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Strategy and Leadership in an Age of Disruption

Adam Lashinsky
Executive Editor at Fortune
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Milken Institute Global Conference 2018
April 29, 2018, Santa Monica, USA
Milken Institute Global Conference 2018
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Strategy and Leadership in an Age of Disruption
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About speakers

Adam Lashinsky
Executive Editor at Fortune
Jorge Paulo Lemann
Co-Founder and Board Member at 3G Capital
Jim McCaughan
President at Global Asset Management
Tim Sloan
CEO and President at Wells Fargo & Co.
Julie Sweet
CEO at North America, Accenture

About the talk

In a white-hot marketplace that embraces disruption and rewards future-focused leadership, successful organizations are those that can deftly turn changes in technology, culture, competition, and the workforce into profit. How should C-suite executives develop strategies to capture and address breakthrough change? How do leaders implement and leverage new technology and data management in their business models? What strategies have been successful when tackling disruptive trends in the past, and will they continue to work in the years to come?


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Thank you. Good morning. Everybody. I just want to make sure that all of you understand one thing before we get started and that is that Tom Brady is speaking in another room right now. Okay, then thank you. It's very kind of you to have to have come to hear to hear our panel given given the Alternatives that you had. We have a very distinguished panel. So you've made of you've made a very good decision. I'm I'd like to start by it by introducing them. I'm going to start with the hardest names first at my far right

to your left is George Apollo lemon the co-founder and board member of 3-g capital and a board member of Kraft Heinz who is joined us today. He splits his time between Brazil and Switzerland welcome. City between us is Jim mccaughan president Global asset management and CEO of principal of principal Global advisors. Welcome Jim. Thanks to the far end to exceedingly easier name's Tim Sloan CEO and president of Wells Fargo & Company. Good morning. I'm fine. Thank you very much and seated next to me is

Julie sweet chief executive officer for North America of Accenture. Welcome to Lee in the age of disruption in an observation to to kick ass off. Is it successful organizations are those that can definitely turn changes in technology culture competition in the workforce into profit. So think about those topics technology culture competition and Workforce. I'm going to give everybody on the panel and opportunity to speak with To speak and also to speak with each other to have a tab of dialogue amongst ourselves. I'd like to include you in

the in the dialogue as much as possible. I'll save some time at the at the end for audience Q&A. We have Mike's in the room, but I'll just tell you right now that if you feel that you absolutely can't wait to ask your questions stand up and make yourself known to me. The lights are very bright. So I have to go like this to see you so you're not generally here because you're shy people so don't be shy and I'm happy to bring you into the conversation sooner than the appointed a Q&A time Juliet like to ask you to kick things off of frame the conversation for a strategy

and leadership in an age of disruption. I know you spoke earlier on artificial intelligence if you'd like to start there. I I I think that would be fine tell us what the challenges that everybody on this panel and everybody in the room is facing right now. Maybe just taking a step back. It's very common people talk about the fact that over half of the companies who were on the S&P in 2000 are no longer here. So that sort of the view is it that has been caused by digital disruption but probably more important is to look at the pace of

that change. So it took over 20 years for Amazon to really challenge the Walmart took the world tonight. It's only taken around 7 for Uber and so that the compression of the disruption in terms of how it's challenging Industries and is is going much faster and then you think about the change and how we as as individuals are operating and what that means for business is so just for fun. How many of you check your phone before you go to bed? And before you get out of bed just a show of hands

5% of Americans do so and by the way, I'm not going to ask you this but 3% sleep with their phone in their hand. So I don't miss any any iPhone didn't exist 11 years ago until the disruption is not only what's happening and industries in two companies. It's also what's happening in terms of consumer expectations and employee expectations. And dance this idea of what does it mean for have leadership in this in the space of these really C3 macro-trends? I'm going to get to artificial intelligence lasso shirts is this point around experience as companies are looking to

transform themselves across their Enterprise what they're doing dealing with is a very different love. Expectations around experience with an employee's expect experience with our partners expect and what their customers which requires very different thinking and so the idea of starting with the employee we had a panel this morning where there was a lot of discussions around artificial intelligence, but the resistance of employees being the biggest piece of it and so how you addressed expectations of employees and their fears and what they see as opportunities and doing an experience

level is a very important macro Trend that's happening. The second is the need for innovation in large companies. So if you're born digital and you're challenging major industries, you are not looking at having to we skill or completely change your work force and that is probably the topic that we hear the most across-the-board from companies with interesting is only have that discussion. Probably the biggest challenge is The recognition of the need to change the kind of leaders that you have and that's probably when we look at the most successful companies who really

address disruption they are usually much more willing to redefine. What does it mean to lead moving from its about how many people are you control to actually having an innovation mindset and being able to to to look at Innovation is being critical. And so this need to innovate every company working with today is having some experiment on how to innovate. It's the biggest struggle for particularly established companies in the final is in artificial intelligence since we look at artificial intelligence much like the impact of electricity right in

terms of how it's changing society and business in the knock-on effect of what it's enabling Mitsubishi huge opportunity. Our research shows that 38 you could if Fortune 500 company could see an average 38% increase in Revenue by 2022 if they put in place the best practices, but when you look at where we are half of companies today or not embracing it about a quarter are doing experiments and then 1/4 actually have something at scale has huge opportunity and I'm one thing Julie which is I I am

fascinated by this electricity comparison. No, no company in the room. There are a few companies that pay attention to their electricity strategy. Maybe they maybe once upon a time there companies are their predecessors would have so I guess and I'm going to do a quick Guardians pole, but talk more about what extents Business Leaders need to personally understand their artificial intelligence strategy where think we would agree that they probably don't need I understand their electricity strategy

true because today it is it is taken for granted. Right. We're at the beginning of understanding how artificial intelligence can impact every aspect of the business. You look at Technologies, like blockchain going to be very interesting going to have a big impact is not going to affect literally every industry in every function and that's the difference. And so we believe that eventually artificial intelligence will not be something that you put over here is a proof-of-concept. It will be at all like your Computing right the

fact that no one questions today that you have to have a network and now they're now they're the question is how do you get it to the next level? But it is just a core function and you're beginning to see it 30 years ago. When we started shared services they were all about, you know Finance accounting HR today. The conversation is Sherrod, sir. This is around analytics and artificial intelligence as a capability for the entire organization and the best companies are doing that. And so it will become as ubiquitous. It's just as simply another tool as as

many of the core functions you have today 50% of companies are doing some percentage are doing meaningful experiments. A quarter have things that are done at scale in about half of not really started former category either doing things that scale or doing meaningful experiments in artificial intelligence now, Okay, so I'm that's about 5% of the 5% of the room and then the ratio of hand if you personally are involved in those initiatives. Okay. Well, let's

do it yourself letting us a huge opportunity on the on the subject of helping people come from forward to you. If I could please the industries that you have invested in that I'm most familiar with our our old line consumer Focus Industries beer food talk about how those companies is Siena vacation today and and how you have used Innovation looking backwards as well over the past decades. I'm terrified dinosaur, especially after attending this meeting and went to a

food meeting yesterday and all they talked about was new product the new forms of producing food that I go to the next meeting is on our artificial intelligence and was talking a lot about data analytics and like that and I've been living in the Kozy world of old Brands big volumes nothing changing very much and you can just focus on being very efficient and you'll do okay at all of a sudden we're being disrupted and always if you go to the supermarket, so you

see hundreds of you brands on the supermarket shelf. The clients doesn't want to move out of his house anymore. He wants everything delivered to his house and beer we have the the new kinds of beers coming in all over I like that. So we're we're being affected by everything what we're doing about it where we're running to adjust. A company's of runs a sort of and their own way for a long time. So in beer we have set up a totally separate department and skull ZX and it's supposed to deal with this ruption and supposed to

disrupt ourselves and we have new people different kind of people younger people more digital minded more. Mine doesn't like that. We hope this will be a model which we can build on for our other companies. So that's the worst Grambling and wood. Would it be fair to say that in your career with that? This is a new paradigm that you were able to do things. Basically one way for this. Of time in this is a market shifts right now. Very much so weak we bought Brands and we thought they would last forever.

We bought a lot of cheap money because money was cheap. So that worked out very well. And then we simply managed. What was there a little bit more efficiently and now we have to totally adjust to new demands from clients clients, which are a lot more fickle. They want different product every day. They would have it delivered in an easier form. Like that's all we really have to adjust. There are big companies who are ahead of us in terms of being in the commodity business. And you know, I just a name so having Starbucks is

one the Nike is another one Zara you're up and like lots of there are people who are in a business like ours which is traditional business and which have adjusted. So we we have to get going that. So if I could if I could disagree with you on something you said you've managed these businesses a little more efficiently. I would think most people would agree. You've managed them a lot more efficiently. Oh, I don't know people people people criticize us for that also. So it's not only not only

to play Devil's Advocate. Are you are you is is is there isn't there? I could see someone making an argument that your colleague that you and your colleagues are not the people to manage this this Innovative change because that's not where your experience lies. How do you how do you confront that our approach that guy it also I've I've been adjusting and I'm 78, but I'm ready my God, so that's where the Starbucks Nike in Zara. Yeah, I say they've done a better job than we're doing in terms of understanding what their clients wonder what their consumers want and like

that. Can you can you buy any of them? Haven't thought about it. Don't think about it. Very good thoughts on Monday and disruption in leadership in general and then we'll throw them since we've been talking about innovation in the first place. Why do we have an AI strategy? Why do chief Executives have to deal with technology and not with electricity? Well, I think it's about change the Opportunity Center has changed a lot. If we were talking in about 1890

your electricity strategy would be very important cuz it was brand new and it was the thing that was revolutionising business and putting people out of work by the way. So this is not a new phenomenon phenomenon is the pace of technological change the power of the current technological implementation has to change jobs and in order to exploit that possibility. I need to innovate and that's pretty unfortunate for big businesses cuz couch really big businesses don't innovate very well. So what can we do about it? You know, it's not just

cultural when you look at a big business Innovation firstly. It doesn't look important compared to the business that really makes the money and then once it gets to be important, it looks threatening because it threatens does its place the business was making the money, you know, it's the Kodak syndrome which is often talked about by the time you're ready to replace the business. Someone else is probably done it and disrupted you and Manny most Industries are bit like that at the moment. So how can big companies how can big business innovate? I would suggest a large part of it is

fragmentation and to give you a couple of examples in the asset management industry of the multi Boutique structure. Lots of little teams that are very focused and quite self-contained. You got a lot more Innovation out of them. When you two out of one big somewhat bureaucratic group another example of the advertising the most successful advertising agencies have motor size Define creative team and centralized media buying the forces cost down and gets the economies of scale. So in other words Frank meant to be focused where it pays to do, so

but the efficient and coordinated and singular about the shared services at Where It's At by advantageous to do. So, I think that the leadership was needed to get the right degree of fragmentation in the right places to keep people focused is actually one of the main challenges in leadership that we see in business right now. To keep going if you wouldn't talk about it a little more specifically how technology is disrupting your business and what you're doing about it. Yeah, I set my nutrament the products and capabilities that you really wanted to have 20 years ago. You

don't want anymore. I'm talking here about active large contact with these you could run hundreds of billions of dollars on a fee of 4050 basis points that business is as gone as the bakkie with basically that money no buys beta through index funds and then the 40 or 50 basis points has become 20 or 30 because of passive competition and it's headed down. So large liquid markets are not the perfect area to be in like they were before the industry's being disrupted by the passive players just as surely as retailing's being disrupted by Amazon. So what do you do

about it? Well, our strategy is to go for Less liquid markets. Less efficient less well-researched private markets. Those are fire. You have the that the ability to add value for clients and also to get paid for it multi-asset strategies for an outcome. But I think any investment manager to take care of industry and stay close to home any investment manager who can't articulate a strategy to combat this disruption is probably headed for Oblivion. At 10 I hate to eat it. I hate it to suggest if that's a Segway for no more to say

but I do need to go poop. But it is Tim's turn to speak and then end up falling all in all seriousness Wells Fargo obviously has a lot of challenges are right now of the moment. So thank you for being here in and and showing your face in representing and in public in Tom Brady talk about Your industry faces a ton of disruption say let's start by talking how your how your confinement Wells Fargo perspective 166 years ago and our business model people and packages by horse. Think about that

quickly. We've been innovating for that entire. I said and I would absolutely agree with the things that you said. It's the difference today is it's moving faster and it's a bigger deal because it's happening to us the innovation of 10 and 15 years ago was nice but it was happening to somebody else. We're the ones now that need to change that need to leave that need to think about competition in a different way. And so it just feels like it's more acute and and a little bit more challenging. I don't really think it is. I think it creates an incredible

opportunity because what it does and whether you're talkin about Big Data Artificial intelligence or machine learning or blockchain or whatever it is. They're it's if they're just different ways in which we can provide more value to our customers. That's what it's all about. It's not about change for change's sake you could save a little money and things like that, but it's about listening to our customers and finding out what they want for those that sleep with her phone. So think about that meat we introduced of a product or service in May of last year called

real-time balance alerts some pretty basic we know all about your checking account at Wells Fargo inflows and outflows. We say to our customers let us know what balance you'd like to know about. Why do we do that? So you can manage your finances better that makes sense. So when we rolled it out, it's wish low and now 20 million times a month. We have a new way to interact with our customers providing them with the service that they didn't have before so. Those that are sleeping with their phone and they wake up and all of a sudden their balance is $100. They need to do something

about it. So they can manage their finances appropriately huge opportunity and it's also allows us to look at our customer from an end-to-end base. It's it's not just about a credit card or the debit card. It's about payments what that's the relationship that we have with our customers were applying that in every one of the products and services that we had. We introduced intuitive investor business product for our our wealth platform in November. We interviews is what other people called Robo advisor. What is it doing? It's providing our

customers with a more efficient way like to select gym, right if they want gym in principle to manage your finances. That's great. Let's give him all kinds of different ways to manage your finances know the way we're doing that is how many people in this country are in the in the Room has gotten a mortgage before is it one of the most painless experiences you've ever had you just enjoy it? And what's the thing that you dislike the most 7000 times we asked for information that

we should already know about the wreck. We completely change that you of your Wells Fargo customer you apply for a mortgage today. We pre-populate the entire application are there may be some few things that might be new. So you do that what happens if the experience is so much better. We we introduced that we pilot last year and reduce their first quarter now 10% in March 10% of all of our applications turn on customers by using artificial intelligence by using apis are so many exciting applications to what we were talking about it. We got to embrace

it. Don't be afraid of it and braces. Pitching drill drill down for this sophisticated Financial audience and leave the audience of leaders how your team win about developing that product? I'm curious to know, you know, this is the size of how many not specifically but generally how many developers it took how expensive it was how long it took one person was my idea. So that's interesting when we look at at introducing new products and services at Wells Fargo historically the way that we did it is we said, you know what we're going to

develop everything about this and we don't need any help from anybody else and it worked for a while, but when you want to move quickly and you want to make sure that you have the best Minds on something sometimes they're not all working at your company and sell the the mortgage application example is a good one. And that is we looked at how long was going to take for us to do it and then we looked outside the company instead of their other firms in the History of that are doing something similar and we ended up partnering with a firm called blend Labs. We made an investment in the company.

We thought that was the better way to do it and we're absolutely open to inventing things ourselves and making those improvements of which we do a lot partner in making Investments. You name it Whoever has the best idea we want to be working with that person or that firm to be able to deliver that experience with our customer. I think to Tim said something that's very general in its application to business switches. If you're faced with A disruption like Robo advisor those two possible responses out of your pretend. It's not

that I even got disrupted are you do what wells have done which is embraced use it and actually the robo advisor could be something that makes a Wells Fargo advisor even more effective looking forward and I think it's important business is recognized that distinction. Connect to other things if you'll notice everything Tim said was about it was a it was about an outcome and a challenge and it starts there and a lot of companies to say, where do you get started? So what's your biggest challenge? What's your biggest opportunity and then and then drive your technology strategy and the

opportunities and the other piece was this idea of speed. So as we look at our own industry in terms of Consulting where we see that industry being completely disruptive and what we're now as we look at what we're doing is this idea of speed that companies can't afford to eat out have a big strategy spend a lot of time and sending me to move much much faster. And so we built an innovation Network around the US where we're doing laps. We had company come to us recently so we can do you want to do a virtual concierge. They had a bunch of rental products. I wanted to compete with

hotels with me all day there to study and then the consumer Mix with 3 developers, we built a minimum viable product. And guess what when they saw it and they were like, you know what this is actually not going to work. It's not going to be personal enough. Now the next step could have been testing it right but it's a very different mindset oil and gas fields. We just had some really disruptive work in in maintaining Wells and we did it with the company where they said look we we have something called be called the milk run right you send a guy out

and go to the same route every checks every well. That doesn't seem like a smart answer we did three eight weeks Prince working with people in the operations building minimally viable product testing it to get into something that's now being rolled out across the u.s. And eventually the globe in the old days that would have taken a year right and not what I expected but there was a willingness to experiment you got to be able to expand me to take it doesn't make sense. And then you also have to be thing you're going to work very differently. So I I think that and but that's a cultural

change for large companies. I want to see the conversation a little bit of the concept of speed to timing. And so what I mean by that is real craft beers have been popular for a while now for each large company. The question isn't so much should we innovate when exactly in the cycle? Is it the moment we see something happening, but we haven't validated it yet, or do we wait for validation? How do how do you and your your company's think about that? Just to mention something we're global

companies now. So here in the US everything is happening. Everything is changing very fast. That's nice for us in a way because we can see what's going to happen the rest of the world but its not happening as fast in Africa, which has a billion people will have to be to the people in 25 years young population hot climate of a beers going to be very big and we're going to be able to learn everything were flirting here and and eventually do it in Africa. China's a big growing Market. Also, you have some time to do

things when craft took us by surprise. We're just coming to the us we are just bought Anheuser-Busch and then craft came in and it really surprised us and it took us a little while to to react like that and how do you mean crap surprised you in what way Like I said, we were stuck in our way of the solid Brian and that's going to be important than I got all the sudden these things come in and we went to restaurants. We went to a board meeting at a restaurant or 200 craft beer brands in the restaurant none

of ours and things like that. So so it surprised this but I reacted with bought 20 Kraft companies taking some guys on board. So we're learning and we're learning a lot from them and the international markets we won't be surprised. So if any craft beer appears in Argentina or Brazil and it looks good, we'll buy it you right away. Yeah, you know so weak that's exactly the balance. I was I was getting a tan timing and similarly Tim. I don't think Wells Fargo

was the first big company too long. Te Robo advisory so talk about that timing if you would and I think we were a little bit slow to be honest and not on purpose. I think the reason for that is that are are advising business Wells Fargo advisors was so successful and so profitable that it didn't seem like we needed to change as quickly as we should have and I think one of the things that we've learned over the last few years is it you need to say that's all well and good but just assumed that that's going to change and it's going to change tomorrow. What would you do it may

mean that you do nothing right for me me and you say you know, what we need to develop competing products that might have a lower margin, but that what that's what our customers are clients one. It's it's got to be turned around. So it's less about what we think makes the most sense and what our customers incline. Things are telling us and is Julie the mention in end in her opening remarks that the expectations particularly the millennial generation and younger are so much different in terms of how quickly something needs to happen. I didn't want it yesterday. Well, sometimes the

products and services that we provide them are complicated and in so you got to do what you got to think differently about how you deliver those products and services. But I view this is one of the most exciting times in business history because there's so much opportunity out there and even though sometimes big companies are criticized because they're they're slow and they don't move as fast. They also generate a tremendous amount to invest in an appropriate way and one of the things that we've learned it Wells Fargo over the last few years is that we've got to be organized

differently until which we've completely reorganized the company to be able to take advantage of innovation art. Social intelligence big data and you need to bring new people onto the platform that have different set of skills that weren't on the platform 5-10 years ago. He was a quick example of the of the of reorganization that has worked. So she'll win historically the way we were organized in a retail banking business is it we were organized by product by checking account by credit card by debit card and so on and so forth except that's not how our customers think about us They

think about the relationship on a consumer side with Wells Fargo is being a payment relationship. So what do we do? We combined all those businesses together under one leader of emotions to buy an innovation. We had Innovation that was really exciting and each one of our businesses, but we said we weren't moving fast enough and we weren't prioritize things as well as we could and we weren't thinking about our customers on an end-to-end basis. So we centralized Oliver Innovation activities the pace of innovation at Wells Fargo has doubled is not true. Over the last few years because of that

change the gym with you pick up on the on the global aspect of this that Georgie the Georgie began because you run a global business. If you look at Innovation, globally George is coming sexually beer is remarkably similar to Asset Management in one respect which is ideas from different countries do tend to translate intent resumes translate. It's over relatively short periods of time, but if I can go on to the the pace of change, which you've been touching on I think this is what's qualitatively different now

about most past. Which seen in a very short. Of time automation social media Communications, not only make businesses more efficient. That's good, but putting quite a lot of people out of work, that's so that's bad. So what do leaders do about this if they're our last job store? Cyclical certain sorts of people, you know white people without a college education. They used to dominate the workforce and they don't anymore and that's why they have been the people voting for populous on both sides of the Atlantic. The real trouble here is

technology is not going to stop and job patterns will change as a leader. The important thing here is to help your people develop and help them develop so their skills are still relevant in discussions like this. I find it a little disturbing the business people will say the answer is education and then they breathe a sigh of relief and say that's governments problem. That's not true government's not going to fix it business is an obligation to develop its people work through the skills and make sure that people can as far as possible stay relevant in a changing economy. I think

that's a very important call to action for business. I want each of you to comment on that. Julie was he wasn't on re-skilling In the fall is that investments in artificial intelligence by business is at increased 70% and the same Executives only 3% of them said they were going to invest in re-skilling and to Jim's point. A lot of that re-skilling is going to have to come from employers and including a partnership until I look at a sweet over an 18-month period we automated eighteen thousand jobs. We reinvested 60% of the savings

and upskilling and didn't fire anyone and by the way had the strategy up front because the way we will be able to move with speed was we asked our people to help us identify where to automate but the strategy really needs to include for companies and investment. We still not everyone's going to make the journey but it is really important and the statistics are sobering all the same time I M with a lot of companies at the Business Roundtable and elsewhere who are investing, but if you really look, Broadly, it's not enough. I would agree urine

infection. We mention of Business Roundtable. We've got a partnership this developing of the Business Roundtable to go out to community colleges to high schools to colleges and say these are the types of skills that we need as opposed to just waiting and hoping it get they get develop not that are schools and universities are doing a great job, but as his businesses, let's be more proactive in in setting expectations of what we need. And I'd only what we need today, but we need five years in 10 years from now. So I think it's got to be company-specific is got2b industry-specific but then

it's got to be companies across various Industries. For example, we need more help in cybersecurity. You need more help in cybersecurity. Everybody does right. So why don't we ask our schools to improve the quality of education for those skills? How about let's say what percentage of the problem The Business Roundtable as a as a metaphor? Cancel. All right, so because businesses don't employ everyone schools don't educate everyone in other words. You said it's not only government's responsibility, but I'll flip the question

around to any of you isn't it also government's responsibility. And now this is because of the US phenomenon, but if people don't have the skills, they need their they're being failed at multiple levels including the government including employers. I think they're a different solutions are there. I don't think it's just to us problem. The the popular ISM anti-immigrant populism anti-trade populism is very strong in France and Germany and it led to the brexit vote. So Europe has the same phenomenon of displaced people feeling angry and they feel

angry and part because I believe the reason for the Des Placement in for their lack of good jobs and Prospect isn't the Foreigner the trade to the immigrants. It's actually technology and that's why re-skilling is so important. I think the politicians are in a phase of denial right now on both sides of the Atlantic but I think that at some point they will have to get onto me maybe that maybe things have to get pretty bad before politics move. But at some point I think education has to get back on the agenda in a much stronger way, but in the meantime business

can't stand idly by one of the Business Roundtable and we've just kicked off an initiative to this point around the balance is that as companies is Tim said we're working together we're going out. I'm Accenture is helping lead in Chicago. When are you guys are doing it a whole network of apprenticeships? So to Jim's point we're acting now but we were working to set we calling Innovation agenda that's going to be very clear about the play. This is where as a country. We need a different strategy and one of them is around education because there isn't actually enough discussion and

framing of the discussion in the concept of technology is a lot of dystopian conversations around it, but actually not a strategy around what we're going to do and how the government and the private sector are going to work together to do that. Are you How often Mystic are you that's that there that's something concrete will happen. If this it reminds me of the old Steven Wright joke that everyone complains about the weather, but nobody does anything about it whether we will get Congress and everyone to move yet, but big step forward to

actually I think you don't get this on the table and a different way. But from the company's and Tim, I'm very optimistic mean in Chicago alone. It was myself in and great case at Aon. We said, you know, we're both doing this stuff what we do it in in two months. We have thirty-two company sign stop to we know we're creating apprenticeship in a box and trying to shave it was very easy because people see the issue may see it both has a talent Gap that also a real sense of corporate responsibility and where things are going. So I'm very optimistic tomorrow how you feel and we're not going to

solve all the problems. We have local education decisions in the United States are done locally. Not nationally no matter how it in. So there's not going to be a one-size-fits-all kind of solution to this. But but I think it's a to start and I think we as employers particularly large employers have an obligation the way that we think about it Wells Fargo's we know we can't be successful in the communities that unless the communities that we do business in our success. She just makes sense. Tell George I listen to this conversation about the

worker training and Andre Skilling and if you'll forgive me it sounds very expensive to me especially in Aloma low-margin business. How do you think about it? Oh, I think people are the most important asset that you have in a company. So we've always been very focused on training people giving young people an opportunity in we hardly higher from the outside. Most of the people come in through our trainee programs. Like I said, we're very focused on people and we track the fast the fast run carefully. We follow them we see what they need.

So we we are adjusting the new needs we need and you and you kind of people, you know much more in the data analytics and things like that, which is different volt what we needed before we have also been very Conscious of giving the right incentives and the right signs the peeps all our parking spaces board members is really making sure that we have the right incentives to the right kind of people that we want and and give him, you know attract them so that they eat they keep

coming up and like that. So where were very very focused on people expense with people is not not where we cut expenses come in and you're you're you're speaking right now about the operating companies not about 3-g itself with yes. That's what I was I was sitting here wondering just that 20 people in the world with me. Let me pause right there and ask if there's anywhere we do I see him right there and I was asked to give they Mike Runners more time than I just gave them.

So please stand up and somebody will find you with a mic. Maybe it's not here comes yet right there and just please tell us who you are. Thank you. No, here comes the mic. We want to record it. I am Seth Keller and I appreciated Julie's comments about electricity electricity and AI but it worries me how easily accepted the idea was that we don't need to worry about electricity and just too quick points. I was coming back to my fault not hers, but go ahead and I was coming back from Massachusetts after storm in for about an hour. We

were driving with no lights around and we realize that it wasn't just the lights but the gas stations weren't working because the gas stations were all powered by electricity not by gas. So given that little experience are given what happened in Puerto Rico and are under investment in infrastructure. How much would she should we be investing in the things that we're not worrying about because we just expected electricity is the basic infrastructure versus highfalutin things, like artificial intelligence

water utilities is to better use these Technologies to create more resilient networks to have more predictive and prescriptive help in into those networks. And you're absolutely right. And if you lose in the Northeast just just a couple of weeks ago and you know a hundred thousand people at least out for a for a week and so it is an issue and it's an issue also around security anywhere or he's already looking ahead at what we call Post Quantum rights when Quantum Computing

comes in and it's even more fast and then what that does for a critical infrastructure with the security risks, so it's I think at our Peril do we know? Look at our critical infrastructure and continue to invest but I think it's not it's an alternative. In fact technology is going to be part of where I think we can get more Reliant reliable Network. Please I'm sorry, please introduce yourself. Gator and I'm from Volunteers of America and affordable housing Builder across the country in the beginning of his you've made a statement about how

everything must work with culture Workforce in all of them. Now. My question is about a I only 12% of the people on the planet have white skin and are white Nai a lot of their prejudices and mythology of the people who are programming them has been inculcated into how they are focused and structured. Another thing is that a lot of some AI has found to be flawed because it does not detect brown skin for instance facial recognition even in some of the bathrooms where you wash your hands for the water will not turn on for you if you have anything but white skin now how

speaking to the issue which was proof. That you made in the beginning of all these adjustments we must make in order to have a continued sustainable society and Workforce in this country. Are we correcting these things that we have already found out about artificial intelligence. It's a really important point. And in fact when we advise clients and we say, you know, it's there. So, you know, how do you approach it? One of the key strategies is what we call responsible AI in other words artificial intelligence can't be simply owned by the business units. It's not only a

c-suite imperative. It has to be infused from the beginning with standards and ethics not only about Job displacement, but for exactly this issue and so what we're seeing is the companies were very serious about this our building from the beginning. So designing into their strategy how they will ensure responsible AI with ethics and testing. And the good news is there are clear ways and methodologies to do that. It's really about choosing to do it and design it into your strategy. The real answer

to your question is a really important one is something that's been part of leadership for decades the importance of diversity. If businesses don't have gender and racial diversity of the senior levels, they will actually fail and you gave a very good example of how lack of racial diversity can lead to failing systems. So I left the example night. I think it goes back to our truism of leadership which is to try to ensure diverse teams. Play some front major cantar from United States Marine Corps on my questions about leadership. We talked about Innovation briefly. I'm really

interested. Cuz a lot of innovation that you madam you've written about Uber. We talked about Snapchat with a couple other Innovative like Warby Parker are millennials and there's a stigma that Millennials won't work for companies Long unless they get benefits and move up very quickly to my question is how do you Foster Innovation? We just had animals breed is he was the NATO Commander for several years talking about Innovation for Our Generation. So how do we Foster that innovation in that jail are the generation after the Millennials and try to keep them apart of us. Thank you for

that your first thank you for your service second. I don't think Millennials are really that much different than Baby Boomers more active describing how different they are. We going to get ice. I speak from a little bit of experience. We have five in the Sloan family and I actually think they want exactly what I wanted. They want it at a different time. I'm in a different way and that's all well and good. I've been at Wells Fargo for 30 years a baby boomer. Right but I've had about 16 different job and I think the key is to make sure that you're hiring the right

folks that believe in the mission of your company. And if if you if you can connect those two and you're going to be fine as long as you're continuing to be focused as everybody on the panel has said and that is it people are the most valuable assets. We all have you can't treat them like a number there not an FTE right there not an employee. We calling team members at Wells Fargo. So when you Foster that kind of environment, but you also make sure that they understand right that they don't get to be CEO after a year and that's the way to be a good lender in a

very proud of the fact that we provide more credit to anybody today than any other Bank in this country to make a lot of mistakes. And survived you do it over a long time cuz you can only make really tiny mistakes. So is it a fact that I think almost everyone has been with their employer for a relatively long time on some of us a very long time. Is it a fact that those days are over no matter what other you made with no matter what else you said? It appears the people that young people do not want to stay the same company for a long time. I see I disagree with

that. Cuz when I look at it again, I'm done speaking from Wells Fargo Jewel, you'll probably have better stats for the text. But when I look at turn over at are the millennial level it's not that much different than it is a five years and there's always that. Of time and everybody's career or they start out and they realize you know what I don't really like what I'm doing it. Yeah that tends to happen when you're younger as you as you age you find what your passion might be but one of the great things about our company today and most large companies today is we have to ask that. What's a

jobs are 3x the types of jobs that we had when I start it so the more opportunity it's exactly right. So we want you to have a long career at our company if but if you or any or any day you wake up and say, you know what? I'm just not happy with what I'm doing raise your hand. Let's talk about it. Maybe we can find something over here, please. My name is Seema Shah and the principal Global Investors. So I'm not going to Target my questions for the gym because we are

comfortable. I just about qualifies Millennial and one of the things about having keeping Millennials in a job is feeling that they have strong voice an important voice which I think in the future given that were talking about the age and Technology. Our voices will pretty be more and more important because we will help you recognize this changes in air pressure would but my question really was when it comes to government spending to education teaching in schools a I like coding those kinds of things the US is probably one of the the

country that spends the least. I'm not significantly compared to the age of the evening you spent a lot more. So if you look over the next few decades, how do you feel us companies will be able to compete on a global scale? If the people in the u.s. Not getting the education where is in Asia and Europe? They all seem only Millennial and development issue. I think this is a special case of the importance of having a coach of the challenges people and let them develop whether it's Millennials are baby boomers. If you let

them get stale in the job and don't stimulate and challenge them they will go and I'll be right to go. So we need to have organizations that are culturally ready to to give people a challenge in terms of the the question about stem education. You know, it's not quite so simple that the u.s. Is liking if you really looked at the high end of Technology education the u.s. Is the best in the world and I do think that that's a great asset that helps has developed leadership in those Industries. That's why the world's top tech companies are Bass. Apart from the

Chinese ones that are American and that Innovative culture, I think comes from an excellence in education in part of the system the problem that I think we have an us education. It doesn't give a fair deal to the masses and I think that's a really serious problem and it will take time to fix for all the reasons we know about how slow politicians are to do things. But I do think business house to help his people develop and I think that's something we can creatively inappropriately do right now, so I think that's part of the answer. Thank you factor.

It seems that the AI in the high-tech piece of of this came as a almost like a war cry against unskilled Labour beat, you know High wages and you know pushing that down on on business is it seems to me that if we get that out of shift that out of the the war mode and into do we want to retrain you and help you you're suggesting with that we've gotten the tone wrong and in the in the debate I came in with the wrong tone into this room and this really been helpful, but I think I think that the my

colleagues are really concerned about. Well, what if they just legislate High wages and then we have to respond and now it's you know, Anybody want to take a gym? That's right. I think I think that it is very important to look at the potential Solutions and to identify the problem correctly to start with and I think a lot of the political debate is very sore and very inaccurate in terms of its eye diagnosis. So I do think you're right that the positive agenda has to spread get up there never has been a. Of innovation and

printing job disruption that permanently led to last jobs being available, even though there have been similar boats of job losses to Automation in the past. I don't think it needs to happen this time, but we maybe need better public policy and that's our actions by companies. Then we're currently seeing to make it turn out. Well at the beginning of these Cycles it always looks like this it always looks like there's going to be a net loss of jobs. Other word leadership in R&R in the title of our talking to him. I wanna I want to end with you and we had joked about

you. You being being that you came. You've been very forthright of talking about the challenges. That won't that Wells Fargo has and this is the ultimate example of leadership. I think being the CEO and in a situation, would you the best way to ask it with the short time that we have left is give us your report card on yourself and on Wells Fargo how far along are you on working through the challenges that you've had to confront? This is sceon. When will it be over very far along? So I've been in this role for about 18 months. I was very clear that we were going to look

at all of the products and policies procedures that we had within the company and make sure that we were doing things in an appropriate way and I and I was very clear that we're going to be very transparent about it and fortunately one fat that occurs you get some negative headlines and that's been The Challengers no question about that, but in terms of the progress that we've make it made we've we've addressed the concerns of our customers in terms of making things right for them. As I mentioned. We're fixing anything that needs to be fiction and we're we're moving forward. So and I think

we're very far along in the evolution of the company, but I think one of the things that we learned going through this. Of time because it was five years ago that we were the most valuable financial institution in the world. And you know, what when that happens to you you think about things a little bit different and you don't raise the bar high enough for yourself, you don't say what do we need to do to change and that's a really important lesson that we have learned that will never again happen at Wells Fargo, right? Because you always need to assume that tomorrow is going to be a

little bit different. Somebody's going to have a little bit better idea. Your competition is going to be a little bit smarter and you can't rest on your laurels as much as as we did, but I would tell you that the two things that have gotten me through this. Time more than any is again. We have got the best team in the industry. The one is you have to have a sense of resiliency you need if you can't assume that everything is going to be good and magical things are going to change. You got to be very resilient. Right? I look at some of those are the two phases here

particularly from the members of them in the military. I think that's one of the traits that you guys exemplify more than any of us in the room. Is that ability to be resilient and then and then secondly, it's a sense of optimism for your company. If you don't believe fundamentally believe in what you're doing and that you can do it better and that you can be you can be more successful then you shouldn't be the leader of a company and it's so those two are probably the ones that have been most important to me. But you said you're you're very far along as

an outsider looking in. I wonder if you feel like The Regulators in the end the press and even competitors, Arpaio. Does that concern you or can you not afford to think that way I think the media tends to be very good at piling on because it's pretty build them up and then we knock them down his mouth, but nobody but your business has been completely disrupt it but you don't have time to time that you had five years ago in 10 years ago to really investigate an issue. So so you have no one knew headline of and then that you repeat the same story again and again and

again because your margins are lower I get that right but that's just part of my life. And I think that that that which is the media tends to be like 6 months behind reality. I want to thank I want to thank each of you for sharing all your very interesting thoughts in Love you for being such a good audience. Thanks. Again. Thank you very much.

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