Community during these unprecedented time. Every week, who will host events here on our page. Our Event Schedule will appear on our website at harvard. Com. We have a term great events coming up so dont miss out. If you want more, next monday may 11, tonights event will conclude with some questions. If you like to ask something, ask question button at the bottom where you can submit your questions. At the bottom of the screen during the presentation, youll see a link to purchase your copy of reimagining capitalism. Huge thank you in advance for all of your support during this difficult and uncertain times. You will see a donation button. If you have a copy of the book wed like to contribute to the series to the store in a different way, we would greatly appreciate it. Your contributions make this new virtual author series possible, support our hardworking staff and now more than ever, ensures the future of a landmark independent bookstore. I am pleased to enter nights introduce tonight bigger. She has a joint effort in the Harvard Business school in the general management unit. Rocket is also a Research Fellow at the National Bureau of economic research. Shes been a leading authority in organizational and strategic change for more than 30 years. The business and economic correspondent for the pbs news hour and is a Brady Johnson distinguish petitioner and grand strategy at the Security Studies department at yale university. Many awards include emmys, and global award. Reimagining capitalism in a world on fire. Answering everything happening around us, we need this book now more than ever. Based on rebeccas strenuous research and probably his experience, it shows how we have failed capitalism and what we can do to fix it. Library journal review said henderson convincing arguments will be called to action for Business Leaders and interested readers everywhere. On that, now that the authors tell us more. Rebecca, thank you for joining us tonight. Hi, rebecca. This is my advanced reading copy. I get a lot of books in the mail. This one i read and this is a book i thought wait a second, this is something to be taken seriously. Making the convenient convincing argument. Thank you so much for joining me on this program. I would like to say thank you to everyone who has dialed in. I was hoping when we launched the book to have like an in person event where i would be able to send you off with champagne and a hug. That seems like a distant paradise now. Hopefully everyone on the call as a drink. Thank you for joining me tonight. So summary of my book in ten minutes. No problem, he recovered but okay. It sure took me more than ten minutes to read it. [laughter] so first, why reimagining capitalism . Sometimes people look at me and say why dont we just throw it out the window . When you think about the problems we have and i think covid19 has really shown up in our society dramatically. We are living in a time where capitalism is not working as it should. We have very significant inequality, half the population, 400 away from financial disaster. Covid19 has shown our community does not have enough money to stay at home and stay safe. Does not have healthcare or sick leave, disability insurance. We have people performing socalled essential work but being treated as if they were disposable. Most of the productivity growth over the last 20 years has gone to the top one to 10 of the population. Its not been shared with the majority of our community. Its about creating prosperity for everyone and we havent been doing that. The second problem changed the planet. Climate change potentially catastrophic changes coming soon to a planet near you. We are doing almost nothing. Climate change is already at work. Seen in california and australia, fires. 3500 year floods in a three year period and Climate Change is going to hit most vulnerable first. We need to reimagining capitalism for our only planet. Last problem, we have a political issue. We have so much money and politics for more than 70 of the u. S. Population says the system is bricked and not working for them. 66 of the World Population in capitalism is not working for most. We have capitalism that is not delivering. Should we start out . I dont think so. I think a reformed capitalism is essential. I teach at harvard, i think capitalism is one of the greatest inventions of the human race. Unparalleled source of prosperity and innovation and creativity. We cant throw it out, we dont have any good alternatives that we must rebalance it. We must put capitalism back in balance with a strong society, Strong Civil Society and strong government. If we are to build a Sustainable Society going forward. So how do we do that . One possibility to wait for the kind of massive cultural and Political Movement we need to strengthen our government, reclaim our democracy so we build a sense of ourselves as a community. I think it is soon super important. Youre not going to solve this without appropriate recordation. Without a capable government. I think covid19 shown the rhetoric over the last 20 years that we should drown government in the bathtub. That government is the problem, thats so clearly wrong. The spectacle of our government move so slowly of the pandemic. Against each other or medical equipment, talk about taking the market to seriously. Im a huge fan of free market but thats not a good place to be using it. Need the government to step through, step forward, take charge and take the analysis. We seen the cost of not having a functional government. I am hopeful this cultural and social movement we need will happen and will seek medical change but i suggest the private sector could play a major role in accelerating this shift. I lay out what i hope is a relatively pragmatic road back to how acting alone and together can be powerful allies in driving systemic change, reducing the quality to environmental problems and cleaning up politics. I try for people who are actually doing this its not that i think this is a done de deal, five easy steps to reimagining capitalism, this is tough but i think the course will allow disaster. I think the private sector could be an important ally reimagining capitalism. Select the book in ten minutes. Youve got studies, convince us, ive been reporting on this kind of stuff, goodygoody efforts for as long as i have been a business reporter, a very long time. The response continuing his sounds great, everybody is in favor of this and doing that. Being responsible and so forth but whats in it for the firms . What makes you think the capitalist world, just take america, is going to convince us that they are going to change. Give us examples. Okay so i think its important to think about the case for action if youre a firm to couples. One is the individual case, why should i act . Going to answer that but i want to come back to the question as the collective case for action. I think one way to think about it suppose you and i are the only ceos in the world which would not be great for so many reasons but lets propose we own all the Economic Activity on the planet. I think when you have a Business Case for action, for us, Climate Change would be a serious problem. For us, accelerating inequality would be a serious problem. I think we are beginning to see the recognition amongst the people who do own most of the planet, this is the scary creepy think, you can get 15 people in a room there managing 50 of the worlds financial assets. They are beginning to say Climate Change is a problem, seeing inequality is a problem. So i think we should also talk about the collective to action which is really new and potentially very powerful but having said that, back to me, i am running a firm. Whats the case for action . Let me be running the firm and i am this skeptic as i expect most people who are running firms in this country, its good to be a nice guy and quit but i am responsible for my shareholders, thats what i am doing. Climate change, maybe years. Maybe i will be the ceo anyway but inequality, just take inequality. Whats in it for me . Lets start with inequality. Im going to suggest that there are two ways to run a firm. What we might call a local road, treat people as dispensable units, managed by the numbers, drive them with fear. Im caricaturing but a lot of firms are gone that way. Then theres a high road, that would be Like Southwest Airlines or spanish firm. In a high road system, that means you treat people with dignity and respect. You design a work system in the firm which is about incremental improvements and you have frontline people to generate those kinds of improvements. This system has named many people know called the toyota production system. Its the car industry. The trust of the people on the line managers with the court people on the line. Its half nordstrom became one of the most successful retailers ever. They had a onepage employee handbook and it said, im not going to get it exactly right but welcome to nordstrom, youre going to have a good time. Rule one use your best judgment in all situations. There will be no additional goals. I think classic system. We take care of you and in return from you work hard. Heres what i think is so exciting. If we had this for 100 years, running firms this way is a better way to run the firm but we have no much better statistical evidence that this is the case. What we have now is the way in which running a firm in which people are much more resilient is a better way to run the firm. My first thought to you is, have you considered running a high road employment . Will do just as well. This is such a great idea, how come they are not following it . How come its always southwest . Because doing it requires facing the problem what i call with the butter. Its not that you can just wake up one day and say you know, Southwest Airlines a point. I sent that gm could wake up one day and say should trust our workforce, we should be buddies and working together. Lets do it. General motors tried that. Horrible finding noise. Doesnt work. In order to build this model, you need two things. The ceo and senior team willing to do the emotional work. To trust that people on the floor have good ideas, are worth treating as human beings and not every team leader has those kinds of skills but thats not enough. The second thing is actually build the trust and the way of working so you can put in place the system. Its a transition. The people who get ceo of american, author, i dont know them but do they have those qualities . Do they have the qualities and motivation the opposite, getting to the top of the firm . Of course some are promoted because there ruthless pastors but they know they way through, i understand that but not all. One of the striking things thats happening is emergence of groups with names like business for a better world and higher inpatient leadership. Even the ce dp which is to be the central. What i think has happened, the reason i am optimistic is for 30 years, weve had dominant ideology that real managers managed by the numbers, its all about me right now. Thats what makes good management. This is my entire business reporting career which is what i was teaching, maximizing shareholders. And where has that brought us . A bunch of people are very rich and the rest of society is full of anger into something. It is not working. So one of the reasons i wrote this book is to give Business Leaders all the way up and down the hierarchy who have known for years that this is a crazy way to manage. Want to manage in a different way. I think we are seeing investors shifting from managers shifting, the ceo of aetna, incredibly successful ceo leadership of one of the Largest Companies in the country, cap there and looked around and decided he wanted to do Something Different because it wasnt working. Health Insurance Industry wasnt working. He was smart enough to see that. He discovered, because he was on the social media seats, he had a bunch of people working for him who are working at minimum wage. We are often working toward jobs, they were on medicaid. He found out these are the people answering the phones. Here was the Health Insurance company, there answering phones and were not paid enough to have a decent life. He went to his Management Team and said, how many do i have on minimum wage . What would it take to move them up . They said because its so deeply interested, they said they are paying a living wage, why do we need to pay for . He said, because a, this is unconscionable and be, there answering the phone and if we were taking care of them, they would do a better job. You know how much it cost to bring 12 of his workforce up from minimum wage to a decent wage . Get reasonable healthcare that aetna was selling when he announced that, people cried. It cost him 20 million. The profit that your was three or 4 billion. He believes that increased productivity and creativity but it it wake the rest of the firm. During the right thing. It is an opportunity to change the firm. Anyway. Good example, is an extraordinary person. The last thing you would ever say, although he was the ceo when aetna sold the company. Another example. About five years ago, i ceo i know while called me up. He said hello and i said hello. How are you . He said im doing okay but you think sustainability is just a motive and i sent yeah, i know how you think. He said you know my problem . My problem is everyone want to hire its important. Would you come and talk to us about the stuff . So i came in talk to him and i showed him the research and talked about how under leadership of an extraordinary person, an amazing man, you either went from being a boring Consumer Company that sells toothpaste to one of the ten most desirable places to work on the planet. Thats straight to the bottom line. We could talk about the fact that the focus is twice as fast as the rest of the fact that everyone else is think that but backed my process ceo. This is a guy who had a background in investment banking. Heres all about shareholder probably is. Change is company, talked about mike too, so smart that, this sounds as if i know what im talking about but lets suppose i do. Let me try this. You want me to talk about values and purpose . Is in the business was providing good but he never talked about it. He was always talking about increasing shareholder value. He started to use it to recruit. He started to look for how you would run the business different if you thought about it that way. The company has been immensely successful. Its a great magnet for talent and hes come to believe it. This is what blows me away. After five years of experimenting with this new way of talking, now hes all about heres what we do, create value for all stakeholders. Of course i would turn money to my shareholders it is about bottom line. One more thing. The ceos i know who do this, they are not about its not just ceos. We can talk about people much lower down. About love one another right now, its about holding, inherently the need to focus on the bottom line and the need to manage in this different way. People get that right, outperformed, i really think the upper from. One of the things in your book, the punchline there, the moral of the story was, as you alluded to a few moments ago not just a particular work but consumers care about these values now and one of the pressures you see that might change the world so it reimagines is consumers, all of us are able in our own ways to begin to put pressure on companies that then respond in the ways that you think are better for all. You are exactly right. Without Research Suggesting consumers would not pay more sustainable product. The exception of some consumers, economic women drive from cambridge, most people would pay more. What we are seeing is that people will shift. If you offer products of the same quality and give them what they want and by the way, people will shift their behavior. Here is what i think about this whole issue. I think the world is facing a kodak moment. I was a professor for 20 years, i studied firms that would not change including kodak. You know what i would say . The world might be changing but maybe not. If it is changing from a we are not going to make any money and if we are going to make money during the new thing, and i spent a year trying to convince apple to be taken seriously. When i think about this moment now, we sort of know we need to change. We know what we are doing is working. Ten years ago, when i started teaching, i had 28 students in the class now we have 300 and they asked me to take these on leadership in government. Because everybody knows. What we are feeling is to really important things. One, the world is changing. Look at elon musk. He moved into electric vehicles way ahead of the curve. He really pushed and took the technology down the learning curve. Now the industry is changing because everyone can see it coming, they can see thats what consumers are wanting. Consumers are shifting. I understand why your are cynical. All this high variance like we should just do good in fact good. We havent even got to the second part of my book which is about of course, even if firms do all this, its not enough to drive change. Theres lots of moving parts here. Not a done deal but maybe, just maybe this is the moment. I keep wanting you to make the convenient convincing arguments. Mark there was a man who was a relatively low cover guy inside, was given this responsibility. Commodity market, not going anywhere. What you do . He went to kenya and started talking to the people and he learned two things. First, conventional ways of growing tea met in 20 or 30 years, there might not be t. People were dumping too much fertilizing on the ground, trying Climate Change was driving higher and higher up. Theres the going to be no more mountain to grow on. Living working conditions for those picking were awful. Inadequate healthcare, horrible stories. Growing tea eventually was a disaster. Second thing, there was another way. Can you escape, a big demonstration from if they were growing tea in a different way. Nearly 50 higher than conventional t investment they could pay their employees a decent wage and give them healthcare and take care of them. So michelle