Now please give a warm door to
Ted welcome to David Caplan

going to be careful with the steps.

Well good afternoon.

Claudia thank you very much for
that nice introduction very well done.

I understand you get extra credit for
that.

Well look it's great to be in
Georgia again in Atlanta and

my first time back after having been out
of the government and to be on spend some

time talking about a topic that is
actually very very important to me that

doesn't involve the law that doesn't
involve patents trademarks copyrights or

trade secrets except as
the object of some business and

that is a topic of leadership.

So what will.

We're going to do if it's
OK is I'll just talk for

a few minutes convey the thoughts.

In this area that I've got regarding
what we did at the U.S. P.T.O.

and then I'm going to invite my friend.

Stu Graham to come up to do was
one of my key partners in our

adventure if I can call it that in
the government and still come up and

then we'll have a kind of a dialogue for
a while and just talk about some of

the things that we did some of the things
that worked and some things that did so

you're all business students right
you're here learning about the role

of business in our country
running businesses hopefully.

Becoming leaders in
the business community and.

So you're going to be running into I think
it's fair to say pretty soon a lot of

the issues that come up in any services
enterprise were in Europe now in which.

Services enterprises are where
a lot of the action is whether

it's information technology sir.

Voces or other professional services or
even logistic services.

Well this agency the U.S.
P.T.O. is just a service

organization it's an enterprise
of about eleven thousand people.

It's got a budget of about
three billion dollars a year.

It takes in requests to perform
services they're called patent and

trademark applications and
it takes in money with those requests and

then at some point in time.

Unfortunately usually a long
point in time down the road.

It actually performs those services and
it renders an opinion

a document that describes the result
of its services and there's a back and

forth that occurs in this enterprise
make some final decision.

We're going to grant you a trademark or
not we're going to grant you a patent or

not and the process concludes And

so in a sense the US P.T.O.
is not at all different.

Not much different at all from any of many
many other services organizations law

firms are one large category of
examples but there are many others

you think about consulting companies
that some of you will go to work for

the Deloitte in the McKinsey's in
the Bains similar kind of things that

those folks do terms of taking in requests
for services and providing services.

So what was it that we did at the U.S.
P.T.O.

from two thousand and
nine two to two thousand and thirteen.

Well we'll talk about that but
but the starting

point that you need to understand
is a couple of things number one.

In the summer of two thousand and nine.

Shortly after President Obama started and
we began at the U.S. P.T.O..

Of course the country
was not in good shape.

It was basically the depths of the reset.

No one knew how long it was going to
take to recover Treasury had kind of

save the country in the world
from a huge economic collapse but

we were stable at a very low level.

The U.S. P.T.O.
this particular agency was.

It's an agency by the way that's been
around for over two hundred years.

It was started when the first very
first Congress passed the very first

patent law and then President Washington
asked then secretary of state.

Thomas Jefferson to handle examining
him self of patent applications.

He and James Madison did that together for

a while until the clerk that was
actually managing the process.

Pluck young guy named Remsen came into
Jefferson's office and said I've ad it.

This is way too much work you've got
to like establish some infrastructure

to do this and
that was the birth of the U.S.

Patent Office so it's an agency
that's been around a long time.

It's got a venerable
history leadership has

been documented over the centuries and
all of that unlike any other

federal agency you know
it's had its ups and downs.

Well when we started fair to say the U.S.
P.T.O.

is having a down maybe one of the worst
downs it's ever had was being sued

by its user community which is
first time that's ever happened.

Its core metrics were
completely in the trash can and

it was taking nearly four years to process
a patent application and there were better

than three quarters of a million and
process patent applications sitting around

in the agency and all the metrics
were headed in the wrong direction.

If that weren't enough
the coup de gras was

that the agency had run out of
money when the recession started.

Patent application filing rates
cratered along with everything else and

it exposed a fundamental flaw in the if
you could call it business model of

the agency which was a highly.

Level of reliance on current
incoming fees in order to

support the work being done on things that
were sent into the agency years earlier.

OK so some of you are thinking things like
Is that kind of like a Ponzi scheme where

you get people to pay in and then you use
that money to do things for the people who

paid in earlier and that I'm not the first
to use that term by the way former leaders

of the agency have used that term and
others in government and and in

the private sector have also in any event
without putting too much of a label on it.

It clearly was what I have always
called an unstable business model and

its weakness was exposed of course
when filing rates went down and

so as we started in the summer of two
thousand and nine the agency was literally

looking at furloughing its entire
workforce of employees that's a pretty

ugly thing to do with any workforce but
it's a really ugly thing to do.

In the government so that was one of the
first things we literally had to go into

an agency that had no money had all
of these major major problems and

figure out a way to get it pointed
in the right direction and

so you know if you think of this is a kind
of like a Business School case study.

You know Consider also that you
can't give people raises because

that really can't be
done in the government.

You don't have the levers of flexibility
like you have in the private

sector to move the workforce around.

So what do you do right.

What do you do in that situation.

Well we did a couple of things.

And we started with.

Changing over some of the senior
management executive level management.

That was a situation where
there were some problem

problems that had grown up over the years
and some changes need to be made but

we did not we could not and
we did not attempt to change.

They're career employees below
the senior management level of the.

You know.
Eleven thousand plus or

minus people who were at the P.T.O.
when we started in two thousand and

nine the vast majority of them X.
attrition are still there now and

by the way those are the same people
who were there in two thousand and

seven when the agency was headed this way.

So so you've got the same people you're
not going to change the vast majority of

those you change some senior management.

Recognizing that certainly something that
I recognize coming from the private sector

that senior management sets the tone.

That senior management
ultimately bears responsibility.

And that usually frequently usually
it turns out we learned this was

the case that the vast majority of
the employees in any enterprise

actually know what the right thing is
to do you want to do the right thing.

Are motivated do the right thing and
will do the right thing.

If they're given the coaching flexibility
and tools to go out and do that so.

So there were some initial
management changes.

That's something you can do.

There was a second major
component though second and

third major components that
were the starting point for

us moving in a very very
different direction.

The second component was to recognize

that some key relationships need
to be changed a lot classic

business move classic leadership
move you come in to situation and

you evaluate the most important
relationship stakeholder relationships

constituent relationships in the case
of a an agency like the U.S. P.T.O.

you've got the intellectual property
community a powerful bar of you know.

Circuit I don't know maybe ten thousand or
so something like that

active practitioners all over
the country in fact all over the world.

And they're they're a stakeholder
group they're not customers and

you know the agency is not there to do
what they want necessarily but the agency

is there to help them be effective
in representing their clients and.

To listen to them and
to be respond to them.

So that's a big stakeholder group the big
stakeholder group is of course employees

we could talk about that
you know later was do.

And then the third stakeholder group.

That's the representatives of
the employees is the unions in

government there are some powerful
unions in the U.S. P.T.O. has over

ninety percent of its workforce unionized
represented by three unions one of which

is known as perhaps the toughest

Union in the entire Federal Government
fact I remember a story when I started.

A government lawyer from another
agency asked me where I was from and

I said Well I'm you know the new guy
at the U.S.B. D.O.J. that my god.

You've got to deal with that labor union
we fear them they were she was referring

to the Patent Office Professional
Association which is the union that

represents the patent
examiners at the U.S. P.T.O..

And so stakeholder groups.

Right.
You've got a broken situation.

It's it's always going to broke it.

What got broken and what keeps it
broken in my experience is always going

to involve to a significant extent.

Breakdowns and relationships with the
various stakeholder groups in this case

the user community the patent attorneys
that's why they were suing the P.T.O.

for the first time in its history.

The inventor community right.

Somebody is filing those approximately six

hundred thousand patent applications
a year and when you think about.

The fact that there's an average
of something like two point three

inventors per patent application.

You're talking about over a million
customers quote customers a year

coming into this agency who care
deeply about what it's doing right and

so you've got to figure
out how to work with them.

Relationship with them you know broke and
I think it was quite fair to say or worse.

So what we did was to take stock.

Very quickly of those relationships and

figure out ways to start
turning them in new directions.

Right.

Simple things that we could do
the didn't cost a lot of money and

that didn't take a lot of time and
it didn't require Congress to pass a law.

Or you know some hearing on Capitol Hill
or any other major thing to occur so

simple to think of some simple
actions Here's one that we use.

Sitting down with the president
of the labor unions.

Having separate meetings with them and
asking them each for

the three things they would like
senior management to do that.

Senior management could sign right
in my case that I could just

sign and it could be done.

And it where when winds right you can't
give him pay increases because you can't

do that anyway so it had to be things
that were in everyone's best interest.

And lo and

behold they had ideas right there and
then they didn't even have to wait.

They didn't have to go and think about it
and lo and behold they were good ideas.

So you start going through an mental
process like this what you

start concluding is it's
actually not that hard right.

It's about assessing
your stakeholder groups.

It's about getting in connection
with your stakeholder groups.

It's about listening to them picking
their good ideas in and going and

taking action on you know
we reached out right away.

To another stakeholder
group the attorney groups.

And they said well look
this isn't that hard.

We sued you in this case that was
called half as at the time we soon

you because your agency has these
completely dysfunctional rules.

Is that it's talking about putting in
place that are going to be destructive

to the American innovation system.

Why don't you just cancel those rules.

So we said Well that sounds like
a good idea that doesn't not only does

not cost anything.

It saves money because it stops spending
internal legal fees on something that's

unproductive.

So we figured out how to go and
do that and on and on and on.

So what's that all about it's about
when you don't have tools available

to you figure out the tools you do
have available to you and go and

use them to do what you could do and
do quickly and and get moving.

So there was a lot of that sort of

early stakeholder outreach and

reconnection with stakeholder groups
that in an in an environment in

which there was not much we could do was
one thing that we actually could do.

So the last thing I want to
mention in this category.

Of early actions that I observed
in my many years at I.B.M.

actually when Lou Gerstner came in and you
know it was business students you probably

heard something about you know the need or
fatal collapse of I.B.M.

and the rescuing of it by then C.E.O.
Lou Gerstner Well I was there and

you know and and expose was
an employee actually an executive for

a lot of that time through
the depths at I.B.M. and.

Long recovery and
one of the things that I remember from

learning from Gerstner when
I started at the U.S. P.T.O.

was you know you've got to
move to an agenda which you're

communicating a lot with people with your
key stakeholders got to tell them what's

going on and you've got to find lots of
ways to tell them what's going on and

if you can do that you can translate
a situation that's marked by desperation.

To one in which you restore hope and
when you restore hope.

Even in a bunch of people who are really
broken which I think is fair to say about

the U.S. P.T.O. at that time and

you get them to believe they can do things
they can start doing things right and

that was you know part of what was
magic about what person who did it.

I.B.M. He put in place.

He stood in front of the whole employees
the whole employee group half a million

people every quarter and

just talked to everyone about what was
going on in the company and as simple as

that is it was very transformative So we
started doing similar things at the U.S.

P.T.O. remember one of the first things we
did I reached out to the White House and

said you know what you know we do a lot
of blogs in the private sector is it OK

if I like have a blog in the government
and at the time I think we were

the the second agency and I was the second
agency head in the government who

was proposing to do a blog where the good
news about that is there were no rules.

So the White House said well whatever we
don't really know what that is but cool

whatever you want to do so we started a
blog we called it the directors forum and

that proved to be a huge leap simply
pull right this is stuff is all

simple a hugely transformative
be it simple mechanism for

changing the discussion because now
suddenly for the first time the agency

an agency leadership had a direct channel
to its user community to the examiners

to the patent people the trademark people
the inventors we had a way to get messages

out on our terms to explain ourselves
to establish our narrative to repeat

it in the in the voice that we wanted to
repeat it in it so we were able to start

communicating directly and indirectly to
our employees and everyone else about what

was going on at the agency what we
were doing and our view of the world.

And started to turn things around
in that way and give the people in

the agency the hope that they needed
to start picking themselves up.

We get other communication V.

To and I won't go through all of them but
there are actually.

Many channels that we open.

On the view that communication is
something at a leadership level

that's got to be extremely repetitive
that's got to go out to as many channels

as you can get it's got to be done over
and over and over and over and over again.

Gerson always used to say you have
to be really let loose and boring.

And I can remember going into
speeches at the peak you know

where I'd look at my speech and go.

I don't want to give this speech
I've done this like ten times I'm so

bored with this.

And but
you got to hang in there as a leader and

give that speech because believe
me you'll find that even

if you've given it ten times and you
think you've reached everyone and most of

the people won't have gotten everything
that they want to gotten anything.

So there's a tremendous value in
having communication channels and

in using them relentless and boring right
to get those kinds of messages across.

I felt it was that way particularly in
a situation where the agency had so

many palpable problems that there was

absolutely no way you could just
find some masterstroke to fix them

all in one single occasion I knew from the
very beginning it was going to take years.

It was going to take a lot
of little things and

you had to get people on board or they
wouldn't go with you on the first step.

So that leads into other topics we can
maybe talk about change management I'm

sure you're in the you're you're learning
about that here we did a lot of that at us

P.T.O. lot of that again
is about putting out

a vision getting people to understand
it getting them to take the first step.

Finding champions those kinds of
things the last thing I'll say and

then invite Well two more things
actually then all invites to.

One of them is that.

At an agency or

a enterprise that's got lots of people
ten eleven twelve thousand people.

Invariably you know you.

Got layers of management and one of the
things that I certainly knew coming in and

we experienced it in real
time as a leadership team

is that as a as a senior leader.

It's actually easy to reach
people on the two extremes but

not easy to reach people in
the middle ineffective way.

Senior management.

You can reach them.

I used to call it the you know
the one next to squeeze rule you your

direct reports.

You can column in your conference room.

You do you.

You've got their phone
numbers on your speed dial

you can send them an email you know who
they are you know what they're doing

they're quickly invested in the mission
because they're seeing you every day and

they're hearing the messages so there's
not a big problem with senior management.

And the line employees believe it or not.

So this is the you know most of the ten
eleven thousand people are also not

that hard to reach they are dying for

change because they're the ones who are
living with a dysfunctional situation so

they're not a problem getting them to
change and you can use proxies you don't

need to speak with eleven thousand people
you find some people that you know that

are approximate hers that you
can establish relations with and

you can then have open channels that I
believe are really important to leadership

levels of management filter information
you want to know what's going on in your

business you have to have people at
the secretarial level at the first line

management level at the engineering level
at every level that you are in constant

contact with emails going back and
forth having coffee with them.

Those kinds of things.

To know what's really
going on in your business.

It's in my opinion an experience
very very important so.

I didn't find it hard to get contacts
going and wound up within a year.

I probably had several
hundred people at the P.T.O.

who were regularly sending
me emails telling me

what was going on problems things going
well initiatives that are working.

Blindspots So you feel like you know
like you've become a sick what is

it a mantis like you've got lots of eyes
to work with in that kind of environment.

The group that's really hard to reach
is middle management because you can't

put your hands on them but
they have a huge impact on your business.

So what we did at the U.S. P.T.O.

again never done before new stuff
making it up as we go along.

But I believe that really worked well
was do a stab wish come to thing that we

called the Senior Executive Service
counsel so executives at the agency

about sixty of them or so
had never had a vehicle through

which they could meet together and
sit in the same room and

hear the same things and
sort of to swim in the same issues.

For a concerted.

Periods of time so we established
that didn't cost anything costs

nothing to establish
a group like that started

to call the senior executives
together right on a regular basis.

I think it was what every other
months do what every other month.

I insist on personally
chairing the meeting.

So every time you know you've got to get
up in front of these people and talk to

them and listen to them and be prepared to
confront the issues they're going to raise

and we did that and by doing that and
by teasing out the issues and

listening to people and
getting the right speakers in we were

able to gradually start to get
to know the senior executives

better break down the barriers between
the various business units and this

happens in the government but it happens
everywhere everywhere I've ever worked.

Or seen work their business lines wind up
becoming somewhat balkanized they try and

become independent as much as they can or
self-reliant it's natural.

But what that creates
is infrastructure and

in the need for
cross talk between the business.

You know it's so
how do we deal with that establish this

council where did that idea come from not
brilliant on my part certainly I.B.M.

had something called the innovation and
values team if I recall that was the top

time I was there about the top three
hundred fifty executives in the company.

That Sam Palmisano who was then the C.E.O.
used to bring together.

Y. for the very same reason to
integrate the company together right.

So we just ran that same play at the U.S.
P.T.O.

you got to integrate the enterprise
integrate the agency and

it's the middle managers that
are the subject of that integration.

So we did that began to get people
working together that way and

then suddenly you see people are more
comfortable relying on one another and

leaning on one another and trading jobs.

And picking up issues for each other and
they're less threatened about going on

the other guy's turf or making a comment
on the other guy's performance or

the what their business unit is doing and
then you can start to

have the mature discussions that you
need in order to sort out problems.

So those are just you know randomly
some of the tricks that we used

hopefully stuff that
you're learning here that.

That did a lot at the P.T.O. and hopefully
you'll hear a little bit about that later

last thing I want to
say is you know I think

in distilling what we did at the P.T.O.
it's actually not all complicated.

And aside from the specifics that I've
talked about there were about five or

so med behaviors that we
established that were very

simple that were transformative
to the agency first one is

we were perpetually impatient
all of us at the senior level.

I think I could speak for
Stu in this regard perpetually impatient.

Everything was needed yester.

And it's especially a problem and
something that need to be the case in

the government but
I think it's the case in life it

probably occurs at universities it occurs
and businesses are perpetually impatient.

Number two is we were uniformly
dissatisfied with the status quo.

There was nothing we saw that we couldn't
figure out a way to make better and

sometimes you use leadership judgment and
you don't spend too much time on something

because there were diminishing returns and
all of that.

But having that sense of
critical evaluation right.

The status quo isn't good enough.

Nothing is presumptively good enough
very transformative way of thinking

we listen more than we spoke of a tendency
in the government to avoid listening.

Why because if you listen right.

You've got to actually then do something
or change your mind or alter your behavior

based on what you learn from that and
that's hard to do in the government.

So you know one of the things that you
find out is that Be careful how much

you listen because you know that
there's a cost to listening but

we were willing to bear that cost and so

we spent a tremendous amount of
time listening listening tour as

Federal Register notices meetings round
tables etc etc It's all about listening.

We took what I call a twenty first
century approach to leadership which is

inspirational and operational right
a willingness to have a vision and

to do things you're
learning a business school.

Stablish a vision.

Put out simply repetitively find
vehicles to talk about your vision but

also a willingness to go to
the opposite end of the spectrum to

move away from presidential leadership
to operational leadership to

actually vector off into a problem and
help the team solve it.

So one of the things that happens when
you do that is sometimes you find

out there is a problem
in the middle of a meat.

And you've got to go over to help
the folks all of the problems so

that they can go and
do their job and move the.

Enterprise for well we were willing to do
that even at the cost of you know breaking

schedules sets a tone though that you're
willing to actually help people solve

problems and it empowers them and
energizes them to go and do more.

And in the last by far the most
important in my view this is a hard

thing in government but I think it's not
necessarily easy in business either.

Which goes back to the old Wayne Gretzky.

Saying that probably some
of you have heard Wayne for

those of you who are not familiar with you
know probably most famous hockey player of

all time and
quick that he was once attributed to him

was you miss every shot you
don't take you miss a shot.

You don't take.

So how does that work in a business or

in an agency I call it bias to
act in any leadership decision.

You sitting in the conference room.

You've just gotten forty
five minute presentation and

there are issues all over the place.

There's a lot of things that
could be followed up by you can

always get more facts
you can always wait for

some event to occur and it's an especially
easy to do that in the government.

There's any.

Any reason you can come up
with to delay action but

we took the exact opposite approach
in Ecuador as we move forward.

Unless there was a proven reason right.

In other words it would be
stupid to move forward or

there was a you know a strong reason
to say we can't move forward.

It does not make sense.

We for Star selves to move forward.

So as a bias to act on a bias
toward in action and so how do

you do that in a sensible way when there
are fat more facts to be gotten out there.

You move forward you test your.

Measure you get more facts and
then you keep moving forward and

you just as you need to do it was that
relentless bias to action which of

course comes with the price of some
failure which is hard anywhere but

it's especially hard in the government.

So you've got to accept some failure.

You've got to be prepared to explain.

My god that didn't go well we're going to
have to go back and do a redo on it but

we accepted all of that and

when you get yourself comfortable with
accepting that there will be some cost you

can then become really relentless
about moving things forward and

that's how you go out and get it done in
the space of a few years what people would

have said multiples of what anyone
would have said you could have possibly

gotten done or just those five things put
together so that it's do what you can.

Assuming

I'm on this.

Right.

So it's a it's a great pleasure
to to welcome Dave here and.

I can tell you and
all the students in the room.

You know we as factually
were students too.

And life is a continual learning
experience and although

I teach strategy and I teach management
I teach leadership in my classes.

It was a it was a great
pleasure to be able to leave.

Leave the Institute for a few years and
go up and spend time with Dave and

learn as Dave was tackling
many of these problems.

And to join him and
be on the teams we did that.

I'm going to start asking a couple
questions of Dave and then.

Open it up to the audience because I'm
sure many of you have questions as well.

But let me just start off Dave.

By giving the folks in
the room a sense of.

Of how the community views the
accomplishment of the time in which you

were in which you were leading the
organization so you know the organization.

Dave's already told you was in a.

In a desperate situation when when
Dave came in the door for decades.

There had been a lot of.

Displeasure voiced by many of
the stakeholder communities.

And the public and the press and

the Academy very critical
of management at the.

At the US P.T.O.
in the way the organization was going.

I think that a lot of that was
unfair because there are more huge

constraints under which the.

The agency was was living
a diversion of over twenty years

all bow eight hundred
million dollars in fees

diverted away from the agency
on able to to spend those two.

To do the production that.

We know is necessary.

But nevertheless given that
unfairness it's it's it's clear

that the community roundly considers.

The years in which you were there as
a transformative set of years really

moving the agency from.

What was the depths to an agency

that was and
still is considered innovative and.

An organization worthy of a lot of.

A lot of prates.

So.

I'd like you to comment a bit on that and

maybe while you're
commenting on that also.

I invite you to analyze this
through a particular case study and

that would be the case study of
the patents and to end implementation.

And maybe tell the audience
a little bit about what that was

how that was in vision and how that vision

of that project fits in
with the overall theme of.

Of the day of how a twenty
first century agency.

Should should should contemplate itself.

OK yeah sure says so.

So let's talk about patents and
so one of the problems that was

long dogging the P.T.O.
was its information technology systems.

And we all have seen a vivid
reminder of how hard I T.

is in the rollout of health
care dot gov late last year.

It's I T is really really hard.

I'm an electrical engineer twenty
six years at I.B.M. I'll tell you.

ID is really hard.

I came in knowing there was anything
that I could fail at it was

going to be the I.T.
systems it's hard to have to change I.T.

systems even in the private sector but
it is really really hard

in the government for many reasons
that we don't need to go into here.

What we realized when we started
this project patents and

which was an I.T. project that from
the very beginning we envisioned we

were one of the first things that you
know that was not very challenging for

me to do when I got in was to
commission an assessment of the I.T.

system and taken on a view.

So how do we move it from where we
are which was constant down time and

multiple images of software and hardware
which is really expensive to maintain

and systems that couldn't be upgraded that

cost enormous amounts of money to improve
because they would all become so.

So hidebound and and
Obama the way I went in with

the presumption having been through a lot
of I.T. change projects that usually

it does not make sense to just rip and
replace usually it's better to try and

work with the system that you've got so
when the team came back and

made the recommendation to me in the end
including you know we hired a consultant

who had published a book that said rip and
replace is usually a bad idea and

he came back and said You've got
to rip into places whole system.

It's so hammered.

You can't do anything with it.

All right.
I accepted that.

So we created this project P.
E. patents and N..

To say let's Invision what the next
state system is going to look at and

in and
take it in the little bite size pieces and

get there the transformative
thing about that those

two was not that kind of an approach
because that's pretty straightforward.

But what was transformative about it.

Is that we departed from
the assumption that leaders make

all the time two assumptions
number one I can trust

my instinct on things bad
assumption in a data driven world.

And number two don't trust your will for

the i only trust your instinct when you
have absolutely nothing else to go on.

If you've got data you've got
to get the data and look at it.

The second thing that we
decided was paramount.

And as a I think also a leadership
blind spot that you see all the time is

relying on intermediaries.

To to translate user needs
into Enterprise Action.

Right.

The problem with that is that
the intermediaries will filter

things in ways that will cause.

Was you to then design systems
that meet someone's needs

from years ago or
that meet some specification.

Of attributes functions and
features but don't actually accomplish

what the users want to accomplish
the way the users want to accomplish it.

So this like everything else
is not that complicated.

You've got to go to the users and
so we started doing that and

amazingly it had been done before
we just put together focus sessions

with the actual examiners at
the agency and we sat down with them.

We were fortunate to bring
in a very talented I-S.

expert a professor at U.C. Berkeley
a friend of student mind Marty her first.

And she was relentless about setting
up the user roundtable sessions and

focus sessions so that our everyone from
all of the secretaries to the examiners

trademarks and patents were able to tell
us what they wanted the system to do and

what they wanted to look at what
they wanted it to look like.

And then from there it's very easy.

You start taking that
off in little pieces and

building the components of it so
patent said in.

You know at the end of the day was
really about the leadership discipline.

Listening to your end users and following
the instructions of your end users and

staying very close to your end users
in designing a ninety system so.

You know not only did we do.

One set of focus actions then we

designed prototype the system and
we came around again to the people and

did focus actions to say
Alright here's what we built.

Is this what you know here's
a prototype is this going to work for

you you get a lot more input.

You're correct course and then you start
designing the first components and

then you know what you do you have
another set of focused session.

And you get the people to say All right
here's what's go and well here's what you

need to change and then the process
actually becomes very self correcting and

supportive and low risk because you're
finding out where you're going wrong

before you go way Rog and have a huge
crash as we've seen in other places right.

And you know and just to give
the the students here a sense of of

why it is that this this
information infrastructure is is so

important and why in this case
the the users that had to be

focused upon were the examiners is
this is an Information Agency right.

These are knowledge workers you think
about what's coming in the door here.

What's coming in the door is
a description in language

of an innovation right an invention.

That's happening at
the front here of knowledge.

Right.

So things that are really pushing
the frontier trying to describe that with

language and then asking the examiners to
judge against a set of legal standards.

Right.
Whether this invention is worthy of

the grant of a patent and
the way they judge that is by searching

existing information sources and so

searching information is the key
to this entire endeavor and

adding in information system
that supports that kind of work

as opposed to what was
there when you came into

office right which was layers
upon layer of systems and legacy.

The job of getting the relevant
information into the hands of the examiner

was a series of transactions right.

So a.

An easy example of one of
the beginning steps of.

That was the recognition I mentioned
this before of multiple images

that employees had so you know
what does that mean it means that.

For instance when I started on my first
day I was horrified when the staff walked

me into my new office and said Mr Kappos
here is your desktop computer.

And here is your laptop computer and

they weren't the same computer they
were totally different computers and

I said what in the world is going on
here where this agency is paying to have

two images two pieces of hardware and two
pieces of software for every employee you

add up the cost of that it's hundreds of
millions of dollars a year we're talking

serious money being blown
that have multiple images.

So one of the early things we did is to
say get off of this right you got to get.

Did order to invest in
information technology

projects you've got to find money and
you're talking serious money right.

So how do you do that when you know Stu's
pointed out you're being pilfered and

money's being taken out all the time and
that's the diversion problem.

You can't just raise fees it takes
years to do that because you've got

to go through Congress to do it.

You can't control the rate
at which work is coming in.

That's patent trademark
filings that that's a function

of the external environment
almost entirely.

And so you know again you can either sit
around a moan the fact that you've got

no levels of levers of flexibility or you
can find some levers of flexibility so one

we found was that internal infrastructure
that was just being wasted hundreds of

millions of dollars a year being spent
on multiple images took all of that out.

We changed it over to a single image for
each employee we were able to get

the unions to go along with that by
giving them great images in other

words a great new machine and cut multiple
hundreds of millions of dollars of.

And out of the agency that was the money
that we freed up to be able to go and

do step two of the.

Transformation as we got going on that and
so you know I T.

you know major risk but
like everything else.

I think we found it P.P.O.

that by using an approach that
was grounded in listening.

And that focused on you
know sort of a simplicity

finding the essence of what we need
to do We were able to significantly

unravel a situation that seemed hopeless
and get it pointed in the right direction.

Thanks Dave.

So I'm cognizant of our time here.

We're going to be ending at five thirty.

So I'd like to invite with
questions from the floor.

I think there are a couple microphones and

when we give a preference to students
asking first if there are any.

And if not we can then
move to other guests.

Right.

You identify yourself what
you're studying and and

then launch and
I'll try not to pick other stuff up.

Hi My name is Yuvraaj I'm an industrial
engineering student at Georgia Tech.

My question is when you plan to
make changes in government and

organizations especially changes
like introducing new technologies or

technology platforms a lot of the people
that are resistant to such changes.

How do you as a leader go about do you
can get out of this resistance and

making sure like all of these
changes are implemented smoothly.

OK that's a great question.

So.

My view there are a number of steps that

get through that that set of issues the
first one is comes back to communication.

You've got to explain to everyone.

Get everyone on board with how bad
the current situation is right.

So that there is a sense of all right.

Well may be you know there
is some need to change here.

Then you've got to get them comfortable
with and understand the fact that there is

a new approach that can be
actually much better for

you and that becomes a very personal
message at a place like the P.T.O. right.

An opportunity to make something
better for an examiner

in the biotech arts might be viewed as
an opportunity to make something worse for

an examiner in the mechanical arts.

So you've got to start
personalizing a message like that

down to a granular enough level
where people will understand.

OK.

This really can be better for me.

Then you've got to go from there to what
I call the retail level where you're

actually then meeting with individual
groups who voiced their concerns and

you have an opportunity
to answer those concerns.

In some cases change the plan in
order to address the legitimate

concerns and
gradually get people comfortable with

the fact that you know things are going to
be better the new way of doing them and

I don't think there's that
much risk in it for me.

I mean a perfect example is this.

Moving to single image that I
mentioned at first there were every

concern you could imagine.

These computers are going to be too heavy.

The function isn't going
to be good enough.

How are they going to work on the current
networks that we have I need to

have two displays because that's
the nature of the work I do.

How are they going to interface
with my printer the software is not

going to be compatible with the software
that we currently use blah blah blah all

of those kinds of things some
of them are legitimate issues so

you've got to listen to
respond to the gym at once and

you gradually take those off the table and
then have a narrative on all the other

ones that explains that people don't
worry you're going to be able to use.

If you're too displays and if you
don't currently have to displace but

you need to displace we will get into this
place of the world's going to be even

better for you.

Cost is minimal to do something like that.

And so it we gradually build up
the narrative get another component

of the retail work is you've got
to get some key thought leaders

on board that will become evangelists so
we were always quite

practical about finding thought
leaders and there always are sub

there's always some people out
there who are good spokespeople and

they're become cheerleaders they'll
quickly say this is going to be so cool.

I can't wait to change over
to this new system and

you use them then let them go out as.

Evangelists to start moving other
people in the right direction and

gradually what you find is that there's
the evangelists it's a modest group.

There's the vast majority of people who
are perfectly fine they just say something

like well OK Just tell me
what to do it all do it.

It doesn't seem like a big deal and
I think it'll probably be better later on

but just get me through
the transition it's cool and

then when you find after you do
the retail is there still a tale.

There's still some people who
are like really change resistant and

they're go and I can't do this
you know I just can't do it.

And so
you've got to sit down with them and

we we sat down with folks like that
in the P.T.O. one by one when we

had to to get them comfortable
the large majority of the tail.

It will take some hand-holding we
had to do things like for instance.

As we moved over to the new laptops.

We sent a SWAT team of highly trained

folks in so that every person got
touched beforehand to say Alright

here's what's going to happen
here's out going to work.

What are you comfortable with
that if anyone was resistant we

spend extra time with them.

We would give them that we would
like delay if we needed to say

we're not going to force
anyone to do anything.

We're not about forcing people to
do things we want to make change

something that's a positive for you.

So that sort of level of human interaction
to where people felt like they were like

going to be thrown over a cliff was very
helpful for what was left of the tail.

Then at the end of the day there's going
to be a few situations where a very

very few and I'm talking like a handful
of situations where you where people

will just not move and
you've got a van and.

Apply at that point some management
direction at the end of the day right.

You're managing a business and
you've got to get something done and but

the but fortunately what I found
all of my experience stand for

the proposition that if you go through
those steps you will find that there

is a vanishingly small number
of people that yeah and

you have to be directed to do something
because by the time you get to that level.

Almost everyone is ready to go and
they've already transition and

the people who are really worried
see other people transitioning and

they go I guess this can't be too bad.

I'll go along with it and you gradually
move everyone in the yes column.

That's a it's a great question.

Classic straightforward.

You know the leadership change management
issue comes up all the time in ninety.

Dorie do we have time for
one more question.

Excellent.

Police identified.

Hi my name so
home from electrical engineering.

So thank you so much for coming here.

I won't have a question about your
former employer and obviously I.B.M.

is a very innovative companies have
being the top pattern receiving

the past twenty years and
some shareholders not to criticize and

many of those underutilized and

since you have been there for
twenty six years what's your take away.

Sure they focus on fewer pounds.

And the money times if you make it
into the next revenue car or or

should you just keep doing it.

That's a great question.

I'm going to generalise it a little bit
because it's it's the kind of thing that

is a dilemma for every company even small
companies I'm coaching clients now and

you know in my role in the private sector
Stein you little startups and there

are basically asking the same question
on their own scale should we try and

get a lot of patents or just a very few.

So there's a long held theory in in
the intellectual property strategy at the.

You know the point where the intellectual
property legal discipline meets

the business discipline setting
strategies and executing on them and

that theory is called the coal pile theory
and what it stands for is a proposition

that you can't tell which piece of
coal is going to turn into a diamond.

So you just have to mine.

A lot of coal and

among all that coal that you mine
there will be some diamonds in there.

And I would tell you something.

I have found over the now many years
I've been doing this stuff that

there's something to the coal pile theory.

I've been burned any number of times and
I've been pleasantly surprised.

Any number of times when when
I found that it was that

invention that was very marginal it

was that technology that nobody thought
was going to amount to anything.

It was that idea that seemed nutty at the
time that ten years later you find out.

My God that's the one that wound up
being the way the industry way or

that the technology that everyone's
come back to or whatever whatever it is.

And so you've tracked that back a ways and

ask yourself well why is it the case that
all this stuff is so unpredictable goes

with something Stu said before you know
you're talking about where technology.

He meets the future.

You can't predict this stuff you can't
predict consumer preferences you can't

predict a technology development.

You can't predict the demographics
that are going to interact in social

changes in other technological fields and
crossovers between things

like material science and engineering
disciplines you can't predict any of that.

So the best bet is man any
great idea just protect it.

Worst case you wind up then
dedicating it to the public later on.

By not paying maintenance fees on a patent
or maybe not even paying a patent.

But that's a small cost
compared with finding

out ten years down the road
that you'd let go.

Something that turns out to be
transformative So that's the general coal

pile theory and I have to tell you I
think that there is something to it.

We have got time for one last questions
to Tory she says yes is because

I saw someone else who had a question.

Hi My name is Mark sun I'm
a senior a business ministration

major with the conservation accounting and
my question for you Mr people says.

You see any other challenges or
destructors that you.

Look for see the countering in
the media future and the P.T.O.

Well yeah there are there
are there are innumerable.

Of those in fact one of the fun things
about management and leadership.

Is that no matter what you do you find
out there's always a you know what next.

Horizon.

To deal with so
I'll give you one right now.

One of the one

of the things that we got in the first
Obama administration is we got

some major legislation done for the patent
system it's called the America Invents

app patent system had been
substantially updated litter.

Since eight hundred thirty six when
a Maine senator named John Ruggles

created the system we have now
there had been several pieces of

legislation Lincoln got through patent
legislation during the civil war.

There was some legislation it was in
one nine hundred fifty nine fifty

fifty two fifty I'm sorry
the fifty two act yeah.

And but it was all codifying
JUDGE ME case law so it was you know

not like transformative change where we
got to this huge thing called the American

vents Act and the president signed it and
you know this is one of those

things then you know you sort of feel
like the dog that caught up to the car.

Because the day after you know and
Congress is doing high fives and

everyone's real happy
at the White House and

then you realize that it's this agency
that owns one hundred ten percent of

the responsibility for implementing
this gigantic piece of legislation.

So we undertook the most ambitious
rulemaking by far the history of the U.S.

To thousand I mean we literally choked the
Federal Register they had to spread out.

The printing of the rules because it
was choking the Federal Register It was

amazing piece of work.

So what comes out of that
now to answer your question.

The U.S. P.T.O. created a new court
called the patent trial an appeal board.

The job of a court is to call balls and

strikes period if it's over
the plate it's a strike.

It's not over the plate
it's a ball should be no

politics involved there should be no.

You know justice is blind.

Right.
No no games.

But the problem when you're
just calling balls and

strikes is sometimes you're going to see a
lot of balls or a lot of strikes in a row.

And that's what's happening.

And so think about this.

Now if you're leading the U.S. P.T.O.
How would you solve this this problem.

Suddenly you've got a situation where you.

I've got ten thousand people or
so who are dutifully examining

hundreds of thousands of patent
applications a year in the issuing.

Pardon me maybe.

What is it two hundred thousand
pounds a year or something like that.

So there's two hundred thousand
patents coming out of the agency.

And then you've got this group of judges
the patent trial and appeal board and

it seems like seems like not quite
the case but not far from the case

it seems like every decision they
come out with is invalidating a path.

So think about this narrative right.

This is not a good narrative.

The narrative that's going to come out
is you've got an agency in which ten

thousand people are granting patents and
two hundred people are invalidating every

patent they get their hands on
a very good narrative right.

It doesn't go good places.

So if I'm the leadership of the U.S.P.S.
right I'm working on

dealing with that narrative right now and
there are ways to deal with it.

No question about it and you know and
as an American I can get.

OK with the concept for various
reasons but that's the kind of thing

that represents a challenge that
you find appears to you when

you know because of implementing other
things that you would do that space and

I could give you any number of
other things like that that

are coming up there's
more legislation pending.

So how do you deal with that right.

There's an odd dynamic that's appeared you
know student mention this in specific but

when we started in two thousand and
nine the U.S. P.T.O.

was one of the worst agencies the federal
government if you know this but

the government does a survey every year.

It's called the Employee viewpoint survey
and it's like you know one of those

fill out the dots sort of things where
you answer about one hundred questions.

My manager knows what I'm working on
I have good enough to be successful.

My pay is come insert with
the quality of my work.

Questions like that anyway.

In two thousand and eight or whatever.

Before we started the P.T.O. was like
in the bottom third it was pretty late.

Last year the end of two thousand and
thirteen the P.T.O.

ranked number one the very best agency
out of three hundred eight three hundred

agencies in the federal government that
little agency is now a little the very

best agency in the entire
federal government.

Well that's cool.

That's actually pretty cool and
I think that you know we got all be

proud as Americans that agency
was able to do that but

in an environment where
the media is coming

out with constant attacks on the patent
system and pointing out the inevitable

mistakes that occur the patent on
side swinging sideways on the swing

the patent on peanut butter jelly
sandwiches all that kind of dumb stuff.

How do you reconcile these
two things they seem

inherently contradictory you've got
now what is raided by the government.

You know over two million people take
this survey three hundred agencies in

the government and
this agency is the very best one.

How do you reconcile that with
the marriage with the media view so

problems like that
are leadership problems and

they've got to be sorted out at
the top of the agency and they're

the ones that I hope that our successors
are dealing with right now right.

So right before I ask you to think Dave I
just want to comment a bit of on this this

employee survey because echoing something
Dave said earlier in his comments.

You know these were essentially
the same people who were.

A few years beforehand raiding their
managers in the organization and

their job.

As you know somewhere in the bottom
third of the federal government.

And through you know leadership.

This.

This agency and its employees the same
people are now at the top of the federal

government and
what I think that that demonstrates

to us is that you can get a lot of
good things out of people right.

But you just have to lead them to water.

And.

So with that let me just
say thank you to Dave and

please join me a in.

Thank you.