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Speaker 1: Broadcasting live to New York Bloomberg eleventh, RYO to Washington,

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Speaker 1: d C, Bloomberg to Boston, Bloomberg Well hundred to San

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Speaker 1: Francisco Bloomberg nine six, to the Country series at SAMN

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Speaker 1: General one nineteen and around the globe the Bloomberg Radio

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Speaker 1: plus Aben Bloomberg dot Com. This is Hoomberg Surveillance. Good morning,

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Speaker 1: I'm Karen Moscow along with Tom Keene and Michael McKee,

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Speaker 1: and the opening bell is brought to you by the

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Speaker 1: University of North Carolina's Keenan Flagler Business School Master Year

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Speaker 1: Business Sheet with their world class Master of Accounting Executive

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Speaker 1: Development in NBA programs for the U, n C, dot E,

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Speaker 1: d U, SLASH business and stocks. They're little change to

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Speaker 1: lower at the open the S and P five hundred

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Speaker 1: down less than a tenth of upper center one point

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Speaker 1: seventy one, Dow Jones Industrial Average down a tenth of

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Speaker 1: upper center eighteen points to seventeen thousand, seven hundred seventy

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Speaker 1: four and ASDAC is little change down two points to

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Speaker 1: eleven Tenure Treasury is little change yield one point seven

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Speaker 1: six percent heel than the two year point seven four

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Speaker 1: percent non ex scret oil down four tenths per cent

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Speaker 1: or twelve cents at thirty six sixties six and arrol

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Speaker 1: Co mix s goold is down a tenth of upper

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Speaker 1: center a dollar ten to twelve forty announced the euro

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Speaker 1: a dollar fourteen oh seven. The end one eleven point

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Speaker 1: three five. Tom and Mike Karen thank you so much.

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Speaker 1: He is the physicist and engineer from Cambridge. He has

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Speaker 1: an esteemed career at the challenges of British Petroleum BP.

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Speaker 1: Lord Brown joins us. Now, John, I I look at

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Speaker 1: your book, Connect and all I can say is you

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Speaker 1: have the strangest group of quotes on the back of

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Speaker 1: your book. I find it of immense value that John

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Speaker 1: Van Reenen of the London School of Economics loves what

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Speaker 1: you've done. Yere about bringing trust back between fancy corporate

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Speaker 1: people like you and a global public that is removed

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Speaker 1: from capitalism and removed from the titans of capitalism. Where

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Speaker 1: are we in the trust meter right now? Are we

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Speaker 1: getting more trust? No? No, we're not ready. We're getting

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Speaker 1: less trust with the general public, if you will, more

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Speaker 1: trust with the elites, which is hardly surprising. So people

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Speaker 1: believe people like themselves and people don't believe people not

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Speaker 1: like themselves, and there is a growing gap as a

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Speaker 1: result of that. Well, you were a CEO for a

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Speaker 1: long time. Was there a time when you were popular?

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Speaker 1: For one of a better way to put it, when

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Speaker 1: you were popular? I mean, have people mistrusted big business forever? No,

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Speaker 1: they haven't. Goes in cycles. Certainly, when I started business

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Speaker 1: Saven there was quite a lot of trust in business.

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Speaker 1: That was a very long time ago. People almost spoken

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Speaker 1: definitions and people believed it. So authority is now tested

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Speaker 1: very hard, and I think the ability to test it

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Speaker 1: through many angles, through different media has reduced people's reliance

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Speaker 1: and authority. And actually by making mistakes, people have breached

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Speaker 1: the trust that authority is given. But it goes in cycles.

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Speaker 1: And that's the point of the book is that we

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Speaker 1: can't be complacent with the cycles because the cycles get

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Speaker 1: deeper and worse over time as more and more people

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Speaker 1: can contribute to the debate. So people have to put

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Speaker 1: business has to do much more in joining up with

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Speaker 1: society as a whole. What triggered this cycle Lots of things.

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Speaker 1: I think combination of executive pay in the Europe, the

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Speaker 1: global financial crisis, a variety of events, that occur, the

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Speaker 1: latest being Volkswagen and their issues with pollution control. So

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Speaker 1: a variety of events produces it, and the response to

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Speaker 1: events not being fast enough reinforces this, I think. And

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Speaker 1: if we can talk about the physics of the slew rate,

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Speaker 1: this goes to global information transfer, which you go timber

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Speaker 1: and lease in euro to a great extent on the Internet.

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Speaker 1: But you as a physicist, no, you, folks, this is

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Speaker 1: the siloscope that we all remember. Do they even use

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Speaker 1: the celloscopes anymore? Remember your first ciloscope at Cambridge? You know,

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Speaker 1: your little out of paper. You know it's great about

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Speaker 1: this Mike Bloomberg, folks, this is a true story. On Friday,

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Speaker 1: Mike Bloomberg showed me his old slide rule from engineering

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Speaker 1: at Johns Hopkins. Again, Mike Bloomberg is the principle of

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Speaker 1: Bloomberg Gilp, owner of this UH network. But but Lord Brown,

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Speaker 1: I would suggest the days of Mike bloomberg slide rule

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Speaker 1: or years of my soloscope, those are gone. Slew rates

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Speaker 1: are too fast, of course, of course they are. But

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Speaker 1: that doesn't mean to say that industry business generally should

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Speaker 1: sit where it used to be and not update itself

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Speaker 1: with the demise of the slide rule of the demise

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Speaker 1: of this telescope, And that's exactly again, won't My book

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Speaker 1: indicates how you have to get much closer, much much

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Speaker 1: closer to all the constituents that you affect as a business.

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Speaker 1: Strategy based on just production and marketing doesn't work. Strategy

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Speaker 1: based on regulators, society generally communities that works, and that

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Speaker 1: actually produces far more money. As I think all the

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Speaker 1: studies clearly show, can you be involved enough in communities

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Speaker 1: quote unquote when you are a global company, absolutely you

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Speaker 1: have to have in It's a well known phrase, but

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Speaker 1: it has a lot of meaning, which is you have

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Speaker 1: to localize yourself you people. I always remember when I

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Speaker 1: was running BP, I reminded myself that people don't travel

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Speaker 1: from Wales in the UK to Cleveland, Ohio to buy gasoline.

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Speaker 1: They're going to the red tax game today that they will.

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Speaker 1: They do all sorts of things, but what they don't

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Speaker 1: do is they go They don't go global. We may

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Speaker 1: think of ourselves as global sourcing, global supply chain, global branding,

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Speaker 1: but actually the most of this is to do with

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Speaker 1: localization and having people that people trust in charge of

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Speaker 1: the business locally. But how do you translate that. I

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Speaker 1: mean for most people, you're probably right that VP is

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Speaker 1: the petrol station on the corner, But the headlines they

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Speaker 1: read are global, the CEO pay is global. How much

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Speaker 1: contact do I have with the local guy who works

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Speaker 1: for VP as opposed to what I'm reading in the

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Speaker 1: papers and seeing in the news. You certainly can't disenfranchise

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Speaker 1: the local woman or man who's who's looking after the

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Speaker 1: company locally. But CEOs have to spend very much more

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Speaker 1: time doing first, I think, reinforcing that purpose globally. Secondly,

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Speaker 1: making sure that they understand how they're engaging with different

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Speaker 1: parts of the society that affect them. And thirdly, to

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Speaker 1: engage very radically, make sure they get on the same

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Speaker 1: agenda as people in the real world, not I think,

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Speaker 1: to condescend or patronize them with the messages that they

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Speaker 1: want to give them. Look John D. Brown with us

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Speaker 1: from British Patroling. Of course, this new book is connect

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Speaker 1: how companies succeed by engaging radically with society. I adore

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Speaker 1: page one seventy seven the Palmisano shift. You go right

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Speaker 1: through the creation and shareholder value is mantra. You turn

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Speaker 1: the page and Eric Schmidt says nothing's changed. Why does

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Speaker 1: Errick Schmidts say that, Well, it depends on the majority

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Speaker 1: of your business. I think if you're in a big

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Speaker 1: growth business way, every day you can grow. I think

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Speaker 1: you can begin to save yourself. Maybe I can just

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Speaker 1: grow within the limits of the law, and that's all

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Speaker 1: I need to worry about. But actually you may hit

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Speaker 1: a barrier. Google's hit a few barriers around the world,

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Speaker 1: not least with their triolitical pro taxes. We're gonna come

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Speaker 1: back on this, but critically, Lord Brown, and if you

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Speaker 1: look at the partial differentials of revenue, is unit dynamics

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Speaker 1: in price dynamics is global disinflation? It in deflation causing

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Speaker 1: some of these entrepreneurial challenges because they don't have price

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Speaker 1: growth some of it. It's also causing anger, I think

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Speaker 1: with people who don't get to experience growth like they

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Speaker 1: used to wages and in opportunity and in promotion. Mike.

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Speaker 1: That goes back to Jeff mL saying, oh we need

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Speaker 1: is three point two g d P. Yeah, it ain't there.

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Speaker 1: Well it's uh, it's again as we saw earlier. Um,

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Speaker 1: the guest leaves me with a question to ask when

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Speaker 1: we come back, and we'll come back with Lord brown

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Speaker 1: In just fr Monty his co author Tommy Standley. The

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Speaker 1: book is Connect. Companies succeed by engaging radically with society.

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Speaker 1: I guess engaging it all would be somewhat radical for

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Speaker 1: many of these companies. Well, this I should point out

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Speaker 1: Peter Grower, our chairman, when we go pieces Connect provides

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Speaker 1: a clear understanding of the value of connected leadership. That's

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Speaker 1: something Mr Grower's doing each and every day. So we'll

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Speaker 1: come back on the new core, Sir Martin soil. Sir

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Speaker 1: Martin's is intelligent, practical, of immediate value. What I loved

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Speaker 1: about it was a history in the scope and scale

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Speaker 1: of where we've been and then to where we're heading.

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Speaker 1: We're negative thirty three on the dow of First We're

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Speaker 1: gonna check out with Michael Barr and get the latest

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Speaker 1: world in national headlines like Mike tom thank you very much.

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Speaker 1: All eyes will be on Wisconsin tomorrow for its primaries.

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Speaker 1: Donald Trump has called on rival John Kasik to drop

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Speaker 1: out of the race for the Republican presidential nomination, saying

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Speaker 1: Kasey has no chance to win It. Ted cruise campaign

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Speaker 1: in Green Bay yesterday and took a jab at his

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Speaker 1: Democratic rivals. The Democratic field consists of a wild eyed

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Speaker 1: socialist with ideas that are dangerous for America in the world,

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Speaker 1: and Bernie Sanders. Democrats are debating about a debate. Hillary

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Speaker 1: Clinton says she has accepted a debate hosted by ABC's

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Speaker 1: Good Morning America on April fifteenth. Bernie Sanders says he

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Speaker 1: has agreed to an NBC primetime debate. On April tenth,

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Speaker 1: three boats carrying a total of more than two hundred

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Speaker 1: migrants and refugees who had fled degrees have reached the

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Speaker 1: Turkish port town. The migrants were returned to Turkey as

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Speaker 1: part of a European Union deal to stem migration to Europe.

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Speaker 1: Brussels Airport plans to resume flights with New York City,

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Speaker 1: the African continent and at least six major European cities. Yesterday,

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Speaker 1: only three flights departed from the airport that was struck

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Speaker 1: by a terrorist attack two weeks ago, and the Yankees

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Speaker 1: have postponed their home open there today because of gloomy,

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Speaker 1: rainy skies in New York. He's trying to pretend he

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Speaker 1: cares about the Yankees Go Tigers, where the Tigers played

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Speaker 1: no they're not playing today, They'll play tomorrow. They'll play tomorrow. Okay,

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Speaker 1: So no whether concerns for Detroit. We're happy if you

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Speaker 1: build it. If you build it, This is Bloomberg Radio Worldwide.

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Speaker 1: Bloomerk Surveillance is brought to you by Untucked. Think your

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Speaker 1: shirt is too long to wear? Untucked probably is. Untucket

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Speaker 1: w BR for fifteent off to improve your WARDO Bloomboo

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Speaker 1: Business News twenty four hours a day. If Bloomberg dot

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Speaker 1: com the radio plus mobil and on your radio is

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Speaker 1: a Bloomberg Business flash and I'm Cameron Moscow. This updates Bronty.

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Speaker 1: You buy National Realty returns on cash and rented real

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Speaker 1: estate find them at n r i A dot net.

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Speaker 1: US stocks are a little changed to lower this morning.

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Speaker 1: They are near their highest levels of the year as

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Speaker 1: investors look for fresh reasons to a send a rally

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Speaker 1: who checked the markets every fifteen minutes throughout the trading day.

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Speaker 1: On Bloomberg, the S and P five hundred is down

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Speaker 1: about a tenth of upper cent, down almost two points

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Speaker 1: to seventy Dow Jones Industrial Average down a tenth of

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Speaker 1: upper center twenty two points to seventeen thousand, seven hundred

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Speaker 1: seventy one. The now's deck is down less sent a

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Speaker 1: tenth of a percent, down three points to forty nine

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Speaker 1: eleven ten. Your treasury down one thirty second. The yield

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Speaker 1: one point seven seven percent yield on the two year

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Speaker 1: point seven four percent. No i'm x screwed oil of

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Speaker 1: four ten percent or seventeen cents at thirty six ninety

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Speaker 1: five of barrel comes goal down three tents per cent

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Speaker 1: or three dollars forty cents at twelve announced the euro

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Speaker 1: a dollar fourteen o one the en one eleven point

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Speaker 1: three eight. Alaska Air Group agreed to buy a Virgin

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Speaker 1: America for two point six billion dollars in Virgin America shares,

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Speaker 1: They're up forty per cent this morning. Bass Global Markets

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Speaker 1: initial public offering may value the second largest US stock

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Speaker 1: exchange operator at as much as two point one billion dollars.

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Speaker 1: That's more than double the expected valuation in its first

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Speaker 1: attempt four years ago. And that's a Bloomberg business flash.

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Speaker 1: Tom and Mike Karen, thanks so much. The books connects

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Speaker 1: our company succeed by engaging radically with society. John Lord

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Speaker 1: Brown with us right now, Lord Brown, if he was

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Speaker 1: still at BP British Petroleum, Um, I have to say

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Speaker 1: that I can't. I still not used to BEP. It's

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Speaker 1: British Petroleum. I'm sorry. It would be his forty seventh

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Speaker 1: year if it was still there. He got some young

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Speaker 1: guys to put connect together as well. He was new

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Speaker 1: college cricket, rugby and football first team at Oxford. Tommy

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Speaker 1: Stadlin joins us out of the lase, John reen Van

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Speaker 1: Reenen and Ellsee Raby. What was it? How intimidating was

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Speaker 1: it to work with Lord Brown in this? I mean

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Speaker 1: you have to put on ropes to write damn book.

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Speaker 1: Very scary at first half to say, but you know,

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Speaker 1: it's been actually a pleasure to write with someone who

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Speaker 1: has been through these issues, both on the business side

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Speaker 1: but also on the government side as well. So I

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Speaker 1: really fantastics write the boat with John. Well, we'll talk

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Speaker 1: about the book. I was gonna go with the Kitchuk's

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Speaker 1: note this morning where he's complaining about the state of

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Speaker 1: England's cricket um. But no, it's sort of like Canada

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Speaker 1: that being in the Stanley cupland hockey. It's to saying,

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Speaker 1: it's saying that's not fat. Oh we could ask Lord

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Speaker 1: Brown about Leicester City and you know that whole thing too.

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Speaker 1: If we wanted to go into sporting route, we should

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Speaker 1: refer to Tommy. He's much more aspects than this. All right,

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Speaker 1: Well we'll hit your area of expertise, which is not sport,

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Speaker 1: but but being a corporate leader. Uh. Tom In your

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Speaker 1: exchangement time just before the break, you mentioned that the

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Speaker 1: lack of inflation around the world is a problem for

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Speaker 1: corporate profits. But I'm wondering what else is going on

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Speaker 1: that we have seen profits drop so significantly at a

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Speaker 1: time when at least in the United States growth hasn't

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Speaker 1: changed all that much. European growth dropped but now is

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Speaker 1: rising again even without inflation. There seems to be um,

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Speaker 1: some positive momentum, and yet it's not being reflected on balances.

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Speaker 1: It's not I think a lot of the obviously que

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Speaker 1: as as everyone I think is now observed, has gone

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Speaker 1: into h M and A measures and acquisitions on actually

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Speaker 1: into deep capital expenditure, and as a result, long term

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Speaker 1: sustainable growth is is wanting and I think that reflects

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Speaker 1: in people's mindset. You know, what do employees want? What's

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Speaker 1: going to go onto the future? If I look at

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Speaker 1: my own own own industry, there's been about having there's

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Speaker 1: so much capital cut out of the business now with

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Speaker 1: the decline of oil prices that probably oil production will

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Speaker 1: be down three million barrels a day at some time

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Speaker 1: in the future. And that's the question when based on

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Speaker 1: this reduction in capex. Well, I can understand it in

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Speaker 1: the oil business because prices have dropped so significantly, but

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Speaker 1: why the loss of confidence just you know, in c

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Speaker 1: suites around the world. You know what's making people so depressed? Well,

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Speaker 1: I think people people's first attention obviously is to say, well,

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Speaker 1: let's see if we can grow on wall streets, so

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Speaker 1: M and A and secondary, what can we do to

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Speaker 1: improve the bottom line through cost cutting. There's been a

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Speaker 1: huge amount of cost cutting and it's been very favorably

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Speaker 1: received by investors who are not at the moment, I think,

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Speaker 1: receiving really interesting long term investments with the enthusiasm that

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Speaker 1: they used to. But there's a generational shift here. Tommy

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Speaker 1: Stile and everybody in this room as a fossil except you.

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Speaker 1: You worked at McKenzie on this. We we've had any

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Speaker 1: number of guests who are corporate leaders saying the ute

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Speaker 1: is changed and forever different. You guys have grown up

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Speaker 1: with the technology that is made for a never ending week.

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Speaker 1: We've gone from forty hours maybe it was a six

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Speaker 1: day week, forty eight hours to sixty and seventy hours

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Speaker 1: wired in. How can corporate leaders adapt to the demands

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Speaker 1: and exhaustion of a new professional class youth? Well, I

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Speaker 1: think you raise youth, and I think it's very important.

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Speaker 1: I think that this is an era of radical transparency

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Speaker 1: because of my blocking activity, and I think that there

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Speaker 1: is no highly played business now. So we talked about

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Speaker 1: trust earlier on the people trust business leaders to tell

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Speaker 1: the truth much much much higher than that. So we've

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Speaker 1: seen a trend now of young people not trusting business leaders.

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Speaker 1: When we go around and talk to business schools and

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Speaker 1: we ask how many people in this room trust business

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Speaker 1: leaders to tell the truth about one or two people

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Speaker 1: put their hands up, and that's at business school. So

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Speaker 1: this this is a critical issue for business. We found

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Speaker 1: in the book that thirty percent of the value of

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Speaker 1: a company is at state care. That's a huge amount

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Speaker 1: of value of state for companies. We also found that

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Speaker 1: CEO is a spending thirty of their time on this issue.

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Speaker 1: But the other thirty percent is that less than thirty

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Speaker 1: percent of CEO is reported success in engaging with society.

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Speaker 1: So you've got this huge pot of money available, but

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Speaker 1: people are not competing well over it. They're not connecting

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Speaker 1: the distinction between society the public. In society, if you're

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Speaker 1: running twenty thousand or two hundred thousand employees x amount

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Speaker 1: are under a certain age, which society is a book

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Speaker 1: connected about. The book is about all of those all

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Speaker 1: of those groups. And what we found interesting is that

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Speaker 1: these cycles come and go. So yes, now young people

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Speaker 1: are very wary of business, but this goes all the

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Speaker 1: way back to ancient China. We start the book in

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Speaker 1: ancient China, and look how China fell behind the West

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Speaker 1: in many ways because of the distrust of business. You

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Speaker 1: have business blowing off mountaintops and paying themselves too much,

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Speaker 1: and because of that, China reacted against business and that

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Speaker 1: cost China. One of the most fascinating effects in the

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Speaker 1: book I found page one thirty four where you note

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Speaker 1: that the life expectancy of a leading US company has

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Speaker 1: plummeted in the last century, from sixty seven years in

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Speaker 1: the nineteen twenties to fifteen years today. So, uh, executive

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Speaker 1: don't have a lot of margin for mistake here. They don't,

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Speaker 1: although they can prolong their lives. I think if they

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Speaker 1: put out the right strategies and they more importantly performed

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Speaker 1: against them as is I think the current vogue now

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Speaker 1: to talk to corporations about publishing strategies and performing against them.

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Speaker 1: But companies who don't have a clear purpose in life

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Speaker 1: and don't execute well obviously vanished, and they vanished faster

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Speaker 1: than they used to because people can see the lack

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Speaker 1: of performance more quickly than they used to. What is

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Speaker 1: what do you do to connect what you know? What

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Speaker 1: are the lessons in the book? So we recommend four things,

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Speaker 1: and two of them seem so simple, but yet they're

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Speaker 1: not often executed well. The first is for leaders to

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Speaker 1: just look around and understand what's changing, and it changes

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Speaker 1: very fast every day in the world does affects them. Secondly,

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Speaker 1: to be very clear about that purpose. I think there

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Speaker 1: is no room for for not doing that. Thirdly, to

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Speaker 1: really engage with people on the basis that they wish

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Speaker 1: to be engaged with. This is called radical engagement is

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Speaker 1: to give yourself a chance of being trusted because other

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Speaker 1: people will validate what you're doing, and you will speak

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Speaker 1: to the people you affect. And the fourth is to

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Speaker 1: do it and to measure what you're doing, do it

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Speaker 1: well and professionalize all these areas can I grip up?

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Speaker 1: The script is that? Okay, I'm gonna do that right now.

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Speaker 1: It is National Museum Week in the United Kingdom. We

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Speaker 1: can't fathom that in America. John Michael Swade I spoke

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Speaker 1: to the other day about the British Museum. You are

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Speaker 1: the force at the Tate, your your tenureship at chairman.

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Speaker 1: You've expired like four times and they keep having you back.

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Speaker 1: Tell us what will be new editate, which I believe

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Speaker 1: is four platforms. And who reinvented what a modern museum is?

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Speaker 1: Across the river there? What's the name of the river

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Speaker 1: in England? The town the Tames Yes see, you know

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Speaker 1: you reinvented modern museums to that. What are you gonna

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Speaker 1: do next is you don't expire. So in June we're

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Speaker 1: going to open the so called extension to take modern

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Speaker 1: This is the modern contemporary Gallery South of the of

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Speaker 1: attempts in the old PA station. We're basically doubling the

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Speaker 1: size of it and we're making a global contemporary art museum,

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Speaker 1: the first in the world. It will be phenomenal. You'll

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Speaker 1: be able to see things that nobody was really thought

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Speaker 1: of as contemporary art from different societies, different cultures. So

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Speaker 1: that's happening then, and that's costa. We've invested to under

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Speaker 1: seventy million pounds into that experience, so it's a big deal.

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Speaker 1: There's a great building by Herzog and Demoran, and we

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Speaker 1: hope it will be very competitive globally. But I'm chairman

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Speaker 1: of the tit until uh the end of August next year.

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Speaker 1: After that, let's see what I can do. I really

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Speaker 1: have to expire at ten years and ten years you

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Speaker 1: when you're out. It's but it's been a great experience.

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Speaker 1: You know. We're the most visited contemporary and modern art

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Speaker 1: museum in the world. We have four platforms. We have.

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Speaker 1: People love it because they like coming, because they think

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Speaker 1: it's cool. They do. That's the ample. Very good, Lord Brown,

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Speaker 1: thank you so much. Tommy Seton, thank you so much

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Speaker 1: as well. The book is connect Arianna Huffington says, a bold,

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Speaker 1: timely blueprint for the future. Forget about what Arianna says.

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Speaker 1: Here's what you need to know. The world is changing

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Speaker 1: for business and for enterprise. Again the book Connect. This

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Speaker 1: is Bloomberg surveillance