WEBVTT

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We begin this evening with our ongoing

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look at the 2008

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presidential race.

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Our guest is Congressman Rahm Emanuel.

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He is from Illinois.

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He's also the Democratic Caucus chair, the fourth highest

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ranking member in the House Democratic leadership.

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He's also close to senators Obama and Clinton and has not

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made an endorsement.

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In the 1990s he was a senior adviser to President Clinton.

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The Chicago native is also a close friend of David Axelrod,

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Senator Obama's chief strategist.

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Last night Senator Clinton captured a critical victory in

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Pennsylvania that bolstered her case to stay in the race.

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Here is a part of what the candidate said today in Indiana

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which holds its primary on May 6th along with North Carolina.

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>>SEN. HILLARY CLINTON (D-NY): So as

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you think about how you will make that hiring decision after

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the longest job interview that anybody can remember, ask

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yourselves: Who would you hire to turn this economy around?

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Who would you hire to protect our jobs

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from unfair competition?

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>>SEN. BARACK OBAMA (D-NY): When

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John McCain suggests, as he did last week, that he had looked

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over the Bush economic record and he thought that we had made

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great progress.

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That is -- that's four more years that we can't afford.

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Joining me now, Congressman Rahm

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Emanuel from Washington. Welcome.

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Hey, Charlie, how are you?

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Some people say that you may play a role if one

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of these two candidates decides that they're not going to make

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it all the way.

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Is that accurate?

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Well, I don't think so.

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I think the most important people that are going to play a

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role are the voters in the Democratic primary.

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That's number one.

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I think people are all in search for, you know,

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somebody to do something.

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I think the number one person or the number one group of people

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will be the voters who are participating in

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the Democratic primary.

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The second thing that I think is very, very important will be

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the person that loses in this process.

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Because I think, Charlie, how the loser loses will determine

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whether the winner can go on to win in November.

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I think that is the more -- if you say, you know, play a role.

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I actually think, you know, these -- both Barack and Hillary

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are very smart people.

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They understand the politics that are going on.

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They're both making their cases to the voters.

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I think the most important group of people to determine the

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outcome will be the voters in the primary process.

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The second will be these two individuals who

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are the two candidates.

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If somehow somebody is going to play another role, there may be

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a place but I think the first two important places are the

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ones I just mentioned.

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Fair enough.

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Tell me when you mean "playing a role" and

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"how you lose," what's

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the right way to lose and what's the wrong way to lose?

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Well, let me do this by analogy, OK?

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I thought, and this is not to castigate, it's a long time ago,

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we had once a primary in our party, Ted Kennedy

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versus Jimmy Carter.

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And I thought then that the party could have come together

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in a way to help Carter more take on Reagan.

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We had a divisive primary.

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And that's not to castigate and I want to say anything or where

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I was or what anybody was doing back in 1980, but if you pull a

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role that was seen as kind of a half-hearted endorsement for

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your nominee, then you're not really pulling your side of the

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weight to help the general election.

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So what I mean by that is, the way the loser loses and what

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they do as it relates to the winner will have a lot to do

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with whether the winner can go on and win in November.

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And all of us have got to be good Democrats and keep our eye

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on the most important goal which is in November, bringing a new

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direction to this country after eight years of George Bush.

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And so that's why I think how the loser loses will determine

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whether the winner can win.

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And I think if you looked at Kennedy-Carter in 1980, that's

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an example of -- in my own view, of what not to do.

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The Republicans say that happened with Reagan

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after Gerald Ford won the nomination.

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There's no doubt about it, right.

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So that's why I get back to not just what I state.

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And I think that that is a very, very important moment in time.

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You just can't go up there, give a perfunctory, emotionally void

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speech, fold the hands, walk off stage and never be seen before.

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Because the issues that bring us together as Democrats, on the

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economy, our role in the world, our health care policies, what

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we will care about and agree on, what we care about and how we

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would come to solve those problems and meet those

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challenges that are facing the country and the families across

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the country, far more agreement among us than disagreement.

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This is not an ideological battle that either Reagan and

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Ford had or at that time Kennedy and Carter had.

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What is this a battle about?

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Who will be our nominee.

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And what -- you know, the difference both styles and

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qualities that they bring and somewhat, you know, where they

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set their priorities on there.

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And there's also -- you know, if you go through the process and

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look at -- you know, and analyze it somewhat like (INAUDIBLE),

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there are different kind of voting groups that make up the

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Democratic Party and where they sit and kind of what role they

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have in sitting around that table making up the coalition

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that makes up the Democratic Party that will

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determine our nominee.

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Is there a risk that this fighting is tearing

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the Democratic Party beyond repair?

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Absolutely.

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You know, I'm so glad you asked that. Absolutely.

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First of all, this is not ripping the party apart.

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You know, I'm from Chicago.

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I mean,.

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Charlie, you're doing your taping from New York.

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Anybody that has been in politics a while, I mean, this

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is not -- let me say it this way.

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This is not defending your thesis at Harvard.

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On the other hand, this isn't ugly politics.

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I mean, let me give you my example --

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This is beanball, is that what you're saying?

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No.

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I said this is not politics like I had in Chicago or anything

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like that.

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I mean, this is not negative by any stretch of the imagination.

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I ran in a district that is close to

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about 68 percent Catholic.

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I'm Jewish.

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My predecessors are Dan Rostenkowski, Frank Annunzio,

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Roman Pucinski, Rod Blagojevich.

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I'm running against a person who is Catholic, whose main

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thesis when I ran against her was Rahm Emanuel, he's not one

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of us.

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So I know something about politics in

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the sense of negativity.

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This is not negative in any stretch of the imagination.

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And there's not something that is negative that is not going to

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be like in the general.

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And it's not like it doesn't prepare you for what, in fact,

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the presidency is about.

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That is tough.

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And so I'm not -- but here's to the political question.

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You said, is it tearing the party apart?

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I do not think that.

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I think Democrats, let's go back at this.

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We've had an incredible turnout, over 100 percent from the 2004

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presidential primary to now, 100 percent in our primaries.

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We have record donations to the candidates and to our

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congressional Senate campaign party apparatus.

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We just won a special election in a seat that former Republican

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Speaker Dennis Hastert had held.

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We have two specials coming up in Mississippi and Louisiana.

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John McCain is spending his time acting like he wants to be

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adopted by the Bush family on its economic policy.

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This is not negative.

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And we're in a good position.

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We have energy and enthusiasm and a country that wants to make

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a change.

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And I don't think the parties -- I really don't -- I mean, but

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everybody is saying negativity.

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It's not negative by any stretch of the imagination.

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It's not an ideological battle.

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OK.

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Well, just hold on.

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Listen to this commercial that ran in Pennsylvania.

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Here it is.

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It's the toughest job in the world.

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You need to be ready for anything, especially now with

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two wars, oil prices skyrocketing, and

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an economy in crisis.

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Harry Truman said it best.

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If you can't stand the heat, get out of the kitchen.

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Who do you think has what it takes?

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I'm Hillary Clinton and I approve this message.

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Hillary is doing what she should be doing in the

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campaign, laying the question down about who do you think can

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handle that job?

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Barack has a responsibility and he has done it to date of making

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a campaign based on the type of change that he would bring and

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the type of hope and the contrast that brings to Hillary.

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But here's the question.

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Is this going to be a primary in which the party can't come

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together and face November?

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And I think you've got to fast forward it.

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Let me give you one example I have.

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In 1992 I remember when Bill Clinton in June secured the

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nomination in California and was then running third against Ross

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Perot and George Bush.

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And some of the same voices you hear now were wringing their

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hands, said, oh, we've got to find somebody else who -- Bill

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Clinton can't win in November.

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We have got to get another nominee.

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Bill Clinton not only won in November, he won in

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November of '96.

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First person since Franklin Delano Roosevelt for the

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Democratic Party.

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The party, you have got to fast forward yourself to September

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and October.

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Will the party come together for the common cause of trying to

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win in November around the set of issues that we care about as

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Democrats on health care, the economy, our stature in the

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world, and a different type of foreign policy?

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And I absolutely believe there will be unity because the two

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leading candidates will come together and know that that

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battle is that important.

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And I don't believe what's happening now will prevent that.

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And you have to fast forward yourself to

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September and October.

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OK.

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Let me fast forward you to The New York Times editorial today.

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Quote: "On the eve of this crucial primary,"

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Pennsylvania, "Mrs.

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Clinton became the first Democratic candidate to wave the

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bloody shirt of 9/11.

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A Clinton television ad, torn right from Karl Rove's playbook,

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evoked the 1929 stock market crash, Pearl Harbor, the Cuban

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Missile Crisis, the Cold War, and 9/11 attacks complete with

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video of Osama bin Laden.

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'If you can't stand the heat, get out of the kitchen,' the

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narrator intoned.

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"If this was supposed to bolster Mrs. Clinton's argument

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that she is better prepared to be president in a dangerous

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world, she sent the opposite message on Tuesday morning by

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declaring in an interview on ABC News that if Iran attacked

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Israel while she was president, we would be able to totally

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obliterate them."

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You disagree with The New York Times, obviously.

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Well, first of all, I think, let's take the

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first part of the criticism, that somehow the ad was wrong,

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unfair, and out of Karl Rove.

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And The New York Times writes important editorials.

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I'm not here to attack the editorials.

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But they're not exactly the best campaign

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strategist that I would

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hire and put around a campaign strategy.

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I don't think that ad is what they did.

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Barack has run his ads.

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This is about making your case to the voters of who would be a

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better nominee and have a better set of policies, both on the

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quality of the character of the individual and the

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set of policy differences.

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But I think the notion that people are saying that somehow

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this is horrible that either one of the candidates have taken it

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there, I'm not where (ph) they are.

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OK.

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Fair enough.

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And then you say, this is not even remotely damaging the

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Democratic Party and their chance for success.

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The only thing that could -- you're saying the only thing

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that could damage success is if the loser

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doesn't lose graciously.

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That's what could damage success?

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Let me continue.

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Yes, but, Charlie, let me

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say -- let me interrupt.

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Obviously what you're seeing now, if it continues unabated

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for, you know, for months upon months, I would back off.

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I'm just saying I think people should take a deep breath and

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remember that in '92 we had a process that went all the way to

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June, and some of the same voices that were wringing their

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hands didn't realize that you could go -- after the

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convention, Bill Clinton never lost the lead.

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I do believe there is a slightly flashing yellow light.

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I'm not where everybody else is that somehow it's a bright red

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light that we've, you know, somehow emulated.

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Two months ago, on this show and other shows and among the

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papers, people said that John McCain had a divided party and

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could not bring his party together.

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What has happened in two months?

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He's (INAUDIBLE) -- you know, I wouldn't say it's the most

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successful, but he has started to do that.

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You'd be amazed the kind of turn you can have in turning from

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where you are today, because politics is a dynamic process.

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It's not stagnant.

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When you -- how will the candidate know it's

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time to go?

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To leave the stage?

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Yes.

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Well, there will be

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factors, financial resources,

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states popular vote, delegate count, et cetera.

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There will be a lot of factors that will lead to that.

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00:13:03.734 --> 00:13:06.767
And they'll know whether they can put a credible case that

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they can make an argument to the delegates that are left that

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they should be the nominee.

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And so I think that you have two very good candidates who are

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astute to politics.

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Both have a claim that they want to make but they will know on

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the ability of whether they can continue on a host of reasons to

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00:13:24.067 --> 00:13:26.968
make a case that they should be the nominee.

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I mean, they are not obtuse to what is going on around them,

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00:13:29.934 --> 00:13:32.934
either one of them.

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Clinton strategists today were quoted in

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newspapers as saying, if they don't win Indiana like they won

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00:13:38.300 --> 00:13:41.100
in Pennsylvania and North Carolina, then they

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have to get out.

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00:13:43.300 --> 00:13:45.534
You're laughing because you think it's silly of these

303
00:13:45.534 --> 00:13:47.734
Clinton strategists to say that or you agree with them?

304
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Well, one is I've always

305
00:13:49.934 --> 00:13:52.000
believed that some point

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after Indiana, before June 1st, May is going to be a very

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00:13:54.067 --> 00:13:56.133
important month for the Democratic Party.

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And I think, A, the nominee will emerge and, B,

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the person who is

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00:14:00.267 --> 00:14:03.000
not going to be the nominee will also know.

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But I don't think you should be -- I'll bet you the Clinton

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campaign woke up and looked around the table and said, OK,

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who said this?

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And I think there's a posse

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00:14:15.033 --> 00:14:19.834
set up to find out.

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Because I read that -- I'll tell you this, this

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is -- I work out, as you know, Charlie, in the morning, as you

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00:14:24.501 --> 00:14:26.834
know very well.

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I'm sitting out on the -- I'm on the elliptical machine, I read

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00:14:29.167 --> 00:14:31.767
that and I think I fell off the right side.

321
00:14:31.767 --> 00:14:34.501
I was like, wow.

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00:14:34.501 --> 00:14:37.067
As a matter of fact, so did I.

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And I thought, if I can get Rahm Emanuel to come on here and say

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the same thing, then I have a story.

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00:14:42.400 --> 00:14:45.067
Will you say the same thing?

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00:14:45.067 --> 00:14:47.767
If she doesn't win Indiana, can she get the nomination?

327
00:14:47.767 --> 00:14:50.300
Well, I'm not doing a hypothetical.

328
00:14:50.300 --> 00:14:52.968
I will not do hypotheticals.

329
00:14:52.968 --> 00:14:57.834
But I would say to you --

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(INAUDIBLE) you know, how they

331
00:15:00.167 --> 00:15:02.434
have bumpers in bowling?

332
00:15:02.434 --> 00:15:04.634
Not to overuse a bowling metaphor.

333
00:15:04.634 --> 00:15:06.534
But I'm going to put a bumper on elliptical machine next time I

334
00:15:06.534 --> 00:15:08.601
read the paper.

335
00:15:08.601 --> 00:15:10.701
I almost fell off the right side.

336
00:15:10.701 --> 00:15:12.534
I was like, wow.

337
00:15:12.534 --> 00:15:14.167
So that said, I do believe this and I've always said this,

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00:15:14.167 --> 00:15:16.000
Charlie, May will be the month of decision in our party.

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I really do believe that.

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OK.

341
00:15:19.567 --> 00:15:21.033
So what are the primaries that will determine this decision?

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00:15:21.033 --> 00:15:22.434
North Carolina and Indiana for sure.

343
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What else?

344
00:15:23.701 --> 00:15:25.167
Well, that's May 6th.

345
00:15:25.167 --> 00:15:26.767
That's not May.

346
00:15:26.767 --> 00:15:28.200
That's May 6th.

347
00:15:28.200 --> 00:15:29.801
By May 6th -- the day after May 6th the Democratic Party will

348
00:15:29.801 --> 00:15:31.234
have a nominee, is that what you're saying?

349
00:15:31.234 --> 00:15:32.834
No, no.

350
00:15:32.834 --> 00:15:34.534
Because what we'll have -- you do have Kentucky

351
00:15:34.534 --> 00:15:36.434
and stuff like that.

352
00:15:36.434 --> 00:15:38.100
But I think Indiana is going to be -- is clearly going to

353
00:15:38.100 --> 00:15:39.934
determine who owns the ball in overtime.

354
00:15:39.934 --> 00:15:43.767
Because you'll have a host -- you'll know --

355
00:15:43.767 --> 00:15:45.834
To play the Hoosier metaphor, you'll know

356
00:15:45.834 --> 00:15:47.934
who has got control of the resources.

357
00:15:47.934 --> 00:15:50.167
But I think here's my caution to both candidates.

358
00:15:50.167 --> 00:15:52.334
Don't parallel park into the nomination.

359
00:15:52.334 --> 00:15:54.200
What does that mean?

360
00:15:54.200 --> 00:15:56.100
Don't sit there and walk through

361
00:15:56.100 --> 00:15:58.067
the resources, delegates.

362
00:15:58.067 --> 00:15:59.968
Go seize the nomination.

363
00:15:59.968 --> 00:16:01.901
You know, both candidates have got to go take this nomination

364
00:16:01.901 --> 00:16:03.801
and make that case.

365
00:16:03.801 --> 00:16:05.734
If you try to parallel park into it, you put

366
00:16:05.734 --> 00:16:07.634
yourself in reverse.

367
00:16:07.634 --> 00:16:10.234
And that's what I meant by it.

368
00:16:10.234 --> 00:16:12.934
Give me an example of parallel parking.

369
00:16:12.934 --> 00:16:15.567
I've got X dollars, I've got X delegates,

370
00:16:15.567 --> 00:16:18.267
and I've got X popular vote.

371
00:16:18.267 --> 00:16:20.801
That's just not -- that's not -- that's a tactical argument.

372
00:16:20.801 --> 00:16:23.367
Take the nomination from the other person.

373
00:16:23.367 --> 00:16:25.868
Go and prove your vote count among a constituency

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00:16:25.868 --> 00:16:28.334
you haven't had.

375
00:16:28.334 --> 00:16:31.033
Go make a dramatic statement because people for president

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00:16:31.033 --> 00:16:33.567
vote for strength, confidence, and optimism.

377
00:16:33.567 --> 00:16:36.300
And then you have a way of taking the nomination and

378
00:16:36.300 --> 00:16:39.133
seizing it in the way that people want to see in our party

379
00:16:39.133 --> 00:16:42.400
that you are the right person for November.

380
00:16:42.400 --> 00:16:45.367
Clinton argument to superdelegates, Obama does

381
00:16:45.367 --> 00:16:48.067
not have appeal to Reagan Democrats.

382
00:16:48.067 --> 00:16:50.601
Obama will put certain crucial states like Ohio at risk.

383
00:16:50.601 --> 00:16:53.234
What do you say?

384
00:16:53.234 --> 00:16:55.868
Yes, you can say that Barack has a problem of

385
00:16:55.868 --> 00:16:58.300
closing the deal.

386
00:16:58.300 --> 00:17:00.934
And Hillary's position is -- right now is only to date so far

387
00:17:00.934 --> 00:17:03.400
of blocking him from the nomination.

388
00:17:03.400 --> 00:17:05.834
That's where we are.

389
00:17:05.834 --> 00:17:08.167
So her only thing she can do right now is block

390
00:17:08.167 --> 00:17:11.000
him from the nomination.

391
00:17:11.000 --> 00:17:13.667
That's the only strategy she has at this point.

392
00:17:13.667 --> 00:17:16.167
No, no.

393
00:17:16.167 --> 00:17:18.934
No, I said to date they both have a lot to advance and they

394
00:17:18.934 --> 00:17:24.767
both have shortcomings. OK?

395
00:17:24.767 --> 00:17:28.067
The fact is I don't think primaries explain what's going

396
00:17:28.067 --> 00:17:31.334
to happen in November.

397
00:17:31.334 --> 00:17:34.567
I believe firmly, as has happened in both '92, '96, 2000,

398
00:17:34.567 --> 00:17:37.467
and 2004 the Democrats will win the industrial heartland.

399
00:17:37.467 --> 00:17:40.167
It has suffered the most under George Bush's economic policies.

400
00:17:40.167 --> 00:17:42.901
Median household income in this country has gone down by $1,100

401
00:17:42.901 --> 00:17:45.501
under George Bush.

402
00:17:45.501 --> 00:17:48.033
Health care costs have doubled.

403
00:17:48.033 --> 00:17:50.667
Energy costs have more than doubled, and college costs are

404
00:17:50.667 --> 00:17:53.267
up 68 percent.

405
00:17:53.267 --> 00:17:55.734
The middle class life in this country is under attack by

406
00:17:55.734 --> 00:17:58.501
George Bush's economic policies, which is why for the life of me

407
00:17:58.501 --> 00:18:01.100
I can't understand why John McCain wants to be adopted and

408
00:18:01.100 --> 00:18:03.701
adopt those policies.

409
00:18:03.701 --> 00:18:06.434
That said, I believe that is going to be true for whoever our

410
00:18:06.434 --> 00:18:09.400
nominee is.

411
00:18:09.400 --> 00:18:11.734
And if you want to get into data, and I don't want to get

412
00:18:11.734 --> 00:18:14.033
into that, but both -- you know, the fact is that Barack doesn't

413
00:18:14.033 --> 00:18:16.367
have -- I wouldn't quite say he has a Reagan Democrat problem.

414
00:18:16.367 --> 00:18:18.701
He has a Reagan Democrat problem for people

415
00:18:18.701 --> 00:18:21.000
who are 60 and older.

416
00:18:21.000 --> 00:18:23.901
And he has to do better in communicating, which gets to my

417
00:18:23.901 --> 00:18:26.601
earlier question, go seize a constituency.

418
00:18:26.601 --> 00:18:29.100
Seize the mantle of this nomination by making a broader

419
00:18:29.100 --> 00:18:31.901
appeal to the constituency beyond the -- for either

420
00:18:31.901 --> 00:18:34.501
candidate, beyond what you have to date.

421
00:18:34.501 --> 00:18:37.100
Both candidates have their constituencies.

422
00:18:37.100 --> 00:18:39.567
There is race, economic class, culture, are all running through

423
00:18:39.567 --> 00:18:41.734
this process.

424
00:18:41.734 --> 00:18:43.868
It has, as it always has in American politics.

425
00:18:43.868 --> 00:18:46.000
One of the things -- I wrote a piece the other day was about

426
00:18:46.000 --> 00:18:48.133
the suburban vote, all about the increasing role

427
00:18:48.133 --> 00:18:50.267
of suburban vote

428
00:18:50.267 --> 00:18:52.767
in the Democratic primary.

429
00:18:52.767 --> 00:18:55.200
We've had a -- across the country, as I noted earlier, we

430
00:18:55.200 --> 00:18:57.601
have had 100 percent increase in

431
00:18:57.601 --> 00:19:00.067
Democratic primary participation.

432
00:19:00.067 --> 00:19:02.400
But in the suburbs it's nearly double that.

433
00:19:02.400 --> 00:19:05.000
And in the exurbs as well.

434
00:19:05.000 --> 00:19:07.234
The special election we won in Illinois

435
00:19:07.234 --> 00:19:09.767
was an exurban district.

436
00:19:09.767 --> 00:19:12.601
In 2006 over half the seats we won were in suburban

437
00:19:12.601 --> 00:19:15.367
and exurban districts.

438
00:19:15.367 --> 00:19:17.968
These used to be the Republican stronghold in this country.

439
00:19:17.968 --> 00:19:20.834
And as the suburbs goes, so therefore goes the country.

440
00:19:20.834 --> 00:19:23.767
And our party is stronger in the suburbs.

441
00:19:23.767 --> 00:19:26.234
I think that's an important thing to note.

442
00:19:26.234 --> 00:19:28.834
It also notes Hillary is doing better in the inner suburbs.

443
00:19:28.834 --> 00:19:31.267
Barack is doing better in the outer suburbs and

444
00:19:31.267 --> 00:19:33.868
exurbs of this area.

445
00:19:33.868 --> 00:19:36.334
Because economics and class -- and economics, rather, is

446
00:19:36.334 --> 00:19:38.934
playing a big role in this primary.

447
00:19:38.934 --> 00:19:41.868
And the suburbs are playing an increasingly important role in

448
00:19:41.868 --> 00:19:44.934
the Democratic primary, which is a good thing.

449
00:19:44.934 --> 00:19:47.567
I -- listen, when you have an increase of 100 percent

450
00:19:47.567 --> 00:19:50.067
participation in your Democratic primary over the Republicans,

451
00:19:50.067 --> 00:19:52.734
you have also an increase of donors in dramatic forms both

452
00:19:52.734 --> 00:19:55.234
for party and candidates.

453
00:19:55.234 --> 00:19:57.767
That shows you energy and hunger.

454
00:19:57.767 --> 00:20:00.501
I'll give one Pennsylvania district we won in 2006 with the

455
00:20:00.501 --> 00:20:03.234
Democrat that took out a Republican seat that had been in

456
00:20:03.234 --> 00:20:06.067
the Republican Party since the Civil War, had more Democrats

457
00:20:06.067 --> 00:20:08.667
vote in their primary than Republicans and they had an

458
00:20:08.667 --> 00:20:11.133
active congressional primary.

459
00:20:11.133 --> 00:20:13.868
That is an energized party that's hungry and will go out

460
00:20:13.868 --> 00:20:16.400
and work in November.

461
00:20:16.400 --> 00:20:19.100
I have all the confidence of that.

462
00:20:19.100 --> 00:20:22.167
Tell me what you think each candidate has to do

463
00:20:22.167 --> 00:20:25.000
in order to win the nomination.

464
00:20:25.000 --> 00:20:27.667
Obama has to do what, Clinton has to do what?

465
00:20:27.667 --> 00:20:30.200
Well, I mean, I don't want to -- it's easy to

466
00:20:30.200 --> 00:20:33.133
sit here, and I used to hate this when I was on the other

467
00:20:33.133 --> 00:20:36.267
side where somebody was an armchair consultant, not living

468
00:20:36.267 --> 00:20:39.100
and breathing the campaign.

469
00:20:39.100 --> 00:20:41.868
I mean, I'm actively reading and observing them.

470
00:20:41.868 --> 00:20:44.934
You know, part of the argument -- well, let me just

471
00:20:44.934 --> 00:20:47.734
take a step back.

472
00:20:47.734 --> 00:20:50.300
Both candidates I believe will be stronger general election

473
00:20:50.300 --> 00:20:52.767
candidates having gone through this process.

474
00:20:52.767 --> 00:20:55.100
I think that's true for Barack and I think

475
00:20:55.100 --> 00:20:57.567
it's true for Hillary.

476
00:20:57.567 --> 00:21:00.367
I really do.

477
00:21:00.367 --> 00:21:03.100
And there's nothing that they're getting hit with today

478
00:21:03.100 --> 00:21:06.200
that ain't going to come out or be dealt with in September -- I

479
00:21:06.200 --> 00:21:09.267
mean, July, August, September, and October.

480
00:21:09.267 --> 00:21:12.701
So nobody should be surprised.

481
00:21:12.701 --> 00:21:15.334
Second, is they've got to -- by making a certain argument of the

482
00:21:15.334 --> 00:21:18.000
type of change they would bring and the quality of their

483
00:21:18.000 --> 00:21:20.634
character for that change, is essential to expanding beyond

484
00:21:20.634 --> 00:21:23.267
the vote base -- the voters that make up

485
00:21:23.267 --> 00:21:25.934
their respective numbers

486
00:21:25.934 --> 00:21:28.534
in each of these state primaries.

487
00:21:28.534 --> 00:21:31.667
It's important to get the nomination not by having checked

488
00:21:31.667 --> 00:21:34.567
enough lists that you block the other person

489
00:21:34.567 --> 00:21:37.300
and you're in front.

490
00:21:37.300 --> 00:21:40.000
And go -- because so much about being the president is about

491
00:21:40.000 --> 00:21:42.567
communicating a certain sense of qualities.

492
00:21:42.567 --> 00:21:44.767
So go seize that nomination.

493
00:21:44.767 --> 00:21:46.701
And I'm going to give you one closing comment about it.

494
00:21:46.701 --> 00:21:48.367
Remember Ronald Reagan when he grabbed that microphone and

495
00:21:48.367 --> 00:21:49.901
said, I'll pay for it?

496
00:21:49.901 --> 00:21:51.300
Right, right.

497
00:21:51.300 --> 00:21:52.834
New Hampshire.

498
00:21:52.834 --> 00:21:54.501
He took control.

499
00:21:54.501 --> 00:21:56.367
New Hampshire.

500
00:21:56.367 --> 00:21:58.300
Right, in New Hampshire.

501
00:21:58.300 --> 00:22:00.367
And it was an important moment for him in the same way that in

502
00:22:00.367 --> 00:22:02.167
Bill Clinton in New Hampshire when people were taking his --

503
00:22:02.167 --> 00:22:03.767
remember, voters are taking candidates' measures here.

504
00:22:03.767 --> 00:22:05.467
That's really what they're doing, not that

505
00:22:05.467 --> 00:22:07.567
issues aren't important.

506
00:22:07.567 --> 00:22:09.834
They're vitally important.

507
00:22:09.834 --> 00:22:12.067
But they're taking a candidate's measure.

508
00:22:12.067 --> 00:22:14.567
And when Bill Clinton said, I don't -- and this is after

509
00:22:14.567 --> 00:22:16.701
Gennifer Flowers and the draft letter had come out.

510
00:22:16.701 --> 00:22:18.567
I can almost do the voice and that's kind of sad.

511
00:22:18.567 --> 00:22:22.534
But he said, "listen, Charlie, this is a big deal."

512
00:22:22.534 --> 00:22:24.334
No, he said --

513
00:22:24.334 --> 00:22:26.167
What did he say?

514
00:22:26.167 --> 00:22:29.534
He said, "the hits I take are nothing like" --

515
00:22:29.534 --> 00:22:31.100
I like it better when you

516
00:22:31.100 --> 00:22:32.767
do it in the impression.

517
00:22:32.767 --> 00:22:34.501
I used to do that for him and made

518
00:22:34.501 --> 00:22:36.300
him laugh too hard.

519
00:22:36.300 --> 00:22:38.267
"The hits I take are nothing like the hits your kids are

520
00:22:38.267 --> 00:22:40.000
going to take unless we turn this country around." And they

521
00:22:40.000 --> 00:22:41.767
took his measure, forget the words for a second.

522
00:22:41.767 --> 00:22:43.968
But it was a time in '92, we were facing

523
00:22:43.968 --> 00:22:45.834
an economic recession.

524
00:22:45.834 --> 00:22:47.601
George Bush wasn't answering that recession.

525
00:22:47.601 --> 00:22:49.901
Thought the economy, like now, was, as he said,

526
00:22:49.901 --> 00:22:51.868
just a couple headwinds.

527
00:22:51.868 --> 00:22:53.834
Things are going fine.

528
00:22:53.834 --> 00:22:55.934
That Bill Clinton, people took his measure and knew which side

529
00:22:55.934 --> 00:22:58.033
of the fence he was on.

530
00:22:58.033 --> 00:23:00.167
And when he got to that White House, how he was going to roll

531
00:23:00.167 --> 00:23:02.100
up sleeves every day and who he was going to work on.

532
00:23:02.100 --> 00:23:03.801
What the voters are doing right now, looking at these two

533
00:23:03.801 --> 00:23:05.267
candidates, they're taking their measure.

534
00:23:05.267 --> 00:23:06.701
Show them what you're made of.

535
00:23:06.701 --> 00:23:08.167
Show them who you are.

536
00:23:08.167 --> 00:23:09.634
Show them what you're willing to go fight for and

537
00:23:09.634 --> 00:23:11.100
why you want to

538
00:23:11.100 --> 00:23:12.868
fight for it.

539
00:23:12.868 --> 00:23:14.434
You do -- each one of them, whoever does that better will be

540
00:23:14.434 --> 00:23:16.334
the nominee.

541
00:23:16.334 --> 00:23:18.767
Will superdelegates

542
00:23:18.767 --> 00:23:21.200
determine this nomination?

543
00:23:21.200 --> 00:23:23.534
I really think, as what I said when we started

544
00:23:23.534 --> 00:23:25.767
this interview, voters will issue the verdict.

545
00:23:25.767 --> 00:23:27.701
The two candidates are next.

546
00:23:27.701 --> 00:23:29.434
Yes, you could say superdelegates will play a role,

547
00:23:29.434 --> 00:23:30.934
but I believe that they will have -- I don't think it will

548
00:23:30.934 --> 00:23:32.601
come down to that.

549
00:23:32.601 --> 00:23:34.067
I really don't.

550
00:23:34.067 --> 00:23:35.701
So --

551
00:23:35.701 --> 00:23:37.400
We'll have a nominee before superdelegates

552
00:23:37.400 --> 00:23:39.167
have to determine the nominee.

553
00:23:39.167 --> 00:23:41.100
Thank you very much.

554
00:23:41.100 --> 00:23:43.000
It's always a pleasure to talk to you.

555
00:23:43.000 --> 00:23:45.167
Great seeing you, Charlie.

556
00:23:45.167 --> 00:23:47.033
Rahm Emanuel has not endorsed either Senator

557
00:23:47.033 --> 00:23:48.701
Obama or Senator Clinton.

558
00:23:48.701 --> 00:23:50.100
And he's very good friends with both of them.

559
00:23:50.100 --> 00:23:53.901
We'll be back.

560
00:23:53.901 --> 00:24:03.367
Stay with us.

561
00:24:03.367 --> 00:24:06.300
Lafley is here.

562
00:24:06.300 --> 00:24:09.200
He is CEO and chairman of Procter & Gamble, one of the

563
00:24:09.200 --> 00:24:11.634
world's largest and most powerful corporations.

564
00:24:11.634 --> 00:24:13.934
Last year the company made nearly $80 billion selling

565
00:24:13.934 --> 00:24:16.367
popular consumer goods such as Pampers

566
00:24:16.367 --> 00:24:19.033
diapers and Tide detergent.

567
00:24:19.033 --> 00:24:21.367
He has widely credited with successfully overhauling the

568
00:24:21.367 --> 00:24:23.667
company since he took over as CEO in 2000.

569
00:24:23.667 --> 00:24:26.434
He has a new book called "The Game-Changer," how every leader

570
00:24:26.434 --> 00:24:28.734
can drive everyday innovation.

571
00:24:28.734 --> 00:24:31.000
We'll talk about that and much more.

572
00:24:31.000 --> 00:24:33.067
I'm pleased to have him here at this table for the

573
00:24:33.067 --> 00:24:34.901
first time. Welcome.

574
00:24:34.901 --> 00:24:36.734
>>A.G. LAFLEY: Thank you, Charlie.

575
00:24:36.734 --> 00:24:38.567
It's good to be here.

576
00:24:38.567 --> 00:24:40.400
Let me talk about the economy

577
00:24:40.400 --> 00:24:44.601
first as much as you can.

578
00:24:44.601 --> 00:24:47.334
I mean, because you sell consumer products and so many of

579
00:24:47.334 --> 00:24:50.701
them, tell me what you know about where we are in terms of

580
00:24:50.701 --> 00:24:53.834
consumer spending.

581
00:24:53.834 --> 00:24:57.400
>>A.G. LAFLEY: Let me tell you some of the things we're seeing.

582
00:24:57.400 --> 00:25:00.567
First of all, in the staples consumer categories that P&G

583
00:25:00.567 --> 00:25:03.200
competes in, so household care products, personal care

584
00:25:03.200 --> 00:25:06.868
products, we're seeing some slowing of growth but we're

585
00:25:06.868 --> 00:25:10.234
still seeing growing categories.

586
00:25:10.234 --> 00:25:14.267
And that's good news.

587
00:25:14.267 --> 00:25:17.968
We're obviously seeing some increases in unemployment.

588
00:25:17.968 --> 00:25:21.000
And we're seeing some changes in consumer behavior.

589
00:25:21.000 --> 00:25:23.667
With gasoline prices at record levels, consumers are making

590
00:25:23.667 --> 00:25:26.167
fewer shopping trips so they're trying to consolidate their

591
00:25:26.167 --> 00:25:29.267
shopping trips.

592
00:25:29.267 --> 00:25:33.033
Driving less.

593
00:25:33.033 --> 00:25:36.234
>>A.G. LAFLEY: Driving less.

594
00:25:36.234 --> 00:25:40.367
Shopping fewer stores, buying more when they do shop.

595
00:25:40.367 --> 00:25:43.701
We're seeing consumers obviously cut back on discretionary

596
00:25:43.701 --> 00:25:47.567
consumer purchases.

597
00:25:47.567 --> 00:25:51.834
Automobiles, home renovations, vacations, dining out, all of

598
00:25:51.834 --> 00:25:55.267
those things.

599
00:25:55.267 --> 00:25:58.133
But, knock on wood, for us so far when you're in weekly

600
00:25:58.133 --> 00:26:00.868
purchase, daily usage staples categories, you know, we still

601
00:26:00.868 --> 00:26:03.334
go to the bathroom.

602
00:26:03.334 --> 00:26:05.667
We still brush our teeth.

603
00:26:05.667 --> 00:26:07.968
We still take our baths and showers.

604
00:26:07.968 --> 00:26:10.400
We still do our hair.

605
00:26:10.400 --> 00:26:12.968
We still wash our clothes.

606
00:26:12.968 --> 00:26:15.667
We still wash up our dishes.

607
00:26:15.667 --> 00:26:19.501
So the staples categories have held pretty stable.

608
00:26:19.501 --> 00:26:23.000
You, like other companies, are increasingly

609
00:26:23.000 --> 00:26:25.868
focusing on global sales and especially in emerging markets.

610
00:26:25.868 --> 00:26:28.400
The so-called

611
00:26:28.400 --> 00:26:30.601
>>BRIC countries: China.

612
00:26:30.601 --> 00:26:32.868
-- China, and then you add Mexico to that, say.

613
00:26:32.868 --> 00:26:35.067
What are they experiencing?

614
00:26:35.067 --> 00:26:36.968
Is it different there?

615
00:26:36.968 --> 00:26:39.133
>>A.G. LAFLEY: From an economy --

616
00:26:39.133 --> 00:26:43.934
Consume spending --

617
00:26:43.934 --> 00:26:47.400
>>A.G. LAFLEY: Consumer spending, much different.

618
00:26:47.400 --> 00:26:51.000
For the most part those economies are still enjoying

619
00:26:51.000 --> 00:26:55.133
fairly significant GDP growth, driven by commodities in markets

620
00:26:55.133 --> 00:26:58.701
like Russia and Brazil, but also driven by increases in

621
00:26:58.701 --> 00:27:02.167
manufacturing activity across all of the markets.

622
00:27:02.167 --> 00:27:05.367
And what's really going on is a lot of this is demographically

623
00:27:05.367 --> 00:27:08.767
driven and economically driven.

624
00:27:08.767 --> 00:27:12.133
Demographically driven because for the most part it's the

625
00:27:12.133 --> 00:27:15.434
developing world where the babies are born, where the

626
00:27:15.434 --> 00:27:18.901
households are forming, where the households are larger and

627
00:27:18.901 --> 00:27:22.167
where the incomes have risen to the point where they certainly

628
00:27:22.167 --> 00:27:25.567
can afford every day consumer staples products.

629
00:27:25.567 --> 00:27:28.868
So what we're seeing is double-digit sales growth,

630
00:27:28.868 --> 00:27:32.100
double-digit profit growth in developing markets.

631
00:27:32.100 --> 00:27:34.334
And today, for my company, 60-plus percent of our sales are

632
00:27:34.334 --> 00:27:36.567
outside the U.S.

633
00:27:36.567 --> 00:27:38.801
And it' increasing.

634
00:27:38.801 --> 00:27:41.033
>>A.G. LAFLEY: And it's increasing, 28 percent of our sales are

635
00:27:41.033 --> 00:27:43.234
in so-called emerging markets or developing markets.

636
00:27:43.234 --> 00:27:45.734
And that's increasing and will be 30 percent or more by the end

637
00:27:45.734 --> 00:27:48.234
of the decade.

638
00:27:48.234 --> 00:27:51.234
So that has really been the consistent engine of growth

639
00:27:51.234 --> 00:27:53.701
throughout this decade.

640
00:27:53.701 --> 00:27:56.267
Do you expect though it might change in terms

641
00:27:56.267 --> 00:27:58.801
of growth rate if the American economy slides into

642
00:27:58.801 --> 00:28:01.367
a prolonged recession?

643
00:28:01.367 --> 00:28:03.901
>>A.G. LAFLEY: I think if we went into a

644
00:28:03.901 --> 00:28:06.467
prolonged recession, there

645
00:28:06.467 --> 00:28:10.334
would be some moderation in growth.

646
00:28:10.334 --> 00:28:14.267
But again in our categories, they tend to be more local and

647
00:28:14.267 --> 00:28:17.968
more regional.

648
00:28:17.968 --> 00:28:21.901
So, for example, in Russia or in Brazil or in Russia-Ukraine,

649
00:28:21.901 --> 00:28:25.167
virtually everything we sell in those markets is manufactured

650
00:28:25.167 --> 00:28:28.534
and produced in those markets for those domestic economies.

651
00:28:28.534 --> 00:28:32.133
So, again, I think we would see some slowing but I think we

652
00:28:32.133 --> 00:28:35.701
would hold up pretty well.

653
00:28:35.701 --> 00:28:38.601
One of the great things about the relatively boring consumer

654
00:28:38.601 --> 00:28:41.100
staples industry is in tough times we can still eke out some

655
00:28:41.100 --> 00:28:43.801
growth and in high growth times, you know,

656
00:28:43.801 --> 00:28:46.300
we're not that exciting.

657
00:28:46.300 --> 00:28:49.267
All right.

658
00:28:49.267 --> 00:28:51.734
When you think about global markets you also think about

659
00:28:51.734 --> 00:28:54.501
global trade.

660
00:28:54.501 --> 00:28:57.100
Trade has become a political football in

661
00:28:57.100 --> 00:28:59.534
this campaign season.

662
00:28:59.534 --> 00:29:01.934
Democrats, there's even a difference of opinion between

663
00:29:01.934 --> 00:29:05.200
Senator Clinton and her husband.

664
00:29:05.200 --> 00:29:08.501
He was very much a supporter of NAFTA, as you know.

665
00:29:08.501 --> 00:29:11.801
Where do you come down on this?

666
00:29:11.801 --> 00:29:15.100
>>A.G. LAFLEY: Well, we are long-time believers and supporters

667
00:29:15.100 --> 00:29:18.400
of open

668
00:29:18.400 --> 00:29:23.133
markets and what I guess would be called freer trading systems.

669
00:29:23.133 --> 00:29:27.634
And I think the reason we are is because at least in our

670
00:29:27.634 --> 00:29:31.734
experience, and I would argue in the experience of the American

671
00:29:31.734 --> 00:29:35.934
economy, over the longer term it has benefited the greater good.

672
00:29:35.934 --> 00:29:39.901
I know it is a politically charged issue today.

673
00:29:39.901 --> 00:29:43.901
It is one that we are engaged on.

674
00:29:43.901 --> 00:29:48.300
It's one that we believe in.

675
00:29:48.300 --> 00:29:52.501
And it's one that we'll continue to support.

676
00:29:52.501 --> 00:29:56.901
You know, in the end, I think we can prove beyond a shadow of a

677
00:29:56.901 --> 00:30:00.901
doubt for our company trade, open trade has clearly

678
00:30:00.901 --> 00:30:04.434
contributed to our growth and, frankly, has clearly created

679
00:30:04.434 --> 00:30:07.534
jobs not just at P&G, but in all of the partner network.

680
00:30:07.534 --> 00:30:10.100
We have a huge network of supplier and customer and

681
00:30:10.100 --> 00:30:12.701
distributor partners in the U.S.

682
00:30:12.701 --> 00:30:15.300
and around the world.

683
00:30:15.300 --> 00:30:17.901
The other thing that's important to

684
00:30:17.901 --> 00:30:20.467
understand about our industry

685
00:30:20.467 --> 00:30:23.701
and our company is most of what we sell in the U.S., for

686
00:30:23.701 --> 00:30:26.934
example, we produce and manufacture in the U.S.

687
00:30:26.934 --> 00:30:29.767
When you're selling household care products or personal care

688
00:30:29.767 --> 00:30:32.501
products for $1 to $10 apiece you cannot ship them very far.

689
00:30:32.501 --> 00:30:34.968
In fact we just announced we're building a big new paper

690
00:30:34.968 --> 00:30:37.300
manufacturing plant in Utah.

691
00:30:37.300 --> 00:30:39.300
There are very few companies I think building major

692
00:30:39.300 --> 00:30:41.067
manufacturing sites.

693
00:30:41.067 --> 00:30:42.868
Let me stop you there.

694
00:30:42.868 --> 00:30:44.734
Why did you choose Utah?

695
00:30:44.734 --> 00:30:46.400
I mean, what was it?

696
00:30:46.400 --> 00:30:48.133
How does one make a decision about where to locate plants?

697
00:30:48.133 --> 00:30:52.567
>>A.G. LAFLEY: Where to locate? Yes.

698
00:30:52.567 --> 00:30:54.734
You know, in the end we're looking for a site that meets

699
00:30:54.734 --> 00:30:57.834
our basic economic criteria.

700
00:30:57.834 --> 00:31:01.000
So location, criteria, logistics costs, energy costs, basic

701
00:31:01.000 --> 00:31:04.000
operating costs.

702
00:31:04.000 --> 00:31:07.033
But frankly what we're really looking for is a well-educated,

703
00:31:07.033 --> 00:31:09.634
strong labor force.

704
00:31:09.634 --> 00:31:12.200
You know, that's really what matters -- what matters to us

705
00:31:12.200 --> 00:31:14.834
because when we choose a plant location, we expect to be there

706
00:31:14.834 --> 00:31:17.100
for a few decades or more.

707
00:31:17.100 --> 00:31:18.801
So you look at public schools.

708
00:31:18.801 --> 00:31:20.534
You look at universities -- state universities

709
00:31:20.534 --> 00:31:22.234
and private universities.

710
00:31:22.234 --> 00:31:23.968
>>A.G. LAFLEY: Quality of the work force,

711
00:31:23.968 --> 00:31:25.701
educational attainment of

712
00:31:25.701 --> 00:31:27.968
the work force.

713
00:31:27.968 --> 00:31:30.667
technical skills of the work force.

714
00:31:30.667 --> 00:31:33.033
This issue gets into the trade question because

715
00:31:33.033 --> 00:31:35.501
a lot of times people look at the trade issue and they

716
00:31:35.501 --> 00:31:38.767
understand why people sometimes in their

717
00:31:38.767 --> 00:31:41.534
instinct want to be protectionist.

718
00:31:41.534 --> 00:31:44.934
And they understand also that those jobs that are going

719
00:31:44.934 --> 00:31:48.868
overseas are of a certain nature and that America has to retrain

720
00:31:48.868 --> 00:31:52.467
its workers.

721
00:31:52.467 --> 00:31:56.501
Tell me how you see that and what is necessary for a society

722
00:31:56.501 --> 00:32:01.167
to meet sort of tectonic shifts that are taking place from east

723
00:32:01.167 --> 00:32:06.400
to -- from west to east or wherever they go, from China to

724
00:32:06.400 --> 00:32:10.934
India to Asia that are demanding that American leaders respond.

725
00:32:10.934 --> 00:32:15.400
>>A.G. LAFLEY: I think you're on one of the critical points.

726
00:32:15.400 --> 00:32:19.000
Broadly what's going on is, whether we like it or not, we're

727
00:32:19.000 --> 00:32:22.667
in a smaller, flatter world.

728
00:32:22.667 --> 00:32:25.767
And what happens somewhere in the world impacts us, point

729
00:32:25.767 --> 00:32:28.501
number one.

730
00:32:28.501 --> 00:32:31.000
Point number two, we're in a world where change is coming at

731
00:32:31.000 --> 00:32:33.234
us a lot faster.

732
00:32:33.234 --> 00:32:36.601
So we're seeing more change.

733
00:32:36.601 --> 00:32:40.033
We're seeing less predictable change.

734
00:32:40.033 --> 00:32:42.868
We're seeing bigger changes.

735
00:32:42.868 --> 00:32:45.901
So if you accept that reality, and we do, then I think we're in

736
00:32:45.901 --> 00:32:48.467
a world where we have to be more agile, we

737
00:32:48.467 --> 00:32:50.868
have to be more flexible.

738
00:32:50.868 --> 00:32:52.934
And we have to be able to re-train and

739
00:32:52.934 --> 00:32:54.701
re-educate our work force.

740
00:32:54.701 --> 00:32:56.567
The asset that matters in the U.S.

741
00:32:56.567 --> 00:32:58.434
is the human asset.

742
00:32:58.434 --> 00:33:00.467
Human resources.

743
00:33:00.467 --> 00:33:02.267
>>A.G. LAFLEY: It is.

744
00:33:02.267 --> 00:33:03.834
Tell me why you wrote "The Game-Changer." I

745
00:33:03.834 --> 00:33:05.367
mean, because what you have said -- I mean, the key word here I

746
00:33:05.367 --> 00:33:06.934
think is innovation.

747
00:33:06.934 --> 00:33:08.501
>>A.G. LAFLEY: You know, frankly, at P&G,

748
00:33:08.501 --> 00:33:10.067
innovation is at the core

749
00:33:10.067 --> 00:33:11.767
of our business strategy.

750
00:33:11.767 --> 00:33:13.801
It is critical to our business model.

751
00:33:13.801 --> 00:33:15.567
But innovation means what?

752
00:33:15.567 --> 00:33:17.400
Do what --

753
00:33:17.400 --> 00:33:19.000
>>A.G. LAFLEY: Let me tell you what -- OK.

754
00:33:19.000 --> 00:33:20.467
That's a great question.

755
00:33:20.467 --> 00:33:22.067
For us, innovation is not the idea.

756
00:33:22.067 --> 00:33:24.100
It's not the invention.

757
00:33:24.100 --> 00:33:26.968
They're important.

758
00:33:26.968 --> 00:33:29.367
That's the first step in the process.

759
00:33:29.367 --> 00:33:32.000
Innovation for us is a new or improved product or service that

760
00:33:32.000 --> 00:33:34.701
you as a customer can buy and that we can make some sales and

761
00:33:34.701 --> 00:33:37.467
profit on.

762
00:33:37.467 --> 00:33:40.400
So until that idea or that invention is commercialized,

763
00:33:40.400 --> 00:33:42.834
until the iPod is in your pocket, until the new Herbal

764
00:33:42.834 --> 00:33:45.601
Essences shampoo and conditioning line is on the

765
00:33:45.601 --> 00:33:48.601
shelf and in your home, we don't have an innovation.

766
00:33:48.601 --> 00:33:51.100
We have ideas.

767
00:33:51.100 --> 00:33:53.901
We have inventions in various stages of development.

768
00:33:53.901 --> 00:33:56.667
But it doesn't impact your life and improve your life in some

769
00:33:56.667 --> 00:33:59.267
meaningful way.

770
00:33:59.267 --> 00:34:01.701
And it certainly doesn't resolve in any revenue or profit or

771
00:34:01.701 --> 00:34:03.868
return until it's commercialized.

772
00:34:03.868 --> 00:34:06.000
So that's the definitional side.

773
00:34:06.000 --> 00:34:08.767
So what are you doing at P&G, just

774
00:34:08.767 --> 00:34:11.467
take you as a laboratory?

775
00:34:11.467 --> 00:34:15.000
>>A.G. LAFLEY: OK.

776
00:34:15.000 --> 00:34:18.667
I think there are maybe three or four things that we've learned

777
00:34:18.667 --> 00:34:22.133
are incredibly important.

778
00:34:22.133 --> 00:34:25.300
But the key point is we engage the consumer early on and we

779
00:34:25.300 --> 00:34:28.901
involve the consumer in the co-creation and the co-design of

780
00:34:28.901 --> 00:34:32.100
whatever the brand or product or service ends up being.

781
00:34:32.100 --> 00:34:35.000
And I think that's what's different.

782
00:34:35.000 --> 00:34:37.434
We engage her or him early when it's a very primitive prototype.

783
00:34:37.434 --> 00:34:40.000
And we involve them in the design.

784
00:34:40.000 --> 00:34:42.667
They are involved in the design of the product.

785
00:34:42.667 --> 00:34:44.968
And I think that's new.

786
00:34:44.968 --> 00:34:47.834
Because in the end you don't have an innovation until she's

787
00:34:47.834 --> 00:34:50.267
will to go part with her hard-earned money

788
00:34:50.267 --> 00:34:52.767
for that new product.

789
00:34:52.767 --> 00:34:55.200
The second thing we talk about is what we call

790
00:34:55.200 --> 00:34:57.634
the innovation drivers.

791
00:34:57.634 --> 00:35:00.133
And I'm a big believer in these.

792
00:35:00.133 --> 00:35:02.634
And they start with purpose.

793
00:35:02.634 --> 00:35:05.534
You know, companies that have a real purpose.

794
00:35:05.534 --> 00:35:08.234
You know, P&G has a simple but powerful purpose.

795
00:35:08.234 --> 00:35:11.467
We're in the business of improving your everyday life.

796
00:35:11.467 --> 00:35:14.534
Apple has a clear purpose.

797
00:35:14.534 --> 00:35:17.400
Fisher-Price has a clear purpose.

798
00:35:17.400 --> 00:35:20.501
Companies with purpose tend to innovate against a higher cause.

799
00:35:20.501 --> 00:35:23.701
And that higher cause is creating delightful products

800
00:35:23.701 --> 00:35:27.167
that make people's lives better.

801
00:35:27.167 --> 00:35:30.267
Then, of course, the selection of your goals and the choices of

802
00:35:30.267 --> 00:35:33.501
your strategies drives your innovation model.

803
00:35:33.501 --> 00:35:36.334
The way you organize the systems that you put in place, all of

804
00:35:36.334 --> 00:35:38.834
that drives your innovation success.

805
00:35:38.834 --> 00:35:41.634
And finally, and this is really important, innovation is a

806
00:35:41.634 --> 00:35:44.534
social system.

807
00:35:44.534 --> 00:35:46.968
It's a team sport.

808
00:35:46.968 --> 00:35:49.701
So the culture you create and the leadership you develop is

809
00:35:49.701 --> 00:35:52.834
really quite different from an operating culture or an

810
00:35:52.834 --> 00:35:55.834
operational leadership.

811
00:35:55.834 --> 00:35:58.634
So let's assume that I am the brightest bulb in

812
00:35:58.634 --> 00:36:01.033
the universe and you want me to come to Procter & Gamble.

813
00:36:01.033 --> 00:36:03.334
And you say to me we have a great culture.

814
00:36:03.334 --> 00:36:05.300
And I would say to you, so?

815
00:36:05.300 --> 00:36:07.267
Tell me how it's different.

816
00:36:07.267 --> 00:36:09.267
What is different about culture and what do

817
00:36:09.267 --> 00:36:11.000
we mean about culture?

818
00:36:11.000 --> 00:36:12.567
>>A.G. LAFLEY: OK.

819
00:36:12.567 --> 00:36:14.200
What we mean by culture is

820
00:36:14.200 --> 00:36:16.434
how we behave. OK?

821
00:36:16.434 --> 00:36:18.234
And --

822
00:36:18.234 --> 00:36:20.100
With the public and with our -- among ourselves

823
00:36:20.100 --> 00:36:21.968
and as an environment to be spending a significant portion

824
00:36:21.968 --> 00:36:24.234
of your day.

825
00:36:24.234 --> 00:36:27.067
>>A.G. LAFLEY: Exactly.

826
00:36:27.067 --> 00:36:30.133
I mean, if you come with us, you're going to spend 50, 60,

827
00:36:30.133 --> 00:36:33.133
70, 80 hours a week with us and with our customers.

828
00:36:33.133 --> 00:36:35.601
You're going to join us because you believe in our purpose.

829
00:36:35.601 --> 00:36:38.167
You're going to share our values: integrity and trust,

830
00:36:38.167 --> 00:36:41.300
leadership and ownership, passion

831
00:36:41.300 --> 00:36:44.133
for service to consumers.

832
00:36:44.133 --> 00:36:46.767
And you're going to join an innovation culture.

833
00:36:46.767 --> 00:36:49.267
And what we're trying to do is be open, be connected with

834
00:36:49.267 --> 00:36:51.734
innovators all around the world.

835
00:36:51.734 --> 00:36:54.400
And I'll come back on that because it's really important.

836
00:36:54.400 --> 00:36:57.434
We created an open innovation architecture.

837
00:36:57.434 --> 00:37:00.467
And we connect and develop in more than half of our new

838
00:37:00.467 --> 00:37:03.167
products have at least one external innovation partner.

839
00:37:03.167 --> 00:37:06.067
And we'll encourage your curiosity.

840
00:37:06.067 --> 00:37:08.501
We'll encourage you to collaborate with others inside

841
00:37:08.501 --> 00:37:10.667
and outside of the company.

842
00:37:10.667 --> 00:37:12.601
And we'll encourage you to be a courageous because innovation is

843
00:37:12.601 --> 00:37:14.734
a very risky business.

844
00:37:14.734 --> 00:37:17.300
Most innovations fail.

845
00:37:17.300 --> 00:37:20.000
All right.

846
00:37:20.000 --> 00:37:22.801
Let me go back to another experience in your life which

847
00:37:22.801 --> 00:37:25.300
was, I think, when you were at the military base in Japan, you

848
00:37:25.300 --> 00:37:28.467
were in charge of like quartermaster or something.

849
00:37:28.467 --> 00:37:31.400
>>A.G. LAFLEY: I was in charge of the retail stores and all the

850
00:37:31.400 --> 00:37:34.100
service operations on the base.

851
00:37:34.100 --> 00:37:36.601
And you began to have the women who did a lot of

852
00:37:36.601 --> 00:37:38.767
purchasing -- you had meetings with them?

853
00:37:38.767 --> 00:37:40.868
>>A.G. LAFLEY: I did every week.

854
00:37:40.868 --> 00:37:42.701
Saying to them what?

855
00:37:42.701 --> 00:37:45.167
What do you want?

856
00:37:45.167 --> 00:37:47.267
>>A.G. LAFLEY: No.

857
00:37:47.267 --> 00:37:49.701
I wanted to listen.

858
00:37:49.701 --> 00:37:52.334
Basically I was listening to their needs, their

859
00:37:52.334 --> 00:37:54.667
wants, their dissatisfactions.

860
00:37:54.667 --> 00:37:57.400
You know, one of the great things about complaints, one of

861
00:37:57.400 --> 00:37:59.968
the things I learned in the retail business that you

862
00:37:59.968 --> 00:38:02.834
treasure complaints.

863
00:38:02.834 --> 00:38:05.234
Because complaints are these little clues that help you find

864
00:38:05.234 --> 00:38:07.501
ways you can improve your service, ways you can improve

865
00:38:07.501 --> 00:38:11.367
your operation and frankly ways you can innovate to find, you

866
00:38:11.367 --> 00:38:17.567
know, new products and new --

867
00:38:17.567 --> 00:38:20.367
So almost you should encourage complaints.

868
00:38:20.367 --> 00:38:22.734
>>A.G. LAFLEY: You definitely should.

869
00:38:22.734 --> 00:38:25.000
You should treasure them.

870
00:38:25.000 --> 00:38:27.267
And we get -- a company of our size, we get a lot

871
00:38:27.267 --> 00:38:29.434
of consumer feedback.

872
00:38:29.434 --> 00:38:31.601
And most of the consumer feedback you get is a complaint.

873
00:38:31.601 --> 00:38:33.701
Is -- you spend -- you have research and

874
00:38:33.701 --> 00:38:35.534
development centers all over the world, right?

875
00:38:35.534 --> 00:38:37.467
>>A.G. LAFLEY: We do.

876
00:38:37.467 --> 00:38:39.167
What goes on there?

877
00:38:39.167 --> 00:38:40.968
Are you creating new products?

878
00:38:40.968 --> 00:38:42.801
Or are you analyzing -- using it as a marketing tool to analyze

879
00:38:42.801 --> 00:38:44.667
where consumers are?

880
00:38:44.667 --> 00:38:46.567
What is your research and development about?

881
00:38:46.567 --> 00:38:48.901
>>A.G. LAFLEY: OK.

882
00:38:48.901 --> 00:38:51.300
Our research and development is about the creation of

883
00:38:51.300 --> 00:38:53.968
experiences, brand and product and sometimes product and

884
00:38:53.968 --> 00:38:56.234
service experiences that delight consumers and, if they're

885
00:38:56.234 --> 00:38:59.234
disruptive, create new consumption if they're

886
00:38:59.234 --> 00:39:01.767
sustaining, you know, enable us to build our current position in

887
00:39:01.767 --> 00:39:03.968
the marketplace.

888
00:39:03.968 --> 00:39:06.567
But what we do in R&D centers is we develop new

889
00:39:06.567 --> 00:39:08.734
products with consumers.

890
00:39:08.734 --> 00:39:10.901
That's what we do.

891
00:39:10.901 --> 00:39:12.934
And many times we're developing those new products

892
00:39:12.934 --> 00:39:14.968
with outside partners.

893
00:39:14.968 --> 00:39:17.000
An outside partner would be?

894
00:39:17.000 --> 00:39:19.000
>>A.G. LAFLEY: Anybody from a guy in a garage to a

895
00:39:19.000 --> 00:39:21.033
team from a research

896
00:39:21.033 --> 00:39:23.167
center, university or private, to a competitor.

897
00:39:23.167 --> 00:39:26.300
Take us to school, just back

898
00:39:26.300 --> 00:39:29.868
to marketing today.

899
00:39:29.868 --> 00:39:33.601
All right.

900
00:39:33.601 --> 00:39:36.634
And in two ways, number one, the impact of Google and the impact

901
00:39:36.634 --> 00:39:39.701
of search, and the impact of knowing more than you've ever

902
00:39:39.701 --> 00:39:42.267
known in your life about who your consumer is and what their

903
00:39:42.267 --> 00:39:46.067
desire is.

904
00:39:46.067 --> 00:39:49.767
>>A.G. LAFLEY: I think it's a great two-way street.

905
00:39:49.767 --> 00:39:53.067
What do I mean by that?

906
00:39:53.067 --> 00:39:56.234
On the one hand, we know more of our consumers more intimately.

907
00:39:56.234 --> 00:39:59.634
In a way that's much more -- that's much closer and can be

908
00:39:59.634 --> 00:40:02.934
more personal if that's what they want.

909
00:40:02.934 --> 00:40:05.868
And how do you know that?

910
00:40:05.868 --> 00:40:08.868
>>A.G. LAFLEY: Because in some cases when you're talking about

911
00:40:08.868 --> 00:40:14.801
Internet purchasing or cell phone purchasing in --

912
00:40:14.801 --> 00:40:17.267
>>A.G. LAFLEY:  -- I know Charlie Rose bought this P&G product

913
00:40:17.267 --> 00:40:21.767
at this time,

914
00:40:21.767 --> 00:40:23.801
You know my demographic too in terms of age, in terms of

915
00:40:23.801 --> 00:40:25.868
gender, in terms of --

916
00:40:25.868 --> 00:40:27.934
>>A.G. LAFLEY: If you want me to and if it's allowed by the

917
00:40:27.934 --> 00:40:30.000
privacy laws

918
00:40:30.000 --> 00:40:32.934
which prevail in different countries --

919
00:40:32.934 --> 00:40:35.634
Is that going to be an issue do you think?

920
00:40:35.634 --> 00:40:38.167
I mean, Google is already having to address it in some ways.

921
00:40:38.167 --> 00:40:40.334
>>A.G. LAFLEY: Well, I think it is an issue for some consumers.

922
00:40:40.334 --> 00:40:42.434
And our point of view on that is very simple.

923
00:40:42.434 --> 00:40:45.968
You know, we respect individual privacy.

924
00:40:45.968 --> 00:40:47.667
We only want to know as much about you as you

925
00:40:47.667 --> 00:40:49.367
want us to know.

926
00:40:49.367 --> 00:40:51.067
>>A.G. LAFLEY: Exactly -- well, no, as much as -- yes, as much

927
00:40:51.067 --> 00:40:52.767
as you

928
00:40:52.767 --> 00:40:55.033
want us to know.

929
00:40:55.033 --> 00:40:57.100
And then we will operate with that.

930
00:40:57.100 --> 00:40:59.000
You know, surprisingly one of our top 10 sellers of Pampers

931
00:40:59.000 --> 00:41:00.901
baby diapers in the U.S.

932
00:41:00.901 --> 00:41:02.834
today is amazon.com.

933
00:41:02.834 --> 00:41:05.033
Is that right?

934
00:41:05.033 --> 00:41:06.934
>>A.G. LAFLEY: Yes.

935
00:41:06.934 --> 00:41:08.868
One of the top 10 sellers?

936
00:41:08.868 --> 00:41:10.767
>>A.G. LAFLEY: In other words, yes, they're one of our top 10

937
00:41:10.767 --> 00:41:12.634
retailers of Pampers.

938
00:41:12.634 --> 00:41:14.534
So people buy Pampers online.

939
00:41:14.534 --> 00:41:16.400
>>A.G. LAFLEY: They buy Pampers online because

940
00:41:16.400 --> 00:41:18.300
it's a weekly purchase.

941
00:41:18.300 --> 00:41:21.133
They're using four or five or six disposable diapers a day.

942
00:41:21.133 --> 00:41:23.734
It's a fairly bulky purchase.

943
00:41:23.734 --> 00:41:26.334
Amazon has a very good shipping service and very good shipping

944
00:41:26.334 --> 00:41:28.934
terms so it's a great way (ph) and it works.

945
00:41:28.934 --> 00:41:31.501
When Amazon came along and then

946
00:41:31.501 --> 00:41:34.100
there were all of

947
00:41:34.100 --> 00:41:37.234
these companies like Barnes and Noble and other book publishing

948
00:41:37.234 --> 00:41:39.901
companies, there was a great debate about, you know, how deep

949
00:41:39.901 --> 00:41:42.667
the impact of electronic commerce would be

950
00:41:42.667 --> 00:41:44.968
on bricks and mortar.

951
00:41:44.968 --> 00:41:47.467
Where is that going today?

952
00:41:47.467 --> 00:41:49.834
>>A.G. LAFLEY: I think it's in addition.

953
00:41:49.834 --> 00:41:52.100
In addition?

954
00:41:52.100 --> 00:41:54.300
>>A.G. LAFLEY: I think it's in addition, for our kinds --

955
00:41:54.300 --> 00:41:56.434
Because people like Wal-Mart got into the

956
00:41:56.434 --> 00:41:58.567
business of online real quick.

957
00:41:58.567 --> 00:42:00.868
>>A.G. LAFLEY: Sure.

958
00:42:00.868 --> 00:42:03.167
Wal-Mart has their own online offerings.

959
00:42:03.167 --> 00:42:05.467
Target has its own online offerings.

960
00:42:05.467 --> 00:42:07.434
So while drugstore.com does quite well, CVS and Walgreen's and

961
00:42:07.434 --> 00:42:09.400
Rite Aid are also doing quite well and they're offering their

962
00:42:09.400 --> 00:42:11.400
own online choices.

963
00:42:11.400 --> 00:42:13.367
So after the impact of sort of dread for a

964
00:42:13.367 --> 00:42:15.334
moment that everything is going online, there's more of a sort

965
00:42:15.334 --> 00:42:18.167
of balanced view of this, that it's an addition, not something

966
00:42:18.167 --> 00:42:20.934
that is going to destroy retail stores around America.

967
00:42:20.934 --> 00:42:23.701
>>A.G. LAFLEY: Right.

968
00:42:23.701 --> 00:42:26.167
Because if you really get into our shopping behavior, we want

969
00:42:26.167 --> 00:42:28.868
to shop across channels.

970
00:42:28.868 --> 00:42:32.033
And sometimes we want to shop online and sometimes we want to

971
00:42:32.033 --> 00:42:36.334
shop in a physical store.

972
00:42:36.334 --> 00:42:39.901
A consumer goes into any store in America,

973
00:42:39.901 --> 00:42:43.200
Wal-Mart or Target or the local supermarket.

974
00:42:43.200 --> 00:42:46.400
What do you know about why they choose to buy Tide versus

975
00:42:46.400 --> 00:42:49.767
another detergent?

976
00:42:49.767 --> 00:42:52.534
Your brand versus another brand?

977
00:42:52.534 --> 00:42:55.467
What is it that in their brain that chooses that?

978
00:42:55.467 --> 00:42:57.901
Is it the color of the package?

979
00:42:57.901 --> 00:42:59.701
Is it the place on the shelf?

980
00:42:59.701 --> 00:43:01.467
Is it some commercial they have seen on television?

981
00:43:01.467 --> 00:43:03.267
What is it?

982
00:43:03.267 --> 00:43:05.033
>>A.G. LAFLEY: In the end -- well, let's take Tide because

983
00:43:05.033 --> 00:43:06.834
that's a

984
00:43:06.834 --> 00:43:08.701
well-established brand, over

985
00:43:08.701 --> 00:43:10.634
60 years old. Well-known.

986
00:43:10.634 --> 00:43:12.734
Broadly tried.

987
00:43:12.734 --> 00:43:14.901
In the end with Tide, they're buying two things.

988
00:43:14.901 --> 00:43:18.968
They're buying proven performance, quality and value,

989
00:43:18.968 --> 00:43:22.667
and they're buying trust.

990
00:43:22.667 --> 00:43:25.801
That's what they're buying.

991
00:43:25.801 --> 00:43:28.801
Now, if you'd asked me about a new brand, OK, then there are,

992
00:43:28.801 --> 00:43:31.567
you know, different -- you know, they -- you know, it's a

993
00:43:31.567 --> 00:43:33.901
different phenomenon.

994
00:43:33.901 --> 00:43:37.467
In the case of, you know, a brand new brand, when we first

995
00:43:37.467 --> 00:43:41.901
offered Febreze or Swiffer, they didn't know what

996
00:43:41.901 --> 00:43:46.100
those brands were.

997
00:43:46.100 --> 00:43:49.734
So in that case what they're -- what we're trying to do is

998
00:43:49.734 --> 00:43:53.167
connect a new brand and product offering to a group of consumers

999
00:43:53.167 --> 00:43:56.167
who we know are in that market or who we believe would have

1000
00:43:56.167 --> 00:43:58.901
interest in coming into that market.

1001
00:43:58.901 --> 00:44:01.968
And then all the factors you touched on.

1002
00:44:01.968 --> 00:44:04.767
What is this brand?

1003
00:44:04.767 --> 00:44:07.167
How we communicate.

1004
00:44:07.167 --> 00:44:09.267
Frankly, where we are in the store.

1005
00:44:09.267 --> 00:44:11.334
How we're presented in the store.

1006
00:44:11.334 --> 00:44:13.367
What's the price in the store?

1007
00:44:13.367 --> 00:44:15.400
All of that matters.

1008
00:44:15.400 --> 00:44:17.400
And how do you influence that?

1009
00:44:17.400 --> 00:44:19.434
>>A.G. LAFLEY: Well, a lot of that is -- some of that, of

1010
00:44:19.434 --> 00:44:21.467
course, is

1011
00:44:21.467 --> 00:44:24.234
our control and our choice, the way the package looks, the way

1012
00:44:24.234 --> 00:44:26.934
the product is configured, what the price is.

1013
00:44:26.934 --> 00:44:29.467
The rest we partner with the retailers to make sure that the

1014
00:44:29.467 --> 00:44:31.868
presentation is right because it's in their interest and it's

1015
00:44:31.868 --> 00:44:34.234
in our interest that it be a success.

1016
00:44:34.234 --> 00:44:36.300
You're the world's largest advertiser, yes?

1017
00:44:36.300 --> 00:44:38.300
>>A.G. LAFLEY: We are.

1018
00:44:38.300 --> 00:44:40.634
What is changing about where

1019
00:44:40.634 --> 00:44:44.033
and how you advertise?

1020
00:44:44.033 --> 00:44:47.701
>>A.G. LAFLEY: Almost everything.

1021
00:44:47.701 --> 00:44:51.467
And I mean that.

1022
00:44:51.467 --> 00:44:55.534
Consumers are choosing virtually every conceivable medium

1023
00:44:55.534 --> 00:45:00.234
available from their cell phone to the Internet to public

1024
00:45:00.234 --> 00:45:04.467
events, you know, in addition to sort of the tried and true

1025
00:45:04.467 --> 00:45:07.901
television, radio, print, et cetera.

1026
00:45:07.901 --> 00:45:10.968
And frankly we have to be when and where you or she wants us to

1027
00:45:10.968 --> 00:45:16.400
be, when you're amenable to listening to our --

1028
00:45:16.400 --> 00:45:18.667
When I'm in a decisional mode.

1029
00:45:18.667 --> 00:45:20.634
>>A.G. LAFLEY: Sure.

1030
00:45:20.634 --> 00:45:22.968
You're either in, I want to be educated, I want to be informed

1031
00:45:22.968 --> 00:45:25.200
or, I want to make a decision.

1032
00:45:25.200 --> 00:45:27.367
And we have to be there.

1033
00:45:27.367 --> 00:45:29.501
And it's interesting, on some of our brands and product lines,

1034
00:45:29.501 --> 00:45:31.868
television still works very well.

1035
00:45:31.868 --> 00:45:34.133
Thank you very much.

1036
00:45:34.133 --> 00:45:36.067
What would that be?

1037
00:45:36.067 --> 00:45:38.334
>>A.G. LAFLEY: Anything where you can show and demonstrate the

1038
00:45:38.334 --> 00:45:40.667
difference that the product can make in your life, the

1039
00:45:40.667 --> 00:45:42.701
performance difference.

1040
00:45:42.701 --> 00:45:44.701
But in a lot of our product lines and a lot of our brands

1041
00:45:44.701 --> 00:45:47.067
we're increasingly using what we call all of the alternative

1042
00:45:47.067 --> 00:45:49.434
kinds of media.

1043
00:45:49.434 --> 00:45:51.801
Of which they are?

1044
00:45:51.801 --> 00:45:54.167
>>A.G. LAFLEY: Everything from feminine care, one of our biggest

1045
00:45:54.167 --> 00:45:56.567
-- the

1046
00:45:56.567 --> 00:45:58.968
biggest contributors there is online.

1047
00:45:58.968 --> 00:46:01.567
We have a site called beinggirl.

1048
00:46:01.567 --> 00:46:04.133
It is "the" --

1049
00:46:04.133 --> 00:46:07.300
A Procter & Gamble-created site.

1050
00:46:07.300 --> 00:46:09.934
>>A.G. LAFLEY: A Procter & Gamble-created site.

1051
00:46:09.934 --> 00:46:12.701
It appeals to pre-teen and young teens.

1052
00:46:12.701 --> 00:46:15.901
The point of entry for women in the feminine re

1053
00:46:15.901 --> 00:46:18.567
category is puberty.

1054
00:46:18.567 --> 00:46:20.934
And they would much rather educate themselves and learn

1055
00:46:20.934 --> 00:46:23.534
about that product in the relative privacy of

1056
00:46:23.534 --> 00:46:25.834
an Internet communication.

1057
00:46:25.834 --> 00:46:28.801
Find fragrances.

1058
00:46:28.801 --> 00:46:31.667
We need to be -- frankly we're in bars.

1059
00:46:31.667 --> 00:46:34.367
We're at concerts.

1060
00:46:34.367 --> 00:46:36.667
We're in places where Gen.-X and Gen.-Y young men and women are

1061
00:46:36.667 --> 00:46:38.901
in the mood to try a new fragrance.

1062
00:46:38.901 --> 00:46:41.200
So it really depends.

1063
00:46:41.200 --> 00:46:43.133
It depends on the category.

1064
00:46:43.133 --> 00:46:45.100
It depends on the product line.

1065
00:46:45.100 --> 00:46:46.834
And it depends on, very importantly, who the target

1066
00:46:46.834 --> 00:46:49.133
consumer is.

1067
00:46:49.133 --> 00:46:51.100
Are you more excited about development of new

1068
00:46:51.100 --> 00:46:53.067
products or how to sell them?

1069
00:46:53.067 --> 00:46:56.801
>>A.G. LAFLEY: Well, I have to be excited about both.

1070
00:46:56.801 --> 00:46:58.901
>>A.G. LAFLEY: Right?

1071
00:46:58.901 --> 00:47:00.701
If we develop it, and I can't sell it, I

1072
00:47:00.701 --> 00:47:02.567
don't have an innovation.

1073
00:47:02.567 --> 00:47:04.467
Thirdly and more importantly, some sense of how

1074
00:47:04.467 --> 00:47:06.133
you develop talent.

1075
00:47:06.133 --> 00:47:07.901
So what have you learned about that?

1076
00:47:07.901 --> 00:47:09.701
>>A.G. LAFLEY: OK.

1077
00:47:09.701 --> 00:47:11.334
That's a great question.

1078
00:47:11.334 --> 00:47:13.033
Because you went to Harvard Business School but

1079
00:47:13.033 --> 00:47:14.801
you don't have a bias against -- for people who went to fancy

1080
00:47:14.801 --> 00:47:16.634
business schools.

1081
00:47:16.634 --> 00:47:18.267
>>A.G. LAFLEY: No.

1082
00:47:18.267 --> 00:47:20.000
We're looking for -- we talked about this briefly earlier.

1083
00:47:20.000 --> 00:47:21.767
We're looking for the best available talent from anywhere

1084
00:47:21.767 --> 00:47:23.634
in the world.

1085
00:47:23.634 --> 00:47:25.501
We don't care what your background is.

1086
00:47:25.501 --> 00:47:27.167
We don't care if you're from a small town or a big town.

1087
00:47:27.167 --> 00:47:28.934
We don't care what university you went to.

1088
00:47:28.934 --> 00:47:32.834
We don't care what jobs you've done or how many times --

1089
00:47:32.834 --> 00:47:34.667
Then how are you going to determine what I --

1090
00:47:34.667 --> 00:47:36.534
that I'm a winner rather than an also-ran?

1091
00:47:36.534 --> 00:47:38.467
>>A.G. LAFLEY: We listen to you every step of the way.

1092
00:47:38.467 --> 00:47:40.133
Every step of the way.

1093
00:47:40.133 --> 00:47:41.901
That reminds me of this story about you.

1094
00:47:41.901 --> 00:47:43.434
And just -- it's such a great, great story.

1095
00:47:43.434 --> 00:47:44.901
Somewhere you went to work.

1096
00:47:44.901 --> 00:47:46.734
You were a bit fed up because you

1097
00:47:46.734 --> 00:47:48.601
thought it was too bureaucratic.

1098
00:47:48.601 --> 00:47:50.834
And a guy named Donovan.

1099
00:47:50.834 --> 00:47:52.767
>>A.G. LAFLEY: That's right, Steve Donovan (ph).

1100
00:47:52.767 --> 00:47:55.601
Steve Donovan basically -- when you said you

1101
00:47:55.601 --> 00:47:58.467
were going to resign, said what do you?

1102
00:47:58.467 --> 00:48:01.667
What did he do?

1103
00:48:01.667 --> 00:48:05.200
>>A.G. LAFLEY: Frankly, it was a great moment in my life.

1104
00:48:05.200 --> 00:48:08.834
Steve has been a great inspiration in my life.

1105
00:48:08.834 --> 00:48:12.100
But, yes, I had been with the company five, six, seven years.

1106
00:48:12.100 --> 00:48:15.067
I was frustrated with the bureaucracy.

1107
00:48:15.067 --> 00:48:17.534
I was frustrated with the ability to impact change and the

1108
00:48:17.534 --> 00:48:19.901
ability to get things done.

1109
00:48:19.901 --> 00:48:22.167
And I did resign.

1110
00:48:22.167 --> 00:48:24.367
In fact, it was pretty funny.

1111
00:48:24.367 --> 00:48:27.534
I handed him my resignation letter.

1112
00:48:27.534 --> 00:48:30.567
And I don't know if you heard this part of the story, and he

1113
00:48:30.567 --> 00:48:33.100
read it, and then he looked at me across the table like this.

1114
00:48:33.100 --> 00:48:35.501
And he picked it up and he tore it in half.

1115
00:48:35.501 --> 00:48:37.801
And then he tore it in half again and then he handed it back

1116
00:48:37.801 --> 00:48:40.033
to me.

1117
00:48:40.033 --> 00:48:42.234
And he said, I'm not accepting this resignation.

1118
00:48:42.234 --> 00:48:44.167
And you know, I was dumbfounded.

1119
00:48:44.167 --> 00:48:46.100
And then he said, what are you doing today?

1120
00:48:46.100 --> 00:48:47.834
And I told him what I was doing.

1121
00:48:47.834 --> 00:48:50.033
And he said go home.

1122
00:48:50.033 --> 00:48:51.934
That doesn't need to be done today.

1123
00:48:51.934 --> 00:48:54.033
Go home.

1124
00:48:54.033 --> 00:48:55.934
I'll call you at whatever, 5:00 or 6:00, I want

1125
00:48:55.934 --> 00:48:58.734
you to come over.

1126
00:48:58.734 --> 00:49:01.367
And for several nights in a row I went over to his apartment and

1127
00:49:01.367 --> 00:49:04.133
we talked.

1128
00:49:04.133 --> 00:49:06.434
And his basic message to me was, don't run away.

1129
00:49:06.434 --> 00:49:08.400
If you want to make a difference, if you want to make

1130
00:49:08.400 --> 00:49:10.167
a change, stay here and do it.

1131
00:49:10.167 --> 00:49:11.734
But you're right.

1132
00:49:11.734 --> 00:49:13.434
He listened to me.

1133
00:49:13.434 --> 00:49:15.300
And frankly I listened to him.

1134
00:49:15.300 --> 00:49:17.467
Yes.

1135
00:49:17.467 --> 00:49:20.234
What intrigues me about this story and what I like about this

1136
00:49:20.234 --> 00:49:23.067
story and what I like about that, what I think is the lesson

1137
00:49:23.067 --> 00:49:25.534
of the story, is in a sense people listening to each other.

1138
00:49:25.534 --> 00:49:27.934
>>A.G. LAFLEY: We try to engage a consumer, attract a consumer,

1139
00:49:27.934 --> 00:49:30.567
and then serve her or him or their family for a lifetime.

1140
00:49:30.567 --> 00:49:32.801
We have to listen to you.

1141
00:49:32.801 --> 00:49:35.834
We have to observe you because here's the issue.

1142
00:49:35.834 --> 00:49:38.834
You can't really tell us everything that

1143
00:49:38.834 --> 00:49:42.033
you want and need.

1144
00:49:42.033 --> 00:49:45.234
We innovate a lot of our best new products based on what we

1145
00:49:45.234 --> 00:49:48.234
call "unarticulated needs." And the only way we'll get at those

1146
00:49:48.234 --> 00:49:50.968
unarticulated needs is if we really deeply listen to you and

1147
00:49:50.968 --> 00:49:53.567
deeply observe you and understand you in a way that you

1148
00:49:53.567 --> 00:49:56.167
may not even fully understand yourself.

1149
00:49:56.167 --> 00:49:58.667
What would you change about the world you live

1150
00:49:58.667 --> 00:50:00.801
in -- I don't mean politically, I don't mean the environment,

1151
00:50:00.801 --> 00:50:03.467
and I don't mean to do something about poverty in the world, or

1152
00:50:03.467 --> 00:50:05.734
global health, which I hope you're

1153
00:50:05.734 --> 00:50:08.300
committed to all of those.

1154
00:50:08.300 --> 00:50:11.767
What would you do about the world that you

1155
00:50:11.767 --> 00:50:15.234
have some power in?

1156
00:50:15.234 --> 00:50:18.667
What would you change if you had the power to do that?

1157
00:50:18.667 --> 00:50:22.133
>>A.G. LAFLEY: The single biggest thing I would try to change --

1158
00:50:22.133 --> 00:50:25.601
I would

1159
00:50:25.601 --> 00:50:30.067
change is I would try to encourage people to engage more,

1160
00:50:30.067 --> 00:50:34.834
collaborate more, dialogue more with the purpose of innovating

1161
00:50:34.834 --> 00:50:39.501
to solve problems that people believe are unsolvable.

1162
00:50:39.501 --> 00:50:43.834
I don't know how to solve the health care challenges in the

1163
00:50:43.834 --> 00:50:48.100
U.S., but I am certain that if we put a group of good minds,

1164
00:50:48.100 --> 00:50:52.200
and more importantly, open minds together from all of the

1165
00:50:52.200 --> 00:50:55.634
representative constituencies and stakeholders, that we would

1166
00:50:55.634 --> 00:50:59.300
get to an outstanding solution.

1167
00:50:59.300 --> 00:51:03.000
I have seen that happen in my company when we've had a hard

1168
00:51:03.000 --> 00:51:06.734
problem to solve.

1169
00:51:06.734 --> 00:51:10.267
If we get the right people around the table, if we get the

1170
00:51:10.267 --> 00:51:14.200
right process going, if people really engage -- if we get a

1171
00:51:14.200 --> 00:51:17.400
good problem definition, people really engaged, they really

1172
00:51:17.400 --> 00:51:20.033
dialogue, we can crack a problem.

1173
00:51:20.033 --> 00:51:22.734
And I have so much confidence in knowledge

1174
00:51:22.734 --> 00:51:25.367
workers and human capital.

1175
00:51:25.367 --> 00:51:28.000
That's the real asset.

1176
00:51:28.000 --> 00:51:30.834
When you asked me about people, the real asset at P&G -- there

1177
00:51:30.834 --> 00:51:34.100
are two assets at P&G.

1178
00:51:34.100 --> 00:51:36.801
The primary asset is human capital.

1179
00:51:36.801 --> 00:51:39.300
And then the secondary asset is the brands that they create.

1180
00:51:39.300 --> 00:51:41.434
That's why we have a market cap of $200 billion and a balance

1181
00:51:41.434 --> 00:51:43.534
sheet of $100 billion.

1182
00:51:43.534 --> 00:51:45.667
And a revenue of, what --

1183
00:51:45.667 --> 00:51:47.801
>>A.G. LAFLEY: Revenue of -- you know, it will be

1184
00:51:47.801 --> 00:51:49.901
above 80 this year.

1185
00:51:49.901 --> 00:51:52.300
But that's really what investors in P&G are paying for.

1186
00:51:52.300 --> 00:51:54.968
They're paying for our human capital and they're paying for

1187
00:51:54.968 --> 00:51:57.767
these brands that have been created.

1188
00:51:57.767 --> 00:52:00.467
Thank you for the conversation.

1189
00:52:00.467 --> 00:52:03.033
I have enormous interest in what you are learning and what that

1190
00:52:03.033 --> 00:52:05.834
experience is and how it relates to all of us in terms of

1191
00:52:05.834 --> 00:52:08.801
whatever we're doing in terms of political leadership, in terms

1192
00:52:08.801 --> 00:52:11.300
of people within communities.

1193
00:52:11.300 --> 00:52:13.434
The idea of how we take advantage of what other people's

1194
00:52:13.434 --> 00:52:15.501
experience teaches them in dealing with a

1195
00:52:15.501 --> 00:52:17.601
whole range of problems.

1196
00:52:17.601 --> 00:52:19.634
So I thank you very much.

1197
00:52:19.634 --> 00:52:21.667
>>A.G. LAFLEY: Thank you.

1198
00:52:21.667 --> 00:52:23.701
A pleasure to have you here.

1199
00:52:23.701 --> 00:52:25.601
>>A.G. LAFLEY: Thanks.

1200
00:52:25.601 --> 00:52:27.334
The book is called "The Game-Changer: How

1201
00:52:27.334 --> 00:52:28.868
You Can Drive Revenue and Profit Growth with Innovation," A.G.

1202
00:52:28.868 --> 00:52:30.534
Lafley and Ram Charan.

1203
00:52:30.534 --> 00:52:32.200
Thank you for joining us.

1204
00:52:32.200 --> 
See you next time.