Speaker Name: Hugh L. McColl Jr.
Speaker Title: Chairman and CEO
Speaker Company: Bank of America
Bank of America Website
I always enjoy coming back to Boone. It's an honor to participate in a speaker's series that is named for Harlan Boyles, one of our state's leading citizens, and that has included great North Carolina business leaders like Bill Lee and A.F. Sloan. And it's especially good to be here at Appalachian State as you all are getting ready to celebrate your centennial anniversary.
I was doing a little reading about the anniversary coming up, and I saw that on September 5th it'll be 100 years since the first class met. On that date in 1899, this school was called the Watauga Academy. And, as I'm sure you all know, its founders and co-principals were two brothers, B.B. and D. D. Dougherty.
I also noticed, however, that the Watauga Democrat was the only newspaper in the region that announced the founding of the Academy on July 15, in plenty of time to recruit students. The Democrat's editor, of course, was D.D. Dougherty.
So D.D.'s school got its publicity. His paper got an exclusive. And everybody went home happy. Appalachian has been a home to sound business strategy ever since.
This school, this city and this region have changed a lot in the past 100 years.
In 1899, Watauga Academy enrolled 53 students in three grades, with the aim of making local teachers out of local students. Boone was a small town of less than a thousand citizens. And western North Carolina was a rural farming community that still wasn't entirely convinced it needed a new school or any new teachers.
Today, of course, Appalachian State University is a full-fledged four-year institution offering scores of programs to more than 12,000 students from where in North Carolina and around the world.
Boone has become home to about 13,000 citizens, and is now a regional center for education, health care, tourism and the fine arts. And western North Carolina has made the transition from a provincial, one-dimensional economy based almost solely on agriculture to a diverse, thriving economy that is fully connected to the rest of the state, the country and the world.
The irony is that in 1899, most of the people living around here doubted the need for a new teacher's school. And yet, that school provided this region with the teachers and the educational resources that enabled the people here to keep pace with a changing world.
This university, this town and this region are proof positive that no one escapes the winds of change. And the winds are blowing harder today than they ever have before.
I read a couple of articles recently that I thought were particularly instructive as to what's going on in the world today. And, although these articles seemed at first glance to simply theorize about the future of our society, I think under the surface they both say something important about access to education and the future of our communities and our nation. The first was by Walter Wriston, former chairman of the former Citicorp. It's titled "Bits, Bytes and Diplomacy."
Wriston first argues that we have experienced two great revolutions in human history, and that we're in the midst of a third. The first resulted in the agricultural age, and the second the industrial age. The third revolution the information revolution, which is causing the value of physical capital to shrink just as the value of intellectual capital grows is happening now.
Wriston's second point had to do with the effect this revolution is having on national economies. Power is flowing into the hands of individuals, and old hierarchies are becoming obsolete. National economies remain somewhat intact for now -- witness the U.S.'s resistance to the Asian flu -- but computer and telephone networks have created an integrated world economy from which no local market is fully insulated. And, this integration and its effects will only grow in the future.
At the end of the day, Wriston argues, it is not natural resources or industrial capacity that will determine the global economy's winners and losers. Rather, and I quote, "the attraction and management of intellectual capital will determine which institutions and nations will survive and prosper, and which will not."
The second article, written by Thomas Petzinger, a reporter for The Wall Street Journal, is about an even broader shift in the way we think about business, organizations and our society.
According to Petzinger, the old way of looking at things was based on a mechanical view of human enterprise. Structure and discipline were important. Hard assets were valued. Organizations emphasized strict hierarchies and command-and-control leadership. The new paradigm, however, takes a biological view of things -- in other words, we don't think of ourselves as parts of a well-oiled machine but, rather, parts of a living organism or an evolving ecosystem.
In this new way of looking at things, Isaac Newton's rigid mathematical theories give way to Einstein and chaos theory. Traditional sources of value like land, minerals and capital give way to new sources of value like information, knowledge and creativity. A classical symphony gives way to the free-form improvisation of jazz. And organizations emphasize self-organizing teams over established hierarchies.
Petzinger concludes, and I quote, "Organizations can survive only by engaging the eyes, ears, minds and emotions of all individuals and by encouraging them to act on their knowledge and their beliefs."
We encourage our associates at the bank to do that, as long as they get it right.
Now, both of these articles have implications for my company. For example, we are well on our way to becoming an information management company, as opposed to simply a traditional financial intermediary. We offer many traditional banking products and services. We also offer investment banking products that are fairly new to banks. But so do many other companies.
What will differentiate Bank of America in the future is not the products we offer but, rather, our ability to process, analyze and synthesize vast amounts of information and then use that information to create value for our customers. In simple terms, this means helping clients and customers quickly and easily make sense of their finances at home or in their businesses. It means creating a network of knowledge and information that will enable customers to manage their finances when they want, where they want and how they want and to use information to create value for themselves that they couldn't create before. It means associates from across the bank coming together and working in teams on their own initiative to create solutions and solve problems for corporate clients or individual customers.
Both of these articles made me think about the future of my company. Not because of the direction in which we're going; I am confident that we have the right strategy. I think about whether my company -- and every other company in the country -- will find the people and the intellectual capital we'll need to compete globally in the next century. And I think about what will happen to our economy if we fail to provide all our citizens educational opportunities that are equal to the task before us.
The common thread in Walter Wriston's idea, and Thomas Petzinger's idea, and the company we're building at the new Bank of America is the need for educated people -- people who bring intellectual capital to the table. There is no part of this new world order that works for you if the employees in your company or the citizens in your country don't have the intellectual capital to make it work. And intellectual capital is created through education.
One hundred years ago, the Dougherty brothers could not have foreseen the changes in society we're looking at now, and they probably didn't talk much about intellectual capital. But as they looked toward the dawn of the 20th century, they had changes of their own to deal with. They knew that technology was changing industries and economies. They may not have worried about competing with Hong Kong or Malaysia, but they sure didn't want to get left behind by Raleigh and Winston-Salem.
So they decided that the region needed a school. They decided that the best answer to a changing world was education.
Now, as many of you know, I was born in Bennettsville, South Carolina. That's down in the Pee Dee region of South Carolina, in Marlboro County. I like to say I came north to make a living. At the time, the economy in the Pee Dee was mostly farming and the crop was mostly cotton. It also bears mentioning that there was plenty of farm work to go around. Wages were low, but so was unemployment. There didn't seem to be too much need for higher education or the cultivation of intellectual capital in Bennettsville. When I was growing up in the 1940s my family used to come up here and vacation in Blowing Rock. Sometimes, we'd take a ride from Blowing Rock over to Boone. We'd stop at a creek and hunt for crawfish, play in the water, and then we'd go see another performance of The Horn in the West. The economy here then, as I remember, revolved around small farms, the cottage furniture industry, tourism and crafts. Appalachian State was growing, but still had just about 1000 students. People seemed to be doing fine just as they were in Bennettsville.
Today, however, the difference between the two regions is striking. Although the Pee Dee region has begun to join the nation's economic recovery in the past couple of years, economic growth in Marlboro County has lagged behind much of the South for decades. Bennettsville has struggled to attract major industries. The county does not have a single community college or four-year educational institution. And, as of last month, unemployment was approaching 14 percent.
Here in Watauga County, as I mentioned earlier, the economy is thriving. Your regional university is the center of a vibrant intellectual community. And Boone is a center for commerce, culture and the arts.
In large part because of the university that the Doughertys founded here 100 years ago, the people of this region are fully prepared to join Wriston's new world order or Petzinger's new biological organization. What's made the difference, in my judgment, is education.
Now, when I was first asked to come up here and speak, I thought I should give a speech about how students here can best prepare themselves to succeed in the information age.
Then I looked over all the speeches from the past 10 years of the Harlan Boyles Lecture Series. John Allison talked about leadership. Bill Holland talked about vision. Ann Lewallen Spencer talked about the entrepreneurial spirit. And John Clancey talked about globalization. I'm not sure what I can add.
The fact is, you already know what you need to do. You're here at this university. You're studying management, computers, information systems and international trade so you'll understand the mechanics of how business works. If you're smart, you're also studying history, geography, politics, religion, English, Spanish and Chinese, so you'll understand the people of the world with whom you are going to do business. You are surrounded by strong leaders that will teach you how to become leaders in your own right.
If you work hard and keep your eyes open, you should all be fine. Opportunities abound, and they are yours to find.
Unfortunately, however, I don't believe that helping our current college students achieve individual success in the new world economy will be enough to ensure the prosperity of our region or our country in the future. We are losing too many of the low-skill, high-wage jobs that have supported American families for most of this century, and they are not coming back.
Just to give a few examples, between 1996 and 2006, U.S. jobs in manufacturing will show little or no growth, while jobs in textiles will drop by about 10 percent; jobs in the tobacco industry will drop by about 25 percent; and jobs in the coal industry will drop by almost 50 percent.
These jobs are being replaced by jobs in information and knowledge-driven industries, as well as by information-oriented jobs in traditional industries. Again, for example, we'll add more than a million computer and data processing jobs an increase of more than 100 percent between 1996 and 2006. Securities and commodity exchanges will increase employment by almost 30 percent. And education will add almost two million jobs, an increase of close to 20 percent.
For our country to succeed, we must re-train workers whose jobs are being eliminated. And, we must give everyone in our next generation of workers the opportunity to prepare for the high-tech jobs and the knowledge jobs of the future.
Walter Wriston said that the attraction and management of intellectual capital will determine the winners in the next century. And Thomas Petzinger said we will survive by engaging individuals' minds and emotions. I think they're half right.
What Wriston and Petzinger miss is that engaging and managing the intellectual capital we already have isn't good enough. And attracting intellectual capital that already exists somewhere else will leave too many Americans behind. What we need to do is develop the intellectual capital that lies untapped in working Americans from coast to coast. Like land or minerals -- the resources of the past -- intellectual capital occurs naturally as raw material. It exists in the intellectual potential of people. To create economic value, you've got to mine it, refine it, process it and bring it to market.
This process, when applied to today's primary resource, intellectual capital, is called education.
In 1920, H.G. Wells, the English author and historian, wrote, and I quote, "Human history becomes more and more a race between education and catastrophe." I don't think Wells was exaggerating. Of course, my definition of catastrophe -- for my company or my country -- is anything short of winning.
The point is that 100 years ago in this very place, two brothers decided that their own educational achievement was not enough to ensure the success of their town, their county or their region. They knew that to truly be successful, they had to do everything they could to make their community successful. And that meant providing an opportunity for people to educate themselves.
Today we find ourselves in a similar place. The difference is that we can no longer settle for educating a portion of our people. Today, the global economy challenges us to give every citizen the chance to compete in the information age.
I said a moment ago that intellectual resources are like physical resources in many ways, because you have to plant the seeds, care for them and nurture them, just as you would a crop. But unlike many of our natural resources, our intellectual resources are limitless. They will not run out, like coal, oil or land. And using them does not strain the environment, as it does when we use our rivers or forests.
Intellectual capital is the cleanest burning, most plentiful resource we have. And, in the interest of making our country a winner in the coming century, it's up to all of us to develop this resource wherever we can find it.
If you are a businessperson, form a partnership with a local school, community college or university to help them prepare students for the jobs of the future, give employees time off to volunteer in schools or tutor kids who need help, establish a company scholarship fund or donate equipment to schools that will help students learn how to use technology.
If you are a parent, don't stop at making sure your own child is on the right track for the future. Take an interest in your local schools and in the future of the other students who may not have all the advantages your family enjoys.
If you are a student, work hard, play hard, and never forget to reach back with a firm, compassionate hand for your peers who may be falling behind. Yours may be the hand that makes all the difference.
And if you are an educator, keep up the good work. Be vigilant in your pursuit of knowledge. Be steadfast in your application of the highest standards. And do everything in your power to help every student who walks through your door prepare for our brave new world.
We hear a lot of talk these days about the importance of education and how much we all need to commit to our young people. But I think we're at the point where talk is cheap, and we all need to challenge ourselves to put our money where our mouths are.
That's why we've made a decision at Bank of America to pour the majority of our gifts for education into early childhood wellness and development programs. For example, we've supported Smart Start for years and, last January, we made the largest gift in our history a $50 million commitment to the national Success by Six initiative run by The United Way. These programs attack the cycle of frustration for underachieving students at the root, before they fall too far behind their peers.
That's why we support community colleges and scholarship funds, to provide opportunities to individuals in our society who might not otherwise get a chance to become part of our pool of intellectual capital. Finally, a commitment to education and our kids is why we encourage every one of our associates to take off work for two paid hours every single week to volunteer in their local schools.
As we begin the countdown to this university's centennial anniversary, as well as the countdown to the new millennium, the good news is that the United States has a solid lead in the world in cultivating and deploying intellectual resources. But we don't have a monopoly.
Our challenge is before us.
I look forward to working with all of you and with communities across our country to make sure that in the race between education and catastrophe the right side wins.
Thank you very much for inviting me to speak here today. It's been a pleasure and an honor.