Eddie Obeng - Unleashing the Power of New Thinking in Leadership and Innovation

Full transcript: Eddie Obeng on London Real

3:55 This is London Real. I am Brian Rose. With me today is Mr Patrick Ryers, who is a former guest. He used to be a credit derivatives trader at Goldman Sachs, but don’t hold it against him. I used to do business with Patrick’s company when I was back in the city a couple years ago, but he left two years ago to go pursue a career in MMA as an amateur fighter and as a promoter.

4:18 Is that right? Professional fighter subsequently retired, and yeah, as a promoter we had a great year last year, 12 shows in nine countries. That was for Cage Warriors. For Cage Warriors, yeah, fantastic. So that was an eventful year and I learned a lot.

4:33 So awesome. If people want to learn more about you, they can go back to your episode, which was over a year ago. Dude, it was like December 2011. It’s called Goldman Trader to Fight Maker. I made that title up myself.

4:45 I hope you like that. And so if you want to check Patrick out, you can go watch that episode. And our guest today is Mr Eddie Obeng, who is a British educator and author. He’s also a professor at the School of Entrepreneurship and Innovation at Henley Business School. He’s also the founder and the learning director of Pentacle, which is a virtual business school, and Abbey National is called him their secret weapon.

5:10 That’s quite a compliment. Yeah, I think so. Okay, Eddie, welcome. Thank you very much. Thanks.

5:15 You also give a mean TED Talk. Oh, it’s very kind of you. Thank you. I must say it’s very good. And you know, if people don’t know TED, Patrick had just heard of TED recently.

5:23 I thought everyone knew TED, but it’s a group. How would you describe TED, actually, if someone who hadn’t, who’s never seen one? Yeah, I mean, I think the idea behind TED was Chris Anderson was looking at ways of bringing ideas around technology, entertainment and design to the world, and it started just by collecting talks and filming them, and then it took off from there, and they put the talks on the internet, and it took off a bit more, and then they got organized, and between him and Bruno Giussani they sort of managed to curate interesting sessions with a number of different speakers, and then people rolled in to listen, and then it took off, and the rest of history.

6:01 I think it’s quite a select audience. I mean, yeah, I think they claim to have X number of billion views so far, and it’s a mix of people. So it’s people in schools, so lots and lots of schools watch it as a way of seeing what the world is, cause you’ve got speakers who’ve got backgrounds in things like technology. I mean, I’m an educator, so for me it’s about trying to help people to learn. And then you’ve got all the sort of artists and the entertainment side, so it’s quite a mixed group and then you get people who are cutting edge innovators also looking to see what’s new, because often people go to present their latest coolest, slightly wacky stuff.

6:38 It’s quite an interesting mix. Yeah, no, I think it’s, and it’s quite an honor to be asked to talk at a TED talk. It’s not they don’t let it is actually. Yeah, no, they don’t. They don’t just let anyone in.

6:47 They don’t let the riff-raff in, that’s what they said to me anyway. Okay, you know, I watched a video recently when you were, I think at Harley-Davidson in the States, and you were giving a, it wasn’t a talk, there, you looked like you were giving one of those management-like seminars where people have to get involved, and I was wondering, I mean, you’ve championed a concept called New World management, and I was wondering when you walk into a company like Harley or any company, is there a common problem that you see, like, right away? Yeah, the problems are really similar.

7:13 It’s not a common problem. The problems are really similar. What happened was, um, mid-90s, I stumbled across an idea which really changed my life, and the idea was very simply this. I was looking at what was happening in the business environment. I teach management and for most of my clients, what I found was more new stuff was coming along which they hadn’t anticipated, so they were constantly being surprised.

7:35 We didn’t expect that market to grow up. We didn’t. They were constantly being surprised at the same time technology was sort of feeding it. This is the early days of the internet, so things like, I don’t know if you’re old enough to remember things like Netscape? Yeah, first browser, right?

7:48 Yeah, exactly, was sort of coming in. So all these things were happening. And what occurred to me was that the pace seemed to be going up. The pace of the environment just seemed to be going up. We were connecting more and more, continent in terms of global trade, things like M&A, you, you were a trader before, had really kicked off.

8:05 So companies, instead of growing naturally, they were growing by putting two together. So they were growing really fast. They were going from, you know, normally it takes you your life to build a business of a thousand people, but now they go from a business of a thousand people to business of 100,000 people in three years. So that pace was really kicking in. At the same time, they were connecting more people and the technology was speeding up the speed with which people could connect and communicate and work together.

8:30 And so I had this understanding that we were getting a sort of an exponential rise, a sort of steady exponential rise up in terms of the pace, the change, the dynamics. And I looked at what we were teaching in business school, and we were teaching stuff which was very similar to stuff which had been taught 20 years before. When you looked inside organizations, they still have things like hierarchies. They still do. There’s a boss.

8:50 Boss is supposed to tell the next layer what to do, and so on. So, for it’s like the typical Harvard Business School study, the stuff I learned when I, my MBA, you with me, and I thought, geez, we’re learning at a really flattish rate. The world’s accelerating exponentially. I’ll bet the pace of change and the complexity overtakes our ability to learn. And I think that’s happened, and so when you walk into an organization, what you’re aware of immediately is many of the things they’re doing don’t match the complex world we’re in.

9:18 It was designed for another era, an era when the boss had done your job before and could tell you what the job was. You know, that’s when that’s how they actually have thought about a job. When you make a strategy and you sort of launch it, it takes you about three or four or five years, and the world would stay the same. A world where if you were making decisions, you didn’t have to think of them on a global scale. You thought them on a local scale.

9:41 And that world’s gone, but a lot of the organizations have that, and so they get pushed into things like, in the old environment, the leader just had to be the boss. I mean, the boss got it right. Everyone was happy. Now, hello, you’ve got an organization. Everyone has to take a lead in different things.

9:58 You know, whether you’re junior maybe you’re talking about the latest trend and how that could affect the business. It might be that you’re actually quite tangential, but you’ve understood what the customers are doing because you shop with people who buy the product. You know, so all of a sudden the game really is very different. So when I walk into an organization like that, I’ve got all this antenna up. The problems are very, very similar in terms of, how the hell do we deal with the chaos?

10:20 How do we get the leadership? How do we make our business more consistent, so that it makes money where we were expecting it to make money? They rather than making money, and then we go oh, we need it all along, and so on, trying to like empower the individual. You’ve got to empower the individual but connect them. You see?

10:38 When you can learn fast and the world is changing, if you’re trying to organize people, you can put them into different boxes because you understand what’s being done. You understand, let’s say for example you’re making mugs like this one I was drinking my tea out of. You understand how you get the clay out of the ground, how you make the mold, how you heat it, how you sell it. So the leader, the boss, whoever it is, probably understands the whole thing.

10:59 So you can say to the guy who’s digging the clay out, just keep digging clay. Get really good at digging clay. Don’t worry about the selling, because you, in your head, can knit them together. But when you hit 21st century, don’t forget the guy who’s digging the clay. If his stuff isn’t eco, the guy who’s selling it can’t tell the story.

11:16 So it’s not just about empowering the individuals. It’s about building a connected network. It’s about building them into a team. It’s about connecting them with their future customers. That’s where all the difficulty comes, cause you, it’s much more, much more connected and much more collaborative and much more complex.

11:31 How did it go with Harley? Harley was good fun. I love Harley. What did Harley think of you? Where are they located, by the way?

11:36 Um, and knew you were going to ask me that. Somewhere in the States, stat. I got on the plane, got off, got in the taxi, went. So this, this British guy born in Ghana comes in and starts telling them what do they make of you? Oh, they’re good fun.

11:47 Yeah, yeah, no, I enjoyed it. It was, it was great fun. The, the video which we, you, you probably saw, we were looking at, really how you get other people to take, grow, to grow and develop, even though you’re the leader. So I was trying to help them to look at how you do something. You’ve been in sport, but really how you coach very effectively, because often what happens for most of us is we’re pretty good at what we do.

12:10 So when somebody comes along with a problem and they pitch it to us, the first thing we do is start solving it in our own minds, and then you’re doomed, because now you’ve bottlenecked this connected organization, which I was talking about. What you need to do is leave the ownership with the person but help them to solve it. So what was in that clip was I was trying to get them to break the habit of taking on board other people’s problems, but instead learn how you ask questions, so the person figures it out.

12:34 So the model I use is some is very simple one. It’s called coach, just because it spells the word out. But basically somebody brings you a hassle. Oh my God, Brian, how are we going to make this video work? He talks too fast.

12:47 I don’t know what it is. Okay, so what should I do? And what you don’t say is, what you need to do is set it up with a no, you say, tell me again, what was the problem? So you basically start off by trying to find out a little bit more about what’s gone wrong. Okay.

13:02 So you check out what’s gone on, then when they’ve told you, well, actually, this is what was going on. You ask them questions about what’s going on, but the reason for asking them this is important is not so that you understand, but so that they think deeper. So you might ask them, well, why did he talk so fast? Why was he doing that? It’s not so you understand, but it’s so the other person understands.

13:22 And then when they’ve talked a bit, you then challenge them. So how could you do it differently? So rather than you just telling them, you’re not letting them think. So all the ownership is still with them. Now they’re fully empowered, and if they’re really stuck, then the age comes in, which is where you help them out with a couple of ideas.

13:36 But by going through that process, it lets the person own the problem, work it out, solve it and remember it, and feel that they’ve grown. And that’s really what that little clip was just showing. It was just showing that little bit of trying to go through that coach model. Okay, do you get resistance when you come into a company? You must have had consultants come into a company over the years.

13:56 I don’t know if you have. And they’re going to like take you through a management workshop, and most people are skeptical, right? When you get there, I’ve seen these before, and I’m like, I’m going to fall back and they’re going to catch me, and it’s not going to be very useful. I mean, how do you deal with those guys? Yeah, I mean, that’s, I’m in a lucky place, cause I’m not a consultant.

14:14 I’m an educator, so I’m there. My job is not to come and tell them how stuff should be done. My job is to teach them how they might do it differently. So I’m there on, I’m on their side, so that’s an advantage to start off with, whereas a consultant comes in and they go, this is offer and you will stick to it, and we’ve worked with all these other companies. I rarely ever tell them about any companies I’ve worked with.

14:35 I start off by usually starting to say, well, what is it you want to learn? You know, if this is the set of issues you’ve got, what would you, what would be great for you? And so even the cynical guys are going, yeah, yes, sure, I’m sure it’ll just be the usual old rubbish they throw at us. And so you sort of draw them in into the discussion, because they’re telling you what’s useful to them. Once they’ve told you what’s useful to them, then it’s my job to try to work out what stories, what frameworks, what tools, what ideas I can bring, which will allow them to be able to solve those issues.

15:04 So I’m in a better, better place. But you do get people who go, huh, tell me. I had one once who said, um, he was sort of sitting there with his arms folded, etc., and he’d obviously be rehearsing this, and he said, well, it’s all right for you, you’re being paid to be here. And so I said, you’ve come for free. So of course everyone burst into laughter, cause we’re all being paid to be there.

15:26 And that made him smile, cause he had never occurred to him that it was part of his salary to learn and develop. It just, you know, hadn’t been there. So yeah, you do get people like that, but usually this, the real secret is, you’re not. I’m not there as the boss. I’m not there as a consultant.

15:42 I’m there as an educator. My role is to help them to learn, because I think in the world we’re living in, you know, if you want to make things work, you learn new ways of doing stuff. That’s the way out. You know, often people imagine that somehow or other they can do what they’ve done before and it’ll work. But I think a world which changes far more than you can learn, learning is pretty crucial.

16:01 You know, the typical path for Wall Streeters, I don’t think you did this, but it was to do a four-year bachelor’s degree, go work for two years as an analyst at Goldman or Morgan Stanley or something, then go back to business school for two years. You didn’t do that track, did you? That’s the track if you want to be in investment banking per se, not as a, not as a trader. As a trader, typically you would go straight in. Right.

16:21 Did you get an MBA straight to the floor? No, I did a masters. I didn’t do an MBA. Okay, I was wondering do you think there is value in that traditional, get your bachelor’s, go two years, come back and get your MBA, or not? Because you’re talking about everything changing in the world.

16:34 I’m guessing you’re going to say not, but maybe you are. I don’t know. No, not really. I mean, the thing is, what you have to understand is that I call it the new world, and it’s a very simple idea. Basically, I think it’s reality.

16:44 You know, if you ask most people, can you figure out what’s happening next year? They’ll say yes, and then you quiz them, they’d say no. You know, when we had the collapse of 2007, I just remember everyone being so shocked. I remember the Queen saying, how come no one advised me, you know, etc. And I talked to a lot of people, and you realize that in many situations, the world we’re living in is quite complex.

17:05 You can see patterns, and I’ll talk you through patterns if you’re interested. So if you want to know what’s going to happen next, you can see the structure of the pattern, but the individual events they come and go like, like, like crazy. So that’s one. If you’re going to do your MBA in order to learn how to think, how to see things, how to communicate. Cool.

17:22 But most MBA structures, I think, even today are just like the one I did decades ago. It’s roughly the same stuff. They’re teaching you about strategy. They’re teaching all this stuff which looks great, and when you’re in a boardroom, when you’re talking to other people who’ve done the same thing, you have a common language. But it doesn’t necessarily connect to reality.

17:41 The average strategy which gets written has a shelf life of execution, three to five years. If you look at the FTSE 100, I haven’t done the sums recently, but you look at the tenure of a CEO, FTSE 100 or FTSE 250, you’ll discover that it’s often shorter. I think it’s about two and a half now, shorter on average than the length of their strategies. So hello, why are you doing a strategy when the person is executing who’s kicked it off will be gone before it.

18:04 It makes no sense, but we continue. It’s a ritual, and there are lots of rituals in organizations. And when you do your MBA, they’ll teach you about things like budgeting, annual cycles. You know, you do your budget over the course of, hello, who can predict forward one year? You know, whilst you’re putting your budget together, it’s already obsolete.

18:22 You know, before you publish it, you know, people go, we need to make changes, we, this number isn’t tight enough. You know, so what you find very, very quickly is that those things are rituals in an organization: the meetings, the travel to meetings, the budgeting, the rituals. And bigger the organization, the worse the rituals. The bigger the organization, the older it’s been, the longer it’s been going, the more likely it is they’ll have more complex and rich rituals.

18:48 Did you find rituals in the city where you were? Just like, why are we doing this? Absolutely. It seemed like every, you know, two to five years you’d see a change. They’d say, okay, now we’re going to push our sales force geographically rather than do it by covering hedge funds or asset managers, and things would get changed.

19:07 You’d have the guys that made the most money were the people that moved all the desks around. So you’d see these guys come in, and you’d say, okay, so now we’ve got to move these guys over here, and it never really seemed to make any sense. But you know, having worked for 10 years, every three years you’d see it come in, and that chart would change, and who reports to who would change, but nothing on the underlying business and it would often, we go back to how we were previously.

19:30 So you know, the people, the only people that were making money were the managers, and the people who were justifying their jobs by changing things, and the people that were doing the actual moving, because very, very little tended to happen to revenues. Wow. You know, just quickly, you traded through the credit crisis of ’07 and ’08. I was I was on the other end of the phone, broking through it. But just, can you give people an idea of what it was like, the kind of panic going on, or lack of panic on your side, when the credit crisis hit?

19:59 There was definite panic. For the first time in my life I was afraid that my money wasn’t safe in the bank. So there was a time, you know, just before Lehman defaulted, where people worried about AIG, people worried about Citibank, you know, very large institutions which were responsible for people’s savings, people’s mortgages, people’s insurance, people’s health insurance. So things that are very fundamental to everyday life, and I was wondering should I be moving my money into different, you know, to different places in order to ensure that it would be safe?

20:28 Then you also had to think, if one goes, they’re all going to go. So my view was that if a bank is going to go, and is, a big bank with savings, not necessarily like Lehman but like an HSBC or one of those banks, they’ll be they’d be somebody would do something about it. But no, if they were to let that go, and they were to let people’s savings go, I think there would be anarchy on the streets. I think as soon as you can’t get money out of your ATM card, I think people panic.

20:56 There’s a run on banks, and you know, it’s a house of cards. Gordon Brown said it was like two days away from ATM machines not working on RBS. I mean, can you imagine? I mean, the thing which is to me is really interesting about that story, and also the reorganization story. There’s two.

21:13 The reorganization piece is quite intriguing, because they do that ritual, and what’s funny, for, I wrote a book called Never Reorganize Again, because you’re absolutely right, they don’t work out what the fundamental problem is. And we’ll come back to that, because that’s crucial to also understanding what happened in 2007. You see, as the world started to move, we started to create new ways of thinking about things, and we forgot the world was moving and we hadn’t understood them.

21:35 For me, the one I love, tellings the story about the difference between wealth, value and money, because this is, at my interpretation, what blew up in 2007. When I’m teaching, I tell a story about a chicken farmer, cause it’s funny. Okay, and I give him a name. Give me a name for my chicken farmer. Francis.

21:51 Francis the chicken farmer. Fr, we’ll go for Franc. It’ll get confusing. Franc is the chicken farmer. So he spends all his life, he builds a hut.

21:59 Okay, so he’s got his hut. So if you ask, if I ask you, what’s his wealth? You would say a hut and some chickens. He’s no brainer. He has no money.

22:09 He’s a chicken farmer. His wealth is a hut and two chickens. Okay, great. Then his neighbor comes to and says, I love your hut, I’d love to buy it. Okay, he says, I don’t want to sell my hut.

22:18 Okay, my brother’s got a hut, go and buy my brother’s hut. So he goes to his brother and buys Francis’s brother’s hut for 10, 10K, 10, 10K. Okay, so let’s just check. So what’s Francis the chicken farmer’s wealth? It’s a hut and a couple of chickens.

22:33 Okay, it’s not 10K. 10K is the value that someone else placed on his hut. It’s not his wealth. You with me? This is really important, because it’s from here on that the whole financial system starts to fall apart.

22:47 So the neighbor’s sister also wants a hut. So she comes, says, I’d love to buy a hut. He says, no, I don’t want to buy my, I don’t want, my hut. My sister’s got a hut, go and buy her hut. So the neighbor’s sister buys Francis’s sister’s hut for 11K.

22:59 This is important. So what’s Francis’s wealth? Chickens in a hut. It hasn’t changed. Okay, okay.

23:05 What’s the value of his hut? 11K. How did it happen? Because some idiot decided to pay 11K for a similar hut. His has gone up.

23:13 Nothing’s fundamentally changed. Their, you, be his wealth is still hut and some chickens. And then what’s funny is his brother’s hut, which he sold last year, is now also worth 11. So when one idiot buys a hut for 11K, all the huts go up to 11K. So what you realize is wealth and value don’t move in step.

23:29 They don’t have to. They don’t have to move in step. And then what’s funnier is the neighbor’s cousin wants to buy the hut, but of course he has no money at all. So he goes to the bank and says, I have no money, I have no collateral. The bank says, no problem, we’ve assessed the market.

23:42 There’s growth in the value of huts. If you buy a hut at the moment, they’re worth 11K. We’ll lend you 11K with no deposit. You got it? Am I describing the credit crunch?

23:52 So now they lend 11K, but they go, oh well, you might need to furnish it, so we’ll give you 12K. Okay, and then he maxes out on his credit cards, so he buys the third hut for 13K. Are you with me? You’re describing a bubble here, and it’s a strange bubble, because the wealth hasn’t changed. The value has changed, but forget the value.

24:13 Once you can borrow real money against value, you can borrow, take the money and spend it on something else. You split the three up. But how else do you assign value to wealth then? Well, now you’re asking me how do you work in the new world. That’s a much bigger question.

24:27 First you have to understand why they screwed up. This is kind of the concept of mark to market, which is a daily ritual, but the real issue that you’re which isn’t being described. As if he earns off his two chickens five grand every year, then paying 10 grand for a hut is fine, cause you’re, you know, two times two, talking, you’re talking about yes. Great. I don’t care what he pays.

24:47 All I’m saying is wealth can stay the same whilst value can track and liquidity can do its own thing. The three are not necessarily connected. They’re definitely not connected. Yeah, and you’re saying when they get out of, out of par? No, it’s worse.

24:59 It’s not them getting it, it’s people not realizing what’s going on. And that was the shock for everyone, cause everyone was so confident in the valuation that the banks were marking against the valuation and not looking at the underlying development and growth of wealth. You touched on the two points that caused, in my opinion, the credit crunch, and one was poor lending and fraudulent lending to people that didn’t have the capacity. Fraudulent, there were, there were, there were guys going in.

25:24 There were who got paid purely by, um, yeah, the fact that they signed up a mortgage. Okay, and they were saying, okay, don’t worry, you’re earning how much? Oh, it doesn’t matter. Just, you can, you can, you can sign off. You can sign off yourself.

25:37 You don’t have to prove how much your income is. Yeah, but that wasn’t really fraudulent. That was when you’re lending money to people that you know can’t repay it. You’re bordering on fraud. And lending, true, but, but don’t forget that in the market where everything’s rising, the sales guy is being incentivized to sell, and he’s signing out the mortgages.

25:53 Everything’s rising, and as long as it keeps rising, the numbers all look good. The value goes up. So they’re two distinct things. Yeah, exactly. Okay, when the person’s selling, he should have no view on whether the market’s going to go up or down.

26:05 It should just be where the repayments are going to have, are able to be made. I agree with you. I know how it’s supposed to be done. Yeah, but this, but the so the first thing is there was, you know, people were ignoring FICO scores. They were, you know, telling people who didn’t have enough income that they, you know, that they could borrow, these, take these loans out, etc, etc.

26:22 Exactly. And the second thing was when all the financial wizards were getting involved and putting into these models and structuring everything and selling it to insurance companies. There was an input into the model which assumed that house prices would always rise. Correct. So those two things, when people started defaulting, and when you actually went, oh okay, so we’re going to put a negative number into house prices, they blew up.

26:44 Yes, and two levels. Correct. The assumption was the value would always go up, irrespective of what the wealth did, to the out of balance. And then you’ve got the practice you were describing, but my question is not what did they do? That’s history.

26:56 My question is why did they do that? Greed, you well, you say greed just like one word. But the financial guys are being incentivized to structure all this, because they get paid good bonuses. But why were they incentivized to do that? Because the more they sell, the more their bonus will be.

27:14 Yeah, but no, but who set up the bonus? So why did that person make that mistake? That’s what I mean by why. What’s interesting is, when I do my research, I do it a bit differently from normal business schools. When I was a proper business school, we used to do things like surveys.

27:29 Okay, so what you do at the surveys is you interview 400 people and you say, what do you think the causes of the financial crisis were? And then 10 of them will say, oh, it’s greed, then 12 say it was laziness, etc., and then you publish your graph with a little chart like that, and you say it’s obviously greed, because most people say that, and a lot of the media, a lot of the newspapers, that’s what they publish. You know, it’s survey information. Great stuff, but it doesn’t necessarily mean it’s true, because all you’re doing is taking people’s opinions.

27:53 So the second thing which they do when they’re more scientific is they look for correlations. In other words, when this goes up, does that go up? Okay, so they’re looking for correlations, and they’ll do lots of sums to make sure things really do correlate. But there’s a problem. You know, every time the flowers come out, the birds start singing.

28:10 We were talking about spring the other day, just earlier. Yeah, it’s not the flowers which are making the birds sing. It’s cause the sun’s come out, cause it’s spring. So when two things have a common cause, they always correlate. So you can read lots of correlations, but there’s no causation.

28:25 Right? Is that what you’re getting? The sun makes the sun, that makes the flowers bloom, and it makes the birds sing. You with me? So the causation is from sun to flowers, sun to birds, not from flowers to birds.

28:37 So correlation doesn’t exactly match causation. But so, so to get back to your point, then the reason that it happened was banks work on a 12-month compensation cycle. Why do they work on a 12-month compensation? Because people want to, at the end of every year, so it’s going to go about to historical. But well, some bits will be historical, and some bits will be people changing things and deciding, for example, cause traditionally banks weren’t expected to turn out vast amounts of profits.

29:02 That happened 30 years ago. You know, um, if you roll back and think 30, 40 years ago, the bank, if a bank made more than 5%, it was amazing. So you’re just saying, but it’s just, it’s a, we changed something? It say it was endemic to the system, but it’s also, it’s innovation that you’re talking about. Correct.

29:18 It’s financial innovation. Exactly. But we also changed our view on what banks should be doing. What I’m saying is, for me, what I do is I map out the complexity of the causality. I don’t choose one solution.

29:29 So I think that if we look at the financial thing, uh, crisis, it’s probably a little bit of the fact we decided our expectations on banks are different. Then we enabled these large organizations to work globally and dominate markets. And then at the same time we brought a lot of people with a similar mindset through that track you were talking about. They’ve all gone through the same training, so there’s no diversity in thought. So when one of them says something, they all go, yeah, you said it, I agree.

29:52 If you said it and I agree, we’re both right, it must be right. So we did a number of things, there probably about a dozen crucial things which then set off this train of events. That’s what I call a pattern. Okay, I understand your point. We could, we could debate this, a tum, but I do understand the point you’re making as far as there’s this structural issue with the way we’ve set up, the way everyone does business.

30:11 Exactly, and that was what I was explaining, even with the Harley-Davidson thing. There’s a way which people take on these rituals. They add extra bits, and it builds a pattern. Okay, and once they build that pattern, I’ve got another question for you, and I want to get Patrick’s opinion as well. You know, in America they have this saying that we kill our dinosaurs, as in the companies that don’t perform anymore.

30:29 For example, like General Motors, they let them go into bankruptcy and restructure, and the equity losers lose all their money and stuff, whereas in Europe typically, something is kept alive by the governments, because the governments seem to work hand in hand with the corporations. You know, you you’ve probably studied both models. Are those fair assessments, or not? Yeah, I mean, they’re curriculur, but they’re, they’re not far off. They’re not far off.

30:51 I mean, if you are good enough, if you’re lucky enough, to be an organization which builds up massive reserves, and I won’t mention other companies, American companies with massive reserves. Um, but there’s one who make computers, and they’ve got so much money that if they keep their run rate up, I think they can survive 132 years without, I won’t mention any names, without having to make any more money. That used to be Dell, though, a few. Okay, but when you’re in that mode you could well be a dinosaur.

31:20 Um, it’s probably not Apple, because the company I’m thinking about hasn’t actually generated any organic innovation for about 20 years. All the things they’re known for are things they’ve bought recently and repackaged. So some dinosaurs can survive if they’ve got enough money. I used to have a boss who used to say, just because the tree is still standing doesn’t mean it’s not dead. So the American model weeds out the guys who run out of cash and are not connected to the customers.

31:46 In Europe, we do actually have a different way of looking at things, and often they’re looking at the bigger social, especially when you hit mainland Europe. They’re looking at the whole social context, and they’re saying, actually, it’ll be less damaging if we just keep this alive. Now, whether that’s true or not, I’m not sure. You had a lot of your training in the States, didn’t you? Your first your first trading was actually in New York, right?

32:06 Yes. And when you came to Europe, was it weird to look at, like, the German, some of the banks, and how they’re, like, really closely knit with some of the corporations? Like the banks were originally created just to loan money to the corporations. So I originally traded investment grade, so stuff that’s very far away from actually defaulting, but, like, BMW and all these. Exactly.

32:23 But if you look at, if you, there’s two great examples that spring to mind, places, um, companies that had lots of cash but refused to innovate. One is Eastman Kodak, who were the obviously original producers of film, right? And I’m not sure if they actually went into bankruptcy. That was, they have now. So they’ve gone, they’ve gone into bankruptcy, and they had lots of cash, but was, jet gry, slowly but surely they couldn’t reinvent themselves, and they went into bankruptcy.

32:50 Then you have Nokia, and that was like a year and a half ago, um, where its sales came out and they were absolutely poor. They were losing market share left, right and centre, having probably 10 years ago been, personally, you know, they were the most easy to use phones. Everybody liked them, but they could never get a smartphone that worked correctly. And it was a big dilemma amongst the people that I used to trade with, which was what’s going to happen to Nokia, because they have these piles of cash?

33:16 But they continued to lose market share, and people lost faith in Nokia, and the stock absolutely crashed. Yeah, it was only a link to Microsoft, and I’m not sure if Microsoft actually eventually bought a Bard stake in Nokia, but that was under extreme pressure, and I think the fact that it was Rel, I think the fact that it was a European company definitely helped it out. In the States I think things would have got significantly worse, because there is generally a feel that people will not, because of the amount of, um, these national champions, the amount of people that they employ, and the amount of, uh, um, impact that they would have on the local communities, that they won’t let them go.

33:56 Is one better than the other? It is one. It’s the European model versus the American model. Well, I would say the American model makes you know, it’s a more efficient allocation of resources, right? Because if you don’t, you know, if you’re not up to it, then you die and people put their money elsewhere.

34:10 So if you are, if the government artificially prolongs a company’s life, then I don’t think that’s an efficient allocation of resources. I mean, I used to really think quite hard about efficient allocation of resources, because that’s what they taught me on my MBA. But a lot of the work I’m doing is about companies transforming and reinventing themselves, and you have to re-educate their workforce. And we also know that startups, 9 or% of them have failed within the first two years.

34:34 So if you look on the round, you really have to question what’s the best way of doing it? If you’ve got a company which has started, it’s going to be three years, and then you allow it to fail because you don’t invest, not money, but ideas, so they can transform. Is that better than letting them die and then starting up from scratch? The other thing which also, but do you want the government is never going to invest ideas, because the government’s the innovative of any institution.

35:00 If, if another company wants to come in and do that, then that’s fine, but that’s an allocation of their resources into. I’m with you on that. I wasn’t arguing that the government were going to give anyone ideas. That would be very very funny. But the thing which I’m trying to describe is that if, if, if you have an organization which is already performing, where you’ve got people, people are bought in, they’re all engaged, and you give them ideas.

35:22 How much investment, how much energy do you have to put in to make that really spectacular versus starting something from scratch? And I now think starting something from scratch, even in our fast world with the barriers coming down, is much more difficult than taking something which is already working and shifting people’s minds around and enabling them to grow. And so the classic view, which I would have held 15, 20 years ago, I now dropped that, cause I just took it on trust.

35:48 So if you’re asking the European versus the American model, my answer is, whichever model allows people to continue to transform is probably going to be better. And the American model assumes you can’t transform, therefore you die. But your initial example was something that’s working already but needs tweaking, whereas Eastman Kodak is not working at all. No, that’s my, one of my trees, that’s a dead tree. Yeah, and that’s why I was saying, even in the American model, you can have businesses which are already dead, but just because they’ve got so much cash, they don’t get taken out.

36:19 Blockbuster, yeah, so they hang around messing up the market for everyone else for a long period of time, like Eastman Kodak, which is your example. Yeah, and so the efficient model, which is supposed to take them out and bring in new, and allow the, it doesn’t happen, and people continue buying these cameras which they don’t want and giving them away, cause they’re rubbish, etc, for 10, 20, 15 years. Hmm, it’s the same with some of the current organizations we have.

36:42 What about the 20-year-old that’s listening into this right now, or even you at 20? Um, and you’re just about to get out of college, and you’re thinking, okay, I can go into this company with 50,000 workers, where I can learn the ropes, and maybe after five years become management, management, or there’s the hot new startup down the street. Or, if I make it, the third option is to find an organization which you’re not going to end up as manager in three years, but you’re going to be doing something useful now, cause the organization’s of a size where they’ll value you immediately.

37:15 Okay, so those are the three options. Okay. Um, I think going to the startup is exciting. I mean, I always wanted to start my own business. I did it, and eventually it’s really exciting.

37:21 It’s tiring. It’s fun. It takes over your life. All those good things. The young man’s game.

37:26 Yeah, um, it’s tiring. That’s why it’s a fit person’s game. Okay, that’s basically the secret. If you’re not fit, you’re going to die. Okay, it’s just too stressful.

37:36 So, um, so that’s great. Okay, the corporate one is interesting, because the corporates um, the corporates are going to transform, even the ones with cash, and as they transform, as they have been doing, what you discover is that there’s less opportunity for you to, go up in an organization. In fact, if I let you in on a secret, it was rare for people ever to go up in a corporate. There’s an illusion. You know how when you’re on a train, and the train next to you starts to move, and you think you’re going backwards?

38:02 Have you ever had that? Okay, now just think about it. Most corporates start quite small. They’re little triangles. Okay, and so you’re at the top.

38:09 You start the company, and there, or maybe someone else starts the company, you’re two levels down. Okay, what happens next? Year in a corporate, you get growth, growth, so more younger people come in at the bottom below you. So all of a sudden you are the most junior person. Now you’ve got two people to manage.

38:23 Guess what happens next? Here you’ve got more of the same again. More younger people come below you, so you actually stay in exactly the same point, but the whole organization grows below you, because it’s growing below you. When you started, you were junior. Now you’ve got 20 people below you.

38:37 So you imagine you’ve gone up in the world, but you don’t go up. You stay in the same world. The organization just grows below you. So in corporates it’s always been a bit of, but you have more responsibility, and therefore you should have a greater compensation. Fine, I’m happy with all of that, but you haven’t moved your position.

38:53 Your absolute position stays the same. Your relative position seems to move, cause the more people below you, and don’t worry about the compensation, I’m not worried about that, but you don’t traverse through an organization. And so as long as major corporates are in growth mode, joining as a young person, you will get more responsibility. You will get paid more as more younger people come in below you, but the trend has been for the past five years that even the corporates aren’t growing the same way.

39:19 They’re not growing organically, more and more, down. So your young who joins at the bottom might get the right corporate, might get the wrong corporate, one which is just stalled. And so that’s the other option. And I think, I mean, when you’re young, you sort of imagine you live forever, um, which is great. Some people do.

39:35 Um, but for most of us, what we’re assuming is that we’re not going to live forever. So you want to enjoy it as you go. Now, in the old world, where you could learn faster, the world was changing, where people could predict and their strategies worked much better. In that world you could say five years from now, I know what I’ll be doing. I know where I’m going to be going.

39:52 But in this complex world, it’s safer to enjoy yourself while you work, while you learn, while you live your life. You fold them all into each other. You don’t go, I’m going to work really hard till I’m 65, or 60, or 30, or then I’ll retire and be happy. Yeah, you know, it’s madness on the other side of that timeline. You just made a blog post recently about, um, what is it you call it, the death of retirement?

40:12 Is retirement dead? And you made the kind of assertion where there is no active end of working and then start of enjoying yourself. I think you’ve got to be enjoying yourself all the time. Yeah. What did you mean by that?

40:23 Well, I mean, if if you’re serious about living as you’re living and enjoying as you go along, what you do is you don’t set yourself into a role where you get the balance wrong. So you still want to spend time doing things you love, doing fighting, swimming, whatever it is, seeing your family, etc., learning, reading books. You want to meld them all together, and you want to be doing all of those as well as your job. If you love your job, it’s even better, as well as your job.

40:48 So you’re rolling them all together. You fold them into each other. Is that possible as a Goldman Sachs I’m going to say, if you take London as an example, there’s very few people that achieve that. Correct. And that’s my point, that what we do, most of us, as rituals, are things which are designed for the old world.

41:02 That’s why I started. They’re still living as if they’re going to hit 60, 65, and then retire. But I mean, the governments are already pushing the numbers up, cause the numbers don’t work. We’re back to our wealth, value, money things don’t work anymore. But you’ll still see young people going, well, when I get to 65, I’m, I, me, goodness, when you get to 65 the world will be completely different.

41:20 Are you crazy? You know, so a lot of people, even in their day jobs, the 20-year-olds are still stuck with the rituals from one generation back. That is true, and I mean, that’s one of the huge challenges. I mean, one of the biggest projects, my new project which I’m working on, is something called Project Cube, and what I’m trying to do is use virtual environments to bring learning and working together. So traditionally you’d study, then you’d go and work, and then you’d study a bit more, then you’d go and work a bit more, and the assumption is your studying is good and it’ll last you three, four years, then you go and you know, you put it into practice.

41:55 But hey, these days you want to study a little bit less, and then put it into practice, and then study something different, and then put that into practice. The only way you can do that is if you have a continuous connection between learning and applying. And so what I’ve been doing with my business is trying to find ways that I can get people to learn and apply seamlessly, like at night they’re learning and working during the day, or taking three months on your job.

42:17 Even Goldman actually, um, incorporate that into their, um, review process, so they provide Goldman Sachs University, so, um, you have, when you go through your review, you have to complete a certain number of, um, educational hours per year in order to tick that box. Um, and you get all these different courses, from learning about specific derivative products to learning about, um, uh, ethical behavior in the workplace, and over a whole wide variety of different topics. Um, so I guess what they’re doing is allowing you time during the, um, during your working day to go and complete those sessions, there, online stuff.

42:52 So I guess that’s in a way trying to, uh, implement what you, exact, P&L is good, though, right? Exactly. If the learning is good, your P&L should respond. If the learning is, R now. Then this is my question to Patrick Ryers.

43:08 Did you achieve a work-life balance when you were trading for Goldman for 10 years? So I did, but at the deficit of my, um, of my body. So the things that I really wanted to do was I really wanted to be able to compete and fight at the same time. Um, and so I would get up, and two nights, two mornings a week, I would go and train at 6:00 a.m. What goes through your schedule, cause you had a ridiculous schedule?

43:31 So I would start work every day at 7:00 and finish around 6:00 or 7 every night, and I’d do two, two, uh, mornings a week, uh, training, and then every evening, two, a couple of hours’ training after MMA. And so when you’re young, you can do that, but one thing I’ve learned this year is, having had a much, uh, less strict schedule, is if you get sleep, and I’ve been getting 8 to 10 hours sleep, um, every night for the past year and a half, you can, your body can recover and can do anything, and can rise to peaks which you know you wouldn’t have been able to hit, um, in your 20s sleeping at a lot less. So the fact that, um, I was living on, you know, between 6 and 7 hours’ sleep every night, what impacted when I was working, my ability to recover, plus I was stressing myself with a stressful job, and so it wasn’t sustainable.

44:19 So, and yeah, and that’s the reason after 18 months I burnt myself out. Um, and I generally think that’s an extreme example about people being dedicated to sport and still having to work hard. But I generally think that people don’t have a very good work-life balance. Ed, do you see this a lot? Yeah, yeah, I don’t think it’s about balance for a start.

44:37 I think the secret is to make the work bit as enjoyable as the life bit. This is, I can’t do MMA during exactly as much as, like, but also there are other things. I mean, part of the reason that I use virtual environments is because I watch people, and you guys live in London, but I live just outside London, and for most of the people around me, this is what their lives look like. They’re sitting in front of a computer, which looks, which is a modern 21st-century computer.

45:01 They wake up in the morning, they get on a train or in a car, they sit in the car for an hour, an hour and a half, unable to do very much. They arrive in the office, sit in front of another computer, usually a 20th-century computer, because the organization’s invested, and then they do that in reverse every single day. They lose, they just drop two hours of their lives, and they’re two hours of stressful activity, cause you’re in, it’s like sitting in a corridor, public corridor.

45:26 You can’t really relax, you know, and that happens every day. And I go, we’ve got technology. You know, technology means you can be in two places at the same time. If you get a good virtual connection, you don’t have to. So even just watching that, you can just lift two hours and give them back to them.

45:42 But can people work virtually? Yahoo just recently banned all people working from home. It was the CEO’s decision, and everyone was up in arms, cause I think like 20% of the workforce is working from home. Do you think you can really work offsite and get things done in an organization? Yeah, because they probably, we’re working virtually, but not really virtually.

45:59 I’ll explain the world I live in. I’ve got partners in different parts of the world who run part of the virtual business school. The way we work together is we have Cube, and Cube is an avatar-based three-dimensional environment. So the way my world looks is, I get in the morning, I have a look if the person’s there, I switch my avatar and we go and chat. We sit around the table like we’re sitting around today.

46:18 If we’re working on a document, we scribble, we type into that real document, real life, and then it’s in the cubicle for us for later, or for us to print, whatever. So we’re doing real work, collaborative work, like you do in the corridor when you bump into somebody, but we’re doing it virtually. We’re not Skyping and just chatting. So that basically I’m just, I’m dressed from the bottom up, and rest of the time in the fridge. That does happen, right?

46:39 That’s not what we’re doing. We’re actually doing real work, and for me that has been a really important part of developing the virtual business school, that the environment must be so effective that you can do real work. And I suspect the Yahoo one, I don’t know what they were using as their platform, but I had somebody today suggest to me they were going to, uh, work collaboratively on Yammer, which is great. Yammer is great. I like Yammer, but all you can do is send a text message.

47:01 You can’t put an image up. You can’t look into each other’s eyes, you know, with our, you can switch the head of the we call them cubots and avatars, on and we can video conference, and we can walk around the room, and we can break into different syndicates. We use it for teaching, but I use it for running my own business. Gotcha. So technology is potentially key, but it’s getting technology to help you with your life, not getting technology cause it’s cool.

47:23 Okay, and that work bit, it’s really, you start to think about the work and the learning together, as you described, but also blending them so that it doesn’t start and end in one place. And if you started to do that, some of the pressures, I think, might start coming down. I mean, the fitness piece is quite very hard on a trading floor. But still, yeah, but it’s the construction of a trading floor. Why are trading floors organized that way?

47:45 I mean, you’re working with people around the world, aren’t you? So I get, you get in really early in order to use a machine which is on the trading floor. Why is the machine on the trading floor? Why isn’t it in your home, in a secure box? We’ll get you to consult for Goldman next.

47:59 I want to ask you about something you said about, there’s the classic story of the fish. The man in a… you, he wants to eat for a day, you give him a fish, he wants to, you teach him how to fish, and he learns to eat for a lifetime. But Eddie, you’ve got a third spin on this thing, and I didn’t actually understand it when I read about it, and I was wondering if you can kind of explain, because I think you’re saying that’s the old world way of looking at things.

48:22 Yeah, I mean, we know now that giving, you know, the quote is give a man a fish, you feed him for a day, teach him to fish, you feed him for the lifetime. Whatever it is, it’s actually not true. In fact, we know from a lot of the aid projects that giving a man a fish actually impoverishes the whole environment. Well, exactly, because if you give away the fish, it screws up the local economy, so the other fishermen can’t sell their wares. They’re hungry, you know.

48:44 So even that props is a bit dodgy these days. Okay, um, but what I’m looking at is, I’m trying to understand how you might get to an answer. So I’ve taken a one-step further, which is maybe you teach him to learn how to fish, because he can learn how to fish, he can learn how to swim, he can learn how to build an airplane, because the thinking process, the patterns, are all the same. It’s a way of approaching challenges. Is this meta learning?

49:11 You teach a man meta learning, so you teach him to learn how to learn. And then there’s one level above that, okay, which is before he even begins to think, I have a meta-level idea that I would learn, like, to learn how to learn how to fish. He’s got to imagine a fish, and so my blog is actually called Imagine the Fish. I had a hard time getting my hair around, and the reason is because I’m saying, well, what could be possible? So when I joke about, or I’m serious about, I don’t know, your trading floor, which is a virtual trading floor where you trade from home, people go, oh my God, that’s not how it’s done, that’s ridiculous.

49:42 And I get responses like that, and I just smile, because what they’re doing is they’re mapping on to what they know. We’re back to the rituals, we’re back to the old world again, when you roll for 20, 30 years, and we’ve done things like that, and you look back, you’ll go, I can’t believe we did things that way. A bit like we do with history, but with this particular turning point in mind, that actually everything is now probably possible to be done differently.

50:07 The point you just raised about the fishermen, and generally making them, their ability to learn greater, is at the core of everything that you preach, right? Correct. Yes. The more intelligent, the right word. It’s a useful word, but it’s not the safest word.

50:21 Yeah, so, but okay, so increasing people’s ability to learn is the most important thing that you can empower somebody to do. Yeah, because if I can help them to see a different way to approach their issues, then I’ve moved them one level, and then they can start to look at the whole pattern. Um, if we go back to, you know, we’re talking about the city, and so, but if you can find a different way of thinking about the story I told you about Francis, if that’s lodged in your mind, that things can disconnect and people don’t notice, just that idea.

50:49 You might take that idea and apply it to something else. Music, you know, that you can have a disconnection between the enjoyment of music and the writing of music, and that idea then allows you to tackle your world in a very very different way. What do you think about that, Patrick? Are you skeptical? No, no, not at all.

51:03 I think I was going to use the word intelligent, but the more intelligent, the more flexible somebody can think about something, the um, better they will be able to react to situations. What us now as avoiding the world, intelligence is, because there’s an assumption that it’s about tests, and some people are smarter than others, and a lot of it isn’t just about smartness. What about you? When you trade now, I mean, the worst thing you want to be as a trader is you want to go with the rest of the herd, because you’re going to be one step late, and you’re probably, or behind the herd, which means you can lose money.

51:30 So like, you, from a creative standpoint, if and when you go back into trading, do you ever think, like, how do I get my brain to be creative about stuff? So I’m going to be slightly, um, cynical first, and think that most traders, probably myself included, they make money when the market trends, and they lose money when, when the market, um, when the market blows up. So geniuses, if you’ve ever read Nassim Nicholas Taleb? What’s, but the better before that is, um, I think it’s called Fooling Randomness, or something like that, and he basically thinks that basic people on Wall Street are basically a step above monkeys, but slightly intelligent monkeys, that all they do is they make money when the market goes up and they lose money when the market goes down, and there’s very few people who actually apply independent thought, and all this money is generated because of timing and being in the right seat at the right time.

52:22 Um, and they’re effectively making, um, Fooling Randomness. That’s the name of the book. And they’re, they’re effectively um, all they’re doing is being, you know, um, a rising tide raises all boats, or whatever the, whatever the, um, the, the, the phrase is. What do you say? Um, yeah, I think that’s generally right.

52:42 There’s definitely some very smart people, and there’s some that are smarter than others, but if you look at how desks generally do, um, they make more money when volumes are up, and they make more money when, um, the market goes up, or at least the market trends. Yeah, but how does Goldman Sachs make money consistently every day of the 365 day? So there are obviously some people that are, that are, that are smarter than others, um, and, uh, you know, but if you’re looking at one thing as a whole, then I would generally agree, that’s a, um, then that’s the right principle.

53:13 But in terms of, um, your, um, your thesis, the more flexible you can be, the more, um, contrarian you can be, sometimes it will cost you money. And we talked about this before, is that you can predict what’s going to happen but you can’t predict when. So I met so many smart people who had been negative on the market for the right reasons. Look, we’re over-levered, people aren’t saving enough, etc, etc, etc, but they got in there two years early. And the way that Wall Street works is that you’re on a 12-month compensation cycle, so if you’re not making money for that 12 months, then they’ll, you know, they’ll either put somebody else there or they’ll give you lower risk limits, and you know, even though you’ve been right in terms of, you know, from a purely academic perspective, the, you know, often the market doesn’t react for a longer period of time, and you potentially lose your job.

53:58 Stre, look at Paulson. So Paulson, the guy that made more money than anything out of the subprime market, he was the, he was a contrarian, and he had the flexibility to look at these models, to examine it, and say, um, you know, I think something’s wrong here. And you know, he got in relatively early, but he stayed true to his course, and he’s made more money than… Yeah, he was in that Michael Lewis book, or something. He’s one guy who shorted the subprime market.

54:19 Absolutely. Okay, one of a few. But I mean, the, the, the, the, the, the thing is that, in terms of timing, when are going to happen? You know, I talked about patterns. Unless you look at the whole pattern, if you even if you’ve got the right levers and go, this is what’s going to happen, you miss the other actions which have to happen for the pattern to shift.

54:36 And that’s why we get the timing wrong. It’s so difficult to work out whether people will move as fast as you thought they were, where the customers will change their habits. And that’s where it gets, it gets a bit difficult. The other element, in terms of this, um, thing about intelligence also is, in the new world, you get smarter by connecting to more people. So that’s why I was a bit nervous about the word intelligent, because it’s simply by connecting and listening and talking you get much smarter.

55:00 I, I don’t know what happens exactly in detail on the trading floor, but my guess is that people do talk to each other. But again, my point earlier, a lot of the people have been selected, gone through the same education with roughly the same ideas. So although they’re talking to each other, there’s not much diversity. Yeah, self-fulfilling prophecies, they reinforce everybody’s, get smarter, by you must have been trained as a trader to, to, with the same mindset of the guys that came before you, 10 years, 20 years.

55:25 The challenge, you probably, you know, did your P&L, ran your risk in the same way. I mean, do you think you’re a product of an old mentality of trading, to a certain extent? Well, I was relatively lucky in that the product that I started trading, which is credit derivatives, only really started to get liquid, and I traded a lot from 2000 onwards, so it’s a relatively new product. Um, so I was learning from people that had just literally started doing it.

55:51 So, uh, I, I would like to, if I think about the last guy that I effectively uh, worked for and what he taught me, he was a very intelligent guy, and I, I think he taught me how to look at risk in a, um, in a pretty disciplined way. And yes, I’m sure there will have been um, sort of throwbacks from when he was learning, and stuff like that, but because so many people were looking at the product for the first time, you know, you’re looking with relatively fresh eyes. Exactly.

56:16 You look at, there’s not too much uh, sort of entrenched, um, thought that’s gone into that. That makes sense. But I mean, there’s a couple of things which would have come into it, cause his thought process would still be governed by this 12-month cycle. Uh, absolutely. Why 12-month cycle?

56:30 Um, because, you know, calendar year, calendar year, you know, farming, that’s where we started. Why month? Cause the moon’s gone around the earth and the fishermen are getting more fish. Hello, what’s that got to do with trading? And yet that’s driving a lot of it.

56:42 So you end up picking up a lot of old rituals, habits, by mistake. The other thing is that, um, people who are, quote, the best in their field, sometimes they don’t re-examine. I, I had to give a talk recently at the LSE, and I was, I was joking about many things, but the chap who was speaking before me was talking about inflation, and inflation always makes me smile. When I was a kid, they used to calculate inflation by having a basket of goods. That’s how I described it.

57:06 So you’d have bread, and you’d have baked beans. I don’t, they still do RPI as a basket of goods, but when I was a kid, when they said a basket of goods, and they said bread, we all ate the same bread. It was this white sliced loaf, so you knew what they meant by bread. I have no idea what they use as the bread in the basket these days. So my guess is they’re using proxies to try and guess at what’s happening.

57:27 And of course, when you’re talking about multiple breads and multiple, you know, designer breads, I doubt that, I’m going to be very rude, but I doubt that there is, in the same way as we separated wealth, value and money, I doubt there’s a link between products and inflation anymore, but everybody’s basket of goods is different. So the rich City banker, um, his basket of goods is hotels, business class flights, exactly, um, cars, and then you know, your, your, um, fisherman, in, um, you know, just working, his, his basket of goods is very much, very much different. So it’s hard.

58:01 It’s even worse when I was a kid. Most people in the middle classes, their baskets of goods were pretty similar, they ate, cause this is before the infusion of different cultures, and therefore lots and lots of different types of food, even in London. So if you ate at home, you’re all eating roughly the same thing. The game moved on. Let me get your thoughts on, um, China and India.

58:19 Just a general thought. You know, we’ve seen China now manufacture probably every single electronic good in a one-block radius. Let’s be honest, is manufactured in China right now. Do you think at some point they’re going to make a massive transformation to designing the goods, as opposed to manufacturing them? And then are, are the people in the West, are the Harvard-educated kids in the States at risk of losing their jobs too?

58:41 Well, I don’t know. I’m, I’m not, I’m not usually a pessimist. Um, a number of things. One is in terms of the design. I mean, I spent some of my time on the UK Design Council, and I, so I know some of the stats at the back of my head.

58:52 I probably get them wrong, but I think China each year turns out more designers than we have uh, designers in total in the UK, in terms of quantity, something scary like that. So in terms of quantity, so given the fact that as they connect more people, they’ll get more ideas, there is a high likelihood that they’ll start doing some cool design. I, I saw, hly at the moment, their ability to connect is limited because of the, um, you know, social networking is limited.

59:17 And exactly, so that’s probably slowing them down, but there’s no reason that they won’t get to that point, cause the government’s cracking down on the web. Yeah, it’s complex in terms of the government, uh, how the data is managed in and out of China. You been to China? I haven’t been, but imagine what could happen if that was, if. So one of the things that we discussed previously was that at the moment information is free, and for the first time ever in the history of the world everybody has access through the internet, or most of, yes, most of us have access to the same information.

59:45 And one of the reasons that I like London Real is because there is so much stuff out there. What you’re acting as, as a filter, so that we get to see interesting stuff. So now, the, so now the emphasis is no longer on being able to access the content, which is what it used to be about, who could get first access to that information. What’s happening to that company? What’s happening in that country?

1:00:04 Because everybody knows, because it hits a blog, it hits a newswire, and everybody’s understanding it’s about getting access to the best content. Yeah, and the best filter, and so you’re acting as a curator, basically. Yeah, which is a different way of trying to manage it, but it’s more complex than that, because I use the word information. I just call it data, cause for me information is very special. If you ask me, how old are you?

1:00:27 If I say 42, 42 what? 42 years? 42 years old? It’s all still meaningless, and say you say, how old are you? In which case I say, I’m 42 years old.

1:00:36 So that gives you information. It’s an answer to a question asked. I’m not 42, so it’s wrong information, but it’s still information all the same. So the important thing there is that the data is out there, and as you said, it’s completely democratized. Anyone can get hold of it.

1:00:48 The question is, which bits of data, what questions should we ask? And that’s what you’re doing. That’s TED does as well. I guess that’s what TED does, and it’s the same process on a bigger, bigger sphere. In terms of China, um, there’s no reason that they won’t be able to design.

1:01:02 I think the bigger challenge is the politics of the country and how that will pan out. I have no idea how they’re going to get from where they are now to the future. I don’t know whether the model they have will scale, will last, or whether it’ll start to unravel. Some say that’s the best way to run that country is through their political system. Yeah, but that’s not it’s not a single country.

1:01:25 They’ve got loads of different races, tribes, groups, even different languages. You know, so it’s not uniform. When you’re outside, sometimes you sort of think they’re all the same. They’re not. They’re all very, very different.

1:01:35 What’s the quality of design that’s coming out of China? Because, you know, anecdotally, like I was watching Top Gear recently, and they went to China and they looked at the cars, and all they’d done is they copied the Mini, and they just made slightly inferior copies. And so yes, they’re producing all these designers, but at the moment, because they have less interaction and less connectivity with the rest of the world, it seems like they’re producing an inferior product, which is okay for a country that has been deprived of all those other products.

1:02:02 In some of the cultural aspects within China, um, there’s this thing of losing face and keeping face, and not necessarily wanting to be first all the time. So even if you can produce something which is groundbreaking, you may not do it. It might be too showy. So you must bear that in mind as well. Um, they have a niche, which is cheap labor and production.

1:02:21 So labor is not that cheap anymore. Well, still, it’s still cheap. It’s cheaper, but it’s still, I mean, we’re now getting, we’re now getting back, having gone offshore, lots of things are now going back onshore. So it’s getting complicated. Um, India is slightly different.

1:02:35 Um, that’s more complex. The language advantage they have, in terms of connecting to the rest of the world, and the fact they’ve got democracy, but they’ve got other issues, social and political, because they’ve got a class system, you know, which is still in place. You know, caste system is what they call it. So that’s complex. They’ve had the rapid growth of cities, which means that it’s hard to build really strong human networks underpinning all.

1:02:59 And so on. So they’ve got very, very different issues. Um, I, the way I see the world is, as you said, the whole thing’s connected. Um, I think if you’d asked me 20 years ago, I’ve been going East versus West or West versus East, I would see country blocks. What do you discover is that, um, I, I don’t know.

1:03:17 Even if you look at us, you probably started off in America, you probably started in the UK, I started off in Africa, and here we are sitting around the table trying to work out how the world’s working. Countries were just inventions. It’s just another one of those rituals, and to build so much around these rituals is dangerous. The countries were relevant. There’s a war.

1:03:35 Exactly. When there’s a shortage and then there’s a war, then it becomes interesting. But what drives the wars? It’s either dis- agreement in terms of sets of ideas, resources, that will always happen, or resources, and at the moment, resources, there, people are starving. That’s not what’s driving a lot of the wars.

1:03:53 So again, by looking at patterns, rethinking, it’s possible we can find other ways of thinking about ourselves. Okay, and that might be the way forward as we start to think about just a couple of questions before we finish up. 10 years from now or 20 years from now, what, what, what do you think will be a big technological change that we don’t see coming? We don’t see coming. Yeah, um, I suspect that, um, a number of things which will happen.

1:04:16 One is, um, by then we will be far more cyborg than we are. Um, we’re already doing it. You’ve got artificial limbs, artificial eyes. So I think we’ll be much more cyborg. I mean, your iPhone basically is attached to you, because you probably think it’s going to be, do you think it’s going to be imprinted into your skin, so you click a button and you hear it in your, I don’t think you need to have it imprinted.

1:04:36 You’re carrying it anyway. But it’s possible we might end up doing things like that. Um, I think the real thing which will surprise us, which may or may not be an innovation, is the interaction between things. Um, I’m not sure it’ll all be good, because people aren’t very critical when they take on board a new technology. The technologies we have already, if you really wanted to enslave the world, or at least the West, I suspect you could do it without anyone knowing.

1:04:59 Um, I’ll give you an example. When you, when you Google, if I Google myself in my office, I get a different set of answers from if I Google myself from home or from a client’s premises. In other words, someone in the middle is telling me, is doing the curation for me, and because I have a belief that I’m being given, not being, uh, filtered. I believe it. Yeah, and so, some of those, I, I wonder whether the innovation will be about driving something like that.

1:05:22 Um, in terms of energy, I’m less worried. Uh, I think we’ll have plenty of energy. Human beings don’t do that much work themselves anymore these days. The oil does all the work. We sort of pretend we do, but the oil does all the physical work.

1:05:34 Yeah, yeah. We, in order to get exercise, we have to go and fight or run or something, because physically we don’t do it. Even coming up to this studio, I just stood in a lift and it brought me here. I didn’t, I walked up the stairs. Well, there you go.

1:05:45 Okay, so the oil does all the work, and as long as we’ve got uh sources of, of, of energy, we’ll do less and less and less. So I, I, I can see that we have the opportunity for inventions which will be around, um, uh, enhancing our lives. My guess is they probably won’t. They’ll just enslave us by accident, because they’ll let us do less and less and less. Okay, if you could make a phone call right now and call up the 20-year-old Eddie Obeng and give him a real piece of advice, you can’t say keep going, cause that’s too easy.

1:06:12 What advice would you give him? Buy Apple shares, buy Google shares? Yeah, well if I want, like, I wanted to sit on the beach. Yeah, but I’m, I’m not sure the 20-year-old Eddie wanted to sit on a beach. Um, you know, in fact I’m not sure the current Eddie wants to sit on a beach to be, do it for two weeks, three weeks, then it’s enough.

1:06:27 I’ll do something else. Um, I think what I tell him is about the balance, you know, not don’t worry about work-life balance, but fold things in, you know, learn something, try something, work somewhere, you know, do it all. Don’t, don’t focus on just one thing. I’m working my career now, or I’m working on, you know, so, so juggle it around. The other thing I’d say to him also is more diversity in terms of conversations and the people you meet, that would be really useful, because it would give you such a massive insight.

1:06:54 Uh, and then I think I’d tell him just to relax and chill, cause life is just life. You know, it’s just a journey, and enjoy yourself, and don’t get too earnest about it. And people worry about you know, sometimes people say what would you like on your tombstone? I wouldn’t like anything on my tombstone. I would have a tombstone.

1:07:07 Why would I want anything? But joking apart, you know, it’s people get too hung up on, you know, I’m trying to fulfil this particular, you know, set of things, or, you know, the bucket list I have to do. And I would tell him just to chill, enjoy himself, fold it all in, and uh, keep learning and keep doing things. You know, we had Tim Ferriss in that chair, who’s the author of The 4-Hour Chef and The 4-Hour Workweek and all that, and he has this concept that you are the average of the five people you spend the most time with.

1:07:33 Is it possible? Do you subscribe to that? Uh, it’s possible. It’s possible. Probably I’m not, cause I spent five people.

1:07:42 No, not for me. I suspect it’s probably true for some people. The thing is, with the virtual world, it’s weird, because you could spend time, and I spend time with Joe Rogan every week, listening to him. So if you listen to podcasts all the time and listen to input, it’s possible, I think, to get some exposure to people you wouldn’t normally have. What do you think?

1:07:58 Do you think that’s true? His point is that you should get out the negative people in your life, because you’re really going to be influenced by these five people, and if they’re all positive, you’re going to be positive. Yeah, but negative people are also useful, because when you’re doing new things, sometimes it’s worth trying to. You’re a trader. It’s worth trying.

1:08:12 You said you understood risk in a different way. It’s worth trying to work out what would go wrong, cause that actually helps you succeed. And sometimes negative, I think it depends what it depends, why they’re being negative. If they’re being negative for negative sake, and they’re, you know, restrictive to change, and that kind of thing, but if they’re, you know, constructive criticism is always a positive. So I think it depends how you define that.

1:08:30 So you agree with this five people? I don’t know. I think I think you can take positive, you can take good things from everybody that you interact with. So maybe it’s not, maybe five is narrowing it down a little bit. It’s a bit selfish as well.

1:08:42 Just think about these negative people. They’re having a bad life. You’re the only good thing in their lives, and what do you do? You take yourself away? I mean, come on.

1:08:51 Be live, life is short. Eddie, no, no, you make a good point. Um, Eddie, how can people get a hold of you? Oh, it’s easy. Um, uh, easiest way is, um, via the website, the one I, Ed, for the sort of uh, general world is worldaftermidnight.com.

1:09:04 World after midnight, world after midnight.com. What, that sounds, that sounds, that’s just me trying to explain the new world. So that’s, and my joke is that at midnight everyone, all the rules were changed, and there’s a little podcast on there which explains some of the things I’ve been describing. Uh, and then my blog is imaginethefish.com. So that’s the other one.

1:09:23 Um, but it’s, it’s easy to get a hold of me. Um, electronically it’s difficult to get hold of me physically. Okay, well, we, we did today. Are you doing more TED Talks, or is that a one-time thing? You said your piece.

1:09:34 I think I’ve been asked to do another one, um, on the power of one or something. So I, I don’t know, we’ll see. The book, um, no, I think that’s the theme for the talk. Um, but, but that, that’ll be, that’ll be fun. I’ll probably just do a, a fun ad hoc thing.

1:09:49 Do you, I mean, do you think people should, everyone should write a book these days? And do you want to write another book, or a book, or do you think there’s a there’s a place for certain people not to write a book? Yeah, well, I’m in the process of writing another book. Uh, it’s called Who Killed the Spark. It’s about innovation, but I’ve written it as a novel, um, because I was just having fun.

1:10:07 Okay, um, should everyone write a book? I’m not sure. I’m not sure. I mean, the purpose for writing books was to make sure that you’ve got all your thinking lined up, because you can’t backtrack in a book, and then people can follow it. Um, I think there’s so much out there at the moment that writing yet another book, I’m not sure whether it’s anything more than ego, unless people really want to read it, or you’ve got something really special to say.

1:10:34 Yeah, there’s, are you going to enjoy it? I mean, they say everyone has a book in them, but for some people it should stay there. It’s so good. But no, I, very many guests come here and they have books, and they’re self-published, and I look through them, and I’m like, I only have so much time to read books, and so when I do sit down I want it to be really, really good. Well, and it’s difficult.

1:10:51 There just isn’t enough time, you know, to go through all the volume of stuff, all the historic volume. Um, and often people are writing books for themselves. It’s an achievement, so that’s okay. Yeah, not fair enough. Um, but if they’re writing books hoping people will read them, that’s another question, because then you write the book to say, how can I help this person’s life, how am I going to grow them, how am I going to make them laugh?

1:11:12 That’s a different game altogether, in which case you wouldn’t put your name on it. You’d probably use a pseudonym or something. Yeah, that’s true. Patrick, what’s next for you? You actually are retired as a fighter.

1:11:20 You actually made that call. So I may, I may box again. A box, but it all depends on what country I’m in. Okay, what can you explain that really quickly? Um, potentially, uh, looking to, uh, explore opportunities, uh, in Brazil.

1:11:36 Okay, so, uh, you know, I had, I’ve just been there for a couple of weeks. It’s the sixth time I’ve been, and, you know, talking about learning new things and, uh, work-life balance. I just think, you know, Europe to me almost seems as though, if Europe, and I guess to some extent the, the States, if you look at the demographics, everything’s, you know, when you look at the markets, everything seems a little bit, um, over mature, and, you know, there’s a lot of issues that come from having lots of old people.

1:12:04 Look at their pension issues that all the European countries and the US are going to approach. I just think potentially with Brazil, you have an emerging market. You have, you know, exponential growth, and you just have a society which enjoys life, and if I can combine um, you know, being able to work there as well as having a better, uh, um, standard of life, then it’s something that I think I should probably pursue. Uh, but there’s a few other things going on, so maybe that will happen, maybe that won’t.

1:12:32 A boxer, or is a trader down there? Um, potentially going to work in the world of finance there. No, and boxing maybe just as an enjoyment. Okay, but mixed martial arts first, competing is done well. Never say never, unless UFC gives you a call.

1:12:45 Never say the UFC is not going to give me a call. But um, never say never. Fair enough. Um, Patrick, thanks so much for being here. Um, it’s really nice having you on.

1:12:52 Loved you for the first show, and it, this was perfect, because you guys were talking the same language, you know, kind of. Um, Eddie, thanks for the great debate. I did not expect that we would have this conversation. Brilliant, by any means. So it was really a big pleasure having you on.

1:13:04 I hope people check you out. You must watch his TED Talk. It’s uh, it’s crazy, you know. I think you’re wearing that same shirt too on the TED Talk, maybe. Uh, no, I’ve got more than one.

1:13:13 It looks good on you. So um, that’s it. If you’re listening to us on iTunes, if you could, um, subscribe, if you want to see, um, our extremely good-looking faces, come to YouTube. It’s channel London Real TV. Uh, we’re on Twitter as well.

1:13:25 Come follow us. It’s a lot of fun, and we’ve got a group on Facebook called London Real, where people post head talks, they post ideas, they post MMA videos. Uh, it’s a lot of fun. A lot of people get involved, and we’re on Reddit, um, which is a great little kind of, I call it a forum of forums, where everybody talks, and a lot of our guests are doing Q&As. Maybe even we’ll get Eddie to do one, um, you know, via remotely, and all that stuff.

1:13:45 You do everything remote. So um, that’s it. Um, thanks for joining us, and until then guys, it’s about the journey. Thank you very much. Thank you.