1 00:00:02,480 --> 00:00:05,840 Speaker 1: Global business news twenty four hours a day at Bloomberg 2 00:00:05,880 --> 00:00:08,960 Speaker 1: dot com, the Radio plus mobile last, and on your radio. 3 00:00:09,280 --> 00:00:13,240 Speaker 1: This is a Bloomberg Business Flash, and I'm Karen Moscow. 4 00:00:13,280 --> 00:00:16,360 Speaker 1: This update is brought to you by National Realty Returns 5 00:00:16,360 --> 00:00:18,520 Speaker 1: on cash and rented real estate find them at n 6 00:00:18,640 --> 00:00:21,560 Speaker 1: r i A dot net. U s stocks are falling 7 00:00:21,600 --> 00:00:23,680 Speaker 1: as commodity shares the climb, with the s n P 8 00:00:23,840 --> 00:00:27,080 Speaker 1: five hundred slipping from a ten month high amid speculation 9 00:00:27,120 --> 00:00:29,560 Speaker 1: equities may have run too far, too fast given the 10 00:00:29,640 --> 00:00:33,080 Speaker 1: lackluster prospects for global growth. We check the markets every 11 00:00:33,120 --> 00:00:36,400 Speaker 1: fifteen minutes throughout the trading day on Bloomberg, and the 12 00:00:36,520 --> 00:00:38,880 Speaker 1: SNP five hundred is down four tenths per cent or 13 00:00:39,040 --> 00:00:42,639 Speaker 1: nine points to one ten. Dow Jones Industrial Average down 14 00:00:42,640 --> 00:00:45,040 Speaker 1: three tenths per cent or sixty points is seventeen thousand, 15 00:00:45,120 --> 00:00:47,520 Speaker 1: nine hundred forty four. Then as d ACT down four 16 00:00:47,560 --> 00:00:50,720 Speaker 1: tenths per cent or eighteen points to fifty five. Ten 17 00:00:50,800 --> 00:00:53,280 Speaker 1: year Treasury up ten thirty seconds, the yield one point 18 00:00:53,320 --> 00:00:55,440 Speaker 1: six six percent. The yield on the two year point 19 00:00:55,520 --> 00:00:58,440 Speaker 1: seven six percent. Now I'm excrude oil down one point 20 00:00:58,480 --> 00:01:00,720 Speaker 1: four per cent or seventy two cents to fifty dollars 21 00:01:00,760 --> 00:01:03,320 Speaker 1: fifty two cents of barrel comes. Gold is up three 22 00:01:03,320 --> 00:01:05,520 Speaker 1: tenths per cent or four dollars ten cents to twelve 23 00:01:05,600 --> 00:01:08,919 Speaker 1: sixty six forty ounce the euro a dollar thirteen twenty 24 00:01:09,000 --> 00:01:11,360 Speaker 1: six the yen at one oh six point for eight. 25 00:01:12,640 --> 00:01:15,720 Speaker 1: Household confidence increased for a second week, reaching the highest 26 00:01:15,800 --> 00:01:18,600 Speaker 1: level since early April, as Americans felt better about the 27 00:01:18,640 --> 00:01:21,920 Speaker 1: economy and the buying climate. According to the weekly Bloomberg 28 00:01:21,959 --> 00:01:25,560 Speaker 1: Consumer Comfort Index, consumer comfort gage rose to forty three 29 00:01:25,560 --> 00:01:28,200 Speaker 1: point five at the period ending June five, from forty 30 00:01:28,200 --> 00:01:31,560 Speaker 1: three point two in the prior week, and Restoration Hardware 31 00:01:31,600 --> 00:01:36,200 Speaker 1: Holdings is down nine this morning after the Upscale furniture 32 00:01:36,240 --> 00:01:39,720 Speaker 1: chain posted a surprise loss and cut its annual earnings forecast. 33 00:01:40,080 --> 00:01:43,080 Speaker 1: That's a Bloomberg business flash. Tom and Mike Karen, thanks 34 00:01:43,080 --> 00:01:46,880 Speaker 1: so much. Michael. We're talking with David Wilson earlier about 35 00:01:47,000 --> 00:01:50,720 Speaker 1: jam Smucker they make. It is just you know, we 36 00:01:50,800 --> 00:01:55,640 Speaker 1: know the jams they make. Jiff peanut butter founded in 37 00:01:55,760 --> 00:01:59,559 Speaker 1: nineteen fifty eight. They acquired it in two thousand two, 38 00:01:59,600 --> 00:02:03,000 Speaker 1: what is it, fourteen years ago. They do car Nation, 39 00:02:03,200 --> 00:02:07,080 Speaker 1: They do Smuckers. Of course our W Knudson, do you 40 00:02:07,160 --> 00:02:11,920 Speaker 1: want to make fifteen percent per year total return for 41 00:02:11,960 --> 00:02:17,200 Speaker 1: the last decade with a stunning Dana her like persistency 42 00:02:18,200 --> 00:02:21,840 Speaker 1: that is JM. Smucker and you and you're earning stick 43 00:02:21,880 --> 00:02:24,600 Speaker 1: to ther and yes. And I would suggest that it 44 00:02:24,840 --> 00:02:29,959 Speaker 1: is out of Ohio a culture that that we should 45 00:02:29,960 --> 00:02:36,120 Speaker 1: not make light of. A culture of a company matters, right. Uh, 46 00:02:36,200 --> 00:02:40,520 Speaker 1: speaking of that, there's a good sigui, as you like 47 00:02:40,600 --> 00:02:43,880 Speaker 1: to say to our next guest. Um, I don't know 48 00:02:43,919 --> 00:02:51,320 Speaker 1: what you're You're performance review is always upstandingly exceptional. But um, 49 00:02:51,400 --> 00:02:53,680 Speaker 1: there is a school of thought that seems to be 50 00:02:53,680 --> 00:02:56,160 Speaker 1: growing these days. G one of the the companies that is 51 00:02:56,200 --> 00:03:01,200 Speaker 1: looking at scrapping traditional performance reviews and finding ways of 52 00:03:01,280 --> 00:03:06,400 Speaker 1: doing things. Um, we called it everyone culture becoming a 53 00:03:06,440 --> 00:03:11,120 Speaker 1: deliberately developmental organization looks at this. It's written by Howard's 54 00:03:11,560 --> 00:03:15,960 Speaker 1: Robert Keegan and Lisa Lascout Leahy, and we welcome Professor 55 00:03:16,000 --> 00:03:20,040 Speaker 1: Keegan to the program. And I want to get to this. 56 00:03:20,360 --> 00:03:24,120 Speaker 1: There's a The book is case study, no surprise from 57 00:03:25,240 --> 00:03:27,080 Speaker 1: but I want and I want to get to one 58 00:03:27,120 --> 00:03:29,880 Speaker 1: particular case. But first let me ask you to define 59 00:03:29,919 --> 00:03:34,119 Speaker 1: a deliberately developmental organization and what kind of change you're 60 00:03:34,160 --> 00:03:38,400 Speaker 1: suggesting might be useful, Sure, the good morning. A deliberately 61 00:03:38,400 --> 00:03:41,160 Speaker 1: developmental organization, which is kind of a mouthful, so we 62 00:03:41,240 --> 00:03:44,720 Speaker 1: call it a d d O is a company that 63 00:03:45,320 --> 00:03:48,880 Speaker 1: has a culture. If you so valued developing the capabilities 64 00:03:48,920 --> 00:03:50,960 Speaker 1: of your people that you would want to create a 65 00:03:50,960 --> 00:03:55,960 Speaker 1: culture that would be the world's greatest incubator for developing talent, 66 00:03:56,440 --> 00:03:58,320 Speaker 1: that's what a d d O is. We think it's 67 00:03:58,320 --> 00:04:00,440 Speaker 1: a kind of a company that can form to what 68 00:04:00,560 --> 00:04:03,120 Speaker 1: we've learned at the end of the twentieth in the 69 00:04:03,160 --> 00:04:06,880 Speaker 1: beginning of the twenty first century about adult development. So 70 00:04:07,720 --> 00:04:12,000 Speaker 1: a DdO first of all, recognizes it. In a normal organization, 71 00:04:12,120 --> 00:04:15,200 Speaker 1: everyone is doing a second job that nobody's paying them for, 72 00:04:15,680 --> 00:04:18,560 Speaker 1: and that second job is basically covering their rear ends, 73 00:04:18,600 --> 00:04:23,159 Speaker 1: looking good, managing other people's favorable impressions of them. And 74 00:04:23,240 --> 00:04:27,279 Speaker 1: we think this is an enormous waste of energy everybody's 75 00:04:27,320 --> 00:04:30,239 Speaker 1: doing getting paid full time money for doing part time work. 76 00:04:30,480 --> 00:04:32,880 Speaker 1: Imagine if you could recapture some of that energy, bring 77 00:04:32,920 --> 00:04:36,160 Speaker 1: it right into the company itself. Imagine if you were 78 00:04:36,640 --> 00:04:40,920 Speaker 1: expected to manifest your strengths but also manifest your weaknesses, 79 00:04:41,000 --> 00:04:43,320 Speaker 1: bring them out into the light of day so that 80 00:04:43,400 --> 00:04:45,560 Speaker 1: we can build supports around you so that you can 81 00:04:45,600 --> 00:04:49,680 Speaker 1: overcome them. That's a deliberately developmental organization. Well, one of 82 00:04:49,680 --> 00:04:53,599 Speaker 1: the companies that you choose to study embraces that wholeheartedly 83 00:04:53,640 --> 00:04:55,880 Speaker 1: and has for years. Our good friend Ray Dalio and 84 00:04:55,880 --> 00:05:00,080 Speaker 1: the folks at Bridgewater. What did you find when you 85 00:05:00,080 --> 00:05:04,080 Speaker 1: look at them? I mean, everybody knows that public criticism 86 00:05:04,120 --> 00:05:07,920 Speaker 1: of others work is part of the culture there. Yeah, well, 87 00:05:08,080 --> 00:05:11,320 Speaker 1: I think I think Bridgewater and the other companies that 88 00:05:11,400 --> 00:05:13,599 Speaker 1: Decuri in the next jump that we study in the 89 00:05:13,640 --> 00:05:16,039 Speaker 1: book and everyone culture are just some of the most 90 00:05:16,120 --> 00:05:19,440 Speaker 1: interesting companies on Earth. I mean, if you look at 91 00:05:19,440 --> 00:05:22,400 Speaker 1: recent studies about millennials who will soon be the majority 92 00:05:22,720 --> 00:05:25,200 Speaker 1: of the workforce, one of the things they most want, 93 00:05:25,400 --> 00:05:29,560 Speaker 1: you know, is more frequent feedback. At Bridgewater, if you 94 00:05:29,600 --> 00:05:32,320 Speaker 1: have three or more people in a meeting, uh, they're 95 00:05:32,320 --> 00:05:35,640 Speaker 1: all plugged into their iPads and they're not just evaluating 96 00:05:35,640 --> 00:05:37,640 Speaker 1: each other at the end of the meeting, they are 97 00:05:38,240 --> 00:05:41,880 Speaker 1: giving each other a doct as it is, like votes 98 00:05:41,920 --> 00:05:44,440 Speaker 1: on a one to ten scale kind of how you're doing. 99 00:05:44,960 --> 00:05:49,200 Speaker 1: And the feedback is coming in continuously. And when people 100 00:05:49,240 --> 00:05:50,960 Speaker 1: first hear this, they think, well, this would be kind 101 00:05:51,000 --> 00:05:54,440 Speaker 1: of overwhelming and intimidating. But the key thing these people 102 00:05:54,440 --> 00:05:57,160 Speaker 1: are onto is that most people are taking a kind 103 00:05:57,200 --> 00:06:01,120 Speaker 1: of performance attitude toward work. So it's a performance and 104 00:06:01,240 --> 00:06:03,799 Speaker 1: you get you're getting a review, you're holding your breath 105 00:06:03,839 --> 00:06:07,400 Speaker 1: and you're hoping you don't fail. But these companies shifted 106 00:06:07,480 --> 00:06:10,320 Speaker 1: all to a kind of a practice orientation. We hired 107 00:06:10,360 --> 00:06:13,520 Speaker 1: you not because you're perfect, but because we think you're good, 108 00:06:13,800 --> 00:06:15,920 Speaker 1: and we think you know, you can learn kind of 109 00:06:15,920 --> 00:06:22,120 Speaker 1: fail frequently, fail forward, fail fast, and that's how you'll learn. Um, 110 00:06:22,200 --> 00:06:23,520 Speaker 1: I don't tell m wants to jump in, but let 111 00:06:23,560 --> 00:06:27,560 Speaker 1: me just ask one more question about that. How do 112 00:06:27,760 --> 00:06:32,240 Speaker 1: you tie the success and of Bridgewater, and of course 113 00:06:32,240 --> 00:06:35,640 Speaker 1: it's pretty much the most successful hedge fund out there 114 00:06:36,320 --> 00:06:41,240 Speaker 1: to this kind of organizational culture and separate out the 115 00:06:41,279 --> 00:06:43,880 Speaker 1: fact that maybe Ray Dalio is just a really good 116 00:06:43,880 --> 00:06:47,040 Speaker 1: stock pick. Yeah, this is our our interest to I mean, 117 00:06:47,160 --> 00:06:49,760 Speaker 1: clearly they're successful, but we wanted to know, you know, 118 00:06:49,920 --> 00:06:53,160 Speaker 1: is your success in your culture just coincident? You know? 119 00:06:53,240 --> 00:06:56,880 Speaker 1: And every one of these companies interestingly made the case 120 00:06:56,920 --> 00:07:01,160 Speaker 1: that they thought their culture was these single greatest contributor 121 00:07:01,520 --> 00:07:05,240 Speaker 1: you know, to their success. So you know, you ask Bridgewater, 122 00:07:05,400 --> 00:07:08,119 Speaker 1: why were you one of the few organizations on Earth, 123 00:07:08,240 --> 00:07:13,000 Speaker 1: you know that anticipated the financial crisis? And it's it's 124 00:07:13,240 --> 00:07:15,920 Speaker 1: to us. It became a pretty convincing argument that when 125 00:07:15,920 --> 00:07:22,320 Speaker 1: you're continuously kind of holding things in doubt, asking hard questions, 126 00:07:22,880 --> 00:07:26,400 Speaker 1: seeking out weaknesses, not to you know, humiliate people, but 127 00:07:26,440 --> 00:07:30,800 Speaker 1: to help people be stronger and help your analyzes be stronger, 128 00:07:31,160 --> 00:07:34,960 Speaker 1: anticipating all the different possibilities, even the things that would 129 00:07:34,960 --> 00:07:38,440 Speaker 1: be most inconvenient. This is a kind of way of 130 00:07:38,440 --> 00:07:41,040 Speaker 1: thinking that makes you not just help people develop, but 131 00:07:41,080 --> 00:07:44,640 Speaker 1: it makes the company smarter and more effective. Don Barton 132 00:07:44,720 --> 00:07:47,760 Speaker 1: gives you a rave review. He talked to a lot 133 00:07:47,800 --> 00:07:53,440 Speaker 1: of big publicly traded companies. Can your model, Mr Dalios model? 134 00:07:53,480 --> 00:07:56,520 Speaker 1: If you will? Can it be transferred over to General Electric? 135 00:07:56,560 --> 00:07:59,880 Speaker 1: And Jeff Emil get anything out of your book? And 136 00:08:00,120 --> 00:08:04,320 Speaker 1: everyone culture well, we think so, I mean we we 137 00:08:04,040 --> 00:08:07,720 Speaker 1: we can't. It's true that all three companies are you know, 138 00:08:07,960 --> 00:08:12,160 Speaker 1: between the two hundred and maybe fifteen people, can it be? 139 00:08:12,200 --> 00:08:14,880 Speaker 1: Can it be transferred over to JP Morgan? Yes? We 140 00:08:14,960 --> 00:08:17,880 Speaker 1: think The answer is yes, we we are working actually 141 00:08:18,000 --> 00:08:22,880 Speaker 1: right now with a hundred thousand person uh company. We're 142 00:08:23,000 --> 00:08:26,960 Speaker 1: using the new technologies to spread a lot of these practices. 143 00:08:27,520 --> 00:08:29,520 Speaker 1: I think it's a matter you know. It starts at 144 00:08:29,520 --> 00:08:32,000 Speaker 1: the top. Just like everything else. The leader has to 145 00:08:32,000 --> 00:08:34,319 Speaker 1: be willing to be vulnerable, has to be a mistake 146 00:08:34,400 --> 00:08:38,640 Speaker 1: maker too frequently when I when I look at this 147 00:08:38,760 --> 00:08:41,240 Speaker 1: in the number one thing I see generationally as a 148 00:08:41,360 --> 00:08:47,200 Speaker 1: young kids today are acutely aware within any system of labor. 149 00:08:47,280 --> 00:08:50,240 Speaker 1: By young kids folks, I mean somebody under forty, they're 150 00:08:50,280 --> 00:08:55,360 Speaker 1: they're acutely aware of labor misallocation, which is people at 151 00:08:55,360 --> 00:08:58,640 Speaker 1: whatever level in the hierarchy aren't getting it done or 152 00:08:58,840 --> 00:09:02,920 Speaker 1: are in the long job. Can you help a company 153 00:09:02,960 --> 00:09:06,840 Speaker 1: on labor misallocation. It's interesting because they have a totally 154 00:09:06,880 --> 00:09:09,280 Speaker 1: different view of what is a good job fit between 155 00:09:09,280 --> 00:09:11,200 Speaker 1: a person and a role in a d d O. 156 00:09:11,640 --> 00:09:14,640 Speaker 1: If you already have all the capabilities to fulfill the job, 157 00:09:15,080 --> 00:09:17,400 Speaker 1: it's the wrong job for you because it has no 158 00:09:17,720 --> 00:09:20,240 Speaker 1: stretch in it. A job should be like a tow 159 00:09:20,320 --> 00:09:23,280 Speaker 1: rope in these companies, so you should be a bit 160 00:09:23,400 --> 00:09:25,320 Speaker 1: over your head. There should be a little bit of 161 00:09:25,360 --> 00:09:28,560 Speaker 1: this allocation at the beginning and then there should be 162 00:09:28,880 --> 00:09:32,080 Speaker 1: supports built around you so that you can actually grow 163 00:09:32,200 --> 00:09:34,960 Speaker 1: into the job. How do you respond? And I've seen 164 00:09:34,960 --> 00:09:38,320 Speaker 1: this folks with various and Sunday offspring, where a younger 165 00:09:38,360 --> 00:09:40,920 Speaker 1: employee is so valuable they can't move on to the 166 00:09:41,000 --> 00:09:44,199 Speaker 1: next constructive challenge because they can't figure out who to 167 00:09:44,280 --> 00:09:49,319 Speaker 1: replace that employee with. Yeah, I've seen in these organizations, 168 00:09:49,559 --> 00:09:52,400 Speaker 1: you know where they will actually face in some cases 169 00:09:52,440 --> 00:09:54,440 Speaker 1: that that's the case, and they will help that person 170 00:09:54,480 --> 00:09:57,960 Speaker 1: get a job in another company. But you know, if 171 00:09:58,000 --> 00:10:00,959 Speaker 1: if you go ahead you want no, I know, I 172 00:10:01,360 --> 00:10:04,679 Speaker 1: just find that to be bordering on fantasy among the 173 00:10:04,720 --> 00:10:07,959 Speaker 1: experience of various and Sundery offspring. I mean, I am 174 00:10:07,960 --> 00:10:12,040 Speaker 1: the behavior I would suggest a professor, the behavior of 175 00:10:12,200 --> 00:10:16,760 Speaker 1: many corporations is far away from an everyone culture. Do 176 00:10:16,800 --> 00:10:21,040 Speaker 1: you agree or absolutely? I think a normal company is 177 00:10:21,080 --> 00:10:23,320 Speaker 1: like I have a picture in my office I'm looking 178 00:10:23,320 --> 00:10:26,439 Speaker 1: at right now. It's a nineteenth century surgical room. You 179 00:10:26,600 --> 00:10:29,959 Speaker 1: got three doctors, you know, working very hard. They might 180 00:10:30,000 --> 00:10:32,959 Speaker 1: even have the right diagnosis, but half the patients died. 181 00:10:33,080 --> 00:10:35,560 Speaker 1: Why because they didn't have a germ theory. They didn't 182 00:10:35,559 --> 00:10:38,760 Speaker 1: have any notion of infection. And I think today, the 183 00:10:38,760 --> 00:10:41,960 Speaker 1: company is the normal company is operating, you know, like 184 00:10:42,000 --> 00:10:45,520 Speaker 1: a nineteenth century surgery room. It isn't taking account of 185 00:10:45,559 --> 00:10:48,160 Speaker 1: the of the germ theory, that is theory of the 186 00:10:48,400 --> 00:10:51,920 Speaker 1: mind and adult development Professor Thank You, sou Robert Keagan, 187 00:10:51,960 --> 00:10:56,560 Speaker 1: Lisa Lesca, Lady and everyone Culture. Don Barton suggests it 188 00:10:56,679 --> 00:11:01,480 Speaker 1: is a must read. Shake up corporate foundations. Stocks negative 189 00:11:01,559 --> 00:11:04,800 Speaker 1: forty four, the vics fourteen point six seven. Markets on 190 00:11:04,800 --> 00:11:07,680 Speaker 1: the Move stayed with Bloomberg Radio throughout the day with 191 00:11:07,840 --> 00:11:10,319 Speaker 1: more data checks Bloomberg Surveillance