captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: michael porter is here, he is a university professor at harvard, a distinction held by only 1% of the faculty. "forbes" magazine described him as the all time great strategy guru and the most famous an influential business professor who has ever lived his ideas on strategy have influenced business people and policymakers around the world.

his aim is to shape the debate about america's competitiveness. last year he launched harvard business school's u.s. competitiveness project. its purpose is to answer one of the most challenging questions america faces today. how do we ensure the united states leads in the global economic arena. i'm pleased to have michael porter back at this table. welcome. it's been a while. great to have you here. >> yes, sir, thank you, charlie, my pleasure. >> let me do this because i've referenced with this with you before. it seems it would be great to be a university professor. for this big reason: it's a distinction, but you get to range over the disciplines on campus. >> and die. >> rose: you could teach in whatever school you wanted to. >> i teach in the medical school, the school of public health, the kennedy business school and it's the best perch one could imagine. >> rose: i want you to give me two minutes because you think about this a lot on health care in america. >> well, i think we first need

to understand that the kind of problem of health care today is not the problem we've been debating for the last 20 or 30 years. we've been debating insurance, how to get more people covered and in the system. that's a fundmental problem but ultimately going forward the problem is how can we get more value for the money we are spending on health care. that becomes, i think, the critical issue now. we've got to improve the outcomes that we achieve for the money we're spending. we've got find a way to deliver those excellent outcomes more efficiently and that will require a restructuring of revolutionary proportions in how we organize health care organizations, how we actually deliver care, how doctors and nurses work together. >> rose: what's "revolutionary"? >> well, health care historically has been a very siloed field. it's a field that's organized around specialties. medical specialties. urology, cardiac surgery and so forth and so on.

health care is organized around the supply of these specialty services. the patient then is the ping-pong ball that moves from service to service, each service sees itself as a stand alone department or stand alone entity. but what we understand is that we want to deliver value. it's not the individual service that matters it the collective set of services reiched to deal with the patient's medical problem. so if you're a diabetic you need an endocrinologist, you need somebody that can educate you about how to manage your disease you need to worry about your eyes, you need to worry about your veins. all kinds of issues and you need a team to work as a team to manage you through that process. ultimately health care fails the most basic test of organization and that is it's not organized around the needs of the patient, it's organized around the supply of the services. and until we make that fundamental transformation we are hobbled in our ability to actually so called bend that

cost curve as people say. >> rose: if we don't do that that we'll never deal with the deficit or the debt? >> health care isn't the 900 pound gorilla, it's the nine million pound gorilla. it will dominate our future budget problems and that is one of the points that i don't think is recognized well enough in all this debate. >> rose: but we just had a huge debate about health care reform during the first several years of the obama administration. why didn't they deal with -- they dealt with access. >> they dealt with access. >> rose: but did not deal with cost containment or restructuring. is it too much to bite off at one time? >> i can only assume that that's why. i mean, it was fundamentally the reform of the insurance system and many reforms were good. and so we today in to give full credit there. but it was not -- didn't go far enough in thinking how we're going restructure delivery of care and how we were going to create primary care structures

that were also able to prevent disease. because one of the problems we have in health scare we have a lot of preventable things that are driving the cost up at a high rate and we haven't cracked the code of how to do that. the best work on prevention now is actually in the corporate sector. companies understand that if their employees are sick, don't show up for work and get expensive illness that's expenseive to the company. so despite the rhetoric i hear, thank god employers are still in the health care system. because the most progress we're making on health and wellness is actually in employers. those people come to work everyday, they ask them to go through health checks and do preventative activity, they give out pedometers so people work a lot and have contests on who walked the most miles during the day. all that stuff sounds hokey but -- >> rose: they're providing places for naps and a whole range of other things. >> and it's working so the cost

curve is bending in the employer sector where you have these on site services and on site health and wellness programs but we haven't been able to find a way to spread that mind-set and that approach more broadly. now i think some things are kicking in that are promising. we're starting to see a move toward changing the reimbursement model where you don't get paid to do your office visit or your particular surgery. you're not getting paid for providing the whole -- what we call the bundle of services. or you're getting paid to take care of this patient's total health needs. so you have an incentive to worry about that total patient problem. so this is starting to change and take off and i would say in the last two years-- and we must give some credit to the reform process-- there's been militia openness to real restructuring than i have seen in my time working in the field. >> rose: so you've -- harvard has put together -- the harvard business school a report

reinventing america, why the world needs the u.s. to bounce back. i'll talk about the specifics of that but why did the harvard business school undertake this project? >> well, charlie, i think that first of all i think we as an institution have missed an opportunity to engage in the most important issues facing business and in society historically. tended to do our thing: we teach wonderful courses, write articles and books -- >> rose: and send people out to the stock market to make money and create products -- >> and hopefully do good things. but we as an institution have an enormous alumni base, we have a pool of faculty and talent and under -- we decided with the support of our dean to take this issue on because we became deeply disturbed about the path that the u.s. economy was on. we were seeing things going on

in the u.s. economy that we have not experienced in this country for decades, many decades. you could argue even going back to world war ii. >> rose: things like? >> things like the sputtering of the job creation machine. i mean, if you look from 1970 to the year 2000 we would create on average smoothing out the ups and downs 2.1% job growth every year. year after year, decade after decade. around 2000, 2001, that just stopped. and, of course, now -- when the recession hit in 2007 it went negative. but the job generation machine started slowing down even before 2007. our work force participation started falling. the proportion of americans of working age who were actually employed in the work force in gainful employment today at this moment is in a 30-year low. so our wages weren't growing. and the great american dream,

the mobility, the ability to have a good middle-class job and rise up was sputtering and sputtering. and we were concerned that we really needed to go and take a look at this issue using all the resources of the school. >> rose: was it because the world had changed and we hadn't? >> i think it's -- >> rose: that the world caught up with us and we no longer had certain advantages? >> that is probably the biggest part of the problem. we -- the rest of the world -- let's go back 20 or 30 years. the rest of the world was way behind, probably because they were still recovering from world war ii, partly because we had just this commanding lead in so many areas. the rest of the world has been steadily chipping away at improving their competitiveness, improving their skills, improving their infrastructure, reducing corruption, lowering bureaucracy, lowering their taxes. and the u.s. for a variety of reasons we have not been

progressing as rapidly. we've retained a lot of our core strengths. things like our university system, things like our entrepreneurial culture. but we've now piled on to those strengths a whole set of cost of doing business that really have kind of thrown the balance in the favor of moving activities outside the u.s. and also the inability to support those rising wages. so things like a legal system, things like the regulatory costs. they don't seem like a big deal individually but when you add them all up you now start to see that more and more of the kind of middle-class work that used to be done here, that doesn't require a harvard m.b.a. or a ph.d. in electrical engineering, a lot of that middle-class work that used to be done here we started losing more. >> rose: providing a manufacturing base as well as the core of our society? >> core of our society.

our society was unique -- >> rose: a great middle-class. >> this great middle-class that was able to succeed and had a sense of mobility. the ability for a person to kind of move up the ladder from a limited background today is harder than it's been in decades many decades, because the bar has been -- >> rose: and the interesting thing-- and you can correct me if i'm wrong-- if you look at emerging nations, the most important thing that has changed is that they are creating a middle-class that he has demands of its own, that requires products and services that fuel an economy. >> that's exactly right. and what's happened with us is our higher skilled high-income people have generally done pretty well but everybody else has been stagnant or even declining at a time when we -- when -- the pressure to pay more of the health care costs and so forth has been building as well. so to me this is the big story

of the whole age of america. this story of can we restore the vitality of our economy, can we restore the competitiveness in our economy so we can start to restart that middle-class prosperity engine. that's the big story. >> rose: i want to talk about your ideas but i want to take note of the fact that this says "why the world needs the u.s. to bounce back. >>". >> yes. >> rose: because? >> because the u.s. has been-- despite our lapses and confusion-- the u.s. has been the champion of the free market economy, the u.s. has been the champion of reducing protection and eliminating distortion and even promoting workers' rights and protecting intellectual property, we have been the driving force behind the world economy that we find ourselves in today that's by and large allowed a lot of countries to raise their standard of living.

without a strong u.s., without a vital u.s. economy, our influence, our ability to continue that role is diminishing. so i would say that this issue of u.s. competitiveness is not just the u.s. number one economic issue, it's our number-one foreign policy issue. it's going to determine our influence in the world and our ability to shape the international dialogue. >> rose: this is the "economist," every year at the end of the year, 2012, they put together a forecast for 2013. guess what was in it here? "what washington must do now: an eight-point plan to restore american competitiveness." we're going to touch on the eight point which is i have here and they are obvious. it clearly looks like the people who write the speeches for the president, the people who help him look at his agenda for the next four years have read some of these ideas. any feedback from the white house about this? >> we have lots of contact with lots of different people. we've been connected with the

president's jobs council. we have a lot of alignment with jeff immelt and his -- >> rose: yeah. >> my former student, i'm proud to say. so there's been a lot of cross talk and gene sperling and the economic team. so i think we've -- sour commitment at the school was to engage with everybody in a bipartisan, non-partisan way on this issue so over the last couple years we've talked to literally thousands of business leaders as well as all the relevant constituencys in washington. hopefully we're having an impact. >> rose: as you know there's a debate in washington that has to do with revenues and spending and entitlement cuts and all those questions. one of the questions that arise when they talk about spending is how do you determine what is simply spending and what is more than spending, it's an investment and an investment in the future and an investment that makes you more competitive and ensures you have a future? >> right, and this's a fundamental distinction.

i'm smiling because i remember i used to go to the renaissance weekend in hilton head with bill clinton and i remember playing golf with him on new year's morning, we did that every year for four or five years in a row. we had this very conversation about investment versus spending and what's investment versus spending. of course every person will define what they want as investment. but i do think that the data is quite compeling and shows quite clearly that the things that we really know are investment that shape our future competitiveness. >> rose: what does competitiveness mean to you? >> this is a fundamental question because what we've encounterd is lots of people thinking about competitiveness in different ways. when we talk about competitiveness, we think the right way to think about competitiveness is that a nation like the u.s. is competitive if two things happen: one, businesses operating in that location can compete successfully in the international marketplace but,

two, while maintaining or improving the standard of living for the average citizen so what that means is businesses are doing well but workers' wages are going down and losing their jobs, we're not competitive. if workers are somehow doing great-- which doesn't seem possible right now that that would ever happen, but it has happened in our history-- if workers are doing well but businesses can no longer compete successfully we're not competitive. you have to do those two things together and the only way to do that is to create a very productive environment for doing business. because if you can be productive you can compete and you can pay a good page. that is the iron law of the marketplace. what's happened is that the american environment, business environment, has eroded to the point where i think we are losing some of that competitiveness. that has led to the consequences we talked about earlier.

>> rose: so you've got an eight-point plan here to restore american competitiveness. item one: ease is immigration of highly skilled individuals starting with international graduates of american universities. you're not the first person to talk about this. >> this is -- again, every one of these eight points, charlie, are pretty much agreed to by almost everybody. >> rose: in fact, you said an interesting thing. some people look at this and say "we've heard that before" you say that's a compliment. >> that's a compliment. absolutely. that means that we have wide agreement among lots of different people on the left and on the right and in the academic community about doing these things. and our point is, okay, we've got to do them! >> rose: right. >> because if we don't do them -- the reason we picked these eight points-- and that being one-- is that each of them addresses centrally one of the real serious weaknesses that has emerged from all this research we've done about u.s. competitiveness. so why do we put ease high-skilled immigration?

because we have a -- sort of a critical shortage of certain kinds of highly skilled and highly trained people in engineering and science and math and other areas. we are educating many of these people in our own universities. they would like to stay in america. and they're being asked to go home. and that's not a solution to our fundamental problem of skills in america. we have a lot of other things to do. in terms of something that would move the needle relatively quickly and start to affect our competitiveness quickly this is something that we can do. >> rose: point two: simplify the corporate tax code with lower statutory rates and no loopholes. so in other words this is a grand bargain. we'll lower the corporate rates but eliminate deductions. >> deductions that have grown up over many decades in special deals with special industries and so forth. yeah, the u.s. now has the highest corporate tax rate in

the o.e.c.d. we used to have the second-highest, japan lowered theirs. >> rose: and the consequences of that are capital seeps lower tax rates? >> the consequences are on the margin a business decides where they're going to put a major activity and major jobs and they're going to put that activity where the net to them the good. >> rose: does big business want a lower corporate rate or the deductions that benefit them that they know how to advantage? >> for the first time ever in the history of the harvard business school we surveyed our alumni. can you believe it? we hadn't used this asset. we did it for the second time and there's overwhelming consensus in business that we should lower the corporate rate and the loopholes. and that's business leaders who are more liberal, business leaders who are more conservative. 90% says that's a great deal, it's time to do that now. so that would have a -- in fact, we also surveyed in the most recent survey which was last

fall we surveyed the sample of the general public and you know what? the general public of all these things that we recommended, the general public's favorite things reduce the corporate tax rate and eliminate the loophole. >> rose: at the same time are those people, especially wealthy individuals, okay with the fact that the president and warren buffett and other famous people have come on toward the idea of a higher tax rate for people who make more than-- take your number, 250,000 or 400,000? >> well, i think we found in our survey -- we nut there the solve called buffet rule which says that if you american that case more than a million you have too pay at least 30% in taxes. >> rose: right. a minimum tax rate. >> yeah, minimum tax rate for high-income people. that was not widely supported in business. but because i think people feel that, okay, what if you've -- you know, what if it's all investment income? what if -- so i think people

feel that's too simplistic. but the idea that we should bring down the corporate tax rate and eliminate the loopholes, that's a good deal. talking informally with many business leaders i think idea that the bush tax cuts could expire and we could go back to the clinton rates, i think my personal view-- and i work with a lot of business leaders-- is that there was willingness to do that. i think big hangup has been okay yes, we'll do that but we have to control spending. because if we don't control spending we're just going to be back at the table again. >> rose: but they do consider raising taxes? when you're talking about eliminating tax rates, they define that as raising taxes. >> they define that as raising taxes and there's a growing groundswell that there should be a limit on deductions, personal deductions. >> rose: not only that they suggest in some cases putting deductions that have become sacrosanct in america on the table. >> and i think we should. and they need to be means tested

at very least. and we just got in -- i think we got into a rhythm here which i think people are now willing to revert to a much better structure. >> rose: i want to go through this and remember what we're doing. we're talking about ways that america can be more competitive and satisfy the world as well as its own self and save itself. one, again, immigration. two, simplify the corporate tax code. three: create an international tax system for american multinationals that tax overseas profits only where they are earned consistent with practices in other leading countries. >> this one has been controversial and here with respect i would they the president has talked about this in a way that has been a little confusing. the idea here is this: most countries if you have a multinational company it has locations around the world and if it has a german subsidiary it

pays german taxes. and then the money after taxes -- you know, it can pass that money back to swedeen if that's where its headquarters are and there's no additional tax. you pay taxes where -- >> rose: where the money is earned. >> where the money is earned. the u.s. system is an outliar. our system is okay, yes, pay german taxes but if your german tax rate happens to be lower than our american tax rate, remember, the highest in the world, you have to sort of top it up. so you have to pay us taxes on the difference. and that is not as refoye encourage companies to repatriate their profits to the u.s. so we had this large pile of pro fit sitting around the world -- >> rose: they never brought it hope because they didn't want to pay taxes. >> they didn't want to pay the difference. >> rose: and that would be a means for them to reinvest it under the best of circumstances? >> absolutely. but the president has said that

there's a tax break for having jobs overseas and, frankly, i don't understand that. there's not a tax rate. we have the highest corporate tax rate in the world. the tax break for sending jobs overseas is because of our tax policy, not overseas tax policy. >> rose: okay, there you go. international institutions directions, distortions and abuses in international trading and investment system. that's number four. >> we have a high-skill high in novation high intellectual property high service economy. and we still face massive barriers to those things around the world. intellectual property is not respected, china is exhibit a. services trade is impeded by all kinds of rules and distortions so the u.s. has traditionally been a major force for opening markets and opening trade but

over the last five or six years we just stopped. we stopped our leadership. and we believe that the u.s. must reengage in -- >> rose: part of that is because of competition with congress and some labor union objections to fair labor practices and the like? >> right, right. and i agree with -- and that's exactly right. the point that i think that we all have to remember is we are relatively open economy. people can already import into america. we have the largest trade deficit in the his riff of the world. we have had it. these trade agreements are opening those markets. our market is already open, they almost inevitably benefit us more than the country. yet we've gotten ideologically tangled in trying to use these agreements to try to get other countries to change their social policies and so forth and we have to reengage. i was very pleased to see the president talking about a trade

agreement with europe. what a smart thing to do. let's go and open trade with europe and let's create more economic integration, that will be good for all of us. >> rose: five: simplify and streamline regulations affecting business to force on outcomes rather than costly reporting and compliance, delays, and frequent litigation. >> now, the regulatory debate has been flawed in the following way. you need to separate regulation into two issues. number one is what standards do you set for safety, the efficiency, energy? and the second is how do you go about achieving compliance for those standards? our problem is not too high standards. that's not the problem. our f.d.a. regulation is no more stringent than the european equivalent of the f.d.a. but the problem we have is the compliance process. we're slow, we're bureaucratic, we inflict massive cost and delay so let's separate those two issues. let's all agree on high

standards but let's get it done better. let's get it done faster. let's get it done with less bureaucracy. and, you know, and that's going to make us more competitive. >> rose: number six, enact a multiyear program to improve logistical communications and energy infrastructure, prioritizing those projects most important for reducing the cost of doing business and promoting innovation. >> we have this copious evidence that our infrastructure is no longer world class. we've let it deteriorate and we have trouble mounting a long-term strategy to deal with that. we may need new sources of financing. we may need private/public partnerships. there's some infrastructure bank ideas. lots of good ideas here. we all agree with this. >> rose: even if we agree on what we should do, we don't agree on how to do it. >> exactly. and often at the root of the problem is that we've fallen into this horrible habit that we

won't allow good things to happen where we agree because there's something we care deeply about that we're holding everything up for. >> rose: number seven: agree on a balanced regulatory and reporting framework to guide the responsible development of american shale gas and oil reserves. the idea that we have here. energy reserves that will enable us not to be energy dependent on the middle east. >> epic opportunity for america. we've won the lottery. we can eliminate or come close to eliminating our need to import energy because of the tremendous natural gas resources we have we can get a 50% carbon benefit by converting from oil to natural gas. we have plenty of gas. let's get this done.

it will allow us to support a lot of industries that have not been competitive in america because we've had relatively high cost energy so here's an epic opportunity that will benefit america but we've been tangled in a squabble over environment versus economic, should we allow exports of gas and we haven't come together around sort of a regime a federal regime that will give us certainty and allow this to be developed in the long term. again, it's one of those things that is just one of many examples but all of these are a little bit like that. this is the thing came out of nowhere. i think we've been seeing these other things building for some years and we've -- but this one came out of nowhere and it was american technology. it was innovation.

>> rose: found out we could go places we didn't know and it was cost feasible. >> it was cost feasible. and so that -- it's a marvelous opportunity for america. let's get around for this opportunity and move ahead. everybody agrees. >> rose: number eight: create a sustainable federal budget through a combination of greater revenue, include regular deucing deductions, and less spending through efficiencies in entitlement programs. efficiencies in entitlement programs and revised spending priorities. embodying a compromise such as simpson-bowles or ruben domenici. this is the washington debate? >> this is the washington debate right now and we had -- erskine bowles came to harvard business school when we had the first big event of our u.s. competitives project where we had about 100 c.e.o.s and other leaders from all across the country and he

spoke the evening before the first big seminar session and talked about the whole journey that they've been on with simpson-bowles and talked about the plan and so forth and i can tell you that if we had taken a vote that night of these hundred c.e.o.s it would have been 100 for and zero against. >> rose: where were they when simpson-bowles came out and even the president didn't support it. >> yup. and this is a great failure on the part of the business community to get behind the kind of steps that all of these eight things represent. so i think we're now seeing a different discussion in the business community. we're seeing a different point of view in the business community. it' emerging very, very rapidly. i think we hope we've had in some way an influence on that.

i will also tell you, charlie, that part of what needs to be done needs to be done in washington but we think actually business itself can make an enormous impact on this issue. >> rose: because it can influence washington or because it has within its own operation it is capacity to change? >> because of the latter. because business has a tremendous ability to influence the skills issue. and we have dozens and dozens of examples about companies that are transforming the skills situation. business can affect the supplier base, business can affect k-12 education, business can affect a lot of these things and business has many more resources than government but business leaders in this world of the global economy sort of got trapped into what we believe is a bit of a -- the i don't think thinking and

that is since we're a global economy we no longer have to worry about -- >> rose: you're no longer an american company. >> our u.s. communities and therefore it's somebody else's job to worry about that. now we've woken up in the business community and we understand if we don't have good skills in our local communities how are we going to find the workers we need? how are we going to find the engineers we need? how are we going to drive growth in our company. so i think there's historic opportunity right now for business and government to work together in a more constructive way that i have certainly not seen. >> rose: but here i remember once being in a room where tim geithner made a speech and talked about spending and the obama administration's view of things he said it's not about -- it's about politics in tend. >> i would say these issues are actually about economics. and what we've allowed ourselves to do -- >> rose: that's why i quoted him

in case you disagreed. >> they're fundamentally about economics. and there's an economic truth here and there's a reality which is the modern global economy and what it takes to be competitive. and what f we can't understand that we have a common interest in getting things right politics will destroy us. >> rose: i think geithner's right, actually. i think you've got to talk common sense and you've got to develop within the country a political demand on the part of washington. >> uh-huh. >> rose: that they do what you might wall the right thing. >> yup. i would agree. and what's ironic, as i told you a minute ago, we surveyed the general public on these eight points. >> rose: right. >> you know what the number one favorite thing of the general public was among the eight? >> rose: what? >> corporate tax reform. >> rose: yeah. >> they get it. they understand that -- but somehow that process of getting it at some deep democratic level is not working its way into the

votes that are cast. >> rose: because it has to go through k street in part? >> right. it these go through k street. well said. >> rose: thank you, michael, good to see you. >> good to see you, sir. >> rose: michael porter from harvard business school and harvard university where he is university professor. these points you can see in the harvard business review reinventing america why america needs the u.s. to bounce back. thank you as always. backing in a moment. stay with us. reynold levy is here, he has been president of lincoln center since 2002 and will step down at the end of december. he's led lincoln center through expansion and growth, the completion of a $1.2 redevelopment project and the rest of the campus. the changes include fashion week studios for channel 13 13-and the process for redesigning fisher hall. i'm pleased to have him here. welcome.

we are friends and i know saturday is a good time for you to catch up on this television program from your own testimony. let me do a bit of biography for you college where? >> hobart college. >> rose: then columbia law? >> columbia law school and a ph.d. in international relations from the university of virginia. >> rose: thinking could do what? >> unsure. wanting to build intellectual map for myself and give myself the capability to do many things. >> rose: you went into government? >> went into government for a while with new york city then to the 92nd street y for ten, 12 years. for eight years. then to at&t for a dozen as a corporate executive. spent the last four years helping to run international business for at&t and then the international rescue committee helping refugees and if there to lincoln center. >> rose: in 2002? >> in 2002. >> rose: what's the common

denominator in terms of experiences you had or in terms of the core confidence you felt you had to call on to do what they wanted you to do at those different institutions. >> helping to create where it didn't exist and sustain where it did exist an environment that would support creative and gifted people. >> rose: that's really interesting. create an environment that supports creative and gifted people. find a culture and an attitude and a place that talented people can show their stuff. >> exactly. give them the space to do their best work. >> rose: how do you do that? >> you support them in every way possible so in some instances that means fund-raising and financial capabilities. >> rose: which you're pretty good at. >> thank you. that means space. >> rose: as you said once, no is the beginning of a conversation.

(laughs) >> and i promise you three things for a major gift to lincoln center. i promise you a great night's sleep, i promise you a long life i promise an unobstructed pathway to heaven. >> but you need that. you have to have resources to do that. >> you need all kinds of administrative support. you need an environment that nurtures, that allows for time off, that allows people to get training and the necessary training. that allows people to explore their interior life. >> rose: what does that mean, explore their interior life? >> it means have time to read and reflect, to network, to get outside of -- you know, institutions run the risk of complacency. they run the risk of thinking of themselves from the inside out rather than outside in. not thinking of the customer they serve first or the artist they serve first in the case of

lincoln center so it's important for people inside the institution to spend time outside of it with the patrons, with donors, with artists and have the freedom to do that and the capacity to do that. >> rose: did you get this out of a book or from on-the-job training? >> very much a combination of reading and on-the-job training. imagining yourself in the roles and situations of others. >> rose: see, what interests me in these questions, it is human potential, you know? human resource. how much do we fail to get from it because of the environment, the motivation the reinforcement, the time for interior space is not fertilized and served. >> psychic support is really important and i think vastly underestimated in the for-profit environment so i'm --

>> rose: vastly -- >> underestimated. >> rose: underestimated? in corporate america. >> there's a great focus on material compensation and beyond a certain point that matters less than the view of your boss or the view of a peer. so a note that goes home to tell someone how well they've done or picking up a book that you think will -- they might be interested in and -- >> rose: telling them you care about them individual. >> exactly. and that they did something special. that you really noticed and want them to know that you know and want their spouse to know and their kids as well. that helps to fuel their activity. that's what brings them into work. at lincoln center heads of every institution want to know most from me did i like what they just showed. did you see this latest opening? what did you think? >> rose: how important is it to say it didn't get there yet

hearing those words you are -- you want to rush back to the laboratory or the training room or to the studio. >> well, i think the most politic thing for the president of lincoln center to do is what my board members do when they're at their best which is to ask questions. so rather than critique something that i've seen i'll ask the director "why did you change that scene at that time?" or "help to explain the lighting choices." >> rose: would you get into that with the director? why did you change the scene? >> yeah, sure, sure. sure. that's one of the enormous freedoms that comes from being the director of lincoln center. you can ask almost anything you want. >> rose: tell me what you did that made you proud at lincoln center. part of it is physical. and part of it is -- >> part of it is physical.

we did this $1.2 billion renovation in the middle of recession. we handled our physical infrastructure, we handled our public spaces, we handled our artistic spaces and we did so to the applause of artists and audiences. >> rose: and what's the secret to that? >> brilliant architect. >> rose: right, yes, i know. >> you've had them on the show. very forceful direction from the client. >> rose: that would be you. >> and others. it's very much a team effort. >> rose: whether it's ballet or symphony. >> all of my colleagues on the con stretch went institutions but also board leadership. this country is filled with nonprofits and nonprofit leaders as an important sector of our society. it's 7% of the g.d.p. it's one out of every seven

white-collar jobs is in the nonprofit sector. nonprofits own 10% of the real estate and the value of the real estate in the entire country. more people -- >> rose: 10%. >> 10%. more people volunteer for charity and give money to charity than vote in national elections. so involvement in nonprofit institutions keeps america vibrant and strong. we talk about our universities as a competitive advantage, they're not to be taken for granted. they're built and rebuilt and reinforced day after day after day. and lincoln center is very fortunate to have terrific leadership on its board. >> rose: and how do you use them? >> no board member at lincoln center says they're underutilized. >> rose: okay. but how do you do it? >> well, first of all we engage them in problem solveing. so we'll get them together and say who should be at that space at 66 and broadway?

how do we determine who we want to rent that base is to? who should be the restaurateur at our new restaurant? what's the pricing algorithm for one of the largest underground garages in new york city? we're thinking about building a consulting practice at lincoln center. what should be our -- >> rose: consulting, say, for the government of china? >> correct. and for many other clients. what should be our criteria for client selection and how do we assess which clients we should take on and not take on? behind almost every development have been civic actors bringing their corporate and professional experience to the lincoln center table and helping managers make these decisions. >> rose: and people like doing that if they're -- >> they love it and they particularly love it if there's a beginning, middle and end within a 90 day, 120 day period and they sea see that decision that incorporate into the

mainstream of life at lincoln center. >> rose: what do you think lincoln center to the world community? people who have come to new york. >> well, i think first and foremost the highest standard of performing art. if you come and see the new york city ballet or the new york city philharmonictor metropolitan opera you are seeing among the very, very best of that art form that were can be produced in the world on any given night. it simply doesn't get any better. i'm fond of saying that lincoln center has a total of 30,000 seats in 22 auditorium. that's 12,000 more than madison square garden and we have better seasons. >> rose: (laughs) better singers, you said? >> better seasons. >> rose: you mean your performance style is better? >> exactly. >> rose: we hope that's changing by the way. but when you look at the physical plant there were you

just horrified by it? did you say, my god, this is a -- this is a place that doesn't reflect the genius of the people who live here. >> rose: there was a consensus that lincoln center needed a modernization and a thor thorough one. >> rose: and a new look or just a -- >> it needed a respect for its past, its storied past, but some interventions that would open it up, that would fuse the city with lincoln center that would engage social conversations, social discourse with what occurs on the stage. so there are so many places at lincoln center that you could hang out before or after an event. or sit in a green area and use wi-fi.

lincoln center as a destination not only lincoln center stages in essence in the 21st century was what goes on stage is essential but not sufficient and what surrounds it creates that. >> rose: you know as you go down 5th avenue-- it could be true for lincoln center as well-- if you want to have a sandwich sitting on the steps of the met-- metropolitan museum-- that's a great experience. you just feel like you're somewhere special. >> so on top of the illumination lawn which is right on -- it's a green space right on top of lincoln restaurant you have your sandwich and your computer and you feel like -- >> rose: you're in a special place. i'm surrounding by genius. >> and in a dense city like new york there are that many open spaces -- you can enjoy. >> rose: it really is a signal

to people from outside our shores that here's -- here's what we're proud of and here's where you can come and be part of who we are. >> absolutely. and what i care very much about, charlie, is the metro card carrying brown bag carrying they are mouse carrying new yorker first generation new yorker. lincoln center is for them, too. so we've lowered the barriers to physical entry but we've lowered the barriers to entry in many other ways. we've expanded live from lincoln center. we've increased the number of reduced price tickets. peter gelb has done a great job of bringing the opera to movie theaters. we've said to the city of new york and to the world that lincoln center is open for business and now we're putting great emphasis on digital media. >> rose: so what do you regret that you didn't do that you wanted to do when you came there? >> i actually don't have any

regret. we were able to maintain art at a very, very high standard even as we went through redevelopment redevelopment had no cost to our expension budget and to the amount of art we put on stages. we have a first-rate staff. we have a terrific board. >> rose: would you say to a guy like peter gelb-- who is my friend-- would you say "peter, if you don't have a bad opera occasionally you're failing"? >> i think peter knows that. >> rose: it's true, don't you think? >> absolutely true. lincoln center has got to be a place filled with surprise. lincoln center has to be a place where -- full of risk. and full of risk where things go beyond. >> and that could happen in the world. no one else can bring the paris opera ballet to the united states. >> rose: you're a busy man, how

do you keep up? how does one make sure that not only are they doing the hands on thing required but also that they are accessing the excitement that's around them that's also instructive? >> so i have this management theory that i have five or six things that i think are important to do on monday and on sunday night there's an active conspiracy to prevent-the-from doing them. so that all of the things that go on in daily life that a c.e.o. has to attend to needs to be attended to and that creates a lot of distraction so unless you are bound and determined to accomplish those five or six things that you have in mind it's not going to be a good day and that often means more hours in the day. it means coming in early, it means leaving later so that you can get those things. >> rose: but how do you find the right time to read, to think, to do all those other things that are required to fuel fuel the

decision making you have to do? >> well, i think you and i have a common understanding that sleep is overrated. >> rose: (laughs) i do. so next you're going to write a book? >> i am. >> rose: about your experience, part memoir but also about leadership? >> about leadership as it's reflected through the experience i've had both corporate nonprofit -- >> rose: and so what kind of institution would you like to run next when you decide to do that? >> well, i don't want to run another institution. i've had -- i've run four and i'm more interested in -- >> rose: like a university wouldn't appeal to you? >> no, no. >> rose: harvard business school wouldn't appeal to you? >> to run an institution you have to be totally in. totally in. not entirely off, you need a little bit of distance but you have to be totally in and i would much prefer this next

stage to have a composite of activity so i'll do writing, teaching, consulting. >> rose: bart giamatti once said to me-- and others-- he thought eight to ten years is about the right time to be the head of an institution because at some point in that process you're responding to what what you've already done rather than initiating new things. >> i agree. and in addition to that the learning curve gets far less steep and learning is very, very important to me. but beyond those personal conversations, institutions require fresh ideas and one risk is that people who are running them conflate themselves with the institution if they don't leave at the appropriate time. >> rose: is there one performance, one act of performing art that you saw or heard that was l stick in your mind forever? >> well, there's one person who does and that's audra mcdonald. >> rose: really?

>> for me, audra is the quintessence of lincoln center. juilliard school graduate who's performed on every stage, five time tony award winner, now the personification of "live from lincoln center." audra reflects for me so much that is wonderful about our place. >> rose: thank you for coming. >> great to see you. >> rose: thank you for joining us. see you next time.

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this is "nightly business report" with tyler mathisen and sues gharib. >> another day, another record. the dow ends at a second consecutive all-time high as the federal reserve says the economy is growing but modestly. >> and america's energy future. in focus, a special report on a sector that could power u.s. growth and jobs for decades. and stormy weather. a big problem for you but also a big pain for business. how mother nature is the great disrupter. and welcome to all of our public television viewers. tyler, another day of stocks and the economy grabbing the headlines. >> the stocks once again, another day the dow jumps over the moon. the blue chip index adding 42 points. the broader s&p 500 was up one. the nasdaq though edged nearly

two points lower, pulled down by apple and google. the markets began the day higher after better than expected news about jobs with payroll firm adp reporting 198,000 private sector jobs added back in february, more than economists expected. also helping today, applications for new mortgage loans shot up 15% last week after home mortgage rates edged a tad lower. >> new records have a way of making investors feel optimistic. they also triggered new worries as people try to figure out if the next milepost is dow 15,000 or dow 13,000 again. at these heights, there's fear of the unknown and plenty of caution flags flying. is it too late to get into the stock market? that was the question individual investors were asking all around the country today. the headlines and the euphoria about a new milestone for the dow were tempting for many investors and scary for others at this charles schwab center in new york city. >> i think there's a game in the back room that we're n