want to shut it down. So we really try to be very open minded when people bring us ideas, and it's created tremendous success across the company. The story I love to tell is reality television was created by MTV a thousand years ago. And as opposed to it being geniuses sitting in the room and thinking about the future of television, which is the way everybody would love to believe every good idea comes about, it was born with the fact that MTV was going through a programming strategy transition. And they said, well we can't rely on music videos anymore. We need to go and kind of create content with narrative arcs. Well, we have a big idea. We'll create soap operas for teenagers, right? That sounds intuitive, sounds entirely logical. So they said, great we're going to create soap operas for teenagers, but they'd never made soap operas before. They went out and talked to the producers who made soap operas, and discovered it was way too expensive. The budget to MTV couldn't support creating soap operas. So like up the strategy has failed, we'll never be able to do it. And so they go back to their offices and they're sitting around, and they're like yeah, it's way too expensive because you have these writers, and you have this this and you have this that. And somebody's like, well what if we did it without writers? And what if we did it without this, and what if we did it without that? What if we just got teenagers in the room and let them do stuff and put a camera on them? And that's how reality TV was created. And I think it's that idea that it's not this beautiful process where you create a lab, and you get people in the room and they ideate and that's how you get there. But it will be born of failure, it will be born of frustration, it will be born of past pursuit that don't come to fruition. And all those little pieces are then the inputs of these great business outcomes that you get. >> You've mentioned quite a bit, implicitly, about mentoring and encouraging folks. And I'd like to turn that on its head and ask you who was the best mentor or advisor that you ever had? What'd you learn, what made them the best? >> So my single best mentor and advisor is Ken Chenault, Chairman and CEO of American Express. And I think in the context of entrepreneurship, Regardless of how talented you are, that if you're very talented, and you're presented with extraordinary opportunities, either you've made a great product or you've created a great company, you have a great idea, whatever that may be, that there are a suite of extraordinarily complicated other things that are going to be important, right? You may have created a great product, but now you have to create a great company, right? And maybe you're a great product developer, but you're not a great CEO, you're not a great manager, you're not a great leader. Maybe you are a great CEO, manager, leader, but maybe you don't know the capital markets, right? And so you need somebody to help you understand that. Maybe you created a great company, and now you have to bring on equity partners, right? You're not a subject matter expert on capital structures and equity routes. The reality is almost everything in life from a business perspective, outside of product creating development, all of the underlying parts of business, they've been around for a thousand years. And people who are subject matter experts, who have tremendous experience with respect to all of those nuances and intricacies, boards and how you manage boards and how you create companies and how you capitalize companies and how you think about career paths, are extraordinarily valuable. So Ken Chenault at American Express has been an extraordinary resource to me, because throughout my career, as I've been presented with opportunities, and I've had to think about them and assess them and determine whether I should pursue them, and how I should pursue them, and how I should manage them. He's been able to give me extraordinary counsel born of his tremendous experience both in managing his own career, but also obviously managing the careers of the tens of thousands of employees at American Express, that he's been able to give me extraordinary counsel that serve me amazingly well in my professional journey. And it's a role that I take, because I assign so much value to it, I try to play a similar role for other people. And I encourage everybody to really understand that in success, having a suite of advisors who can provide you counsel in the areas that are outside of your lane of expertise is an extraordinarily valuable asset. And a really great mentor is an amazing asset. And Ken's been an amazing mentor for me. >> So you're talking about personal networks and all the connections that one makes over the course of their different experiences, both at work and at school and otherwise. So we have a lot of viewers of this course who may not have had access to a prominent educational institution up front or may just be starting off their careers. What sorts of things should they be thinking about to try to grow this suite of connections who will ultimately be able to help them with resources as they're pursuing anything entrepreneurial? And when I say resources I'm not just talking about advice, I'm talking about funding, I'm talking about endorsements, capital, etc. >> Right. I think it's very important for people to try whatever space they're in to determine what are the value-added networks and network opportunities in that space. I was in a meeting the other day with two entrepreneurs who had come together to create a business and they were pitching this business and the services of this business to us here at Viacom. And they shared that they met through their membership in YPO, in their predecessor companies, right? And so what I think for all business people is to think about, given the space in which you operate, what are the organizations of value that you can join, that can be additive to your overall goals? And I think you don't have to start off with YPO, right? It stands for Young Presidents, right? But so maybe you're not a president, but I think in every space there are organizations that will allow you to tap into networks. And I think as long as you do it in a deliberate, thoughtful way, that those networks can, the first thing that I think everybody should aspire to is knowledge, right? I think that's the resource that I think creates access to all the other resources. And so I encourage everybody to think about the spaces in which they work. So if you're in the tech space, what's the suite of networks there? If you're in the media space, we have a bunch of organizations in the media space. And I think again, as a person who loved his experience and his education from the Wharton School, I think if your school has the potential to be an extraordinary network and an extraordinary resource. I think you should not over-leverage it. I think you have to be, with all of these networks, you have to be thoughtful and deliberate about how you engage. I don't think you should overextend. But I think those networks become entry points and they then can, it's less about YPO or CUP, as an organization in New York where I'm on the executive leadership council, or being on the board of your school. It's less about it linearly lining up with this thing that you want, but that in a much more non-linear way that it can create a path to resources and connections that can be helpful overall. >> Are there other things that you want to share with us about being entrepreneurial, both as an individual or as a member of a large company? >> Great. I would say being entrepreneurial as an individual, that you really have to truly understand yourself. And I think this is true with respect to any job. That being an entrepreneur requires, or the people who are best suited to it have certain attributes, and that people should assess whether or not they in fact have those attributes. You have to have, you should have a very high tolerance for risk. Somebody was talking about an investor the other day was being asked as the market was imploding, what is your recommendation? And his response was, well, you know the old Wall Street adage, sell until you can sleep, right? And I think that's, it's important for people when they say they aspire to be an entrepreneur is to understand, do you actually have the tolerance for risk that you can actually live in a business where maybe your next paycheck isn't certain, maybe the structuring which you work in is uncertain. So [COUGH] I think that's one key thing for people. I think the other thing is you have to be passionate about change. You have to really, really be excited about the idea of change. And true entrepreneurship, to me, is less about the aspirational economic outcome, and much more about the aspiration to create value. And in creating value, there'll be these attendant economic benefits. But if there's real passion for creating value in new and original ways, I think that's another kind of condition precedent to being an entrepreneur. And somebody who's really, really comfortable embracing change, because in general, that's where opportunities come from. I always say, [COUGH] I was an investment banker and I decided I wanted to become an entrepreneur. [COUGH] And I took this job working for the most successful African-American entrepreneur in the world, this guy Bob Johnson who founded BET, was the first black billionaire, blah, blah, blah. And so I took the job and I realized like, in two weeks into the job that something that seemed so obvious, but that in part being an entrepreneur is like, doing the deal when the numbers don't work. And I know that sounds silly, but the punch line is if you only ever did the deal when the numbers worked, all these big giant companies have hired all of these super smart kids to run the numbers. And they're looking at every deal that ever came up. And so if it was just about running the numbers, then all these big companies would always have these best innovations. But instead, it's these entrepreneurs who could look at the numbers differently, who could see things that people couldn't see, who have visions that typically others don't have that can create this outsize value. So if you're that person, I say, have at it and do wonderful things. >> Scott, it's been so great to talk with you today. I wish you all success in all off your entrepreneurial activities, both individually and on behalf of Viacom. Thank you so much. >> Thank you, Laurie.
