Recent years to fall back on if i was stillwnhi wouldnt read t. Rose we conclude this evening with david kelly and his brother tom kelly. They have written a new book called creative confidence. Im thinking is that methodology that weve always used as designers. You know, its kind of like, you know, its a process like when a writer has a blank piece of paper and cant figure out how to get started, its our way of Getting Started on that. You know, understanding humans, building prototypes and telling stories about the future. I mean, the designers have this lovely job, inherently positive profession because your always painting a picture of the future with your new idea in it and see if anybody like it. Rose Alan Greenspan, david kelly, tom kelly when we continue. Captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. Let me start off by just saying, we had a terrible problem forecasting, because when we look out into the future, it is incredibly foggy and i want to try to indicate what it is and why that is the problem. Rose Alan Greenspan is here. He was chairman of the Federal Reserve from 1987 to 2006. He has spent a lifetime studying the complexity of the u. S. And global economy. The financial crises of 2008 took nearly everyone by surprise, leading economists and the brightest minds on wall street were forced to rethink fundmental functions, the map and the territory, risk, human nature and the future of forecasting is a guide to measuring economic vacialsz variables one thought to be immeasurable. Im glad to have Alan Greenspan back at this table. Welcome. How do we decide on the map and the territory. Its a little abstract and thats what its supposed to be. The map is supposed to be the conceptual framework what were doing with and the territory is reality. And economists always try to get the two of them to come together and a good deal of the times we fail. Rose all right. Lets talk about all that. Role clip. This is a clip with you and i n an interview before you wrote this book. Something you can never the quite cal brate is the human emotional aspect of markets. Im glad you raised that issue charlie because im just starting to write a economic. Its call the economytrics of human name. Rose so you do put numbers on. I dont know that yet. I know i can do it in a number of instances but whether i can do it in enough and when i finish the book i will know. Rose what have you learned. Now that you have done all this study, what have you learned about the measurement . Well, what i first started on is an extraordinary event. Its not that all the leading forecasters didnt know we were in a bubble at one point or another. Thats not the issue. Thats very easy to tell. The trick and the very difficult issue for forecasting is how can you pinpoint when the bubble breaks. But more importantly, what are the consequences of that. And this book attempting to attack those two questions was fundmental to how the economy functions. As far as im concerned, theres one critical issue which i think probably more than any other was, that was essential for writing this book. I had to discard the basic premise which all classical economists or those of us who were involved in that form of economics and computerbase models, and have to look at fundamental premise. And i basically assumed as we all did that not only, that fundamental premise is that human beings act in their own long term self interest most of the time. But the general belief of all economists who are forecasting, is while it is not only most of the time but when it isnt, its random. And you can disregard it because it cant be muddled. What shocked me is when i started to try to actually model it and i was getting extraordinarily, extraordinary results. Rose and what were they . Basically, that socalled animal spirits, which is a term rose talking about the john precisely. And they are deep seated aspects of human nature. Predictable ways. For example, you can measure fear. Everybody responds to fear when their values are say life and limb and net worth under stress. But how they react will be different person by person. By major problem that we deal with here is that fear is the most prominent factor in peoples decisionmaking response and which is far greater than euphoria or greed. The way we do that is if you take a look at the Business Cycle and put one on top of the other, they all go up as euphoria builds, greed builds and it gets to the top. And this is the top. And then it goes down very sharply. When fear takes hold, it is a very much stronger individual view or individual input i should say than as euphoria. Then we have a whole series of other inbred propensities, i guess thats what i called them in the book. Which are remarkable stabilities going through time which fix the new way im looking at the economy. I mean, for example. Theres such a thing as time preference which is a fundamental issue in economics, suggesting how People Discount the future. And the most important evidence of that is Interest Rates. We look back to 5th century b. C. And youll see Interest Rates are approximately where they are today. That tells you something about fundamental nature and that type of characteristic. If you look at the savings rates, we have data going back to the 19th century, no trend. For similar reasons. I dont want to go through all the full detail of this, i suggest you read the book. Rose thats a good idea. I do maybe 10 or 15 of these and then i bring it altogether. And i was quite surprised how much i learned in the process. I started off on the basic discussion that was introduced at the beginning of the discussion. Not really hopeful. Rose that you would be successful in finding a model you could project. I thought that i would try and probably succeed only in part or maybe even fail. In my judgment. I would like, you know, i suspect my judgment is slightly biased here, i admit to that. I think i made very significant progress. Rose nobody took more hits after, after the crash than you did. And then people said heres a guy who thought the market would work perfectly, you know. And it didnt. And hes to blame. Yes. Well, first of all ive been around 21 years and remember harry truman said if you cant stand the heat get out of the kitchen. Rose right. I found that opposition very useful. Im acutely aware who im dealing with. I got a late of praise during the 18. 5 years there that i didnt deserve. Rose why do you think that was. Because they gave you too much credit for being the guy who was going to keep inflation under control. It was more than that. Yes. Fundamentally. From the point of view of what was supposed to do, the Federal Reserve. That was it. But mainly people, people would come up to me all the time and say thank you for my 401 k . And i didnt know how to handle that and i said basically well i appreciate that but i had very little to do with your 401 k . Rose they thought you were the steward of the monetary side of american economics. I think so. Yes. Well, its hard to know what everyones thinking. Rose yes, but you read. You get out. I do, i do get out. But its very clear, it made me very uncomfortable. Rose what made you uncomfortable. The fact i was getting praise more than i deserved. Rose you were getting criticism that you didnt deserve questioningly. Not particularly more. Rose its hard for me to believe you felt more badly about the praise you were getting and didnt deserve than you did about the criticism that you felt you did not deserve. Im a human being. If you read my book, youll find one of the things i do in trying to determine whether certain of these inbred propensities are real, i start with myself. And i say how do you respond to certain things. And i say such and such. And then i realize so does everybody else in the same way. I mean for example, i say very early on in the book. I was brought up in canyons of new york and wall street and i really didnt get out into the real world until i got into music. And then later i got into National Economic events. And i realized one day that everyone smiles for the same reason. Pleasure. What pleases them is sphif. But i began to realize that we are a homogeneous species. Theres something about human beings and our nature, which is replicated time and time again. And for example, jane austin writes about culture and early 19th century britain. Its exactly the same. Teenage girls behaving precisely the same way back then as they do now. And ive now seen a number of generations of teenagers, and they have all the same rose fundamental aspects of human nature that dont change. Precisely. And that is what is critically important, because that determines how people act. And we dont want to know how the numbers would look if people were essentially operating on their own long term self interests. Rose let me just go back to Interest Rates very quickly. Do you believe that low Interest Rates did or did not drive, you know, the euphoria that led the Housing Market to collapse because of mortgages that were unable to be paid. As i say in the book, yes, its low Interest Rates but its low long term rates, not short term rates. And indeed as i say in the book, it really goes back to the end of the cold war when the cold, when the berlin wall cam down, the economic ruin behind the iron curtain was way beyond expectations of what most, even panelists in the American Intelligence Agency were saying. And as a result of that is a vast proportion of the socalled third world shifted from fabian socialism and regular types of things all to market economies especially china. And when that created a huge boom in the third world. They couldnt consume it, and theres a huge amount of savings flooded on the market which brought long term Interest Rates down around the world. And its those long term Interest Rates which fell very dramatically at induced housing boom everywhere. United states had a housing boom which was average, but the economist, the magazine used to follow 20 countries. And it looked all the same. And the reason was that when long term Interest Rates go down, the financing capability to invest in longer term assets goes up. And thats what we saw. The argument against easy money policy upon the fed might have been true. But there is no evidence that it was indeed i dont actually go into detail. Rose i want to make sure i understand when the change came and what exactly is the change in terms of your analysis. Youre saying here, i found out that there was something called fear that had a stronger punch than exhill race. Rose and you can measure it. To my surpriseness. Rose how much are you influenced and this always comes up with you in any extended conversation by what you learned from ayn rand and human nature. I think we had this conversation before. Before i first met ayn rand, i was already a libertarian economist. But i was a positivist. It really says if you cannot measure it, it doesnt exist. And that eliminated me from all contact of understanding how human beings behaved thats all irrational and not worth doing. She denied to me that i was wrong. And that didnt have a full effect immediately, but it grew on me and i look back now and i think some of my views that evolved in recent years fall back on if i was still a logical positive, i wouldnt have wrote this book. Rose knowing what you know now and what you express in this book, would it have changed any decisionmaking of the Federal Reserve under your leadership. Its very difficult to say. I suspect not but i cant say thats for sure. Rose would it have caused you to strongly recommend the fed not take a certain direction that it took after you left into the chairmanship of ben bernanke. Well one of the problems i have with questions like that is that paul vocar never commented on rose dont worry about the president or paul vocar. Just tell me whether ben bernanke made mistakes. I was about to say i applaud the same principle to bernanke, and thats as far as i go. Rose what kind of historian are you, and what kind of, we depend on you to bring your experience so we can understand the great issue of our time and you refuse to criticize no, its not necessarily criticism, i may be complimenting him. Rose why is not necessary for us to understand the kind of mistakes from the past. Isnt that what were supposed to do, learn from history. Wait for my next book. Rose come on. So let me just talk about where we are today. When you look at the most recent crises, can you give me your assessment of what happened in terms of the debt ceiling and in terms of using that as a weapon which Warren Buffett calls a weapon of has destruction. I think something very fundamental has happened in recent years. Going back to fundamentals. I discussed this actually in the back as well. Rose right. The people like we have in the United States have to agree on certain fundamental principles. Thats the bill of rights. Thats basically freedom of the press, freedom of speech, assembly, religion. Everyone agrees with that. And we go much beyond that. You have to be willing to compromise on all other positions because you cannot have a functioning society unless people recognize they want to live together because of the fundamentals. After that like weve done for a very long period of time, a degree of comedy in the political system, which weve lost. Thats what i love to use because it was so graphic is jerry ford, president ford used to rare against speaker tip oneill from 9 00 a. M. To 5 00 pm. Even though they served in congress tomorrow. At 6 00 m tip would come over to the west wing and have a scotch or bourbon with his old buddy jerry. Rose my interest is understanding how you might create a different atmosphere that would allow people now charged with finding common ground, to do that. I mean, do they, for example, Warren Buffett suggested maybe what they need to do is not have any, just go off somewhere and have the privacy of not a public discussion. They dont have to go anywhere. The troubles, im not sure that will work. Were going to find out soon enough. Rose exactly, by december 13th. Remember that the crucial issue is what you mentioned before the gerrymandering thats been going on. If youre sitting there with having one previous election, youre in the house, 8020 votes. And you have a very strong set of positions as you have people in your district. If youre interested in staying in the congress, you dont care what the president of the United States says or anybody else for that matter. Rose too big to fail. Does it continue to exist and should it exist. It continues to exist. Its getting worse, and its a danger to the system. The reason it is a danger is basically an issue which is a little complex but i hopefully describe it in there. Its how savings move into investing. The only way that you got a growing standard of living is that the scarce savings of a society are channeled through the Financial System into real Capital Investment which builds up the Capital Stock and thats the base of where our standard of living comes from. We have a limited amount of savings, to the extent that there are firms which are too big to fail. And, theres another qualification here that they are inefficient. They are absorbing the savings that would ordinarily go into High Tech Industries and enhance the standard of living, and i cant go both places so the main problem with too big to fail is that they are absorbing the savings which should be focused on high tech and more advanced type of Capital Investment. Im moving around. What problems do you have with entitlement programs . I have two things wrong with them. First, theres a general view on the part of the populous that the moneys they pay into the Social Security trust funds plus the interest is in fact adequate to fund the benefits they are getting. They believe sincerely that that statement is true because in many of the people in the political realm tell them its true. I mean for example, theres an aarp had a very interesting ad, which they basically said that its been my impression that if people believe they are getting charity, they will not take it. I go through a very interesting thing about what happened with the Social Security commission in 1983. Do you know rose yes. He said he never bought, he only bought right companies. Yes. Anyway. I assume that we were going to solve the problem basically by taking general revenue and sticking it into the trust fund. And he got up and said absolutely not, that would make Social Security welfare. And there is a very strong stream amongst those who essentially were there as he was when Franklin Roosevelt signed the bill in 1935. And that whole view was that this is very similar to private sector defined benefit programs, which they were actually intended to do. The only problem with this is while it is certainly the case that i would say the vast vast majority of people who are getting Social Security for example believe they are getting their own money back. Rose i think thats a perception. And that perception is actuaries of the Social Security trust fund say its fun. Rose whats false the reality or perception. Precisely. Sort of like the map rose so theres also the question of regulation. And does it act as not a perfect bill as tim geithner would tell you, but as creation of rules and regulations that would be a kind of monitor, so that circumstances that lead to bubbles wouldnt happen or in a sense, removing or restoring some of the kinds of oversight that both was a warning, you know, and intervention. As doddfrank is written now, the answer regrettably is no. Doddfrank, for example, the Capital Requirement is very important. In fact, i would even go farther than that. I would say that what were trying to avoid is the corrosive collapse in doubles which have high leverage. For example, the dot com book collapse in huge losses but the economy barely budged. And theh2 . Qpajthe toxic acid, toxic acidt that time which is stocks were held with 401 k s, mutual funds, households, no debt to speak of. If there is no debt, you cannot have failure and you cannot rose right. There are situations in the past where we went through the big bubble, it burst. Theres a big loss but no economic rose a lot of those companies had core values, i mean they had core strengths its just that they had a stock price that was inflated. Yes. That was certainly the case. And i can give you stories about that which will make you crazy. But the whole point here is this. What youre trying to do is to put in regulations which will effectively solve the problem. Big, big increase in capital in and of itself will cause, will prevent contagion he occurring. Rose what do you think about the Justice Department paying 13 billion i was saddened by that because i was on the jp mortgage before i went to the Federal Reserve. And the crucial issue with the board is how do we maintain our triple a rating. And they were very scrupulous in what they did. I have no way of knowing obviously the specific charges. Its beyond my, i wouldnt say its not beyond my interest, its beyond my knowledge. Rose right. But im saddened that weve gotten to this point. Because remember j. P. Morgan was actually a very instrumental player in helping the government rose but are you also saddened by the fact so many people found themselves with mortgages they couldnt pay for and lost everything. Do you know what i think about that. Rose and so many people who invested. Go ahead. No no, actually, i think whats wrong with doddfrank in a way is i dont think that the particular regulations theyre setting up will work. I think a necessary condition when youre having a regulation is to explain what it is and what its supposed to do and if it doesnt, forget it. Rose you feel comfortable were on our way and so therefore unemployment now down to seven plus. Seven plus two. Were doing better than europe. Yes. Rose yeah. And by the way, chinas not doing all that great compared to what it was doing. Correct. Rose brazil has slowed down. Obviously. Emerging nations. So everybodys saying well maybe america is not so bad. China is doing a little better recently. But we have a fundamental problem which i discuss in this book namely that the reason why we have such a sluggish recovery is that the part of the economy, which is represented by investments and assets of 20 years or more in namely buildings, that is essentially collapsed. Im including residential buildings and nonresidential buildings. Thats why we have been soggy here during all this period. And thats caused by a huge degree of uncertainty. That has to be left. But there is some evidence that it is being lifted. The stock market is behaving well. I should think that if it continues to do so, that could bring the economy up with it. Rose with an amount of time and questions that i want to get to some of these. We were talking about the Federal Reserve it goes now from bernanke to yellen. You know janice yellen. I do. Rose and you have some policy differences with her. Im just trying to say yes, but that is good not bad. She i find, she is a highly skilled economist. We get along very well. Rose her projections have been remarkably accurate. Everyone, its hard to know. I dont want to, let me just say one thing about her. I learned a lot from her when she was on the board and i was chairman. Because there was often a number of academic arguments and academic papers, which i hadnt had a chance to read or if i did i didnt understand. Rose so how do you feel about the Transparency Initiative thats coming out now . That we ought to know more about the way the fed operates and it should be a bunch of people at some hide away in jackson hole or something. Thats fine. Its just that remember that one of the things i ran into is that, and this goes exactly with the whole concept of how people respond. On many occasions, the Federal Reserve had a statement which said we are not raising our federal funds rate this time. But we may well raise it the next time. The markets open and boom its fully discounted. So were dealing strangely enough with precisely the problem that im discussing in this book that people dont behave in their long term self interest. They respond in a certain way which is basically animal spirits. And markets do precisely that. So i think you have to be a little careful with rose so you think less transparency is better because markets wont go off into their. I think that it depends on what type of transparency youre talking about. If youre clarifying rose publishing an inflation target. Inflation target is fine. Its anticipating your future actions. Is a problem which has very considerable advantages if you can make it work but thats very tough to do. Rose lets one area of your book i read Steven Bernstein washington post. He brings them right back to where he began to an unshakeable fate in free marks and typically towards Market Regulation and conviction that progressive taxes and social spending are to blame for slow growth, stagnant wages and exploding deficits. Those who have followed his career know that it was greenspan who gave the green light to bank consolidation, greenspan who put financial deregulation, greenspan who advocated global rules that would reduce capital reserves and greenspan who blocked efforts to crack down on awe bossive subprime lending. But if youre looking for him to accept any responsibilities for the crises that ensued, you will be sorely disappointed. I suggest that people read the book and conclude themselves what they think about that. Rose thank you for coming. My pleasure. Rose Alan Greenspan. The book is called the map and the territory, risk, human nature and the future of forecasting. Back in a moment. Stay with us. I thought a lot about what was i put on earth to do, you know. What was my calling. What should i do, right. And i was lucky because i had lots of options. Wed been working in health and wellness in k12 and the developing world and there were lots of projects i could work on. But i committed to at this point the thing i most wanted to do was to help as many people as possible regain the creative confidence they lost along their way. Rose the Global Design and Innovation Firm in silicon valley. The Company Breakthrough inventions have transformed businesses, government and healthcare. David kellys the founder of ido and a pioneering Design Thinking. He also created the d school at sanford university, he built tom kellys apartment ideal and his book the art of innovation and ten faces of innovation an executive fellow at uc berkleys high school of business. Together they have written a book sharing their secrets so everyone can find their creative powers. It is called creative confidence unleashing the Creative Potential within all of us. Im pleased to have tom and david kelly at this table for the first im. So welcome. Great to see you. Thank you very much. Rose explain the brother act. Well, you know, weve been close our whole lives. Hes four years younger than me, and in a mid western house which didnt have enough bedrooms, he and i ended up in the basement together and that was our bedroom. So for 14 years before i went to college we lived there. Kind of left alone in a basement, you can get into all kinds of trouble. And so but the story of the book is really, weve been close our whole lives. But in 2007, i got cancer, throat cancer and it was bad stuff. I told you that story and its like you know, 40 chance of survival and my lovely brother was there every day for me. As i started to get better, as it was clear i was going to survive, we said you know we got to celebrate this. We dont usually hang out that much in a company like ours one goes one place and the other goes the other kind of divide and conquer. So we decided we were going to do something about this, celebrating my survival. So we decided that we would travel a little bit and then we would do a project. And so the book was the project that we decided to do. Rose ill do the book in a moment. So where did you travel. So david let me choose. Anywhere in the world you want to go. And so i picked a place thats easy for me bedavid is less likely to go on his own which is japan. We spent time both in tokyo and kyoto. I speak enough japanese to get by and we had a fabulous time and weve got a photo book to commemorate that trip. Rose whats the link between design, what you do, innovation and the things you do and creativity. Well design is kind of a Design Thinking as we call it is kind of a methodology around how you kind of routinely innovate. Its a process that you can mindful of and hold on to. When given a difficult task you say i know how to do that, ill apply this process i used before and was successful. Creativity is the natural ability that everybody has to kind of come up with big ideas. And so the interesting thing is design is kind of what you work at. Creativity is something that you have naturally. We just need to unlock that. Divine is more like playing the piano. Creativity is something that you just, that you always have had since childhood and you may have kind of opted out of it for a while. Rose and Design Thinking is. Design thinking is that methodology that we always use as designers. Its kind of like, its a process like when a writer has a blank piece of may and cant figure out how to get started, its our way of Getting Started on that. Understanding humans, building prototypes and telling stories about the future. I mean, the designers have this lovely job inherently positive profession because youre always painting a picture of the future with your new idea in it. Rose the interesting thing about you is that often we think of design and we think of products. They may be cars, coffee cups, they may be books. But you have in a sense enlarged that idea. Almost design is a way of thinking about a solution to a problem or something that needs to be changed. Thats exactly right. So whats happened is you know design was thought of that way and so somebody, if they wanted to see me, some higher up in a company or the president of the university would come and say to me where did you get those glasses or i was in charge of cool stuff kind of as a designer. We still do that, you know. But what happened is the world decided that this kind of creative thinking, this building on each others ideas that design was a methodology that they could get all of the, you know, the deep thinkers as a way to get them together to Work Together that because our process is so human centered that you know, it was going to be kind of a low barrier to getting people to Work Together. So its become a team sport. I mean Design Thinking is kind of the glue that holds these, you know, High Performance teams together rather than the guys who are making it beautiful at the end of the project. Rose didnt you say 25 years ago that you thought design was relegated to the kids table. It felt that way when i joyed david at ido. We were at the kids table. We were obvious having this kind of optional if you over at the side. Rose with the building blocks. While the real business was being done and the board room and the conference room. And the great thing, it feels like the world came to us or somehow creativity became central. And so now we get to sit in those board and Conference Rooms so we get a chance to have a bigger impact on the world. Rose creativity, innovation is simply a product of creativity. We believe that everybodys creative. Weve got to stop this processing which we divide people into the creatives and noncreatives. Everybodys creative. Rose they have potential for creativity. Everybodys got it in their path when you think of kindergarten. Some people just buried it somewhere along the way. Rose or beaten out of them. Or beaten out of them or their Education System or by growing up and are trying to do the right thing for them push them toward the safe thing when in fact we believe people got to follow their passion. Rose how do you unleash it. The gray great thing is like it is possible if you have some methodology to it, if you are willing to kind of practice at it a little bit. Theres a story in the book about a young guy we work with, who when theres a kid he wanted to be a professional music. He loved performances but he hated to practice, right. He didnt think you should have to practice, right. If you were good and just come naturally but in fact you do have to work at it. So as a High School Kid he got a chance, he got to see yoyo ma play, it was a great experience and by lottery he was picked to be one of three kids to ask yoyo ma a single question. And his question he smiles when he tells this now but he said, his question was now that youre a professional musician, isnt it wonderful because you dont have to practice anymore. And yoyo ma says i have some bad news for you. Six hours a day, right. And so it does, you still do have to work at it. Its zz not like creativity cs from on high. Rose jazz musicians will tell you the more sophisticated you are about music the better you can be as respondent anywayity. Your intuition is informed by your experience. So the more you, the more times youve gone down this path of coming up with a new idea and testing with people and trying to understand the right thing. Your intuition is informed and so you, its easier to leap to that big idea, to that. None of our process gets you away from having to have that Creative Leap to a new place. Rose you also talk about rediscovery in your creativity. Thats what youre trying to do. Yes. So at stanford and with our clients at ido. Rose creative confidence. Yes. So what happens is that they have it but its kind of hidden. Its like a fear of being judged. You dont want to show that you have this idea that you think that theres this really interesting way to go because if youre just silent, nobodys going to like you know say thats a bad idea or that was charlies idea, thats why we went down. If you attach your name to a creative idea, it might be negative for you. So weve been really surprised at just how easy with this we have this process we call guided mastery that we learned from stanford and psychology professor. And basically what happens is if you take people who are not thinking of themselves as a creative person, thinking of themselves as analytical person, if you hold their hands and take their through a series of products where theyre successful and they come to a break through idea and take them to another and they have a big idea there and pretty second they flip and they say oh my god, my teams coming often with this wolfed idea or i call up with this wolfed idea and that moment where they finally in their body they think of themselves as a creative person is so emotional you see it over and over. Rose is that what alan bedour. What did he teach you. Yes. He, its more like he gave us the language and has the kind of psychology, he has the kind of scientific studies to prove it. Weve been kind of doing this like bouncing around in the dark and we figured out in this works. But he calls what we call creative confidence in the psychological literature he calls itself efficacy. Its the same thing, that you have a sense of the world and that you can accomplish what you set out to do. Thats really the same thing were talking about. Rose what do people mean when they say look at this with fresh eyes. Well to kind of let go of some of your assumptions and things like that. What we find especially when im working with Senior Executives is they have this, pertise, this expertise thats really important to their company. Very valuable. But sometimes in developing their expertise, theyve learned to screen out distractions and anomalies. And sometimes the distraction or the anomaly is the opportunity today so thats why you have to look with fresh eyes. We have a phrase we didnt exactly coined, we borrowed to try to get these people into that mental state. Theres a word in the dictionary everybody knows, deja vu, its been there before. But the mental state we try to get people into you is opposite of deja vu so we call it vu deja. The home page of your own website but you see it with own insight you see opportunities every time. Rose why do you say i would rather build the taj mahal out of toothpicks than write a paper. Whats wrong with writing is a paper. Its not the way im wired. Like writing is like i have to choose every word and im insecure, i dont have a lot of creative confidence around my writing. But i love to build things so i know i can, if i want to like make something that will convince somebody that i have a good idea, i could write a paragraph about it. But if i can build a Little Something i think i got a better chance. Rose that means in a brain you have a visual acuity. Yes. Everything, i do everything. Tom and i are different that way. Hes a writer and im this kind of visual person. And so its the same way with kids, right. You have to, a lot of of the stuff im sure anybody you talk to who is big in k12 education is talking in a way the kid can accept it. If he and i were in the same classroom wed have to have two different teachers. So in the process of the book for that reason, we cant work from an outline the way our High School English taught us we worked from mind maps. The essence of the book came out for mine maps written on the white board in davids office. And from that, the idea is build and build and build until youve got enough for a book, we know because we just did it. Rose okay, go ahead. My map shows the connections between the things. Adjacencies. If you look at mine maps, thats there. Rose take a look at this. This is a diagram in the book with the concept and thinkings. You can see it over here. Yes. So you know, normally when you try to look for an innovation, theres lots of places to look. You know people who have come up with the technical idea, right and that technical idea is you still have to figure out if you can make a business out of it and you have to find out whether people will accept it or want it, right. If you go from a business point of view, you still have to be able to do it technically. It has to be feasible and you also have to find out. Rose so viable, feasible, attractive. Right. We come in. Most of our team we come in from the people side. We would rather take the technical and the Business Risk but understand what is really meaningful to people. What do people really care about. And then go out and take the technical risk we can do and the Business Risks that we can actually deliver it. Rose the thing i love about what i learned out of creative confidence is at the Design School and all that you do at ido, you have a bias for action which means. I could get one thing out into the kind of corporate america, thats what i would do. What we normally do is we plan a lot. We sit around the table, everybodys got their computer open and we talk but we dont know anything yet. I mean im all for planning but after youve actually jumped in and kind of understand whats going on, you know, like come way up to speed and the kind of messiness of whats in the problem. Rose just get started and dont worry about perfection. Were so concerned about looking like were doing something wrong. Instead of just like wallowing in the mess. Rose exactly. Right. I think i a perfect embodiment of that idea of just get started the Program David started at the school theres a program called launch pad. In entrepreneur courses around the country there are these courses where the final deliverable in the course is a business plan. But in launch pad, its a ten week course and by week five you got to have customers, right. So you got to have customers in week five. Youre not spending along planning at all. You are building to think from the very first day of the class. Rose so tell me about the Design School. How is it different from school of architecture or school of Chemical Engineering or electric engineering are which is where i think you went. Yes. Its the difference between kind of depth and breadth. I love people who are working on winning nobel prize and stuff please dont stop doing this. We need you. Its just that the university has been kind of trapped in this depth paradigm where you know like they talk about the silos of higher ed and its true. So what happened to me was when i got to kind of had tenure and could do anything i wanted, i started teaching with my friends. It was kind of an emotional thing i wanted to teach with my friends. So i did a guy from the Business School or computer sign. He would bring his students and id bring mine and wed teach the class together. I saw this phenomena kind of twinkle in the eyes of the students they loved working together. They only worked with people of their own kind and they saw that their ideas are on top of these other strange persons ideas that the combination was something and more interesting i found the teaching was more interesting than staying home and teaching. So i decided that we should clarify this. We should make the University Like sanction it and have a Big Institute to do it and so thats how it happened. Rose it reminds me of the meefers where they go in and steal somebody. They need somebody who knows how to pick the lock. All of those skills. Thats exactly true. But picture the our of these professors who are so smart. If you can get them to like kind of be together. Not just have a series of lectures that add up to something, but if they are really in a classroom together and fight with each other and disagree. The students love to see the professors fight. Having different point of view that kind of work at each other. Rose what was the most fun about righting this book . Well, it lived up to the promise we made to each other, right. So david and i are not really good at leisure. We both have kind of full time jobs. So we dont golf, we dont like play tennis together, things like that. And so we couldnt, like the idea how far just hanging around together playing cards or whatever it is people do, just wasnt on. And so we knew if warren going to spend a lot of time together, it would have to be a project. Something we would kind of be building together. This was certainly that project. It was seven days a week for years. Rose it is wellknown that david kelly and steve jobs were very very good friends and they both were living with cancer. For 60 minutes i did a prefile of david and ido the school i mentioned earlier. Heres a clip from that. Here it is. He came over and said look, dont consider any alternative, go straight to western medicine, dont try any herbs or anything. Why do you think he said dont look for alternative medicine go straight to the hard stuff. I think in his mind he had made the mistake that he had tried to cure his pancreatic cancer in other ways other than, i mean he just said dont mess around. When we both had cancer at the same time is when i got really close to him. And i was at home like sitting around in my skivvys waiting the for my next dose of something. This was the day after the iphone was a announced and he had one for me. It was a lovely feeling. So he decides to hook it up for me so he gets on the phone to at t and peace going hes going to hook up my phone and its not going well. Eventually he pulls the im steve jobs card. He says to the guy im steve jobs. Im sure the guy on the other end says yeah body im napoleon, like get out of here. So anyway he never really did rose he never hooked it up. No, not that day. Rose thank you, great to see you. Thank you charlie. Rose thank you for joining us. See you next time. Captioning sponsored by Rose Communications captioned by Media Access Group at wgbh access. Wgbh. Org captioning by vitac, underwritten by Firemans Fund announcer the following kqed production was produced in hidefinition. Its all about licking your plate. The food is just fabulous. I should be a psychoanalyst for the amount of money i spend in restaurants. I had a horrible experience. I dont even think we were at the same restaurant and everybody, im sure, saved room for those desserts