Assessing Risk | General David H. Petraeus

Dani Ng-See-Quan: Hi and welcome to TRUST FASTER - a Clearspeed podcast about the ways that risk and trust intersect in our day-to-day lives. I’m your host, Dani Ng-See Quan.

Risk assessment is something we all do every day, from picking the right jacket to waiting for the light to turn green before we cross the street. But sometimes risk assessment happens on a much, much, much bigger scale. And risk assessment on some of the biggest stages imaginable is exactly what our guest this week has been doing for five decades.

David Petraeus is a retired US Army General with 37 years of service, and probably one of the highest-profile members of the US Military since WWII.

In 2007, Gen Petraeus was appointed by Pres. George W. Bush to head multinational forces in Iraq. He also served as commander of U.S. and NATO forces in Afghanistan from 2010 to 2011.Following that he served as the Director of the CIA from 2011-2012.

Gen Petraeus is now active in the private sector - most notably as a partner at KKR Investments and Chairman of The KKR Global Institute, a division of KKR that enables smarter investing through a better understanding of the world.

He’s also the co-author of the best-selling book, Conflict: The Evolution of Warfare from 1945 to Gaza.

In the conversation with General Petraeus you’re about to hear, we dive deep into his ideas around leadership, risk assessment, managing trust relationships, emerging tech, and more.

But, I wanted to start things off with a more personal question. The general has been described as a “warrior intellectual” - so, I really wanted to know how that came to be, and what that title means to him.

General David Petraeus: Well, it's interesting because I was told when I decided to go to graduate school instead of the ranger regiment that I was committing professional suicide. But that's the source of, if you will, the intellectual piece. I mean, there weren't too many people who were able to get a PhD as an infantry officer at a great university having only had two years in residence to do it. So I mean, then you finish up the dissertation later on, but it's a pretty heavy lift because you got to do all the coursework in general exams for the master's degree simultaneously. You're doing all the coursework in general exams for the PhD, and it's pretty heavy load, to put it mildly. It was a real grind, not as much of a grind frankly as the surge in Iraq, but there were some similarities. So I taught at West Point International Relations and Economics, and I ended up sort of being sucked back into the orbit of the very senior leaders typically to be what we called a designated thinker.

I was an aide to the chief staff of the Army executive officer chef to CAB chief of staff for the internal staff of the chairman of the Joint Chiefs. I was a speech writer for the Supreme Valley Commander Europe. And so when I wasn't in infantry assignments, I was in these outer office assignments. And I guess that's what, and then I oversaw the draught in the counter Surgency Field manual PhD was on the American military. In the lessons of Vietnam, I wrote lots of articles. I helped other people write articles even if their name was on it. There was one I was particularly proud of with General Jack Galvin, for whom I worked three different times personally. He was the Supreme Allied commander when I was a speech writer, and it was titled Uncomfortable Wars, and it laid out the challenges of irregular warfare because he was the commander of US Southern Command at the time, which is essentially all of Latin America, central and South America. Eventually it came out that I'd basically drafted that and that became significant because eventually I was the architect of our strategies for irregular warfare. So again, that's how that came about. And then of course, also, if you do five combat tours as a general officer, you probably merit the term warrior, I guess, even though I'd see a warrior as a little bit more junior in rank than I was. But yeah, no, that applied. And then now you can add then was spymaster, I guess an investor or something like that as well.

DNSQ: Over the past few years, General Petraeus has spoken frequently about his framework for strategic leadership. It’s something he developed during his three- and four-star tours in Iraq and has implemented throughout the rest of his career.

He believes that there are four main tasks to leading strategically, and in his recent book he applies that intellectual framework in his assessment of past and current wars.

I asked the General to walk me through those tasks and how getting them right is central to a person’s ability to lead successfully.

GDP: So this intellectual construct does have four tasks. The first is far and away the most important because if you fail to perform this task, it doesn't matter how well you perform. The other three, the enterprise is probably doomed and the first task is to craft the big ideas, to get the big ideas right, to craft the right strategy in conflict. This means to understand the nature of the war in which you're engaged. We did not, by the way in Vietnam, took us 13 years to get the right strategy to understand your forces.

The enemy forces the physical terrain, the human terrain in which you're going to engage. It involves how a country is supposed to work, how it really works, all the elements of society and the various dynamics in it, the neighbourhood and so forth. And again, get the big ideas right. The second task is to communicate the big ideas effectively throughout the breadth and depth of the organisation. You're privileged to lead, but also to everyone who has a stake in the outcome of the conflict. And it's not just the White House number 10 Downing Street, the Iraqi White House or what have you. It's not just all of our forces and coalition elements and everything else. It's America's mothers and fathers, the great American public, other coalition country publics, the Iraqi people, and it's very, very important that this is communicated correctly, honestly, and effectively. The third task is to oversee the implementation of the big ideas because of course the strategic leader is not implementing them, him or herself.

You're overseeing organisations below you that eventually you get down to the level of individuals who are actually turning big ideas at your level into reality at theirs outside the wire, for example, in combat doing what only they can do, which is to engage the enemy and to engage the population. It includes providing the right example, giving energy inspiration, hiring the best and brightest and hanging onto them as long as you can, incentivizing them to achieve true excellence. It's allowing those not measuring up to move on to something else. It's the organisational architecture that you develop for the conduct of the endeavour. There's no template that gives you the right answer for every different conceivable situation.

We spend a lot of time actually determining how I could and should most effectively use my time to be the most productive, achieve the greatest impact, most efficient and so forth. And that involves your battle rhythm, we called it.

What do you do on a daily basis? Several times a week, once a week, every other week, monthly, quarterly, and so on. And what is the substance of the different meetings, activities, engagements that you have? And on that battle rhythm are events, meetings and so on, activities that enable you to perform the fourth task of a strategic leader, which is to determine how you need to refine the big ideas to repeat the process and do it again and again and again, noting that as the situation evolves. So to must your strategy, I offer examples, by the way, there's a whole website on this. If you go to belfercenter.org, it's one of the great centres at Harvard where I was a non-resident, senior fellow for six years. A group of graduate students who had worked for me in the war zones helped me to distill this intellectual construct and to lay it out in a series of interviews and then also to discuss the tactics, techniques, and procedures of leadership that can help you to implement this in the most effective manner possible.

Again, I think this is a critically important construct. I developed it between my three and four star tours in Iraq, use it explicitly for the surge in Iraq, command of central command, greater Middle East and command in Afghanistan, as well as being the director of the CIA and frankly even since then in business to identify is this strategic leader impressive? Does the strategic leader have the right big ideas? Can the strategic leader scale the company?

And frankly, I've done all of this of course with clear speed, very impressed with your strategic leader, which is why I invested in the company.

You have a very powerful big idea and your leadership seems to be capable of performing the four tasks that I've laid out admirably, and therefore you won't have the kind of disruption. Remember, even Steve Jobs was fired from the company that he created, made one of the biggest in the world Apple, because there were qualities that he exhibited that were a bit toxic. And so he was on gardening leave for a couple of years as I recall, and then came back and lent his creative genius to it, having tempered some of those other qualities that had undermined his ability to continue to scale one of the great technology companies of our day.

DNSQ: Now, it’s easy to know if you got the big ideas right in hindsight, but making those kinds of big picture decisions in the heat of the moment is an altogether different thing.

So, I asked the General about his process for evaluating the big idea in real time.

GDP: Let's start off with how do you get the big ideas right in the first place? And that is by having a deep understanding of these different elements. I laid out what they are for conflict for a war, but they're similar ones for the business and so forth. In general, in my experience, I don't usually get hit on the head by a big idea fully formed like Newton's apple. If I find the right tree to sit under, rather I get hit on the head by a seed of a big idea and then you shape it into a big idea like a clay object, and you do so most effectively. If you do this very openly, you want everybody feeling that they're inside the tent because you know what happens if people feel like they're outside the tent and what they do to those inside the tent, you want it to be transparent. It has to be iterative inevitably. Again, you're not going to settle on the big idea.

And as I've explained, the big ideas need to evolve as the situation evolves as well. So first and foremost is going through that process, having the deep understanding of what you're engaging in and the context in which you are seeking to engage, and then get the big ideas right upfront, but then of course, keep them right as the situation evolves. I can give you a great example. Netflix is a very nice concise example. Basically four incarnations of Netflix. This is overly simplistic, but worked with it and I've laid this out with Reed Hastings, who I think is one of the great strategic leaders of our time, right up there with Jack Ma, Alibaba, Jeff Bezos and so forth. So the first big idea of Netflix is that we're going to put movies in the hands of customers without brick and mortar. So we're going to charge less than Blockbuster.

And essentially they're going to put Blockbuster out of business, which of course they do. Two years after this, he's down in task number four, how do we need to refine the big ideas? He says, aha, the context has evolved. Broadband speeds are much increased. Now let's have people download movies. So okay, that's a new big idea. They work through that. Third big idea is the breakout moment. This is where they develop their own content, a hundred million dollars on House of Cards alone, all of these other iconic series that we know and loved and binge-watched during the early months of the pandemic out of sheer boredom, et cetera.

And then the fourth big idea was we're going to make major motion pictures. And he goes out and buys not one but two movie studios. They do it so well over time that they got more Academy Award nominations three or four years ago than any other major studio,

So they just have shown an ability with, again, to get the big ideas right, communicate, execute 'em, and then determine how to refine them and do it again and again and again.

DNSQ: So I want to ask you about task two, General - communicating the ideas effectively in your experience or just otherwise, are there certain types of resistance that come up over and over during that communication period and how do you deal with that?

GDP: Well, you have resistance to the big ideas themselves. And you want people to do this except it's ideal if you do it while you're still refining or tweaking the big ideas before you actually put them out there. Ideally, if everyone has been involved and it's iterative and you're welcoming, constructive criticism, if you will, thoughtful, reasoned content and so forth, that's provided to you, that's what you really want. But certainly there will be people who hadn't been part of the process who when they hear this will say, we had this during the surge in rock, one of the big ideas, the biggest of the big ideas was we have to secure and serve the people got to go back downtown, have to live within. This is 180 degrees different from what we've been doing. It doesn't get any bigger than that when it comes to change management.

And it was dangerous and we had to fight to establish these 77 additional locations in which our forces and Iraqi forces would locate. But then the next one was promote reconciliation. We cannot kill or capture our way out of industrial strength insurgency. We have to reconcile with as many of the rank and file of the insurgents and also of the Shia militia supported by Iran, ultimately 103,000. Well, some of these people had our blood on their hands and some of our junior commanders say company battalion commanders. So the ones actually out there who are going to engage with these individuals and convince them to reconcile. They said, Hey, I don't want to sit down with people who have our blood on their hands. Now, these are not the most bloody of hands. There's levels of many of them.

Were in the wrong place at the wrong time. They're chameleons. They end up having to go with a side that they think is going to win. But then there's a third big idea, by the way, which is pursue the irreconcilables even more relentlessly than we have been. But no, it took persuasion in that particular case. And my view is that even in the military, you shouldn't have to resort to poking somebody in the chest and say, I'm the commander. You do what I say, you really want to have exchange. You want reason, dialogue, constructive criticism. And I brought people out to Iraq who I knew would provide that HR McMaster, who was somebody who was known as, he never leaves anything left unsaid that was not viewed as a positive quality by many of my four star counterparts. I viewed it as enormously positive.

That's exactly what you do want. If you want a culture that is going to foster learning, you have to have people that are willing to offer, again, different views, tell you why they don't see it through the same lens that you do, et cetera. And so he'd been sent off to the International Institute for Strategic Studies after a very successful colonel level command and combat in Iraq, in part because he was outspoken at times. I went and found him and brought him to Iraq, and then I even sat as the president of the promotion board that finally picked him for Aire General in his third and final try. Now, that was not ever mentioned by name, but that's the only board I ever sat on in my life, and it's the only case that I know of in history where a commander of a war went back to sit in a windowless room and go through personnel files for a week.

But there were a number of other great folks on that list as well. So yeah, there's going to be, and you should welcome it, but you should ideally identify any objections or reservations or so forth during the process of developing the big ideas rather than by the time that you're actually announcing them. But you have to engage with everyone. You have to engage with the press. I was identify it as what was called a celebrity general, which is a term of endearment with the Bush administration, which was going all in on the surge and trying to preserve the president's legacy by turning around a war that was escalating into an incredibly violent civil war. And we did 90% almost reduction in violence in 18 months continued to go down further over the course of the next three and a half years. Candidly, celebrity generals, that was not a term of endearment in the subsequent administration as I came to understand, and you just have to understand the context and read the room.

DNSQ: This podcast and Clearspeed itself, it's really about risk and trust and how they intersect. So thinking about those principles of strategic leadership and also what you've shared, where does trust play a role or where does it fit or does it underpin everything? What's your take on that?

GDP: Well, you obviously want a leader who is going to shoot straight. I mean, we had actually big ideas for dealing with the press. It was simple, be first with the truth. We're not going to put lipstick on pigs if it's a bad day. We're going to acknowledge that. We're going to explain what happened, why we think it happened, where the failure was and what we're going to do to mitigate it in the future. When you make a mistake, just acknowledge it is the best course of action. And we made plenty of mistakes.

Acknowledge it, make amends for it, take corrective action, learn from it, et cetera, et cetera. And I think that's the way to go about it. You just have to shoot straight.

You have to again inculcate the importance of integrity in addition to being a learning organisation and open, transparent and respectful. And so it's really about I think the kind of interpersonal skills that any leader should engage in anyway. But if you lose that, that's pretty important. And the fact is that some of the most senior leaders had lost that, and this is one reason why I said we have to be first with the truth.

DNSQ: And so how does someone in power, a leader, government organisation, whatever it is, rebuild that once it's been broken, what do you do when you lose the confidence of the people you're supposed to be leading?

GDP: You try to understand why that happened. And then you set about remedying it, it involves communication, involves admission of failures, of shortcomings, of setbacks, whatever. Again, the key is to be honest with folks, and again, to ensure that there is a degree of trust that is there as much as you possibly can build, but it's really about how do you react to mistakes because it's mistakes that actually lead to an erosion of trust. And again, acknowledge them, explain what happened, why did it happen, what do you do in response? What are the lessons that we need to learn to mitigate the possibilities of something like that happening again, it involves, again, shooting straight. Don't put lipstick on pigs. There's still ugly, there's still a pig. Don't spin, and again, I know this is easily said, and yet in today's day and 24 hour news channels that are very much in one camp or the other or social media that often end up being echo chambers, grievance filled and all the rest of this, this is hard, but you have to engage and the key is and engage at scale.

By the way, now we were fortunate in the time when I was commanding in Iraq that you didn't have the incredible number of social media options out there. The news channels were not as clearly in the camp of one or the other at that time, but we had a war room operation ongoing. It's very similar to a political campaign where we had somebody watching every single TV channel that folks in Iraq watched reading every newspaper that was out there of any size on the internet to see what was being said there. And when there were inaccuracies or falsehoods or false allegations, we sought to counter them and we did it by being first with the truth to the greatest extent that we possibly could be.

DNSQ: Leadership often means making high-stakes decisions very quickly. You have to weigh infinite possibilities against infinite outcomes in the blink of an eye.

I asked Gen Petraeus how he developed this knack for strategic judgment.

GDP: Making those decisions has to do with getting the big ideas right, and so people would ask me, what is it you look for in say your successor or in your three stars right below you? Is it somebody who can run with you? They knew I was a bit of a running nut actually, and fitness nut, or you want somebody who can do as many pushups as you can or this kind of thing. I said, goodness, no. In fact, if you looked at the two principal three stars, one is currently our Secretary of Defence, the other was General Austin, the other was General Oona. These were the Clydesdale crowd, these are the interior linemen with bad knees. I mean, I wasn't looking for that aspect. I mean, I want various attributes including again, integrity and all the rest of this work ethic and interpersonal skills, but really I can overlook a lot of other shortcomings.

You can't overlook lack of strategic judgement . That's the quality because again, this is why this intellectual construct is so important. You got to get the big ideas right now at the three star level. They obviously were performing task number one within the confines of decisions that I made when I said, we're going back downtown. Their job is to operationalize that. So I was making the strategic decisions. I was the, so-called Strategic Architect of the Surge. They were the operational architect, but they're operating within the big ideas, the decisions I've made at the strategic level, but there's still a lot of latitude there. There's still an awful lot of tough decisions that they have to make on where do they prioritise the effort, who gets more assets than the other? Where is our focus? All the rest of this. So it always comes back, I think first and foremost to judgement .

I would argue the same is true in business. That's what enables you to get the big ideas right, other skill sets of course, that enable you to communicate them effectively and oversee the implementation, determine how to refine them again is a judgement issue and it's hard to teach judgement . I mean, you can talk about it a lot, talk about how do you enable yourself at least to make hopefully the best decisions by assimilating all the information you're constantly living in it. We used to talk about marinating in this stuff. You have to have this. You have to feel what's going on, and that's what is absolutely crucial. There's brains involved, obviously just sheer intellect. There's experience, expertise, and all the rest of this that is accumulated over a lifetime of service. By the time you get to the three and four star level, you're then into your well beyond three decades in that point. But again, how do you try to help yourself? How does your staff, what do you need them to do to enable you to weigh all the options and then ultimately, hopefully touch wood, make the right decision. That comes down to judgement .

That's again, its skill in identifying and knowledge and expertise and experience in identifying the risks, and that's a team sport, but then it's judgement as to whether or not you can sufficiently mitigate them to enable investment to be successful in spite of the risks that you have identified.

DNSQ: Do you have a risk assessment playbook? Do you have a set of questions or parameters that you universally look at in some of those situations to inform your Judgement ?

GDP: Absolutely. Yep, yep. We have a whole, and again, it depends where the country is, what the circumstances are and so forth, but inevitably, you're looking at, in some of these in frontier markets, you're looking at what's the level of security? What is the level of the legal system in case you run into problems, what's the quality of the strategic leadership in the country? What are the chances that there will be violations of really basic concepts about responsibility environmentally and responsibility for people? There's a whole series of these that we go through.

DNSQ: Your career in the military coincided with a number of groundbreaking technological developments or just advancements. So can you talk a little bit about some of the changes you saw during your tenure?

GDP: Oh, sure. What we've seen is everything from the advent, and if you take the whole period of my career from being commissioned in June of 1974, you have the advent of precision munitions, GPS to provide precision navigation. You have unmanned systems superior on the battlefield starting in early 2000, which became then incredibly capable. You have ever better surveillance, ever better targeting, ever better communications. You go from sort of a simple radio in the clear on a single channel to frequency hopping, encrypted fm, so it's not broadcasting to the whole world. Again, the advance is just continue and continue and continue. And when we're facing improvised explosive devices all over, you have v-shaped hull, so the explosive goes up and out. But it took us too long to get that, but we eventually did. But now in a lot of ways it's about the really advanced software.

It's about AI, machine learning, unmanned systems, and not just remotely piloted, but what are going to be increasingly algorithmically piloted. And you see this in the battlefields of Ukraine. Now, Ukraine is unique in that you have almost World War I aspects, trenches, barbed wire, concertina bunkers, lots of heavy artillery, no man's lands and all the rest of this. Then you have largely late cold war era armoured systems, and then you have cutting edge unmanned systems in the air at sea and increasingly on the ground, this is going to be transformative. It already is transformative. This is the only reason, the innovation on the Ukrainian side in particular where they produced 1.5 million unmanned aerial systems in the course of the first nine months of this year. That's the only way that they can prevent an enemy who outnumbers that many times, outgun them considerably from making great gains on the battlefield and inflicting enormous casualties on them for the incremental gains that they have actually been achieving. So again, the tools of modern warfare have been transformed from what they were again when I was commissioned back in 1974.

DNSQ: What are the downsides to adopting new technology? Are there unforeseen vulnerabilities?

GDP: There can be. Sure, there can be vulnerabilities through cyberspace, hacking offensive tools. Again, they can surveil you. It's pretty well known that those have these athletic monitoring applications or are signed into these athletic, again, they're applications that allow you to track what you're doing, where you're doing, how much you're doing, share it with others. Well, the enemies figured out how to tap into that as well and has identified bases where our soldiers were in places that we hadn't said there were bases. Northeastern Syria was one of those cases, and some of our most highly specialised and special operations units, I sort of forgot to take off their app or whatever it was. That's uploading stuff automatically. There's something that just happened like that in Israel. So again, there's always now you have biometric data being taken. When you enter a country, they're taking your picture.

We take your picture at the airport now, supposedly destroy it. But again, always there are flaws in these systems that can be found by really persistent, skilled, bad guys. But Tradecraft, for example, that used to be employed by say the CIA is just no longer valid. It does not work when there are cameras hanging off, every lamppost pointed in 360 degrees and all kinds of other technology that can be used to monitor your location, your activities, your communications and so forth. So it's very, very challenging, but it has lots of opportunities for us as well.

And you should understand that generally if other people can do something that probably the US can do it as well.

DNSQ: Gen. Petraeus’ time in the military coincided with tremendous advancements in technology. From satellite technology to the internet to weapons guidance… he’s seen a lot of change. And he’s consistently called on the US Government to be bolder in its adoption of new technologies.

I wanted to end our conversation by asking the General to talk about why it’s so difficult to make that happen.

GDP: A lot of the innovation is in the private sector, department of Defence is awfully good at certain tasks, certain missions and so forth, but writing the best software or code is not necessarily among them.

DNSQ: Why is that, do you think?

GDP: Because the compensation for people in Silicon Valley is about 10 times what it is for those in the Pentagon, it's maybe not that much, but it's considerably more and it's hard to hang on to the very best people. I mean, you have to appeal to a sense of patriotism, the privilege of serving a mission larger than self, doing so with others feel the same way, and at a time when America's citizens are grateful to you for what you're doing, even if they may disagree with the policy you're implementing, the problem is that that's much more powerful In a time of war. We had no problem with re-enlistment during the war years, the height of the war years recognising there's still wars going on, but nothing like the scale of what we were engaged in during the surge in Iraq or the surge in Afghanistan.

I presided over the largest reenlistment ceremony in history in Baghdad, second year of the surge, and they knew that they're going to go back to combat because they're raising the right hand reciting the oath of enlistment after me, and I'm wondering, what is this all about? And there's no stock options here. There's not the kind of compensation incentive, so what is it? And I realise they feel privileged to serve a mission margin itself after our nation was attacked, privileged to do it with others who feel the same way and privileged to do it. When America's citizens appreciate your service and thank you for it, even if, again, they might differ about the policy that we're implementing.