00:04Once again, thank you so much for
being here with us today.
00:07We really appreciate it.
00:08>> I'm thrilled to be here.
00:10>> As Sarah alluded to in your
introduction, you had an upbringing and
00:14sought to your career as a death penalty
lawyer that was very different to most of
00:18your compatriots in the Fortune 500.
00:21It's a little bit more
about how that upbringing,
00:23that experience in your early
career shaped you as man?
00:26>> So let me just start by saying again,
I'm thrilled to be here.
00:29It's a wonderful place to be.
00:33I think what my upbringing really taught
me, because I was born on the other side
00:38of the tracks and
had the opportunity because social
00:43engineers engaged in what was
then called school desegregation.
00:47I was raised in the inner city of
Philadelphia, had many older siblings.
00:52But my younger sister and
00:53I were born at a time when
experimentation was happening in America.
00:57And one of the experiments was,
it was called school desegregation,
01:01which is different from integration
in that the social engineers in
01:05Philadelphia felt that a few inner city
black children should be put on buses for
01:0990 minutes one way to go to
the best schools in Philadelphia.
01:14As a result of that,
which by the way I hated as a child,
01:17I realize now looking back,
that I was given an opportunity
01:22that most of my friends and
even my siblings were not given.
01:27And so I think what that caused
me to realized is that there is,
01:30in fact, this opportunity gap
that exist in our society.
01:34That if you're lucky
to be put on a bus for
01:3790 minutes a day,
it closes that gap for years.
01:40But there are lots of other
people who are similarly talented
01:44who don't get those opportunities.
01:46So I started off, I guess,
in my career, thinking about how do
01:50those of us who are lucky enough to have
these opportunities, how do we get back,
01:54how do we figure out how we can help
those other people who were not so
01:58fortunate, not so privileged,
to actually reach their full potential.
02:04>> You were a lawyer for a long time and
02:06not in a perjorative sense of the word,
okay?
02:08>> [LAUGH]
>> You were a business lawyer and then
02:13now you're the CEO of one of the biggest
pharmaceutical companies in the world.
02:17How does that happen?
02:18How does a lawyer get to that stage?
02:20>> So the first thing I have
to say about career paths, and
02:23I've had this conversation
with a lowt of people,
02:25is that there's an element of
serendipity in everybody's career path.
02:28So I never aspired to be
a pharmaceutical executive.
02:35As you mentioned, and I had
the opportunity in the private practice of
02:38law to do things that I thought
were really be great adventures,
02:41whether it's teaching in South Africa,
doing death penalty work.
02:45But one day, the phone rang.
02:49I answered the phone and
it was the General Counsel of Merck,
02:53who said I'd like you to come and
meet with me and the then CEO of Merck,
02:57a really great CEO named Roy Vagelos,
one of the great CEOs of recent history.
03:03I want you to come and interview with us
because we'd like to bring you to Merck.
03:08And I said, well, okay,
I'll come interview.
03:11And I went home that night and
I said to my wonderful spouse, Andre,
03:15who's in the front room.
03:16That I intended to humor my client by
going for an interview, and she said,
03:21honey, I don't want to tell you about your
business, but this whole law firm thing is
03:24a cruel hoax and you might want to
think more openly about it.
03:28So I did what she told me to do.
03:32>> [LAUGH]
>> And I ended up going to Merck, a little
03:35bit against my will because I didn't
think it would be nearly as adventurous,
03:39being in a corporation as being in a firm
where you could represent anybody that
03:44But little did I know that there was
going to be a real as I worked there.
03:49>> Through serendipity or not,
03:50a lot of us ended up here
[INAUDIBLE] in the world of MBAs.
03:54you've been quoted as being slightly
skeptical with the MBA as a degree.
03:57I believe the exact words were I'm
not sure Bill Gates ever had one.
04:00>> [LAUGH]
>> Don't worry, we get a lot.
04:04But I'm curious,
what is it you think we're missing?
04:07What is it you think we need to go out and
learn in the next phase of our careers?
04:10>> So
let me say that I think business education
04:15really has its values, so you should
be encouraged to hear me say that.
04:19But I think the issues that we face in
business are broader than the traditional
04:24issues around finance, around marketing,
04:31I think the issues that
we have to address is,
04:34as businesses are generally
the issues that society faces.
04:38I believe that the biggest problems
that we have in society can only be
04:41addressed through sustainable means, and I
think businesses can address those issues.
04:47But only if their leaders are willing
to take a broad point of view about
04:51what it is that the business exist to do?
04:53What is the fundamental
purpose of the business?
04:56We have this discussion now,
and unfortunately,
04:59I think what people like Larry think it's
become more of a widespread discussion
05:03about whether corporations exist solely
to create value for their shareholders or
05:08whether they have a broader
purpose in the world.
05:10I happen to believe very strongly that
a company like Merck has a real broad,
05:15significant, salient purpose in the world.
05:17It's 127 years old and the reason why
it's lasted more than a century is
05:22that its purpose goes beyond simply
making money for its shareholders.
05:27If you get up in the morning and
your sole intent is to make money for
05:30your shareholders, you'll miss some really
great opportunities to do a lot of good
05:34for a lot of people.
05:36>> That must particularly hard for
a company like Merck where you've got
05:39employees, you've got shareholders,
and most of all, you've got patients.
05:43How do you go about weighing up
those different constituents
05:46whenever you make a decision?
05:48>> Well, there's no formulaic
way to do it, obviously.
05:51But I think the first thing
is that you have to remember
05:54that the company exists for this purpose.
05:56So I came to work for
a really great CEO named Roy Vagelos.
06:00And I could tell you a lot of stories,
but the thing that I remember more than
06:03anything else is he used to say to me and
he still says to me.
06:07He's 89 years old, and
I still see him frequently.
06:10He says, there are a lot of metrics
around on the way the company operates.
06:15But just remember at Merck,
there are two fundamental metrics,
06:19that if you remember as CEO, you can go
through all your operating reviews, and
06:22you can look at your margins, and
you can look at your cost of goods sold,
06:26you can look at all these
wonderful metrics, but
06:29there's only two metrics
in the end that matters.
06:31Number one, how many people do you help?
06:36And number two,
how much help do you give those people?
06:40And if you're maximizing
the number of people you help, and
06:43you're maximizing the amount of
good that you do for the people
06:47that you are helping, then all of those
other metrics will fall into place.
06:51>> I'd love to unpack that some
more later on in the interview,
06:56bur firstly, there are a few
times when I was researching for
07:00this interview that I came across
times when you had to make really,
07:02really difficult choices,
made very brave choices.
07:05For example,
taking the James Cochran case,
07:08leaving the President's
Manufacturing Council.
07:10You also took on highly sensitive internal
investigation into the Paterno Sandusky
07:15case at Penn State, and I hugely admired
how you held your ground against some
07:18people who were trying to sweep
certain elements under the rug.
07:22How do you know when to act when other
people around you are being silent or
07:26>> Well, I had great parents.
07:29But my mother died when I was young,
so I had the experience of
07:32being raised by a single parent
father who was like a drill sergeant.
07:36He was a very unsentimental person.
07:39But he said to me when I was very young,
07:40probably the best piece of advice that
I've ever gotten from anybody else.
07:44And here it is in a nutshell.
07:46He used to say to me, Kenny,
07:48what other people think about you
is none of your damn business.
07:55when I was young I would think,
how could that be?
07:59I want to be Liked, I want to be friendly
with all my colleagues around me.
08:06I want people to like me and
enjoy being around me.
08:10But the more I've experienced in life,
I understand exactly what he was saying.
08:15He was saying that if you can,
focus on what's the right thing to do.
08:21Irrespective of whether people
around you like you or not.
08:25Then you can do the right thing,
so every one of those situations,
08:28the Sandusky investigation was
a very difficult investigation.
08:32I'm a very proud alum of Penn State.
08:36The week before the Sandusky grand jury,
I actually exchanged correspondence
08:42with Joe Paterno who, there'll never
be another coach like Joe Paterno.
08:45No one will ever coach at this school for
60 years.
08:51He did a lot of wonderful things.
08:53But when we began to see some of
the things that were happening behind
08:56the scenes as a board,
08:57then we had to decide whether we were
going to put the children first,
09:00or whether we we were going to put
the reputation of the university first.
09:04And we chose to do what we
thought was the right thing.
09:06I can't say that everybody agrees with us.
09:08In fact, many of our alums think we
should have represented the university.
09:12We should have defended the university.
09:14We should have defended
the football program.
09:16And I think they have a legitimate
point of view from where they sit.
09:20And the end of the day though, it seemed
to me that what was right in the long
09:25run was that we took a strong stand for
what needs to happen for children.
09:29And you see it happening everywhere.
09:30You see it happening at
Michigan State now, right?
09:33Where the same kinds of things went on.
09:35So I think whether it's Penn State,
you take a death penalty case,
09:39it sounds great in retrospect.
09:41When you start that case, my client
was 13 days before his execution day.
09:45There was a lot of hostility
in that part of Alabama,
09:48because people had bought in to the story
that the conviction was correct.
09:53And in comes this northern lawyer, by the
way, wearing a blue suit, which you're not
09:57supposed to wear in that part of Alabama,
because we're still fighting that war.
10:02I'm here to say that the community's
perspective, that the community's
10:07story about what happened in
the night in question is wrong.
10:12That creates a great deal of
anger in the people around you.
10:16And the only way in which you can do that
on a consistent basis is you really have
10:20to believe what my father said,
10:21what they think about you ultimately
is none of your business.
10:26>> You talked about doing the right thing.
10:28And I think a lot of people think we're
at a turning point society at the moment.
10:32There's a real lost of
trust in institutions.
10:36>> And you mentioned earlier to us in the
greenroom that the kind of conflict you
10:40see between capitalism and
10:41democracy in this country and accepting
a certain manner of social inequality.
10:45Is there a solution to this or is this
a endless series of decisions where
10:49we have to rely on people to
make the right one every time?
10:52>> Well,
I don't think that I can sit here and
10:56give you one short set of solutions.
11:00What I would say is that what I am
greatly concerned about our society
11:05is the seeming inability for
us to have nuanced
11:12constructive conversations about
the issues that exist in our society.
11:16And we will never reach
11:19constructive solutions unless
we can have those conversations.
11:23So, for example, frankly,
as I was growing up in
11:28the 70s I would have viewed
myself as a socialist.
11:33The concept that I'm running a large
pharmaceutical company to me,
11:36sometimes I just can't believe it's true,
right?
11:39I remember having an economics
professor in undergraduate school and
11:42he was talking about capitalism.
11:44He happened to be from Eastern Europe,
Professor Albinski.
11:47He was from Eastern Europe.
11:49And he was talking about
the virtues of a capitalist system.
11:51And I remember saying to him,
you're so conservative.
11:54And he walked over and he leaned over, he
looked at me, he said, and you, sonny boy,
11:57have nothing yet to conserve.
11:59>> [LAUGH]
>> I really get him now.
12:06here I am,
a staunch defender of the free market.
12:10Well, the free market Inherently requires
some level of economic inequality.
12:17Those people who create value are going
to have more resources than those people
12:23We can't say that everybody is going to
have exactly the same amount of resources.
12:28I think it's actually the best
economic system in the world.
12:32However, if you allow that economic
inequality to translate into
12:37political inequality, for example,
people who have a lot of money can in fact
12:42buy elected representatives,
then I have a problem with that.
12:47And so how do we think about preserving
12:50the economic system in this country which
has created not only tremendous wealth for
12:54people in this country but
around the world?
12:58While at the same time thinking,
13:00well, what's the right balance to have
in terms of our political system?
13:03How much economic inequality are we
willing to tolerate in our country?
13:09We now have a situation where our
economy creates a lot of value for
13:15people who hold capital.
13:18Globalism has been great for
people who hold capital.
13:23The technology revolution, which of
course is centered right out here in
13:26Silicon Valley, it's created a lot of
value for people who hold capital.
13:31But if you're not well-educated,
if you're a person who has a labor job,
13:36all of those have actually been bad for
you.
13:39Because now machines take your place,
labor arbitrage takes your job away.
13:44So how do we try to have a balanced
economy where everybody is
13:49included without losing what's driven the
fundamental strength of our country for
13:54years, which has been
the economic system that we have?
13:57I can't answer all those questions.
14:01the point I'm making is it's not
a choice between one thing or the other.
14:06>> Certainly not asking you to
answer all those questions,
14:09but will ask you to answer
one particular one.
14:12We're relying on decisive
leaders like you in healthcare.
14:14And we have a system that's hard for
many of us to be optimistic about.
14:18>> [LAUGH]
>> You're already highly influential
14:20If you could be king for the day,
14:22what's the one thing you'd change about
the health care system in this country?
14:25>> I would make it patient-centered.
14:27I think the incentives in the system drive
people away from what's good for patients.
14:33I'm a CEO of a pharmaceutical company.
14:36I think Merck goes great things in
the world, but when you sit down with our
14:40friends in the insurance business,
they have different economic incentives.
14:45Physicians have different
economic incentives.
14:48I think the only way in which we can
actually come together and kind of get
14:53alignment around the cost of the system,
around the value of the system,
14:58and the impact of the system on society
and our budgets in society, and
15:03on patients, is to actually say,
what is good for patients as a whole?
15:09Individually, and
from a population standpoint.
15:12I think if we would all agree that
we're here to serve patients and
15:16we want to do what's in the best interest
of patients, I think that would help
15:20us align the really badly aligned
incentives in our system right now.
15:25>> How does that kind
of conversation start?
15:27How do ou get everyone
in the room together?
15:28Is it politically led?
15:31>> We're trying do it.
15:32A bunch of us are going to try and
15:33come together again in June from
across the entire healthcare spectrum.
15:40We think of ourselves as
the enlightened ones.
15:42>> [LAUGH]
>> We're all going to try and get together
15:46and see if we can have a conversation
that bridges some of those gaps.
15:50I mean, if you listen to what was being
said the other day by President Trump and
15:55Secretary Azar, a lot of what they
were focusing on is they can see
15:59how badly misaligned
the incentives are in the system.
16:03So, for example,
You hear a lot about drug pricing.
16:08The system in which we actually sell drugs
in the commercial market is one in which,
16:14if you actually lowered your list price,
you'd be less competitive.
16:19As an antitrust lawyer,
I just can't get that through my head.
16:22The way to be non-competitive in my
business is to lower your price.
16:28Well, because many of
the actors in the supply chain
16:32make money as a percentage
of the list price.
16:36So for them high prices
are better than low prices.
16:41But if you're a person who's filling
a prescription at the pharmacy counter,
16:46you're paying a copay
based on a list price.
16:49So you would actually
rather have a lower price.
16:53We actually ran that experiment with
a hepatitis C drug that we came out with
16:57We said, okay, we're the third
entrant in the market, this is a cure.
17:02Let's see what happens if we bring this
17:05product to market significantly
lower than our competition.
17:08Now, that was the category, hepatitis C,
17:10where they used to talk about the $100,000
cure you might remember a few years ago.
17:15We said let's see what happens if we
bring in a drug at a lower price.
17:19Well, I think the experiment
that we ran showed
17:22that a lot of actors in the system would
disfavor a lower list price product.
17:26And there's something wrong with
a system that operates that way.
17:31>> One of the other things in that speech
was referring to President Trump's notion,
17:35I think shared by many people, that
foreign governments who run countries and
17:39public healthcare systems take
advantage of American consumers because
17:42they're able to negotiate drugs in bulk,
effectively.
17:46Is that notion correct, and
is there something that you can change?
17:50>> Well,
I think if you look across the world,
17:54I think it's pretty fair to say that
there's some countries in the world,
17:58particularly some of the higher
OECD countries in Western Europe,
18:03That actually don't pay their fair share
of the cost of pharmaceutical research.
18:09I think that's pretty clear.
18:11How we change that,
I mean I just left London where I met with
18:14some of the top health officials and
I have news for the President.
18:18They're not actually interested
in paying more for our drugs.
18:21They're pretty clear about that.
18:24They actually found some of those comments
mildly amusing, as they say in London.
18:28>> [LAUGH] It's a real shocker they
didn't want to pay more for them.
18:32>> The problem is though, of course,
18:37if Americans didn't, quote, overpay for
drugs, there would be no drugs.
18:42>> I mean,
that's the sad truth of the matter.
18:45At the end of the day, the only thing
worse than Americans paying a very
18:49substantial amount for drugs, is Americans
not paying a substantial amount for drugs.
18:54Because if they didn't, frankly,
18:56we couldn't raise the capital to take
the risks that we do in R and D.
19:03>> You take risks in R and D for
19:04some diseases that you're not
planning on making any money on.
19:09You mentioned that today you shipped
Ebola vaccines free to the Congo.
19:14You, in the past, developed a cure for
River Valley Fever.
19:19When is it you choose to go
after these particular diseases?
19:24How do you come up with that?
19:27>> So the way that we think about our
R and D enterprise at Merck is that
19:31we're pretty much agnostic
to therapeutic category and
19:35pretty much agnostic to modality.
19:38That is to say, we don't say we
want to do a small molecule or
19:43a vaccine or a biologic.
19:44And we don't say we want to do
this disease or that disease.
19:48We try to follow the scientific
opportunities that we get.
19:51And the reason that we ended up in Ebola
was the work that we were doing in our
19:55vaccine research organization really lent
itself to doing something about Ebola.
20:00At a time when frankly, we had that
last outbreak in western Africa,
20:05Sierra Leone, Guinea,
Liberia which killed 11,000 people and
20:09made 25,000 people sick before
we got it under control.
20:12We were able to look at some of
the work that had been done,
20:15pioneering work done elsewhere, and
say the work that we know how to
20:20do inside Merck to sort of purify
the antigen to make sure that
20:25we bring forward the right kinds of steps
to go from just having an antigen to
20:30actually having a full-fledged safe
vaccine is what we do every day.
20:34We thought if we took that program over,
if we paid for that IP, if we brought it
20:38in-house, there was a good chance that
we could do something for the world.
20:42And I'm very proud that in
the field tests that drug,
20:45that vaccine has been shown to be,
so far, 100% effective.
20:54And Merck does a lot more.
20:56>> Well,
it's hard to be more than 100% effective.
21:03>> [LAUGH] Merck does a lot more for
causes.
21:07And one cause I've heard you speak
about particularly passionately is
21:11preventing the death of
women in childbirth.
21:13Why is this something you are so
passionate about or that Merck is so
21:17>> So, I think, I don't want to
sound like I'm just a booster for
21:22Merck, but I will say that
the company has as part of its Ethos,
21:26the concept that we should
be contributing to humanity.
21:31And we don't just say, well,
we're contributing to humanity because
21:35the medicines and vaccines that we
make actually have a positive impact.
21:39I have to say this industry
has a lot to be proud of.
21:41At the beginning of the 20th century
global life expectancy was less than
21:46It's now above 70 years, largely
driven by the innovations by Merck and
21:52But we don't say, because we invented
a measles vaccine which probably has saved
21:5720 million children's lives over the last
15 years, that that's all we need to do.
22:01We need to also look at those things
that we're not required to do.
22:05We need to find areas where we can bring
both our financial resources as well
22:10as our scientific expertise to bear and
we just chose maternal mortality because
22:15there's, 80% of women who die in child
birth die from preventable causes.
22:21And just to give you some data,
people think this is a problem in
22:25Sub-Saharan Africa or India or
other poor places in the world.
22:30In New York City, the chance that
a black woman dies in childbirth is 12
22:35times higher than the chance that
a white woman will die in childbirth.
22:41If you look across all OECD countries,
in maternal mortality,
22:45the US ranks 32nd out of 35 countries.
22:48I mean, that's an amazing statistic.
22:53So as we look at those things,
we know what to do.
22:56The problem in maternal mortality is
that we don't have these clear protocols
23:00to deal with the issues like hemorrhaging,
like spikes in blood pressure,
23:07It used to be in this country that
if you had a heart attack, you died.
23:09Now you don't die anymore because there
are clear protocols to what to do when
23:13somebody presents at a hospital
with a heart attack.
23:16So we just decided that we would devote
a half a billion dollars over ten years
23:20to seeing how we could reduce
preventable cases of maternal mortality.
23:24And we feel good about that.
23:26But there's also a business
benefit to that,
23:28because when we go to recruit world class
scientists that come out of academia,
23:34those kinds of things are evidence to them
of what the company really cares about.
23:40And I think it's a tremendous
competitive advantage.
23:43When people can see the kind of impact
that we're having in areas like that.
23:48>> You mentioned a truly horrifying
statistic, which is that black mothers
23:52are far more likely to die than
white mothers in [CROSSTALK].
23:54>> Yeah, only 12 times more.
23:57>> Is this an example of
institutionalized bias?
24:01What are the factors behind this and
what can be done about them?
24:04So again, in the spirit of
having a nuanced conversation,
24:09I won't label it as just
the product of institutional bias,
24:14but clearly, there is institutional bias.
24:17Because the same studies that show
a black woman is 12 times more likely
24:22to die than a white woman
show that it almost
24:24doesn't matter what the socioeconomic
status of the black woman is.
24:28So, even when they have insurance,
24:30even when they present,
they don't get the same care.
24:35There's also the issue of what
happens in their environment, right?
24:39And so, from my perspective,
that is an issue, I think in this case,
24:43because even if you control for
socioeconomic status.
24:49An African American woman in
New York City with an advanced degree
24:52is more likely to die than a white
man without a high school degree.
24:56And I think it's pretty hard to square
those things without looking at
24:59how the healthcare system delivers
care to different people.
25:05>> There are clearly issues
more broadly in society, and
25:08we've all heard about
the opportunities gap before.
25:11You mentioned this earlier at
the beginning of the interview.
25:13In the past, I've heard you also mention
an access gap for minorities in business.
25:17Can you unpack this idea
a little further for us?
25:19>> Sure, when I talk about
the opportunity gap, I mean two things.
25:22And then I'll get to access gap.
25:23So I talked about being bussed as part of
the experimentation when I was a young
25:28child in Philadelphia,
being bussed to majority schools,
25:33white schools,
let's call them what they were.
25:36So, what did that do for me?
25:37When I was in elementary,
25:39and middle, and high school,
I didn't think of myself as a student.
25:43I went to schools where the ambient
standard for education was very high.
25:48I didn't know it was higher than
the kids that I was playing with in my
25:51neighborhood in the summers, but
the ambient standard was very high.
25:54So when you took standardized tests,
you came across as being very prepared for
26:01So that closed one form
of opportunity gap.
26:05Also when you go into business, or
in my case, into the practice of law,
26:10the opportunity to work on the best
cases isn't distributed evenly.
26:17This is the stock and trade of lawyers.
26:18In my case, I was very fortunate
that the then general counsel of
26:23Merck took an interest in me and
made sure that I got really good cases.
26:27And then I learned to try sophisticated
cases, and that made my career what it is.
26:33So one form of opportunity
gap was education.
26:35The other form of opportunity gap is,
once I arrived in the institution,
26:39who got the best opportunities
inside the institution?
26:42And then the third one is this access gap.
26:45So the access gap is what I would
define as being, do people have access
26:50to the people in the firm who can make or
break their career?
26:55So I sit before you as the CEO of Merck,
and the reason I am the CEO of Merck
27:00is that Roy Vagelos, who was the CEO two
removed from me, took an interest in me.
27:06Hired me in the company as a lawyer,
called me into his office as soon as he
27:10got me to sign up, and said,
you cannot be a lawyer.
27:13I said to him, what do you mean?
27:15I'd like to contribute to
Merck in my own discipline.
27:19that's the most ridiculous thing
I've ever heard in my life.
27:22We're in the medicine business.
27:23We're not in the legal business.
27:25And he forced me out of my comfort level.
27:27And as a result of that,
27:29I got access to working in broader areas
of the company as I sit here today.
27:34I realize that I'm the product of
being given access to those broader
27:38opportunities inside the company.
27:41So that Is an important issue.
27:43There was a New York Times front page
story, you might have seen it last fall,
27:49that said the majority of both men and
women are uncomfortable
27:53with close mentoring relationships
between men and women.
27:57Well if that's the case,
27:59then we're putting women in the position
where they lack the mentorship and
28:03the sponsorship that's necessary
to be successful in business.
28:07And so we have to mindful that
talent may be evenly distributed.
28:13I believe it is, but opportunities and
access are not evenly distributed.
28:19>> You are at the very top now,
28:21you have access to boardrooms that
none of us are able to sit in.
28:25Minority underrepresentation on boards has
received a lot of attention from the media
28:28in the last few years.
28:30From your perspective, from where you sit,
do you think attitudes and
28:34perceptions in boards is really changing?
28:37>> So I have access to a limited
number of boards, of course,
28:40my board is extremely enlightened.
28:51>> Pete Wendell's in the front row.
28:53>> [LAUGH]
>> No, I do think that
28:58generally speaking,
the conversation is happening around
29:03board rooms about representation,
about diversity.
29:09I think that there still are challenges.
29:11So for example, there's a lot of focus
now on recruiting women to boards.
29:17I'll use that as an example.
29:19But the selection criteria
have lagged that conversation.
29:25So everybody's eager to recruit women to
boards, but they still say we want CEOs.
29:30Well, there are more CEOs with the first
name Michael than there are women CEOs in
29:36So if you're going to insist on women and
saying that you have to use
29:39the same traditional criteria, then
you're at odds with your actual intent.
29:44So, I think we have to open up our minds,
29:48because there's talent everywhere,
and I think we have to be open.
29:51But when you have that conversation,
29:54you have to guard against the reaction
that you're lowering standards now.
29:59We're bringing women into the board room,
but we've lowered the standards.
30:03And in fact, actually, I think the biggest
problem with boards is group think.
30:11And so, if you get a bunch of people
who come from the same background,
30:14they're more likely to see
the problem the same way than
30:17people who come from
different backgrounds.
30:20The value of my board,
frankly, is two things.
30:24They bring varied experiences that are
very different from the management teams,
30:28including an outside-in view of Merck.
30:32And the other one is that while
they're empathetic, they're just not
30:35too empathetic, so that they don't
let us get away with our bullshit.
30:39So at the end of the day,
you want people who come
30:42into the board room with very different
experiences and perspectives.
30:46That's how you get the best deliberations.
30:50>> You remain one of the very few
minority CEOs in the Fortune 500.
30:53>> Yeah, there are three of us,
out of 500.
30:57>> Where all have you been?
30:58>> There used to be six
of us in the happy days,
31:01the halcyon days of African American CEOs.
31:04A few years ago, there were a whole
six out of 500, now there are three.
31:09>> We're all hoping to be
leaders in the future.
31:10What do you want all of us to do to
make sure we change this for the better?
31:14>> So I think this issue of diversity is
one of these issues that I've started off
31:18saying is a very challenging and
31:20nuanced issue, that it's really difficult
to discuss in corporate America.
31:26Because what happens in the conversation,
inevitably,
31:30is people say, in effect,
let me tell you what my experience is.
31:35And you're not allowed to
challenge my experience.
31:39And that leads people to
retreat to different camps,
31:41to be defensive,
to engage in the rhetoric of blame,
31:45which doesn't solve anything,
as far as I'm concerned.
31:48So I would say that for
the young students who are here today,
31:52I hope that you actually understand
the points that I made about how
31:57opportunity and
access isn't distributed [INAUDIBLE].
32:01And I hope that you're willing to take
steps to ensure that we close those gaps,
32:05whether you're talking about What's
happening in public schools in our
32:08society, whether you're talking about
what's happening in corporations.
32:13I think enlightened leaders can
provide those opportunities.
32:17the last time, I am the product of
a CEO who looked at me and thought
32:22that I had much more potential than I ever
would've dreamed that I would of had.
32:27I hope I have done a good
job as the CEO of Murk but
32:30the opportunity came from somebody
who was willing to invest in me.
32:35>> So
again before we turn to audience Q&A,
32:37I've got one last huge societal
problems for you to solve.for us.
32:40If you succeed at your job you
will save the employee lives,
32:44it's obviously a good thing.
32:46But there's an aging population and
the associated burden's worry
32:50I mean, we talk about the cost to
the health care system, of our drugs.
32:56So that's certainly a challenge
to the health care system.
32:58But the fundamental challenge in our
health care system is chronic disease.
33:0390% of the costs in the healthcare
system is from chronic disease and
33:07chronic disease is correlated with age.
33:11So the good news is with all
of these medical advances,
33:14people are living longer,
longevity is the good thing.
33:18But when it comes to healthcare
consumption, longevity isn't a good thing.
33:23The older people are,
the more healthcare services they need.
33:28And as a compassionate society I would
hope the more health care services we're
33:32willing to give them.
33:33But the aging of our society
is a major challenge for
33:37the economics of our health care system.
33:39In fact, some estimates are that a third
of all health care spending is in the last
33:46We have to think about that and we have to
think about what's the compassionate and
33:50rational way to deal
with people as they age.
33:55>> So kind of a, half of us here are
second year MBAs, we're about to graduate.
33:58We've got a month to go.
33:59We're going to have as much
fun as possible in that month.
34:01But soon reality's going to
hit us in the face.
34:03So I'd like to give you the opportunity
to give us some quick words of wisdom
34:07before we go,
in the form of a lightning round.
34:10So I'm going to hit you with two options,
and
34:12then just say back the one
you think is most appealing.
34:15>> Okay.
>> So should
34:16we take time finding the perfect job or
just get on the ladder?
34:20>> I say get on the ladder.
34:24>> Stay in the US or move to China?
34:26>> Stay in the US.
>> Go into tech or into finance?
34:30>> Communication,
should we be blunt or tactful?
34:32>> I think we should be tactful
at all times but honest.
34:37>> Is Bitcoin a bubble or the real deal?
34:41>> [LAUGH]
>> Well Bill Gates says it's a bubble,
34:45so who am I to argue?
34:46>> [LAUGH]
>> Beyonce or Rihanna?
34:50>> Beyonce or Rihanna?
34:52>> [LAUGH]
>> Beyonce.
34:56>> [APPLAUSE]
>> Personal philanthropy,
35:02should we be giving time now or
money later?
35:04>> I'd say both really,
but give money later.
35:10that's the question at
this gentlemen over here.
35:13If you have money you an make
a big difference in the world.
35:17>> East coast or West coast?
35:19>> Clearly East coast.
35:20>> [APPLAUSE]
>> All right.
35:23>> Especially Philadelphia, right?
35:26>> [APPLAUSE]
>> Kids now or kids later?
35:29>> [LAUGH]
>> I'll tell you I have two,
35:34it's an overrated experience when
they get to be here on this show.
35:37>> [LAUGH]
>> Don't have to tell me.
35:41Given the state of the world today,
optimism or realism?
35:44>> I say optimism, for sure.
35:46>> And finally, the big one,
LeBron or Jordan?
35:51>> No question, Jordan.
35:53>> Yeah!
>> [APPLAUSE]
35:55>> Ladies and gentlemen, thanks so much.
35:58Please welcome him back, Ken Frasier.
36:00It's all in fun, thank you.
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