We met good afternoon. Thank you for tuning into our lifestream. Im a University Professor at the university of toronto. Before get started, we need to acknowledge his land on which the university of toronto operates, without of the credit rivers. Home to many indigenous people, we are grateful for the opportunity to work on this lan land. University of toronto also extend solidarity with protests against systemic racism and discrimination. I have a great pressure of introducing Katherine Gehl shes a business leader, author and speaker she is the founder of the institute for political innovation and the ceo of innovations think about the intractable problems but catherine was formerly the president ceo, 250 milliondollar hightech food manufacturer. She holds degrees from notre dame, and Northwestern Kellogg School of management page lives in wisconsin with her two children. And that is where is calling in from today. The special honor to host Michael Porter, diversity of lawrence professor and harvard university. Michael and i met a long time ago when i was a student in his industry of the Competitive Analysis on Harvard Business school that was not long after his foundational book called strategy. We collaborated extensively but i work deeply and widely with the business framework in my own work over the years. His framework is front and center in our strategy course which is very popular in all of our programs. So welcome to catherine and mik mike. It is a pleasure to have you here. Catherine and mike just had a book called the politics industry, how political innovation can break partisan gridlock and save our democracy. Which was published earlier this week by Harvard Business review press. And congratulations on that as well. Many of you watching this live stream have your hardcover copy when you registered. Your copies will begin shipping tomorrow. But lets edit started here pretty wanted to ask an opening question to catherine. I wonder how this project got started . Where did the idea using the five forces framework to understand the politics come from . Cnet thank you anita. Its interesting actually the idea came long before the idea to disseminate it. So want to go a little bit beyond that. In 2015, i told my Food Manufacturing company and i did that imparts i could work on all these political change issues. Because i was so deeply concerned. I was basically training at the Business Community involved execs out there mia. And i was really completely striking out. I would be in new york and have a meeting with a billionaire without was really amenable to system. And having a great meeting and thinking oh my gosh its going so well i should ask for 5 million and said the 1 million i was going to ask for. I before i get my ascap, said person goes oh, this is fantastic. Count me in for 25000. I realized while, i am not making the case here. So i said, they just dont see this investments going to give a good return. Thered been successful people in business they want to know what theyre going to get and how it is going to work. Otherwise they will not have their capital. We need to explore this business case. Unfortunately, i already had the answer, which is to say the Gold Standard five forces that Michael Porter originally created. Back in 2013 when i still had my company, we are doing the Company Strategy project using the five forces. Because i was already deeply involved in politics, that was a lifeline moment. Oh, politics is explained by the same factors. So was basically running a food company on the left side, and politics analysis on the right side. It was all fascinating. It was so clear and so detailed. You can answer a million questions by looking at the forces prettier intending to write about it but then you can take the language that is so familiar to people and we can create the thesis for investment and political innovation. So i went ahead then and thought having the right ideas is really important, no question. But having people think they are the right ideas so once again it is serendipitous. Michael porter had done the Company Strategy with me. He invented five forces prayed so i to comedy my coauthor so that that immediately gave this whole new lens legitimacy instead of me, im not a politics expert, im not important by hipaa hundred ceo making it happen. So we teamed up together and put our report out in 2017 and now the book. Indeed, the partnerships been amazing that way. Because we been able to have this fabulous analysis and also have the interest that people have been looking at it. And most importantly, we are able to use this analysis to create the strategy for strict change. Because we didnt want to just two and analysis. We needed a prescription. We need to make things different. We dont want to be interesting and illuminative, we went to be action oriented. Its super excitingly excited about the books and get the message out. I know we will talk about the solutions later. Spin it before i do can ask you one quick followup question . It is so interesting its so straightforward. So clear how to apply to the situation. But the results for me for reading the book was counterintuitive. The political system and the United States is not broken you say, but its actually working exactly the way it was designed to work. What do you mean by that . Can you convey a little bit the intuition for how you come to that conclusion . Cnet guests. So we always have to be coming to look at the problem from the right angle. In the confusion for so many decades has been the assumption that the political system was designed to work for the citizens. To work to solve problems in the Public Interest because we think it comes from the constitution. But it turns out that as we know, the u. S. Constitution is tiny. So it fits in your pocket. We talk about pocket constitution breeds of basically the design of the system, the design of the rules that drive the incentives, that drive the behavior comes from the political Industrial Complex. So that is the name that we give to the two parties and all of the industry after words with the power of industry. The system has been designed and optimized by and for the benefit of these private gain seeking organizations that make up the political Industrial Complex. The design is perfect for them. It is working for them. There is more power, more money, more growth than ever. Even as citizens has never been more dissatisfied. And i will say, let me just say two things about this. The system is a duopoly. The most important customers are not voters. They are special interest, donors and a small slice of voters in the primary. The dropper league, operates with huge barriers of entry. So the one thing that Neither Party has to do is deliver results. They have to say what they are for. They dont actually need to deliver. Because the voter is still going to choose them because they at least say with that voter believe. So they have this protected they have no accountability. There are no results in our system for theres not accountability prayed that is all design. Him because of that we now know where to go into that design to break it apart and alter the competition. Stomach i cant wait to talk with you a little bit about your proposal. Just to track this argument for our listeners here. I wanted to ask a little bit how we got from the constitution to this problem that you have described thus in the book . What if i could ask a little bit about this and welcome course of the conversation. Could you give us some sense of one or two of the most important historical developments in the u. S. System that led to this that catherine just described . Talk about the interbranch competition of 1980 for example. Or the antitrust. Are there events like that that led us to the situation that catherine is just described . First of all let me say what a pleasure it is to be with you. Dear friend, coauthor, colleague. We have worked together on so many things. Thank you for having us. Its a thrill to see you and i havent had chance to do that lately to say the least. In terms of how this all got created, one thing we need to make clear is the people who have been running these parties over the years are very smart and very sophisticated. They think competition thinking. They understand principles. Theyve never heard of the five forces, most of them but they act like they do. When you think about history, you have to go way way back. When democracy started, it was very, very well structured by our founders. They have a lot of great ideas. It was very successful. Theres a lot of collaboration and legislation passed. There is a culture of making progress in solving problems. But what happened after some years really whats called the gilded age. Which is 1880, 1890s is the parties that had grown up by that time started optimizing the system for them. They did that in a whole variety of ways. For example the parties had the ballot. He got a republican ballot if you ask fort or democratic ballot if you asked for. And then as you walk to where youre going to your vote, there be all these people standing around. And you had the ballot. Theyll be talking to you, trying to persuade you change your ballot. Cant do too deeply into this. The other interesting thing the parties create is every city in america. There is a republican newspaper mn democrat newspaper. And all they did was tell their parts of the story. And that is what the citizens have to read. And it went on and on. Theres all kinds of rules created way back when. In the constitution there are things they created that allow them to gain tremendous control to also kind of separate themselves and have this partisan competition. I was the went by, during this gilded age our government just kind of shut down. There is no longer any process, there is fighting with each other. And then, so that was the first phase. The book is covered in detail in the book, theres an own chapter on this. Its an unbelievable reading about american that most of us dont i thing about this. But citizens started see it really upset that nothing was getting done. His gridlock, bigger partisanship. Party control over everything. The citizens of america, decided that it was not working. So they rose up, collectively. Not in a Single Movement but something called the progressive reforms. Americans rose up in a lot of innovative people, a lot of smart people. A lot of leaders in various parts of the countries started putting forward new policy. And so it is during that period that a lot of the good part of the democracy was put in place. On may collaborating and cooperating. and the institutions creating healthy competition not the broken stuff what we are used to today. Watching the differences go down a lot of good things happen to put our country on track. And thats in the Current Party started to take back control behind the scenes quietly so the gilded age worked in the progressive era worked. On then we step back with the parties and their allies in the Industrial Complex. And it turns into a catherine described very briefly. But this structure has been driven over a long period of time. Used to be president ial debates run by the league of women voters. And then at some point in the parties figure out we can decide who will get in. And i dont have time to tell you the whole story. They found a clever way to kick out league of women voters to take over the president ial debate so the parties decide who is in and who was out. Theres no independence if youre not a republican or democrat you dont get to speak. Ross perot is one exception. Where the both parties can be very successful and not have to be accountable for results. Its an unbelievable journey and have any idea how all this happened. We thought it was in the constitution it was totally created in most cases. Thank you for that. Makes incredibly impressive in what a great teacher you were. So talk about the political Industrial Complex with those organizations of different types and making money as a result of this polarization and acrimony and dysfunction and the two players and how much money are they making . Theres not a lot of disclosure here. They dont allow or eliminate disclosure. Nobody really knows the prl but i can give you the gist of it. Private organizations they are not public and money or anything else. But surrounding them as catherine has already mentioned our customers. Who should be the customers in this industry . Us. Voters. Citizens. Public interest. And those that passion and then contains a benefit of industry. That they are passionate about and prolife. And very substantial that comes into the duopoly and it comes from business and donors and the best guess is the total revenue in the election cycle a lot of money is spent on the elections themselves so we have p l that money is pouring in. Thousands of jobs created pulling jobs lobbying jobs, then the money pours into those with political advertising and the money is spent by the parties and the donors. And those the partisan with special interest and also the media itself and the suppliers of the industry. And that make the system work and get paid very well. We dont know the net p l of the parties. We wish we did. We can deploy that money anyway they want. That p l is very good even though we dont know how much each party takes home and pays out to each other. So thats what we know about that question. One of the things we need to do is improve disclosure. And there are rules about money and those used to be much better in the progressive era so now theres no limits on money its a major issue we need to addres address. Its a different system than canada or the uk and i recommend the book to anyone thats interested as someone with industry issues looking to the book i think the special interest also see the greater role of the investors of the party and some level and then those organizations that are clearly channeled with the paid for advertising services. One of the questions that came up for me what are they actually buying . Do we think of these buyers as legislation . So whats being sold by the politics industry is instrumentally being in purchased and politicians . A wonderful question and important. Something thats really unique and this industry has two currencies and some buyers pay with money. Thats the special interest and donors putting revenue into the system from the lobbyist. Some customers pay with votes and thats a proxy for what the interest needs but the value of each vote is so little the currency of money has become the only valuable currency. The only that has any value is the Party Primary vote and guaranteed to win the district the smallest proportion to have any power we need to take down that amount of money but thats not the way to go added. And to increase the value of the vote. That representation of interest and with the money the people that pay with that are buying representation of their interest in favor of legislation and regulation. Im not saying it is the quid pro quo but the reason it can be so valuable with that stable outcome is because the value is dramatically diminished what changes that is to eliminate the barriers to new competition so the vote can go to someone other than the duopoly and then they have a lot of value that people would be competing for for now they dont have to pay them any mind after the primary. What immediately comes to mind how media organizations broker this and the complicated way and i recommend the book to anybody with the political situation in the United States i may not understand how legislation and to implement of that business and all of this machinery is part of the military Industrial Complex. And then branches of government has failed us. And in the constitution and the judiciary that the representatives to identify which judges will be appointed and the rivals in this business if we think of them as the parties primarily engaged first senators and congressional representatives look at the judiciary failing to provide a check and balance with those legislative branches of government. Its a fascinating question that the broader question its a great thing to talk about that we have a broader way to describe this issue of partisan infiltration and these were independent entities that ran the government with Civil Servants with the Bar Association and their independence with regulatory agencies that were independent and thats the way it was for a while for quite a long time that over the last decade what happened is we had partisan infiltration they infiltrated the institutions that is supposed to be a check and balance by putting partisanship into the qualifications to be a member or a participant. And that they are vetted through the process but today to get a top Government Employment in the executive branch, you have to be a party loyalist. And are taken by a party nominated loyalist. The congress has to approve them. And then fill up all these agencies. And used to be a commissioner and the fda and thats how you get nominated for that position. And that affects that kind of regulation. And then the judiciary was all matter of the Bar Association screening and the nomination and process a totally partisan process with the Judiciary Committee to get the nominee onto the appellate court. And the net result of that we dont have partyline votes there is some ideology so often they have a consensus the people on the right foot for that side and the left on that side so that partyline vote between 2,002,009 the one partyline vote per year but by the time they got through 2010 there were seven partyline votes each year and so what has happened the judiciary system is a bedrock then we struggle with this partisanship. We all heard of gerrymandering that is a Congressional District and that goes back a number of decades and then there is Three Chances to strike down and guess what happened they passed all three times what could be more anti democratic to get your type of candidate to win but that goes through the supreme court. And that they could deliver more value in that has broken down a significant degree in the United States. And without talking the crisis and the extraordinary proportion of black men are imprisoned and then the judiciary of the political Industrial Complex. That is a more fundamental breakdown in the society with the militaristic policing in the United States. And his part of the political Industrial Complex . And that they need to be concerned with in a different way. Any problem has multiple factors and level of urgency and also the division. Because the government has a role and government is failing and it. Government hasnt done what needs to be done. So the way in a duopoly is to divide. And to differentiate yourself and thats how it works in the political campaign. So that solution is not ideological to be all of this are all of that. So its not that simple so the fact we have the nature of competition makes it impossible for the elected officials and congress or state legislatures to effectively deal with the problem its not the only place where the divisiveness comes from the distressing Current Situation in america which troubles us all in advance of the election. If you vote for us we are for defending ever as we are for law and order. This is the worst that could ever happen. Government wont do what it needs to do and over time it has failed in the same way with the quality of life issues that we have criminal Justice System problem and we havent had fair education. And then a new problem on top of the others it is exacerbated and we are going down the wrong path which is why we have to get into the cycle and find a leverage point and alter the incentive not with what we say longterm sustainability and held accountable if thats not what they deliver. And with that legislation to overcome the present problem. And people of color specially with that systemic racism. So with that outcome you will hold the party responsible under accountability regime for one a typical part of outcome . They dont have an opinion about the a policy. To not allow ourselves to get distracted even though issues are of enormous importance. To change the rules of the game with that enormity to have a chance to be addressed. And not have the focus on changing the system so those candidates or policies and may be we dont agree with her they are at. And go back to the position to make one plus one equals three instead of one over here and zero in the middle. So with story and healthy competition, changing how we know is the incentive to deliver the result so remember we have not set it yet but we dont demonize republicans or democrats or two parties. So these two parties that we currently have are guaranteed to continue no matter the voters dissatisfaction so we want to put the threat of new competition with political entrepreneurship and able to solve the problems and change the behavior of the existing parties that they need now to grapple with this. Competition and free markets delivers results and accountability we call this the free market politics where incentive for innovation and results that is the key to progress and once again be the key to progress in our political system. So what structural changes do you recommend . Can you explain what that is and what it takes to get establishe established . Our solution called final five voting. What we identified we need to keep our focus and then to address the root cause and not elect more but all about results and then to be ruthlessly realistic and only put ourselves with what is achievable. Thats a pipe dream they dont recommend anything we dont have an act of congress because they dont serve the current problem to change the structure. So what we have is that the intersection is doable and worth doing. Final five voting will make two changes first get rid of the broken primary system because that pushes the elected official so far to the right and left because they wont get reelected and lose in that Party Primary. And the top time finishers and to get rid of plurality voting. And to indicate your preferences. And the reason that that matters with our analysis that any new competitor that comes in is reduced to being a spoiler. So without ranked Choice Voting to see they are a spoiler or a wasted vote. With the threat of new competition to be way over there or here. And we can do that to this day and article one delegates all the rules of election to each date and the other half they need the legislature to make the change so if the local state politicians are Election Authority and with the ballot initiative. And the electors to the electoral college. We are very much focused on congress to but any change and half the states have direct democracy and then on the ballot and then to say yes or no on final five voting. And if more people vote yes than now that its done and then not dramatically and cheney on changes the incentive. We dont need all the states to do this because if you have five states now you have ten senators or 50 representatives and captive to party leadership. They have a different set of incentives of how to be reelected. Then that begins to break open a false duopoly which doesnt get us anywhere. And the president and cfo. And acrimony and it was the best practices thats an interesting question. That acrimony of the structure of the system. And hundreds of years ago and a lot of collaboration and solution to find compromise. Not ideologically driven legislation and policymaking. Right now the right and the left and different views of what good is. And over time and when members of Congress Share an apartment in washington. And to be very collegial. So that acrimony is not built into two parties and is how they have chosen to compete with the left and the right. There are care about the moderates or the middle. That structure that has been decades and decades getting in the way of all the policies. The policy to education why do we have such Racial Division the Education System doesnt work for everybody have tremendous issues in healthcare with divisions and personal safety. And all of that comes from ideology and extreme partisanship and thats what we have to break down. We have to change the incentives leading to that kind of competition. It all requires compromising and synthesizing and then to choose among people with different views. And then the top five voting is the most powerful that we know of. And those that talk about political reform talk about term limits. It has no impact and strategically whats going on is a solution. And i began to see the layers more clearly. And then we have the final word but we do have a question a recent graduate and with the Democratic Party and looking at the candidates if they stick with the established manifesto or position to respond to young peoples interest. Do you see any room for a change in the candidates position . So right now to be a candidate you have to be a part of the Party Running in the primary. So if we have a situation they could do their work and optimize benefit to the constituents. So right now the key customers are special interest. And then to be more of an influence but you have to understand they are not the core customer democrats tend to be more on the Progressive Side of those that have that character. And those that want to be progressives and then to get to the core determine its of the status quo. Again to make sure their policy has to be good for everybody. And to destroy a the federal deficit we have to learn to collaborate in the americans more than that ideological left or right. One thing on that. Everybody is focused on who will win and their platform that none of these people achieve their platform we are always looking in the wrong place they say they are for something not only more of this or more of that of how we get that done. And nobody can say they were day to get it done because its not possible given the incentives that work in washington dc. It has been wonderful to have you with us today. Thank you to the audience for watching in my Professor Emeritus well talk about the age of surveillance and capitalism. You can register for that on the website. Have a great rest of your day i am the director here. Welcome to todays program making change. A writer and worked this is moderated by the San Francisco supervisor it asking a question during the program at the lifestream that youre watching. That has temporarily suspended in person events so ee