Randall L. Tobias Oral History Interviews

Transcripts

Part one

Skip to part two of the interview transcripts

SCARPINO: Today is Friday, December 1, 2017. My name is Philip Scarpino, Professor of History at Indiana University/Purdue University, Indianapolis, and Director of Oral History for the Tobias Leadership Center, also at IUPUI. I am interviewing Randall L. Tobias at his home in Carmel, Indiana.

We’ll include a more detailed biographical statement with the transcript of this interview, but for now, I’ll provide an abbreviated overview of Ambassador Tobias’ career.

Randall Tobias graduated from Indiana University with a bachelor’s degree in 1964. He spent the next two years in the US Army serving as a field artillery officer. In 1966, he joined AT&T where he held a number of positions with AT&T subsidiaries in Indiana and Illinois. In 1981, he moved to AT&T’s global headquarters in New Jersey, starting out as a Corporate Vice President. In 1986, he was named Chairman and CEO of AT&T Communications, AT&T’s worldwide long distance and network business and served concurrently as Vice Chairman of AT&T from 1986 through 1993, and Chairman and CEO of AT&T International from 1991 to 1993.

In 1993, Tobias joined Eli Lilly and Company as Chairman, President and CEO. Under his leadership, the company experienced one of the most successful periods in its history. On January 1, 1999, he retired from Lilly, but he definitely did not actually retire.

In July 2003, President George W. Bush nominated and the US Senate confirmed Tobias to serve as the first United States Global AIDS Coordinator with the rank of Ambassador.

In January 2006, President George W. Bush named Tobias as the nation’s first Director of United States Foreign Assistance with the rank of Deputy Secretary of State, and nominated him to serve concurrently as Administrator of the United States Agency for International Development (USAID), the principle government agency that administers economic and humanitarian assistance worldwide.

In Indiana, he served as Chairman of the Indianapolis Airport Authority board, as a member of the Board of Governors of the Indianapolis Museum of Art, a member of the Indianapolis Corporate Community Council, a director of the Indianapolis Convention & Visitors Association, a director of the Economic Club of Indianapolis and Chair of the Committee to bring the NCAA Headquarters to Indianapolis.

He has received numerous honors and awards and recognitions for his achievements, including the awarding of an honorary Doctor of Laws degree by Indiana University.

His book on leadership lessons learned, Put the Moose on the Table, written with his son, Todd Tobias, was published in 2003.

So, as I mentioned when the recording was off, I’m going to ask your permission to record this interview, to transcribe the interview, and to deposit the recording and the transcription with the IUPUI Special Collections and Archives where the recording and transcription may be used by patrons including posting of all or part of the recording and transcription to the website of the IUPUI Special Collections and Archives, and also to deposit the recording and transcription with the Tobias Center to be used for the same purposes.

TOBIAS: You have my permission to do all those things.

SCARPINO: Thank you very much. So, as I mentioned when I was emailing back and forth with you and your assistant, I want to start the interview process by talking to you about the purpose of why we’re here, which is leadership, and with the big question, in 2004, the Tobias Family Foundation gave a major gift to Indiana University to found the Tobias Center for Leadership Excellence, now known as the Tobias Leadership Center.

My question to start off is why did you decide to invest in the development of a Leadership Center at IU?

TOBIAS: Well, at the time I made that decision, it became apparent to me, based on my experience in a variety of roles, many of which you’ve listed, that the role of leadership in the success of all organizations, whether it’s in the for-profit world or the not-for-profit world, is so important to our way of life and the well-being of the country and indeed the world. It seemed to me there’s always a question of are leaders born or are leaders made. I think the answer to that probably could take a long discussion, but…

SCARPINO: We’ll talk about that later.

TOBIAS: …but the simple answer to that is yes, it could be all of those things. But certainly leaders that are born can become better leaders, and people who might not expect to be leaders can develop leadership skills. Therefore, as somebody famously said, “Doing the same things over and over again and expecting different results is probably the definition of idiocy.” So, what are we doing to take advantage of lessons learned? What are we doing to identify things that work and things that don’t work? And it seemed to me, not enough. So, it seemed to me that there was an opportunity both in an academic environment, as well as a practical environment to not only study and learn and share information in the academic world about leadership. But also equally important to me, and maybe more so, was to have a Center that could share and help implement this kind of information, particularly in Indiana, but not limited to Indiana. It’s been my hope, it remains my hope, that increasingly this Center might be looked upon as a convener of solving problems. When people in the community need to figure out how can we do a better job of this, that or something else, I would hope this Center might increasingly be a source of not only expertise, but just a place where that kind of information could be shared and it could be a facilitator going forward. At any rate, that was my general 30,000-foot motivation when we started this.

SCARPINO: So, you had in mind then a place that would provide instruction, but also serve as kind of a learning laboratory?

TOBIAS: Correct, correct. And would also, in addition to that, would also understand from case studies around the country, around the world, what are examples of situations where leadership has really been required and people rose to the occasion and failed, or leadership has really been required and people rose to the occasion and had great and unexpected success. What can we learn about those things that may be applicable to other future circumstances?

SCARPINO: We’re going to probe leadership at great length, but listening to you talk brings two questions to mind. You mentioned case studies, two possible tracks, one is where leadership hasn’t succeeded and one where it has. Based on all your experience, what example do you think would best illustrate a case where leadership didn’t work? I’m not talking to you to tell on yourself, I mean…

TOBIAS: No, no, no. Well, that’s interesting and…

SCARPINO: In other words, if you were going to assign the Center to start with a case study, which one would you pick?

TOBIAS: Yeah, I think – let’s come back to that because I think I’d want to think about that a little more to give you the best examples that I can think of. Certainly, one thing that comes to mind in the instant case is the current state of our US government, and in fact, to some degree, the current state of government in general. We elect people both to the legislative branch and the executive branch, whether it’s here in the State of Indiana or other places, notably the mess that the State of Illinois is in at the moment, but certainly in the federal government, we elect people to exercise leadership. One thing leaders cannot do is to put their own self interest ahead of the interest they should have in providing leadership to whatever the issues there are that they’re facing. And I think you could generally characterize most people in elected office today, the vast majority, unfortunately, of people in elected office, as people whose number one test on most issues is: what is this going to do relative to my ability to retain my office and get re-elected? We see examples all of the time, including right now, the inability or the unwillingness of people in the Republican Party, of which I have been a lifelong member, but we see the unwillingness of people to step up and deal with what’s going on in the White House and the lack of leadership there. So, that’s one example that comes to my mind instantly is the requirement for leaders to deal with the greater good whether it’s going to be popular or not, and I think that applies to people in the corporate world. I can think of examples in my own experience where right here in Indianapolis, back in the mid-‘80s, I guess, AT&T had a very large factory through its subsidiary, then called Western Electric, but had a very large factory that at it’s peak I think employed about 10,000 people on the east side of Indianapolis. At the time that it was required to make a decision about the future of that factory, it happened to fall under my sphere of responsibility, and there was really no clear decision or, let me say it another way, there was a clear decision that needed to be made and that was to close that factory. And the end result of that was that there were, at the time, I think 6,000 or 7,000 people who were going to be without a job. Now, they were taken care of in the best way organizations can, and AT&T in those days did it better than most in terms of severance packages and healthcare and that kind of thing, but the fact was that decision needed to be made, it wasn’t very popular, it wasn’t popular at all, but – and I’m not putting myself up as a hero then, I’m just giving an example of the kinds of decisions that I wish people in government were making today.

SCARPINO: As an individual who spent a long career practicing leadership in a variety of settings, how do you define leadership?

TOBIAS: Well, I think there are several elements of leadership. One is to develop a very clear vision of where you’re trying to go and what it is you’re trying to get done. Secondly, it’s a requirement of leadership, once you understand and have a clear vision of where you’re trying to take an organization, then it’s the ability to communicate with total clarity, a communication that anybody and everybody can understand, communication that does not require interpretation that, “well, did he mean this or did he mean that?” – clear communication. Third, it requires the ability to inspire people, the ability to get people, once they understand what that vision is and where we’re going, that they need to be inspired to want to get it. Probably the greatest compliment I ever had, or one of the greatest compliments I ever had as a leader, was during the time I was at Lilly, a woman working in a factory in Europe essentially filling pill bottles, who said to me, through the translator, “I don’t really know what you guys up there are doing, but you have caused me to have confidence that you know what you’re doing and so I’m fully with you.” Now, I thought, okay, we have thousands and thousands of people, but here’s one that I’m going to declare a success that I’ve gotten done with this person what I wanted to do. Then the next thing, once you inspire people, is to find ways to get people fully and completely engaged and then embrace their engagement. And by that I mean from the top of any organization, you need to point the clear direction of where we’re going, but you also ought to admit, you don’t totally know how we’re going to get there. And everybody in the organization needs to feel empowered to help the organization achieve the goals that started at the top, and to feel like they have a piece of getting that done and they know what that piece is and they know what the bigger picture is that their piece fits in. I think, in summary, that’s what I’ve concluded over time, that those are important factors of leadership.

SCARPINO: So, would it be reasonable for me to conclude, based on what I’ve learned about your career, that you arrived at that philosophy sort of through on-the-job training.

TOBIAS: Yes, yes.

SCARPINO: You learned it, rolled up your sleeves and learned it.

TOBIAS: Yes, yes, that’s probably too simplistic in the sense that when I wrote my book, that was a great opportunity for my late son and I to sit in this very room, or a room very much like this room, and talk for hours. And it was a time that I became aware of lessons that I had learned, not because of anything I did, but lessons that I had learned over the course of my lifetime that I didn’t realize I was learning, that I learned from observing other people and I learned how they were addressing certain issues, and then intuitively I guess, over time I was able to apply some of those lessons learned to very different kinds of circumstances. But, yes, you’re essentially correct. I think it’s things that I learned over a long period of time. And, therefore, to go back to your question about the Center and the why of the Center, I think it raises the question: okay, if I learned those things and it took me 30, 40 years to learn those things, can we take somebody that’s 30 years old and find ways to shortcut that time and share that learned experience in a way that people can build on that much earlier in their lives and go forward and learn other things?

SCARPINO: It seems to me from what you just said, when you and your son were working through the process of writing the book, the required self-reflection really caused you to pull this together in one place for the first time.

TOBIAS: Yep, that’s correct.

SCARPINO: And you’re doing the same thing with the Center.

TOBIAS: That’s correct.

SCARPINO: Okay.

TOBIAS: That’s correct.

SCARPINO: What do you think, how do you think we define successful leadership?

TOBIAS: How we could find it?

SCARPINO: Define.

TOBIAS: Oh, define successful leadership.

SCARPINO: Or measure it.

TOBIAS: Well, I think probably against the four or five things that I described earlier. Again, if we look at the current state of the executive leadership of the United States government, I have no clue what the vision is, if we have a vision. There have been other times in our history where I think people could sit back and some Americans could say, “I understand where this president is going and what he’s trying to do and I think it’s crazy.” Or, during that same period of time, other people could say, “I understand where this president’s going and I love it.” At this particular point in time, using that leader as an example, I don’t think anybody knows where he’s going because I don’t think he knows where he’s going. And I think there have been times when you can say that same thing about corporate leadership. I can certainly think about not-for-profits over the years, where the leaders really haven’t had a vision. And, again, I’ve long believed that it’s more important to have a vision than to have the right vision because if you have a vision and if you can get everybody going the same direction, you will figure out that it’s the wrong direction and you can get that direction changed. But if everybody’s scattershot all over the map, you can’t get that done.

SCARPINO: So, would you add responsible and reflective flexibility as a quality of leadership?

TOBIAS: Yes, I think that’s true. Now, I also think that leaders who have been thoughtful about developing a vision need to have some patience, because I think if people in an organization, or people in and around more broadly, believe that, okay, this leader had a vision and now he’s changing that vision and then he’s changing that vision again, that pretty well translates to he didn’t really have a vision. So, I think it needs to be pretty thoughtful ahead of time and I think people need to be patient, but I think, you’re right, they also need to be very flexible because they may have gotten it wrong or they may have learned more things or the circumstances may have changed.

SCARPINO: How would you describe your own style of leadership?

TOBIAS: Well, I would hope that I have aspired to do the things that I’ve just described. And, in those instances where I would look back and think I wish I could have a do-over on that one, it was because, in my judgement, of a failure in one of those things. I didn’t have a clear vision or I had a clear vision, but I really didn’t get it communicated, or, even more likely, I had a clear vision, but I just couldn’t get people inspired to do it. And conversely, I think in those cases that I would look back on with some pride, I could analyze along the way and say that I think all those elements were present.

SCARPINO: Do you think that a good leader has to be cognizant of the fact that he or she has different constituencies that that lead? In other words, if you’re the CEO of a company, you have a Board…

TOBIAS: Yes.

SCARPINO: … you have stockholders…

TOBIAS: Yes.

SCARPINO: … you have employees…

TOBIAS: Yes.

SCARPINO: … does your leadership style or approach change as you go from the Board to the stockholders to the employees to the customers?

TOBIAS: Well, I think your vision, all of those things are interconnected. I can’t really think of an example where they’re not in some way interconnected. One of the things I tried to communicate during my time at Lilly, because it was a need, it was an area where employees really didn’t understand this, was that we needed to look at our customers, our shareholders, our employees, all of our suppliers, and the communities in which we worked, and we needed to keep those things in balance because if you’re not taking care of your customers, then everything else is going to collapse. If you’re not taking care of your shareholders, you can’t take care of your customers and you can’t take care of your employees, and so forth. Lilly, over time, had evolved that the taking care of the employee part in the culture, not in reality so much, but in the culture of the company, I think a lot of Lilly employees had come to believe that the most important day in their career was the day they got hired because from that point forward, they were going to be just fine. And at the time I arrived at Lilly, people were fond of telling me that around here, nobody ever gets laid off. And one of the first things I said in a significant talk to the employees was that I wish, as the CEO, I could make that commitment, but CEOs don’t decide whether employees get laid off. The marketplace decides, and we don’t to ever have layoffs, but we have to earn the right with our customers, we have to be sure that our shareholders are continuing to invest. The best supplier is not a dead supplier. So, we need to have the kinds of financial relationships and other kinds of relationships with our suppliers so they can help us be successful. And we need to take an interest in the communities in which we work because that’s where our employees live, that’s where their children go to school, that’s where all the elements of their lifestyle exists. So, have to take all those things in consideration. Sure, there are times when it’s necessary, like the factory closing I was talking about, where you may have to get one thing or another apparently out of balance, but you need to do that in order to keep it all in balance for the longer term.

SCARPINO: Can you come up with a specific example that best illustrates the success of your style of leadership, where something worked really well?

TOBIAS: Well, I’d like to think that it was – well, I can think of a couple of things. I would, first of all, want to make the point in both of these examples – one would be Lilly and one would be my experience in the government with the President’s emergency plan for AIDS relief. Each of these circumstances, there’s a tendency for people to give way too much credit to the person who’s leading the parade than that person deserves. Now, I would also say, there’s often a tendency to put way more blame on the person leading that parade – sometimes there is – than that person deserves. But in the two cases I’m describing, Lilly and AIDS effort, it was really the collective effort of lots and lots of people. But in both of those cases – but let’s take Lilly, it was a matter of coming in and assessing the situation and talking to a lot of people and concluding about, as I recall, there were five or six things that I wrote down on a piece of paper for myself, and in effect said, okay, these are my priorities. These are the things that right now I’ve got to focus on and get done. Then it was a question of communicating what those things were and testing them and socializing them with the people immediately around me which, by the way, meant getting people immediately around me that I was comfortable, had the capability of going forward, which meant encouraging some people to retire and promoting some people and so forth. And then, it was a matter of being sure the entire organization, and going to New York and talking to the investment community and communicating through our salesforce to the doctors and hospitals and insurance companies and all those things, but communicating what it was we were going to try to do and getting people inspired to get all that done, and then communicating, communicating, communicating. That job is never over for the leader of an organization, to continue to communicate those things. Just as one measure, I’m proud of the fact that taking into account stock splits, you could have purchased a share of stock in Lilly for $12.50, I think it was, at the time I became CEO, and at the time I announced my retirement, it was in the $90s. Now, that’s just a measure. I didn’t do that. I did the kinds of things I’m talking about of, okay, here’s what we’re going to do, we’re going to get rid of these businesses, we’re going to invest in these businesses, here's where we’re going, here’s the left side of the road and right side of the road, we’re done debating what else we’re going to do, this is where we’re going, but I have no idea how we’re going to get there without every single employee engaging in that, and they did. So, I think that is an example. And we did pretty much the same thing – I’m probably a one-trick pony – but we did pretty much the same thing in the President’s AIDS effort in Africa in terms of how it was organized and having a clear set of goals and so forth.

SCARPINO: So, you mentioned in the case of Lilly, and I’m sure it was also the case with the AIDS effort, that part of the trick was to put a group of people around you who had talent and intelligence and so forth, who would buy into your vision. So, do you think that part of the trick of becoming a successful leader is figuring out how to read people and pick the right team?

TOBIAS: Yes, I do. In my earlier list of elements of leadership, let’s consider that to be the 30,000-foot list, because as you begin to drill down in that, you can’t develop a clear vision on your own. It requires people around you who, among other things, will argue with you or will bring insights that you don’t have or bring experiences that you don’t have. When I came to Lilly, kind of the culture of the senior management team was that they were part of the group of six or eight or ten senior people because – it was more of a legislative approach, I think – that if you were running the research part of the business, it was your job to represent the interests of the research part of the business to the CEO. I made very clear to the people who were on my team going forward that that’s not the way we were going to do it. I was going to pick the people who were going to be on my team and their number one loyalty had to be to the total organization. Now, the person running research needed to bring research knowledge and insights into those deliberations, but at the end of the day, needed to be willing to be a part of decisions that he or she believed were in the best interests of the company whether or not they were in the parochial best interests of the research organization. As an example on that one, we made decisions to dramatically increase the percentage of the research budget being spent through investments in research organizations outside the company. Up until that point in time, it had been more heavily skewed toward internal investments. Now, people in the research organization obviously weren’t fond of seeing their budget dispersed in other directions, but I think it was very clear, at that time, looking at a bigger picture that no company’s research organization could be smart enough or lucky enough or well enough equipped to be smarter than the rest of the world combined. So, that was an example where the then head of research, the late Dr. Gus Watanabe, was very much a party with me of that decision. So, that’s one element of the kind of people you need to bring together, but you have to have a team, and then that has to permeate through the organization, absolutely.

SCARPINO: Over the length of your career, you have been a leader and exercised leadership in a variety of what the leadership people call sectors. You’ve been in the military, business, government, education. Can you talk a little bit about how leadership works across those sectors?

TOBIAS: Well, you know, it’s not that different. I remember people asking me, when I became the CEO of a pharmaceutical company, having spent most of my principle career in the telecommunications business…

SCARPINO: I have to admit, that’s a part of your book I read with great interest. So, sorry to interrupt.

TOBIAS: … but you know, people, I think obviously would ask that question, how can you possibly do that? I’ve said to people over time, with total seriousness, that I believe that the only job at Eli Lilly and Company I was qualified to do was to be the CEO. I don’t think -- I wouldn’t have hired me to do much of anything other than being that. But the skillset that was required for being the CEO, 80% of what I did, I would have done, the kinds of things I would have tried to do elsewhere. I was, during one time or another, I was on the Board of Directors of a major New York bank, I was on the Board of Directors of the nation’s second largest newspaper chain, I was on the Board of Directors of one of the major petroleum companies, ConocoPhillips, I was on the Board of Directors of a major paper and consumer products company, Kimberly-Clark, it was all the same. I mean, the widgets going out the door were different, but the principles of leadership were really pretty much the same. Now, cultures are different. For example, being the Chairman of the Board of Trustees at Indiana University and being the CEO at Lilly and being a United States Ambassador, you’re operating in different cultures, but what that simply means is having the vision is still the same, but communicating it is different and inspiring people is different. For example, if you try to go into the government and act like a CEO and not recognize that the long-term bureaucrats need to be onboard because they’re going to be there long after you’re gone, and that the members of Congress need to be supportive and all the way through, and it takes more time and it’s irritating that you can’t get done as quickly what you can get done when you’re a CEO. So, that’s different. As you well know from where you live and work every day, higher education is different. So, I think the role of a university president is one of the toughest leadership jobs that exists because of all these competing constituencies, all of whom think they’re the most important part of the equation. Nothing wrong with that, but it’s the role of the president to keep that going. So, all of these things have some differences that one needs to understand, but when you come right down to it, the elements of leadership are the same; there are just some differences in how you have to go about getting it done.

SCARPINO: So, as one moves from one sector to another, similar elements of leadership, but to be successful, you have to be cognizant of the culture you’re functioning in.

TOBIAS: Exactly, exactly.

SCARPINO: We’ve talked a little bit about this, but I want to see if we can get this in one place. Based on the decades of experience that you have as a leader in various sectors, what have you learned that you think would be helpful to aspiring leaders? What would you want to tell an aspiring leader about what you’ve learned to help that person along the way?

TOBIAS: Well, again, not to keep just harping on the same things, but I think the elements that we’ve talked about, is to understand that you really do have to take the time to figure out where you’re going. Now, to your earlier question about being flexible, there’s an old saying that one of the best ways to be a leader is to be willing to embrace ready, fire, aim, in the sense that you may need to be willing to trying some things before you have a clear vision of where you’re going. But I think, in summary, those things about having a vision and communicating that vision and inspiring people and then communicating, communicating, communicating to be sure we’re all still going in the same direction. One of the great leaders that I’ve had the privilege to work for, General Colin Powell, when I worked for him, he would gather his senior 10 or so leaders every morning at 7:30 and we’d spend about 20 minutes together, and it was an opportunity for him to communicate something, it was an opportunity to go around the table, if people knew of something short term or long term that the group needed to know about. But as he said to me once, when I inquired about that approach, which was a little different than anything I’d seen, he said he had learned that in leading an organization, people need to get together he thought daily and look each other in the eye and in effect say, “I’m okay, you’re okay, we’re okay, we all know where we’re going, now let’s go get that done,” but you couldn’t do that once a month. You really needed to do that with frequency and that’s one of those lessons, little lessons learned.

SCARPINO: What do you think made Colin Powell a successful leader?

TOBIAS: I think the kinds of elements that we’ve been talking about. He is a very, very intelligent man. He was very thoughtful, took in all the information he could get from every direction, but he was very decisive and he had the ability to gather information to develop a point of view. In the particular areas where he and I worked together, I think he probably spent more time trying to get me to talk than him talking to me, which I think is also a characteristic of a leader, in trying to understand what I thought about those areas where I was spending a lot of time every day and he wasn’t. But at the end of the day, he was distilling all of that as part of his role of, okay, here’s where we’re going to go. And he had, and has, a real ability to communicate clearly and to inspire people. Thinking about Secretaries of State over time and thinking about my conversations in the State Department with career foreign service officers and people as is the case in the foreign policy environment in Washington, there are non-career people who in and out and in and out of government, but I think they would mostly say that to be successful at the Secretary of State, you have to be truly the country’s lead diplomat, which means lots of hours dealing face-to-face with people and developing those same relationships around the world and outside what State Department people refer to as the building. So, developing those relationships with members of Congress and elsewhere, but you also have to manage the building and you have to demonstrate to the people there that you care about the people there and demonstrate to the people there you care about the role of diplomacy and that you care about the functioning of the State Department itself. I don’t think it’s probably appropriate for me to name names, but in the recent history, post World War II history of the State Department, I can think of at least one Secretary of State that pretty broadly within the State Department people despised because that Secretary of State was solely focused on being the nation’s leading diplomat and could care less about the State Department and its needs and the budget battles with Congress and all that kind of thing. I think we have a situation in the early part of the Trump administration where Secretary Tillerson, with whom I had great hope at the time he was nominated, but I think too early – historians are going to have to tell over decades – but I think, based on what we can see in less than a year, he’s gotten pretty consumed with the inside of the building, but doesn’t seem to be getting a lot of input from people and, not to be overly critical of my profession, but I think he’s trying to be a CEO, a corporate CEO within the State Department. Now, there are a lot of those skills that are very applicable, but there’s some that are not. So, we’ll see how all that turns out.

SCARPINO: Are there any examples of situations where you ran into difficult leadership challenges you were not sure you could solve?

TOBIAS: Well, yeah, everything in the government. The United States government is so broken and so dysfunctional. And essentially in my view, if you were to be totally simplistic about it, it gets back to the fact that the people at the most senior levels who are running the executive and legislative branches of government do not have the overriding best interest in the country largely in focus. I have said to people that if somebody made me the dictator and said it’s your role to go fix the U.S. government and you can pull any of the levers you want to pull, I would have no idea where to start because I think it is so dysfunctionally broken, and it’s way more broken than when I went into government 15 years ago. So, yes, that was a very discouraging time for me, even though in my little corner of the government, we got a great deal done and I have a great deal of pride in…

SCARPINO: I was going to say, I thought your record of accomplishment is actually reasonably impressive.

TOBIAS: Well, we had great success and I was surrounded by a large number of people, Americans and non-Americans, who were very dedicated to the cause of doing something about AIDS. And frankly, mostly what they needed was somebody to say, “Okay, here’s where we’re going,” and do all the things that flow from that, and then to have the support and resources, which I had from President Bush who provided extraordinary personal support. I was trying to do what he asked me to do, but he followed up with the personal support that made it possible for me to do those kinds of things, but I’m talking really about the government at large. The second job I had of overseeing all foreign assistants and trying to bring that all together, that was less successful, although 15 years, or whatever it is, 12, 13 years later, there are a lot of elements of what we’d put together at that point in time that are still in place or people are trying to move forward. Those things that require a long-term vision and personal leadership sacrifice to get them done, those examples are few and far between in the government. I’ve also had, if I go back to my AT&T experience, at its peak, at the time I first went to New York in the early ‘80s, which was 1984, the consent decree with the government to break AT&T into eight pieces took place, but in the early ‘80s, when I was there in the run up to all of that, many people alive today don’t remember this, but AT&T had over one million employees. Its significance in the world was such that I could get into see heads of state in places in the world much more easily than the representatives of the United States government could get into those kinds of circumstances. So, that was a period of time that we were dealing with a company that had been established as essentially a monopoly for over a hundred years for a very specific purpose. Okay, then the world changed and we divided it up. Technology was changing, globalization was changing; that kind of an organization really no longer fit. We’ve given up some things because we don’t have that anymore, but we’ve gained way, way more, starting with the explosion of technological innovation that’s taken place during that period of time. If you’re running an organization with a million employees that was thoughtfully put together based on certain assumptions, one of which was you were going to have 100% market share, and suddenly it became United States government policy that you weren’t going to have 100% market share, out of those million employees, you got people you don’t need because the world changed. So, I think it’s impossible, humanly impossible let’s say, to find other ways – I mean, theoretically you could say, well, it’s going to other businesses and let’s retrain and redeploy. Well, I think the rocks of business history are strewn with the wreckage of organizations that tried to do that. The examples of organizations, certainly in the corporate world, the examples of organizations who have successfully and significantly redefined themselves are few and far between. There really aren’t any that come to my mind. And if I think of the major corporate powers that existed at the time I graduated from what’s now the Kelley School of Business in the mid-‘60s, many of those great powers either don’t exist or are dramatically diminished, AT&T being one. General Electric is going through all of that right now, United States Steel, I don’t know what they’re doing, the Pennsylvania Railroad, some of the major airlines that are not so major anymore. IBM is not what it once was. The United States automobile manufacturers are not what they were. And yet 50 years ago, when I graduated from IU, it would have been unthinkable for people to imagine that 50 years from now, those would be diminished or gone, and at the same time, companies with strange names, like Amazon and Google and so forth, or Microsoft even, or Apple, would be such enormous powers. So, reinventing large organizations so that they resemble what they did before but simply doing different things, is a pretty daunting task. To go back to your question, in my experience, those things that I have found almost impossible to deal with are those that required dramatic redefinition or those that were dramatically missing one of the elements of leadership, like do we really have a shared vision.

SCARPINO: And one of the things you mentioned in several places, including your book, is that you didn’t believe that AT&T had a shared vision when they were faced with the breakup.

TOBIAS: That’s correct. AT&T had a very, very clear vision for a hundred years, which was to provide effective affordable telephone service to anybody in the United States who needed and wanted it. Everybody understood that. That was the one goal that everybody in the company was working for. After that was no longer the objective of the company, I think it became a leadership issue. It became a million issues, but at the top of that pyramid, it became a leadership issue in that the leadership of the company, through no fault of their own, was ill-equipped to run something different from what they had been running. And unfortunately, virtually every effort that the company made, either in leadership changes or strategic changes or what were ill-conceived acquisitions that were made in an effort to redefine the company or decision to hang on to significant pieces of the company when AT&T was no longer the best and appropriate owner, and the shareholders and the employees and everybody else would have been well-served to spin those off or sell them or something, the leadership of the company was just paralyzed in its ability to do those things. And that may have been a bigger example than in some cases, but it was not atypical of what companies faced.

SCARPINO: So, as I’ve been doing the background for this and reading and studying up on your career, it occurred to me that when you were in the AT&T headquarters that you were probably within a few years of being eligible to become CEO, and you left to go to Lilly. Could one conclude that one of the reasons you left was because of the leadership turmoil and lack of focus and vision in the company and you’re looking for a fresh start? Were you jumping off the ship, is what I’m asking you?

TOBIAS: Well, let me just say that at the time I left, I think that – and having been Vice Chairman, it’s pretty hard to point a finger much higher – but Bob Allen, who was Chairman and CEO at the time, with whom I had worked literally since – and this is very coincidental – but he was my very first boss out of college. We were both involved in the subsidiary here in Indiana, then called Indiana Bell, and he was my first boss. Our paths then went pretty much in different directions and then converged when we were at AT&T. At the time I left the company, he was the Chairman and CEO and I was the Vice Chairman. But Bob and I did not agree on the direction that the company needed to take. That didn’t mean that I was right and he was wrong, it just meant we had a different view. So, anyway, yes, I was, in fact, even though I was – I’ve forgotten how old I was – but I was in my mid to later 50s, certainly mid-50s, and I was contemplating retiring. I didn’t think I’d ever totally retire, but I didn’t have anything else in mind and I was financially sufficiently comfortable that I could have retired and had a very secure life, and my late wife and I were contemplating that. Part of it was that I was just tired of it. It was a really tough time and I wasn’t really sure that I was going to make much difference, and it was pretty clear to me that my vision of where we wanted to go or needed to go was a little different from Bob’s, and I’ve always believed you either need to sign up or sign out. So, it was getting harder and harder for me to be committed to what we were trying to do. And again, I’d be very clear, Bob had a tough, tough job, and somebody had to make the decisions and it was Bob, and there just weren’t any really great clear answers. At about that time, Lilly found itself in some leadership difficulty and I’d been on the Lilly Board for some time. So when I was approached about being the CEO, I surprised myself and took that very seriously. And it was for the reasons that you – it was kind of a convergence of events where if I’d been asked to do that five years sooner, I don’t know what my reaction would have been, but yes, you’re right.

SCARPINO: One of the things that you brought up, and that I was going to ask you about, were the tremendous changes that have taken place in the business environment since you graduated from college in 1964, and you laid out a number of those. So, as a business leader, is that an opportunity or a challenge?

TOBIAS: Yes.

SCARPINO: (LAUGHS) Yes. I guess I asked for that, didn’t I?

TOBIAS: I think I said in the book, and I’ve long believed that one of the things in all aspects of life, but certainly in business or in higher education or in philanthropy, but certainly in business, one of the things that’s just always true and inevitable is change. The world is just going to change, circumstances will change, technology changes, every aspect of the world just constantly changing. It’s been that way, to the best of my knowledge, since the beginning of the world. So, there are two basic ways that a human being or a leader can look at that change. You can either fight it, resist it – you know, think about the current debate about the liquor laws in the State of Indiana where you can buy warm beer, but you can’t buy cold beer. Okay, there are elements who have a self-interest in this who are doing everything they possibly can to resist that change because they perceive it’s in their self-interest to resist that change. Inevitably, it’s going to change, and there are other people who are figuring out how do I use that change to my advantage? Now, what so seldom happens is that the people who perceive they’re going to be negatively impacted by that change are the same ones who figure out how to turn that into a positive. But that’s another important element of leadership, is to figure out a) that change is inevitable, and b) how do you change that into a competitive advantage? Because if you stop and think about it, the mere definition of change is that there are going to be winners and losers. So, it’s not preordained that you associate yourself with the losers just because the change is going to impact what you’re doing. You can turn that into a positive. It’s just that human nature or whatever that people often are very reluctant to do that.

SCARPINO: Along the course of your career, have you had mentors?

TOBIAS: Yes, I have, and I don’t know that I have ever had a mentor that I viewed at the time, in any kind of a formal sense, as a mentor. I’m not sure that that was as common at the time I got out of college and started going through my career. So, I can’t really identify people with whom I had a comfortable close relationship where I could go to somebody and close the door and let it all out and get advice. My mentors were more the kinds of people – Colin Powell would be an example – they were the kinds of people for whom I had great respect. I believe that that was, in one form or another, reciprocated, or maybe to put it another way, that I was viewed by those mentors as somebody that was worth investing a little time and energy in. It’s almost more in retrospect in looking back at what I learned that I realize that I was mentored, as opposed to – you know, from time to time even today, there are a handful of people who will send me an email and say, “Could we have breakfast again? I’ve got some things I’d like to talk to you about,” and I do that. I enjoy doing that. When you get to my stage in life, you have fewer audiences, so you’re more willing to invest that kind of time I suppose. But I think the world is a little different in that regard.

SCARPINO: So, you had people who performed a mentoring function…

TOBIAS: Right.

SCARPINO: … not in a formal way.

TOBIAS: Right.

SCARPINO: Have you mentored people…

TOBIAS: Yes.

SCARPINO: ... subconsciously along the way?

TOBIAS: Yes, both subconsciously and more formally. I can think of an example. I’m not sure I’m comfortable assigning a name to it. But I can think of an example of someone worked for me and I thought that person – and then I went on and did something else – and I thought that person had the capacity to one day be the CEO of the company where that person was working.

SCARPINO: Excuse me. I’m going to hit pause. I’m really sorry.

TOBIAS: Oh, you’re asking me about an example of mentoring.

SCARPINO: Right, yes. We’re on.

TOBIAS: Okay. There’s an example of an individual who I thought had the potential to some years in the future perhaps become the CEO. So I took some steps after I retired to arrange to get that individual on the Board of Directors of a small/mid-sized company where I had enough influence with the – it wasn’t a company I was ever involved in, but I had an opportunity to say to the CEO, “here’s somebody that’s potentially a more capable person than you’re likely to get and I think it’s in your mutual interest to invite him to come on your Board, and I’m going to encourage him to do that if you do,” and that took place. This little company was going through some tough times and was ultimately acquired, but I think the person in whom I had an interest would tell you today that he got a great deal out of that experience, starting with the fact that it was the very first time that he was ever on a corporate Board or spent much time in a corporate Boardroom. So, over time, as he moved up in his organization, he had a set of experiences that were applicable that hadn’t “cost him anything,” that he could make mistakes without, as sometimes is the case, people walking into an experience and it’s the first time they’ve had it. And I did try to do some other things with him along the way. So, yeah, I’ve had several of those kinds of circumstances. And I have breakfast or lunch from time to time with the current CEO of Lilly, Dave Ricks. I had lunch or breakfast from time to time with John Lechleiter, the prior CEO, who is one of my close friends. In each instance, I suppose someone could in some way assign the word mentor to that. But I also think, thinking about a recent conversation I had with Dave Ricks, who was about to make a decision that was similar to a decision that I had made, whatever it was of 23 or 24 years ago, and was interested in my recollections about the things that I had to deal with both in making that decision and any unintended consequences coming out of that decision that I might think were useful with sharing. Now, I don’t think he was looking for me to in any way influence his decision, but what I think it was more of an information sharing kind of thing. So I still do that kind of thing on occasion.

SCARPINO: Do you think that a mark of effective leadership is the ability to pay attention to or be on the lookout for unintended consequences?

TOBIAS: Oh, absolutely, absolutely. I think unintended consequences are the things that kill the success of a lot of circumstances, and maybe it’s broader than that. It’s both unintended consequences and then sometimes it’s consequences that were unintended – well, unintended and unanticipated, and sometimes it’s unanticipated but feared, but the worst are the unintended consequences that nobody ever thought were the possibility of things that happen.

SCARPINO: I mentioned, when I introduced you, that your 2003 book that you published with your son, Todd, Put the Moose on the Table: Lessons in Leadership from a CEO’s Journey through Business and Life, and because not everyone who looks at this interview will have read your book because that title is so interesting – I mean, I read your book; I know what it means – but could you explain the connection between putting the moose on the table and leadership?

TOBIAS: Yes, I’m happy to. I stole that term from a man named David Nadler who, unfortunately, passed away several years ago. David ran a consulting firm that I believe to have been the most effective people I ever worked for on organizational development. They were particularly effective in helping organizations that were about to go through tumultuous change. And David used that term to get people to realize that often there’s something that everybody in the room knows and nobody in the room is talking about and everybody is kind of trying to work around. So, what David meant by the term put the moose on the table, is let’s imagine metaphorically that we’re all sitting in a conference room and over in the corner, a big hulking stinky moose wandered into the room and everybody’s just ignoring it. Well, nobody would ignore that, and so by putting that moose in the center of the table and saying let’s all recognize that we have this kind of an issue. So, when I was at Lilly, I bought, I don’t know how many, 300 or 400, small models of a moose and passed them around, and it became a tool. After we spent a lot of time talking about what that means, and I suspect we’ll get into at some point here the things I tried to do to change the Lilly culture, but not to get into that now, but to just foreshadow it a bit. One of the elements of the Lilly culture was the level of politeness, at least as I perceived it, that inhibited decision making. People would sit in a conference room and really try to find the lowest common denominator that everybody could agree to, and there weren’t the kind of knockdown, drag out debates that I have been used to. So, I tried to get people to understand that we can disagree without being disagreeable. And you’re really not being honest with each other if you don’t get everybody’s best thinking on the table and we develop the best answer, which not necessarily is the answer everybody can agree with. So, anyway, you’d wander around the company in that period of time and people would have these little models of a moose in their office. I was told of stories where people would pick up their moose and they’d walk into somebody else’s office and they would say, laughingly, “I want to put a moose on the table,” and they would begin to talk about – it kind of became, I don’t know how widespread this was, but it kind of became a vehicle that people could use to disarm the conversation and say there’s something here we really need to work out. So, that’s what that term meant. Interestingly, when I told David that I was putting that in the book and that the publishers had decided that that was the name they’d like to use, and I said, “I just wanted you to know in case you have it copyrighted or something.” He laughed and told me, he said, “I actually stole it from somebody else some years ago.”

SCARPINO: That’s a catchy one. A couple of things that you said in the book stood out for me and one was something you said in the introduction, “With almost total certainty, employees entering the American workforce today, regardless of the industry, will have been hired to do jobs that will have a shorter life cycle than their careers. The business world today is governed by a constantly evolving set of changing ground rules.” What occurred to me when I read that was, given that understanding of business, how does that influence the actions of leaders?

TOBIAS: Well, if you go back through business history, I think one of the characteristics of a lot of failures is that people never really understood what business they were in. One of the most famous examples of that, I suppose, is Black & Decker, the toolmaker, realized at some point in time that they were not in the electric drill business, they were in the hole business because nobody wanted to buy an electric drill; what they wanted to buy was a hole.

SCARPINO: That’s true.

TOBIAS: And the way in which they went about creating the hole, which is what they wanted, was to buy an electric drill. So, if you were just focused on making a better electric drill, you might or might not be kind of missing the point. When I went to Lilly, people would talk about being in the insulin business, and to some degree, I think they probably still do. This is one of the benefits of coming from the outside, is that you realize how silly that sounds. I happen to be a type 2 diabetic and have been for 30-some years and I have insulin shots, give myself insulin shots four times a day, and it’s as routine with me as brushing my teeth; it’s no big deal, but I don’t want to buy insulin, I want to keep my diabetes under control. So, if a company thinks they’re in the insulin business, that tends to give you a different mindset than if you understand you’re in the diabetes business. You’re really in the business of helping people deal with their diabetes. I think the role of leadership in understanding the inevitability of change starts with figuring out, okay, what business are we really in? Because if you’re running a railroad and that’s the business you think you’re in, and your customers really need to move goods from point A to point B, but you’re focused on a solution, and that solution changes, unless you figure out a way to evolve so that you’re, in today’s world, you’re now in some fashion in the intermodal business where you’re operating both truck and trains or you have intermodal sites and all that kind of thing – I really don’t know anything about that industry – but I think companies get so focused on their solution, that as the world changes, they really have trouble changing with it.

SCARPINO: Again, looking back at what you said in the book about employees entering the workforce today regardless of the industry will have been hired to do jobs that have a shorter lifecycle than their careers, how do you think that that knowledge should influence the training of leaders?

TOBIAS: Well, I think probably it begins with getting leaders to think about that statement and if they’re willing to embrace that statement, then to get leaders to think about what are the implications of that statement. Again, going back to our discussion about the old Bell system about AT&T in its old form, AT&T really never got over being in the telephone and network business, and tried, but I think in part, as I said, didn’t have the right leadership and the right skillset and, maybe more importantly, the right culture to be able to embrace the right to, first of all, have a vision with the right changes and be able to embrace that support going forward. So, I think in the educating of leaders, training of leaders, that’s an aspect that I think it very important for people to learn to anticipate, and also to understand it’s never over. So, you know, if you figure out, okay, what is the next thing – I also think – not to be all over the map here, but I also think that’s an aspect, recognizing the realities of life. It’s an aspect of why it’s important for leaders not to stay too long because I think most of us only have so many changes in us. And most of us become sufficiently invested, not in the problem, but in the solution, that it’s very difficult, in human terms, to get to a point and say, okay, this great solution with which I am associated which has brought great success to the enterprise that I’m leading and to me, no longer makes any sense, and so I need to evolve that and move on. That’s really hard for leaders to do. I think probably also is related to why most Nobel Prize winners, in the sciences certainly, but most Nobel Prize winners did their breakthrough work very early in their careers.

SCARPINO: Do you have any recollection of when that insight became a part of your world view, when you told yourself as I move up, as I am the leader, there’s a lifespan of this; it’s not forever?

TOBIAS: I don’t know. I think most of the insights that I now have, or insights I think I have or have developed over time, have been insights in retrospect. I don’t think there’s ever been a time when I’ve had, or not one I can think of, where I’ve had an ah-ha moment on big significant things; I think it’s been more a case of looking back and having an ah-ha or I now realize what I…

SCARPINO: So, when you took the helm at Lilly, it’s my understanding without ever having asked you directly, that you didn’t intend to stay for a long time.

TOBIAS: I did not.

SCARPINO: Was that because you were approaching retirement age or because you realized that a leader has a limited shelf-life?

TOBIAS: Well, it was probably some of both, but it was more I saw myself as someone who could make a contribution based on abilities and experiences and skillsets I might have, someone who could make a difference in the circumstances the company found itself in at that moment. I think the best way I can answer your question is that at the time I chose to leave, I concluded that it was the best time for the company for me to leave, and it was also a time when I was ready to leave. I’ve been through some personal tragedy, I’m sure we’ll talk about, and it was just a time I was kind of tired and wanted to take a break. And it had been a pretty stress-filled six years or so, but it was also a time in the life of the company where what needed to be fixed, in very simple terms, were the fundamental blocking and tackling of leadership. Who are we, where are we going, what are we going to be good at, what do we need to do to be good at it, and get that train on the track, and I think we did over that period of time. Now, the next challenge was really focused on taking that and running a very successful pharmaceutical company with a lot more emphasis on the intricacies of a pharmaceutical company. I’m not sure I would have been the best person to do that. We’ll never know, but I just thought it was a good time. Now, had one or the other of those things not been present, what would I have done? I don’t know. If I had felt that the things that I needed to do on my watch were not done, I’m sure I would have stayed. On the other hand, if I had not wanted to go, would I have been willing to take the initiative, which I did – I shocked the Board when I told them I wanted to leave – I don’t know. It was kind of a convergence of good things.

SCARPINO: So, you provided me with the names of several individuals who could help me understand your career, and without attaching a name to this, I’m going to tell you one of the compliments that one of these people paid to you. I asked him, “How do you account for Randall Tobias’ success?” and so on. We were chatting along those lines, and he said that you’re a lot like Michael Jordan. Now, he didn’t say you could dunk the basketball; that’s not where I’m going with this. But he said that when it came to business and leadership, he said you were born with tremendous talent and you worked really hard to cultivate that talent, and I think Michael Jordan did that in basketball. So, not comparing you to him, but how much do you think that your success in leadership is based on the talent you were born with, and how much of it is based on the effort that you put into cultivating that talent?

TOBIAS: I think that’s a subject that can be debated forever and probably no one could ever come to a clear answer. I guess what you’re asking and what I can say is what my opinion is about that more broadly than myself, and that is that I do think there are people who are born with some innate skills. Now, how they got there – is it genetic from their parents and others in that way, is it the influence that they’ve had by all the people with whom they’ve been in contact over time, is it all those things? I don’t know, but I do believe that there are things that I have done that I’ve done more instinctively and haven’t really kind of known in a conscious way why I did them. They just kind of seemed like the right thing to do, but at the same time, I’ve tried to learn from those experiences going forward. I have concluded over time, and I think this is something that people in leadership positions need to conclude about themselves, is that I’ve concluded that I do think about things sometimes differently than other people around me. So, I’ll go that far, but I think that’s important as an aspect of leadership, because leaders who have more difficulty communicating and inspiring are often troubled by the old saying that they don’t suffer fools easily; and they have their own definition of fools, and a fool is somebody that’s different than they are. Whether it’s good or bad or an innate leadership skill or not, I don’t know, but I do know that there are ways that have been easier for me to conclude that ought to be done about things that don’t seem to be what everybody jumps to. So, first of all, you have to kind of question yourself and say, okay, what am I missing here, and be sincere about it, not what are they missing, but what am I missing, and then convince yourself that the path forward is the right path forward and proceed.

SCARPINO: So, I’m going to talk to you about Remington in a minute, but you know I drove up…

TOBIAS: Oh, no I didn’t.

SCARPINO: Oh, I drove up there. I spent an afternoon with Mr. and Mrs. Biddle.

TOBIAS: Oh, good.

SCARPINO: Bill Biddle took me around, showed me the home you grew up in and the farm and all that stuff, and it was a nice time, really nice man. He seems still to be in awe of your dad, but one of the things that stood out to me in reading about you and in talking to your friends that knew you when you were a young man is that you stood out as a young man. I mean, you had qualities that other people didn’t have. Did you know that?

TOBIAS: You know…

SCARPINO: I’m not asking you to be conceited…

TOBIAS: Some of these are obviously difficult questions to answer and some that I haven’t thought about, or I haven’t thought about and wanted to think about. But I had a similar question when I was in my 40s from somebody in New York who was writing a profile piece, and I sort of blurted out a statement that I’ve stuck to over the years because I think it’s descriptive of this kind of thing. And that is, quite simply, I’ve known me all my life and so people who meet you at age 20 or 40 or 70 or whatever, tend to have a view of you in the context of what they know about you for some period of time, but they have a view of you who you are then. When you are you, and you’ve known yourself all your life, life is incrementable; life is an inch at a time. So, the only thing I can say about that is, you know, I’m just the person I’ve always been and I’ve never – you know, it’s just hard to be on the outside and look in, if that makes sense.

SCARPINO: I’ve had an opportunity to talk to a significant number of leaders, thanks to the Center that you founded, in the past 10 or 12 years. One of the things that I found to be interesting and useful to ask them about is what they read, and so I’m going to ask you, what do you read?

TOBIAS: Well, I read a lot. I think there’s probably not a day that goes by that I don’t read. I begin every morning with the Indianapolis Star, which these days doesn’t take long, and the New York Times, Washington Post, The Wall Street Journal, and the London Times, and that’s my kind of daily reading. I read some other things, too. I read a lot of history. I read biographies. And I enjoy a lot of – I’m not quite sure what the genre is – but kind of spy novel, kind of fiction I particularly enjoy. Right now I am reading a book entitled April 1865. It’s a very, very interesting book that focuses on the importance of that one month in the history of the country because that was the same month that Lee and Grant met at Appomattox. I was also the month when President Lincoln was assassinated. It was the month when a number of important leaders, Grant and Lee and Lincoln and others, but I’d say Grant and Lee among others, entered into decisions that represented great long-term leadership, the kind that I said earlier was kind of lacking in today’s political mechanisms, where Grant concluded that the future of the United States was best served by not being vindictive toward the South, and that was unique in the annals of civil wars. Civil wars are more often characterized, I think, where the vanquished have been put on trial and executed and punished and so forth. Grant, in effect, sent Lee’s army home and sent them home with their mules and horses. All that was really required of them was to pledge allegiance to the country and go back. And that had been Lincoln’s view before his assassination. Now, the country went through great turmoil at that time. To some degree, we’re still fighting that war on a cultural level, but to your specific question about what do I read, that’s an example. It’s enjoyable, it’s an enjoyable book. It’s a book I love to pick up and read, which I’ve only been doing three or four days, but I’ll finish it probably in a day or two, but I like to read things I learn something about. Even the fiction I read, I find interesting. I particularly like fiction that involves international intelligence and those kinds of things because interspersed in that, you always pick up some things about the history and culture of countries and peoples and so forth. So, that’s what I gravitate to.

SCARPINO: When you started answering, you mentioned the newspapers that you read every day. Did you do that when you were still actively engaged in leadership? Did you start your day that way?

TOBIAS: One of my joys of being retired is the ability to do that and to do it in some depth. I did two things in the last 25 years or so, I don’t know, 25 years of my career when I was fortunate enough, particularly in Chicago and New York, to have a driver. So every morning I’d sit in the backseat, and the time I had was really commuting time to read the morning paper. But in the senior jobs that I had in the last 25, 30 years of my career, I always had on my desk, what we called it a set of clips, and there were people who’s job it was to do what I would have liked to have done and that is to go through all the – this was back when print was…

SCARPINO: Yeah, real newspapers.

TOBIAS: … yeah, but to go through all that. So I would have on my desk maybe 25, 30 pages of clips from newspapers that were based on some criteria, and certainly anything about the company, anything about the industry, anything about the economy, anything about the political governmental situation that one ought to know. So, yes, I’ve always taken the time to do that, but I thought all the time I was working that one of the great joys of retirement would be the ability to read a newspaper from end to end.

SCARPINO: I’m going to ask you one more question about leadership and then move on. We’ll bring leadership up again later, but I’m going to do it this way by putting out that you have a really strong record of philanthropy, including to Indiana University. You gave the gift that started the Tobias Leadership Center. In 2016, a family gift led to the founding of Tobias Center for International Development at Indiana University School of Global and International Studies. You’ve been a supporter of IU Athletics and obviously you’ve been a philanthropist in other areas as well, and so here’s the question – do you see connections between being a successful leader and being a philanthropist?

TOBIAS: Well, I guess so. I’m not sure I’ve ever thought about it in that way, but I do think, if you go back to what I’ve said about leadership and the absolute need to stay focused in some balanced way of all the various constituencies that impact on what you’re trying to do, so it’s not just the customers, it’s not just the shareholders, not just – or, if you’re looking at it from the point of view of an educational institution, it’s not just the faculty, it’s not just the students, it’s not just the alumni, it’s the greater good. It’s the responsibility that Indiana University has to make life of the people of Indiana and the world better as a result of what Indiana University does. So, you can apply that to about anything. I think if you find yourself in those kinds of roles, then you just get interested in what people might call the greater good. I don’t know exactly how I got – I don’t think about philanthropy as an end. I tend to think about it, I guess, as a means to something else. I tend to think about subjects that I’m interested in or problems that I’m interested in or needs that I think need to be addressed, and sometimes one of the tools to help make that happen is money. So, I’ve seen these things – when I provided, first of all, the original idea for and then the initial funding for the Leadership Center, I made very clear in a paper that I wrote that I didn’t see that as philanthropy. I saw it as an investment, and that I was investing in it in the same way I might invest in a business, and that I was looking for a return on that investment and the return had to be more than just the creation of knowledge. The return had to be on what do we do with that knowledge, and how do we make the world a better place, and how do we solve problems as a result of making that investment? And I think I could pretty much say that – oh, I suppose there are exceptions – but I think I can pretty much say that most of the philanthropy I have engaged in – I can think of a thing or two, so I’d say not all – but most of the philanthropy I’ve engaged in, I’ve viewed more as an investment.

SCARPINO: But do you think that, in reality, effective philanthropy should be an investment?

TOBIAS: Yes, yeah, I do. I think that’s one of the ways in which philanthropy has changed over my adult lifetime as the available personal wealth has probably moved into a somewhat different category of potential philanthropists. Fifty years ago, I can’t say this with certainty, but my impression is that 50 years ago, personal wealth tended to be more in the hands of either inherited wealth or corporate wealth, people who had worked for large corporations and had stock options and so forth. Today, I think much of today’s wealth is in the hands of entrepreneurs who have created that wealth not by doing what I did, which was to go to work in a place that had been somebody else’s idea. The telephone wasn’t my idea; it was Alexander Graham Bell’s idea. The pharmaceutical business wasn’t my idea; it was Colonel Lilly’s idea. I went to work in places where my job was to take something somebody else had done and try to advance the cause. Not the case with Bill and Melinda Gates. Not the case with many others of today’s philanthropists. As a result of that, I think we probably all agree that many of today’s philanthropists are approaching philanthropy in the same way of what their life experience has been, which is I want to know what the return is going to be on this. And I think they tend to be more engaged, tend to be more passionate. They don’t tend just to write a check because somebody asked them to.

SCARPINO: Fifty more minutes, can you do that?

TOBIAS: Sure. I have all the time (INAUDIBLE).

SCARPINO: So, I want to transition to your youth, and I know that somebody can look this up, but when and where were you born?

TOBIAS: I was born – my parents lived in Remington and I was born in a hospital in Lafayette where babies were born from parents who lived in Remington.

SCARPINO: In what year were you born?

TOBIAS: 1942; I was born in March, March 20, 1942.

SCARPINO: And who were your parents?

TOBIAS: My mother was, her name was Fern Harwood Tobias. She was born of parents who lived on a farm in Kansas at the time, grew up in rural Illinois much of the time, and then her family moved to an area actually pretty near where the farm I currently own is, near Remington. My father, his parents were also farmers in the Remington area. They were both very unique people and they were part of a unique community at the time. For a small town of 1,100 people, the number of college-educated people who lived there during the time I was growing up in the ‘40s and ‘50s was really quite extraordinary, including my own parents.

SCARPINO: Both of your parents went to college?

TOBIAS: They did. Neither one of them had any money. Growing up, they grew up, as I said, on farms and neither of their families owned any farmland. They rented land. My mother graduated from high school and, at that time – she was born in 1904, so I guess she would have graduated from high school in the early 1920s. She was able, as I understood it, to take an examination and become certified to be a school teacher, and it didn’t require further education at that point in time. She began to teach and, at some point early on, started going to summer school and kept going to summer school and accumulating credits. Then at some point, she dropped out of teaching for a year and went to summer school for that summer and the following two semesters and then the following summer, I think, and that was all at a university or college, at the time, I guess, that was called Illinois State Normal, which was a teachers’ college in in Southern Indiana. I think it’s now called Illinois State University. She kind of worked her way through to a college degree at that point. My father had a high school teacher who saw in him the ability to get a college education and helped him get a scholarship to DePauw University, which is a scholarship that exists today called a Rector Scholarship. There was a doctor, I think, who’d given the University back in the ‘20s, or maybe earlier, a good deal of money that had grown into a significant endowment. In those days, my father’s scholarship was room, board, books, tuition. He used to tell about kind of going through four years of college scared to death because he had to make a certain grade point average in order to keep the scholarship, and without the scholarship, he would’ve never been able to stay in school. So, that was, I suppose, a subtle – the role models that they provided about the importance of education, the importance of self-sacrifice in getting an education. I don’t think there was ever a time that I didn’t think I was going to college, and in a small town like that, there are a lot of people who could go to college, but never, in those days, but never thought about it.

SCARPINO: Do you have brothers and sisters?

TOBIAS: I have one, well, technically I had two brothers. I had two brothers who were born August 23, 1937, and they were twins. One of the brothers only lived about a week and died at birth. My other brother, Roger, who died about a year and a half ago, lived to be 79, a day short of 79. Growing up, it was my mother, my father, my brother and me. My brother was about four and a half years older. He was five years older, I guess, in academic terms. So, when I was a freshman in high school, for example, he was a freshman in college. So, there was some gap growing up. We grew up as a four-person family unit, but by the same token, there was some spread between my brother and me and it really wasn’t until later in life that we became – we were always close, but we became very close and I would say, and I said at the time he died, he was really my best friend.

SCARPINO: But when you were growing up, you were the kid brother.

TOBIAS: When we were growing up, I was the kid brother. That’s exactly…

SCARPINO: You may love the kid brother, but they’re also annoying. (LAUGHS)

TOBIAS: I was the kid brother, I was annoying, I was always trying to keep up, I was always trying to hang out with he and his friends, and I wasn’t welcome and, yeah, so all the stereotypical things you can think of.

SCARPINO: So, as I mentioned, I drove up to Remington, a small town in the midst of what looks like incredibly fertile farmland, just off I-65. I note that there’s a painting of Remington in the entryway of your home that Chapter Four of your book deals with growing up in Remington. According to your long-time friend, William Biddle, you bought a farm just outside Remington in 1998 that he, or his son, farms for you. He told me, he said that, and I wrote this down when he told it to me, he said that the community atmosphere of Remington shaped the people who grew up there. And then he knew we were talking about you, so he said, “Randy never lost that footing.” Can you talk about the impact of growing up in Remington and how it shaped the adult that you became?

TOBIAS: Well, I don’t think I could – I agree with Bill, and I don’t think I could overestimate the impact that growing up in Remington at that point in time had on me. I’ve sometimes described Remington in those days to people who are old enough to know what I was talking about was that it was like growing up in a 1950s and ‘60s sitcom where Ozzie and Harriet were your next-door neighbors and Marcus Welby, MD, was the town doctor. The community was an extended family. If you did something on your bicycle somewhere in town that was dangerous or shouldn’t do, your parents were probably going to hear about it. The values, the morals, the ethical standards that one grew up with at that period in time were what we all hope our children and grandchildren experience. I can remember that one of the principles that my parents felt very strongly about, that I probably realized early on was an important principle of life, was keep your commitments. I can’t remember quite how I remember that, but I just remember that it was so important to my parents that if you agreed to do something, you agreed to do something, and if you agreed to be someplace, you needed to be there. If you had, I think it was school related, but it was just very clear that if you were on some committee or you had an examination or whatever, you had a commitment and you were expected to meet that commitment. Broadly speaking, it was kind of that kind of value system. You took care of your neighbors. My parents were involved in volunteer roles or leadership roles in the church, in the community. My father worked all of his life in a small bank in Remington. As a result of that, he was the treasurer of about every community organization. He thought he would be and the community expected he would be. My mother was involved in various things. She was the President of the Library Board at a time. It was one of those old Carnegie libraries and they had a fire in it, the building burned and pretty much the collection burned. So she provided the leadership for the community to rally and raise the money and get the grants, or whatever they did, to rebuild the library and so forth. Bill’s parents, Bill Biddle’s parents were involved, and other people. It was just kind of the way it was, and again, it’s one of those things that you only appreciate that, or you greatly appreciate that, in retrospect. And you appreciate it to some degree when you realize that not everybody had the benefit of growing up in that kind of an environment.

SCARPINO: So, your mom had been a teacher.

TOBIAS: She’d been a teacher, correct.

SCARPINO: Did she continue to teach while you were growing up?

TOBIAS: Yes, she did. I can’t remember when she went back to teaching, but I think I was probably in maybe third grade or something like that, and she taught – it’s kind of an interesting story. This was a small community school, so there was one classroom for every grade, and my mother for several years taught sixth grade. When my own class finished fifth grade and we were about to go into sixth grade, my mother and the fifth grade teacher swapped so that my class has the same teacher for both fifth grade and sixth grade, and it was because my mother thought it was totally inappropriate for me to be in her class. And again, I think it was – I mean, there were a lot of obvious reasons for that – but I think it was probably a values reason of avoiding any appearances of conflict of interest. That was part of the kind of a value system.

SCARPINO: How do you think your mom shaped the adult leader that you became?

TOBIAS: Well, in a variety of ways including just by example, in the way she lived her own life. She was a life-long student. Back when Indiana University had an adult education program, which it did in those days, a pretty significant one, our dining room table was always piled with stuff from some correspondence course that she was taking. She was always – I’ve talked about some of the advantages of growing up in a place like that, but there were a lot of disadvantages, and my mother worked hard to deal with addressing those. So, for example, the summer before whatever grade it is when you’re required to take Indiana history, I think maybe it’s fourth grade…

SCARPINO: It’s fourth grade now.

TOBIAS: … yeah, I think it was fourth grade then. So, the summer between my third grade and fourth grade year, we took a number of family short little trips to Vincennes and to Corydon and to places around the state that she knew I was going to be studying and wanted me to see firsthand. She’d done the same thing when my brother was growing up. She was always – she organized from time to time – we’d get on the Monon Railroad, which was the passenger – most people thing it’s a running trail today, but the Monon Railroad was a passenger train that connected Southern Indiana with Chicago, and it passed through Rensselaer, the County Seat, which was about 10 miles away. Well, we’d drive to Rensselaer on a Friday, as a family, and get on the train and go to Chicago where my mother had arranged – we’d go to some Broadway musical or Broadway play that was in Chicago, we’d go to the Field Natural History Museum, we’d go to the Shedd Aquarium, we’d go to the Museum of Science and Industry, we’d go to the Chicago Art Institute. So she was organizing those kinds of things. Purdue, in those days, and I’m sure today, had a wonderful cultural program in what’s called their Hall of Music, their main auditorium, and we’d go there from time to time, and that just became a habit. When I was to high school, I’d take a date to some event at Purdue, a concert or something at the Purdue Hall of Music. So, she just kind of set that kind of educational example. That’s one thing that I remember.

SCARPINO: And your dad was a banker?

TOBIAS: My dad was a banker. My dad graduated…

SCARPINO: Did he own the bank that he worked in?

TOBIAS: No, he didn’t, but it’s an interesting question. My dad graduated from DePauw in 1929 right at the time of the stock market crash. He had a degree in economics. I think his first job was with an electric power company in the Fort Wayne area. I think that as companies were downsizing and people were being laid off, I think at one point he went from being an accountant or bookkeeper, whatever he was, to working outside in construction in some version, and that all dried up. And he ended up coming back to Remington in, I don’t know, 1930 or ‘31 or ‘32, somewhere in the early part of the Depression. My parents weren’t married. I think they got married in 1934. So, he came back to Remington and had a job working on a farm as just a farm laborer. There were two community-owned banks in Remington that had been started at the early part of the 20th century. In those days, these independent small banks were really started by a group of people who would sell stock to people in the community. The people who were on the Board of that bank, for whatever reason, needed to hire somebody and they came and approached my father. He used to tell the story of he was plowing behind a horse and this Model-T pulled up and stopped, and when he got to the end of the row, he walked over and knew the people that it was. But anyway, they were there to offer him a job in the bank which he took and had said he wasn’t sure he wanted to live in Remington all of his life, but it was a sure better job than looking at the rear end of a horse. So, that was in the mid-‘30s, I think ‘36 or ‘37 maybe, and I’m not exactly sure about the date. So, he worked in the bank, a very small bank. They probably had, I don’t know what the assets and deposits were anymore, but they had about seven or eight employees, I think. He became, at some point along the way, became the CEO, President, Chairman and CEO of the bank and led that bank for I suppose 25 years anyway. He was a very frugal man and very much influenced by the Depression and had some philosophies of life that were pretty good for running a small bank, like you know you can afford to buy something when you have the cash to pay for it. And when you’re running a bank and you’re loaning money to somebody, you need to loan it to people who are going to pay it back. And you need to realize that it’s not your money, it’s the depositor’s money that you’re loaning and things like that. As the bank evolved, and let’s say you’d had a farmer and his wife who, in the early days when the bank was founded put up a $100 and got five shares of stock in the bank, or something like that, and over time, that stock, those five shares worth initially $100 became $200 and $400 and $800, because the bank flourished. It was well-run and it had prospered, and in part because, as you pointed out, the area around Remington – very agricultural community in those days and it’s some of the best farmland in America – so the farmers, in relative terms, were doing well. So, they keep splitting the stock. So, somebody who started out with five shares worth $100, eventually had 200 shares worth several thousand dollars. They’d die and they’d leave it to their children who might still be in that community or they might not, and they’d die and they’d leave it to their children. By that time, their children were living in Denver and Philadelphia and so forth, and they didn’t want that stock. So, they’d call my dad and they’d say you know, “We inherited this stock” – which he probably knew because he was probably the executor of the estate, because when you were running the bank, you did everything – and so they’d want to put the stock on the market. So, somebody was selling, let’s say they were selling 100 shares of stock and he’d save what he could save and he might buy 10 of them himself. So, at the time he died just short of age 90, for practical purposes, he was 90, he was 70 when he retired and sold the bank to Bank One at the time, or effected its sale. At the time he died, I don’t know any more how much he owned, but I’m sure he owned in excess of 10% of the bank because he had acquired this stock, but he never had any – I always thought we had money because we had as much money as anybody else had and nobody had much money, but we didn’t know it. We got new blue jeans for school every fall, but nobody owned second homes, nobody had fancy cars. I didn’t know anybody who ever went to Europe. I don’t think I probably realized until years later that my father and mother were probably scrimping a little – we were prototypical middle-class people, let me put it that way, but my father never really had much liquidity because he owned this stock. It didn’t have a big market and it had intrinsic value, and from a financial point of view as time went on, his cost basis in that stock was so little that if he did sell it, the tax hit on that would have been quite significant and he was too frugal to do that. So, it really wasn’t until after he retired and much of this transaction was a stock-for-stock transaction, so he ended up with stock in Bank One. Anyway, for the time and place and circumstances and for somebody who started with absolutely nothing, he did very well. My parents used to tell stories about when they first got married, they would go to the grocery store and would buy a stick of butter, a quarter-pound of butter, at a time and they would put it in their basement because they had no refrigeration.

SCARPINO: What kind of an influence did your dad have on you as you went on in your career and became a leader?

TOBIAS: Well, my dad and my mother were…

SCARPINO: Because I’m guessing that over the years, your business practices were a little different than his.

TOBIAS: Oh, yeah, they absolutely were. I learned a lot of things from my father that you just absorbed as this is the way people do things. He took everything very seriously. He assumed total and complete responsibility for the well-being of his customers. I think I mentioned this in the book maybe, but he was my first lesson in being responsive to the needs of your customer because I can remember him sitting on the steps on our back porch beside some farmer who had come in to talk to him about a loan or something, but who was in the field all day. So, banking hours didn’t mean much. I mean, it was very inconvenient – coming out of the field and going to see my dad during banking hours, was leaving money, and that’s just the way it was.

SCARPINO: So, he took care of the customers on the porch.

TOBIAS: He took care of the customer. I never thought that there was anything unusual about that because there wasn’t anything in our house unusual about that kind of thing. He was very responsible about his business and I suppose, when I think back on it, and I think back on the things that I think are important about leadership and I think about my father’s attitude toward customers and – the employees in the bank loved my father. I mean, he was not a loveable person per se, but they had great respect and affection for him. The community looked up to him and trusted him. As I alluded to earlier, he was very involved in the well-being of the community, took the needs of the bank shareholders very – because a lot of them were depending on dividend income. So, those I guess were early examples.

SCARPINO: Were there other adults that you encountered while you were growing up there that had a lasting impact on you?

TOBIAS: Well, my teachers were very influential. Again, I think, unfortunately, one of the challenges that we have today in elementary and secondary education is that the, in many cases, the people in those jobs don’t get the respect from the community that they did in my day. But these were among the best educated people in town, and they were just respected by everybody. My high school principal, who was also my math teacher and is still living – I think he’s 102 maybe…

SCARPINO: Is that Mr. Utter?

TOBIAS: Mr. Utter, yeah. I think of him as a great role model. My music teacher, Mr. Shearer, was a great role model. He was probably one of my early role models in there’s absolutely nothing acceptable except perfection and you’re never going to get there. So, it’s practice, practice, practice, and we had a musical program, band and choral, in my school that was taken very seriously. Again, I alluded to him in the book, but I learned things from him, but all of my teachers – I can’t think of an exception – that weren’t significant role models. The community’s doctor, Dr. Schantz, I probably viewed him as one of the most successful people in town, not just financially, but just as really a person that you’d want to be like. So, those are people that come to mind.

SCARPINO: Remington doesn’t have a doctor today, does it?

TOBIAS: No, Remington doesn’t have a doctor and has not had a doctor for some time. When Dr. Schantz retired, and my parents had to find or establish a relationship with a different doctor, that doctor was in Rensselaer, which is, by the way, one of the lessons in life – as you get older, you need to always have a lawyer and a doctor that are younger than you are. No, Remington and most small towns like that do not have a doctor.

SCARPINO: So, while you were growing up, as I understand it, you had a variety of odd jobs. You detasseled corn, you worked as a clerk. I read somewhere that you were a chicken catcher. Now, I did that, so I actually know what’s involved in chicken catching. It seems to me like some of that stuff is really hard work. I mean, detasseling corn, you’re out there working in the fields, and so on, but…

TOBIAS: Well, it has a bit of fun. I mean, other kids were doing it and it was, and you felt good about yourself. You felt like…

SCARPINO: I assume you got paid for doing that.

TOBIAS: Oh, yeah, yeah, and I’m sure it was big money. I’m sure we made $5 a day or something.

SCARPINO: Well, I thought I was rich, but having done all that stuff as a teenager, did that stay with you as you got older?

TOBIAS: Oh, sure.

SCARPINO: What do you learn from that?

TOBIAS: Sure.

SCARPINO: And I don’t expect 16-year-olds really learn a lot from that, but looking back, you’re…

TOBIAS: Well, I think they do, I think they do. I think 16-year-olds do learn from those things. You learn some specific skills in some of those things, but you learn what, unfortunately, some of the particularly inner city schools that I’ve been involved in over time, some of things you learned in that environment and take for granted, you discover kids don’t know it today, like how to set an alarm clock and the need to get up and the requirement to go to work whether they want to go to work. So, you know there are a lot of those kinds of lessons. I think you also learn at a very early age to have respect for whatever anybody is doing and that the people who are catching chickens or detasseling corn – you may also well learn that you don’t want to do that the rest of your life – but you learn to have respect for the people who are doing that and the role they play in society and in the economy. Just one small thing that is neither here nor there I suppose, but today when I have folded currency in my pocket, and I unfold it here, you will see that the heads are all lined up the same way and they’re to the left, and I learned that in Pat’s Grocery Store. That’s the way we put the money in the cash register. The man I learned that from, and I’ve learned this same lesson over and over from other people over time, but the man I learned that from believed, as I do, that if you put the money in an orderly way into the cash register and if the floors were always swept and if you went into the storeroom in the back of the grocery store and everything was where it should be and it was all neat and you could find whatever you wanted to, that’s the way you were going to think about the business. So I’ve always believed over time from some those early lessons that the way you do the small things, spreads over into the way you do the big things, and you do them right and you try to do them correctly and you pay attention to detail.

SCARPINO: You must have learned something about the ability to work hard as well.

TOBIAS: Yeah, I’d like to think I did. I didn’t know anybody or didn’t know very many people who you didn’t look as people who were working hard. Again, that goes back to the question of what are you born with and what do you learn by example, and I obviously can’t answer that question, but I would like to think I have worked very hard all of my life. I work hard being retired. I don’t just sit around all day.

SCARPINO: That’s what I said at the beginning that I didn’t really think you were retired.

TOBIAS: It’s just the way I am. Now, if I have to answer why am I that way, I don’t know, but certainly all the role models and influences I’ve had from the very beginning of my life were people who certainly enjoyed life, but people who have worked hard at whatever it was they were doing.

SCARPINO: I want to ask you one more question about Remington, and then we’ll wrap up because we’ve been talking for two hours and 20 minutes, and I want to frame it this way. I know you have grandchildren, and I assume at some point in the future maybe your grandkids will look at the transcript of this interview, what do you want them to know about Remington?

TOBIAS: Well, it’s important to me that they know where they came from and that they know about their great grandparents, and they do to some degree, and beyond that that they know more about where the family came from prior to that because I think they come from a long line, not just on the Tobias side, but on the Harwood side, which would be those two branches of my side of the family. And really the same is true is of their biological grandmother, my late wife, Marilyn, who came from hard-working people in Oklahoma. But to Remington specifically, I’d like them to know and understand the value system that existed in Remington at the time I was growing up and that they would embrace that as an important part of who they are and as an important obligation that they have going through life to live up to those standards. At the same time, I guess if my six grandchildren at some point when they’re my age, if they’re looking back at their own lives and looking forward at the lives their children and grandchildren, I guess maybe one measure I’d like them to look at is to think about their great grandparents, my parents, Roy and Fern Tobias, and be able to say that had Roy and Fern Tobias had the privilege of knowing my grandchildren throughout the course of my grandchildren’s lives, that they would be very proud of them and that they would see my grandchildren as having lived lives that were exemplary of the kind of fundamental underpinning, the values and culture and expectations of people who lived in Remington during that period of time. You made reference to the painting that hangs in the entry of our home here, which I commissioned at the time we built this house. There’s a painting right across from it in the entry that we commissioned at the same time, that it’s a painting of Deborah’s school and church where she grew up on the east side of Indianapolis. We really commissioned those for the same two reasons. Sometimes people walk into a nice home like this and somewhere they find pretentious portraits of the people who own the home. Deborah and I would like to think that when you walk in our front door, you see our portraits, and my portrait is downtown Remington in 1950. That’s who I am. So, if you want to see a portrait of who I think I would like for people to believe I am, you look at that portrait of Remington in 1950 because that’s the basis of who I’d like to think I am, and the same is true in Deborah’s case for her portrait. So, Remington meant a lot to me when I lived there. I’d have to say I couldn’t get out of there fast enough, but as kids are, when I went off to IU…

SCARPINO: That’s the way it is with young people.

TOBIAS: Yeah, well, when I went to IU as a freshman, I had worked that summer – I graduated from high school, I left home probably a week later to go to my job that I’d had for a number of summers in a summer camp, I came back, I was probably home less than a week in Remington, and I went off to Bloomington. I’ve never really lived in Remington again because I was in school or I had a job that was away every summer after that, and I’m not sorry. I mean, my father would have loved nothing more than if my brother had been willing to come back and run the bank, and then after he wasn’t, my father would have loved nothing more than if I’d been willing to come back and run the bank. That was of zero interest to either one of us, and I don’t regret any of that. But, having said that, I wouldn’t trade the growing up experience in Remington for anything.

SCARPINO: Well, I’ll close by noting that you honored both Remington and your parents by naming or paying for and naming a community center after your parents in Remington near the water tower that’s also featured on the coaster that have my water on here today.

TOBIAS: Yes, I did, and my parents would have been quite embarrassed by that. They would have been happy if I had secretly and privately built a community center, but they would have been appalled to see their name on it. And I didn’t do that until about, I think about 10 years after they died, but I wanted to do something to honor their memory. I had been disconnected at that point in time from Remington for enough years that I wasn’t really sure whether it was worthwhile making an investment in Remington. I’ve done some other things in their name. There’s a scholarship in the Wells Scholars program at IU in their name, which, by the way, I had the good sense to endow that scholarship while they were still living. Breon Mitchell, who was running the Wells Scholars program when it first started, was kind enough, at my request, to stop off in Remington when he was going to Chicago for some reason, and this was before the program started, but was about to start, and he was kind enough to stop off in Remington, at their home, and visit with them for an hour or so and explain to them what the program was about and what this scholarship that had their name on it. I can only imagine my mother sitting there with her notebook – she always had a notebook and a pen. I imagine she was sitting there taking notes to learn about what that was like. I’m very pleased that I did that during their lifetime and I think that meant something to them. But, at any rate, when I had this idea of doing something in Remington in their memory, through an emissary, I went to the Community Foundation in the County to get some help in trying to identify what the community needs might be in Remington, and, more particularly, whether or not their was leadership in Remington that might step up to help get that done, and determined that after school consolidation in Indiana in the 1960s, that there really wasn’t a gathering place in the community for things that people do. I don’t remember how many years ago it was I did that, but 15 or 20 maybe, but every time I have occasion to be there, usually it’s for a funeral unfortunately, but every time I’m in Remington for something, the people associated with the library and community center – which we remodeled the library, in addition to building the community center – and people will tell me with great pride that in the course of a 30-day month, on average, there may be 20 events in that community center. It’s everything; its family reunions, its wedding receptions, its dance recitals, its clubs, community organizations that meet there. So I have felt very, very good about that in the sense that it is something that I think has made a useful contribution to the community, but it’s something that really helps perpetuate the role that my parents played in the fabric of that community.

SCARPINO: So, thank you very much.

(END OF RECORDING)

Part two

Skip to part three of the interview transcripts
Go back to beginning of the interview transcripts

SCARPINO: So, as I said when the recorder was off, today is Thursday, February 15, 2018. My name is Philip Scarpino, Professor of History at Indiana University/Purdue University, Indianapolis, and Director of Oral History for the Tobias Center for Leadership Excellence, also at IUPUI. Today, I am interviewing Randall L. Tobias at his winter home on Captiva Island near Fort Myers, Florida.

This is the second interview with Randall Tobias. The first one took place on December 1, 2017, at his home in Carmel, Indiana, and that interview includes a biographical sketch and focused largely on his views on leadership.

So, I’d like to ask your permission to record this interview, to have this interview transcribed, to deposit the recording and transcription in the IUPUI Special Collections and Archives and with the Tobias Center where both the transcription and the audio may be used by their patrons, including possible posting to the internet.

TOBIAS: You have my permission for all of those things.

SCARPINO: Thank you. So, as I said, last time we talked in December 2017, we spent a lot of time talking about leadership and about your memories of impressions of growing up in Remington. We talked about that wonderful painting you have in the entryway of your home in Carmel. So, we’ve started.

You graduated from high school in Remington in 1960…

TOBIAS: Correct.

SCARPINO: … and matriculated to Indiana University in Bloomington.

TOBIAS: Correct.

SCARPINO: So, why did you decide to go to IU?

TOBIAS: I think the first reason was that I didn’t want to go to Purdue, and there were a couple of reasons for that, I guess in seriousness. Remington, as you know, is about 30 miles from Lafayette and so going to Purdue was kind of like staying at home. I also was pretty sure I was not interested in the major focuses of academic programming at Purdue, specifically engineering and the sciences and agriculture and the like. Secondly, my older brother, Roger, had graduated from IU in 1959, and we had kind of become, in a way, an IU family and our economic circumstances were such that – and my view of the world, I suppose – was such that it had not occurred to me to go any place outside the State of Indiana. My father, who graduated from DePauw in 1929, had some interest in my going to DePauw, but I really didn’t think I wanted to go to a school that small. So, there were both reasons I wanted to go to IU and reasons that I didn’t want to go someplace else, and that all converged on that decision.

SCARPINO: Well, and as you grew older and your career developed, your horizons extended well beyond the borders of Indiana, where they apparently were when you graduated.

TOBIAS: Yes, indeed.

SCARPINO: So, what was your major at IU?

TOBIAS: My major was marketing in what is now the Kelley School of Business.

SCARPINO: Did you start out that way?

TOBIAS: No, I started out not being quite sure what I wanted to do, and at various times I thought I might want to go to medical school. At one point, I think I thought I might want to be a television journalist. I thought maybe I’d be a political science major. I really saw that related to journalism. But I think by about the time I was early in my sophomore year, I was pretty sure that I wanted to major in business.

SCARPINO: Were you a good student?

TOBIAS: I was not as good a student as I could have been because I had a broad range of interests outside the classroom. I was very involved in extracurricular activities. So, I was kind of a B student.

SCARPINO: We’re going to talk some about that, but I want to ask you kind of a bigger picture question before I do that. As I read the records associated with that part of your life, and you just confirmed in my mind one of the conclusions that I came to, when you left Remington, you were choosing between, or looking at Purdue and IU because your horizon didn’t extend much beyond Indiana.

TOBIAS: Correct.

SCARPINO: Do you think that one of the things that happened by virtue of you attending college at Bloomington is that your sense of the possible expanded?

TOBIAS: Oh, absolutely, in fact, I’d say it more strongly than that.

SCARPINO: I was trying not to lead the witness.

TOBIAS: Yeah, no, no. I think I would say that if I had to try to make a list, which I’ve never done, in some rank order of those overarching things that came from my four years at IU, number one on the list would be a realization of what was really possible. Remington – there were 42 students in my high school class. I’m not positive, but I think in those days, there was something in the range of 4,000 to 5,000 students in my class in Bloomington, which by today’s standards seems small. So, my class in IU, the size of my class at IU, was like five times the population of Remington. So, those four years were the most formative changing years of my life in terms of just dramatically changing my whole outlook on what was possible.

SCARPINO: Were there any professors that you encountered there that had a particular impact on you?

TOBIAS: Well, I loved my business law classes and Charlie Hewett, who was a very famous professor of business law in the School of Business. I can still remember to this day some of the cases that we studied in those classes. George Pinnell, who was in the School of Business, who went on to become the Executive Vice President of the University in later years, and a very good friend, and then eventually, before he retired, the Indiana University Foundation had some challenges, and George wanted to run that, but George was someone that was influential. Dr. Robert Shaffer, Bob Shaffer, who was the Dean of Students and oversaw things that deans of students do, but more particularly, was the overseer of student activities, student government, those kinds of things, was someone who was influential.

SCARPINO: So, as you were just talking and you mentioned George Pinnell and you indicated encountering him while you were a student and then you ended it with “and were good friends.” You gave me a list of people who could help me understand your career, and the thing that I noticed after every one of the descriptions was “and we were good friends.” Are friends important to you? Are they an important part of your life?

TOBIAS: I suppose so. Deborah, my wife, is kind of a collector of friends, and she has, I think, a more outgoing, gathering personality than I do. I sometimes kid her and say I have a lot more friends now that I’m married to her than I did before. But yes, I value, I certainly value the relationships that I’ve had with people, and certainly including, in a very major way, people with whom I have worked over time.

SCARPINO: Yeah, we’ll talk about some of those folks as we move forward. So, one of the things that you did while you were at IU-Bloomington was to participate in ROTC. I’m reasonably sure, but not positive, that ROTC was required for the first two years.

TOBIAS: Yes.

SCARPINO: But the second two years are not…

TOBIAS: Correct.

SCARPINO: … you have to make a choice…

TOBIAS: Correct.

SCARPINO: … and when you make that choice, you’re also agreeing to serve.

TOBIAS: Correct.

SCARPINO: So, my question is: why did you decide to join ROTC and stay with it?

TOBIAS: Well, in that period of time, Selective Service was still up and going and, therefore, people were subject to the draft. So there was at least some likelihood that a young man in that era might end up going into the military involuntarily, and so that was one reason. By the time, at the end of my sophomore year, which would have been 1962, it was becoming more apparent that the war in Southeast Asia was likely to grow. So, I had the attitude that the odds were pretty great I was going to go into the military at some point after I graduated. I didn’t resist. A lot of people in my era were trying to figure out all the reasons they could to avoid that. Many, many more people that I knew at IU were happy to serve their country, as was I. But my attitude was if I’m going to be in the military, I’d rather be an officer than digging trenches or whatever someplace. So, that was the reason.

SCARPINO: Did you gain any leadership insider experience from participating in ROTC?

TOBIAS: Yes, the answer’s yes, and I think I came to realize that much more after the fact probably than I did during the time I was in the military; although, I’d have to say I enjoyed it. When I graduated in June of 1964, I had orders to go on active duty in October of 1964. I was designated to be an artillery officer, and so the number of slots in the officer basic course at the artillery school predicated – I think it was a 13-week course – predicated, they started very week. So, anyway, I was designated to go on active duty in October. The Senate passed the Gulf of Tonkin Resolution in August of 1964, based on the famous incident of the Turner Joy, U.S. naval vessel Turner Joy, and allegations in the middle of a thunderstorm and lightning that it had been fired on by North Vietnamese gunship, which I think was later disproven. But nonetheless, between the time I was commissioned, the time I went on active duty, that was the real beginning of the buildup. I went on active duty in October with open-ended orders about where I would be assigned afterward. During the time I was in school at Fort Sill, I think the computer selected me to stay on at Fort Sill as a member of the faculty of the arterially school. So, I stayed there my entire two years of active duty and it was a great learning experience in a lot of ways.

SCARPINO: I’m going to ask you about that in a minute, but I’m going to jump on something you just said. I don’t want to say too much about myself, but I have a similar background, and I actually know how people get selected in the military, and it’s not by the computer. So, I’m guessing if you were selected to be an instructor at Fort Sill that you were selected because you’d excelled in the basic course.

TOBIAS: Well, we’ll never know.

SCARPINO: Well, I’ll put that in the record just so we put that in there.

TOBIAS: My mother, let me say, my mother always thought I was selected for some manner which related to achievement and I always tried to convince her not.

SCARPINO: Well, mothers get paid to say that. So, looking at your four years at Bloomington, one could almost conclude that your real major was extracurricular activities…

TOBIAS: Yes, that’s fair.

SCARPINO: … and I want to, I mean, I don’t mean that in a mean way, but I mean you were really a busy student. I want to talk to you about what role extracurricular activities played in your life, but you were, for example, a member of the Theta Chi Fraternity.

TOBIAS: Yes.

SCARPINO: Why did you pick Theta Chi?

TOBIAS: My brother was a Theta Chi and I thought from relationships and experiences with other people that I wanted to be in a fraternity. I suppose looking back on it, coming from a small-town environment, my brother was kind of leading the way. He went to IU; that was a factor, it wasn’t the only factor, as we’ve discussed. He was a member of Theta Chi. He’d had a good experience there. We, as a family, had gotten acquainted with a number of the brothers that were there during his time, and so that kind of worked out that way.

SCARPINO: Did you play a leadership role in the fraternity?

TOBIAS: No, I did not. The reason that I did not – my fraternity was not as key a part of my college life as it is for a lot of people, and the reason was I had pretty early gotten involved in things that were more campus-wide, and even though I might have tried to prove otherwise, you can’t do everything.

SCARPINO: So, you were appointed to the IU Student Foundation.

TOBIAS: I was.

SCARPINO: How does one get such an appointment?

TOBIAS: Well, in those days, Bill Armstrong, who was the patriarch and – he wasn’t the actual founder – but he was the one who took both the Student Foundation and the Foundation and really built them from kind of an organization raising money for the university and operating out of a desk drawer to something that’s critically important to the university’s wellbeing. I think he was kind of a talent scout and was observing people and he had an enormous network. He probably had the greatest memory for names of anybody I knew. So, Bill kind of had his thumb on people he had thought ought to be in the Student Foundation.

SCARPINO: So, he recruited you as somebody he thought …

TOBIAS: Yeah, well, yes, in one way or another he did, yes.

SCARPINO: So, the purpose of the IU Student Foundation is partly at least fundraising. It sponsors the Little 500.

TOBIAS: Well, yes, it sponsors the Little 500.

SCARPINO: Which is a bicycle race for the benefit of anybody…

TOBIAS: It did in those days sponsor the Little 500. It has now grown, the Student Foundation has grown where the Little 500, billed I think for 50 years as the world’s greatest college weekend, is a 50-mile bicycle race that raises money for student scholarships. But its fundamental strategic purpose was to begin to get those people who had demonstrated leadership as undergraduates and potentially were going to demonstrate leadership in the broader community after they left IU and spread across the state and the country, it was the beginning of a process to try to keep them connected to the university after they left. I’m not sure how many students really understood that, what its intent was, but it was very innovative.

SCARPINO: At the time, did you understand the purpose?

TOBIAS: No, I don’t think I really - I wasn’t thinking about it in those terms.

SCARPINO: So, I had a really interesting talk with Curt Simic, and he pulled some papers out of his desk and told me that on average, 15 to 18% of IU alums donate to the University, but, he said, students who belonged to the Student Foundation tend to donate at a rate of about 65%.

TOBIAS: Well, there you are.

SCARPINO: In other words, it cultivates donors. So, did you learn anything about philanthropy while you were working with the Student Foundation?

TOBIAS: I think I began to learn how important philanthropy was and was going to be to the university, and it was probably my first exposure to philanthropy in that sense. As we discussed the last time we were together, my parents were very involved all of their lives in the community where we lived, but it was more through labor and organization and those kinds of things rather than writing a check. So, yeah, I think that certainly played a role, but maybe even more importantly, it was the beginning of a real lifetime connection with the university.

SCARPINO: You were also active in student government. You successfully ran for Student Senate, which is a governing organization, and you were elected President of your senior class. Why did you decide to get involved in student government?

TOBIAS: I just enjoyed it. I was kind of, I think I was…

SCARPINO: It’s not like you didn’t have anything else to do.

TOBIAS: No, but I think I kind of gravitated to, maybe without being conscious of it, I kind of gravitated to things that involved working with other people and involved learning my earliest lessons about leadership. To go back to your point about, I really majored in extracurricular activities. For a long time after I got into the business world, I would say to people that the things I learned outside the classroom as an undergraduate, were much more important to me in my career, and particularly early in my career, than what I learned directly in the classroom. Because more of what, you know, beyond the general background of a good education, what I learned in the classroom was a curiosity about learning more on an ongoing basis because a lot of what one learns, I think, becomes obsolete fairly quickly.

SCARPINO: It happens, doesn’t it?

TOBIAS: So, I can’t explain. I think it was probably a matter of personality and the way different people are wired, and somebody’s interested in the chess club and somebody’s interested in student government. I enjoyed it and I enjoyed the people that was friends with.

SCARPINO: Is that why you decided to run for Class President?

TOBIAS: That was more just kind of a logical evolution of things. I was kind of the next guy up, so to speak. It’s also interesting, related to this, the number of people that I met at that stage of my life, in student government – and I have photographs, for example, of the Student Senate in those days. Okay, Jim Kittle, who had a very successful career running Kittle’s Furniture stores, is in that picture. Jim Morris, who’s been a very important figure in the development of Indianapolis, was in that picture. Dave Frick, who was a Deputy Mayor for Mayor Lugar, and probably had as much as anybody of the role in bringing the Indianapolis Colts to Indianapolis and much of economic development. Jim Morris went on to run the Lilly Endowment. Well, the people who were involved in those days in those kinds of activities, to some degree it was self-selection, but to some degree it was selection by other people who were a little ahead of you and involved in the process. It turned out to be a pretty good predictor of people who were going to stay interested, who were going to have very successful careers, but were going to stay interested in the broader world as they had as students. It’s been interesting to me to look back on people who’ve been friends of mine for over 50 years who are still friends of mine and I’m involved with in one way or another today.

SCARPINO: It also put you in the company of a pretty high-performing cohort.

TOBIAS: Yes.

SCARPINO: Did you guys push each other?

TOBIAS: I think so. Yeah, I think so.

SCARPINO: So, you successfully ran for Student President. Any particular benefits from that experience as you moved forward with your career?

TOBIAS: Well, in those days, unlike 10 years later – in my day, in student government, the student government was concerned with things like, you know, we need to replace the four-way stop with a traffic light at some intersection on the campus, or those kinds of things. Ten years later, I think people in those kinds of roles were trying to get the United States out of the Vietnam War. So, it was a big change during that period of time.

SCARPINO: I’ve read a lot about your career, and I could have missed this, but I think that was the only time you ever ran for office.

TOBIAS: It was. I came close on one other occasion, but yes, that’s the only time I ever…

SCARPINO: Was there a reason for that, or is it just the way your life unfolded?

TOBIAS: It’s just the way my life unfolded. Later on in my life, I was urged by some people to run for governor in Indiana and toyed with that a little bit and decided – actually, I helped develop a better alternative with somebody else. I don’t want to demean people who run for office, but unlike 50 years ago, I think today – well, when Richard Lugar decided to leave the family business and run for the School Board, and then ultimately run for Mayor, and then ran for United States Senate, he was interested in policy issues and interested in how to follow those to improve the public schools, to improve the city, to improve the country, and indeed the world. Today, all too often, instead of people like Senator Lugar wanting to get someplace to accomplish policy issues and having to run for office as a vehicle to get where they could impact policy, today, sadly, all too often, people want to be involved in the politics. They want to run for office, they like being in the spotlight, and oh, by the way, one of the things they have to do is spend some amount of time dealing with policy, although they spend less and less time on that as time goes on. I began to see that and understand that over time. So, whatever thoughts I may have had as a high school student about maybe I’d like to run for Congress someday, I quickly diffused myself of that.

SCARPINO: Who was the better alternative? You said you helped them come up with a better alternative.

TOBIAS: Oh, well, not to be coy about that because I don’t mean to be, but the State of Indiana, about the time I retired from Lilly, was in pretty dire straits. In business terms, the state was near bankruptcy, the state was kind of paying its bills by putting them in the desk, so to speak, and waiting for the next fiscal period when tax revenues came in, and nobody was doing much about the quality of education and so forth. I was personally very frustrated about that and a lot of other people were too. So there were some people who were urging me to consider running for governor. I hired somebody to do some opposition research on me and the things one does when one’s thinking about running, talked to a number of people who would have to be helpful. In the meantime, my good friend, Mitch Daniels, who had worked for me at Lilly and we’d become good friends and I was a great admirer of his – and he had spent much of his life in public service – and he kind of gave some indications that he might be willing. But again, Mitch is an example of somebody who had some great ideas about things that needed to be done, and running and being elected governor was what you had to do in order to be in a position to get those things done. A prior governor, not the most immediate prior governor, but one or two back, had said to me once that an ultimate objective of his political career in state government was being elected governor, period. In other words, the endgame for him was being elected governor. The endgame for Mitch Daniels was accomplishing an improvement in the economy, more efficient government, improvement in education, ta-da-ta-da-ta-da, and being elected governor was the way to get that done. That would have been my motivation to get involved, but Mitch was more willing that I was and was a much better candidate and was a much better governor than I would have been. But that was the only other time I…

SCARPINO: We won’t know that, but he did a good job.

TOBIAS: But that was the only other time, other than running for senior class president.

SCARPINO: So, who was the governor who told you that the endgame was to win?

TOBIAS: It was, I don’t know if I want to identify him.

SCARPINO: Alright, okay, alright. So, as President of the senior class and being involved in student government, one of the things you got to do was have dinner at the President’s house. While you were there, the President was Elvis J. Stahr, who had actually stepped down as Secretary of the Army in 1962 to become President of IU. So, it’s a pretty high-powered guy. Did you get to know him? What kind of an influence did a man like that have on you?

TOBIAS: My role, one of the few really substantive roles that I had as the President of the senior class, was to be one of the people that the President of the University looked to to try to take the pulse of the student body and talk about things that were of concern to students or things the University Administration might want to do, and how would that go and so forth. We certainly did not become close friends, but if he saw me on the campus, he would say hi, Randy.

SCARPINO: Well, he’s a pretty senior leader and you’re an undergraduate.

TOBIAS: Yes, right, but if we saw each other, we knew each other, and he had a very distinguished career. He was a federal judge, then in one way or another, became known to then President Kennedy who appointed him Secretary of the Army. And yes, that was pretty heady stuff for me to, again, with Remington in the background, to actually know the President of Indiana University, know that he knew me, be occasionally in his office, and have dinner in Bryan House.

SCARPINO: I’m not sure that you may have needed this, but did the fact that you were able to know the University President personally and know something about him and he recognized you on campus, did that do anything for your self-confidence?

TOBIAS: Sure.

SCARPINO: Yeah.

TOBIAS: I think, sure it did, and I think it was, in four years, a collection of those kinds of experiences.

SCARPINO: Another figure on the IU campus when you were there was Herman Wells. He was President of IU forever, from 1938 to 1962, and then when he stepped down in favor of Elvis Stahr, he became University Chancellor. Did you know him?

TOBIAS: I came to know him quite well over the years, to the degree that he, during his lifetime, visited in a different home I had here in Florida on a couple of occasions. I’d like to say we did become good friends, but no, I did not know him. He retired – he was the president during my first two years as an undergraduate and then Elvis Stahr came during my second two years. So, I never really had a chance, as an undergraduate, to do anything other than observe him around.

SCARPINO: So, you were Chairman of the Organization of Indiana College Students for Goldwater.

TOBIAS: I was.

SCARPINO: Now, was that a real organization? I’m going to ask you what you did. (LAUGHS)

TOBIAS: No, it wasn’t really. It was an organization, as those things sometimes are, or were in those days, to try to get students interested in passing out campaign buttons and that kind of thing. And I would have to say that I probably didn’t totally understand – I’m sure I didn’t – everything that Senator Goldwater was in favor of, but what I became interested in was the philosophy that the government was not the answer to everything and that somebody ought to try to do something about the inefficiencies in the government and about whatever was developing in our national psyche that thought that somebody owed people something. My time at IU wasn’t that far after then end of the Second World War, and our so-called Greatest Generation. And I think I sensed we were beginning to lose something of that, and so I considered myself, as I began to think about, do I have a philosophy and if I do, what is it, I began to think about myself as a conservative. Now, 50 years ago, one who thought about oneself as a conservative wouldn’t recognize a lot of what people today who consider themselves conservatives think about. Social issues were not a part of, one way or another, of what people thought about in those days. And I’ve evolved over time to have a much more complicated view of life. But I do have a picture around someplace with Senator Goldwater.

SCARPINO: It’s certainly a stark contrast with the man he ran against for President, Lyndon Johnson. Goldwater got hammered in that election. Did that have any influence on your interest in getting involved in that kind of politics?

TOBIAS: No, not really. You know, the world changed in November of 1963, and nobody will ever know what the election would have been. We remember John Kennedy fondly for a lot of very good reasons, but he wasn’t doing all that well early in his tenure. So, I’m not sure Goldwater would have gotten hammered, he might have, but I’m not sure would have gotten hammered to the degree that he did. That wasn’t, I think I probably took on that role because somebody asked me to. I wasn’t living and dying by what was going on in the broader political scene.

SCARPINO: Are you one of those people like who can remember exactly where you were when you heard that Kennedy died?

TOBIAS: Yes, yes. I had a class in what was then called the B&E, the Business and Economics Building, which is now Woodburn Hall, but it’s where the School of Business was. That class ended and I can’t remember the reason, but I left there and walked over to the Student Union. As I walked across the parking lot and into the door of the Biddle Continuation Center, where the hotel part is, into that lower level lobby, and I remember walking into that space, there were people there. Everybody was standing absolutely still, nobody was moving, and it just looked weird. Then I became aware that, through the speakers in the ceiling where usually one would hear music, there was a news broadcast going on. Then you began to be more aware of what it was and that’s when I first learned that President Kennedy had been shot.

SCARPINO: Even though you probably didn’t identify with him politically, did that assassination have an impact on…

TOBIAS: Hang on just a second. Hi. (Talking to someone who walked in the room.) Okay, thank you. That’s our housekeeper.

SCARPINO: I didn’t quite hit pause in time. We’ll edit that out. I asked you if the assassination of Kennedy had an impact on your developmental trajectory or the way you looked at the world.

TOBIAS: Well, I think the assassination of President Kennedy changed the world, and I think it changed the way we all saw the world. It was, at least during my period of growing up, it was inconceivable that the President of the United States could be assassinated. We all knew that President Lincoln had been assassinated and there had been other attempts, but it just didn’t seem possible. And he was a bigger-than-life figure in that part of his presidency. So, yes, I think that changed everybody.

SCARPINO: We talked about your classes and your professors and the administrators you met and student government and extracurricular activities; what was social life like while you were a student?

TOBIAS: Well, it was very different than it was -- than it is today. For example, the tuxedo rental business in Bloomington was a pretty booming business in those days. I doubt that there, I’m not sure there is one…

SCARPINO: The Greek organization formals and…

TOBIAS: Yes, and as an example, the Student Union Board sponsored a formal dance in the late fall each year that was referred to as the opening of formal season. So fraternities and sororities were not supposed to have their own formal dances, and they all did over the course of the winter, but they were not supposed to have their own formal dances until after the social season, in that sense. I’m not sure I even totally understood that then as much as I do now. You just knew that was the first one and then the social season went on. That was a significant part of social life, that kind of thing.

SCARPINO: Sports?

TOBIAS: Yes. I was, my fraternity, Theta Chi, which has the Greek letters that resemble an O and the Chi as an X, we had an English bulldog that the house owned who had the name Ox, based on the Greek letters. For reasons that I’m not quite sure how this happened, Ox became the unofficial mascot of the football team, adopted by the football team. So, one of the pledges had the duty to manage – well, the pledges had the duty to manage Ox all the time. But one of the football Saturday duties of a designated pledge was to get Ox to the football stadium, and you got a pass and you were down behind the bench where the football players were. So, I have the distinction of having been on the field behind the bench with Ox on a leash on the very first game ever played in our current Memorial Stadium in the fall of 1960. But, football games and basketball games, that was a very key part of social life.

SCARPINO: Did you go through fraternity Hell Week?

TOBIAS: I did, and it was, in those days, it was both worse than and better than the kinds of things that are going on today. I’ve had several recent discussions with people who were in fraternities in my era talking about the lessons we learned from the fraternity system and whether or not it’s possible that the Greek system is going to survive based on chapters that keep shooting themselves in the foot. So I don’t know. But, yes, and a lot of it involved humiliation of the things you had to wear. You had to wear your ROTC uniform for two weeks in a row sometime, or things like that. And there were some unpleasantness of having to drink mixtures of chewing tobacco and things that people knew were going to make you sick to your stomach. But I was never involved in Hell Week in anything that was dangerous. It was just uncomfortable and humiliating.

SCARPINO: And students drank in the early 1960s?

TOBIAS: I’m sorry?

SCARPINO: Did students drink in the early 1960s?

TOBIAS: Yes, students drank and alcohol was a problem then, as it remains today. I think one of the challenges then, as it remains today, is that at the same time students are going from living at home with their parents in a fairly controlled environment to suddenly experiencing for the first time in their life pretty total freedom, even more so today than then probably, and at that same time, there’s an abundance of alcohol available and there are always people who are out of control. One of my fraternity brothers, sadly – I don’t know what his alcohol experience had been in high school – but sadly he began to drink and died in his early 30s as an alcoholic who had destroyed his liver. That was one of the early sad experiences of my life, of seeing how one’s judgement out of control could really take somebody’s life.

SCARPINO: While you were a student at IU-Bloomington, Indiana University along with many other universities in the United States, still practice in loco parentis with their female students. If you were a young lady, you had hours; if you were a young man, no hours. So, I’m sure, because I experienced that too, that guys went out drinking afterwards or whatever, but the question I want to ask you is when you went on with your own career, and you’re rather well-known for promoting women and identifying talented women and putting them in places of responsibility, did that experience of going to a university that treated women like children have any influence on the way you behaved when you were in a position to promote women?

TOBIAS: Yeah, you know, I’m not sure. I think that the influences that may be identifiable as causes for my actions over the years, I’d like to think on behalf of promoting women’s interest, had other roots. I actually never – maybe I wasn’t insightful enough at the time to internalize it as women being treated like children. The women I knew, as undergraduates, never seemed to mind it that much. It was actually kind of a way to end their evenings that they could blame on the university. And the theory, of course, that the people in the Dean’s Office and Dean of Students and so forth, who were promulgating the in loco parentis policies, that if the women went home, then the boys would go home. And you’re right, the boys would usually go out…

SCARPINO: It didn’t work that way, did it?

TOBIAS: … would usually go out and have a drink. No, you look back on it and it’s a pretty primitive approach.

SCARPINO: So, you had a radio show…

TOBIAS: I did.

SCARPINO: … Sunday evening radio show…

TOBIAS: I did.

SCARPINO: … classical music and you also did some talking between records. What attracted you to do a thing like that?

TOBIAS: Well, it was a program that was one of the programs of the Student Union Board, and I was just, as I mentioned earlier, I had thought at one point that I might want to go into broadcast journalism, and this was kind of a way to kind of test whether that had any interest. Interestingly, one of the people that was also involved at that point in time was a guy that I did not know well, but I knew. His name was John Rappaport, and he went on being on the principles that created and produced M.A.S.H., the television program.

SCARPINO: Pretty famous guy actually.

TOBIAS: Yeah, yeah.

SCARPINO: You started a business…

TOBIAS: I did.

SCARPINO: … that you call Tobias Enterprises, but why and what did Tobias Enterprises, but why and what did Tobias Enterprises do?

TOBIAS: Well, I had these business cards printed that said: Tobias Enterprises, if we don’t have it and we can’t get it for you, you’re better off without it.

SCARPINO: Later on, when you worked in sales and so on, this must have been good experience for you.

TOBIAS: Well, I don’t remember exactly what the genesis was of this. Again, I kind of think I was approached by a couple of guys who were in the business of making decorative sorority and fraternity paddles, that would have the Greek letters of a fraternity or sorority branded into them. They were varnished and they’d hang up on a wall, and they were party favors that you’d go to a dance and everybody would get one of these. There were a couple of guys who had resurrected a preexisting business somewhere that made wood products, and this was a line they had. I think probably because – I don’t remember if I, I don’t think I was President of the senior class then; I think this was earlier, but I was known on campus and so I think they probably approached me to see if I’d be willing to take on this business. That led to my own idea about representing some other people, and it wasn’t a hugely time-consuming kind of thing. It was mostly order-taking, but I had some sources of ceramic beer mugs that were personalized, those kinds of paddles. You know, in those days, it was a big deal to have a customized tee-shirt or sweatshirt and I had a company I could get those from.

SCARPINO: Did you make money at it?

TOBIAS: Yeah, I made some money at it, yeah. It wasn’t huge, but it was helpful.

SCARPINO: Help pay for college or dates or…

TOBIAS: It was more spending money kind of money than tuition kind of money.

SCARPINO: So, a lot of extracurricular activities. When you look back on that experience, what do you think you learned from all those extracurricular activities you were involved in that stayed with you?

TOBIAS: Well, I learned some skills about organization. I learned a lot about people because I get up in an environment where there was just this inherent sense of responsibility and commitment. If you said you were going to do something, you did it, and you did everything – I just grew up knowing that whatever you were doing, you did to the best of your ability. That’s just what not only my parents expected, but my teachers expected and I expected of myself. I began to get into some of these kinds of things, and so you’d have a group of people that were on the committee and you were the chairman of the committee and your job was to accomplish a set of tasks for some campus event. So you had a committee and the committee would meet and this person was responsible that and this person was responsible for something else, and pretty soon you’d find out they didn’t do what they said they would do. Well, that was a very eye-opening experience for me, but it was also the beginnings of my learning how to delegate and the importance of delegating, but the importance of following up when you delegate. And when you can have those experiences in an environment where it’s not your career, it’s kind of like practicing for real life. I would characterize my involvement in extracurricular activities probably in that way. I spent more time as an undergraduate practicing for life than I did doing a lot of other things that, with the benefit of a lifetime of experience, I have a greater hunger now for what’s going on in the classroom than I did then.

SCARPINO: Don’t you think in some ways that’s what college is about, practicing for real life?

TOBIAS: Yes, I do, and I thought then and I think now that a lot of people miss a very, very important part of their college experience by not extending themselves. My first grandchild is in college right now. She’s a freshman at Duke and doing very well. Her first semester, I’m proud to say, she had a 3.75 and is involved in some activities and has joined a sorority.

SCARPINO: And her mom went to Duke, right?

TOBIAS: Her mom went to Duke. Her mom has both an undergraduate degree and a law degree from Duke. So, anyway, I’m proud of the fact that my granddaughter, who is a good student but is also getting more out of her college experience than I think people sometimes do.

SCARPINO: I’m going to ask you one more question about IU and then we’re going to move on. So, later in life, when you had put yourself in an economic position to have enough money to engage in philanthropy, IU became a major beneficiary of your generosity. So, no matter how much money people have, there’s always a limit and there’s always a limit to what they can give to, they have to make choices. So, what was it about your experience at IU in the early ‘60s that caused you to want to become a major donor to that university? Why do you still care?

TOBIAS: Well, I think it is, and was, the recognition that my experience as an undergraduate at IU was life altering for me. It was the transition of going from a town of 1,100 people, a high school class of 42, kind of a presence in a community where today my parents, my grandparents, and my great grandparents are all buried in the Remington cemetery. I mean, that was kind of the world. My mother worked very hard, as we’ve discussed, as did my father, of trying to broaden our horizons, but it was still based there. When I left Bloomington four years later, I first of all discovered that all those other people who came from all these big places and had all this money and all these experiences, I could compete with them. When I graduated from high school in Remington, it didn’t occur to me I could compete with those people. I wasn’t defeatist about it; it didn’t occur to me that I couldn’t. I just didn’t think about it. It wasn’t where I fit into life. So, Indiana University was very transformative to me. In the early times of my reengaging with the University in the ‘80s, because I really didn’t have much connection with the University from the time I graduated in the ‘60s, I went off and started a family and began a career and I didn’t have time for anything else, and in the mid-‘80s when I reengaged, I wanted to do something for the University. Well, then I got more interested in the University and made lots of friends who were interested in the University, and one thing led to another and here we are.

SCARPINO: You graduated in 1964, and, as you’ve already pointed out, Lyndon Johnson was President, and over the next two years, the United States was being drawn to an ever greater degree into the war in Vietnam. When you graduated in 1964 – we’ll talk about what you did in a minute – but where did you imagine your life was headed? What did you think the future was going to hold for Randall Tobias?

TOBIAS: Well, literally and specifically, I graduated in 1964, I had this two-year military commitment ahead of me, and I knew that I was going on active duty in October. So, I applied to law school; I was admitted to law school at IU. I then wrote a letter to the Dean explaining my military commitment, asking to be deferred; that was accepted. I don’t know whether that’s still pending or not.

SCARPINO: I was going to ask you if you still expected to honor that.

TOBIAS: My expectation was that I was going to go on active duty for two years, come back and go to law school.

SCARPINO: Why did you want to be a lawyer?

TOBIAS: Well, I don’t know. I think it was my broader interest in public service, and for the same reasons that I thought I might want to be a journalist or I thought I might want to be a doctor, or I was involved in student activities, that was kind of a natural thing to want to be. And I have always been, to the point that Deborah and others tease me about this, but my closet looks like a men’s clothing store. Things are all lined up, the hangers are identical. I’m not obsessive compulsive, but I don’t think anybody would say that I’m not well-organized. The law and the study of the law and the way the law works was of interest to me. So, there were a variety of reasons why that appealed to me. So, I was looking for a summer job between the time I graduated in June and was going on active duty in October, and did a number of job interviews. In those days, for a graduate of the business school, it was a seller’s market. Almost everybody had a job offer and most people had several job offers, as did I. It was done through a process where you kind of figured out who you were interested in and then signed up for interviews. But AT&T called me, which I was extraordinarily flattered by, and AT&T called me and they’d been going through all the records in the placement office at the school of business. They had a new program and based on studies they had done, and AT&T historically – I’m talking about the old AT&T Bell System – was one of the most enlightened human resources organizations. A lot of very famous studies that have been done over the years were done either in AT&T or funded by AT&T. They had done some work to conclude that college students who had exhibited leadership as undergraduates, and particularly college students who had demonstrated leadership that resulted in peer-selected leadership positions, that those were predictive of people who would excel in leadership positions in business. So, they had developed this very limited program called the AT&T – and it had the acronym of IMDP – but it was Initial Management Development Program, IMDP, and they were interested if I’d be interested to hear about it. And well, I was just so flattered they called…

SCARPINO: AT&T called me.

TOBIAS: So I said of course. So, I had an interview and that led to another interview and that led to a job offer with the clear understanding on their part that I’d be going to work for them and I’d be leaving in October. I don’t frankly remember how much discussion we had about the law school, but if we did, I think it would have certainly been in the context of them understanding that was my intent, but two years is a long time from now and we’ll see what happens. So, I went to work for AT&T at their then Indiana Bell subsidiary, worked that summer…

SCARPINO: In Evansville?

TOBIAS: … in Evansville, had a wonderful experience. The company liked me and I love the company. And so, I don’t want to get ahead of where you’re going, but that led to another change in…

SCARPINO: Well, that Initial Management Development Program that you mentioned, not only did it select people with talent, it was an up or out program.

TOBIAS: Yes, it was.

SCARPINO: I mean, you either performed or you were gone, right?

TOBIAS: Yeah, and yes.

SCARPINO: It was a little bit like a filter, a talent filter.

TOBIAS: Yes, it very much was a filter. The objective was that was within five years, you would be a district manager. A district manager, for example, might in Indiana have had all the telephone service in – let me just pick a city – you might have had responsibility for all the telephone operations in Kokomo and eight or nine little towns around Kokomo; that would have been a district. For a college graduate who went to work for AT&T and by the time they retired at age 65 became a district manager, that would been viewed as a successful career. It was a mid-management job, but it would have been viewed as a successful career. The IMDP Program had in mind that you’re going to be a district manager in five years or we’re going to part ways, and part of the reason for parting ways was that your expectations obviously are upward. If you’re not a district manager in five years, you probably aren’t going to be one, you’re going to be disappointed, you probably have talents that are underutilized, probably not a match. And more often than not, it worked, but it didn’t always. I know some people who became successful other places who started out in that program. There were a lot of people in that era who went on to become the presidents of AT&T’s various subsidiaries around the county. So, they were right, it was a predictor and it was a successful program.

SCARPINO: Part of that program was to pair the folks that were enrolled in that with like a rising star in the company.

TOBIAS: Correct.

SCARPINO: When you got assigned to Evansville, the person you were more or less paired with was Robert Allen.

TOBIAS: That’s correct.

SCARPINO: He continued to play a role in your career for years and years afterwards, which we’re going to talk about, but I mean, that’s where you first met him, right?

TOBIAS: Yes, that’s exactly right. He was seven years older, so he was still pretty young in his career, but he had been identified as somebody who was in all probability going to rise in the business. Nobody had any idea how far he was going to rise in the business, but he was certainly viewed -- and he was one of the reasons that I came back after the military because he was my window to the company. And I thought, boy, if this is the kind of talent and kind of personality that makes up rising stars in this company, this is a place I think I’d like to work.

SCARPINO: We’re going to talk about AT&T and Indiana Bell, and we’ll talk about the military too, but because we’re going to end up using terms, I want to get some information in here and make sure that I understand this as well. So, when you started to work for Indiana Bell in 1964 and went down to the Evansville office, was the company in Indiana divided into three divisions in the state?

TOBIAS: Correct.

SCARPINO: North, south and Indianapolis, or center.

TOBIAS: That’s correct.

SCARPINO: Each of those divisions had districts.

TOBIAS: Correct.

SCARPINO: And so the Indianapolis one had two districts.

TOBIAS: I think it actually, it’s hard for me to remember for sure, I almost think it had four, but yes.

SCARPINO: But it was smaller than the others, but also the flagship divisions.

TOBIAS: Well, but yeah, they were the more coveted jobs, and you had many more customers. The predominance of the company was in Central Indiana around Indianapolis.

SCARPINO: So, three divisions, divisions divided into districts, with the central or Indianapolis division really being the primo one.

TOBIAS: Right.

SCARPINO: I also understand that Indiana Bell was divided into three departments. There was plant installation and repair, traffic operations, and the commercial business office.

TOBIAS: Correct.

SCARPINO: And your career began in the commercial business office.

TOBIAS: That’s correct.

SCARPINO: Okay. So, we talked about why you accepted that summer job and the program that pulled you in. When you went to Evansville for that summer job basically, what were you doing down there? What did they have you do?

TOBIAS: Well, here I am a young man, just graduated from college. I show up on day one, I have seven people who are reporting to me. Now, these are seven people who work there, been working there, a couple of them had been working there a long time. The specific functions that they were responsible for were people in those days walked in the front door of this big building in Evansville to counters that looked very much like an old-fashioned bank, and they paid their telephone bills.

SCARPINO: I remember that, not Indiana, but in Connecticut.

TOBIAS: So, that was one function I was responsible for. Then it was still the era of coin operated telephones. There were two guys in Evansville who’d worked full-time going out and taking the money out of the coin phones and keeping all the records about them. They had some sales responsibilities too, if somebody was building a new gasoline station, of getting space to get a coin phone in there. I was responsible for all of that, and I was responsible for two or three young women who operated kind of like teletype machines. It was data input for service orders of people who wanted telephone service installed, and it was all in code and it was terribly complicated, it looked to me. So, that was my first experience in supervising people who knew more than I did, and in some cases, knew more than I was ever going to know about the specifics of what they did. So, it was my first experience with beginning to understand the art and science of leadership in those kinds of circumstances, and this was a job that was constructed specifically for me. Prior to my arrival, the people taking bills reported somewhere in the organization and so forth, but this is the way the IMDP Program worked, was for this mentor to create something…

SCARPINO: Who was Robert Allen.

TOBIAS: … who was Robert Allen, to create an assignment for someone coming into the program that would be a real assignment with measurable results.

SCARPINO: Do you remember how much they paid you?

TOBIAS: Yes, they paid me $6,500 a year and I couldn’t spend it all.

SCARPINO: So, as I listen to you talk, and we’ll come back to this, but when you describe what was going on in that office, in some ways, you were sort of on the cusp of major technological change. Five, six, seven years later, it wouldn’t have been like that.

TOBIAS: Correct.

SCARPINO: We’re going to talk about organization in a minute, but the other thing that occurred to me as you talked, is that what they had you do was a little bit like being a second lieutenant…

TOBIAS: Yes.

SCARPINO: … thrown into a situation where you have a lot of responsibility and you have people working for you that know a lot more than you do and have years of experience.

TOBIAS: Yeah. So, you have to – an environment has to exist where they really want to do it with you and for you, and they feel like that you’re supporting them. And you just begin to learn those things for the first time, that it’s not about giving orders. It’s not about saying, okay, go do this and as soon as you get that room cleaned over there, come back and I’ll tell you what to do next, which I suppose college students have in mind that that’s the way the world works.

SCARPINO: But part of the job, it seems to me, is if you’re going to be successful at it, is figuring out who to create that environment.

TOBIAS: Yes, it was.

SCARPINO: Because it’s not they’re waiting for you.

TOBIAS: Exactly.

SCARPINO: So, U.S. Army, you entered the Army as a second lieutenant in artillery, which I assume was field artillery…

TOBIAS: Right, field artillery.

SCARPINO: … in October of 1964…

TOBIAS: Correct.

SCARPINO: … and served all of your time at Fort Sill, Oklahoma.

TOBIAS: Correct.

SCARPINO: So, usually new second lieutenants with ROTC commissions get a chance to request what they want, you didn’t always get it, but as I remember, I got to make three choices. Why did you -- number one, was field artillery your first choice, and…

TOBIAS: Yes.

SCARPINO: … and why is the second part.

TOBIAS: Field artillery was my first choice. Well, I wanted to be in one of the combat arms because that’s where the action was, and I didn’t want to be in the infantry. I had no intention of making a career. I think had I thought I might want to make a career in the military, I think I would have wanted to be an infantry officer because that’s the path to the top more often. I thought artillery sounded, based on what I knew, sounded like something that would be very interesting, and it was.

SCARPINO: You already mentioned the fact of the Gulf of Tonkin Resolution and the buildup, when you entered the military, did you do so expecting that you would probably end up in Vietnam?

TOBIAS: Uh, yeah, I think, at that point in time, you certainly thought there was a very high probability that you would go to Vietnam. After I went on active duty and was in that first three months artillery school, I was probably 90% certain I was going to go to Vietnam, because the world was changing in real time because of the relationship of the August Gulf of Tonkin Resolution and my arrival in October.

SCARPINO: So, you started off with what should have been a 13-week officer’s basic…

TOBIAS: Thirteen-week, yeah, I think it was.

SCARPINO: What do you remember about that?

TOBIAS: Well, there was a certain amount of leadership training. It was a continuation of what you’d been doing in four years and built also on, there was a six-week mandatory summer camp between your junior, in the summer during your junior and senior year…

SCARPINO: It’s basically like basic training for ROTC.

TOBIAS: Exactly. In my case, it was at Fort Riley, Kansas. So, it was building on all of that. So, there was some amount of general focus on, okay, now you’re a commissioned officer, but you don’t know anything and we have to turn you into what does it mean to be an officer. So, there was a certain amount of that. There was a certain amount of leadership and general military subjects of, okay, you find yourself in command of a bunch of kids, how does all that work? Then, I’d say, the preponderance, maybe 60%, it’s hard to remember, but maybe 60% of the curriculum was really focused on being an artillery officer. So, there were gunnery classes of what do you actually do to get an artillery round from here out there a couple miles on the target? And then the support aspects of that, which were communications, the forward observer, the guns, and the fire direction center all have to communicate, and the capabilities in those days were way more primitive than they are today.

SCARPINO: No GPS, no computers.

TOBIAS: No GPS, no computers, all of the calculations, without getting too much in the weeds here, but the calculations of figuring out where on the ground was the target was all done by a forward observer looking at a map, looking at the contour lines of the map, looking at the actual terrain, and having the training and judgement, which was part of the course, to translate, okay, that piece of turf out there is this place on the ground, and then calculating on the map the coordinates of where on the earth in this piece, transmitting that back to the fire direction center where people were making calculations using a specialized version of a slide rule that they did all that. And then they were taking into account data that was also primitive that was coming from what we called a MET unit, a meteorological unit, that had temperature and humidity and what the impact was going to be on the artillery shell going out, and that data all getting translated to the guns. And the howitzers then being adjusted left, right, up, down, and the proper amount of powder bags being put in the shell, so that all of this came together so that when you pulled the lanyard on the gun that the shell actually went where the forward observer was trying to get it. You look back on that, as compared to the way those things are done today, that was pretty primitive. But what you learned in this 13-week course, you had some exposure to learning all of these various activities that went together to make an artillery battery work. The preponderance of second lieutenants who left that course and went to Vietnam, they either worked in the fire direction center or many of them were forward observers. People used to joke, but it wasn’t funny, that the life expectancy of a forward observer was about 15 minutes because if the enemy wanted to knock out the artillery, you didn’t have to knock out the guns, you had to knock out the forward observer, because the guns couldn’t do anything without the forward observer. And that’s, for a while, what I thought my fate was probably going to be.

SCARPINO: When you’re learning to do this as a junior officer, is part of the process learning to have the confidence to become responsible for actions with consequences?

TOBIAS: Yes.

SCARPINO: If you make a mistake, you drop that in the wrong place.

TOBIAS: Yes, absolutely, yes. And I began to have some of that experience at the telephone company too because there was a culture in those days in the Bell System that you really did view it as a life and death responsibility of making sure the telephones worked.

SCARPINO: So, when you were talking earlier, you talked about leading the kids, and I tried to do a calculation in my head, and when you went into the service, you must have been about 24, 25?

TOBIAS: No, I wasn’t that old. Let’s see, I was born in March of 1942, so in March of ’64, I would have been 22. So, when I went on active duty, I wasn’t 23 yet.

SCARPINO: So, when you’re talking about the kids, you’re talking about the 23-year old leading 18-year olds. I want to put that in perspective for anybody who doesn’t quite get it.

TOBIAS: Yeah, you’re exactly right.

SCARPINO: A question that occurred to me when I was reading the materials about you, and maybe it’s a question based on my own experience as well, I assume that -- you talked about being a forward observer and the risk associated with that, but it seems to me that one of the things that a field artillery officer has to learn is how to load and fire the artillery pieces, plot the firing solutions, adjust the fire on the target, which means – did you ever ask yourself: If I find myself in a situation where the targets are not rusty cars and old pieces of equipment, but people, can I do this? Can I really do this?

TOBIAS: I don’t think I ever asked myself that. It was certainly not something anybody wants to do. It was, I think, as an infantry second lieutenant, where the nature of what you were potentially doing was being out on patrol and walking through rice paddy and suddenly being fired upon, and raising your rifle and seeing the human being that you were aiming at, but even then, it was a circumstance where it was either kill or be killed. But I never got that far to really have to think about it. I think everybody does; I’m sure I would have, but it was all so distant to what you had to do.

SCARPINO: One of the things that occurs to me is that if nobody’s shooting back, it’s like it’s really exciting. I mean, the artillery, the plotting, the explosions.

TOBIAS: Yeah, yeah. I think there is that danger, and I think some of the atrocities that have been carried out in history, and in the history of U.S. military forces, I think have been the result of people kind of dehumanizing where they were and what they were doing.

SCARPINO: We talked about the fact that you received orders to stay at Fort Sill, and you became a member of the faculty where you were teaching, what were your teaching responsibilities?

TOBIAS: Well, I was teaching in the communications and electronics department and I always thought that – and here again, I may have been wrong – but I always thought that if they knew I was on leave of absence from AT&T, that they would put me in the gunnery department because…

SCARPINO: (LAUGHING) Because it’s the only two things that make sense.

TOBIAS: … yes, because what I was doing was, in a technology sense, very much related to where the early part of my corporate career was going to be, but I was teaching the use and purpose and operation of radio and telephone equipment that would be used in the field. I was teaching classes to the officer candidate school students and to the officer basic course that I had just graduated from, and then, before long, teaching what was called the career course, and these were captains who were going to be career officers. Typically, you got promoted to captain, in those days, in about 36 months. You got pretty automatically promoted from second lieutenant to first lieutenant in 18 months and, as I recall, you got promoted to captain in about 36 months. A lot of the people in the career courses I taught had the so-called MAC V shoulder patch indicating that they had been in Vietnam and had come back, and they were now in the next stage of their military education. So, I did a lot of that. Then, in the last part of my second year, I did a number of kind of ad hoc briefings of very senior officers, colonels, generals, who had been maybe in Europe or they’d been in the Pentagon or they’d been somewhere, and they were about to go to Vietnam and they were going to have maybe an artillery unit as part of their bigger command. And so they’d be at Fort Sill for five days or something, and this was kind of a familiarization course on the same kinds of things I was teaching second lieutenants. I really enjoyed it and I was, as we all were, the second lieutenants who did this, we were all team leaders where we taught, but we were also responsible for four or five noncommissioned officers who either also taught – maybe there’d be a lecture and then there’d be breakdown kind of lab work, so to speak, where people were actually doing more hands on kinds of things. And again, this was close enough to the Second World War that many of the people who were assistant instructors who worked for me were staff sergeants, a couple guys were master sergeants. Well, during the Second World War, these were people who had gotten battlefield commissions and had been promoted and promoted. One gentleman that worked for me had been either a major or a lieutenant colonel, and then after the war when there was what they called a RIF, reduction in force, they reverted to their permanent rank. So, you might have a major who suddenly became an enlisted man, became a sergeant, and his motivation for staying in the military was, at that point in time, he’d been on active duty for 17 years and he needed to be 20 years in order to retire, so they were putting in their time. So, that’s a different kind of a motivational challenge as a young 23-, 24-year-old second lieutenant who’s supervising these guys who seemed quite old to me at the time. I suppose they were in their 40s probably, maybe early 50s, probably 40s, who had all these experiences and had been in battle in the Second World War and they’re now “working for” a young second lieutenant.

SCARPINO: Somebody at one point who they would have out-ranked.

TOBIAS: And somebody who they would have out-ranked significantly. So, I had a pretty basic philosophy with them all, and that was if we have something to do, we’re going to do it better than anybody else could possibly do it, but when we get that done, if you don’t have something to do, don’t do it here. I treated them with great respect, learned a lot from them, but I cut them a lot of slack. So, if we weren’t – if you worked for me, there was no busywork. If we had something to do -- if we start our classes tomorrow and the equipment didn’t work or the right stuff wasn’t in the classroom, that was not a good thing. But assuming everything was done in the way it was – and they were all very, very capable people – so, assuming it was all done the way it was, they knew that if they just disappeared, I’d cover for them, and did, and it all worked out great. I really enjoyed being around these guys.

SCARPINO: When you were teaching the career course captains, the military is a hierarchy, you’re a second lieutenant, they’re captains – not only are they a little older than you, but they outrank you. How did you manage to negotiate that?

TOBIAS: Well, again, that’s why, to your earlier question of was the military -- did I look at that as a good and productive learning experience, these are some of the reasons why, because, as you say, these are people who outrank me, they had more experience than I did, and they were, in many cases, motivated to try to embarrass me. I mean, their fundamental objective to deal with their boredom, I suppose, was to see if they could embarrass this poor young second lieutenant. So, you had to just kind of learn, okay, how do I deal with that? Some of that comes with experience, but it’s also a lesson that gets repeated over and over and over and over, and that is anything is all about preparation, preparation, preparation, preparation. So, if you’re going to be in that kind of circumstance, you’d better be fully prepared. You’d better have thought about any possible question that anybody’s going to ask you. And you also better be willing to say I don’t know, but you better not have to say that very often, and it’s not that simple, but there’s some basics that you learn pretty quickly.

SCARPINO: So, you had these senior noncommissioned officers, some of whom had been World War II combat veterans, knew a lot in their particular areas. The experience that you had – I’m going to back up – I would assume that one of the things that one learned, or that you learned from working with those folks, was to respect the knowledge and the experience. But did the lessons that you learned from working with those folks, carry over say into the phone company where you probably did run into people who had 30 years of experience and knew the equipment better than you’d ever know it?

TOBIAS: Well, it actually began on my very first day in Evansville with these seven people who were already on the payroll. The two gentlemen who were responsible for the coin telephone operation, I think at that point in time they probably both had 15, 20 years with the company. So, almost from day one of my very first job out of college, I found myself as the titular supervisor of people who knew a lot more than I did. By the way, that lasted all the way through my total and complete career.

SCARPINO: That kind of a situation presents a challenge, right? Did you ever witness people who failed that challenge?

TOBIAS: Lots of people and for lots of reasons. Lots of people who weren’t able to motivate those people, never got the respect of those people, and it usually began with not respecting the people who really had the knowledge and experience. But yes, I think a lot of people have failed.

SCARPINO: In a situation where you work for the phone company or you’re a junior officer in the military or you’re moving up through the ranks in the phone company or later on at Lilly, how does one go about positioning one’s self to earn respect?

TOBIAS: Well, that’s a very good question and it gets at the heart of how much of leadership is learned through experience, how much of leadership is taught by people who have experience and are trying to convey some principles of leadership, and how much of it is just the way you’re wired and the way you think about things? When people have asked me is it this or is it this or is it this or is it this, my answer has always been yes, it’s all of that. So, I don’t know exactly. I watched my parents interact with other people. I had this experience that I’ve described as an undergraduate at IU and various extracurricular activities, in the IMDP Program, it involved more than just the job. I think once a month the IMDPs – I think there were maybe eight or ten of us – got together for 48 hours and went through some training exercises. There was an exercise that I remember well because I thought it was great that was called the inbox exercise. You were given, in effect, a stack of mail that would be typical of what you might get in the office, and it was all fake memos and notes and so forth. You were given 30 minutes, and what you had to figure out how to do was to process all that, starting with how to prioritize your time. Of course, a lot of people would say, well, I’m going to do the easiest stuff first and then get that out of the way and run out of time and they hadn’t done anything that was important. So, anyway, there was some formal training on those kinds of things, but pretty soon, if you’re going to survive and thrive, you learn that leadership is about what the team is going to get done here; it’s not how smart you are. Part of how smart you are is whether or not you’re smart enough to get the whole team to get done what needs to be done. I’ve never been able to quite put my finger on how those things happen with some people and not with others. I think sometimes you can look at it and say, well, it’s pretty clear that’s not going to work.

SCARPINO: So, one more thing about Oklahoma. While you were stationed at Fort Sill, you met a woman named Marilyn Salyer in 1965, you were married in September 1966 in Oklahoma…

TOBIAS: Correct, correct.

SCARPINO: … right before you got out of the Army…

TOBIAS: Correct.

SCARPINO: I’ll ask a question you never ask a man in front of the woman, how did you meet? Because if they don’t remember, they’re in trouble.

TOBIAS: No, no, I’m very happy to tell you that. Marilyn and I talked about that a lot over the years. If you’re a young bachelor, second lieutenant in a place like Fort Sill, Oklahoma, first of all, there aren’t a lot – there’s no question you’re not on the IU campus anymore.

SCARPINO: It’s not a dating smorgasbord.

TOBIAS: No, it’s not. And the women that you meet are not necessarily women that you would want to spend any time with, in many cases, were you not hanging around a military base. One of my second lieutenant buddies, by the time I’d been there, kind of figured out the system. There were six of us who determined that life was going to be a lot better if we did not live in the bachelor officer quarters on post, and there was a shortage of housing. We were able to get out and live on the economy and we rented a house that had been lived in for second lieutenants forever. It seems like I may have told you this, but the woman who owned this house I don’t think knew who lived there because it just got passed on from second lieutenants to second lieutenants, and these were all guys I knew because we taught together. One of them was dating a young woman who was a teacher. One Sunday he said she’s having a party or a cookout or something in this apartment complex where she lives, and do you want to go? And I kind of maybe I would, maybe I would, but anyway I went, and that’s where I met Marilyn. Well, Marilyn was teaching school in an elementary school that was part of the local public school system, but actually located on Fort Sill, teaching military children. She had a bachelor’s degree from the University of Oklahoma and was pretty far along in her master’s degree from the University of Oklahoma, and was doing that driving from Fort Sill to Norman, the University of Oklahoma, like three nights a week, and that was a pretty good drive.

SCARPINO: A master’s degree in what field?

TOBIAS: In education – actually, in guidance. Her undergraduate degree was in elementary education and she had a minor, I guess, in speech and hearing therapy and then was getting a master’s degree in guidance while she was teaching. Well, that was all pretty impressive to me. Then the more we talked, the more we had in common and fell in love and got married and raised two kids.

SCARPINO: So, you separated from the Army, you decided to move back to Indiana and resume employment with Indiana Bell. And I understand, just so I get this in the record, that both of your children, Paige and Todd, were born in Indianapolis?

TOBIAS: No, Paige – I came back in the fall of 1966. Six months or so before I was due to get out, I got a call from Bob Allen who said we know you’re about to get out, we’d like to make you a job offer and we’d like to promote you. We’re going to give you credit for the two years you were in the military just as if you had been in Indiana Bell all that time, and we’re going to increase your salary from the $6,500 you were making before to $9,000.

SCARPINO: Well, that was a big raise in those days.

TOBIAS: Well, and my recollection is that the base pay I was getting as a second lieutenant – by that time I was a first lieutenant, I don’t remember the number – but everybody remembers that as a second lieutenant, in those days, your base pay was $222.30 a month. And then there was a housing allowance and so forth, and you did fine on that. But $9,000 a year was like somebody saying you’d won the lottery. At that point, I wasn’t sure whether I was going to come back to Indiana Bell or go back to law school, but I was leaning more -- the longer I was away from school and had a little money, the more I thought it would be appealing to make a little more money and then go back and go to law school. So, anyway, they made this offer and the job assignment was to be in charge of telephone service based in Lebanon, Indiana, in that general area, which at the time included Carmel and Zionsville, which were wide spots in the road with a few people.

SCARPINO: There wasn’t much there then, was there?

TOBIAS: No, there wasn’t much there. So, I came back, I was in Lebanon, and Marilyn got pregnant while we were in Lebanon. Then I was transferred to Bloomington sometime in 1967, and Paige was born in the Bloomington Hospital. In fact, I determined within the last two or three years, in a conversation with the then administrator of the Bloomington Hospital, that we believe Paige was delivered in the room that is now his office.

SCARPINO: Oh, my goodness. So, 1968, did I get the date right?

TOBIAS: 1967.

SCARPINO: ’67, alright.

TOBIAS: 1967, which was the fall of the famous Harry Gonso led football team that went on to the Rose Bowl in January of 1968.

SCARPINO: Did you go to any of the games?

TOBIAS: I went to a lot of the games, yeah. I

SCARPINO: But not holding the dog anymore.

TOBIAS: No, no, but it was an exciting time to be in Bloomington.

SCARPINO: Did you go to the Rose Bowl?

TOBIAS: Did not go to the Rose Bowl. Like so many other people, I thought, well, I’ll go to the next one.

SCARPINO: Let’s see if I can get the next child right. Todd was born in Indianapolis.

TOBIAS: He was born in Indianapolis in 1970, that’s correct. In the meantime, I had gone from Bloomington to Evansville again. We were in Evansville maybe a couple of years, certainly not anymore than that. In the trajectory that they had me on, I was going to get moved every two years whether I needed to or not.

SCARPINO: So, you went from the Army, to Lebanon, to Bloomington, to Evansville and then back to Indianapolis.

TOBIAS: Went from the Army, to Lebanon, to Bloomington, to Evansville and then back to Indianapolis, and that was my first district level job when I came back to Indianapolis.

SCARPINO: So, the other jobs…

TOBIAS: I was a…

SCARPINO: … Lebanon, Bloomington and Evansville office management…

TOBIAS: Yeah, yeah, the Lebanon job was called first level. The Bloomington and Evansville jobs were second level. The Evansville job was a bigger job. And then I was promoted to district manager, which in those days, it seemed like…

SCARPINO: And that’s third level job?

TOBIAS: Yeah, third level, and it was a big deal.

SCARPINO: So, you spent 1966 to 1993 with the phone company to one degree or another.

TOBIAS: Yes.

SCARPINO: Twenty-seven years. For most people, that’s a career.

TOBIAS: Yeah.

SCARPINO: And I’m going to just put this in the record, this is phase one of your career, but we could talk about subsequent phases later. So, you separated from the Army, you accept this renewed offer of employment from Indiana Bell, and you and your new wife move back to Indiana and you go to Lebanon where you are manager of the phone company office there in Lebanon.

TOBIAS: Correct.

SCARPINO: What did that job entail? That was a level one, right?

TOBIAS: It was a level one job and it was the face of the company to the community – that was a piece of it, and I’ll come back to the reason for that – and then it was also the customer service operations of the company. So, it was collecting the revenue, it was overseeing the people who took the requests for service, where, in those days, people came to the phone company and they said I’m moving to such and such a street and I need telephone service. So it was the people who did all of that, but it’s important to understand that those were the days when Indiana Bell, 100% owned by AT&T, was a regulated monopoly and so you depended on the political goodwill of the people of the State of Indiana. And that meant that the company understood that if you kept the community as happy as you could make them, not only with their telephone service, but with the company. Well, what’d that mean? The company is a good citizen, whenever we’ve got something we need to do, we go to the guy that’s running the telephone company here in town, and he’s going to help us organize it or he’s going to get the people of Indianapolis to write a check to contribute to it because the objective was to have everybody feel good about the company. Part of my job was to maintain a relationship with the members of the state legislature who lived in Lebanon because the lobbying that the company did was less from the corporate headquarters, and when there was something that we were interested in, every manager in every little town was dispatched to go talk to their local guy. So, it wasn’t the telephone company in Indianapolis trying to get a member of the state legislature to support something or get in the way of something; it was what’s in the local interest of those of us who go to the Rotary Club together here in Lebanon?

SCARPINO: So, you’re back in politics again.

TOBIAS: Yeah, yes, I was. I wouldn’t want to mislead anybody to say that that was the overwhelming part of the job. The biggest part of the job was to play the role I played in being sure that when you picked up your phone you got a dial tone and that your bill was correct.

SCARPINO: So, the technicians who made all of that happen reported to you?

TOBIAS: No, and that was another part of the way that AT&T was organized in those days. It was all functional. So, there was another person there who was slightly lower in hierarchical rank, but was a first level supervisor, had started out as a technician – his name was, and I’ve never seen him since I moved away -- his name was Milo Wert, and Milo had been around probably 25 years, knew everything about everything, but the actual technicians, the installers and repairmen, worked for him. So, this was another management challenge, not unlike the Army, not unlike my first job in Evansville. If somebody was screaming because the phone service for their business had gone out and it was the third time in six months and so forth, and I needed to get them on the front of the line and get it fixed, I couldn’t issue an order to somebody to go out there and do that. I had to have a relationship with my partner, Milo, so that those kinds of things happened.

SCARPINO: So, your portfolio was customer relations?

TOBIAS: Yes.

SCARPINO: Alright. How many people worked for you?

TOBIAS: I think I had about five.

SCARPINO: Do you remember who your state legislator was that you lobbied?

TOBIAS: Yes, John Donaldson was his name. He lived in Lebanon and was fairly senior in the leadership in the state Senate. And another interesting anecdote about him, in those days in Indianapolis, the headquarters of all political activity was the Claypool Hotel in downtown Indianapolis. When the Claypool Hotel was torn down, John arranged to get several truckloads of the used bricks that had made up that hotel, and had them hauled to Lebanon where he was building a new home that was made from the bricks of the Claypool Hotel, which had played such an important part in his political life. I thought that was one of the cleverest things.

SCARPINO: Is that home still there?

TOBIAS: I don’t know.

SCARPINO: I have a question that I’m just dying to ask you. Years and years ago, I had an opportunity to meet what I think may have been one of the most interesting attorneys in the history of Indiana. His name was Willett Parr.

TOBIAS: Oh, yeah.

SCARPINO: Do you know Mr. Parr?

TOBIAS: Sure, Parr, Richey, Obremskey and Peterson when I was there, and Pete Obremskey, who has a long IU connection, played basketball at IU, ultimately became a trustee at IU and still living. I see him occasionally. But he was fairly new in Lebanon, and had become a partner with Mr. Parr, and yes. He was up in years then; I don’t recall exactly. He had a son I think who was also in the firm.

SCARPINO: I don’t know the son.

TOBIAS: I almost think it was Parr, Parr, Obremskey – I don’t know; it changed names over time. But yes, I know exactly…

SCARPINO: He was the attorney for the Rural Electric Co-op System for the state.

TOBIAS: Well, and Pete Obremskey, that explains how he first got into that because when I lived in Lebanon, Pete was very involved with the Rural Electric.

SCARPINO: I don’t want to sidetrack too much. I just was really, really impressed by that man and I wondered if you ever worked with him.

TOBIAS: Yeah.

SCARPINO: So, you went to the Lebanon office, you were then transferred to Bloomington and to Evansville, and part of that was simply moving you up the…

TOBIAS: To bigger jobs.

SCARPINO: … the hierarchy to bigger jobs. So, do you recall when you were moved to Indianapolis?

TOBIAS: It was in the, as I recall, it was the second half of 1969. It was late 1969.

SCARPINO: So, I talked to a former colleague of yours, Jack Sogard, who was I believe the division manager in Indianapolis.

TOBIAS: He was. He was my supervisor when I came to Indianapolis.

SCARPINO: He told me that his recollection was that Robert Allen played an important role in identifying and promoting you for that position.

TOBIAS: Yeah, that’s probably right because up to that point in time, Bob, by that time, I believe was the general commercial manager. So, he would have been fifth level and he would have been responsible for the entire commercial department for the State of Indiana. So, he would have – oh, wait a minute; that’s not right, that’s not right. I actually don’t know what Bob was in at that point in time, but Bob would have been viewed as the person in the hierarchy who would have known me the best. I came to know later that my name about that point in time was in a book that Jack Arbuckle, who was then the President of the company, had been putting together who was – Jack was probably the most, one of the most instrumental people at that stage in my career. He, unfortunately, died at a very early age, but Jack was the President of the company. He told me later that he had started a binder that had never existed before, which was the answer to the question of, okay, who’s going to be running this place in 15 years or 20 years, and what are we doing to identify him and get him in the right jobs, and getting him prepared to move ahead?

SCARPINO: It was his talent cultivation binder.

TOBIAS: Exactly.

SCARPINO: So, you moved to Indianapolis as a district manager…

TOBIAS: District manager.

SCARPINO: … which is level three…

TOBIAS: Level three.

SCARPINO: … what were your duties there?

TOBIAS: Well, I was responsible -- it was just a bigger version of what I did in Lebanon and then what I did in Bloomington and then Evansville, and now Indianapolis. So, I probably had – I’m guessing because I don’t remember – but I probably had 40 or 50 service representatives who answered the phone and said, yes, Mr. Jones, I’m happy to help you get arranged for telephone service in your new home. And it was all the people who collected the bills, including collecting bills from people who weren’t paying their bills, and making the decisions about turning off peoples’ telephone service and that kind of thing.

SCARPINO: By 1969, had you begun to see significant technological changes in the industry?

TOBIAS: Yes, and in fact, you were talking about being on the cusp of some of these things, in the summer of 1964, during the summer I worked in Evansville, Booneville, Indiana – a little town on the river – which was…

SCARPINO: I’ve been there.

TOBIAS: … well, it was operated out of the Evansville office. Booneville, Indiana, was the last town for which Indiana Bell provided telephone service that still had what we referred to as manual telephone service, which meant you picked up the telephone, an operator answered and said number please. You gave the operator the number and they connected you with a business or residence…

SCARPINO: With the cords.

TOBIAS: … somewhere in Booneville, and they did it with the cords. That was, in 1964, that was the last remaining community. During the time that I was there, that became the first community in Indiana Bell in the State of Indiana with touchtone. So, they skipped over the rotary dial telephone, which was backed up with mechanical equipment, and that was the first electronic equipment. I’m not sure we recognized it in those days, but it was a computer-driven system where you punched in the digits on the touchtone dial. So, that was a phenomenal change in technology that took place then. So, fast forward from 1964 to 1969, now that technology is spreading throughout the state. Enhancements to that technology, the speed of dialing, you know all those kinds of things, were moving pretty fast.

SCARPINO: Disappearance of party lines?

TOBIAS: Yes, disappearance of part lines at that same time. They were probably pretty much gone in the late ‘60s, I’m guessing.

SCARPINO: Having people buy their phones instead of lease them from the company?

TOBIAS: Well, now that came later.

SCARPINO: Okay.

TOBIAS: And that was another job.

SCARPINO: I understand that you actually opposed that in the beginning.

TOBIAS: Well, that was a job that I was, later on, I was the President of an AT&T subsidiary called AT&T Consumer Products, and that was in 1973 when the rules changed and we began to sell telephones.

SCARPINO: So, about the time you received the promotion to work in Indianapolis, James Olson replaces Jack Arbuckle as President.

TOBIAS: Correct.

SCARPINO: I understand that this is the first time that you met Mr. Olson?

TOBIAS: Yes. Jack Arbuckle had grown up in Indiana Bell. There was a tradition in AT&T that you never got the top job unless you’ve been out of the company and someplace else. Jack became the Chief Operating Officer at a company in New Jersey. And then more typically, as career patterns went, he would have gone someplace other than Indiana or New Jersey to be the President, if he was continuing to be promoted. He came back to Indiana Bell as the President and – or maybe he came back as the, I’m not exactly sure, came back – let’s say, he came back as the President. Jim Olson then, who had grown up in Northwestern Bell, which was the Dakotas and Nebraska and that part of the country, came then first as the Chief Operating Officer, the number two job, and then when Jack died, Jim became the President of Indiana Bell. I had not known him until he came from Northwestern Bell to Indiana.

SCARPINO: While you were in the book, so to speak, with James Olson taking over, what kind of a working relationship did you develop with him?

TOBIAS: I had a very good relationship with him. My first direct experience with him, if I digress here for a minute – I’ve often been asked in classrooms and other places questions that translate to: How can I grow up and have the experiences you had? And my simple answer to that has always been: If it’s Tuesday, you do the best possible job you can do of what you need to do on Tuesday, and do it again on Wednesday and every other day because you’re never going to know exactly what key moments are going to happen in your career and what decisions and experiences you’re going to make, and quit worrying about how do I get to be there and just do you job and it’ll take care of itself. Well, Jim one day, called me to his office – I was probably, I think maybe I was a division level by then, it’d be the fourth level, and he was seventh level as the President – called me to his office, he said I’d like you take on a project. He said I have agreed to co-chair a conference that’s going to be at the Indianapolis Museum of Art with J. Irwin Miller, who was the CEO of Cummins and is also an AT&T director, and I’d like you and somebody from Cummins to put that all together. Well, I mean, I didn’t know anything about all that, but we did it and we did it well and it was a big success. That was really my – I think that was the first time that Jim Olson personally, other than what people may have told him – that was the first time that Jim Olson personally saw what he perceived my capabilities were, and it had nothing to do with the telephone business.

SCARPINO: No, it was something he asked you to do…

TOBIAS: Yeah, right.

SCARPINO: … that he clearly wasn’t going to do himself. So, one more question about your time in Indianapolis and the Indiana Bell. Actually what you just said, you get promoted up there to one of the district managers; during your years in Indianapolis, were you promoted again?

TOBIAS: Yes, I was promoted several times. I was moved, after a couple of years, I was moved to another district level job in the accounting department, which I wasn’t real crazy about and I didn’t really like the job all that much, but it was a developmental opportunity to see a different – because that was the first time I’d been out of the commercial part of the business. So, I was in the accounting department for, I don’t know, I think less than a year, year-ish. Then I was promoted to division level, or fourth level, in the public relations department, which was a very interesting job because that was the first time that I had the responsibility for advertising. I had all of Indiana, Indiana Bell’s advertising and, in those days, we still had a one-class basketball tournament in Indiana, and Indiana Bell was the primary sponsor of the television advertising. So, I was essentially the executive producer of the television coverage of the Indiana State High School Basketball Tournament, which was really kind of an interesting…

SCARPINO: That must have been really interesting.

TOBIAS: … experience. Plus advertising was, we were one of the bigger advertisers in the state, and I had other public relations responsibilities, but I really enjoyed the advertising part of that. Well, then I was promoted a couple other times.

SCARPINO: Go ahead, yes, let’s get that in the record.

TOBIAS: Then after that, I became the – I was promoted to fifth level and became the general commercial manager. So, at that point in time, I had all the people in the state – I’m guessing 2,000, 2,500, something like that – I had all of the Lebanon’s and Bloomington’s and Evansville’s and Indianapolis’ districts, and all the things that I had been doing in those jobs, everybody in the company who had those kinds of jobs, that came up in the hierarchy to report to the general commercial manager, which put me in the, oh I don’t remember, there were probably from the President to the level of the people who were on the level with me, there were probably 15 people. And at that point in time, there were probably 10,000, 11,000 people in the company.

SCARPINO: So, at that point, you’re in senior management.

TOBIAS: Yes, and that was 1974. So, I’d been back from the Army eight years.

SCARPINO: That’s a pretty rapid rise through the ranks.

TOBIAS: Yes, yes, it was and it kept accelerating.

SCARPINO: Well, we’re going to talk about the acceleration in a minute, but was that the final promotion in Indiana?

TOBIAS: In Indiana, yes, because that was the job that I was in when I then was promoted out of Indiana.

SCARPINO: So, in 1974, when you get this significant promotion, what is the greatest leadership challenge in assuming that role?

TOBIAS: Well, up until district level in the company in those days, that was kind of the level where you were close enough to the actual work being done on the ground, that you really knew what was going on on a day-to-day basis with the people who were doing that job. You knew the names of the service representatives who were taking customer calls, at least, you should. By the time you get to be the general commercial manager, much of your interaction is with people at district level and above. You’re coordinating things with other departments and you’re beginning to be involved in the strategy of how are we going to get the public service commission to approve our next request for an increase in telephone rates?

SCARPINO: And that’s the state regulatory agency for utilities.

TOBIAS: Yes, yeah, and those kinds of things.

SCARPINO: So, the title of that level five job?

TOBIAS: General commercial manager. Within the Bell System, that level, those were general managers and, in this particular instance, I was the general commercial manager.

SCARPINO: Okay, so one final question about your time in Indianapolis, and you know, as I read everything that I did about your career, it’s clear that over the years that trial and tragedy have been a part of your adult life. As a young child, your daughter, Paige, was repeatedly hospitalized with asthma complications. I read somewhere between the ages of one and 11, 60 times and she spent a year at the National Jewish Hospital in Denver?

TOBIAS: Correct.

SCARPINO: How did you and your wife, Marilyn, cope with that tragic and frightening situation in the middle of everything else that was going on?

TOBIAS: Well, it was obviously a big challenge both for us and certainly for Paige, who was the one going through it. Marilyn is the one who really took the brunt of that, but it was a challenging time on a lot of levels. There were two occasions when the doctor who was handling her treatment called us at home in the night and said you need to come to the hospital because Paige is not doing well and we’re not sure that she’s going to get to the morning. And we looked at opportunities – I went to see Jim Olson at one point to talk about whether or not it might be possible for me to transfer to the AT&T subsidiary in Arizona. In fact, a job was worked out that I could – I would have taken a demotion, but I was confident that over time that would hopefully – but you didn’t really worry about it. It was what we needed to do for Paige. The doctor actually talked us out of that by saying that what had happened was that over two or three or four decades, people with asthma had pulled up and moved to Arizona and taken their plants with them, and so that the chances of that really being a solution – but I mean, we were desperate at that point. But Marilyn was up every morning, spent all day in the hospital, and that was her life. I’d go to work and then come to the hospital and stay there and we’d go home. My parents spent a lot of time taking care of Todd, as did Marilyn’s mother, who was a widow.

SCARPINO: Because Todd was a small child.

TOBIAS: Todd was a small child, yeah. Paige was born in 1967 and Todd was born in 1970, so when Paige was five, Todd was two. So, yeah, it was a tough time. It took a toll on everybody.

SCARPINO: And she outgrew the asthma eventually?

TOBIAS: She’s doing fine. She just had her 50th birthday, she’s got four kids and a husband, and lives a very active normal life. She’s had a major leadership role at the Children’s Museum and their Guild and a number of other things in the community. As we talked earlier, she’s a Duke law graduate and practiced law until she started pretty much raising children full time. She had a pulmonologist at the IU Medical Center along the way who was as severe an asthmatic as she was. He had become a distance runner, and he convinced her that if she took up kind of extreme, not extreme, but extensive exercise, that would build her lung capacity. So she’s been very active, either runs or is on the treadmill or something pretty much every day. She’s run two or three marathons, but she does that with a rescue inhaler in her hand when she runs. She’ll have two or three episodes a year, but we don’t talk about it much. She lives a pretty normal life.

SCARPINO: Alright, so we’ve been going for a little over two hours. What does your schedule look like?

TOBIAS: I’m yours for as long you’re here. I’ll maybe take a break and go to the restroom.

SCARPINO: Do you want me to hit pause?

(PAUSE RECORDER)

SCARPINO: Twenty minutes more?

TOBIAS: Yeah, I’m happy, yeah. Whatever you want.

SCARPINO: Alright, let’s make sure we’ve got this thing going. Good, so we’re back on. So, in 1977, you were transferred from the Indianapolis office of Indiana Bell to the Illinois Bell offices in Chicago, and of course they were both owned by AT&T.

TOBIAS: Correct.

SCARPINO: What was the significance of that move?

TOBIAS: Well, that was the first really absolute concrete indication to me and anybody else that the company had plans for me because it’s very unusual to get moved – in those days, it was very unusual to get moved from one AT&T subsidiary to another. The only time that happened was in a developmental kind of a move and it was also, as all these jobs were, was kind of a test to see, okay, you did all these things there, what are you going to do here? But it was a different kind of job and preparation for an expectation that I was going to move. At that point in the business, I’d been identified as somebody who would, at one point, likely be a President of one of the AT&T subsidiary companies, like Indiana Bell, although Indiana Bell was the next to smallest in the country.

SCARPINO: If I figure this out right, I mean it looked to me a little bit like Illinois Bell was sort of the AAA affiliate of the headquarters in New Jersey.

TOBIAS: Yes. Well, you’re correct and getting moved…

SCARPINO: By that, I mean one level below the major leagues.

TOBIAS: Well, getting moved from Indiana Bell to another company was a big deal. Getting moved from Indiana Bell to Illinois Bell was a bigger deal because Illinois Bell had been used for some years as kind of a testing ground for people for whom the company had bigger ideas. The reason for that was, it was thought, and I think correctly, that if you can be successful at Illinois Bell, it’s really a microcosm of the country because you have Chicago, you have all these suburbs, then you have all this rural downstate stuff, you have a state politically, you’ve got a state capitol that’s in Springfield, you’ve got all the rural political influence – you’ve got what you have in the United States. It was also a case where a disproportionate number of people who had ended up in the very top leadership of AT&T had, at one point, gone through Illinois Bell. So, they have sort of a knowledge base about all of that, and they also had networks of people in the company so they could pick up the phone and call somebody who’d been there 40 years down in the organization somewhere, and say tell us about Randy and how’s he doing. So, there were a lot of factors, but the big factor was that it’s a big place with big jobs and big challenges, and let’s see how people do there.

SCARPINO: So, if I looked this up right, your former boss at Indiana Bell, James Olson, replaced Charles Brown as President of Illinois Bell. Robert Allen, who’d been division head when you were assigned to Evansville, was at Illinois Bell as CEO, chief operating officer, so they both moved to New Jersey.

TOBIAS: Right, and kind of for the very same reasons. Jim Olson was, at that point in time, being looked at as somebody who, he’d already been the President of Indiana Bell and he was being looked at as somebody for a senior position at AT&T. That’s how he came to be the President of Illinois Bell. Bob Allen had had a couple of jobs, plus Jim Olson was very comfortable with Bob Allen. A senior officer, whose name was Bud Staley, senior officer from Illinois Bell, had been moved to Indiana Bell to replace Jim Olson when Jim went from Indiana to become the President in Illinois. Okay, Bud had somebody in Illinois that he wanted to move to Indiana, so we always referred to each other as the future draft choice in that transaction. The truth of the matter is, and I learned this later when I was a very senior person at AT&T and learned more about how these things work, the truth of it was that a lot of this was being orchestrated from New York by people that you didn’t even know, but who knew a lot about you because they’d been watching you for several years, but it certainly would not have been done without the blessing of Jim Olson.

SCARPINO: So, Bob Allen, Jim Olson, both promoted to Illinois Bell, you’d worked with both of them in Indiana, to what degree did those two become a part of the network that contributed to your rise in the company?

TOBIAS: Oh, I think clearly they did because it’s like any hierarchical organization. I learned the same thing when I went into the government and you looked at people in the military, and they are places because they’re capable of doing the job, but they got an opportunity because somebody knew who they were and were willing to take that risk. So, up to that point in time, Jim was the most senior person that I knew, and Bob was very much a protégé of Jim’s.

SCARPINO: So, you’re up there in 1977, what were your job responsibilities?

TOBIAS: Well, initially, I was the general manager of the northern suburbs. So, from the northern edge of Chicago, Evanston, Winnetka, Wilmette, Lake Forest, all the way up the North Shore, and then out into the west a little bit, and I had total responsibility. So, I had not only the commercial part of the business that I’d had before, but I had all the installers, all the repairmen, initially the telephone operators, the business marketing people who called on corporate customers, the engineers who identified where a new subdivision was going to be built and decided when we needed more cables and central switching offices and all those kinds of things. So, this was the first time that I had essentially a microcosm of the entire company of everything we did. So, that was my first job in Illinois.

SCARPINO: What was the leadership challenge of taking a job like that?

TOBIAS: Well, it was kind of the same one it had always been. It was something I had no experience with. I was overseeing people who didn’t know me. They probably, in some cases, had some suspicion about who’s this guy think he is to be coming from Indiana to Illinois, you know, we know what we’re doing here. I had grown up in Indiana; I knew the geography. I was dealing with geography there that, not only did I not know where it was, I didn’t know the nuances of the cultural backgrounds and so forth. So, again, the Bell System was a wonderful, wonderful place in terms of its ability to train and nurture people with these different kinds of experiences.

SCARPINO: So, were you promoted while you were there?

TOBIAS: Yes. Then, after I had that job – I’m trying to remember. I think I was promoted once to a bigger general manager job where I had more territories, same kind of job, but more territories. Then I was promoted to vice president of Illinois Bell, of which there would have been – there was the president, think of him as the CEO, that would have been initially Jim Olson, although by that time, he was gone. He’d gone to New York. Then Bob was the chief operating officer; I think by that time, he was gone. So anyway, there was the president, the chief operating officer, and then I think there were about eight vice presidents and the whole corporation, Bell System-wide, was reorganizing. So, my job was to be responsible for residents’ telephone service for the State of Illinois.

SCARPINO: You had to keep all of the customers and residents in the state happy.

TOBIAS: Right.

SCARPINO: So, I talked to Bernie Sergesketter, and he told me that while you were at Illinois Bell, you demonstrated a commitment to affirmative action, particularly promoting qualified women. Is that your memory of what you were doing there?

TOBIAS: Well, I don’t – it’s interesting Bernie said that. Yes, I don’t remember frankly either more or less doing that there because…

SCARPINO: It made an impression on him.

TOBIAS: Well, I think, see, having come from someplace, I think people in Indiana probably were aware I was doing that all my life, but I’m sure I did that there, yeah.

SCARPINO: So, in 1981, you’re named Corporate Vice President in AT&T’s global headquarters in New Jersey. As I said when we took a break and I turned the recorder off, I want to make sure that people understand the context here. So, I’m going to put a little bit of background information in this, knowing full well that you know this and I feel a little guilty saying it in front of you.

I would say, for starters, that your years, particularly at the global headquarters, put you on the frontlines of deregulation and we’re going to talk about that, but by the early 1970s, AT&T Corporation was a vertically integrated company that was the sole provider of both long distance and local phone service in most of the United States. Twenty-two Bell Operating Companies controlled by AT&T Corporation provided local service; AT&T Long Distance dominated long distance telephone communication; AT&T Corporation’s wholly owned subsidiary, Western Electric, made most of the telephone-related equipment and sold it to the 22 Bell Operating Companies. Bell Laboratories was responsible for research and development. In 1974, the U.S. Justice Department filed suit to break up AT&T Corporation’s monopoly of phone service and telecommunications in the U.S. And we fast forward to January 8, 1982, under provisions of a consent decree, the Bell System was broken up. Consent decree generally followed a plan proposed by AT&T when the company, in effect, saw the handwriting on the wall. AT&T gave up control of all the Bell Operating Companies that had been providing local phone service in the U.S. and Canada. AT&T subsidiary, Western Electric, would no longer directly supply the new Bell companies with equipment. AT&T continued to provide long distance service. An existing prohibition on the sale of computers was lifted. In January 1984, the former member companies of AT&T Bell System merged into seven regional operating companies known as Baby Bells. The book value of AT&T stock fell by about 70%.

So, as we talk now, there’s some context for people so they kind of get what’s going on here. You’re promoted to AT&T global headquarters position…

TOBIAS: And just to put that in context a bit, at that point in time, AT&T was the largest corporation in the world with about one million employees. Very hierarchical organization. I was 39-years old. This was, by far, the biggest promotion that I’d ever had because I was reporting to a man names Phil Campbell, who was the Chief Operating Officer of Illinois Bell. He, in turn, was reporting to Chuck Marshall, who was, at that time, the President of Illinois Bell, and the President of Illinois Bell was one of the bigger jobs in the country. In 15 minutes, hierarchically, I went from this job reporting to Phil Campbell to a job that was equal to or slightly higher than Chuck Marshall, the President of Illinois Bell. Unheard of. This was the doing of Charlie Brown, who’d been reading his binders, and Jim Olson – I don’t want to underplay the significance of Jim’s role in that. But Charlie was eager, knowing kind of where all this stuff was likely heading with the impact of the government’s monopoly charges on the Bell System, Charlie was eager to get the next generation of the senior-most leadership of AT&T in place, and that was the big driver, I learned later.

SCARPINO: And Charlie was the head of AT&T at that point.

TOBIAS: Charlie was the Chairman and CEO and I’d never met him in my life, at that point in time.

SCARPINO: But he had done his homework and he knew about you.

TOBIAS: And, you know, one of my thoughts, frankly, was if there – because I didn’t kind of get the bigger picture – one of my thoughts was, I’m 39-years old, if they’re promoting me to this job, what does that say about the lack of bench strength, that there isn’t somebody else that’s more experienced and better qualified to do that job? Now, I’ve mostly thought that I could do the jobs that somebody thought I had the capacity to do, but that one (LAUGHS), I really was questioning people’s judgement. I was delighted to have this opportunity, but I’m just trying to provide a little context in terms of what a really big deal that this move was.

SCARPINO: Did you ever wake up in the middle of the night, before you started that, and say can I really do this?

TOBIAS: You know, I think the best answer to that is to say that I had confidence in the people that I was working for. So, I probably had more confidence in their own judgement than, left to my own devices, I might have had in myself. Because at the end of the day, I thought, well, if they think I can do this, they know more about what it is I’m about to do than I do, so, okay, but boy, this seems like a stretch to me.

SCARPINO: So, what was the portfolio of the Corporate Vice President?

TOBIAS: I was responsible, in a matrix sense – I went up from being responsible for residents’ telephone service in Illinois to residents’ telephone service in the United States. Now, what that meant was that from a policy point of view and from an overall overarching management point of view, I was in charge, but I was in charge of people, like the job I was leaving in Illinois, who were in charge in Illinois. So, the job I was leaving in Illinois reported to the President of Illinois Bell, but it had a dotted line relationship to the job I was going to. AT&T had a lot of those kind of matrix kinds of arrangements.

SCARPINO: One of the things that you had to do to be successful in that position was to develop good working relationships with those people.

TOBIAS: Yes, I did.

SCARPINO: I assume you didn’t know them all to begin with.

TOBIAS: No, I didn’t, although I knew many of them because many of them had come from the part of the business I had, and the Bell System was an organization that had lots of conferences and so forth, so you kind of meet people over the years and you kind of know who the all-stars are and so I knew a lot of people. But you’re right, I didn’t know everybody.

SCARPINO: So, in effect, you’re building a bigger team.

TOBIAS: Yeah, and as is the case, increasingly as you’re moving up in this kind of an organization, there are more and more people who truly believe that they’re way-better qualified to have that job than you do, and particularly under these circumstances. And you begin to get people who are kind of trying to read the tea leaves based on their own knowledge and they’re thinking, well, he’s probably here because he knew Jim Olson or that kind of thing. And yes, of course, the fact that Jim Olson knew me gave me an opportunity to be looked at, but I never had a job that I didn’t have to produce.

SCARPINO: How did you deal with – I mean you must have known that there was some resentment that this 39-year old got promoted – how did you deal with that?

TOBIAS: Well, you just do the job and try to work closely with people and respect people and produce and be respectful. I just tried to do what I’d always done. It was just on a bigger scale.

SCARPINO: That’s sort of the story of AT&T, right, is each move up is a bigger scale, more responsibility, more people. So, I mentioned when I gave a little bit of a background on AT&T and the breakup about the consent decree and how it was based on a plan, largely based on a plan developed by AT&T – were you involved in that?

TOBIAS: Yes, I was.

SCARPINO: Can you explain what you did?

TOBIAS: Well, it went in stages. The first stage was – the fundamental overarching question was that AT&T, going back to 1876 when Alexander Graham Bell founded the company and a man named Theodore Vail, one of the brilliant giants in American business history, effectively created what became AT&T, and it had worked because it was one system and the technology lent itself to being one system. So, the way in which you replace the pressures of a competitive marketplace was with a regulated marketplace where you had government oversight. Well, now suddenly, it’s no longer just the United States; it’s global. The technology is moving so fast nobody can keep up with it. Innovators outside the Bell System are having ideas about things that need to be done, and people are bringing political pressure. Somebody wants to start a company in Colorado, gets the ear of the senators from Colorado, who introduce legislation to permit them to do something that they’d never been permitted to do under the rules governing AT&T, and so forth. So, the first step was the Federal Communications Commission, which was the federal regulatory body, passed a set of regulations that said – and again, let me back up just a second to enhance the background you provided. At that point in time, and I’m talking now the early 1980s, if a residential customer in the United States moved into a new home or apartment and they wanted telephone service, they called their local telephone company and they said I need telephone service. They were assigned a telephone number, they were put into the telephone directory, an installer – probably a man – showed up at their house, installed the telephone equipment, and in the meantime when they placed the order, they determined how many telephone sets that they wanted because you could only get a telephone set from the telephone company. It was unlawful to own a telephone set or to connect anything to AT&T’s network. The rationale for that was that any – what we referred to in those days as foreign attachments – anything that was connected to the network could well disrupt the network to the detriment of other people. So, the FCC’s first effort at solving this dilemma was a form of deregulation whereby AT&T, effective January 1, 1983, was prohibited from telling a customer who called and said I’m moving into this apartment and I want telephone service, they were prohibited from providing a telephone set to this customer. They would say you will have to go elsewhere to get the telephone set. Now, my new job at that point was as the President of AT&T Consumer Products, where I was given the responsibility for the factories that Western Electric had that manufactured telephone sets, including the one then that existed in Indianapolis. The people who were in Bell Laboratories were designing and developing new telephone sets, we created something called Phone Center Stores that we put in shopping malls similar to the same concept that’s now being used by AT&T and others to sell cellular telephones. Well, we created that in 1983.

SCARPINO: Was that you’re idea?

TOBIAS: No, it wasn’t my idea, but I was part of the context. And we looked for every way we could to do these. So, at the time, Sears Roebuck & Company was the largest retailer in the United States. So, we made an arrangement with Sears to provide AT&T telephones through the electronics department of Sears department stores, and the first four of those were in Indianapolis – five, there were five. Sears had five stores around the rim of Indianapolis and one downtown. So, that was a very interesting job because it was something nobody had ever done before and you weren’t quite sure how this was going to go. It was reasonably successful, but this was the beginning of realizing that you’re running something that was designed to work with 100% market share. It’s the objective of the government for you not to have 100% market share, and this was the beginning of the demise because there was no longer a business model that worked in the same way it did from 1876 until that point in time. Then, a year later on January 1, 1984, we then implemented the breakup of the Bell System, in which the Bell System was divided into eight pieces – seven regional operating companies. So, Indiana Bell, for example, became part of something called Ameritech, which was a single integrated company that consisted of what had been Indiana Bell, Illinois Bell, Wisconsin – it was actually called Wisconsin Telephone Company – but Wisconsin Bell, and Michigan Bell. Those came together to be Ameritech. Okay, there were seven of those, and then the eighth company was the residual parts of what had been the Bell System that remained with the company that kept the AT&T name and continued to be called AT&T. And the principle part of that was Western Electric Manufacturing Company, Bell Laboratories, and most significantly, all the networks. So, all of the long-distance service, data service, all of the calling between cities, and then the international business, which was a huge part of our business also, that all stayed in AT&T, and the equipment business of selling business telephone systems and residential telephone sets and so forth. So, we ended up with eight parts at that point. I have trouble explaining to my grandchildren where was it I used to work and what is a telephone and…

SCARPINO: The world has changed, hasn’t it?

TOBIAS: Yeah, the world has changed dramatically.

SCARPINO: So, between the time that the Justice Department filed suit and issuing of the consent decree, at some point, AT&T saw the handwriting on the wall and really developed what became the content of the consent decree. Were you involved in that?

TOBIAS: Yes.

SCARPINO: Okay, what was your role there?

TOBIAS: Well, by that point in time, I was one of the senior officers and there were probably, at that point in time, there were probably 15 or 20 maybe in the context that I was in, but Charlie was beginning to figure out who was going to go where and the musical chairs of who was going to end up where. In the midst of all that, I because part of what Charlie referred to as the Office of the Chairman and there were, I think, seven of us who worked together on all of these things. I’ll give you an interesting anecdote and this is as good a time as any.

SCARPINO: Charlie is Charlie Brown.

TOBIAS: Charlie Brown, yeah, Charles L. Brown, who was the final Chairman and CEO of the Bell System when it was made up of a million people, and did one of the most, in my view, one of the most courageous and farsighted decisions, one of the most difficult decisions that any business leader ever had to make, which was to, as you say, develop a plan to thoughtfully take this big thing apart in a way that wasn’t going to disrupt telecommunication service. We can all see here, in 2018, how ineffective the government is at doing anything. And this was all headed down a path where Congress, with political motivations, or the courts, with legal motivations, all had ideas about how all of this should have been done. So Charlie was leading an effort to get ahead of that and develop something that, in concert with the federal judge who was overseeing the antitrust trial, could figure out how to make it work. While it’s on my mind, I wanted to just provide this one anecdote about a discussion that was typical of the kinds of weighty problems that were going on at the time. I remember, I can almost visualize, sitting in the room on the day that McKinsey & Company, the big consulting firm, had been hired by us to try to determine the future of cellular telephone service, which had been invented in the Bell Laboratories, and was a brand new service at that point in time and nobody knew is this a novelty, is this going to go someplace, where is this really going to go? Well, we owned, we AT&T, owned the cellular technology. So, the question was, in the negotiations that are going to take place here, do we want to retain cellular technology within AT&T, in which case we’re going to have to trade off some things and they will go to the seven companies that are being spun off? Or do we want to spin off to the seven companies the cellular technology in order to get the court to let us keep other things, because, at the end of the day, Charlie’s personal objective, as a man of enormous integrity, was to be sure that this was all done in a totally and completely balanced way, that all eight of these entities had an equal chance to go off and be successful, and the court wanted to see that happen. So, question was, what are we going to do about cellular? McKinsey came back and they said, based on our interviews and assessment and everything we can figure out, we believe that you can price the service at various price points, and the lower you price it, the more customers you’re going to have, but you’re going to get to a point where you could lower the price and you aren’t going to get any more customers and that point is about – and the customer base at that point, is going to be about five million customers. The maximum, because people don’t want to lose their privacy, people want to go where their phone isn’t, when people leave home, they want to leave their phone, or their office, they want private time and thinking time and so forth. So, the real market for this is going to be people who need to communicate in places where telephones aren’t available. So, real estate agents, plumbers, electricians, construction people, that kind of thing, but it’s probably about five million customers. Now, that sounds like a ludicrous idea today, but at the time, it didn’t. Today, I believe, there are about five billion cellular…

SCARPINO: And two of them are sitting on the furniture here.

TOBIAS: Yeah. So that’s an example of the decision-making that was going on in that point in time. There were some terrible decisions made and there were some brilliant decisions made, and there were decisions made that I didn’t agree with. There were decisions that were made that I very much agreed with that turned out to be wrong. So, nobody had a corner on wisdom. But then as things evolved, which is another story, but as things evolved and it became clearer that there were some changes that needed to be made, that’s when it became really tough for people who, in many cases, just weren’t wired to embrace change in the way that it happened.

SCARPINO: You would say that the decision by Charlie Brown to get ahead of the curve was a good leadership decision.

TOBIAS: I think it was a good decision. I think dismantling the Bell System was a good decision. There were several hundred thousand people who, in one way or another, lost their jobs, and if you were one of those people, what I’m about to say doesn’t ease the pain, but the fact of the matter is, is that there are way more jobs today in the broad telecommunications field. See, in those days, people largely didn’t have personal computers; there were no iPhones; there were no laptops; fax machines were relatively new, and the internet didn’t exist. I can’t remember quite the timing of everything, but if it did, it was a nascent. So, the Bell System worked at a time when the Bell System could control the speed at which new technology was introduced and that doing so was not a negative for the consuming public. And for many, many years, that was the case. And along about that time, this just became something that needed to be a more free-for-all competitive marketplace. The breakup of the Bell System, in many ways, created Silicon Valley and all the companies that have sprung from all of that.

SCARPINO: What was it like to be a participant in an industry that was suddenly facing competition, serious competition?

TOBIAS: Well, it was different things for different people. I think there were a lot of people, and I think your question is what did it mean for me, and I’ll get to that…

SCARPINO: For you, yes.

TOBIAS: … but for some people it was, oh, my God, I came to work for this company and I’ve worked here all these years and I’m still here but the company left me because I don’t understand anything – this is not why I came to work here. Other people, and I put myself in that group, said boy, this is exciting, I never really saw myself operating in that kind of a more entrepreneurial environment where you don’t have the constraints, but you’ve got the competition to deal with and that’s kind of energizing and exciting. And at the same time, it was frightening and we were essentially dealt cards that I’ve never been able to figure out a way that all the geniuses in the world could’ve made it work, and I’ll be happy to talk about that later, but it was a very difficult time and it was a very personally painful time because you found yourself eliminating jobs that were inhabited by people who were very, very good and capable people; it’s just the job wasn’t there anymore. I was very involved in the decision to close what had been the Western Electric factory in Indianapolis, that at its peak I think had about 9,000 or 10,000 employees and at the time it closed, I think it had about 4,000. It made telephone sets, and it’s a good example of the change driven by technology in those days, and it’s also a good example of why politicians who tell you that manufacturing jobs are coming back to the United States would lie about other things, because in this particular instance, we were making telephone sets on long assembly lines where one of the telephone sets was very popular, called a Trimline telephone set. It had, as I recall, 46 individual component pieces that were all attached by screws that held everything in place. So, the products being manufactured went down these assembly lines, and mostly women had power-driven screwdrivers, and they’d pick parts out, their part, would be eight or 10 women with the same part, and telephone set would go by, they’d pick their part, they’d put it in place, they’d go bzzt-bzzt, and put the screws in place and it came out the other end as a telephone. Well, in this period in time, the functionality represented by those 46 pieces ended up on a single silicon chip. So, the functions performed by those thousands of women in that factory don’t exist anymore because the people who are putting those functions into the equipment are engineers and computer chip designers in some silicon wafer factory someplace. So, unless somebody decides that we’re going to start manufacturing antiquated telephones that way, those manufacturing jobs are not coming back; they didn’t go overseas.

SCARPINO: They’re just gone.

TOBIAS: They’re just gone. So, all of this was happening at once and there’s no way that, in my mind, the Bell System could have been kept in place given the changes in technology and globalization. And globalization was a big factor in this also.

SCARPINO: And I will want to talk to you about that. 1985 was kind of a big year for you. In May of 1985, James Olson, who had worked his way up from a splicer’s assistant in North Dakota, was elected Chairman and Chief Executive Officer of AT&T, replacing Charles Brown, and Robert Allen succeeded Olson as President and Chief Operating Officer. Well, you retained your title as Chairman of AT&T Communications, the company’s long distance. You took over as Chairman of AT&T Information, replacing Robert Allen. AT&T Information Systems was a division that included computer and telephone equipment sales, and you also filled the spot vacated on the Board of Directors by the outgoing Charles Brown.

So, would it be correct for me to assume that following that and all that reorganization in 1985 that your major effort at AT&T was globalization?

TOBIAS: No, that came somewhat later. At that point in time, what’s the date again?

SCARPINO: 1985.

TOBIAS: Yeah, 1985. At that point in time, I really had what was the company. It was all of network, all of our long distance business, all of our data business in the United States and globally. Bob had been running this equipment business that was shrinking and shrinking and shrinking, and I took that also, so that the only thing in the company that I did not have was the Bell Laboratories and the part of the company that we ultimately spun off that was manufacturing and selling equipment to the telephone companies, which was, by the way, a business we should have gotten rid of way before we did, but that’s another story.

SCARPINO: What was the name of that business?

TOBIAS: Well, it was originally called AT&T Network Systems and then it became – what did we call it – I’ll have to come back to that. I’m having a senior moment. Ultimately, it all merged with Alcatel and it’s now all called Alcatel and managed out of Paris, but it’s a business that AT&T, after the breakup of the Bell System, we were competing. We, the AT&T core, we were among the biggest competitors of the seven operating spun-off companies and the core of their businesses, which would have been network and data and so forth, and at the same time, we were trying to sell them the equipment that they would use to compete with us. Well, in my mind, and I was kind of a minority, at least initially, but in my mind, that would be like saying that, okay, we’re American Airlines at its height and we’re competing with United and all the other major legacy airlines and we also own Boeing, so we’re trying to sell our airplanes to all these other airlines. Well, the last thing in the world they want to do is buy our airplanes and help us be more successful in order to compete against them in our core business. But there was so much ego, I guess, at stake because it would force us to sell all that, or spin it off, which ultimately after I left the company was done, but the decision to get rid of that would, in effect, admit that it was a very flawed decision at the time AT&T was broken apart. It’s a very complex story to try to tell.

SCARPINO: No, I know it is and I think maybe tomorrow I might ask you about globalization, but I think we probably should wrap up. I want to ask you so, in 1985, Jim Olson becomes the Chairman and CEO and Bob Allen was elevated to President and Chief Operating Officer, and your star is rising in AT&T, as you’ve already explained. From what I was able to read and figure out, at that point, you began to encounter increasing friction and conflict with your former, I assume, friend and mentor, Robert Allen.

TOBIAS: Right, right.

SCARPINO: What was the source of that friction?

TOBIAS: Well, to be candid about it, I think it was two things. I think, going back to the very beginning, my very first job right out of college, was working for Bob, who was two levels above me and seven years older than me. And for some period of time, even though I didn’t work for him directly very often, but over the years, as our careers progressed, he always had a job that was a level or two above where I was. Suddenly, and it was really a step earlier than what you articulated there – no, it was in 1985, I think, when it was about a year after the initial breakup and Charlie reorganized the company again, and at that point in time, Bob – I don’t remember what our titles were – but I had all the network part of the business and Bob had the equipment part of the business. And suddenly, for the first time, Bob and I were on the same level and I had the bigger part of the business. That would have been hard for anybody, but that was a challenge for Bob. So, that’s one factor. Then, increasingly, we found ourselves with a very different perspective on what the strategy ought to be for the company going forward. For example, Bob drove an effort to buy NCR, the National Cash Register Company, what had been the National Cash Register Company, which was and I think is still significant, I don’t know – but their biggest thing was ATMs, bank ATMs, but they had aspirations to get into the computer business. Bob got talked into buying NCR, which ended up being a very hostile takeover, but Bob got talked into buying NCR as a vehicle to eventually get AT&T into the computer business. To put it mildly, I thought that was the craziest idea that I ever heard of. So, we were finding ourselves – I mean, we always remained friends, but we were finding ourselves more at odds strategically with things that I thought we should get rid of that Bob thought we should keep, and that Bob thought that we should buy or acquire that I thought we shouldn’t. So, it was kind of those two converging things that made it increasingly a difficult working relationship.

SCARPINO: So, even though it may have looked to an outsider that you were headed toward the helm of AT&T, could one reasonably conclude that you didn’t see that and that you were looking elsewhere, you were ready to leave?

TOBIAS: Well, I know some things now that I didn’t know at the time. The late Senator, Howard Baker, who I admired greatly and was on the AT&T Board of Directors, and this was after he retired from the Senate – for a time, he was Ronald Reagan’s Chief of Staff; one of America’s great statesmen. Howard told me later that if Jim Olson had not gotten cancer and died when he did, that the Board had in mind that I would be the next CEO when Jim retired, but I was young and not ready. I don’t know whether that’s true or not true. I certainly would not have made me the CEO at the time Jim retired. Whether that would ever have been different or not, I don’t know. But taking that data point and knowing some other things, if you go back and try to retrospectively connect the dots, you can see where there may well have been a game plan that, at some point in time, I was being prepared, principally by Charlie Brown, Charles L. Brown, that I was being prepared to, at some point, become the CEO. It was not the no-brainer that people probably think it was, that Jim Olson succeeded Charlie, and that dragged out over a long period of time. Sometimes Boards and CEOs make decisions that are not what they want to do, but it’s better than things they don’t want to do. So, I don’t know, these are all wonderful people…

SCARPINO: I didn’t ask you that. I was digging for dirt, I was just trying to figure out your motivation, and I gather from reading between the lines that when you went to Lilly, you were ready to leave AT&T.

TOBIAS: Yes, yes. That’s absolutely true. I mean, I want to be forthcoming here because this is going to be valuable or interesting to people after all the principals involved are long gone, and in fact, Charlie’s gone, Bob’s gone, and Jim …

SCARPINO: Well, my sense from reading the record is that most of the players honestly and sincerely believe that what they were doing was the right thing for the company at the time.

TOBIAS: That’s just the point that I was about to make, and let me make it. Jim and Bob, in particular, were prepared and would have been wonderful leaders for the old Bell System. They were not well prepared, either one of them, for what it became. Jim then died before we were very far into this, and Bob’s skillset just wasn’t a match for what Bob was required to do. So, one could say that, under the circumstances, Bob did a fine job, but he went down in flames in the end. But in a circumstance of a job that, let me tell you, at that point, I would not have wanted, I’m not sure anyone, I’m not sure the best-equipped person in the world could have taken what Bob inherited when he became the CEO and made that into a blazing success, but Bob was less well-equipped than some other people might have been to have tried it and would have done some different things.

SCARPINO: So, Jim Olson gets cancer. He steps down and then subsequently…

TOBIAS: Well, Jim Olson was diagnosed with pancreatic cancer and six months later was dead.

SCARPINO: And, at that point, were you still there?

TOBIAS: Yes. At that point, I was the Vice Chairman of AT&T and I was running probably, what you described a minute ago, I was probably running all the network businesses and the equipment business, and Bob, who was the President, became first the Acting CEO and then when Jim died, became the CEO of the company, as he should have.

SCARPINO: Okay. Well, what I want to talk to you about tomorrow is Lilly and PEPFAR and things like that, and government service, but we’ve been talking for three hours and that seems like cruel and unusual punishment.

TOBIAS: Not to me. I think it’s hard, if I just say a little bit more about this. It’s hard for people to recognize who weren’t there, didn’t live in those times, and didn’t understand and have no way of understanding what AT&T really was, where it fit into the scheme of things in the world, and then when all that changed, it’s difficult for anybody to understand, okay, what was that all about. There’s a man named Steven Coll, who I believe is still the Dean of the Journalism School at Columbia, been a noted journalist. I first knew him when he was a young reporter for the Wall Street Journal at the time all of this was going on. He wrote a book that I’m going to re-read one of these days, that I thought at the time was a very well-researched and well-written book, called The Deal of the Century. It is the story of the breakup of the Bell System, for anybody who’s interested in that particular story. I say that because that additional context is important to understanding how this fits into all of that. But it was, on the one hand, an incredibly exciting time for anyone who chose to make their career in the corporate world to be where I was from the time I arrived at AT&T headquarters in late 1979, 1980, through the time I departed in 1993. It was a ringside seat. It was more than a ringside seat, it was in part, a ringside seat and part…

SCARPINO: You were in the ring.

TOBIAS: … in the ring, in some of the most dramatic complicated profound changes in the history of American business.

(END OF RECORDING)

Part three

Skip to part four of the interview transcripts
Go back to beginning of the interview transcripts

SCARPINO: Today is February 16, 2018, and I am conducting a third recording session with Randall L. Tobias. We’re at his winter home in Captiva, Florida.

We finished up yesterday, just about wrapped up his years with AT&T. So, we’ll pick up there and then talk about Eli Lilly and government service and post-government service.

So, where we ended yesterday, we talked about you going to the global headquarters in 1981 and the consent decree and all of that stuff. First, I’m going to ask you, is there anything that I should have asked you about the complications related to that consent decree and the breakup of AT&T that I just didn’t because I didn’t know enough to ask?

TOBIAS: Well, no, I don’t think so. It was, as we discussed yesterday, it was a very complex time in the sense that the Bell System had evolved from 1876 until the early 1980s, so slightly over a hundred years, had grown to be a million employees, and was designed to have 100% market share. So, when the decisions were made for it not to have 100% market share and not to work in a monopoly environment, it was essentially the death knell for what was there because it was such a difficult circumstance to find a different business model. I described it to someone at the time, actually when I was the Chairman of the Board of the Indianapolis Airport Authority, it occurred to me that breaking apart the Bell System was somewhat akin to taking an airport and having the federal government say, “Okay, we’re going to divide you into two parts. One part will have the runways and the taxiways and the tower and the control systems. The other part will have the terminal and the baggage handling and the concessions and the parking and so forth. And we’re creating a law where the two parts cannot work together, can’t have any joint ventures, can’t cooperate.” That’s kind of like what happened in the sense that there were all these prohibitions around working together and so forth. It’s very difficult really to adequately explain the complexities.

SCARPINO: Well, eventually, after you left the company, the remaining portion of the old AT&T was, as I understand it, not successful and it was bought out by one of the Baby Bells.

TOBIAS: That’s correct. After I left, what I would have viewed to be the inevitable occurred in the sense that the equipment business – by that I mean the network equipment business – was spun off into an independent company, and it subsequently had a lot of difficulties. It took Bell Laboratories with it which was dramatically downsized. It then merged with the French equipment manufacturing company, Alcatel; the headquarters was moved to Paris. It became an international provider, but I think has had, I haven’t really followed it, but I think it has not had extraordinary success over the years. But it was inevitable after we figured out what was going on, in my mind, it was not inevitable in the minds of others, but it was inevitable that AT&T was not the owner of that piece of the business that could run it at the same time it was running other businesses. Technology made the network part of the business not as relevant in the evolving environment than it had been. The efforts to get AT&T in the computer business never got any traction, which was also, to some degree, inevitable. AT&T kind of devolved into a cellular business and bought a lot of cellular assets. When Bob Allen was replaced, and that whole process was difficult for the company, but when he was ultimately replaced by the Board by a man named Mike Armstrong, who had a background from IBM and then with Hughes Satellite, he tried a strategy, which I think was very sensible, to try to transition AT&T’s network into a cable business and developed a joint venture that ultimately involved AT&T merging those assets into where they put them. But, ultimately, AT&T’s name and the remaining assets were ironically sold to one of the seven spinoffs, which had been in the days of the old Bell System, which had been Southwestern Bell, at the time headquartered in St. Louis, but it was the part of the old Bell System that covered the geography of Missouri, Oklahoma, Texas and that part of the country. At the time those assets were sold to Southwestern Bell, it changed its name to AT&T. So, the fact is that the AT&T that I worked for is essentially gone and the name AT&T is a brand that’s attached to what was Southwestern Bell at the time of the spinoff. They’ve, in turn, grown and been quite successful and are currently involved in an effort to buy some additional assets that would include CNN, for example, and get more into the programming area.

SCARPINO: It occurred to me when you were talking yesterday that that whole process of, first of all, electing to cooperate with the federal effort to break up the company and then going through the breakup, was kind of a leadership crisis too. Some people rose to the occasion and other people just couldn’t.

TOBIAS: That’s exactly right. When Charlie Brown became the CEO of AT&T sometime in the mid to late ‘70s, he replaced a very strong leader, whose name was John deButts, and I think John realized – John was the last defender to the death against the government efforts to keep the Bell System the way it was. I think John realized that that was probably not going to work and he was not the guy to make that change. When Charlie became the CEO, I think Charlie recognized that he was going to be the transitional CEO over his tenure. Unfortunately, and this is probably worth talking about, the solution could have been, at least in the short term, less draconian. There were efforts on the table that could have resolved all this with the federal government if AT&T had agreed to some much smaller things, like spinning off Pacific Bell, which was the subsidiary company in California. There were various solutions like that that were floated. I think had the company not dug in its heels and said, “No, no, we’re not going to do anything,” it could have been resolved; however, I think that would have simply been postponing the inevitable. It’s also probably just interesting from the point of view of the history of it all that it evolved into the perfect storm in that there was a less draconian solution that was on the table in the final weeks of the Jimmy Carter Administration, but the Carter Administration became totally and completely paralyzed by the crisis with the Iranian hostages, and that agreement sat there and sat there and sat there until it became politically too late in the Carter Administration to do what would have appeared to be some kind of a last minute solution. It then spilled over into the Reagan Administration. President Reagan appointed a man as the Attorney General who was from California and had done significant legal work for the AT&T subsidiary in California. He then recused himself. The Deputy Attorney General also had a conflict of interest because, you know, AT&T was so big that people who were partners in prominent law firms across the country almost inevitably had been involved in representing one subsidiary or another of AT&T. It got to the point then where everybody from President Reagan down to the head of the Antitrust Division of the Justice Department, who was a significant figure but not all that high in the senior hierarchy of the Justice Department, was a man named William Baxter whose background was in academia and he had a number of interesting theories about antitrust. So, as Howard Trienens, the general counsel of AT&T, said a few times, “It got to the point where the government was essentially represented by a lawyer who didn’t have a client because there was nobody above him that was giving him, or could give him, any direction or any tempering of the way this went on.” AT&T then came to an agreement with William Baxter. That was taken to the federal judge who had jurisdiction in his court over a consent decree that had been entered decades earlier in an antitrust dispute between the Bell System and the federal government. So this is referred to generally -- this settlement is often referred to as a consent decree. In fact, it wasn’t, and it’s technically referred to as a modified final judgement. The reason it’s referred to that way is that it was a modification of the consent decree that had been entered into sometime earlier. That was in the court of a federal judge whose name was Harold Greene. I think the view of everybody was that the Justice Department and AT&T had crafted this agreement and they would take that to Judge Greene and Judge Greene would have an hour or half-hour hearing and would sign the papers that were presented to him and that would be that. Judge Greene said, “Wait, wait, not so fast.” He decided to hold hearings and the whole process dragged out and all kinds of interested parties got involved. That made it even more complex to get it ultimately settled. I think we all know, from a leadership point of view, that most decisions that are crafted by a committee don’t turn out to be, in the end, the best, most workable decisions. That’s kind of what happened in this case. So, it was a difficult time, but over the years, I think it’s all evolved and it’s kind of a piece of history, and the world has moved on and things operating fine.

SCARPINO: I found an article, it was actually an interview that you gave to something called Global Networks published December 16, 1991, and you said, in that interview, and I’ll quote from what you said, “In 1988, we put into place a series of business units that have profit and loss responsibility for various segments of the market place on a world-wide basis. My responsibility is for all of the activities of those business units outside of the U.S.” My question is, why was AT&T looking to expand globally?

TOBIAS: Well, at the time AT&T had a million employees, I think fewer than a hundred of those million employees were permanently stationed outside the United States. And our international business, which was reasonably significant, but it really involved the inter-relationship between AT&T’s network business, which from 1985 on or during a significant period of my remaining tenure there I had the responsibility for, and the relationship between AT&T, for example, and British Telecom was that there was a revenue sharing agreement so that calls or data transmissions initiated in the United States and terminating with BT in the U.K., the revenue was either collected in the U.K. or it was collected in the United States. There were complex formulas by which, at the end of the day, AT&T and British Telecom split up that money. That was the principle nature in simple terms of AT&T’s business around the world with – I don’t know the numbers, but dozens and dozens of international telephone companies. Up until probably the ‘70s and ‘80s, the ‘80s and beyond, most of those telephone companies were government owned and often they were referred to as PTTs, which stood for Post Telephone and Telegraph companies. They were, the post office and the telecommunications businesses were owned by the government and often run by a government minister. So, our dealings, for example, when I’d go to China, I would meet with the Minister of Telecommunications in China who was our partner in that regard. But we were not selling equipment, we were not dealing with end customers. And as other businesses, IBM, Caterpillar, you name it, as other business were expanding around the world, they needed global networks and they needed the ability to manage their networks and their telecommunications globally. So, that was an important part of our business, and…

SCARPINO: So, you were establishing those global networks, AT&T was.

TOBIAS: Yes, yes. Well, in some cases we were doing that or trying to do that, and in some cases we were doing it in partnerships, forming joint ventures with overseas companies. And of course, that was complicated because of this monopoly mindset around the world, where everybody in a particular country, whether they had the technical capability to get something done or not, their view was they owned the turf and they owned the customers.

SCARPINO: Was that global expansion that you oversaw also an effort to save the company? In other words, if you’re losing market share in the United States, you just go find it overseas.

TOBIAS: I’m not sure the company was prescient enough to describe it as saving the company because I don’t think, until the end, the company really understood how much trouble it was in. But it was certainly an effort to either grow the revenue and profits around the world, and certainly replace what we knew we were losing inside the United States. So, yes.

SCARPINO: Yesterday, we talked about the fact that by the end of your tenure at AT&T, for a variety of reasons, you were ready to leave and you were looking at various options and you ended up at Eli Lilly. A couple of points for clarification because, maybe it’s just because I don’t know this, but I understand that when you came to Eli Lilly – oh, that you were on the Board of Eli Lilly…

TOBIAS: Yes.

SCARPINO: … and you were on the Board and you were invited to join the Board in 1986…

TOBIAS: Correct.

SCARPINO: … and you’re on the Board as an outside director…

TOBIAS: Correct.

SCARPINO: … so, because we’re going to talk about this, could you briefly explain what that means? What’s an inside and outside director?

TOBIAS: Yes, yes. Well, in those days, it was not uncommon for a major publicly owned corporation to have on its Board – let’s say its Board typically was maybe 12-14 directors – it would not have been uncommon for a Board to be made up of some number, let’s say three or four or five, some number of its Board members who were actually employees and officers of the company. As a matter of fact, when I joined the Lilly Board, I think there were, as I recall, there were about 14 directors and I think seven of them were officers of the company and six or seven were outside. That was not all that uncommon. As corporate governance practices began to change and shareholder activist groups and others who were interested in this subject began to put more and more pressure on corporations. That began to shift to the point that today a common model would be that the CEO of the company would be a director of the company, the CEO might or might not also be the chairman of the Board of the company, whereas back in the ‘80s, it was almost unheard of that the CEO would not be the chairman of the company. Today, there might, at most, be maybe one other officer who was also a member of the Board. So, going back to the time I joined the Board, being an independent director simply meant that you had absolutely no other conflicts or vested interest in the company other than being a member of the Board of directors.

SCARPINO: And you wanted it to be profitable, I assume.

TOBIAS: Yes, yes, and your interests were meant to be the interests of the shareholders, whereas, theoretically at least, if you were an officer of the company, your interests might be skewed in the direction of promoting the strategies and plans of the management of the company, which a more objective outside observer might think was not in the best interest of the shareholders.

SCARPINO: So, in 1986, you’re on the Board…

TOBIAS: Correct.

SCARPINO: … and, for the benefit of anybody using this, I’m going to put some background in here that I know that you know.

So, in 1972, Richard Wood becomes Chairman and CEO of Lilly. He served until 1991. In 1991, Vaughn Bryson, Richard Wood’s handpicked successor, was named CEO of Eli Lilly. During his 20-month tenure, the company reported its first quarterly loss as a publicly traded company. Now, I understand that Mr. Bryson was popular with the employees, but that members of the Lilly Board of Directors, some members of the Lilly Board of Directors, were becoming increasingly concerned that under his leadership, the company was foundering. Concerns about change not accompanied by a strategic vision. Bryson seemed unwilling to work with the Board, particularly the Board chair, to address growing concerns, and stock prices were a concern. So, is that a relatively accurate summary of what was going on?

TOBIAS: Yes, yes, I’d say that’s a relatively accurate summary.

SCARPINO: Then, we’ll put you back in the picture again. In March of 1993, you apparently are sitting in your home in New Jersey and you receive a call from Richard Wood who laid out the concerns, probably much better than I just did, about Vaughn Bryson and then raised the possibility of you coming to Indianapolis to lead Lilly.

TOBIAS: It’s essentially correct, but…

SCARPINO: … I want to ask a quick question, were you surprised by that?

TOBIAS: It was not quite that abrupt, and I want to go back and clarify one other point with respect to AT&T. I was not actively looking to leave AT&T or to specifically go someplace else. It was in the back of my mind, moving toward the front of my mind, and my wife, Marilyn, and I discussed that maybe it was time to retire because, as we discussed yesterday, I was increasingly uncomfortable with the strategy that Bob Allen and those around him were promoting for the company. I didn’t really see a role for myself that was meaningful in the company going forward. By that point in time, I was relatively young, but I’d accumulated enough wealth that I could have retired and been comfortable. And I think, as probably was the case with most AT&T lifers, it hadn’t occurred to me to work someplace else. So, I really, at that point in time, was not contemplating that.

SCARPINO: But your mind was open to a change.

TOBIAS: Yeah, the context was that my mind was open to retiring and so that’s kind of where that was. The Board of Lilly began to be concerned about some things that were or were not happening in the company. So the independent directors of the Board, along with Dick Wood who remained the chairman of the Board…

SCARPINO: Of which you were one.

TOBIAS: … of which I was one, began to meet – I don’t remember how many meetings we had, but two or three – either by teleconference, we met once I recall in a hotel at O’Hare Airport in Chicago, but this was historically unprecedented in the company, to discuss our concerns, but it was in the context of what do we need to do to help Vaughn be successful? There was a discussion – in fact, I may have been one of the directors, I don’t remember – who was delegated to go talk to Vaughn and tell him that the Board at its next meeting would like for him to come and present a strategy that we could understand of where are we going and what is the endgame with respect to the challenges that we’re facing? Those challenges for Lilly included not a lot of recent success in bringing new drugs to the market at a time that technology was changing and the pharmaceutical industry was beginning to consolidate. At any rate, Vaughn came to the next meeting, made a presentation which the Board viewed as very unsatisfactory. And he kind of portrayed an attitude of, “Look, I’m the CEO of the company and I’m running this place and I know what I’m doing,” not those words, but that was what was really kind of communicated. Now, in the vernacular of Lilly at that point in time, if you had asked a typical Lilly employee what is the Lilly Board, they would have told you it was the seven – I believe seven – senior-most officers of the company who were also directors. The culture really viewed the company was being run by a Board of directors consisting of these officers and, yeah, there were some outside people who were somehow vaguely involved, and that cultural fact becomes important as we go on here, but that was kind of the view. I think, frankly, that was kind of Vaughn’s view.

SCARPINO: Because he’d grown up in the company, right?

TOBIAS: Vaughn had grown up in the company. He was a very capable, very successful manager, but there had not really been under Dick’s leadership -- and Dick was a very successful CEO --t would be hard to find, in that period, a company anywhere in the United States that was more successful. In fact, I think that out of the Fortune 500, Lilly, at the point in time Dick retried, had the longest string of quarter over quarter over quarter earnings improvement unbroken than all but one other company in the Fortune 500, and it was something like 20 years or something. It was unheard of. So, it was a very, very successfully run company. About the time I joined the Board, there were probably three or four identifiable possible candidates to succeed Dick, but we weren’t talking about it much. Over time, for one reason or another, they kind of fell out of favor. And the succession planning process was pretty much one of, at some point in time – the Board usually met on Mondays, we would gather in Indianapolis on Sunday nights, have dinner with the outside directors, independent directors, and Dick. In one of those meetings, Dick said, “You know, I’m going to be 65 and need to retire next October,” I think it was and this was probably early in that year. He said, “I just want to let you know that my choice is, with your approval, that Vaughn Bryson will succeed me as the CEO, but it is my intent to stay on for a while as the chairman.” The reaction of the Board was okay, because that’s just kind of the way it was at that point in time. The company had been so successful, I don’t think it would have occurred to the Board to question Dick, as we probably should have. Under more normal circumstances, I think Vaughn would have been successful, but it was a period of such change and he had an attitude of he didn’t like Dick, as it became apparent, and thought Dick was, and there was some truth to this, that Dick and the people around him were very kind of stuck in the ways in which they’d been doing things, and Vaughn wanted to change a lot of things and began, once he became the CEO, began doing those things, violating what I – what a colleague of mine at AT&T used to refer to as the first rule of wing walking, thinking about the post-World War I barnstorming pilots who would do these air shows and the pilot would be flying a plane and there’d be some daredevil standing on the wing moving from one part of the wing to the other part of the wing. The first rule of wing walking is that you have a hold of a cable and you don’t let go of the cable you have until you have a firm grip on a new cable. Vaughn kind of let go of the first cables in some of the changes he was making without having a firm hold of the second cable. So, it was a difficult time for Lilly because the times were changing and Vaughn, I think, recognized a lot of what needed to be done, and indeed a lot of what I ultimately did was consistent with what Vaughn wanted to do, but the company was kind of falling apart in the meantime.

SCARPINO: So, when Mr. Wood called you, and you’d been a part of these discussions…

TOBIAS: Well, the discussions with the Board, I’d been a party to and we were moving, particularly after this meeting that the Board had asked Vaughn to come in and present, the Board, the outside directors were moving toward oh, my gosh, we’re going to moving from what do we need to do to make Vaughn successful to Vaughn’s not going to be successful and we may have to do the unthinkable, which is to replace him. Based on the company’s history, the first instinct of the Board was: who else is there inside the company to replace Vaughn? And that’s kind of where we were that there’s not really – there was one potential candidate in the Board’s mind, that was Sidney Taurel, but the Board unanimously pretty much didn’t really think he was ready, and they weren’t really sure if he was somebody that should ever be the CEO, but probably or potentially, and that’s kind of where it was. Actually, I was then, I think the Board met on a Monday and I left the Board meeting on Monday, and my mother, at the time, was quite ill and was in an extended care center in the Remington area, and I left Indianapolis, the Board meeting, and went up to visit her. I was there overnight. I think it was the next day, and a nurse came into my mother’s room where I was and said, “Your office would like you to call.” Of course, that was pre-cellphone days. So, I called my office and my assistant said that Dick Wood had called and wanted me to call him. So, I remember going down the hall to a coin phone and calling Dick in his office in Indianapolis. He said, “You know, I’ve been talking to some of the other outside directors and nobody’s made any decisions, so I’m not calling you with any kind of an official approach, but I believe that there is unanimous support among the outside directors that we’d like to ask you if you might be willing to leave AT&T and come to Lilly and see if you can right the ship. And if you were willing to do that, then I, Dick Wood, would step down as the chairman, you would come as both the Chairman and the CEO.” I was a bit dumbfounded because that, actually, that was not a thought. As I had thought about what are we going to do at Lilly, it had never occurred to me that I was someone who ought to do that. So, anyway, we talked about that for a few minutes and I said, “Well, you know, I need to think about this and talk to Marilyn about it, and I’ll get back to you.” And I said, “I’ll try to do that this weekend.” I think, I don’t remember, it seems like that was later in the week. But at any rate, so I went home and we talked about it and I thought about it. Part of the rationale of Dick and rest of the Board was that I’d been a director for several years, I had experience that we’ve already talked about in some very difficult change circumstances at AT&T, I was born, raised and educated in the state of Indiana, so I had a sense of Hoosier culture, I was pretty well acquainted with people like the governor and the United States senators and people in the state. I was not a, you know, who’s this guy? So, I was probably the most “inside outsider” that could be identified. I think that was kind of their thinking. So, after thinking about it, I called Dick back and I said, “I’m willing to do this; however, I want to, as of now, extract myself from any further discussion that the Board is having about what to do about Vaughn, and it’s important to me that the Board not make a decision of let’s replace Vaughn with Randy. I want the Board to make a decision, two separate decisions; first of all, do we really have to replace Vaughn because this is going to be an incredibly wrenching circumstance for the company? And that needs to be an independent decision. Then, if the Board concludes that it needs to replace Vaughn and now we’re looking for a candidate, then I’m willing to be a candidate.” Maybe that’s counting angels on the head of pin, but it seemed important to me. So, that’s where we were at that point.

SCARPINO: So, when the Board took that vote on June 23, 1983, you were not present.

TOBIAS: I was not present. I was at the meeting, and in fact, it was much more complicated.

SCARPINO: I mean, because when I looked this up, I thought you were at that meeting.

TOBIAS: Well, I was, I was at the meeting, but I stepped out of the room when it came time to actually do this. But, the meeting, as I recall, dragged on for about three days because Vaughn rallied some of the inside directors who obviously had a conflict of interest because they were being asked by the independent directors to participate in effect ousting their boss. So, that was to some degree a suicide mission if that didn’t work. And there was a bit of a standoff between the outside directors and the inside directors, and they were in about equal numbers. People were still trying to kind of keep the peace and so forth. I think the Board met at least twice, maybe three times over a couple of days before this was all concluded.

SCARPINO: So, and it was. I talked, as you know, to John Lechleiter, who went on to be the head of Lilly, but at that time, he described himself as an above middle level executive on the rise, and I assume that’s accurate if he said it. He was not in the upper echelon.

TOBIAS: No.

SCARPINO: But he said that he was there at Lilly at the time that Vaughn Bryson was let go, and of course many years later, he became the head of Lilly and he’s now retired, but when I talked to him, he said that the announcement of Vaughn Bryson’s dismissal and your appointment, when it was released to Lilly employees, he said, “We’re all shocked.” I wrote it down when he said it. He said it was easily the most tumultuous moment in the company’s history. Richard Wood had served nearly 20 years, and that kind of longevity and stability at the top had been the norm. So, obviously you were aware of the reaction among the employees to Vaughn Bryson’s dismissal and to your appointment. How did you address that?

TOBIAS: Let me put even a little more context on that. The company was plus or minus 125 years old at that point in time. It had only had – effectively, prior to Vaughn, it had only had six leaders starting with Colonel Lilly, who started the company. His son, JK, JK’s two sons, JK, Jr., and Eli, all four of them led the company from 1876 until the 1960s. And then Gene Beeson (SIC – should be Beesley), who had been in the company a long time, became the first non-family member and he was succeeded by Dick Wood. So, the culture of the company hardly was prepared to accept somebody who wasn’t a Lilly, let alone somebody who hadn’t worked in the company for their life. So, that was one factor. The other factor was that the employees generally, as I indicated earlier, thought that the Board was really run by the senior officers that were referred to in the company as the Board. So, it was a shock for all of those reasons, too, and it was not well received because Vaughn was very popular with the employees and was very popular for a number of the changes that he was making. It was an environment where the senior executives on the top floor of the company, if they were going to leave their offices and go somewhere else in the company, they would put on their dark blue suitcoat over their white shirt and tie before they left their office and got on the elevator and went someplace. It was a very, very formal traditional kind of culture, and Vaughn was very much perceived and correctly as opening it up to being much more inclusive of employees.

SCARPINO: How did you go about dealing with the unhappiness or the concern on the part of the employees?

TOBIAS: Well, part of what I did on that particular front was to become as known as possible and to communicate, communicate, communicate, communicate. So, I quickly did small things that were not that unusual from what I had been used to doing in AT&T. I’d go to the cafeteria – the senior officers had historically not been eating lunch in the cafeteria – but, I’d go to the employee cafeteria and go through the line with a tray and see a group of people siting at a table and walk over and say, “Can I join you for lunch?” Now, I was doing that purposefully – I don’t want to say I’d been in the habit of walking around the AT&T cafeteria and looking for strangers and so forth – but I wanted to be seen as open and approachable. I spent as much time as I could going around the company, visiting various locations in the company, being visible, being seen as approachable because not only were the circumstances of my arrival difficult, but it was kind of like what does this telephone guy know about running a pharmaceutical company?

SCARPINO: Well, that’s my next question, how did you deal with what does this phone guy know about running a pharmaceutical company?

TOBIAS: Well, what I knew by that period in time, and came to understand much better later, because over time, I served as an outside director – I’d been a director at AT&T and I’d been a director at Lilly, I’d been a director at one of the big banks in New York City, I’d been a director for a while of an insurance company in New Jersey and, over time, I was a director at ConocoPhillips, one of the biggest petroleum companies, Kimberly-Clark, the big paper and consumer products company, Knight Ridder Newspapers which, at the time, was the second largest newspaper chain in the United States. And one of the things that I had learned is that a CEO of any of those companies is doing about 80% of the same things, no matter what the business is, and it gets to being sure the company has a strategy, that that strategy is clearly articulated and clearly understood, that beginning with the senior team of the company, people either sign in or sign out that we understand that this is the strategy and we’re all together and this is where we’re going, and then communicate, communicate, communicate and get everybody on board and headed in the same direction. It doesn’t matter whether you’re publishing newspapers or selling Kleenex or operating gasoline stations or drilling wells or selling telephones or making pharmaceuticals. Those fundamental concepts of leadership are the key to what a CEO needs, and certainly in those days what a CEO needed to do. So, I have often said, and I think people sometimes aren’t sure I mean this, but I’ve often said that there’s only one job in Lilly, in my view, that I was qualified to do and that was to be the CEO because I had experience in doing what a CEO needed to do. I could not have run Lilly research laboratories, I would not have been the best person to run the Lilly salesforce, I would not have been the best person to run Lilly manufacturing, but I knew what to do as the CEO and it just wasn’t that different.

SCARPINO: When I talked to several of your colleagues, many of them mentioned focus as one of the key aspects of your leadership. So, you become chairman and CEO at Lilly and, from what I’ve been able to read and ascertain from talking to people, that you determined that the company, under Vaughn Bryson, lacked focus. What did you do to bring about a focus?

TOBIAS: Well, one of my former AT&T colleagues told me, after I’d been at Lilly about six months, that the approach I was implementing at Lilly was essentially what I had been advocating at AT&T. You know, I was kind of a one-trick pony, I guess, that you need to understand what business you were in, and Lilly owned, at the time, I think, 17 or 18 medical device businesses. Some, but not all, were good businesses, but in my judgement, Lilly was not the best owner of those businesses because the culture that exists in a pharmaceutical company is different from what you need to do in a medical device business. If you’re making implantable defibrillators, that’s more of a Silicon Valley business than it is a pharmaceutical business. But the bigger problem was that Lilly had had this internal debate going on, I learned, for a long time on that subject – do we keep them, do we spin them off, what do we do with them? And there was really, you know, I couldn’t see any plan in place as to when we were going to decide and how we were going to decide and so forth. The company was also kind of – I describe this as the, if you remember the movie Field of Dreams, about the baseball field that this farmer built in the middle of rural Iowa with the view that if you build it, they will come. That was kind of our, in some ways, our research strategy, that it was very much of an academic kind of an environment where the scientists were largely working on what the scientists largely wanted to work on and the attitude seemed to me to be, and again, people who were there at the time might well want to argue with me about this and they might well be right, but the way I saw it, we did not have a strategic focus on our research. Our view seemed to be that we’ll discover something and then the salesforce will figure out how to sell it. Well, it seemed to me that if you looked at the marketplace for anything, but in this case pharmaceuticals, the best place to go was to try to meet unmet medical needs. What are the things out there that nobody else is doing where there’s a real need? Whereas, at about the time I arrived, I think we introduced an antibiotic which was arguably not significantly better than the two leading antibiotics from other companies that were already on the market.

SCARPINO: What antibiotic was that?

TOBIAS: I don’t remember the name of it; it’s been a long time. And the other thing was that we were focusing on so many things that it seemed to me we needed to concentrate our efforts. So, part of the strategy I put in place in the first few months was one of focus, and I talked about focus a great deal.

SCARPINO: I’m going to follow up on what you just said about products. One of the things that you did when you were in charge was to bring new products to market and to speed that process up or facilitate it. So, 1996, Food and Drug Administration approved Gemzar for the treatment of pancreatic cancer?

TOBIAS: Right.

SCARPINO: Zyprexa for schizophrenia in 1996. I ran across an article in Business Week that said Eli Lilly’s Zyprexa, published in 1998, said Eli Lilly’s Zyprexa helps control hallucinations, depression and other symptoms, racking up global sales of $550 million. I don’t know if that’s the right figure, but it was profitable. Evista for osteoporosis, and there are probably others that I didn’t dig out of the paperwork, but did you play a role in making sure those got to market and that they got through the regulatory process?

TOBIAS: Well, there are two parts that are important to that answer. The first is that in the pharmaceutical business, the timeframe of a gleam in a scientist’s eye in a laboratory to a pharmacist at retail filling a prescription that’s been written by a doctor for that same product is a long time. It could be eight to 10 to 12 years. So, any CEO who’s taking credit for products that come to market during the time he’s the CEO of a pharmaceutical company is kidding himself. It’s a long-term team effort involving a lot of people. I did try to understand what we needed to do to speed up the process. I put a lot of effort, which we can talk about in more detail, in putting more resources in fewer areas to be sure that if that was helpful, we could speed things up. The other thing I did was to study and understand that a lot of the value that the security analysts in the stock market place on the price of a pharmaceutical stock is based on the market’s analysis of what are you going to do in the future? And Lilly, as a matter of culture going back to the family, had almost viewed it as being unseemly to go sell itself. In fact, there’d been kind of a slogan attributed to the family that if it has the red lily on it, the Lilly brand, it will speak for itself. So, we raised the stock price, to some degree, by simply starting talking to the investment community, and I started taking more than just financial types to go talk to securities analysts; I took the scientists, those who were articulate and could do this and highly knowledgeable about what we were doing, I’d take them to New York to talk to the security analysts and the market began to appreciate what Lilly was capable of doing and what was coming. And we were able to realize more value for these products that had been in the pipeline and were introduced during the period of time that I was there. So, it is a fact that we introduced a number of what became highly successful products during the time that I was the CEO. It is not a fact that those products were created were a result of anything that I did, but introducing them successfully and perhaps more efficiently and getting more credit for them in the marketplace was something that I was involved in.

SCARPINO: Again, when I talked to John Lechleiter, he told me that, in his opinion, you saved the company. He described you as being a member of the one percent, and then he looked at me and he said, “I don’t mean money, I mean in leadership ability.” So, I just thought I’d tell you that; he said I could. Then he went on to say that you took over the company, it was adrift, no sense of direction, there was serious talk of healthcare reform in the Administration of the newly elected President, William Clinton, Bill Clinton. The Clinton healthcare plan was a 1993 healthcare reform package proposed by his Administration. His wife, Hillary Clinton, headed that up. We know it didn’t work out in the end, but you didn’t know that when you were in the middle of it. So, the President campaigned heavily on healthcare in the presidential campaign of 1992. So, number one, I’m going to ask you, do you see yourself as having saved the company?

TOBIAS: Well, no.

SCARPINO: And then I’m going to what you planned, but…

TOBIAS: John has said that to me privately, and John has very generously said that publicly, including at a lovely dinner that the board of Directors had for John and graciously invited me to upon John’s retirement. And in John’s retirement remarks, he looked at me and said that, and I’m very appreciative of John saying that, but I had a role in it. Obviously, I was the CEO and I need to take responsibility for that, but one of the things I’m very proud of is that other companies that were in difficult circumstances in about that same timeframe who brought in CEOs from the outside, those CEOs mostly brought in a new team from the outside to help turn the company around. I’m proud of the fact that Lilly people, largely, turned the company around. Now, I brought in a small number of people to fill skillsets that the company didn’t have and had not historically valued. For example, Jim Cornelius, who’d been the Chief Financial Officer, was a very effective Chief Financial Officer and someone I relied upon heavily. In fact, Jim went on to eventually after he retired, was on the Board of Bristol-Myers Squibb and became, for a time, the CEO of that company; so, a very effective person. When I moved Jim to another important job, I recruited Charlie Golden, whose entire career had been at General Motors and mostly in finance and at the time was running their operations in the U.K., because I wanted to bring a different perspective and a different model of what does a chief financial officer do. So, I did a few things like that, but largely it was kind of bringing up and promoting a new generation of Lilly mangers, and not that the current senior people were ineffective; my God, they’d been running one of the most effective companies in the country, but that was also a detriment because they were pretty much incapable of step function change. They were so wedded to the way they’d been doing it. The next generation of leaders that I identified and promoted were able to all rally around a strategy that I was driving, with a lot of input from a lot of people in the company. So, there’s no doubt and, in fact, I suspect people in Indiana and elsewhere really don’t have a concept of how close the company was to not being there in one form or another. It was an ideal takeover candidate from someone elsewhere in the industry, but nobody single-handedly, and I know John doesn’t, even though he says it, doesn’t mean…

SCARPINO: I do understand. There was a bit of hyperbole there.

TOBIAS: Yes, but John’s very generous in saying that.

SCARPINO: Although, had it not turned out, the CEO probably would have been blamed.

TOBIAS: Well, there’s no question about that.

SCARPINO: So, you might as well enjoy some credit. So, I mentioned the Clinton healthcare, 1993 healthcare reform package, which we ultimately know was not successful, but in 1993, you didn’t know what was going to happen. Talk about the situation that companies, like Lilly, felt they were confronting as that Clinton healthcare plan was being proposed and discussed and so forth.

TOBIAS: Well, I think, in simple terms, we thought we were heading in a direction that, in one form or another, was going to be kind of a single payor plan where we were going to have one customer, and that was going to be the federal government, and that was going to mean price controls. It was going to likely evolve to some similarity of problems we see around the world, most notably currently with the problems in the British system where the organization is making decisions that are currently in our system made between doctors and patients about what the best treatment is and so forth. So, we really viewed the company and the industry under threat and something that was occupying a lot of time.

SCARPINO: As Chairman and CEO, were you actively engaged in lobbying against that proposal?

TOBIAS: Yes, I was.

SCARPINO: Could you talk a little bit about what you did?

TOBIAS: Well, it was mostly being done through the organization called PhRMA, which is in effect the trade organization of the pharmaceutical industry. The leaders of that organization were crafting, based on discussions among all the CEOs, a political strategy. Then under the direction of PhRMA, we were all off talking to senators and congressmen and others, and engaged in helping fund advertising programs and so forth, and all of that based on trying to figure out, okay, how are we going to make this work? And if this goes into place, what can we all do? And in the meantime, confronted with antitrust constraints about how much you really can talk about among competitors. I will also say that there were others in the company, most notably Sidney Taurel, who had been active in committees on PhRMA, and were much better equipped than I was on a lot of the technical issues. I relied pretty heavily on Sidney to do a lot of that work.

SCARPINO: The subject of streamlining, part of the streamlining when you took over there was the elimination of about 4,000 jobs, I gather mostly through things like early retirement and buyouts and so on. But about six months after you became CEO, you launched the company’s first early retirement and cost-cutting program to trim up to about 4,000 jobs. So, the question that I have is: What were the leadership challenges associated with doing something like that?

TOBIAS: Well, it began with recognizing that it needed to be done, and that was more…

SCARPINO: Was it that hard?

TOBIAS: Well, it was more apparent to me as an outsider than it was to the insiders. It began with beginning to understand the culture of how Lilly went about solving human resource problems, and it was one that I had been familiar with to some degree in the AT&T culture, particularly during the early part of my AT&T career. But in the Lilly culture, it was not unusual that if someone had a job and they weren’t successful in that job, we found them another job. So you ended up with a lot of people who hadn’t been successful who were someplace else in the company. Now, that almost says, on the face of it, that we’ve got more people than we need, if you’re filling jobs with people who’ve demonstrated that they’re not successful. That was at the same time that GE, for example, and I’m not advocating this, but that was at the time that General Electric famously was rank-ordering all of their employees annually and trying to eliminate the bottom 5-10% every year. I don’t think that’s a good idea either. So, I raised the question with the senior team about it seemed to me we had too many people. They kind of reluctantly, or various degrees of, “yes, we do” to “maybe we do,” came around to that. And I said, “Okay, I want you all to come back to me in a week and assess how many jobs should be eliminated in your part of the business.” Pedro Granadillo, who at the time was the head of human resources, I think I designated to lead that effort. As I recall, they came back to me with a recommendation that we ought to try to eliminate somewhere in the range of 1,500 to 2,000 jobs, at which point I said, “Okay, been there, done that; trust me, we’re going to double that number because we are not going to cut off this dog’s tail an inch at a time. And if we ever have to do this a second time, nobody is ever again going to retire in this company; they’re just going to continue working in anticipation that we’re going to announce the next incentive retirement program. So, this has to be a one-time effort.” I will confess that the regulatory, I guess legal requirements of those kinds of programs, require you to make the early retirement program benefits equally available to categories of employees. In other words, you can’t target the program to look at a group of a hundred people who are all doing the same thing and say to the 30% that you’d really like to get rid of on a name-by-name basis, “Okay, I’m offering you an early retirement program and the rest of you can’t go.” You have to make it available, and we did that. I’m a believer in following the rules and coloring inside the lines. But at the same time, I used that opportunity, to some degree, in one-on-one conversations myself, but to some degree using people I trusted in the company as emissaries to go talk to particularly very senior people in the company and say, “You know, this would be a really good time for you to declare victory on what has been a wonderful career and take advantage of this early retirement program and move on,” because it was a face-saving opportunity for people who had made extraordinary contributions over time to the company, but were not the right people to make the kinds of wrenching changes that I knew were going to be ahead of us as we moved forward. So, it was a vehicle where, at various levels and mostly toward the top of the business, we were able to bring some fresh air, let me say, into the senior ranks of the company. It was contrary to anything that had ever been done. I think Lilly employees, to some degree, felt like one of the most important days of their career, if not the most important day of their career, was the day they were hired because the cultural concept was that once you’re hired, you’re going to be there forever. And there was this concept, whatever it meant, that the company’s going to take care of you.

SCARPINO: In doing my background reading on this, at one point in talking about Lilly, you said the following in an interview, I think, you said, “We used to be a U.S. company that happened to have business outside the U.S. Now we’re a global company that happens to be headquartered in Indianapolis.” The first thing that occurred to me when I read that is this sounds like AT&T.

TOBIAS: Well, …

SCARPINO: In other words, you did that with AT&T.

TOBIAS: … Lilly was – yes, some similarities there – however, Lilly was and had been for a long period of time a much more global company than AT&T was. There was a great deal of international diversity among the senior leadership of the company. Almost everyone, if not everyone, probably everyone had had at least one assignment outside the United States. The senior-most people had typically been the president of the Lilly subsidiary in Canada or Japan or Germany or someplace, but some of this had to do with mindset, and I’ll give you a very good example. The same people – you could go to Tokyo or you could go to Brazil or you could go to Germany and identify a team of people that were totally and completely focused on running the Lilly business in that country. You could not do that as easily in the United States because many of the same people, who were involved in running things in the United States, had concurrently global responsibilities for a variety of activities. So, one of the things I did, which may sound simple, it may even sound unnecessary, but they’re the kinds of so-called soft things that I have come to believe over my career are often very overlooked and often very, very key – there’s a helicopter going over – that are often very key is I, in effect, created a subsidiary of the company called the United States business, Lilly USA, and I moved them out of the headquarters building into a different building so that they were able to set up a culture that was separate from the global corporate headquarters because everything pertaining to the US and global were all kind of together in the headquarters building.

SCARPINO: I’m going to move on to a different phase of your career so that we can get through this, but is there anything I should have asked you about Lilly that I didn’t, or anything that you want to say?

TOBIAS: Well, it was, again, it was a unique period of time in the company’s history. I think the decision to bring someone in from the outside, even though it wasn’t driven by a conscious objective of “we should bring somebody in from the outside,” I think that turned out to be an important point in the company’s history. I think John Lechleiter and others would say so because one of the things I brought was just a different perspective about a lot of things. I think my probably biggest legacy, and I think John and others would say so today, was really effecting a great deal of cultural change in the company in the way they think about things and the way they approach things. I’m proud that all these years later, there are a number of things that we put in place then that the company is generally still going in that direction.

SCARPINO: But that does highlight the importance of a company’s culture…

TOBIAS: Yes.

SCARPINO: … over time and its ability to succeed or fail.

TOBIAS: And from a leadership point of view, I believe that the work that is done by the leadership of a company on developing a company’s culture, is among the most important things that a company can do, and it’s often overlooked historically when people are so focused on the nuts and bolts of manufacturing products and selling products and looking at the income statement and balance sheet.

SCARPINO: January 1, 1999, you retired from Lilly pretty much at the top of your game. You appeared to have surprised pretty much everyone when you announced you were leaving. Why did you decide to leave? You’d been there for five years.

TOBIAS: Well, a variety of reasons, but principle among them, I had come to believe then and still do that it’s important for people to leave when it’s in the best interest of the company rather than when it appeals to them personally. I can cite all kinds of examples of people who have stayed too long. Can’t think of too many examples where people left too early, but I can think of a lot of examples of people who just didn’t want to retire and they only took into account what suited them. We were coming up on a period where some patents were going to expire and it was going to be another set of challenges. My wife, Marilyn, had committed suicide after a valiant struggle with depression and bipolar disease and self-medicating alcohol to try to deal with it, all of which none of us were aware of until kind of toward the end. I think no one will ever know, but I think she concluded that she didn’t want to live her life in the circumstances that she found herself and couldn’t see any hope coming. So, that had been, obviously…

SCARPINO: That was on May 16, 1994.

TOBIAS: 1994.

SCARPINO: You had been married for 28 years.

TOBIAS: And we’d been married for 28 years.

SCARPINO: I was going to ask you this in a minute, but how does one deal with that? I mean, how do you deal with the grief?

TOBIAS: You don’t, you don’t, and there’s hardly a day that I don’t think about her in one way or another. I think someone who takes their own life, as opposed to dying tragically in some other way because of cancer or heart attack or something, or who dies under more normal natural cause circumstances, I think dealing with a suicide leaves behind a lot of questions in the minds of the loved ones of the person who died as to what could I have done, what should I have done, what maybe did I do to cause this? On a rational basis, you know that a person who commits suicide is taking total and complete control of their own life and there’s really not much, if anything, that anybody else can do, but nonetheless, you keep looking for answers to that question. So, here we are 24 years later and I’m still thinking about it. It was a very difficult time, and it came at a time when I had been at Lilly less than a year. I was trying to do what I thought was my best to try to help her through this time of illness that was very difficult for her, and at the same time, in a new job trying to turn a company around, feeling responsibilities in a variety of directions. So, that was certainly a contributing factor several years later to I just felt like I needed a break, or I just felt like I was at a stage in life where I didn’t want to have the continuing responsibilities that I had. But, to go back to the question about why did I leave at that particular point in time, the company was in great shape, I felt good about what I had done, I felt good about what I had in place, and I didn’t, in part for the reasons of Marilyn’s death and all the other – simply the pressures that had existed in trying to get Lilly turned around and on the right track during that period in time, I think I was mentally and emotionally tired. But I also, and importantly, thought that if I don’t leave about now, I need to be willing to commit to myself that I’m going to stay another four or five years because this is not a time for a CEO to leave in the middle of managing the expiration of Prozac patent and that kind of thing. So, it was a combination of it was a good time for the company, it’s a good time for me, I don’t want to stay as long as I think I would need, and oh, by the way, I didn’t come here, at least in my mind, to be the long-term leader of this company. I came here because the Board asked me to come to try to get the company turned around. In my mind, and I think everybody else’s, the company was turned around and had an effective leadership team in place. So, the sun and the moon and stars were all, in my view, kind of in alignment. So, I told the Board a year ahead of my retirement privately what my plan was. So they were surprised when I told them. The world was surprised when it was announced.

SCARPINO: They did a pretty good job of keeping the secret. It didn’t leak out, did it?

TOBIAS: They did a very good job of keeping it a secret and there were very, very few people who knew what my plan was. In fact, it was limited; initially it was only the Board and me. And one of the things I told them in the meeting when I told them my intentions was that one of the first things I was going to do was to come around the country and visit one-on-one with each of them in their own offices to get their thoughts about where they thought the company was, what they thought about potential candidates, although at that point in time, we were pretty much settled on Sidney Taurel, who was the President and Chief Operating Officer. So, anyway, that’s what we did at that point.

SCARPINO: I mean, one thing I want to mention just to put it in the record and people can read this in your book as well, but you did a lot for the employees while you were there – work/family programs, personal leaves, flexible work schedules, flextime, child care development center, and all sorts of things like that that you instituted, I assume, based on the assumption that employees who are happy and not worried about those things will be better, more loyal, more productive employees, but…

TOBIAS: That’s exactly right, and again, it falls into this broad category of you have to put a lot of attention, and we certainly did, on the things that are generally viewed as the mainstream core of the business – the development of products, understanding the market, understanding customers, all of that – but Lilly had long had a reputation, both inside and outside the company, of taking great care of its employees. When I came and got to looking around a little bit, I wasn’t so sure, and I had the human resources people do an analysis of virtually every program the company had – our benefit programs, whatever else we were doing that were beneficial programs for employees. And we concluded that, for the most part, they targeted about 18% of the current employees. The reason was that Lilly’s culture really pretty much contemplated a workforce made up of white married families where mostly in management jobs the father was working, the mother was a stay-at-home mother who was home with the station wagon and two kids and a dog, and that the women were working were historically in the assembly lines and that kind of thing and had moved up. Certainly, we had a huge number of women in very important positions over time, but there weren’t any women in the executive suite. So, I thought we ought to take a look. If these programs are the answer, what is the question? And we’d missed the question. We needed to understand who are the people in our workforce? Well, they were dual income households, they were single fathers supporting kids, they were grandmothers who had inherited grandchildren that they were responsible for, they were gay singles and gay couples, and that was something that we certainly didn’t recognize, and the list goes on. So, it wasn’t rocket science figuring out what are the problems in these peoples’ lives? And for working mothers and working couples, it’s: I don’t just want to park my kids someplace in a child storage facility, I need to be able to depend on high-quality daycare. So, we eventually built one and then a second – they weren’t daycare centers; they were child development centers that still exist. We took some unused space, and there’s a tunnel system, underground system that connects the Lilly buildings and there are, particularly at the junctures, there’s some pretty wide spaces that were essentially unused. We built a shoe repair, we outsourced this, the credit union was there, which I ultimately got rid of and got a branch bank. I wasn’t sure the company ought to be in the banking business. We had kind of a card/gift kind of a shop where people could go get things. We had a dry cleaners drop off and pick up. We had an arrangement with the outside vendor who was running the cafeteria to provide pick-up meals that people could take home at night. Now, I have to say, a lot of these programs did not end up being as popular as I thought they would be, the take-out meal being a good example, but people loved the fact that they were there probably to a greater extent than they actually took advantage of them, but the fact that they were there was important and they were …

SCARPINO: The fact that you initiated that study and created and implemented those programs also says something about your leadership style.

TOBIAS: Well, it was, we had to put the employees – there was a lot of talk about how important the employees were and, in a lot of ways, the company, mostly in the form of guaranteed long-term employment and very competitive wages and benefits, Lilly had been and was and continues to be a superb employer. But on the subject of how do we make life as easy as we can for our employees to keep their focus on their work, and particularly what can we do to make it easier for women in the workforce, I thought we were lacking and we needed to do a lot of things, and we did.

SCARPINO: So, I’m just going to put in the record, because this is otherwise in your good, but you remarried Marianne McKinney in July of 1995.

TOBIAS: I did.

SCARPINO: So, we’ll fast forward a little bit, 2003 was kind of a big year. You published Put the Moose on the Table: Lessons in Leadership from a CEO’s Journey through Business and Life, coauthored with your son, Todd, which I encourage people to read, but in 2003, President George W. Bush nominated you to be the United States Global AIDS Coordinator with the rank of Ambassador reporting to the Secretary of State, Colin Powell. Now, Bush announced his interest and focus on HIV AIDS in his January 2003 State of the Union. I assume, from my reading, that President Bush became interested in this topic because he was getting seriously criticized for not being interested, but nonetheless, he did. So, the question that I have is: Do you know why he was so interested in this because he…

TOBIAS: I don’t think the…

SCARPINO: … I assume you knew him.

TOBIAS: No, I didn’t, didn’t know him. I had met him at two or three fund-raising kinds of events, but no, I did not know him. I think it would be unfair to him and probably inaccurate to say that his motivation had anything to do with him being criticized because I’m not even sure he was at that point in time. Bill Clinton had been ironically highly criticized by his own Health and Human Services Secretary that he wouldn’t do anything about AIDS. Now, after he left office, President Clinton became a great advocate for AIDS around the world and has done a lot, but he didn’t while he was in office. I don’t totally know, but I think President Bush, pretty much on his own and I’ve always suspected that his mother had a little something to do with this maybe, but I think in some conversations he had with people who’d been to Africa and were describing to him the just dreadful circumstances in Africa on a human level, he just decided he was going to do something about it. There were a number of people in Congress who were willing to support that. He just took a big personal interest in getting people who were then on his staff, a very small number of people, to develop the outlines of a program and getting the Congress to pass that program and ultimately appropriate $15 billion to be expended over five years to help try to address it.

SCARPINO: Do you know how you name came to the attention of the President?

TOBIAS: Yes, I do. Yeah, I do, and it was, like a lot of crazy things. I was concluding a 12-year time limit as a director of the Colonial Williamsburg Foundation. I had enjoyed that experience very much in being on the Board of a national cultural organization. It had a superb Board that consisted of people like the late David Brinkley, Jim Lehrer of PBS…

SCARPINO: Is he as interesting in person as he seems to be on TV?

TOBIAS: Jim’s incredible. Yeah, we became friends…

SCARPINO: That’s a digression but I had to…

TOBIAS: In fact, Jim was kind enough to write a blurb that’s on the dustcover of my book. Sandra Day O’Connor, the Supreme Court justice, some noted historians and others. I very much enjoyed that. In a conversation I had at some point in probably maybe 2002, the conversation I had, kind of by chance, with Mitch Daniels, who had worked for me at Lilly and had subsequently become the head of the office management budget, and I said to Mitch, I’m not sure…

SCARPINO: Under President Bush.

TOBIAS: Under President Bush. And I said to Mitch, “I’m not sure how the Board is selected for the Kennedy Center, but I know that they’re appointed by the President. And I would be interested in being considered for the Kennedy Center Board because I’m not going to be on the Williamsburg Board anymore and I’ve really enjoyed that kind of an experience, and I’m retired” and so forth. So, Mitch, I believe, had a conversation with a young woman, who has subsequently become more famous in recent times, but at that point was a very young and up-and-coming staffer in the White House named Dina Powell, and Dina Powell had just become the head of Presidential Personnel. So, she had been charged by President Bush to find people for two very important new jobs, one of which was the AIDS job. So, Mitch, as I understand it, had given Dina my bio and said, “You know, when you’re looking for people for the Kennedy Center, he’d be interested in being considered.” I think it was about like that. Dina subsequently called Mitch and said, to quote Mitch, “Why do we want to waste him on the Kennedy Center because I’ve got a couple of things here that would be, if he’s really interested, would be something that he could really contribute to.” One was running the AIDS program and one was running a brand-new government organization called the Millennium Challenge, which was a new kind of quasi corporation that was an experimental way to deliver foreign assistance. So, I got a call from Mitch, who was calling on behalf of Dina, who in the meantime had talked to the President, and Mitch said, “The President is interested to know whether you would be interested in talking about a position in the government; however, unlike what you had in mind, this would involve going to work full-time. Would you have any interest in coming to talk about it?” Well, in fact, I was here in Captiva when I got that call and it was almost exactly 15 years ago right now, and that was certainly the last thing I had in mind. So, but, you know, you don’t say no, as they say, when the President of the United States – at least you didn’t in those days – asks you to consider doing something. So, I went to Washington, I met with Colin Powell, I met with Condi Rice, who was the National Security Advisor at the time, and I met with two or three people who had been significantly involved in helping the President develop this program. I also met with people about the Millennium Challenge account. Mitch, interestingly, was pushing me more toward considering the Millennium Challenge account leadership, and I think Mitch wondered why I’d have any interest in the AIDS program. But, I found the AIDS program appealing; however, when I came home, I called Mitch after a few days and I said, “Would you get back in touch with the White House and tell them I’m really honored and thrilled to be considered for this, but I don’t think the way they’ve got it designed is going to work. I think it’s a very noble cause, but they don’t have it structured in a way that could make it work. I don’t want to get in a position where we have further discussion about this; it isn’t going to go anywhere. So, can you just get my name off the table gracefully?” He agreed to do that, and I kind of went on and forgot about it. I think a month or so later maybe, I got a call from Dina Powell and she said, “Would you be willing to come back to Washington to have a further discussion about this, including a discussion with the President?” I’m not sure I met with the President the first time I came. I may not have, himself. So, I went back to Washington and it was a little bit more of a full court press on the part of Colin Powell and Condi and others. Then I spent probably 45 minutes one-on-one with the President in the Oval Office discussing why I didn’t think this was going to work. It was principally the fact there was too much coordinator in it and not enough somebody’s in charge and empowered here. The President was inclined to agree with that.

SCARPINO: Well, he had a bit of a business background himself.

TOBIAS: Yes, he did. He did, and he saw this as kind of something one-off and, in the meantime, people were seeing $15 billion. A lot of the aid organizations start out with the best of intentions and indeed, they do very noble work, but they become businesses. So, they have a payroll to meet and they have revenue objectives, and so they see $15 billion and they all are lobbying for how they can get a piece of that for their own program efforts. So, a lot of that was going on. People in the Department of Health and Human Services were lobbying to have this program there. People in the State Department were lobbying to have the program there. People in USAID wanted to have the program as part of what they were doing. I was kind of saying to the President, the person that’s running this, in fact, one of the things I recall saying to him, this was in the leadup to the initial invasion of Iraq, and there was a four-star general, whose name was Franks, General Franks, who was in charge of U.S. troops, and I remember saying to the President, “If it’s such a great idea to have a coordinator for this AIDS effort, why don’t, instead of a commanding general, why don’t you have a coordinator of the military effort in Iraq, because it’s the same kind of thing and it just isn’t going to work.” So, anyway, one thing led to another and I was given some assurances about how this program was going to work, or was intended to work, and so I ultimately agreed to do it. I thought I’d do it probably for a couple of years.

SCARPINO: So, initial word of your appointment, as I understand it, was met with some skepticism in the community of people who worked in international AIDS relief. Among the people in those circles, you appeared to sort of represent big pharma and that, by the way, included Nazanin Ash, who later worked for you, who was in Kenya at the time. She said that she shared that concern, but she also wanted to work in the program, and we can talk about how she got involved in that in a minute, but were you aware of that skepticism that President Bush had appointed the big pharma guy to do this?

TOBIAS: You know, I really wasn’t. I was a little naïve, I guess, about all of that because I took more of a view that that was a positive. I came to understand that the general political view in the government is you shouldn’t have any job you’re qualified to have, that if you have a background in one aspect or another of industry, you’re automatically politically viewed to have a conflict of interest. I naïvely took the view – I had gotten Lilly out of the development of AIDS drugs because it was not something that I saw – first of all, we didn’t have great skills in that area, but it was a very, very difficult area fraught with a lot of politics and trying to, if not make money, at least cover your costs in parts of the world that that was going to be very difficult to do. So, in my mind, the thought that this was a big target of opportunity for the pharmaceutical industry, at that point, hadn’t really occurred to me. There were other pharmaceutical companies who I think had a different view. But my view was that I brought some healthcare experience, as well as corporate experience, so that ought to be seen as a positive. It was never overtly a big deal to me that I had to confront, but I learned later, particularly people in the trenches were very skeptical and I now understand why. I should have understood then.

SCARPINO: What was it like to work for Colin Powell?

TOBIAS: He’s a terrific leader. He’s one of the most honest, forthright, you know, he’s one of those I’d follow him anywhere kind of people.

SCARPINO: Well, you pretty much did, didn’t you?

TOBIAS: Yeah, in my experience. I had known him very slightly. I had invited him, while I was the CEO of Lilly, after he had retired from the military, I had invited him to Indianapolis to talk to a Lilly meeting of the global 200-300 leadership. That was when he was first beginning to try to generate some income on the speaking circuit. It coincidentally turned out that he was scheduled to speak on a Tuesday that happened to be the Tuesday after the Monday night national championship NCAA basketball game that was being staged in Indianapolis. So, I got word to him that if he’d like to come on Monday, I’d be delighted to take him to the game and, of course, there weren’t hotel rooms available, but be happy to have him as a houseguest. He agreed, and he came and I took him to the game and he was, of course, he was just off of a very publicized career in the military and was quite a rock star in the stadium and then spent the night in our home. The next morning we went downtown and he spoke to Lilly people. So, I had that little bit of acquaintance with him, but he was a great leader. He wasn’t a great fit in the Administration in the early years. The influence of Vice President Cheney and Defense Secretary Rumsfeld, their influence in the scheme of things was often at odds with the approach that Secretary Powell had in mind and I think that resulted in his resignation being accepted at the end of the first term. But I loved working for him and we became something of friends. He invited me to dinner in his home once and, anyway, I have great, great admiration for him.

SCARPINO: When I talked to Nazanin Ash, she told me about an organizational meeting after the AIDS program had been approved by Congress, and she said the meeting took place right before you were confirmed in the Senate, so probably in October of 2003. She said the meeting was in the State Department and there were key players, mostly the people and organizations that had gotten that legislation through Congress, sitting at a table in the center, and she was there and you were there and she used the term backbencher. You hadn’t been confirmed yet, so you were supposed to sit in the back and she was there just like a fly on the wall, and so the people were talking and so on and so forth and she said at one point, you put up your hand and began to talk about the roadmap that you had in mind, I assume based on the conversations you had with President Bush. And she mentioned that, as she watched people around that table, the lightbulb suddenly went on and it became clear that you were going to lead this thing and not be the coordinator or the figurehead. So, I asked you the other day if you remembered that meeting and you said you did, so can you talk a little bit about what you intended?

TOBIAS: I can, and let me put that in context by also telling you about another meeting that preceded that that was important. I expected that the White House would send out a press release announcing that the President intended to nominate me for this role. Unexpectedly to me at least, in early July or late June of 2003, I got a call from the White House saying that the President wanted to have an event in the Roosevelt Room announcing my appointment and could I come and bring my family on whatever the date was…

SCARPINO: You probably weren’t going to say no to that.

TOBIAS: No, no. It was right around the 4th of July, that 2nd or 3rd of July. So, we all went to Washington the night before and spent the night and we were to go to the White House the day before this meeting. This is the way I think the public is generally aware of, that the small group of the press and other people are brought into the Roosevelt Room and sit in rows of chairs and the door opens and the President and somebody he’s going to nominate comes in the room and the President announces he’s going to nominate that person, ask them to say a few words, and they do. Well, that’s what happened, but importantly, after my family and I had the time with the President in the Oval Office and all the pictures and that kind of thing before the event, my family all were taken out and ultimately seated in the Roosevelt Room, and the President – I didn’t know this was going to happen – but the President had organized a meeting in the Oval Office to take place before this announcement. I think people can visualize the Oval Office as they see it on television, and the two chairs that are in front of the fireplace and then two sofas and then the President’s desk at the other end facing these two chairs and the fireplace. And when we see pictures in the Oval Office, we see the President in one of these chairs and the visiting king or prime minister or somebody in the other chair, and staff of both principals on the sofas. So, I’d been in the Oval Office two or three times over the years for one reason or another, but I wasn’t used to being in the Oval Office certainly. So the President gets ready to sit in his chair and he points at me and he says, “I want you to sit here.” So, the President’s sitting in one chair, I’m sitting in the other chair, and on the sofas are Colin Powell, Secretary of State, Tommy Thompson, Secretary of Health and Human Services, Andrew Natsios, who was the Administrator of USAID, which has the rank of Deputy Secretary, Condi Rice, who was the National Security Advisor, and those were the principals, but there were two or three other people. And the President, in pretty direct language, said to them, he said, “Now, your people, without exception, all believe that I made the wrong decision and should have put the President’s Emergency Plan for AIDS Relief in the State Department or in Health and Human Services or in USAID or wherever. This is the decision I’ve made. Randy agreed to come into the government to take this on because I’ve assured him that he’s going to have my full and complete support. I want you to be sure that all of your people understand that he’s in charge, he has my full and complete support, and will speak for me on what we’re about to do here. Are there any questions?” I was dumbfounded about the fact that the…

SCARPINO: You didn’t see that coming?

TOBIAS: I didn’t see that coming, but it was what we had essentially talked about, but it was pretty clear language. Okay, fast forward to the meeting you’re talking about because obviously the trickle-down hadn’t yet occurred. I think that the people who really had been worrying about AIDS all of their careers and were down in the organization of these various departments who were going to have to work and collaborate to make this all happen, I think that it’s pretty clear that their view was that the person that had been brought in was someone who had been associated with supporting Republican candidates over the years, a CEO of a pharmaceutical company, probably was going to be confirmed as a United States Ambassador and have that title for the rest of his life, and that this was probably a political appointment where this person was, yeah, going to be involved and so forth, but is often the case in those kinds of positions in Washington, I’ve learned, that person’s not really all that engaged. And I think this was the meeting where they understood that that’s not what I had in mind and it’s not what the President had in mind that the President had in mind that I was actually going to run this program. Now, the culture, the protocol is that you’re not supposed to get actively involved in running the job you’re going to take on, that’s a Senate-confirmed job, until you’ve been confirmed by the Senate. It’s viewed to be presumptuous and disrespectful to the Senate. So, you’re permitted – you can’t occupy, for example, the office you’re going to occupy. You have to be in some temporary office someplace and you can sit in the back of the room, but you can’t really participate, and I was trying to follow those rules. So, I was sitting in this room that Nazanin is describing and it became pretty clear to me that people were heading in a different direction than I had in mind. So I do remember deciding, okay, let’s don’t this thing head off someplace that’s different from what I have in mind here, and I scooted up to the head of the table. I remember, you know, I was sitting in a chair that had wheels on it, and I remember scooting up to the head of the table and started describing that I had a different vision of where we were going to go. It’s interesting that Nazanin remembers that meeting, and I do too, because I think it was a bit of an early-on, you know, putting a stake in the ground kind of meeting.

SCARPINO: Can you briefly explain what it’s like to be confirmed by the Senate? I assume you had to go and testify?

TOBIAS: Well, it was ridiculous then, it’s 10 times as ridiculous now. It’s a process that has one objective, and that is gotcha. I was so naïve that I didn’t think I needed an attorney. I subsequently paid more in legal fees to get through the confirmation process than the government paid me in the first year that I was on the government payroll. You can’t believe the forms that you have to fill out and the questions you have to ask. You have to submit, for example, in those days, and I know it’s worse now, any speech, the text of any speech that I made in the last 10 or 15 years, any trip that I’d made overseas and whoever I’d met with in the last 10 or 15 years, everything. The financial disclosures were, the financial disclosures prevent a lot of people with experience from going into the government because of the things you have to divest. I mean, it’s just a ridiculous process that really gets in the way of getting qualified people to go into government. If I were asked to go into government today, I wouldn’t even consider it. And if I’d known today what – I’m glad I didn’t know because it’s one of the most important things I ever did in my life, but had I known, I’m not sure that I would have done it. But anyway, you spend all this time getting prepared. I had the good fortune that Dick Lugar was the Chairman of the Senate Foreign Relations Committee, which had the responsibility for my confirmation. So, at least as far as the Chairman of the Committee was concerned, which was important, he wasn’t meeting me for the first time. I’d know him for decades, and he was very helpful in, and his staff was very helpful in the process. But it was a matter of getting prepared to demonstrate that I knew what I was talking about, which involved a lot of education, briefing, and so forth. And that part, the discussion about the issues made some sense, but all the background stuff is just pure nonsense.

SCARPINO: But you got through the hearing.

TOBIAS: Yes. Well, another interesting story. I got through the hearing. I believe I was unanimously read out of the Committee to the – recommended to the full Senate, and then nothing happened and nothing happened and nothing happened – I don’t mean for months, but for a few days. There’s a process in the Senate where the senators can quietly put a hold, and I found out that actually Senator Jeff Sessions had put a hold on my nomination. So, as is the protocol, I went to see him to discuss what I needed to do to satisfy him. It turned out that it had absolutely nothing to do with me; it had to do with my being held hostage by him because of something else he wanted the White House to agree to do, which is part of the way the process works. So, that all got resolved. When people say they were unanimously approved by the Senate, what it really means is there are three or four senators on the floor, for purposes of getting a bunch of boilerplate stuff done and somebody introduces a resolution that has several people listed on it, and it gets approved without objection. And suddenly you’re watching all this on C-SPAN and, you know, the words are “without objection, so ordered,” and you suddenly realize you were just confirmed after all this. So, it’s a little anticlimactic, but that’s the way the process worked.

SCARPINO: So, you’re confirmed by the Senate, the program carried the acronym PEPFAR.

TOBIAS: Yes.

SCARPINO: When I talked to Nazanin Ash, she talked about you developing the program, and one of the things that she talked about was focus and developing a rigorous framework; so, gathering data to make it possible to track and compare, which wasn’t usual in government, assessment of outcomes. Could you talk a little bit about how you went about organizing that program?

TOBIAS: Well, the first thing I did was to put together a written strategy. There was a requirement in the legislation that we have a strategy, but the same kinds of people who’d been sitting around that table did not, based on their government experience, did not see a connection between the strategy that we were going to develop and submit to the relevant committees in Congress and what we were actually going to do. They certainly didn’t believe that I was going to spend 8-10 hours a day personally writing that strategy, along with a number of other people, including notably Nazanin and Dr. Mark Diebold, who subsequently followed me as the AIDS Coordinator and was very critical to all of this. But my intent was to put together a strategy that very much looked like a strategy we would have had at Lilly or someplace like that, and that had measurable goals and objectives and had people in place whose job it was to measure outputs and outcomes. So that’s where we started. We started simply, okay, what are we going to do here and how are we going to do it and how are we going to measure the success of what we do?

SCARPINO: But that was not necessarily a customary approach in government.

TOBIAS: I don’t think, no, well, certainly the measurement and accountability wasn’t. The other thing that was probably the biggest change that I personally made in the very early days from what the people who had seen that they were going to be deeply involved in implementing this, from what they had been thinking, was what the role was going to be in Washington and what the role was going to be in the field. Again, building on my experiences at not only AT&T and Lilly, but at Phillips Petroleum and Knight Ridder and elsewhere, I was more focused on a decentralized implementation plan. To put it in very simple terms, my view was that in Washington, we’re going to decide what we’re going to do and, on the ground in the various countries, we’re going to decide how we’re going to do it. Now, we’re not going to decide in Nigeria what we’re going to do, which took a lot of discipline and work and leadership to keep that from happening, but at the same time, we’re not going to micromanage from Washington. As an example, the very distinguished head of Catholic Relief Services, one of the biggest and most successful development organizations, came to see me very early on, selling why I ought to engage Catholic Relief Services to implement the programs for a big piece of this $15 billion. One of the things he said to me was, “Let me just tell you about a health program that we have in,” I think it was in Kenya, “and we’ve been there 26 years and we have a very successful program.” I remember saying, “Ken, stop right there. If you’ve been there 26 years, that’s not what I’m looking for. I’m not looking for people who’ve been there for 26 years, I’m looking for people who want to do what needs to be done and get out of there and train local people and support local people. Sure, we may need to be there a long time to help with technology and money and so forth, but this isn’t what I had in mind.” So, after we got the strategy in place, but within being on the job, after I was confirmed, maybe a couple weeks, two or three weeks, I got the United States Ambassadors to the African countries, communicate with all of them, and, in effect said, “I have a new job and so do you,” and got them together in a room for a couple of days somewhere in Africa and talked about this program and talked about the fact that here’s what we were going to do, but I needed their help to implement the program in their country. Well, they were delighted because this was the biggest thing that they would have had…

SCARPINO: The key part of your organizational strategy was working through those ambassadors.

TOBIAS: Working through those ambassadors was a key part of the strategy, and prior to my arrival, I don’t think that would have been the way it would have been done.

SCARPINO: Well, it also required that each target nation in Africa develop an operational plan…

TOBIAS: Exactly.

SCARPINO: … and with some rigor.

TOBIAS: Right. They had to have an operational plan with some rigor that included ways in which we were going to measure it and then they selected, and we had some checks and balances and concurrences and so forth and there were some fits and starts and mistakes, but the idea was to engage certainly U.S. non-governmental organizations, but to engage as many organizations on the ground. And I wanted to do this – I was very aware of all the corruption that’s rampant in many countries in Africa – and I wanted to do this in cooperation with the governments and in a friendly way with the governments, but I didn’t want the money to go through the governments. Now, we provided some money to strengthen capabilities in health ministries and so forth, but we didn’t hand the money – I remember a very difficult conversation with the woman who at the time was the Minister of Health in South Africa, who was threatening that we weren’t going to be permitted to have programs in South Africa unless we gave the money to her and she would decide how it was to be spent. Well, we weren’t going to do that and didn’t.

SCARPINO: And so, do you feel that you successfully, using that strategy, were able to target most of the money for its intended purpose and it didn’t get siphoned off?

TOBIAS: I think, yes, I think for the most part we did. I’m sure there was probably some corruption that I’m totally unaware of, but I think it was very minor. The government has, through its Inspector Generals, has a lot of monitoring processes that are pretty rigorous, and we never had any problems in that regard and we were very careful about it. I’m sure, and I know that some of the money we spent did not accomplish what we had in mind, but if President Bush were sitting in the room here with us today, I am confident, because he’s said this to me and he’s said it publicly, I’m confident that he would say that PEPFAR is, in his mind, one of the most important legacies of his administration. After he left office, he and Mrs. Bush have continued to be very involved in Africa, which is why I say I don’t think his involvement with this was in any way cosmetic or because he was being criticized in some way. I think he really believes this and is interested in it and he and the First Lady have followed up, not only with AIDS, but with malaria, an interest in malaria.

SCARPINO: So, obviously the key to making this all work was getting medicine, affordable medicine, to people who need it, along with education and so on and so forth. And of course, drug companies with patents for AIDS medicines were concerned about violations to their intellectual property rights and compensation. So, how did you work out a program for getting affordable medicine into those countries without violating the intellectual property rights of the companies that developed the drugs and so on and so forth?

TOBIAS: Well, my focus was on getting effective medicine in the hands of the people who needed it without violating intellectual property rights, but the drug companies were very cooperative in that regard. There was a lot of pressure from activist groups who were well meaning, but not well educated, about terms like generic drugs. They generally took the view that a generic drug was a drug that didn’t come from a big drug company and was inexpensive. I remember having a conversation with the President I believe, President or Prime Minister, of Nigeria, I believe it was, who told me that they had decided that they were going to manufacture generic forms of these drugs in Nigeria and they wanted us to buy those drugs with PEPFAR funds. It turned out, I found out later, that his brother or brother-in-law or somebody was going to start this company to do this. I think one of the good ideas we had was I worked something out through Secretary Thompson, Tommy Thompson at Health and Human Services, who had oversight of the FDA, or FDA reported to him, where we got the FDA to agree that they would, on an accelerated basis, use their process for the approval of generic drugs in the United States for any drugs that I wanted to submit to go through that process. So, I was then able to say to all the people in Africa who had sources of generic drugs, I was able to say, “Terrific, I will buy with this money any generic drugs that go through the generic drug approval process at the U.S. FDA, which means that it must demonstrate that it has bioequivalency with the drug that was originally invented.” Well, suddenly the sources of a lot of these drugs dried up, but there were some, a limited number, that went through the process and particularly some, as I recall, I think there were some Israeli drugs and drugs from India from established companies. Drug prices were really not the issue that a lot of political activists would have liked the world to think. It was more the logistics and the people of getting all the infrastructure in place to actually get this done.

SCARPINO: You stayed in that job for a few years, but it occurred to me as I read about what you did and how you distributed the money and so on, that you were really modeling a new way of doing foreign aid.

TOBIAS: Absolutely, yeah. I was modeling a new way of doing – I didn’t really know that much about it, but yes, that’s the way it turned out.

SCARPINO: And that was a model that you continued to use when you became Director of United States Foreign Assistance…

TOBIAS: Correct.

SCARPINO: … okay, in 2006. So, how are we doing on time? We’re a little over two hours.

TOBIAS: I’m fine. Why don’t we take a break for a minute?

SCARPINO: Let me hit pause here, but the other one is going to continue to run. Alright, I’ll turn this back on and the main one’s live.

So, I want to be sure to do this, and we’ll get through your government service when we wrap up, and if we don’t finish everything, maybe we can talk when you come back to Indiana. April 20, 2003, while you were serving as Global AIDS Coordinator, Indiana University announced the founding of the Tobias Center for Leadership to be housed in the Kelley School of Business, located physically in Indianapolis on the IUPUI campus. The press release stated that “Paige Tobias Button and Todd C. Tobias, directors of the Randall L. Tobias Foundation, presented the $5.25 million gift in support of the leadership center bearing their father's name. Randall and Marianne W. Tobias are honorary chairpersons of the very successful Campaign for IUPUI.” Gerald Bepko, the emeritus chancellor of IUPUI, is named as the Tobias Center’s inaugural director. Philip Cochran, holder of the Thomas W. Binford Chair in corporate citizenship in the Kelley School was named associate director and director designate. So, he was going to step up when Gerald Bepko stepped down.

Why did you decide to create the Tobias Center for Leadership Excellence?

TOBIAS: Well, Gerry and I had been talking for some time about a couple things in parallel. We’d been talking about Gerry’s interest in whether or not I might be willing to support something at the Indianapolis campus, as I had already done with several things in the Bloomington campus. And I was interested in supporting Gerry because I did and do hold him in very, very high regard. And, in parallel, we were taking about my interest in leadership and my experience over time about watching things work and things not working and having people for whom I was responsible take an identical set of circumstances and putting one person in it and having it go very well and having another person who couldn’t do it, and my own developing over time and understanding, or at least point of view, of why that was and what the characteristics were, and then looking more broadly at problems being faced in the country and looking at how people addressed them in the private sector and in government and so forth, and thinking that there must be a way to better understand the characteristics of leadership and what works and what doesn’t work and how do we develop leaders and all those kinds of things, and wasn’t there a role that, at Indiana University and more particularly located in Indianapolis because Indianapolis was more the center of government and corporate presence in the State of Indiana. And my view was that while this was being housed appropriately in an academic environment, my view was that a heavy emphasis on this needed to be on the practical part of how do we actually develop leaders? And can this center be a place that actually helps the state, organizations within the state, maybe more broadly, address these kinds of leadership kinds of issues? So, that was the genesis and I was prepared to make a $5 million gift. Typically the way donors do these kinds of things, it was within a capital campaign and I would have said, and I probably did say, to Gerry that I’ll commit, if we can all come agreement here, I’ll commit – and it took a little doing to get everybody on the same page because a lot of the people within the institution had more in mind that this was going to be more of an academic thinktank but there wasn’t going to be much that would come out of it, except maybe writing some papers, and that’s not what I had in mind at all. On one occasion, I almost walked away because I thought universities don’t need donors to be providing money for something the university doesn’t really want to do. But at any rate, we came to a meeting of the minds and I said to Gerry, who was about to retire, “I’m going to give you a million dollars a year over five years,” which would have been typical. “Now, Gerry, when you retire, if you are willing to become the first director and on a hands-on day-to-day basis actually get this thing launched and started in the way we’ve been talking about, I’ll give you the check for the $5 million upfront.” I don’t think that had anything to do with whether he agreed to do it or not, but that’s what I told him. Then, on the day we presented the check, I surprised him a little more by making the check for $5,250,000. The $250,000 being 5% of the $5 million as if, theoretically, I had given the $5 million a year before, so we had one year of earning, so let’s get started tomorrow, not let’s get started a year from now. So, that’s how that…

SCARPINO: Because for people who may be using this and don’t quite understand how these things work, that’s an endowment.

TOBIAS: That’s an endowment, yes.

SCARPINO: So they’re not spending the core, but spending the earnings, which is around 4% a year, give or take a little.

TOBIAS: At the time, it was about five, but the IU Foundation and its Board has determined since, I think very wisely, that something closer to 4% is more sustainable over the long term.

SCARPINO: It’s about what we make now. So, do you think the Center has lived up to the expectations you had for it?

TOBIAS: Yes and no. I think it did in the initial stages. I think things that Gerry did, for example, starting the Hoosier Fellows program, as an example, this oral history program is another example – those are things that I think, over time, have demonstrated significant value. After Gerry left, I think a number of things languished and I was frankly pretty disappointed. But in more recent times, under Julie Magid’s leadership, I’m thrilled with the way the Center has kind of had a rebirth. I don’t know that that’s all that unusual. I mean, it’s 10 years old and sometimes I think organizations need a little new thinking and an infusion of new energy, but I just couldn’t be happier with the way things are going at the moment and the prospects I see for how the Center will go forward.

SCARPINO: You established the Center in 2002, that was a while ago now. A lot has changed in the world and in business and government since then, society. If you were going to do it now, just decide today that I’m going to do this and the University agreed to go along with it, would you give different parameters to the University if you were creating the Center today?

TOBIAS: Probably, I probably would. I’m a little, I don’t know if I’m smarter, but I’m more experienced, and I think I would have a more rigorous agreement with the University that has more measurable aspects to it. I remember my conversation with Gerry and others in the beginning of trying to make clear that I don’t view this as a philanthropy; I view this as an investment. I’m investing $5 million for which I expect a return, and the return I expect is the outcome that’s going to benefit the community and the state and so forth. I think I would have applied the lessons I didn’t have at the time, but have now, from my PEPFAR experience and done it more in that way where…

SCARPINO: Where you did have measurable outcomes and…

TOBIAS: … where I did have very measurable outcomes.

SCARPINO: Outputs and outcomes. So, it occurs to me, obviously, the timing of the gift and your conversations with Gerald Bepko that this gift was also a major gift for the campaign for IUPUI, which obviously campaigns like that launch with major gifts – did you intend it to be that?

TOBIAS: Well, in a way, but also the gift agreement makes very clear that it was a gift to Indiana University broadly, housed on the IUPUI campus, and that the director is accountable to the Dean of the Kelley School in Bloomington, even though the Center is on the IUPUI campus. So, for example, Julie has a dual reporting relationship to Nasser Paydar, the Chancellor of IUPUI, but also has a relationship with Idie Kesner, the Dean of the Kelley School in Bloomington, who recruited Julie and was responsible largely for this kind of revitalization we’ve gone through. My intention was that while I wanted this to be a gift to IUPUI and to help that effort because IUPUI is so important to the state and to Indianapolis, but I also wanted this to be an Indiana University-wide capability that happened to be housed in Indianapolis because that was the appropriate place relative to the outside world.

SCARPINO: And for the benefit of anybody who uses this interview in the future, the Kelley School is a systemwide school. It’s Indianapolis, Bloomington, so on and so forth. So, I’d like to finish at least your government service before we hang it up today.

In 2006, President Bush figuratively called again. September 14, 2006, President George W. Bush nominated you to serve as the first Director of United States Foreign Assistance with the rank of Deputy Secretary of State. At the same time, he nominated you to serve as the Administrator of the United States Agency for International Development (USAID). The Senate confirmed both of those nominations. You reported now to Secretary of State Condoleezza Rice and you remained in government service until April of 2007.

So, before we transition to Director of United States Foreign Assistance and USAID, how would you assess the PEPFAR program that you built between 2003 and 2006?

TOBIAS: Well, I thought that the Foundation was in place, people were in place, there was an understanding of how we were going to do this, there was a strategy and so forth. And in fact, I guess the best answer to that is that I had said to Condi, to whom I was then reporting because she became Secretary of State, that I thought that I had done what I’d been asked to do and that I was going back to Indianapolis and it was time to start looking for a new person to replace me, and oh, by the way, I had a candidate in mind.

SCARPINO: And the candidate was?

TOBIAS: The candidate was Dr. Mark Diebold, who was my deputy. That led to these further discussions of, “Well, the President and I would like you to consider taking the lessons learned from PEPFAR and seeing if we can’t apply that model more broadly to the way in which United States Foreign Assistance is delivered.” I wasn’t real excited about – I was excited about the possibilities of what that could mean, but I had begun to understand that in a two-term President, who serves eight years, really serves two years and whatever a President gets done in the first two years of the first term is pretty much the time that initiatives are going to take place. There’s the initial excitement, you’ve got the first team in place of appointees, you’ve got the momentum, you’ve got political capital, and that’s the environment in which PEPFAR was launched and became successful. We were now in the second term. Anybody that was in office in the second term, almost by definition was the second team because they weren’t appointed in the first term, so these were all replacements. By the time the second term starts, the political people are all focused on the next election. You can’t get the career people who are opposed to something to be quite as willing to embrace change because they can already see that, if we can last you out, there’s going to be somebody else, and all that kind of thing. But I reluctantly agreed to do this and we made some progress in…

SCARPINO: By this, you mean the Director of United States Foreign Assistance?

TOBIAS: Yeah, I agreed to become the Director of Foreign Assistance. This, I didn’t have quite the empowerment that – I had a lot of empowerment, no question about that, but there were some things about it that aren’t worth going into that would have made this a little easier to get done. There was a lot of resistance because, essentially, we were going to start spending $28 billion of foreign aid money strategically. This money had, historically, just been spent to try to get heads of state in various places, for example, to do what the United States – you know, if you’ll do this or that or something, we’re going to enhance your aid budget by something. Not totally, there were a lot of great things being done historically, but this was a real effort to bring some rigor to the way in which we were spending aid money. And that meant there were going to be winners and losers, and that meant that we were going to have a whole new concept, which was, if you’re running a U.S. government aid program in a country, your objective is to work yourself out of business. Nobody ever talked in those terms before, but your objective is to get a country on its own feet where its own people and its own organizations and so forth are trained and have the capability and the support, and we’ll be around as a safety net and we’ll do what we have to do and, in some countries, we’re going to be there past my lifetime, but that was more the focus. I’m happy to say that’s been carried forward in one form or another. As administrations change and the way things are done in Washington, these things tend to get repackaged so that they look like programs of the new administration. But if you get down into the nuts and bolts, as people like Nazanin would tell you, the principles that we put in place then, in many cases, are being embraced still.

SCARPINO: Those principles were based on what you were really doing with foreign aid in PEPFAR.

TOBIAS: Yes.

SCARPINO: So, let’s get it in one place – what are the principles?

TOBIAS: Well, the principles are to have a clear strategic direction from Washington where we’re all clear on what is it we’re trying to get done here. And, in the case of the new foreign aid program, it was putting a framework in place that was a matrix of the areas of foreign aid on the one hand, and then we categorized every country that was receiving foreign aid on a continuum of where were they and what did they need, all the way from those that are broken states that are totally dysfunctional and need about everything to states that need help in enhancing their rule of law and court systems and those kinds of things, and everything in between, education, health, whatever the case may be. So, we took every country that was receiving aid and put them somewhere on this matrix and started directing money appropriately to programs that had metrics associated with them and expectations about measurements and objectives to implement as close to the ground as we could all of our foreign aid. That meant that there were countries that had been getting a lot of foreign aid that didn’t really need it that needed to be cut back. Some, I would say for political purposes, for example, we provide a lot of foreign aid to Israel. Now, I’m very supportive of Israel, and it would be a NAFTA in Washington to talk about cutting that, but essentially the United States government just writes a check to Israel as part of foreign aid. So, I wasn’t going to make any progress there, but I was successful in cutting back, and this was somewhat controversial I suppose, but I was successful in cutting back on the amount of foreign aid we were giving to India. Now, India’s one of the more poverty-stricken countries in the world, so you might ask why is somebody cutting back on foreign aid to India? At the time I did, India was building a nuclear submarine. So, my thought was, now, wait a minute, people need to be helping themselves and setting their priorities and not – I didn’t want countries in the world to be looking at the United States as simply another source of revenue on their national income statement. So, there was all that and…

SCARPINO: Now, you were the first Director of United States Foreign Assistance.

TOBIAS: Yes.

SCARPINO: So, is that a recognition of the fact that President Bush felt a need to reform…

TOBIAS: Yes.

SCARPINO: … foreign aid?

TOBIAS: Yes.

SCARPINO: And did he feel that need – was he aware of what you’d done in PEPFAR?

TOBIAS: Oh, very much. No, I had interfaced with the President, I guess I didn’t really say this, but I had conversations with the President with some frequency. I was empowered enough that when people would say the White House wants this, that or something else, I would routinely say, “Now, is that the President or the pastry chef?” Because if it’s the President, the President’s going to tell me because more often than not, it’s some staff person in the White House that wants one thing or another and they invoke the White House and people start jumping when they don’t need to.

SCARPINO: So, let me see how… We’ve been talking for two and a half hours, so maybe what I should do is try to pull this together and maybe when you get back to Indianapolis, we can just finish up what I’ve got left.

TOBIAS: Okay.

SCARPINO: I mean, you’ve had such an interesting and varied career that it’s not like a person I just sit down and talk to for two hours about – so, I think what I’m going to do is this.

So, on August 14, 2006, you gave a talk to the Society for International Development in Washington, DC. The talk was titled “Transformational Diplomacy: Sharing the Vision.” The opening line of that speech was something that I had to look up. You said, “Thank you, Betsy,” who was Betsy Bassan, I think, Vice President of Chemonics International, and you thanked her for the introduction, so I looked up Chemonics International. I had no idea what it was. But could you relatively quickly tell, for the users of this interview, what the Society for International Development is and what Chemonics is and what were you doing there talking about it?

TOBIAS: Well, I believe this organization, as I recall, is an organization based in Washington, it’s an organization of organizations. If you take all the various aid organizations, many of which are very specifically focused, you have people that are interested in the plight of young girls in certain countries, you have the organizations that are interested in malaria, you have organizations that are interested in advancing democracy – this is an organization that brings all of those organizations together.

SCARPINO: And by this, you mean the Society for International Development?

TOBIAS: Yes, yes. The other one, I don’t know either.

SCARPINO: Well, I…

TOBIAS: I assume that she was…

SCARPINO: I looked it up, I guess I should say. It’s a private international development company that manages projects, I assume, by bidding on U.S. Government contracts.

TOBIAS: Yeah, well, and I think probably, I don’t remember specifically, but I can make a 99% guess here. She probably was the program director or an officer of this bigger organization and it was her job to introduce me. But she would be typical of the people who were part of this organization, which again, had an interest in what the government was doing broadly in foreign aid. And of course, they were, to some degree, supportive of what I was trying to do, but it was also, “Okay, what’s it going to mean to me?” And what you learn in these kinds of organizations is that they all view it, I think correctly, as a single-sum game. So, people who are interested in a particular cause are pretty interested in throwing rocks in the gears to be sure money doesn’t go to some other cause, even though it may a great cause. But if you’re promoting education in Africa, you don’t want your money - it’s very unfortunate, but if you’re promoting education in Africa, you don’t want your money going to healthcare in Africa. So, it’s a jungle out there, so to speak, in Washington about how money gets appropriated. So, they were all very concerned when I said we were going to start distributing foreign aid strategically because they all had their own relationships with various members of Congress and various committees. You may remember, this is back in the days of earmarks. So, this meant that an individual member of Congress could put an earmark on a piece of legislation – earmark meaning I want $100,000 or $10 million, more likely, to go to Organization X, and by attaching that earmark to a piece of legislation, it meant I’m not voting for your bill unless my earmark is part of your bill. The bill got passed and that organization got the money.

SCARPINO: When I talked to Nazanin Ash, she told me that, on your watch, there was not a single earmark. She said that you would go to Congress, and you never said no, you would say, “This is all very interesting, but if we do this, this is what’s going to happen.” Do you count that as a leadership achievement…

TOBIAS: Yes, yes, yes.

SCARPINO: … that you were able to have zero earmarks?

TOBIAS: Yes, I do, but I was able to do that because I did not have a political agenda. I was not trying to favor one thing or another. I was just trying to get the job done and we had a strategy and we had deliverables. So, I had facts that I could sit down with people and, you know, often if you’re going to meet with a congressman or a senator, the best thing that can happen to you, if they’re suddenly called to the floor and they’re unavailable and the only people you can talk to is their staff because that’s where the decisions are made. We tried to develop good relationships with the staff people. There were a lot of, and are, a lot of incredibly great people in Washington, I want to make clear that, particularly the staff level in all the organizations. People in Washington get criticized as a bunch of lazy bureaucrats, and they are not. They work long hours, they’re very dedicated, they don’t make much money, and they really, really care about what they’re doing. Many of them are very young people with very large responsibility and then they leave and go do something else and they’re replaced by other people. It’s the political process on top of that, that I’m sick of, that’s so dysfunctional, but the Nazanin Ashes of the world are heroes and heroines that need to be celebrated.

SCARPINO: Part of your job though in these positions was to cultivate relationships with those staff people…

TOBIAS: Right.

SCARPINO: … who actually advise the congresspeople and the senators.

TOBIAS: Right, right, and the congressmen and senators, many of whom were also very interested in the issues we’re talking about.

SCARPINO: So, I’m going to ask you two more questions.

TOBIAS: Okay.

SCARPINO: You said in this speech August 14, 2006, “we have just unveiled the working draft of a new strategic framework for U.S. foreign assistance focused on our transformational diplomacy goal, helping to build sustained democratic well-governed states that will respond to the needs of their people and conduct themselves responsibly in the international system.” Now, you’ve already touched on this, but what I want to ask you is what did you have in mind by transformational diplomacy?

TOBIAS: Well, transformational diplomacy was a term actually that Secretary Rice had coined. I suppose I was involved in some way as part of her senior staff. But what we were trying to do with foreign assistance was a very, very key part of transformational diplomacy. It simply meant that we’re going to use this money strategically to try to transform the circumstances on the ground. So, you could describe that in a lot of ways, but at the end of the day, we need to have something in mind we want to accomplish and we need to be able to articulate what that is, and we ought to be able to measure in some fashion whether or not the money we put in place actually did what we wanted to do. In the case of PEPFAR, if we’re going to put this money in here, we would set objectives like we want to have some number of people in some period of time on antiretroviral drugs. Okay, did we, or didn’t we? Well, let’s say we’re talking about education. So, the tools are we need to build schools, we need to get teachers in place, but at the end of the day, what is the output? The output is educated children. So, we need to have some way to measure those things, whereas all too often, it was just giving people money in more vague programs and we just kind of went to work every day and kept doing it, but it wasn’t transformational.

SCARPINO: I hope that when you come back to Indianapolis we can sit down and finish up the post-government stuff, but I want to ask a final question, and I did give you a head’s up that I was going to do this. So, I read your book, Put the Moose on the Table and I know what it means because you explained it in there, but in April 2007, you left government service and returned to private life, and I’m going to follow the advice that I garnered from reading your book and put the moose on the table and ask you if you want to talk about why you left and returned to private life?

TOBIAS: I’m happy to. There was a scandal going on in Washington at the time that I found myself unfortunately drawn into. It involved some people in the Department of Justice who decided to go after a woman that I came to know, from press reports and from conversations with people involved, lived, I think, in California and was running a high-end escort operation in Washington and I think had been for some time. This had apparently been in the news for some time about I think she’d been indicted, she turned out to be a little bit unbalanced. She had gone to the media, indicated that she had records of people who had been clients of her service and was going to give those to the media. She’d gone through five or six lawyers I think at that point in time. To fast forward, unfortunately, after she was convicted, she committed suicide. But anyway, while all this was going on, I was oblivious to all of this because I hadn’t really been reading local Washington news. I got a call one day from the public relations people who worked for me at USAID saying that my office had gotten a call from Brian Ross, who was the investigative reporter for ABC News broadly and their weekly investigative program 20/20. I was familiar with his name and the program. But it was not unusual for my office, when I was in PEPFAR and USAID and so forth, to get calls from journalists who absolutely had to talk to me. So I think I sent a text or something back and said, “Fine, can you handle it?” And I think a day or so later, I got a contact again from my PR person who said, “He says it’s a personal matter and he needs to talk to you personally.” Well, that didn’t mean anything to me, but okay. So, I recall, because of what happened later, I can recall vividly. I was in a meeting in a government building in downtown Washington and I came downstairs and was out on the sidewalk and waiting for the driver who was going to pick me up to take me back to my office, and I thought, well, this would be a good time to return that call. So, you can visualize me standing on the sidewalk, traffic going and so forth, and I called Brian Ross. Brian Ross introduced himself and asked if I was aware of this case that was going on; I was not. I think he was incredulous that I didn’t know about this, but anyway, I said I was not, so he told me briefly a little bit about it. And then he said, “and your telephone number is in her records.” And I said, “Really?” And he said, “Do you have any idea why your telephone number would be in her records?” which I didn’t. So I made the unfortunate naïve decision to try to help him. I said, “You know, I have absolutely no idea,” and I said, “tell me what she does.” He said, “Well, she runs an escort operation and a massage operation,” and so forth, to which I said, “Well, I have had massage therapists come to my condo where I live at the Ritz-Carlton, so I suppose it’s possible if she’s running some legitimate massage operation that that could be the case.” Next thing I know, the news is reporting that I have said to Brian Ross that I’ve hired women from her operation.

SCARPINO: Because that escort service was really, those were prostitutes.

TOBIAS: They were prostitutes and but - and it was an escort service, but I was trying to figure out, well, why does she have my telephone number? Turns out, I found out later that in her records there was one case where my cellphone number, which by the way, ends in the digits 6,000 and it’s also the telephone number of one of the large mutual fund firms and so forth, but at any rate, there was one outgoing call in her records to that number. But anyway, this became a bit of a, more than a bit of a flurry, and I decided - and if I had it to do over again, I’d do it a very different way - but I decided, okay, I’m not, this is a no-win situation and I don’t want to be in the middle of all this, and the President doesn’t need this, and I’m tired of being here, and this will be short-term, and this was my misjudgment, this will be a short-term thing and it’ll blow over. So, I said I’m going to resign and go home, and did. Well, it dragged on and it dragged on and it kept getting reported. You would have thought that I gave a gazillion interviews and there was new information coming all the time, and the absolute only source of any information ever involving me was this single conversation I had on the sidewalk talking to Brian Ross. Now, I don’t want to accuse Brian Ross of anything, but I will note that 10 years later, he’s been suspended by ABC News, not for the first time, for falsifying some information. He may have had an honest misunderstanding of what I was trying to say or ask, you know, I have no idea. But I just, you know, I totally misjudged the magnitude of what this was going to be in the press and the degree to which it was going to drag on, and I just didn’t have the stomach for doing that. What I should have understood was, okay, you’re in the middle of this whether you deserve to be or whether you want to be in the middle of this or not, and one of the basic principles of damage control is get out there quickly and get the facts out there and deal with it. Of course, I didn’t have any real mechanisms to do that very effectively. So, bad on me from a leadership point of view of not addressing this aggressively in the ways that I knew how to do, but I didn’t. So, I’ve just gone on with my life and that’s where we are.

SCARPINO: But you did say that if you somehow could have a do-over, you probably would have handled it differently.

TOBIAS: Oh, yes, absolutely. First of all, if I’d really stopped and thought about it as, okay, I’ve got a problem over here I need to deal with, you know, I knew how to deal with that from other business kinds of issues. But I think I just didn’t want to get in the middle of this very sleazy kind of thing and I just thought this was - or convinced myself, okay, this is going to go away. What I ultimately did, just to put another set of facts that are not known, I hired an attorney and said, “I don’t know what this is about or where this is going, so help me figure out how to deal with this.” He contacted the federal prosecutors, the federal attorney who was handling all this, and the attorney scheduled, with my blessing, a voluntary meeting between me and somebody from the U.S. Attorney’s Office and I think there was a representative from the FBI and I think the postal inspectors were involved in this – two or three people. So, I volunteered to be interviewed and we spent a couple of hours in a conference room in Washington going through all this. This was about a month after I left Washington. And what they concluded was there’s no there there…

SCARPINO: But in the meantime, the damage had been done.

TOBIAS: Well, in the meantime, the damage, yeah, in the meantime the damage had been done. Again, if I had it to do over again, I’d handle it much differently, but those are the facts.

SCARPINO: Well, thank you. What I hope we can agree to do is that I would like to talk to you about your post-government service. Like I said, you’ve had such a varied and in-depth career that it’s not going to do this justice in two hours, and some of it’s quite technical. I may have a few follow-up questions on your government service when I sit down and listen to the recording, but maybe when you get back to Indianapolis, we could sit down for a few hours.

TOBIAS: Sure, I’m happy to do that.

SCARPINO: And I will want to do some summary questions about what do you think about your legacy and that kind of stuff, but I don’t think we want to do that now.

TOBIAS: Yeah, right, okay.

SCARPINO: So while this is still on, thank you. Thank you very much. It’s really been a pleasure.

TOBIAS: You’re welcome.

SCARPINO: Thank you for your hospitality.

TOBIAS: I hope I haven’t been more long-winded…

(END OF RECORDING)