Sir Paul Collier

Welcome to the Puck Venture Capital and Beyond, a show that examines the changing landscape of our world. We'll have candid conversations with VCs, entrepreneurs, and thought leaders grappling with our current challenges and providing solutions to key problems we face as a nation. I'm Jim Beer, president of CMBG Advisors. This podcast brings change makers to the table to discover the inner workings behind their decision making strategies and ultimately to how they got to where they are today. The great advantage of tech leaders is that you're used to rising to the occasion to seeing change situations as an opportunity.

Boy, we've got a change situation here. So a good leader in the tech community is able to say, we need to come together and achieve this new purpose. That is inspiring for people in an organization. That's the hope. On our podcast today, I have the great honor of sitting down with sir Paul Collier, a British developmental economist and the best selling author on economics, including his acclaimed release, The Future of Capitalism, Facing the New Anxieties.

We explore the lessons from previous historic downturns and the realities of today's economic and sociopolitical world, while staying focused on how to move forward together to ensure opportunities for everyone across the board. I'm excited to have Paul Collier here today on the Puck. And before we jump right into this, Paul, do you wanna take a few moments and tell us a little bit about your background? Sure. So I'm something called a fluke Because I started from characteristics which nowadays would completely condemn me to continue as I started.

My parents both left school when they were 12. My mom was a shop assistant. My dad was a pork butcher. And I was born in Sheffield, which is now the poorest city in the whole of England. One of the very poorest in the whole of Europe.

Nowadays, born in that situation, parents who'd left school at 12, born in the wrong place, very poor place, my chances of progressing upward in life would be very, very close to around number zero. Even in my day, they were pretty low, but they weren't zero. So that's my background. I'm a fluke. Oh, Paul, your two last books, The Future of Facing the New Anxieties, which came out in 2018, and then also Greed is Dead Politics After Individualism.

I believe you wrote that with John Kaye, and that was published in 2020. In the four and then two years since the publication of these books, how have you seen the economic world change, or what have you noticed the most about our changing landscape? That all the things I most feared in the future of capitalism have come to fruition. We're getting very polarized societies lurching into really serious crises compounded by new uncertainties, a changed world, which has made societies very much more vulnerable. And so we are seeing crises all over the world.

In fact, the best predictors of sales of the future of capitalism around the world, it's in about 20 languages. The deeper is polarization in the society, the more it sells. And the most polarized societies in the world are Latin America. And so, sure enough, The Future of Capitalism is a best seller across Latin America. I've done the business conferences, the keynote addresses for business conferences in all the major Latin American countries in the last year.

First, I couldn't understand it, but that's what's happened. They're deeply polarized societies in which the business community didn't move in time and is now facing a terrible nightmare that idiots are taking charge of their societies in deeply polarized situations, and they're very worried. Historically, you've written about or talked about different periods. I believe the eighteen forties, the nineteen thirties, and now our current environment. What can we learn about those periods and what might be different now and how might we learn from those periods so that we don't have some of the cataclysmic things take place that took place, for instance, in the thirties.

Yeah. Lots of people know about the thirties. Let me go back even further to the eighteen forties, and I'm gonna go to the most booming city in Europe. It was Europe's equivalent to Chicago. It was called Bradford, fastest growing city in the whole of Europe.

My grandfather moved from a an impoverished village in Germany, where his father was a gravedigger. He moved from there to Bradford. Right? And in 1849, what happened in Bradford was cholera. So it was a booming city.

People were very productive. And the leading figure in Bradford, called Sir Titus Salt, he was the local MP, he was the mayor, And he owned the biggest group of mills in the city. So there was no question where the buck stopped. It stopped with him. And Conor hit, and he didn't know what to do.

But his voters were dying. His workers were dying. And it seems to have seared his soul. Because what he did was really rise to the occasion. He gave his entire fortune away over the next twenty years.

He founded the first purpose built industrials town in the world for his workforce called Saltaire, which because it was the world's first, is now recognized by the United Nations as a, you know, as a sort of a World Heritage Center. So Saltaire was a became a World Heritage Center. That was because he realized, oh my god, the buck stops with me. And we've got to do something here. And it worked.

It worked. Life expectancy in places like Bradford had fallen to just nineteen years. Wow. If you're born in Bradford, on average, you were dead by '19. Because although people were very productive, it was a terrible environment in which to live.

And over the next twenty, thirty years, public health in places like Bradford was transformed. And so that was the the big achievement at the local level. People and leaders like Titus Salk rose to the occasion. Now, that was then, we moved to the nineteen thirties. Massive crisis of capitalism.

That's unemployment. Again, people rose to the occasion. Then we get into the second World War and the aftermath of the second World War. There's a catastrophe in Europe. Let me backtrack it.

So after the second World War, a catastrophe in Europe. Something needs to be done about it. And our grandparents rose to the occasion. They created whole new institutions where people could come together around a common purpose. Let's rebuild Europe.

And America rose to the occasion with the Marshall Plan. The very first loan made by the World Bank was to a very fragile country in 1947. It was called France. And in 1947, boy, it was France fragile. The World Bank lent the equivalent of $2,800,000,000 on a one page note signed by the finance minister.

Right. It wasn't full of scrutiny and conditionality. It was a realization by the international community and especially America that if France fell, the rest of Europe is a goner. And so this was a vital common purpose, and people did things. So we've had eighteen forties, a crisis.

People rose to the occasion. There was good leadership, but also a response by the whole community. Nineteen thirties, same thing. Post war, same thing. And now, now, nothing.

Nothing equivalent. We're waiting for the crisis to crash, and it's crashed. Now is the time when we actually have to do something. We have to act. And at last, we've got a role model.

And that role model is thanks to Putin's invasion of the Ukraine. And at last, we see morally purposive great leadership in Zelensky. Now what was Zelensky's talents? He wasn't a great intellectual. He was a comedian.

And so he the one skill he had was he could communicate to people. And he realized that was his skill. And then he realized he needed to win people's trust. Until that invasion, he hadn't been a great president. Far from it.

He'd come on in on a campaign to eliminate corruption and not really got a handle on it. But here was a new purpose. It was vital. Either Putin would walk over Ukraine as every military expert forecast. This is an easy win for Putin.

What did they do to make those estimates? They counted the number of tanks and the number of planes. Is that a good predictor of who wins a war? It turns out no. Because what Zelensky managed to do was first win people's trust by saying, I'm staying in Kiev.

I'm willing to die for this country. That was the morally purposive commitment, which gave him the right then to say to people, and you too, if you're a male of fighting age, you must stay here and fight. That's your duty as a citizen of Ukraine. And what that did was bring people together. Ukraine had been a bitterly divided polarized society, polarized between Russian speakers and Ukrainian speakers.

Putin helped. He bombed the Russian speaking parts of Ukraine. Nobody looks up into the sky and says, oh, good. We're bombing ourselves. They are bombing us.

And Putin very rapidly became they. But combined with Zelensky's willingness to sacrifice his own life for his country, very rapidly, he created a sense of we among Ukrainians. Never mind what language we speak, we are all Ukrainian. That was fantastic. And he gave people a sense of agency.

What you gotta do, you gotta fight. And so that was an immensely powerful demonstration of how good leadership can very rapidly transform a situation. And despite all the forecasts based on how many tanks, how many planes, of course, he succeeded. So when you look at today's world and you look at the economic disruptions that are taking place, are you calling on the tech leaders and other leaders of today to be inspired by Zelensky and rise to the occasion? Yes.

You're not expected to lay down in your life. You don't have to. Right? It's very rare that we get situations like that with Zelensky. Thank goodness.

But we've got one big advantage that all leaders, including Zelensky, can draw on. And that is what modern evolutionary biology is telling us about human nature. Human nature is, we're a mammal. Right? That's the bad news.

If you wanna learn about most mammals, anybody who's got a cat knows what most mammals are like. They're pretty greedy, pretty selfish. And if left to themselves, fed without anything else, they're very lazy. So greedy, selfish, lazy, more or less summarizes the character of a cat. At our worst, we can be dragged down to being behaving like cats.

But we're a very unusual sort of mammal. When we came down from the trees, people who behave like cats died. We were very ill equipped. We didn't have claws. We didn't have fur.

We didn't have scales. We weren't very fast. We were trying to stand up to see what was going on, but we weren't very good at standing up. And we certainly weren't anything like as quick as tigers and lions and things like that. And we were faced by hideous things like mammoths.

Right? This was a very scary environment. The only way we could survive was by coming together in groups. And that's what we did. The people who couldn't cooperate and work together in a common interest, sacrifice their own interest for the common interest.

Those people died out. They exist still, but a tiny sliver of about 3% of the population are basically antisocial. But most of us are hardwired to be willing to sacrifice a little of our self interest in return for a larger common purpose. That's the big resource that a good leader can draw upon. Just as we can be dragged down to being cats, in a good organization, we can be raised up not to be saints, but to rally around a common purpose which we find both attractive and morally purposive.

We feel good about ourselves if we do that. So in the political sphere, if I give you one example, if you follow the latest Australian election, the guy who won actually was not charismatic at all. The reason he won was that the other guy lost. The other guy lost because he was belligerently denying that Australia should contribute in any way to reducing global warming. That was just so unethical.

Here's Australia, one of the richest countries in the world, suffering the risks of climate change and saying, we're not prepared to do anything about it. But if Australia is not prepared to do anything about it, who is? Who should be the people doing something about it? If not us, tell us good reason why not us. There wasn't a good reason.

And so he was voted out. The other guy is the fortuitous beneficiary of that because he just kept his mouth shut during the campaign. Didn't promise very much at all. So that's an example in the political sphere. But the great advantage of tech leaders is that you're used to rising to the occasion to seeing change situations as an opportunity.

Boy, we've got to change situation here. A mindset which says, this is an opportunity. Those are the people who are going to say, here's a new purpose. Here's how we're gonna rise to it. So a good leader in the tech community is able to say, we need to come together and achieve this new purpose.

Right. That is inspiring for people in an organization. That's the hope. And you look at some firms, they're collapsing under the weight of their own hypocrisy. And other firms will benefit a lot by motivating their workers to some shared common purpose.

So when you talk about shared common purpose, and you talk about tech leaders using their platforms to lead, what specific things are you advocating that these tech leaders do to create a more responsible capitalism? Okay. So let's take an example of artificial intelligence. Artificial intelligence is hugely valuable. It's a fantastic way of rapid learning.

No question about that. But if you have only artificial intelligence, and if you link it to an arms race, it actually becomes quite dangerous. And so the tech guys, the people who are really familiar with artificial intelligence, are the best placed people on earth to say artificial intelligence is a massive force for good, except when it isn't. And so we've got to understand both the opportunities and the dangers. And we are better placed than anybody else to warn of the dangers, as well as telling people about the opportunities.

And so that balance, if you don't do it, who's going to? We know what happens if we just leave it to the market to maximize profits and to China to just do its worst. We'll get back into the situation that produced the first World War, an arms race. But now an arms race in artificial intelligence, in which the military says, we've gotta move first because they're moving fast as well. We've gotta stay ahead.

That was the situation that produced the first World War. Really ill informed politicians deferring to a military which said, the first guys to get their troops to the border will win this war. You're hearing people talking about AI and these supercomputers. I recently heard talk about if these algorithms get to the point where they could decode, for instance, any of the encryption. You could see a situation where somebody might even wanna do a preemptive strike because it would be such a game changer, so to speak.

I understand that from the perspective of tech leaders trying to use it for a force of good. But continuing on that theme, look at what's going on with algorithms and the social media world and the polarization that it's exacerbating. We're not seeing a lot of change there for the better. How do you think that we can motivate people or actually start to change this? Yep.

That's a great example. Because part of the time I work on Africa, Ethiopia has had 3,000,000 people displaced by ethnic violence within its regions. So the majority ethnic group within each region has driven out the ethnic minorities. That's produced 3,000,000 displaced people. Huge.

Why did that happen? Because of algorithms run by Facebook. We know because a Facebook whistleblower at a very senior level gave on oath testimony to Britain's parliament recently. And what she said was that we were running an algorithm which incited and got excited and incited ethnic minority groups in America who then were urging on their people back in Ethiopia who were following them, urging them on to drive out the ethnic minorities in each region. She said, because we've got an algorithm where the basic question we're trying to solve with that algorithm is how to maximize people staying on the screen.

We solve that problem with the algorithm. Easy. Just get people really incited to extremist positions. And that worked. People stayed on screen.

But in the process, they created 3,000,000 displaced people in Ethiopia. And there was nothing the Ethiopian government could do. It kept asking Facebook to delete these messages and so on. And, of course, Facebook turned a blind eye to it because it was working, given their purpose. So that was quite shameful.

I'm wondering, you can cite examples where individuals rose up to do the right thing. I'm wondering when it comes to things like AI and these algorithms, will we need governments such as Britain and The United States and the UN to take collective action to make these changes, or do you think that we should leave it to the individuals to have a waking up of faith, so to speak, and putting character over the almighty dollar? Potentially both, but I feel that regulation is very much harder than we might superficially think because there's so much information. There's so much inside information in a profession. And with IT, the situation is so rapidly changing that according to the experts I've talked with, the frontier edge of the profession is moving so fast that the regulators are inevitably gonna be way behind.

You for one thing, you can't pay the people regulating anything like the earnings they can get in the private sector in IT. And so I feel that what is really required, as in a lot of professions, is a degree of self regulation. These things either self regulate or they're not regulated at all. And and I think that the leaders in the AI field understand that better than anybody else. And so those are the people who need to speak up, shout out, and say, we in our own industry can do a lot better than we've been doing.

We can warn people of the dangers, but we can also set new norms, which shame people in the industry who don't adhere to these norms. And that process of shaming and wanting to look good in front of peers, that's a very, very powerful social glue. Are there examples throughout history where you've seen this shaming, so to speak, where you're talking about peers, and it sounds like a ground swelling of almost like a popular uprising that changes the culture? Are there examples where you've seen that historically being effective? Again and again, it happens.

It's actually not that difficult. I'll give you one example, which is vocational training. Our vocational training in Britain has collapsed. It's quite shocking that young people, they either go to university. If you want to be a lawyer, go to university, study law, that's fine.

If you want to be something that's skilled, but a technical vocation, like being, the guy who set up all my IT, then there's no path in Britain for that. We don't have apprentices in this organization or trainees. But if you go to Switzerland, Switzerland, super rich country, very successful. Nobody is gonna accuse Switzerland of being a socialist paradise. Right?

It's not. It's a proper market economy with very successful firms. But at this local level, at the city level, across Switzerland, firms train the next generation. They don't even have to be induced by tax incentives. They don't even have to be forced by regulation to do it.

The reason that they train the young people in their city is that they would be ashamed of themselves in front of other leaders of firms if they weren't doing it. It's very impressive. It's the same in Germany. My grandfather came from Stuttgart a long time ago, nineteenth century. But in Stuttgart, the civic leaders of business are very proud of the fact that they paid for civic institutions, civic buildings, and civic functions that they've then provided to the local authorities to run, but they've financed it.

And they're very proud of the of their achievements for good reason. They've come together and feel they have a responsibility to contribute to show that they're good citizens. They're the leading citizens in Stuttgart. They're the leading citizens because they have built companies, and that gives them a standing from which they are able to contribute. If you look at billionaires in London, they are now despised because how do you become a billionaire in London?

Well, you could be a Russian crook. You could be a Nigerian crook. Or you could be British, but you've made your money by servicing crooks. Right? So billionaires in London is now viewed with great suspicion.

But if you're a billionaire in The Netherlands, you're a billionaire in Denmark, You're admired to the skies. Why? Well, Denmark has some pretty high taxes. If you've made a billion in Denmark, you've probably done something really, really useful for fellow Danes. And so you can keep your money.

Sweden, for example, has no inheritance tax. Swedish billionaires, and there were plenty of them, but Swedish billionaires are seen as having contributed massively to society. And so if they want to give their money to their kids, that's their lookout. So what you're really saying is that it's almost like a cultural groundswell where because of the values of the place, because people, we are tied to place, that the values of that place, if you wanna be part of that community, you then are through social pressure encouraged to do the right thing. Yeah.

Your guys are all leaders that have a community of work. They've got a workforce and a pretty capable one. And they're in a place. And so they've got the opportunity to be the leaders in a community of place as well. California is actually pretty problematic.

Because at the moment, you're a very polarized population in which you've got some of the richest people on Earth shoulder to shoulder with some of the poorest. And that contrast is an ugly contrast. The business leaders at the moment in California are not really rising to the challenge of a community of place. So California is I haven't looked at the most recent statistics, but it may be the fifth largest economy in the world. And I recently drove up to a conference, for instance.

We're in Los Angeles, but drove up to a conference in Northern California, and it's easy to forget just how large California is. And I think you touched on something that's quite important, which is this discrepancy between the haves and the have nots within our state. What would you call the business leaders to actually do? Like, what are some tangible things that people can do to help those that are less fortunate within the community of California? You bring opportunities to people.

The bottom of society, it's now very hard. Where do people live? You've got an awful lot of people just sleeping on the street. So providing some sense of stability in where people can live, and then resetting narratives so that people can gradually lift out of that. There's a very fine professor of social psychology at Stanford called Greg Walton.

And he has demonstrated very effectively that interventions can have a very high success rate taking very disadvantaged people, and gradually step by step giving them opportunities that are feasible for them. It would be great if some California billionaires took on that local purpose rather than just taking on purposes that can be easily mistaken for virtue signaling. So practical things that address the desperate needs of people in their own community of place. And similarly, build their communities of work so that they actually fulfill these purposes of using AI for good purposes and avoiding the AI that's really dangerous. Again, using Greg as a professor that's doing this, is he working with some of the billionaires?

And and is he seeing some success come out of this work? I don't know whether he's working with billionaires. He's certainly working what he's really trying to do, which is a very well defined, but quite a narrow problem, is to say, let's take minority groups that really underperform once they're at university. So people like me who start from no parents with experience of university, get to university, and then start to think, why am I here? Am I an admissions mistake?

I'm worried. There don't seem to be many people like me. I don't have many friends. Is it because I'm different? Is it because I'm not doing very well?

Am I not doing very well because I'm not good enough? These are all the thoughts that people who are in despised minorities face when they get to university. So he's got a very narrowly defined problem. For such people, how do you improve their retention rates at university and ensure that they can do a lot better? And there he's had huge success.

But that's a very narrowly defined problem. Most people are not going to go to university. And really, it would be wonderful to provide opportunities for those people who don't go to university and shouldn't go to university. There's many, many roles in life that don't require a university education, but can make people really, really valuable and contribute to society and feel proud of what they're doing. And so that would be great if a billionaire said, that's what I'm gonna do.

So it sounds like there's a few ways to approach this. There's individuals on a community level really reaching out and doing things that help their particular communities, whether or not it's helping with mentorship or apprenticeship, or trade schools. There are things that tech leaders and individuals can do to help in their community, and they can be inspired by Zelensky and otherwise to take action. That's on an individual level. Switching to a national level or a global level, when you look at some of the economic dislocations going on right now and the worldwide inflation that we're experiencing, what would you see as the calling of our national leaders to deal with the economic disruptions that are going on today?

Yeah. So, here we got a very good example of a concept called radical uncertainty. In radical uncertainty, you're plunged into a new situation where if you honestly answer the question, what's going on here? The answer is, we don't really know. Right?

When you're in that situation, you need a heuristic, a set of rules of thumb to know, what do we do? What do we do? And let me suggest what the the heuristics are here. The big thing you need to do is if you don't know what's going on, learn rapidly. Learn rapidly.

How do you learn rapidly? Well, you can learn from others. When COVID hit, did we learn from others? We didn't. Right?

I was at Davos that late January, early February, when COVID are already raging in Asia. It had already arrived in Italy. Did Davos talk about that? Not one whimper of a thought about it. Even when it arrived in Italy, and it raged in Italy, even in late March, when the Italians had realized how dangerous this was, and how it could cause pulmonary embolisms.

None of that information traveled from Italy to Britain. Because in Britain, the culture was a supreme arrogance we know best. Not just in the politicians, but in the medical profession. And so they didn't learn from others. Rapid learning, learn from others.

Learn from others who are just a little bit ahead. Learn from experiment, and experiment in parallel. How do you ensure experiment in parallel? You give a common purpose to a team to across teams in an organization, and then you say, the heroic words, I don't know how to achieve this. Not enough leaders say that.

Here's the common purpose. You figure out in your team how best to do it as you think. Other teams can try different things. That's gets experiment in parallel. And then a good leader hovers up that experience and says, this is working here.

You, what you've done hasn't worked. Go and have a look at what the guy who's succeeding has done. It may be that this place is different. Or it may be that you have something to learn from it. You know, the greatest experiment on Earth that did that, Deng Xiaoping.

Deng Xiaoping, that's what he did. He was a provincial boy. And first, he went to see Singapore. And he thought, gosh, that shows that socialism doesn't work. Let's try that.

And so he's he's set up Shanghai as an experiment. But his biggest achievement was to say, we'll use the communist party, young cadre. The top 40 people in that cadre, the ones who'd passed all the the party entrance exams and all that stuff. So the top 40 were pretty sharp people. And he said, right.

You young guys, you're each going to be the governor of the region for the next five years. 40 regions, 40 new governors. The good news is you're a governor of that region for the next five years. The bad news for you is that here's the common purpose that you've got to try and achieve. And the really bad news for you is we don't know how to do it.

Try something. And then the really, really bad news, if after six months you haven't tried anything, you're thrown out of the group. You're recalled. You're thrown out of the card. That was very clever.

Because if you tell people, here's the problem. Try and fix it. It freezes people into fear. So he made it very clear. We can learn from failure as much as success.

And then he watched. He said, ah, this one's working, this one isn't. Go and have a look. You might learn, you might not. He ran that that system he set up and it run every five years, a new goal, don't know how to do it, go try something, learn from experiment in parallel.

And you roll that on every five years for forty years, it produces the fastest growth rate ever seen on Earth. This in a country where all the anthropologists had forecast this will never grow because Confucius, that ethic, immobilizes people. And Deng proved them wrong. So when you look at the economic challenges facing the world right now, and you talk about what happened or didn't happen with COVID, are you seeing rapid learning taking place right now and ideas coming forth so that we can start to get ahead of the economic challenges taking place? That's why I wanna talk to your guys because I give a lot of these talks, but I find the most traction is with the IT sector And that basically, the guys who are used to innovation.

The tech sector is used to disruptive change. And it's easy for IT sector to say disruptive change is an opportunity. Some guys are lose gonna lose their shirts, but the people who respond to this right are gonna make a fortune. Because disruptive change means some costs have gone up, some costs have gone down. That's our opportunity to do things which are profitable.

Now because we've also got the Zelensky effect, which demonstrates that we can be morally purposive to very good effect, you bring these two things together, it's a changed world. There's much greater moral expectations on leaders, and especially business leaders. The public sector's very, very slow at reacting. Politicians are gonna move at the pace of a snail mostly, which is fast by their standards. If you look at leadership in America, soon, I will at least be old enough to be eligible to be president of America.

But not yet. I've got a few years to go. These are not people who are fleet of foot, but tech leaders are fleet of foot. And so the baton of morally purposive change of rising to the occasion has passed from the public sector to the private sector. And within the private sector, the frontier is the guys who are used to disruptive change, which is the tech sector.

And so you are the guys who can actually create new actions in communities of work, get your workforce to rise to a morally purposive thing like AI for good, but not AI for bad, and communities of place where they say, we can do better than posture on nice ground statements about global needs. We can actually make a difference in the communities where we live. When you look at some technology companies and leaders that are doing character based and moral leadership. And then you obviously look at some that aren't necessarily doing it. Are there examples that come to mind where you've been inspired by some tech leaders that are doing some things that we could build upon?

Are there examples that you've seen? Yeah. I'll I'll give you one. It's a British company. It's a big one.

The chief executive got in touch with me and said, oh, we wanna have a Zoom with you. I've no I had no idea why you wanted that. I said, okay. And when he zoomed, he told me the following story. He said, my son, who's teenager, had got hold of your book, The Future of Capitalism, and bought me a copy, and it was my Christmas present.

So since he'd given me this book and it was Christmas, and I got a couple of days off, I thought maybe I better read it. At least I better look as if I'm gonna read it in front of him. So he started reading it and he got hooked. So he read it. And then he got worried.

Because he thought, if this guy, Collier, is right, I'm running this company all wrong. I'm doing the whole works of maximize quarterly profits, dry costs down, all the rest of it. Right? I'm treating my workforce very badly. That's no no doubt about that.

And so he was sufficiently bothered by it that he bought a bunch of copies, and he gave a copy to each of the members of his board. And he said, I read this. It's got me worried. Will you have a look? Will you read it?

And they all read it. And then the next board meeting, it was just when COVID was arriving. Mister COVID was just striking. And they discussed it, and they thought the trouble is he sounds as if he might be right. If he's right, then the way we're thinking of reacting to COVID, fire people, drive down costs, make people more and more precarious, that will be exactly the wrong thing to do.

COVID gives us an opportunity either to drag people further down into behaving like cats or to raise people up. And we're a very profitable company. We're doing great. We better show some commitment to our workforce. And so we did.

He said, we worked systematically through your book. And we whenever we could, we said, alright. Okay. We're gonna guarantee people for five days a week work, but you only have to work for four because with lockdowns, you'll have kids at home, and we realize you'll be bloody stressed. So with five days pay for four days work, at least you'll get a bit of relief with the kids at home.

And they kept doing things like that. And then he came out with the great words, if I changed the work practices of one of the biggest companies in Britain just by writing a book, I thought, oh, I'd probably like to know about it. So I'm zooming you just to tell you that's what we did. Thanks very much. Now that company's since been it was so successful in its survival through COVID.

It's just been bought out by PE. So the guy I spoke spoken to has just made a fortune. So that's an example of a company really taking the the ideas in there seriously and actually doing pretty well out of it. You know? They said, it worked.

It just worked. You know, Paul, I I read something recently. You know, we've heard a lot of different theories about the Great Depression and how we move through it. But one of the things I was reading recently was how because of the economic uncertainty that came out of the crash and so forth, that there was this movement of workers to unionize, and there was the strike at GM that then led to a lot of intimidation and challenges for other companies. And that there really was this movement from the workers up because they had experienced all this economic uncertainty, and they now had the leverage and the drive to change things.

I'm wondering if because of the uncertainty that was created with COVID I don't know if you've read about it, but with what happened with the Amazon workers, what's going on with Starbucks, what's going on with REI, There does seem to be some groundswell from workers up saying, we need more protections, we need a fairer system. And I'm wondering if there's opportunity for the leaders, these tech leaders and other CEOs to get ahead of this. And instead of it being imposed upon them, whether or not they can seize the day and see this as an opportunity to bring the workers into the tent and work towards a better, fair character based capitalism. Jim, that's a really good example. Because if you do nothing, you get a reaction eventually.

The poor bite back. But they bite back in a damaging way. An oppositional identity. Whereas, if the successful react first and say, we are gonna rise to this. That produces a united team.

You don't have to get oppositional identities. But if you do nothing, that's the default option. In the little book, I I tell the story of Toyota versus General Motors. This is, an extraordinary story where Toyota decides they try and break into General Motors market in America. And Toyota has no advantages at all.

They're far away. They don't have any scale. They're nothing like it's profitable. General Motors is the most successful profitable company that's ever been on earth, and it takes fifty years to turn General Motors from the most profitable company there's ever been on earth to being bankrupt. And we know how that happened.

It was because Toyota beat them. And Toyota beat them because it had one advantage. The leaders of Toyota at the time were sufficiently modest that they were communicators in chief and not commanders in chief. So they dressed the same way as the workers. They ate in the with the workers.

They could say we to the workers, and people would take them seriously. And so they gave a common purpose. We, in Japan, have lost the war. We've been humiliated. Here's a common purpose.

Let's make Japan proud of us and show the Americans that we can actually succeed in building a better car than the Americans can. And in what sense could they be better? It couldn't be faster, couldn't be bigger, couldn't be cheaper. It could be better in one sense. It could be more reliable.

And it could only be more reliable with a completely new system of quality control. And the system of quality control used in General Motors was what was used everywhere. You take a sample, you take one car in 50 when it comes off the assembly line and test it. And that picks up most faults eventually. But the system used in Toyota said, we want to see faults as they emerge on the production line.

If you see a fault on your little stretch of the production line, faults are treasures. They call it quality circles, little teams responsible for section of the production line. But, of course, the production line wasn't little circles. It was long, long line about two miles long. And then they hung cords all the way down the line called.

If you see a fault, pull that cord. What happens when you pull the cord? The whole line stops. Costly, $10,000 a minute. So in ten minutes, a disaffected Japanese worker who's pissed off with the management can do a $100,000 worth of damage.

So you can only work this system if you've got a workforce that has already come round to a common purpose set by management. We're gonna produce a super reliable car. We know all this because General Motors took five decades to die. And in that process, they commissioned every management study on Earth. Finally, the management studies said, it's quality.

And it explains the way the Japanese have done it. And so, eventually, the chief executive says, if they got Andon chords, we got Andon chords. Put the chords down the line. And, of course, the American line managers were going on bonuses, which incentivized produce a lot of cars. And the line managers knew absolutely that Fred on that production line hated the management at General Motors.

And given the opportunity to pull that cord and do $10,000 worth of damages a minute, this line would never move. And so what do the line managers do? They tie the cords back up again. There's a visual statement, we don't trust you. That's hard to beat.

And so, General Motors goes bust. That's the payoff to getting it right. And if you persistently get it wrong, leave it too late. Even when you understand it, you can't do anything about it. In America now, it's not too late.

But IT leaders can lead the way forward out of the valley of death, which is where America's heading at the moment. If I'm following what you're saying, Paul, from a prophetic perspective, you're saying Ukraine was invaded by Russia, and Zelensky rose to the occasion. You're calling on our tech leaders not to wait for the invasion to take place, but to learn from Zelensky's example and to rise up now and become leaders within their own communities and be creative, and from the ground up, change the character of their companies. And rather than waiting for the wave to hit them, to actually try to get ahead of this and see the opportunity to be a thought leader within their own community. They're a thought leader twice over.

They live in communities of work. They lead those communities of work, and they're major figures in their communities of place. And so both as leaders of communities of work and as major figures in communities of place, they can start the reset. Somebody's got to start it. If not you, who?

If not now, when? Paul, I cannot think of a better way to end this discussion with the wonderful quote and the example you just gave. I thoroughly love this. Thanks very much. The Puck Venture Capital Beyond is produced by CMG Advisors.

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