by Rajat Gupta
This approach was also effective with P&G CEO A.G. Lafley. A humble and understated guy, he was famous for not using consultants. I liked him immediately and suggested I come and meet with him, which I did, several times, over a couple of years. It might have looked like it was going nowhere, and then one day, just before Thanksgiving in 2005, he called me out of the blue while I was at lunch with a friend in Manhattan. “I’m at the Waldorf. Can you come and see me?” When I arrived, he explained that James Kilts, CEO of Gillette, had proposed a merger. He wanted me to form a team to help evaluate the deal, on a very tight deadline. We did so, and recommended that they go ahead. But when Lafley and Kilts met to negotiate, things turned sour. They couldn’t agree on price, and as everyone left for their Christmas vacations, they had to disclose that the discussions had failed and the deal was off.
On January 1, I got a call from Lafley. “I should have done the deal,” he said.
I told him I agreed, and I thought he shouldn’t make too much of the price. “If you believe in the technology, and it’s a strategic fit, you won’t care if you pay a few dollars more a share.”
“You’re right, we should do it,” he said. “But I can’t call Jim.”
“Why not?” I asked. But he just reiterated, “I can’t. But I want you to call and reopen discussions.”
I met Kilts, who had been a client in my Chicago days, for lunch, and quickly learned that he was not at all happy with how things had unfolded. He had told Lafley the price was non-negotiable, and was not happy that Lafley had tried to negotiate anyway. But he, too, conceded that the deal still made strategic sense, so he tasked me with setting up a meeting, with the condition that price would not be discussed. They sat down, one on one, on Martin Luther King Day, out of the spotlight of staff, lawyers, and the media, in a small office in Rye, New York, and did the deal. P&G became a significant client of the firm, and I would eventually be invited to serve on their board.
Because I was still one of the most productive directors in the firm, as well as being a former managing director, McKinsey was willing to give me a lot of freedom to focus on the causes I cared about as well, along with an incredible platform from which to do so. This was a major benefit of staying with the firm—one that I would never have gotten if I’d left to take a CEO job. I began to spend about fifty percent of my time on social issues.
Over the past few years, I’d been increasingly active in the world of global philanthropy, through McKinsey’s not-for-profit practice. One of my favorites was the Gates Foundation. I’d first met the foundation’s president, Patty Stonesifer, at a gathering of philanthropists in 2001. In those days, the foundation was just getting going with a handful of staff, and Patty asked me to come and speak to her about organizational development. We formed a strong friendship, and a few years later McKinsey did an assignment with the foundation, now much bigger, to identify areas that the foundation could focus on, particularly related to AIDS prevention. Eventually, Bill invited me to chair the advisory board for the foundation.
Another Side of Kolkata
“It’s here?”
One minute, we had been walking through a familiar Kolkata neighborhood. The next minute, we had turned a corner and stepped right into the infamous red-light district, Sonagachi. I was shocked. I’d visited Kolkata many times as a child and teenager—accompanying my uncle to the street markets early in the mornings—but I’d had no idea this place existed. Later, as an adult, I heard about it, but I’d imagined some shadowy den of iniquity on the fringes of the city, not this centrally located network of clean, narrow streets, with its neat rows of little one-room shacks. Another thing that surprised me, although in retrospect it should not have, given the reason for our visit, was the number of young children running around.
My guide on this particular occasion, in 2003, was Ashok Alexander, a former McKinsey senior partner who’d joined the Gates Foundation to run the AIDS prevention program that had been launched following our recommendations. The disease was spreading in India, often transmitted from sex workers to men who went back to their villages and infected their wives. The project, known as Avahan, was designed to focus on high-risk groups—organized brothels, truck stop sex workers, and so on—and encourage condom use and other safe sex practices. Gates invited me to be its chair, working closely with Ashok as well as Helene Gayle and Patty Stonesifer, which was why I found myself strolling the streets of a part of my hometown in which I had never expected to set foot.
We spent a whole day in Sonagachi, talking with the residents about their practices and the manner in which they were treated by their clients. These women knew the dangers of AIDS and wanted to protect themselves, but one of the biggest issues that quickly became clear was that there were economic incentives working against safety. Customers were willing to pay more for sex without condoms. There were also varying levels of understanding when it came to the dangers of AIDS.
Interestingly, Sonagachi was one of the few brothels that were unionized, so we encouraged them to unite around a policy of condom use. The response was positive. In general, we found the women we approached to be receptive and pragmatic, much more so than many people in government who still clung to denial, refusing to believe that casual sex was so prevalent in their country. AIDS prevention is a challenge anywhere in the world, but India presented some particular cultural barriers. People believed that an AIDS epidemic could never happen in a religious country like India. They saw it as a Western disease, connected to lifestyles and values India didn’t condone. Sure, it was spreading in Africa, but that was Africa. Indians were convinced of their superior morals and, in some cases, willfully blind to the reality. Our work required a delicate navigation of these attitudes and a lot of education. In the beginning, we tried hard to get accurate statistics about the prevalence of the disease. At a certain point, however, I realized that it didn’t really matter. “Let’s just run the program,” I said. Our energy was better spent on intervention than on cultural disputes.
A New Challenge
“You can’t do anything in health without the support of the government,” Bill Gates told me emphatically. “I’ll give you $15 million, but first you need to get the government on board.”
“Yes, yes,” I assured him. “They have already promised their support.”
This was not entirely true. What Prime Minister Manmohan Singh had actually told me was, “Okay, we’ll support it, but first show us that you can raise money from the private sector.”
It was a couple of years after the AIDS project, and I was raising funds for a new and ambitious venture: creating a public health foundation for India. I knew that I needed both the government and the private sector on board. Hence, I found myself performing a delicate dance between Bill Gates and Prime Minister Singh, assuring each that the other was committed when in fact neither wanted to be first, even though both were enthusiastic.
The idea for the foundation had first come from Barry Bloom, dean of the Harvard T.H. Chan School of Public Health. He had invited me to breakfast one day in 2002, shortly after I returned from the first ISB graduation, the culmination of so many years of hard work. Glowing with pride, I told Barry about the event and was surprised by his response.
“A business school? That’s easy.”
Easy? I would hardly describe it that way. “If you want to really make an impact in India,” he continued, “start schools of public health.” He explained that he’d recently visited my homeland as part of a WHO meeting on leprosy and had been horrified by what he saw. “India has many good doctors,” he said, “but you can’t expect the state of the country’s health to improve through simply treating people once they get sick. It’s a poor nation with too many people and there simply aren’t enough resources. India needs preventative care and the promotion of health, so people don’t get sick in the first place. You have to reduce the disease burden, not just treat the diseases.” With his background, he knew how much change was possible and
resolved to make it a priority to find a way to help. Hearing about my success with ISB, he decided to issue me a challenge.
Barry’s comments got me thinking, and I realized he was right. However, as I told him at the time, I had little prior experience in public health. He suggested that I put together a concept proposal, and I convinced McKinsey to do a study on the state of public health in India. We convened a three-day conference to discuss the findings, inviting all key stakeholders.
The results of the study were not encouraging. The need for a world-class public health institution was clear, but most public health institutions struggle to get adequate funding and this one seemed doomed to the same fate. By now, however, the idea was lodged in my mind. Any project that needs to be done can be done. We had proven this to be true with ISB. Everyone told us it couldn’t be done, but we did it anyway. Why couldn’t the same be true of this? The key was to figure out how. In a series of conversations with multiple stakeholders—NGOs, the ministry of health, and private businesses—we conceived of a novel plan: a public–private partnership that would be jointly funded by the private sector, the government, and foundations/NGOs. One school was not enough to truly move the dial. Instead, we would create a foundation that could start a network of schools and research institutions. Once the plan had taken shape, we set out to build a coalition of support among policy-makers, businesspeople, health advocates, academics, donors, and global luminaries. I spent a lot of time in India during this period, working on the ground to keep everyone aligned behind the vision. The support of Montek Singh Ahluwalia, head of the Planning Commission, was critical. The team from McKinsey India provided invaluable help, particularly a young associate by the name of Prashanth Vasu and partner Gautam Kumra, whose hard work and enthusiasm was central to the foundation’s success.
Unlike ISB, which stayed completely independent of politics, the public health foundation needed political support, hence my fundraising challenge. Eventually, I managed to convince both Bill Gates and Prime Minister Singh to follow through on matching pledges, and I secured an additional $20 million from Indian business leaders.
In 2006, the Public Health Foundation of India was officially launched, with Prime Minister Manmohan Singh and Nobel laureate Amartya Sen as keynote speakers. The goal of the institution was to build large-scale capacity for public health education, research, and advocacy in India. I recruited the celebrated cardiologist Dr. Srinath Reddy, the prime minister’s personal physician, to run it. Suddenly, on the day before the inauguration, we realized we still had no logo. Dr. Reddy, who turned out to be a man of many talents, sat down and sketched a beautiful image of a seed blooming into a flower, accompanied by the words “knowledge to action,” which PHFI uses to this day. I consider recruiting him to be my greatest contribution to PHFI. A passionate evangelist for public health in India, he is largely responsible for the foundation’s dramatic growth and success.
As we had done with ISB, we initiated a competition between states to provide land for schools, and five campuses were created. Today, the foundation has a threefold objective. First, it conducts fact-based research on public health issues and seeks to influence public health policy; second, it trains public health professionals, offering degrees in public health, epidemiology, health management, and so on; and third, it conducts training programs for health workers. It has been a huge success. I served as chairman for the first five years, forging a strong bond with Dr. Reddy, and continue to be involved to this day.
Based on the success of PHFI, I was invited by Prime Minister Manmohan Singh to begin a similar initiative on urbanization, working with Kamal Nath, the minister for urban development. India was rapidly urbanizing, having recently crossed the 50 percent threshold; however, it was woefully unprepared in every way—from infrastructure to finances to governance. The government provided 200 crore rupees of seed funding with the condition of matching funds from the private sector. However, before the Urban Development Institute could be fully operational, I would be forced to withdraw because of my legal issues, the government would change, and people and priorities would shift.
A Global Cause Meets a Personal Passion
One of the most ambitious projects I was involved with was the Global Fund to Fight AIDS, Tuberculosis and Malaria. Founded in 2002, it was an initiative of Kofi Annan and the United Nations, but it was envisioned as being quite different from the UN in its structure. The fund was a public–private partnership, bringing together representatives of governments, foundations, and the private sector to pool resources and attack the three biggest killers in the world besides chronic diseases like heart disease and diabetes. It would soon become the world’s largest health fund, disbursing $3 billion a year.
I was invited to join the board soon after the fund’s inception, as a representative of the private sector. I was still managing director of the firm at the time, but my third term was coming to an end, so I felt I would soon have more time to commit to such initiatives. The Global Fund was appealing both in its scope and its structure. I was drawn to its ambitious goals and potential impact, and I had always felt that public–private partnerships had the best chance to effect change.
I also had personal reasons for wanting to do my part in the fight against AIDS, malaria, and tuberculosis. Each of those three diseases had touched my life in a very direct way. My father had almost died from tuberculosis in a British prison, and it was that episode that weakened his system and led to his premature passing. I’d suffered from malaria myself as a child in India, as had almost everyone I knew back then. I’d also nursed Anita’s younger brother, Arvind, who was like a son to us, through the disease. I’ll never forget rushing him to hospital with a 106-degree fever racking his twelve-year-old body. Thankfully, he was visiting us in the US at the time and we had access to the best modern medical care. I couldn’t help but think of the millions in India who suffered from and succumbed to malaria without those luxuries. As for AIDS, I’d lost a dear friend to its ravages. David Manly, my can-mate at Harvard who had taken me into his family for every holiday and gotten me my first job, was diagnosed with HIV and died in the mid-1980s. He never even saw his fortieth birthday. The Global Fund had lofty targets of saving millions of lives. Thousands of people died every day from these diseases, and our goal was to halve that number. But I meant it when I told the board that even if we could save just one person, it would be enough to persuade me to get involved. That one person would be someone’s parent, someone’s child, someone’s best friend.
The Global Fund’s board had a unique multi-stakeholder structure with representatives from “donor countries,” “recipient countries,” communities living with the diseases, foundations, NGOs, and the private sector, which was the seat I filled. I was present at the first board meeting, and we commissioned a team from McKinsey to help the fund set up its organizational structure, key processes, and so on.
The first task we faced was to appoint an executive director, and I was on the search committee. This was when I got a taste of how challenging it might be to work with all these government representatives. There was plenty of UN-style political maneuvering at work from the beginning, with countries wanting their people in key positions. I felt it was important to resist this and put a meritocratic stamp on the organization from day one. At the board meeting where the executive director role was to be decided, the search committee presented our candidates in order of preference. At the top of our list was Richard Feacham, dean of the London School of Hygiene and Tropical Medicine, who had done extensive work in public health and was head and shoulders above the other candidates when it came to being qualified for the job.
Another candidate who was much lower in the evaluation of the search committee was a former American ambassador in Africa. The US representative on the board was Tommy Thompson, secretary of health and human services under George W. Bush, and he was determined to appoint this guy and had been lobbying on the sidelines of the board meeting. As t
he US was the largest donor country to the fund, he clearly felt their choice should have greater weight. He made an impassioned speech in favor of the ambassador, even though campaigning was not allowed in the process, and even implied that his country’s continuing support was contingent on the fund choosing his candidate.
Looking round the room, I wondered if anyone would stand up to Thompson. I quickly realized that every other board member was representing either a government or an organization, and they were hesitating to take a strong position without approval. I was the only one in the room who was not answerable to any specific entity; I simply represented the business world as a broad sector. So I took a deep breath and stood up to respond. I reminded him that the search committee had conducted an exhaustive interview and screening process and his attempt to override our strong recommendation was out of line. The board as a whole was free to reject our recommendation, but he had no authority to simply elect someone else, without having done the work and gone through the search committee.
There was a stunned silence. No one expected me to take on a US cabinet member in such an impassioned manner. But to me, the risk of his displeasure was much less potentially damaging than the risk of sitting back and letting him foist a less-than-qualified candidate on the board. At the next break, Thompson left the meeting and didn’t come back. Richard Feacham was elected, and the Global Fund began its operations. Our choice would prove to be a wise one, as Richard did a great job and I came to think of him as a close friend and partner in shaping the fund.
When the role of chairman came up for re-election, I suggested to the other board members that we ask Tommy Thompson. He still seemed to bear a grudge over the executive director issue, and I thought maybe this would help. “He’ll never say yes,” people told me. “He’s a sitting cabinet member.” But I thought it was worth a try. When I made the proposal to Thompson, he seemed surprised that this overture was coming from me, after our previous clash. I explained that I thought it would be good for the fund and demonstrate the US commitment to the cause. I also knew him to be an extremely capable politician. “Besides,” I told him, “you’ll get to learn something new. You’ve always spent time in the US but this is a much more global institution and you’ll get a window into the world’s health.” He was intrigued. “But they’ll never elect me,” he said, aware that there was some anti-US feeling on the board. I suggested that I would work on his behalf to warm up the board members. In the end, he stood for election, was chosen unanimously, and became a very good chairman.
