here was this rich man in washington sneering at the poor people. harrison had thousands of acres and estates, so he was actually a very wealthy man but he was portrayed as champion of the poor. women came to the parades and waved handkerchiefs. some gave speeches, wrote pamphlets. it was very shocking. they were criticized by the democrats who said these women should be home making pudding. >> ronald schaeffer, author of the book "the carnival campaign" how the campaign changed presidential elections forever sunday night on c-span's q&a. join us on tuesday for live coverage on opening day of the new congress. watch swearing in of new and re-elected member of the senate and the election of the speaker of the house. all day live coverage of the

day's events on capitol hill begins at 7:00 a.m. eastern c-span and c-span.org, or you can listen to it on the free c-span radio app. >> the ceos of several banks gathered to discuss how their institutions are adapting to technological innovation. this discussion was part of the annual conference of the clearing house association, a trade group that represents the world's largest commercial banks. it's about an hour. >> beth, breen, bruce and bill, you're an ilit rative group,

that makes it fun. we'll talk about the state of the industry, what you see happening with your customers, competitors, and we'll leave a few minutes at the under to take questions from the audience. as we heard particularly in that last session, it's been and interesting moment this last month. companies found real optimism for your industry. beth, maybe we start with you. do you share optimism? do you have reasons to feel scepticism, maybe a little bit of both and why? >> i can tell you there's that old chinese proverb, may you always live in interesting times and i think the last month has done that. the markets had a constructive reaction to the changes in the election. so to me what i keep looking at is it's perceived as a catalyst.

within that catalyst, i think people are looking for something other than the status quo and the belief there will be higher interest rates, fiscal policy to aid monetary policy. we're going to see growth, tax relief, regulatory relief. when lou at all these things, the market is suggesting they think this will be a catalyst for a different trajectory in the overall economy and specifically in our industry with growth, interest rates and potential for some regulatory relief. so i hope they are right, but i also would tell you 30 days in i don't know based on what set of facts, what policies, what prescriptions, if this then that, i don't think we know the if or then at this point in time. i think if you believe things can be a catalyst and tipping point and there will be some self-fulfilling prophecy in here as well as a different tone in washington, it looks like we will be in a different

landscape. but i also think as bankers we're pretty conservative folks, and i think keep on the same path we've been on until there's more substantive insights into what those changes will be. it's been a fun ride. i don't think anybody out here has had a hard time watching their stop go up and create a little extra shareholder value. it is true the animal spirits seem to be up and there is a sense of optimism they will have different trajectory than low growth, low interest rates than the times we've seen recently. we'll see. but i'm not necessarily thinking get up and change your strategies tomorrow against it. >> bruce. >> i would agree with that. i think the fact we now have a republican administration and republican congress and pro growth platform, the market is responding well to that. but as beth said, we don't know

for sure what the key priorities will be and whether some of the more extreme policies that have been stated during the campaign will actually make it in or not. so it feels good to have a bit of a tail wind at this point which could materialize. i'm with beth, we have to stay focused on our strategies and the thing that is working in terms of running our banks better, taking better care of customers, investing in technology, things like that. >> speaking of customers, you all talk to your customers all the time. brian, what are your customers saying? how are they feeling? are there particular bright spots or dark spots? >> you saw it today reflected in confidence numbers going to nine-year highs. on a consumer side when we look at the data for the thanksgiving weekend, i haven't seen the final yet it was up 9% on debit

and credit cards. people are spending money. yes, more of it is online than in the stores but that's been a trend going on relentlessly. but even before that, the customers are spending this year, et cetera. so when they got a reason to think differently about life, you saw the confidence number popping away that hasn't popped in a while. that's the consumer side of it. when you go to businesses, the election was tuesday and wednesday, i can't remember exactly what it was. thursday i know i went and sat with a group of small -- mid-sized business owners and relatively mid-sized town, and their enthusiasm was papable. then i had another meeting with much larger group of companies and the same thing. so there's enthusiasm maybe there will be a new spirit of pro growth, less regulation. these are all kinds of industries, not financial services companies. all kinds of industries. so i think if you think about corporate customers who may have been reticent to act thinking they aren't sure what the next piece of regulation would affect

their business plan or how it would affect it over the horizons they invest on, they are now saying it ought to get better so let me be more aggressive. overall if you follow your customers, they are telling you they are happier. i think the question is what happens next and what happens over 30, 60, 90, 120 days. what happens over the next couple of years will determine what they really feel but right now they are enthusiastic against good core underlying trends. >> i think we've all said and certainly we've seen it for a long time, we've all said -- i describe it as congress on the sidelines, a way to get in the game. we can all use the reasons, uncertainty, whatever it may be. part of the clarity of the election is clearing some uncertainty even though we have no idea what it cleared. but there's some uncertainty that's been taken off the table. so i think we feel that on the surveys that we do on the

commercial side i think reflect that, that there's still confidence, confidence in their companies. whether they are as confident about the economy, but they are still confident about their companies and pros pebts and want to continue to invest in their companies. i think on the consumer side, i agree with everything brian said, but there's a lot of contradiction, too. let's remember how we got here. 70% of americans are feeling some kind of financial stress. so while the consumer seems healthy and would see better spending, i think the fact that the election ended up where it is is because so many americans are feeling financial stress. there are contradictions, some balances. we want to be careful to remember and invest on one side and remember to invest on the other side as well to attack those challenges that still exist in the country. they didn't just change overnight either. they existed and they will continue to exist. >> beth and bruce each made the

point that we can celebrate whatever it's been, 30% or something, a rise in industry values in the last several months. but the thing is for your institutions to stick with your strategies. are there things stepping back from your individual institutions that you think the industry should do to deliver on the optimism that the marketplace is feeling for you all right now? >> i would suggest that i think we've all had a strategy that we have built that's nimble enough to flex to the times. the muscle memory we have unfortunately is to flex to the cautious side as we watched some of the uncertainty and slow growth we've seen in the last couple of years. but i think the way i look at it is i think we've all built strategies to last, benefit from growth and waiting for growth. i think bruce said it well, focused in client needs,

building relationships, fulfilling mandate we uniquely have in the economy, investing technology, being more nimble, being more client centric. i think all those things strategically, i think most banks are well positioned and i think we need to continue to have the mantle of public trust. there's a regulatory debate making sure we show up being the banks and being ready to make sure we do right things by our communities, our customers. and anything in the regulatory environment would be trust well placed. >> i would add to that. i think making sure that we really build the truth with our customers in light of the whole situation that we just had with wells, we've worked really hard since the great recession to try to regain the esteem of society. i think we need to constantly keep a vigil on that to make sure that we're working hard

every day to get good client experience, that we're giving unbiased advice and valuable advice, keep upping our game. that's what we're very focused on. >> i'd like to jump on that. there's never been a more important time to issue advice than now. so if you consider the bank advice and we're all in the advice business, senior leaders unfortunately when you make these parallel on time and they are young and don't get it. the old american airlines tag, pulled out the tickets and said get out and go talk to your clients. that's the environment we're at. rates are going up. what does that mean for hedging strategies, leveraging ratios, multiples and m & a. infrastructure. what does that mean for your company? i think there's baseball a reset of a need to be highly in that advice part of the segment. >> building on the customer

point, it seems equally clear as we're in interesting times, that customers themselves are getting more and more demanding. they are attuned to constant availability, rapid responsiveness. bill, maybe just continuing on the customer theme, what are your priorities both as a leader of an institution but also for your institution as a whole, for improving what you deliver to your customers. >> everything is from the client back. we've just sort of got to remember that. any time we try to forget that and drive institution forward we're making flawed mistakes and it always emanates from client and community and shareholder back. and we're investing to respond to that. we do lots of client surveys. we spend a lot of time and energy and money trying to understand what clients want. what they want is everything.

they want ubiquity in terms of access. they want a seamless experience across all of those access points. i'm a fundamental believer that the digitaltogether. they are not replacing each other. they work together. they are synonymousynonymous. assumptions are always wrong. i was in a panel earlier today and they were making a lot of assumptions demographics and they are always wrong. millennials don't go into branches. . well, they it do to make decisions. not to do transactions. older population are not mobile or online. the biggest complaints we get when we change online is the retirement communities in florida. so assumptions about demographics are always wrong. clients want an institution they can trust. they want am bikty and things

that work on time. they want the experience to be seamless. so everything we're doing and investing is along those themes. >> i think the last comment, the study of the demographics is all the elections. whether it's been the brexit vote. i woke up in the middle of the night. so unpredictable of people's behavior of what's predicted and observed. so that makes running a big institution like we run here kind of interesting because you have to really pay attention to customers and what they are doing and how they do it.

bank of america who ran bank of america. she had a point of view about the customer. i have a point of view about the customers and this it branch. there's no demographic and all this research because of all the different things. you can see them act. older people aren't going that direction. i think that's going to make it fascinating to run these institutions and figure out what we can do in a direct dialogue and customer we can actually have. because they are always connected to us. i think that's a fascinating

step forward for this industry that we'll be wild over the next 10 to 15 years versus what we faced earlier in our careers. >> i think let's go why we're here. enterprise to say the least. about 10% of our costs are to move coin and currency and checks throughout the system. just think about that. yet you have massive amounts going on. you still have 10% of two basic forms. so there's just so much you can do on that. it if we take the view that the reason why you want faster payments and more certain payments.

people have the money and want to make payments. they are saying she wouldn't charge me for doing this. should we make money on deposit. that dialogue we have here is critical. that's what the customer tells us. they want speed of payment and be able to balance their paycheck and have any building to do it. they want to know if they have the money to spend. i think for the clearinghouse is a fascinating repositioning of this franchise. and that's where the team have been driving it and trying to support them. figure out where this is going and drive us to faster age. at the end of the day, they have certain payments so people have discipline and customer control and drive us to a solution. that's going to be fun. >> i will build on something that brian said because i think this notion that it's going to be an interesting issue if you

look for and an interesting 10 or 15 years. the pace of change and innovation is accelerating. so i think part of what is exciting is banks historically their business u model would have been a lot more just ten years ago. i u do think the pace of innovation and change is picking up. i do think within the payment sector and watching trends within the consumerism is what people expect how we look to other forms of delivery, other industries and make sure we have a core purpose in the payment system in security and safety and privacy of information. it's going to cause us all to do things more nimbly and i think it's going to be a real exciting time to be in our industry. >> i would just agree and add on

to that as well. we can learn a lot from other industries. the ones who have digitized faster and better, the consumer when they are shopping on amazon and they go to their bank website, they expect similar performance. and we're not there. so we have to continue to up our game and make those investments to can have a seamless experience from one website to a bank website. >> where are you challenging your organization the most to n uninnovate faster? >> around the customer experience. we're doing a lot of work on customer segmentation. so not trying to be one size fits all, but on the consumer side there's the mass customer. there's the affluent customer. so how can we have good value propositions for that broad category of customer recognizing

as brian said it's hard to pigeon whole individual folks. if you're going to differentuate yourself at the end of the day, people go through life cycle ls different phases of their life. they have debt to try u to minimize the cost and save money for buying a house. you have to have products that are easy to use with good advice as people go through life. >> i think to sort of jump on both those comments, maybe the industry is starting to get this right. . we are collaborating where it's things that are important to the industry, but don't provide a competitive advantage. so things like faster payments and the clearinghouses really provided us the appropriated right forum to do that and do that with more speed and more than we have in the past.

we have been a little busy, as you know. and then spend the time really investing things that differentuate us. whether it's the client experience or geography or product capability, i think that's sort of the right place for the industry to be and it's taken awhile to e get that e quill librium and balance. >> i think if you think about wla all of us have said the pressure to be innovative on the one hand but careful that e we don't innovate past security and trust on the other hand is the thing that we uniquely have to play a different role to providers around out there in the world. and that's where there's a benefit to thinking through it in a utility form with a group of people because we can say what is the way that we have all learned about security.

we haven't done that in awhile. it's good for us because that can withstand the customer demand and also the unique trust and safety and soundness ask other protections are in this industry has to have. if we lose trust, we don't have the cost structure to be deployed. similar to 20% increase. had had to be secure at the same time. that is unique and that's what the clearinghouse can think. . >> i would just add that i u think all of us need to make sure we're clear about what is our valued proposition and in our case, banks are not going to ever be in the competitive world where we're not important about trust, communities, clients,

giving at vice and building relationships. how do you think about innovation and technology and is what's out there to enhance what you're already doing and your value proposition tr your clients. you don't try to chase a shiny object to be different than you are. that's likely to not really be added to strategy and likely not going to be on point. so i think we're trying to have the discipline to say, be real clear about where we can can compete and differentiate ourselves and how do we inu to vat and collaborate around that to make sure we have the best value proposition versus thinking we're going to wake up and be something different than a bank some day. >> maybe let's follow the faster payments trail for a minute. what are the most important lessons that we can see from the global move toward faster payments and implementing in the united states.

>> when we looked at a long time ago when we were looking as a group, we had to talk about the experience and the different parts of the world. but we looked at all that. the ability of right checks. the fact you can't take that out of the hands. what we learned is consumers have been raised about the payment process in a way that we need to sort out and make it simple for them again. the way i think is if they had a bundle of those that got it back, now virtually versus physically, we have to make it so simple they don't have to think about the payment side. tons of it literally.

we were good at that. on the mobile side, we have become better and better. we need to go there. faster payments. you had payment forms with batch processing, delays and things like that, which don't fit with i order today and the product is shipped tonight and will the payment come in and if the products aren't right. we did have a great system called visa mastercard that did this, but it gets attacked on expense. it's about accountability payment and taking the customer out of the worry zone about how do i pay u. they shouldn't have to think about it. if we can make that, when they pay, they know what they are getting and not getting.

there's not faster is better. >> one thing you see in the foreign countries is the bank pg systems are more consolidated. it's a little easier to get agreement and to get moving. so it's important that we have a nucleus of banks that take the initiative and take the lead and agree on certain protocols in the way we want to design things and get people to sign up. it's a little harder given the fragmentation. but it can be dean. >> bruce's point, we have to be willing to do it today because it might take ten years. and that's not the tendency of our industry.

so we have to think across broad bridges. how foost the move for us. >> we're up to 20%. that's because it's easier for the customer. still only 20%. it's going through the atm. so it will have a meaningful form. so we had to think about we're willing to get the transformation where it comes through. you're going o to try to convince me this is a great economic way.

but we have to spread the cost. >> as you're trying to convince other institutions who aren't part of that core group or describe the future to your customers in a way that gets them excited, what do you use to crystallize the value that you'll create? >> i would say on the customer front, they are the pull. i don't think there's a push on the customer front. i think it's what's becoming apparent is it's incumbent on us to build the railroad and have the discipline that the cases aren't immediate. it is a fragmented industry. i think it will take leadership and groups like the clearinghouse and all of us staying clear about having a vision for how to get there. because i think the preference and the customers ahead of us in that regard and that we need to build the infrastructure that

both fits how we can deliver it and what they expect. i think the customer side is more a matter of keeping up with expe expectations. instant gratification takes too long. i think it's more a matter of how we as an industry make sure we have a strong view of what our role is, what we can do and bring ourselves along and stay aligned as we do it. >> describing what's happening outside of the banking industry with others. andok when you talk about nonba competitors, they come in all flavors. there's the nonbank lenders and others. i heard your peers describe them in many ways as competitors. as test beds for new

technologies that i can observe. as potential acquisitions and assets to bring into my organization. how do you think about the constellation of nonbank competitors as they relate to citizens. >> i think there's great opportunities to partner. they are also kind of coming around to the view that initially it was we're going to eat the bank's lunch because they don't do a good job in taking care of the customers. i think as they have gone along, they understand there's things to offer. there's a lot of advantages with customers and deposits and brand and technology and so some of the great work that's being done in innovative technology around the customer experience, around origination and fulfillment are all things if we can lever that

and improve customer experience and shorten fulfillment cycles, we should be willing to do that and embrace that. because that's to the earlier point, that's part of our core mission to really make sure we're taking care of customers. so we have a couple of partnerships already. we have said publicly we're going to have another two that we announce before the end of the year. and i'm really excited. there's an opportunity to do some plug and play u that gets a good product out there to better serve customers. >> i think with their partners, they are competitors and they are clients. so there's three elements. i'm always clear in that conversation you're one of three and i'm going to be focused on all three at the same time. because they are important.

there's lots of collaboration. we have a number of partnerships. we have done an internal with an online consumer lending business. so i think it's all around understanding the companies that they were built from the client backwards. so there's a lot to learn. not only in the core capabilities, but just in the philosophy u and the agility u in partnering and experimenting makes us better in doing that. so i just think it's a world in which we live in a concentric circle and watch each other very carefully and collaborate and work together and figure it out. and those who said they are anti-bank and banks are the end of the earth, they are not our partners. that's not complicated. >> i think we learn. the key is to be curious and

learn about the stuff. we looked at some of the 24 months ago lenders they changed name over time. so there was turn around time. there's willing to take risk on decision engines and things like that. you have to go learn from why they are appealing to some group of customers and try to figure out where that fits your business model and how to apply it. we charged off to analyze on small business cards. so we had the best in the business and middle of 2000. think about that. so we had to pull back, and we did. so that it probably swung to the point we had so much human

interface, you were driving customers crazy. so studying the business models among competitors and among those nonbank competitors is important to learn what you're not doing right. they wouldn't have a customer niche to go after. so we learn from them all the time and on a risk scale and if we do that, we can learn and grow forward without innovation. i think the scale of innovation, when people talk about innovation, when you bring up the scale that we have to think about, that's the art form. it takes a little bit of innovation to figure out how to turn that every single week. so when you start thinking about

that scaling innovation, that's where it gets interesting. that's where the benefits of it can be through the roof. one thing is how to figure out the concepts at these levels. >> learn iing to collaborate an partner, it's a different skill set when dealing with that world. you have to resist. how are you really embed iding in some process, some service and what does that partnership look like, what does that collaboration look like and i think you almost have to rewrite the rules about how that works. we are then taking on the liability of whatever that is because it will ultimately the risks that we're incurring through that partnership will be ours. so i think tough go deeper and

how are you going to invest what they look like. what do you know about the management and if you're going to it introduce them into your customer base, you have to be real thoughtful. yet you have to be nimble. i think it's been a real interesting journey for all of us. fewer but deeper. and try to make sure we learn and it's on point and on strategy. >> i think those of you who run companies in that group the other thing you can't do is ab solve your management team of having to figure all this out and drive it. bill talked about having an online lending company. there's different strategy you can partner with and build some challenge groups. you can't ab solve your basic need from understanding this and figuring it out. .

they always thought the best thing was not do a lot of stuff. they drove against a core strategy enhancement in those days. we didn't create separate business models. that enabled us to move fast. but getting managers to understand, even though you parking lotter in with x or strategic development agreement or why or whatever, you can't ab solve that core person running the business. they have to understand. and figure out how to deal with it within the confines of low revenue growth. i think we as managers don't force to do that, we end up with potentially not enough of right people to run these companies. >> how do you get folks to strike the right balance between being enough outside of there day-to-day work. and where some of the real

innovations are without being distracted by the next shiny object. >> part of that i think is we're not outsourcing innovation. we have to make sure that we understand how the world is changing and how consumers are changing their behaviors. it's our responsibility will be thinking about ways to do things better. so developing a mind set of continuing improvement. and deliver better outcomes. and some of the innovation. the citizens the education refinance market is something that is pretty much all technology. so it's a debt consolidation product. applied to student debt. which has complications. but basically there was a real need for borrowers who had taken out loans to go to college. the parents on the guarantee and

they gt out school and have a a good job and still paying a high cost to carry on that debt. so what's better than offering a product that allows to consolidate the loan. average loan e we console sol date is $50,000. so that wasn't in the field and smoke a pipe and think these big thoughts. they said i have customers who are a burden by this high cost. >> if you set the tone, that's just part of your job and the responsibility of be being a senior leader. then it's about individuals. i spent half my team trying to bring them back to the shop. they have a job out there.

it's about individuals and making sure that you strike the right balance. but the key is setting the tone. it has to be part of your job. that's the responsibility of being a senior leader in a financial institution. >> i do think with the explosion of shadow banking, we are a beneficiary. . we're tracking talent into our organizations that wouldn't have thought of going to work for a financial institution or a bank. so as we become attractive so to bring the tall enlt in. >> as you think about the role of technology more brdly in your organizations, are your priorities more on the customer side generating new revenue or changing wait you operate to drive your cost down.

>> what's the l next question? >> everybody when you talk about types of things the right way goes to mobile banking and mobile application. it's just easier to get people to understand. but there's a tremendous change in the ability to manage a company with the data flows we have. we go back and 30 years ago when interstate banking became the rule and found out that all the real estate loans were going because there wasn't any data and information. the data wasn't there. >> thanks for bringing that. because of the ability.

it was you're still modelling and zip code understand they are related to oil and gas companies and what they would happen and the delinquency rise and different oil prices. and that was interesting. that kind of data information and ability to analyze to bring it to the floor as oppose d to having filed and taking weeks to retrieve is unbelievable. it make you more efficient and manage risk. but it's just as important in the future of this industry is that. then even if you go in payments, the institutional side of payment stuff still think of how much paper we're still taking out every day. all those payments to go to those companies.

putting in order and giving information. it's pretty amazing that much. the application of technology and process and artificial intelligence and gathering data, we have a long ways to go. i don't know how efficient we can be as an industry. we just haven't had a a chance to do this repeatedly. there's different than just dealing with survive and consolidation going on. >> the other thing is many times these things go hand in hand. if you be more efficient, you can deliver a better customer experience. if you look at process on a mission.

now that we process that, we can do it in four minutes. the error rate is zero. so the customer can get set up faster. there's no problems with incorrect data or incorrect data fields. so it takes 10% of the time than it did before to open the account. the customer is happier and you're more efficient. that's what you try to go for. can you get that hat trick. better customer experience, lower cost and better risk and control. >> let's follow up on something that beth said a minute ago related to that. that feels like a different kind of person than a traditional bank employee to deliver on that. how have your people's strategies changed or how are they changing to make sure you have the folk who is can drive those innovations. >> you certainly need to do a skills assessment and a gap assessment as to what are the

needs of the future. how can we train our people to get strong in those areas and where we have real gaps. how can we bring people and other industries. >> i would also echo that i also think that, again, who you choose to partner with, not just on the product side, but the middle office, the back office piece and what's out there because there's thought leaders that can really help you build the road map and they u have some of the capabilities and you can flex through their teams. i don't think you can advocate it's your responsibility to be responsible for the outcomes, but it is an accelerator. that's another example of how you choose who you do business with and partner with. >> the skill sets i think are changing fairly u dramatically

in the business. look at the type of people we hire u now and the partnerships we have at different places and different universities than we had before. the business schools interesting, we know about that. where are they coming from? where do we find them? how do we create those partnerships and alliances. the changing demographics and diversity of our teammate population to see what's happening and i think we went from being industries that people didn't want to work for that changing hopefully quickly. >> what's making that change. >> the work is more interesting. the skill sets are so much broader.

>> so i just it's important to every forum and everywhere we are to talk about the role that we play. we talked about the role we play and in the communities that we serve and the role that we play in the economy. this has never been a more important time than right now. we're on something. and if it's going to work and if it's going to work effectively, the financial services industry is going to be the accelerate rant to make that happen. that's an exciting thing to talk about. versus all the other stuff we were trying to bring up that we don't want to think about anymore. >> if you think about i u think u the recognition, we always

were banking in the broad industry, but the recognition of the i.t. practice, and development practice, that's probably the biggest change that you have seen. so part of that was driven by a cyber security we had to be the best at and we had to hire investigative people. part of it was the mobile technology lift off that took place over the last 10 or 15 years. so i think we become more interesting because the ways we're wrestling down problems than we might have been a generation ago u. it's lessening your dependence on third parties. although they are important for the knowledge base, but you're more the talent coming into the system instead of being in your

business and selling outside, a lot of coming in the system because we're scaled enough we need it repeatedly enough. >> i'll close and then we'll open it up to the audience. you think about a three-year horizon. what the things you think are the best opportunities for this industry. and when you wake up at 3:38 a.m. staring at the ceiling wharks worry woke you up about the industry? >> it's the same worry and the same opportunity. we're businesses that are gdp dependent. the next three years will be great if the economy is good. i think we're well position ed o

capitalize on it. we go into it with a lot of capital and a lot of strengths from all the things we talked about. so if the economy is good, i think we can really, really have a great, fun three-year run. at 3:00 a.m., last time i woke up, donald trump was president, so that was sort of weird. but the same worries. my worries aren't generally microrelated to our issues because i know what we're doing. they are more macroissues. so the same sword has the same sharp edge on the other side. i think it's the same answer to the question. >> i think we need to just stay on the front foot when it comes

to improving the customer experience. investing in technology. and leveraging our brand. if we do that well, there's lots of competition out there. but i think we can succeed and be successful. so the flip side of that is if we fall behind and look at the customer experience and don't capture technology and leverage our brand, we can fall off the pace. there's people that would like to eat our lunch. so that it, to me, is really just keep that focus on the customer. >> i would call it the -- and i'm going to follow up on the way bill thought about it. it's the risk on the opportunity of the same concept. it's kind of akin to high beam leadership. more than ever as leaders in this industry, we have to have a sense of where things are going. i know your question was three years out, but we need to be building skills and value propositions and capabilities leveraging our core strengths, but making sure we're locking out and the flip side of that is

what in the environment, what in the road that you miss would cause you to derail or go off. i think with that vision, the speed at which things are changing, it's a riskier time to be managing those sorts of things than it has been in the past. it's also part of what's exciting and the leadership imperative for our industry right now. >> someone said it earlier. the number one risk for our industry is to lose the trust of our clients. because we lose that and we lose it in pieces. you see the reverberations and how much more difficult it comes to make progress and expensive p prove the facts. that's the one side. our core mission as a financial services institution is to transmit the economy.

so we don't make it happen. we reflect what our clients need to have. and we help them find a way home. and by bringing them ideas or different ways to think about it or better knowledge. if we ever lose two things, we're susceptible what the economy is going to do. but. if we lose that understanding that that's our role, that's when we had the ability to lose trust and e get off your mission and your purpose and whatever words. it's what scares me every night. can we stick to our knitting and do the right skba grow responsibly in good times. so that in bad times, we're in better shape. also we don't lose faith like we did the last crisis u. >> should we take a couple questions from the audience? >> my only request.

>> a brave soul over there. >> using many of the ways that form a part of your strategy. >> i think we're all referring to it. we have mass amounts of information.

we have massive transaction. learning how to manage that and understand and anticipate in all the things is critical. but because we have that, we also have to be careful we don't get ahead of our clients and how they want to use it. it's the biggest tensions. other people that are smaller. so retail loses a bunch of credit card things, it's not really good. we end up paying a lot of money to fix it. but it wasn't core to their business. for us you can't do your basic jobs. having that data in housing and how we treat it is critical. we spent a lot of money on data and getting the information straight. don't take any u comments i was making. all the words use d around that

intelligence and distribution of it. is not critically important. it's what enables all the stuff we talked about. >> the disruption model is all about the disrupter having a cost advantage. you guys represent collectively kind of different evolutions of consolidation in had the industry. which structure or other has the best cost structure. >> i would say it's an ecosystem. i don't think cost is the dedefiner. and i think what we learned in the last couple years is everybody has within the ecosystem a role they play. and the tools we were talking about leverage all our business models. at the end of the day, they have differences that are important to the economy and important to our customers.

i see it as a continuum, not one over the other. >> i think that's a great answer. >> one more question. >> beth, brian, bill, bruce, thank you very much. tonight we continue our look at american "american history tv" normally seen weekends here on c-span 3. . it begins with a discussion on the origins of the cold war. then u.s. democracy and international relations. "american history tv," prime time tonight at 8:00 eastern.

>> in dipt will feature a live discussion on the presidency of barack obama. taking your questions during the program. it includes april ryan, white house correspondent for urban radio networks and author of the presidency u and black and white. watch in depth live from noon to 3:00 p.m. eastern on sunday on book tv on c-span 2. >> the inauguration is friday

january 20th. c-span will have live coverage of all the days events and ceremonies. watch live on c-span and c-span.org and listen live on the free c-span radio app. ibm ceo sat down for a conversation about the future of artificial intelligence and cognitive computing. a silicon valley business and technology forum. . this is about an hour.

>> ladies and gentlemen, please join me in welcoming ceo of the churchill club karen tucker. >> hello. thank you, thank you very much. my name is karen tucker and i u am ceo at the churchill club. welcome to the 2016 annual dinner. as we proudly present the chairman, president and ceo of ibm. she will exchange views on a range of topics from cognitive computing to business transformation to other things that they see as very important for future innovation and economic growth. after their discussion, they will have a few moments to take

questions from the audience. we wish to thank ibm for their partnership in making this event possible. let's just give them a hand. if you're tweeting please use #churchhillclub so everybody can follow along. our conversation leader is a major force in the venture capital industry having invested in more than 70 companies over 25 years with over $40 billion in exit values over that time. early in his career after earning a ph.d. and an mba, he went to work for a large company called emi medical, which was a a pioneer. they pea neared the cat scan or c.t. scan. after that he put in time at a few startups and including stints at coo and ceo in that

time gave him a very special amount of insight into what small companies and startups face having walked in those shoes himself at that time. although they attended at different times, they are both went to northwestern university in illinois. the two first met before he took the helm as ceo and followed her journey. >> we were at northwestern at different times. that wasn't of the same year.

>> it it's a pleasure to be here. thank you, everyone, for attending. e we look forward to an interesting evening here as we talk about some interesting things that are transpiring in the tech industry. and new kinds of innovation that are happening. it's my pleasure to be in conversation here. she has had a great career and accomplished a lot of fascinating things at ibm. in fact, i was looking at your bio a little bit. you started in 1981. >> thanks for pointing that out. >> as a systems engineer. >> we're getting off on a good foot. >> so close to 35 years. >> it was just 35 last week. >> what a remarkable career.

all the things she's been able to accomplish, just fascinating. so appointed ceo in january of 2012. so prior to that, she was responsible as a group executive for all of sales and marketing and strategy. i think i met you at that time. i think it was some event happening in new york. you and i ran sbo each other and began to talk about it. so a lot of fascinating things that she's been involved with. this whole area of cognitive computing and using the program and technology. to apply it to a lot of

different verticals. to do some fascinating things in the area of security and transformation of businesses and a whole host of other things. it's my pleasure to be in conversation with you here. >> thank you. he just landed from india a few minutes or so. >> a couple hours ago. one of the companies that's involved in artificial intelligence. >> i didn't know if i u need ed to have my shopping cart out. >> you have been doing a lot of stuff in the area of cognitive computing. as the street says, you bet the company or the future of the company going forward on watson and on cognitive computing in

particular. so it would be interesting to get your perspectives in how you see that impacting society, the use of cognitive computing. >> at first i should give it a little context. it is a big bet, but it's not a risky bet. this goes back we probably started almost two decades ago on this. i think it's something everybody would identify with. as we got going down this path, and i don't even think of it as a product. it was a time we said, look, we look out and we see a world where there's going to be all this data. whether it's at that time it wasn't tweeting, but it could have been sensors or images or just grow and grow. and we had a lot of discussion over the systems of today can't deal with it. but more important, this is where the word cognitive came from. people will be able to deal with all this. so we'll come back.

this is a pretty important deep root about where the technology is and what's going to happen with it. so it would be this cognitive overload. you'd have to develop something that you'd never program. these would have to be systems that could understand reason and learn. and come up with some of their own answers. and they would learn over time. this is the one technology that will be worth more in time than it less in time. that will be the first. so it would be not a product. and so that work went up until the time we did jeopardy, which some people might be. familiar with. this would be an era that you'd have the systems because you'd have no choice to deal with all this data. and probably more important it was to solve some of the tough

problems. we need this technology to solve it. that brings it today. it was one of the first things we started on. we undoubtedly picked one of the most difficult areas, but the time is right. i did not realize that you worked for health care company become in time. >> that's where i started. >> now i know where you're always asking me about this. now this all made sense. so i must say, i just noticed it on the programs. i think on the front. i really have a deep belief if it's digital today, it will be cognitive tomorrow. it will be pervasive. it is a technology era. we can talk about it. i'm going through all the processes of ibm and where we apply this and change what we do. but to change society to end

your question. we will with not a doubt in my mind we'll be able to impact health care, the environment and actually jobs. we'll talk more about that. you go through the whole list. i think it will be an era of man and machine. another reason we call it c cognitive, ai has some negative baggage associated with it. and we think of it as augmenting intelligence. given all our experience, we did a countdown. we're at a couple hundred million consumers are being touched by watson. it is a very two-way u relationship. so that's what i think i'm very optimistic about this it for good reason. >> there's a lot of talk about ai and machine learning and a lot of companies are received from time to time that are out doing ai as the platform they

are building and so on. you also see some of the larger companies talking about it. so watt on cease approach, in cognitive computing different from what microsoft might be doing or alphabet might be doing. >> there's no doubt i think if we go back in time when jeopardy unleashed again, ai has been around for decades. at one time i was an artificial intelligence specialist. in my early career years, we called it that. i can even remember when we go to parties. he'd say what should i u say i u am. just say i'm an ai specialist. no one knows what it is. this is probably 30 years ago. and so you fast forward to today, some people call it the ai winter. you have everybody talking about it. everybody sees all the same problem. all this data and how to make

something out of it. so i believe as a company, if i kind of fast forward to today, every client and i get. the privilege of e seeing so many, but if they think about what's going to be their competitive differentiation, every one of you will say it's data. it will be the basis of their competitive advantage in some way u. and so what we look ed at and said what would be separate from some of the others out there. and i would say we separate in three ways. one is this point about the goal being augmenting what man does. this is about helping you do your best. or it is about taking care of things so you can do what you are meant to do. which i u think we saw fascinating learning through doctors. we're now touching 200 million patients. so we're watching how the doctors interact with the technology. you would have originally u anybody ever worked with bringing technology to doctors.

is it always work? it's difficult. because i have all these patients. medical data will double every 75 days. what are you going to do? that's impossible. so what i watch, we have been through many runs on this. technology comes in. i can't change what i do. i don't have time for it. i can't do this. what we watched and said with this technology was almost like a collegial relationship between man or woman and this. and that i think has really shown us. i watched it now with lawyers, doctors, underwriters, jers, it's the same. same kind of thing. so what differs is this goal. i think that's what this era

will do. it will be man and machine. these are not machines if you dumped data on them, they would say i'm a doctor now. they have to learn. you have to teach them. these are not start. are these related? no, these are not, and then they learn over time to keep going. the first is the goal. man and machine is where we differ with others, i think. it's this goal that we are augmented what each of us does in our life. the second is probably the biggest business thing that differentiates us from others. and we -- i have to tell you, it took us some time to get this right. so, if you really believe data is your basis of competitive advantage in your businesses, how can i be sure that the insights that you have belong to you and not someone else? so how we've architected -- it's a cloud system, but how we've architected it is such that -- by the way, your most valuable data -- everybody has access to what's public -- the most valuable data is going to be

marrying that with what i call not legacy data. this is like your accumulated knowledge in your business. therefore, i think you're going to see a resurgence of established companies that take advantage of this. so, if i'm a company, i bring my data, my analytics, we bring watson in our data, which we do bring a lot of data. but the insights, we can guarantee the insights go to you and they don't train this data for somebody else to use. now, part of why is that is i don't have a search legacy background, okay? so, some companies grew up as search. search is about a big pool of data that's a knowledge database. that's not what this is. and i think it's an important business model difference. every client i know says, you know what, i've seen this movie before, and i actually know how it ends. that's not a good ending. if i train the data with mine for somebody else to use it. and so, i want the value of all that accumulated years of my data. so our second big thing -- i do think this is, as you all think through your business models and what decisions you make and how

you do it, knowing who owns the data and who owns the insights is a really big point in where you go with this. and then the third one is, i also think we're all in an era now that so much of this is about an ecosystem. >> that's great. >> so, a big, open ecosystem. we had some fun this morning. we did a developer conference. i can't even remember where i was, somewhere not too far away. but innovation hangar? does that ring a bell to anyone? is that a place or did i make up that name? i'm thinking i was in an innovation hangar. okay. and so, but we had, i don't know, 1,500 developers there. and you know, an open ecosystem says you make something consumable, you know, ubiquitous on the cloud -- we broke watson up into all these pieces so they can digest it in good ways. and i met a bunch of people who built things that i had not seen before. of course. i mean, you don't have control then in an open ecosystem like that. so, one of them, if i can just tell a quick, funny story on it. one was a young man, 19 years

old, at stanford here, and he built something called do not pay. okay, so i said, well, what does do not pay do? and he said, well, using watson, he goes, it's a form of a robo lawyer. he said, you know, when i came to the united states -- he's from the uk -- i had to get a driver's license and i kept getting parking tickets. and my parents called and said they would quit paying for these parking tickets. so i had to figure out what to do about this. and i thought to myself, well, like, don't park where you're getting the parking tickets, as, you know, i'm sure what the parents said. and he said, so, instead, though, i came up with this thing that i have put together the cognitive intelligence on how to fight these parking tickets. and it's now gone viral. he's got, i think he said 250,000, i guess, customers. and his hit rate is 50% on winning, fighting on these parking tickets. and he asked you a few simple questions to build your case and it's built out your legal

document and it automatically submits it and how you fight your ticket. and he started with parking tickets, and he has now moved on to fire your landlord, and he's got a whole set of these things. so, i'm like, okay, now, these are all legal, correct, in what you are doing? these are because you believe you did not park illegally. but this is the kind of thing that it's just great imagination, a young kid, but now he's working it -- he's got another whole big group around refugee matching, refugees and how to have them get legal documentation and all. so, i thought it was an excellent, great example. >> so that leads me to my third question on that. you know, you talk about this entrepreneur using watson, pieces of it. so you know, as you look at platform watson, cognitive computing platform, how can start-ups utilize some of the capabilities of watson and then actually build apps and other kinds of applications and

similar solutions? >> look, i actually think -- i'm going to answer it in a broader context, too, because everyone -- i don't mean -- this is not a commercial on watson or anything. subliminal, maybe, but i didn't mean it that way. but, because i think everybody in your own businesses here, you're thinking about how do you form an ecosystem. this is true whether you're a bank, right? >> it's true. >> you can embrace fintech, you can fight fintech, and i think many people are choosing to embrace in a good way. so, everybody's got this point of view of some kind of platform, whether that's micro level or big to build. and if you're going to build a platform, i think you've got to do a couple things. one is you've got to give them access to something they can't get access to anywhere else. so, in our case, we would be the science of watson, the science of the cloud. i mean, we're investing, last 12 months we invested -- even in the first, last 9 months, i think, $12 billion. so, it's a big number. >> wow. >> you can't get it elsewhere. so, that's one is you give them

access to science. i think the second thing you have to do for any kind of a platform here is you've got to help people be better than they would be than not working with you. so, we're offering them all sorts of ways to certify as a cognitive developer, udacity, top coder, you know these things. they're all -- you can get a nano degree in it, so all new concepts out there in this. and third is, help make them commercially successful. >> it's true. >> right? that's what people want on these. and in our case, part of making them commercially successful is we've got the world's largest services company, and they bring hundreds of partners out as part of solutions. and so, channels are what most people are looking for, for whatever their innovation is. so i think those rules kind of fit anybody. >> sure. >> on how to help a start-up. >> good. >> in bite-sized chunks, right? and of course, free. that would be the other thing they want is free, for some period of time. yeah. until you grow up. >> any other thoughts on -- >> on start-ups? no, i -- >> or the whole cognitive

computing stuff? >> the only other point i would make is this point about being able to solve problems that i don't think we could solve today. i mean, they'll span between basic everyday, because i do believe every decision you make in the next five years, personal or really big, you're going to be assisted by some kind of this technology. >> that's right. >> i believe for all of us that's going to be true. and so, i look at some of the basic stuff where we're doing work on right now with "sesame street" and with the united states teachers so. the first wave is rolling out of lesson plans for kids. so on the everyday side. so, i don't know if you've ever looked in a search engine for third grade math lessons. anybody have a third grader? anybody remember third grade math? yeah. so, i did it just for kicks, to see what you get. oh, my god, it's atrocious. >> a lot of stuff, yeah. >> it is atrocious. >> yeah. >> you would never know how to match a learning plan to how this kid learns or even if it was a good plan.

so, the first thing we set watson off on was third grade math. we started with third grade math. and it is to match your child's learning style to the lesson -- the right lessons plans. >> interesting. >> so it's rolling to 500 teachers. it will go to all teachers by next year, then we move into all these other subjects. so you'll feel it on this everyday. to the other side, i would just say, this point on health care. i really -- we will humbly do our little piece, i believe to change the face of health care now. anybody in health care other than promod? we have two, three, four of us? five? >> i think that's it. >> i think the timing is right. >> i think it's a huge vertical when you think of 20% of our gdp spent on health care, $3 trillion a year. a lot of wastage. wow. >> i'll tell you, the waste and the efficiency, but it's the outcomes. >> that's right. >> "60 minutes" did a segment on watson about three weeks ago, and unbeknownst to us had gone out and interviewed different hospitals and the like, and it

was for genomic sequencing. and it's, you know, for us, it's an amazing segment. the doctor says, look -- and back to how doctors will work with professionals, any professional, work with technology. he said, we ran through the genomic sequencing, and guess what, 1,000 cases, patients, watson came up with exactly what my doctors did at the tumor board. so if you know much about complex cancer cases, when they get to a certain stage and you do your genomic sequencing and they meet at a tumor board and they discuss what your possible treatments are. and he said, but in 30% we found more. >> it's true, yeah. >> and that was the ability to match. and so, we're now treating more patients outside the u.s. than in for oncology adviser. mayor clinic does all of their breast cancer clinical trial matching now with watson. and we just announced with qwest who has access to 50% of the doctors. 70% of all cancer cases in this country, if you want genomic sequencing done, it will be done.

so, this is really moving quick. >> oh, i think so. lots of innovation going on in that space. >> i'm very optimistic. and both for costs as well as outcome. >> and we're seeing that in the venture community we're seeing it, lots of start-ups in this ai space, machine intelligence, machine learning space, cognitive computing, as you would, you know -- >> but you do need data. >> you're right, you're right. >> and this is -- >> and when you think about it -- >> not just publicly available data. >> no, it's all kinds of data. when you look at it, we are in what people call the digital economy, right? and one of the things to talk about in the digital economy is that data is the currency. >> yep. >> when you think about it, data is the currency in the digital economy. now, how you put that data to work is what's going to differentiate companies going forward, right? i mean, you could have -- it's like you've got currency sitting there and you could invest it in a cd and maybe make 0.3%, or you

could find intelligent ways to invest that money, right? same thing, you've got data -- look, if a company doesn't realize how to utilize the advantage of the data to its full advantage and that's where cognitive computing comes in. >> when you and i had first met -- it's something to think about. i had coined the phrase that data would be the world's next natural resource. >> correct. >> but the part to me -- >> if you use it correctly. >> not only that, but if you think of other natural resources, the value does not necessarily go to who owns them. and this is why you have to think this through. if you think about oil or, you know, go to africa and every country, and all the raw material. ah, but who refined it is who got the value. i mean, there are really poor countries that have all these rich natural resources. and so, i think it's going to be the same thing's true with companies. >> that's very true, yeah. good, okay. let's move on. >> yeah. >> let's talk a little bit about block chain. >> oh, one of my favorite topics. >> and i know you've done a lot of work in that space. and i know that ibm is pioneering a lot of work in this whole area of block chain. so maybe if you could take just

a few minutes -- >> who -- does anyone know block chain? oh, excellent! i have an audience of experts! okay. okay, put your hands back up, because -- and keep them up if you believe it will have a big impact. oh, more went up even. okay, so that's even better. >> how do you think it's going to impact business? what are the verticals and how exactly will those verticals benefit? >> well, i can see it -- well, i have a bunch of agreers in here, too, so this is -- they'll probably add something to this conversation. but this to me is another one of those kind of -- i can remember -- i've got a funny story about it. it goes back i can't remember how many years ago. i'm in my office one night, my home office. this would have been i guess at the beginning, about all of the crypto currencies and bitcoin, so very early on in bitcoin and all the chatter about it. so, i'm sitting, so i start looking around. i want to learn more about it, so i'm looking, doing my own research online, and i stumble

upon this youtube video. so i'm watching this youtube -- and i must say, it goes on for about 20 minutes, but it's very interesting flipboard, accurate, describing how it's not bitcoin, but how block chain, the underlying technology works under it. but it is a little lengthy, i'll say that. but i watch the whole thing, gets to the end, it's some ibmer. apparently worked for me. so i'm like, excellent. i'm going to shorten that up. all right, so i saw that, but it was right. i mean -- and so, this is the beginning of my love affair with block chain and our love affair with it. and i really believe for any supply chain, any supply chain where there's inefficiency, which is about every supply chain there is, any amount of paper, uncertainty, you will apply -- that is the simplest -- you will apply block chain. this idea of a distributed ledger that is immutable and that you can know that when one link's attached to the next, that is permanent, can't be changed, and goes on, but it's distributed like this.

so, you could have a -- i and we have been as bold to say that block chain will do for trusted transactions what the internet did for information. and i did this op ed in the "wall street journal" that was yesterday. and i said you know, if you knew today what you knew about the internet in 1995, what would you do differently? and i think you should ask yourself that question on block chain. so, i see it with -- i can't remember, we have several hundred pocs going on with clients on this, but here the thing that almost convinced me more. in my own company, i must have dozens of block chain projects going on, and i do not have to force anyone to do any of them. so, that is always a signal. and so, they have embraced it. and we have a big financing business, so we probably do $40 billion of financing a year. and they took a simple process -- disputes on invoices for financing. it would be, this was not

singapore, this was in this other country, wrong tax rate, whatever it is, and you've got capital tied up in it. so, they'd put our ledger up of our whole financing business, pretty fast, up on block chain. and the disputes go to, virtually, friction goes to nothing on these disputes. and so, now take that and pretend you are the world's largest shipper. and we're talking about the flow of goods out of a country in africa and all the different places that you go. and you are talking huge amounts of efficiencies and savings, wow. so, i would add one other thing, though, you've got to have, and this would be the difference. we must -- i've got to put a plug in here for open source in this case. you are going to have to have sort of a foundation that everybody uses that is trusted, the same one, or you're going to get up with islands and you will never get these benefits. and so, the hyperledger project is the fastest growing open-source project out there. and we've built -- we've contributed to it, and it is the fastest growing open-source

projects the linux foundation has ever had. and i think that's what's important be the fouction. >> so it would be both private block chains as well as the public. >> it doesn't matter. because governments are going to want -- it's got to have a permission, and governments are going to want visibility. >> that's correct. >> central banks will, or you won't do serious business over this. >> which vertical do you think will be the early adopter of block chain? what are you finding, based on what you see? >> well, i think the supply chain of shipping, anything, trade logistics, trade logistics, big time. but we have many in the banks. >> i was going to ask you, the financial services industry. >> like tokyo, mitsubishi, mufg, these guys are -- any kind of contract between two parties that they can make a smart contract, there's a lot of that. so trade finance, that. but you could do it for, i've got some proof of concept in compliance. anything you have to have a record, any kind of transaction that crosses parties today. so i think you'll see it first

trade finance. you'll see it in financial institutions. >> that's the favored industry in a period of time, yeah. then governance, risk and so on. >> yeah. >> that's interesting. good, okay. >> do you have any companies in block chain? >> you know, from a venture perspective, we just think it's a little too early for us. >> and you could be a little too late. [ laughter ] >> so, i think, you know, i think the sense is, in fact, some of the reports indicate it will probably be another four or five years before it really takes off. so -- >> i, i -- >> so, we'll see. we'll see how that goes. >> you keep doing your thing, i'll keep doing my thing. it's good. so, i really believe, this is one -- part of it is because it isn't that difficult to implement. in the long side, your current systems, duke it. so, we just did a big announcement with walmart, and it's for food safety.

so we and walmart are doing food safety with block chain in china on pork, where they had had some issues. and that's what this is about. and it will be going here pretty soon, so. >> that's interesting. all right, let's talk about security, cybersecurity. >> another good -- >> huge investment area, you know, for corporations, enterprises, you know, for venture companies, venture funds, funds like ourselves, i don't know, even corporations like yourselves have spent a lot of money on cybersecurity and so on. so how do you see that landscape? how do you see cognitive computing impacting some of that? >> how many of you spend time on the topic of cyber? almost everybody that runs a company, right? because i do it from running our company perspective, right. and you know, obviously, doesn't matter. every day, because a bad guy gets smarter, right? so we're all doing something. to us, it's a business as well. we are now the largest enterprise security company out

there. but the secret of it, i think you're probably not going to be surprised, i think this is a world so complex on this topic, you have to assume whatever you do, the bad guy is in already. and therefore, the answer's going to be related to, you won't be surprised, some sort of massive realtime analytics, that you're constantly looking for something that is just slightly astray, whether that's in data, in a flow, in relationships, in behavior, in trade surveillance, whatever it is. and so, the future's going to be, one, you could put a cloud in. clouds are actually, because they're more standard, they're going to be more secure. we needed in this country and we did get legislation -- still those get through the senate -- to have sharing of information as another way to fight this issue. >> exactly, yes. >> because the good guys have to band together to fight the bad guys. but you have to be able to, if you're a company, if you share, you have to be able to do it knowing you're not going to be liable. i mean, you have to be able to do it without a penalty. and so, our government -- there was through the house of

representatives some very good legislation on information-sharing, now needs to get through senate. i'm hopeful maybe it does before the year is up, before the congress goes out. and so, that is kind of the second part, this collaboration piece. but the third piece is this part that all of us, i think, in my best analogy is to think of it like an immune system, is how security will run. so, all of us have germs in our body. and what does your immune system do? if your germs act up, immune system goes to try to cordon it off so it doesn't get spread to any other part of your body if you get some sort of infection. and that's pretty much how you've got to run it inside of a company and across, right? so that you're constantly looking. you find something, you wall it off so it doesn't infect everything else, and then this goes to the next level. and i think it is a fantastic analogy, because that's why the cdc and the w.h.o. got created for health. because what does the center for disease control do or the world health organization? centers for disease control

says, hey, if there's an outbreak in one place, quick, distribution information, stop it so it doesn't get to the other countries. it's no different than a cyber attack. okay, it's one here, we've got to stop it. we don't want it in all the banks. we don't want it -- and we've got to follow that kind of work. >> totally agree. >> so therefore, i think you're going to continue to see companies pop up. we do it. we have watson for cybersecurity. i think it goes live the first quarter. and you can't find enough professionals in your company. forget that part of it. so, you've got to -- i think there's something like 80,000 security blogs a month written. i mean, really. you know, who's going to deal -- and then to be able to know which even apply to you? so, that's a kind of thing i think is the future for security. and so, if you're investing, investing in companies, like we are, all around -- by the way that was our approach, too. we aren't going to do everything. we put a foundation in so people can write stuff using our data. >> sure. no, no, we as a firm, including

myself personally, we've been very involved in this whole cybersecurity space for many years. you know, we have close to about 15 active companies in the space today. and i think that is where we see machine intelligence, artificial learning, artificial intelligence and so on coming in, and really -- >> but i do think the hard part's going to be -- part of the problem with it is the average client has 80 products from 40 vendors. >> that's right. >> that is a problem. >> i agree, i agree. >> that's like putting a different alarm company on every door in your house. you're like, okay, now what happens? one opened and -- >> i think it's worse than that. because what you have is, when you look at this whole cyberspace, you know, you've got the threat actors on the one end, and then obviously, you've got people who are trying to defend, and it's an arms race, because the threat actors are well funded, state sponsored and well funded in other ways. so literally, they're not

sitting there, you know, there's always new innovation going on. and in fact, one of the things that we're seeing is that the conventional means of cybersecurity in the past, things like, you know, well, antivirus detection and incident response, but then even some of the newer stuff that came out, you know, where you've got sand boxes, right? and you sort of put some of the traffic into the sand box and see what goes on. well, what's happened is that threat actors have figured out how sand boxes work, and so they have figured out a way to evade sand boxes. so you've got malware that's sitting there, totally bypasses sand boxes, and with a certain amount of latency it goes and does whatever. and the amount of information, as you pointed out. the signatures that are created today, thousands and thousands of signatures. and see, that is where cognitive computing comes in, a fascinating way -- >> this is a spot -- >> if you learn from it, it

keeps learning and it keeps adapting and it figures out what is going on, and it provides a whole bunch of insights. and i think -- and then it augments, you know, the security experts that are sitting there. >> that's right. >> because you don't eliminate them, but you give them the abili ability, because it's so hard otherwise to look at -- oh, my goodness, i've got these 1,000 blogs or 1,000 incidents that happened. how do i make sense out of all that? >> yeah, yeah. >> and the ability to use machine learning to be able to draw some insights out of that and keep learning. >> this is another reason why you can't overregulate this area. >> that's right. >> as we've been participate 'trying to get healthy regulation, if you overregulate, we'll be so busy filling out the regulation forms, the bad guys are like, i know what you're working on i'll go over here. so that's a real issue. and the other part, has everyone ever had a chance to see what the dark web really is?

if anyone -- >> oh, scary. >> you know, if you haven't, in serious, you know -- we, in fact, just opened up something called the cyber range. i think it is the only real one of its kind, first of its kind, a cyber range. and of course, it's got all these, i don't even know how to describe how it is -- hermedically sealed. but in there is the dark web. we take clients in to see it to say, you realize what this is, and you'll go -- you can buy anything for anything. and it is very organized, extremely professional. it is hierarchies. there are, you know, organizations perfectly set up, service level agreements on anything you need to get, right? can guarantee this credit card will work five times before it doesn't work, and you name it. so it is worth, if you don't understand it, to see it. it just gives you a tiny glimpse, and that's just the commercial side of the dark web, not even some of the worst side

of what you're up against. and i think if you do that, you would understand why this is, the answer to this is around analytics and your company more than anything. >> that's correct, yeah, yeah. and it's just amazing. this is the perfect example in cybersecurity where you augment the capabilities of the human being, the machine learning and all the cognitive analysis and so on allows, you know, someone that's a cyber expert sitting there -- it increases the productivity, it allows them to be more effective and productive, and especially as you move forward and, you know, sort of, even these days or even five years out, you know, there is a challenge with respect to finding the right skill sets. >> oh, it's a big problem. >> it's a big problem. >> you have to do this for that reason alone. >> so therefore, the ability to augment the productivity of the existing workforce that one

might have and to be able to increase their productivity is a big, huge -- >> i think the estimate for open security jobs is a million. >> it's just huge. >> it's a big number. >> so that's where i think machine learning and cognitive computing augmenting existing technologies and augmenting, you know, the human that's sitting there making decisions and so forth. just a huge, huge opportunity for cost savings as well as achieving, you know, the job that needs to get done. >> he's got a lot of pages left in front of him, okay? so i'm not sure where this is going. all right. >> all right. so, let's talk a little bit about, you know, you've been involved at ibm and you've seen many, many faces of technologies and innovations that have happened over the years and, you know, how companies and societies get transformed and businesses have to transform.

and obviously, over the years, ibm has done a great job. and so, talk a little bit about, you know, as you look into the future, transformation of businesses, whether it's, you know, customers or even transforming what ibm is doing. what are some of the things you've seen happening? >> well, you've learned a lot, too, haven't you? >> i have, yeah. >> we should talk. i've been with promod another time and i want him to share -- i'll answer, but i want him to share, too. i found fascinating a list of things he said about which kind of companies make it and don't make it. i don't know if you remember that conversation. you'll have time while i talk, you can think about it then. so, back to what would -- i guess lessons learned or observations, maybe? because i guess one -- sometimes people say to me, what would you advise like a young company? and i've sat there and thought sometimes. and i think we would all probably say, might be some of

the same things i would say about myself, you know? it doesn't matter. so i look -- we're now 105 years old, so -- >> that's right. >> anybody with companies in that circa, that era? anybody in the room? okay, that would make me. all right. they're probably the ibmers raising their hand. okay, so, okay, we're 105. and the one -- you do have time, and i have had time to reflect about this. and as we've led this and been leading and in the middle of this transformation we're in now, and at 105 in tech -- because i remember when i started in tech, the competitors were burrows, unisys, ncr -- >> data general? >> i guess it was -- yeah, honeywell. honeywell's around, but not in this part of the industry anymore. >> deck. >> deck, wang. okay, there's just three of us that remember this. so, and they're gone. so, but my only point, and

humbly on it, is there is a different set of lessons to transcend multiple eras, because there are other companies that you can make it through one or two, but there's something else about four, five and six, you know? and as i've fought back, and as a team we have fought back about what about it in ibm, what are the lessons learned that you make it through these? >> that's right. >> and you lead some of them. others you go through, you know, they're different. but we i think can stand here and say now we are the only one that has made it through multiple eras of technology. and there are a couple things that i, almost weekly i'll always bring back to my mind, and one is this idea that know what must endure and what must change. and i'm reminded of it, because people will say to me, well, what is ibm now? what is it? i know you had pcs, that was a long time ago, but what are you? and to me, the thing that stayed constant is, look, what we are

is solutions to society and business' most challenging issues. >> that's correct. >> how we did it has changed, but that one thing stayed constant. and that idea of not defining yourself as a product, even though we've talked a lot about watson. but if we come back in 25 years, it will be something else that will add to that. and this lesson of change, endure, and don't define yourself as a product. if you define yourself as a solution, it frees you up to do other things. the other, i think, piece would be -- and i know this is hard -- don't protect your past. >> mm-hmm. >> and i think back, even in my tenure, we've divested of over $8 billion of businesses, done 50 acquisitions, spent on average 6% of all our revenues in r&d every year. and so, that idea that you have to let go of some things is a

hard thing, but if you don't, then you'll ride them down, right? and so, and then you can't change. it's too late. so this idea of don't protect your past. but even to a young company, right? and this is changing fast now, right? it would be my second lesson learned. my third is one i have actually talked a lot about, which -- and i think it's true and it's interesting at this point in time. i think it's true for people, it's true for companies, and it's true for countries, which is this thought that growth and comfort never coexist. >> that's correct. >> so you have to get pretty comfortable with being uncomfortable to be able to live through these. >> change is always threatening. >> it is. and i think -- i feel like i learned it young. and even if you shut your eyes, assuming they're not already shut. but if you shut your eyes and you think about when in life did you learn the most, right? it's probably a time you were at risk for something, that you

were put at risk. and you'll say, yep, that is when i did. so, i think companies and people have to get used to that feeling of being really uncomfortable. it's like -- it's a very, to me, it's a very sort of almost soothing feeling, to know that when you're really, really nervous about something, you're really learning something at that time. >> that's true. >> so, it's a channeling of that energy from a company, a country, a person, and those would be to me the sort of enduring lessons that -- and again, we're still working, we're still moving through things. so, but firmly, firmly now this era of now us being a cognitive solution and cloud platform company is here. >> very true. and we're seeing that, you know, we've seen that having funded a lot of companies. companies that get too comfortable with the status quo and don't want change because it's threatening don't last.

yeah. >> sometimes it sneaks up on you, right? so you have to -- >> yeah, yeah. and i think the other thing we're seeing in the marketplace today is that the rate of innovation is a lot faster than it used to be. >> oh, without a doubt that's true. >> and therefore, the life cycle of products is a lot shorter than it used to be. it used to be ten years, you could design something and, you know, you could keep selling that product for ten years. but now the pace of innovation is so high and so fast. >> well, that's why i think -- >> things get obsoleted a lot faster. >> people use it as sort of a buzz word, agile. but we've spent a lot of time because of this issue -- >> that's right. >> any of us that run businesses, you've got to rethink about how you do work, because that innovation cycle that is so fast, it can't be just for a little company. that's got to be for a big company, too. so, this idea that you co-locate people, minimum viable product that you multidisciplinary teams, you know, and you can do that in a big firm as well. i know we've -- i've probably moved -- i think we as a team have gotten about $1 billion of

real estate products going on. you've got to reconfigure workspaces, bring different skills together. and so, we're probably one of the largest agile developments in the world. >> that's great. okay, so, i think it's time to open it up for some questions, from the audience here. >> my health care guy, i think. >> yeah, so, any -- yeah, okay, right there. we've got a mike back there, someone -- yeah, there we go. >> i hope he was agreeing with me. i can't see him from here, okay, so i might be in trouble. >> hi. can you hear me okay? >> yeah. >> yeah. >> so, as an ibmer, i'm really fascinated by this vision. but at the same time, i'm really scared. and i'll tell you why i'm scared. i'm not even scared about job 15 years from now or something. i'm more scared that after some point, ai, or cognitive technology, will try to conquer the world. >> yeah. >> and the question is, what we're doing already now in security to prevent this kind of

development? >> yeah. this is to me a couple ways to answer this. there's a misconception about this topic. first off, for ai -- i'll answer you sort of two ways. i told you the goal. the goal is man and machine. so, first it starts with the approach you take to it. but the second is, the technologies for self-learning at massive scale like that, those do not exist today. and so, the state-of-the-art -- you have to still -- these are taught. these machines are taught -- machines. i use that word loosely. the services, they're taught. so, this is between man and these systems. these are statistical algorithms that you teach. so, this isn't something that self-learns and does away with you. that isn't it. these are taught. now, the second part of this whole thing is, back to my comments about business model for data and that it is important that you know you own your data and the ip from that. i think that's an important

point, because versus concentrating all data and all ip in two or three places in the world. that is not the world i would like to live in. i would like in a world of diversity of ip and who owns it and what happens. and so, i think that kind of a business model actually helps that issue as well. >> great. any other questions? over. okay, right there. >> what do you think about -- [ inaudible ] >> okay. there we go. >> i couldn't hear him. >> i'm sorry. what do you think about recor records -- and mimicking that in silicon so you can infusion not only cognition, but consciousness eventually? >> well, again, i think this point about, you know, that you can mimic -- we do a lot of work. in fact, actually, our head of research -- well, all of it -- john is here -- on brain-inspired computing, right? and so, and for many good reasons, by the way, to do

things like perception and your ability to have much safer roadways, all sorts of things that are around there. so i think these technologies, any one individual, but if you tried to then put together what man does and all of its pieces, we are not to that point, and it won't be for very far foreseeable future. so, i think a lot -- these are -- let me bookend the different points. because i'm not just saying don't pay great attention to these things. i actually think there are issues of ethics that have to be paid attention to. and we are part of and we formed the ai partnership with google, with facebook, with others that is to say, look, you've got to take seriously some of the issues that come with the ethical side of ai. and in this case, not that you would have read -- there was a very good paper, i think, actually, the white house did on -- it was office of science and technology -- that frames what these issues are and both

what public debate and policies are required to have these technologies really do what we started with, which was bring great good to society in that trade-off. so, i think -- i don't mean to short-count it. i think there are some issues about where the technologies are today and for the foreseeable future, but i also think we should then pay attention to these really invaluable questions. >> all right. one more question. right there. get the mike, yeah. >> hi. i'm alex, ceo of a company called datanovo. for the 21st year, ibm has gotten more patents than any other companies in the world. do you envision dedicating some of those patented technologies, much like what elon musk has done with tesla? >> do i envision? >> dedicating some of those patented technologies to the public, much like the way -- >> oh, we have. we have. we have been many times in our lifetime here, we have dedicated

these, and put them in open source as an example. that's happened many times in our history. so these have not all been kept with us. there have been -- i can't even remember what percentage of them that's been done with, but many, many different times. in fact, it gave a big rise to the open source community what we dedicated and put out there. and i assume -- i won't assume, we will continue to do. so we do both, yeah. and i think that's how many people who have -- maybe not many, but intellectual property, look at both sides of that, right? >> good, okay. so, i think we're going to have to close here because i think our time is running out. so, karen, if you would come up. let me just make one quick comment here, give you a bunch a gavel perspective and all the debates that have been going on about jobs and so on. this is the way i see it. you know, let's just use a simple example, call centers. a lot of call center jobs, as you know, have been outsourced to different parts of the world.

and the reason for that is that you can get that job done for one-third the cost and so on and so forth. so now take a look at the call center individual here in the u.s. and if we augment that call center person with machine intelligence and cognitive computing and make that person two to three times more productive than he was on his own before he or she, that job can stay here and the money gets spent in the local gdp. and i think that's what we have to think about. cognitive computing, which is machine intelligence empowering, augmenting existing human beings and increasing their productivi productivity, will lead to tremendous amount of benefit for the country. so that's the way i look at cognitive computing in the

future, whether it's call centers, whether it's other kinds of jobs, but i think it will make a big difference. anyway, if you want to come up, karen. >> good. >> i'd like to thank our speakers very much. >> thank you. thanks. thank you, promod. >> thank you. you were great. thanks. >> thanks. >> as a very small -- just before you leave -- >> oh, a gift? >> we have a small gift for you. >> okay! >> it is the churchill club speaker t-shirt, of course! >> oh, excellent! i hope it's big enough. >> please wear that. >> let's see. >> thank you very much. >> i want you to know that a recording of this program will be available on the churchill club youtube channel shortly, where you can find recordings of our other programs as well. i hope you find that to be a useful resource. please, do stay seated, as dinner will be served now, and you've been a terrific audience. thank you so much. enjoy the rest of the evening. >> okay.

tonight we continue our look at american history tv programs normally seen weekends here on c-span3. it begins with a discussion on the origins of the cold war. then u.s. democracy and international relations. and then the legacy of world war ii. american history tv, prime time tonight at 8:00 eastern. new year's night on "q&a" -- >> while people were starving, van buren, he was having these fancy parties in the white

house. it was part of the image-making, where harrison was the candidate, poor man for the poor people, and here was this rich man in washington sneering at the poor people. harrison had thousands of acres and estate, so he was actually a very wealthy man, but he was portrayed as the champion of the poor. women came to the parades and they waived handkerchiefs. some gave speeches. some wrote pamphlets. and it was very shocking. they were criticized by the democrats who said that these women should be home making puddle. >> ronald schaffer, author of "the carnival campaign: how the rollicking 1840 campaign of tipper canoe and tyler too changed presidential elections forever, sunday night at 8:00 p.m. eastern on c-span's "q&a." join us on tuesday for live coverage of the opening day of the new congress. watch the official swearing in of the new and re-elected members of the house and senate

and the election of the speaker of the house. our all-day, live coverage of the day's events from capitol hill begins at 7:00 a.m. eastern on c-span and c-span.org, or you can listen to it on the free c-span radio app. in june, president obama appointed a duke university professor of surgery and pathology to serve on the u.s. national cancer advisory board. the world-renowned cancer researcher and oncology leader is from ghana and specializes in brain cancer and the development of smart anticancer drugs to battle tumors. he addressed a science symposium at westminster college in fulton, missouri, in mid-september for about an hour. >> good afternoon. my name's kurt jefferson, and i am the assistant dean for global initiatives here at westminster college and director of the churchill institute for global

engagement. thank you for coming here today. i also coordinate the hancock symposium, and i'm thrilled that we're off to a wonderful start. and it is a wonderful day to be here. i would like to at this time invite you to the obligatory please silence your devices, cell phones, and i would really like to also ask you to refrain from using your cell phones and also, please do not go in and out of the room while dr dr. ali-osman is giving his talk. really would appreciate that. i want to introduce one of the world's foremost medical professionals and cancer researchers. we are really fortunate to have dr. francis ali-osman here. dr. ali-osman is the margaret harrison, david silverman professor of neuro oncology and research and co-director of the experimental therapeutics program of the duke university

cancer institute. a professor of surgery and pathology and an active member of duke's medical research team, dr. ali-osman is a world leader in the field of experimental oncology, cancer therapeutics, and pharmacology and cancer drug resistance with a particular focus on tumors of the central nervous system. his research seeks to understand the cellular and molecular processes that underline malignancy and to determine the response of cancer patients to their treatment. this work is used to develop novel, highly targeted, smart anticancer drugs and to design more effective individualized treatment strategies. dr. ali-osman has held faculty positions at the university of washington in seattle, at the university of texas, m.d. anderson cancer center, and currently, as you know, serving at duke university in durham, north carolina.