CEO Initiative 2023

Senator Marsha Blackburn has made moves to ensure regulation has been rolled out on a laundry list of issues from AI to taxation. And while regulation is key to the success of the U.S. government, how can the Senate learn from the private sector on how to streamline their processes and get things done faster? Senator Blackburn shares more on her plans for Tennessee and the nation at large.



CEO Initiative 2023: Rules And Regulation 

Conferences

Marsha Blackburn, U.S. Senator, Tennessee

Hello. Hello, I'm back. Um US, Senator Marsha Blackburn, Republican of the Great State of Tennessee has served in the Senate since 2019 and is a seasoned member of Congress having previously served in the US House, which was full of drama today, by the way, in case you missed the headlines. Um She's a keen advocate of prioritizing America's technological growth and embraces the transformational benefits of A I. She believes advancements should be smart and secure and include laws that protect consumer data privacy. She emphasizes the important balance between safety and innovation and her other top priorities include reining in federal spending, streamlining the government and she says there are lessons in efficiency to be learned uh from the private sector and good for her. She's gonna be speaking to a room full of people from the private sector here you are. So we're interested in getting her take on it all. So please welcome Senator Blackburn to the stage. Thank you so much for joining us. Well, why don't we start with? Um and just forgive me. I'm, I'm from New York and I cover business. So is Washington always as exciting as it is today. And does it have to be this exciting? The mayor should answer this. Are you? But I mean, all in all kidding aside, it's, um, I remember, you know, when I started business school, we learned about how companies, what they wanted from government was stability, low political risk. And I think that's something that the US has enjoyed for a long time. Um, but, you know, shutdown seem to happen pretty often and I think deep down, we all kind of knew that they would kick it down the road. So is is this not a problem for, for uh the American economy that we have uh you know, this kind of political climate at the moment? Well, instability is always a problem in uncertainty is always an issue. And every year I am in each of Tennessee's 95 counties and there I am meeting with businesses, large and small people that are main street merchants, people that are manufacturers, people that are suppliers to the auto industry or the logistics industry. And they repeatedly talk about the effect on them of uncertainty, the effect of different administrations, changing rules, the inability to make long term plans and how that affects their, their bottom line, how it affects the ability to work with your employees and to address those workforce issues that are always top of mind. So what can we do to have a less, less toxic political climate that would lead to fewer I I like to say, let's work in a bipartisan way. And when there is something that I'm working on, I always reach out and look for someone across the aisle that I can work with. You. Mentioned A I and Senator Hickenlooper and I are working on some things that deal with technology. I'm the top Republican. He's the chairman of the consumer protection, data security subcommittee. So much of technology comes under our committee uh at the finance committee, uh, we've just passed out a bill. I've worked with Senator Wyden on dealing with pharmacy benefit managers and addressing some of the components there that need to be done. Senator Ossoff and I are working um on human rights issues at the judiciary committee. He's the chair and I'm the top Republican there. So, uh, that we work better and, you know, the interesting thing that I have found whether I was in the house or in the Senate. If you want to make change that is going to be lasting, then you need to be working in a bipartisan way and build bipartisan support. Uh, Senator Blumenthal and I have worked on a piece of legislation that deals with kids and social media. It's the Kids Online Safety Act. And we've worked on this for three years and going back into 2019 when I led the tech uh task force at the Senate Judiciary Committee. And then we started to develop this concept of how do we protect Children and deal with the mental health crisis and deal with some of the content Children are exposed to online that you would never in the physical world, expose those Children to. And we now have nearly 50 senators as cosponsors on this bill. It came out of the Commerce Committee on a unanimous vote and there are over 200 organizations in the country that are supporting the Kids Online Safety Act. And but we've taken the time to find consensus and to build that support on a broad basis and I appreciate the opportunity to do that. So I wanna talk a little bit about A I because we've not talked about an A I enough today. But, um, I can only imagine because it's quite a topic on the hill. So what, what do you see, uh, perhaps, you know, what's essential for making the USA leader in A I? Um, and what can government do to foster the industry but not get in its way and not get in its way is a big part of that, the hearings and things that we've done on A I, whether it is at Commerce Committee or a judiciary committee. Uh, every witness we have had before us has said, well, for starters, why don't we do a Federal Online Privacy Act is that you need to give people that firewall to protect their data and their information and doing that privacy standard would be a very important thing. To do. So, I, I think that as you look at it, that should be number 11 of the things we've also heard is people don't want to. There are some that say, well, get a license to innovate. And I think that's a terrible idea, innovators. Uh I, I love the fact that our nation has so many entrepreneurs and people really desire to come here and innovate and you may be working on something. And then you say, well, what if we did this and you come up with another utilization? And uh I, I think that guard rails guidelines, that is a good thing to do has done kind of a framework uh that they've put in place where they look at mapping out what you're doing, measuring um then managing through some of the risk and as as we move forward, those are good things to keep in mind. I do appreciate the fact that members are beginning to hear more and learn more. One thing we do have to keep in mind is that Congress will never ever pass bills that are going to keep pace with technology. And because of that, you need to be light touch and focus on the environment and not try to regulate to a technology. And that's one of the lessons we've learned as you look at the music and entertainment industry, which is so important to my state. Um Well, speaking of your wonderful state, um I wanna, and we, we're, we're grateful that you like Nashville. You, Nashville is amazing. Except for the Bachelorette Industrial Complex with all the drunkenness on it and, and I love, I love Memphis too, but you don't wanna get on a beer wagon. No, I wanted ear plugs and I found them at the local Walgreens. But, um, but all kidding aside, I mean, it's, it's been great to see a city like Nashville emerge as, you know, from a regional city to really uh it's booming. But uh the next question has to do with talent attraction. And you know, CEO S talk about uh labor shortages. So whether unskilled but also very skilled and not enough uh visas for the super talented. So, you know, there's immigration is such a hot button issue. So where do you fall on? How can and workers? Well, there are a couple of things that I think we need to do and in our state, we are focusing on some of these developing uh emerging technologies. And when you look at Chattanooga, they're doing a lot of work in quantum and looking at that workforce. Ut Chattanooga is very focused on that. And they're working with Oak Ridge National Labs, you know, the fastest computer on the face of the earth is in Oak Ridge, Tennessee. And uh the quantum work that is being done there is really quite exciting and so they're really quite focused on that. And um the Knoxville area, you see a lot of work being done in fintech. Uh Some of the early fintech companies kind of started in Tennessee. They were outgrowths of other things, the health care industry, of course, and some of the state of work that is being done there in health care in Nashville. And then you see classes that are being offered that are specific to that and to that helps information technologies uh to fostering some of this education and innovation. Likewise, our state has put an emphasis on that highly skilled labor through what we call tas, which are our um our schools, Tennessee College of Applied Technology. And this is something that students in high school can have dual enrollment and then be ready to move forward. And uh growing this workforce is something that we have placed a tremendous amount of activity on when it comes to immigration. This is why that legal immigration system and individuals from all over the world that want to come here and work there needs to be that path for that visa. We hear this from companies in Tennessee companies that are in need of engineers, companies that we want their R and D to be in Tennessee like blue oval city that Ford and SK are doing in West Tennessee. Uh We want that R and D center here. We don't want that to end up somewhere. Would you like the federal government to increase the number of H one BS and just make it easier for a talented. I think the thing is let's settle down and let's look at, uh, how we make certain that we address the issue. You and I don't know what all of those answers are going to be. I don't think anybody does. If it were easy, it would have been done years ago. And, uh, you have companies that are moving into Tennessee, like Oracle, like Amazon that has done a fabulous facility in Tennessee. And they talk to us regularly about specific talent that they need for specific jobs. Now, the Nashville area is home to two pretty successful and large retailers and retailers are also saying that they, there's a labor shortage around the country. Um You know, and, and there's the migrant issue and I'm just wondering why, why wouldn't we make it easier for migrants to get work permits so that it would help these such companies and retailers and, you know, I live in New York and that's really the, the discussion right now. Uh why not give migrants uh quicker access to work permits? And uh making certain that that legal immigration system is addressed is going to be important, securing the southern border is going to be important. And I hope that at some point soon we can turn our attention to those issues. Ok. We have about a couple of minutes. If there are any questions I'll uh send over the microphone. But um in terms of, um, uh, corporations and governments getting out of their way. I mean, I want to wait a little bit into the ESG debate. Uh, there's been push back, uh, as we saw in Florida but ultimately, um, isn't it up to companies to decide, uh, whether they wanna follow ESG and, and, and pursue diversity initiatives rather than, you know, what, what's your, what's your take on that? Is it, is it, uh do you think that a lot of companies are getting bullied by the zeitgeist or uh is it, you know, ultimately, should they be the ones to determine uh their diversity? What I have found in talking to companies in Tennessee? And as I said, I am in each of our 95 counties all over the state. And what they want to do is make certain that they are able to make a profit that they're going to be good employers for their employees. And Tennessee, as you know, is a wonderful, uh a wonderful place for having a business, no state income tax. And uh people really appreciate having that smaller government and coming there. Uh And they work hard to make certain that there is that right environment. And employers will talk about wanting to, wanting to be able to offer benefits for their employees, wanting to be profitable, wanting to continue to grow the company, wanting to continue to grow jobs in those communities. And then the elected officials in those communities talk about the importance of making certain that those companies can stay there and stay productive and that those are good jobs that are going to be in there. They know that uh companies have suppliers, they like having those suppliers in proximity. Uh They want companies to be successful, tell their friends, bring their friends coming there and uh see that, that growth. So I know the mayor was talking about DC being open for business. Tennessee is open for business also and uh has a done a superb job of staying at the top of that heap. Well, on that note, thank you for joining us. I did to join you and you know, it's yes, everybody go to Tennessee but not for a bachelor party or a bachelor party, but there are a million other reasons. So thank you very much for joining us. Thank you very much. Ok, and enjoy your main course. Thank you.

Muriel Bowser, Mayor, Washington, D.C. Moderator: Matt Heimer, Executive Editor, Features, FORTUNE

CEO Initiative 2023: What’s Next For D.C.

CEO Initiative 2023: What’s Next For D.C.?  

Good evening, everybody. Thank you for playing the Pina Colada song, my traditional walk on music before I arrive. Um So thrilled to see you all uh one last time and it's been such an inspiring and thought provoking day. I really want to thank each of you for your uh engagement and your collaboration and uh your commitment to the CEO initiative. It's a great thing to be part of every year. Um We're as a fortune, we're always happy to be hosting events here in the nation's capital. You know, to be at the epicenter of America's political landscape uh to be in this melting pot of cultures and ideas and ideologies. Uh as you probably know, uh Washington DC, it's not part of any state. It is a city governed by the mayor and the city council, but also accountable somewhat to Congress. And that puts Muriel Bowser in a uniquely powerful and just unique position among America's mayors. Mayor Bowser has an ambitious plan to shape and grow Washington DC. She's got her eyes on driving economic development, increasing the city's population and making the city in general just a destination for job creators. She also has the distinction of being the first black woman ever to be elected to three full four year terms as mayor of any American city. Um So given all this, we're especially grateful to have Mayor Bowser joining fortune this evening, we're going to talk about D CS changing landscape. Uh Talk about the impact of new technologies and talk about the policies that she's hoping will shape the trajectory of the city. So please join me in welcoming to the stage, Mayor Muriel Bowser. Yeah. Thank you. Thank you for asking. I'm glad to have you here. Thank you, my pleasure. Yeah. Um So as you might have heard, uh the my, my colleagues and I spent a lot of last week uh kind of fretting and saying, oh my gosh, how are we gonna put on a conference uh in Washington DC? If there's a government shutdown, what will we do? So if it was stressful for us, I have to mention like, what was it like for you as the mayor of Washington DC to anticipate, you know, a possible shutdown. Well, one of the biggest stressors that we had welcome by the way and welcome to the most beautiful city in the world. Um We had the World Culture Festival that chose Washington DC and the United States to come for their convening and literally hundreds of thousands of people um plan to be here on the National Mall, filling hotels and neighborhoods across the city. Uh and going to events, um they started, I think they loaded in on Friday and if there had been a shutdown, there was the possibility that they would have to shut down. Um So these are musicians and performers, musicians, performers, thousands of people, heads of state ambassadors, you know, all coming for um the world cultural to talk about peace. So that kind of a uh irony there. Um And talking about, you know, understanding across lines. So it's just a wonderful uh event and we were planning on it for a month. So I told everybody just, they're there and they're not gonna leave like what's gonna happen and we're going to support them as the city to figure out how it can work. We had conversations with, of course, the National Park Service and uh heads prevailed there. Uh And the shutdown was averted anyway. Glad to hear, at least, at least for a while, at least for now. How much of your own, you know, you've been here for a while. You, you, this is your ninth year in office. Uh You've got a lot of experience navigating all these quarters of power. How much of your, of getting your own agenda implemented is sort of dependent on Congress's sign off Congress's cooperation. Not much. Um You, you, you started off saying I like to say we're, we're not exactly a city, we're not quite a state and we are, there's nothing like us anywhere in the United States. So as the nation's capital, um we have a pretty flat governing structure. There's a mayor of 13 council members that decide on our $20 billion budget for 700,000 people. And uh we are, we while we interact with the, the Congress kind of like any another city would do with its state in its state legislature or our state legislature is the Congress. Um so it can interfere and it, it does, uh, usually on like social issues that get the congressmen attention back home, uh, on issues that they can't deal with at home, but they try to make points with in DC. No drag brunches on the Washington Mall, kind of something like that. Yeah. Well, let's talk about, I mean, you, as I mentioned, uh, it's your ninth year, you were just reelected last year. Um, let's talk a little bit more about what you may be able to do over that time. I mean, uh, how, uh, how does the city's economy specifically look different compared to when you took office back at the beginning of 2015? Well, a lot has changed and, um, part of what I, you know, share with residents when I went out and asked them to do this again. Uh, is that the job of being mayor is different post COVID? It's just a different job bringing the city back, um, filling the, the gaps that were created by the COVID and getting growth going again is a different job. So our time is very different. Like II I became mayor when with a raging economy, job growth um in residential growth. And our biggest problem was our economy was too hot. Um that it was driving prices up all over uh for, for housing in particular. And so we uh I have spent nine years really focused on how we build more affordability. Um because that um, we saw as the biggest threat to our growth, that families wouldn't be able to afford to live here and that some businesses would, wouldn't be able to, to come here, wouldn't choose our city. Um, because of the inactions are pretty good. But the goose that I frequently say that lays the golden neck for us has been downtown real estate and COVID wreaked havoc on downtown real estate. Um, but even with that, uh, I see kind of the positive energy, uh, in that space as well. And I think over the next 3 to 5 years, um, we're gonna see improvements there too. Is there gonna be some, I know like a lot of cities including my hometown in Chicago, you've got a lot of, uh, of downtown vacancy that might not go away no matter what happens with the economy. Is there some talk about like residential conversion there, is that a way to take some pressure off the housing market and some other neighbors? No, for sure. And, um, and even Chicago is in some ways situated better than we are because you have already have more residential downtown than we do. That's true. Uh We have a, a downtown that's about 90% commercial and that mix just isn't gonna work and it wasn't healthy before COVID. Um, and it certainly isn't now. So we're pretty aggressive about our subsidy programs to convert commercial real estate downtown to housing. We have a, we've laid out a five year economic strategy. I've dubbed it the comeback plan, um that set some pretty aggressive goals about downtown employment. Uh and how, what the government is going to do to be a partner to, to great developers who have great ideas about bringing people downtown. Got you. Uh We had some fascinating conversation earlier with uh Ken Frazier and Debbie Dyson at 1 10 about uh about matching skills to jobs and sort of bringing, uh you know, creating more opportunity for people in underserved communities by taking the college degree requirement of a lot of, a lot of employment. And there's also an upskilling component to that too. That's really important. Um I think a few years ago when I talked to you for CEO initiative, we were talking about upskilling three years later down the road. How's that going? I mean, uh you're reaching some more communities of that kind of thing. I think we're reaching more communities. We are actually experiencing less unemployment than in the history of the district of Columbia and in areas in the city um that have the most employment hurdles. Um So that's good. It's not great because we, we still like to be closer to the national average, but more people are working. Um And so that's a wonderful thing, but we also wanna be focused on uh our pipeline and especially for uh our residents, natives like me. Uh Well, not exactly like me but native Washingtonians who want to uh experience, it's the prosperity of our city. Um And so we know that starts in schools. Uh We're very proud of the investments we've made in our public schools. We're uh we probably have the most robust free pre K three program uh anywhere in the country. And I know when CEO S think about places to locate DC is open, by the way, um You're looking at what your young parents and your young employees, they're looking for great public schools where they can send their, you know, their three and four year olds uh for free. And that helps with the affordability, uh the affordability question. So we continue to be very focused on our public schools. Now, the that's pre K three, I'm gonna take you to the other end. Uh And we're calling it advanced technical education is kind of the new vocational education. Um but it's really going to all of our schools partnering with them, with our higher ed uh communities and training them for the, our actual job needs in the city. And that is really beginning to keep our kids engaged and excited about high school. I call it the new high school um where they're doing um school and they're also earn and learn opportunities and real training um with our partners so that they're, they're qualified and ready to work. That's a big deal. And again, that's also a draw for other businesses. It's, it's a draw. So most of our business uh groups have, have put workforce development at the top of their list of like our regional um work, work together. I see. Uh Speaking of reaching CEO S, uh I, uh I do wanna make sure that you all know the floor is open for questions. If you, uh if you want to ask one, raise your hand, we'll get a mic to you. Uh, because I don't want to monopolize the mayor. Um I know that another problem that a lot of cities grappled with in the wake of COVID was uh an uptick in crime. And I know there's been concern about rising homicide rates, rising gun violence here. Um I know you got a new, uh a new police chief in place which is encouraging. Can you tell me a little bit more about how you're navigating that? No, for sure. Uh I've been mayor long enough and I've been in elected office long enough to see crime go do like this sometimes. Uh and every time I that I've been in leadership and experienced spikes in crime, which we are experiencing um spikes in some crime in some places in our city. Um Is we literally throw everything at it. Uh And that's a lot of resources on the prevention side, but it's also a lot of accountability on the other side. Uh And one unique aspect of us in the district is that the political ceo me um does not control the whole criminal justice system. And so, so, uh, we have to work doubly hard um with our US attorney who is appointed by the president and accountable to the president not to the voters of the district. Uh We have to work doubly hard with our judges. We're not elected or appointed by DC residents, but in the federal judiciary. Uh and well, it's really state but, you know, it's federally appointed. Uh and likewise, um, like most places we have really had to deal with um, swings and attitudes towards policing. Um And I think a lot of kind of the tumult of this last several years around how we keep our cities safe and how um we um support and encourage constitutional policing and accountability is, is our focus. Sure, I read also recently, uh some coverage about some of the skills, uh I should say conflict resolution skills teaching that uh your administration has been working on uh as sort of an intervention before. Yeah. Uh unfortunately, what we are finding with our gun violence issues in the district is the conflict between having a, a legal gun and not knowing how to settle disputes and are leading to, to, you wouldn't even be, you will probably be blown away by some of the minor disputes that result in, in gunfire. I'm sorry to hear that. And it'll turn around, I believe it. Um, on a, uh, slightly less, um, uh, on a note that's a little bit, uh, a lot lighter. Uh, I, uh, was talking with your chief and she was telling me about, uh, that I had to ask a question about getting the commanders to actually play a game, uh, inside the chief would say that. Yes, uh, city limits, uh, tell us a little bit more about that. Well, there is a, uh, a pretty ground, uh, pretty, it's a groundswell of, um, talk and support and activity around sport in our city and a lot of times, especially on days like today, people don't think of DC as a sports tale, but we really are. Uh, so we have championship teams in, in, in baseball. We won the World Series fairly recently and, uh, the Stanley Cup and our soccer teams. Both the women and the men are doing well and women's basketball team has also won a championship recently, but we don't have our football team. Uh, and it is a source for Washingtonians of great despair. Uh, and so we've been working pretty hard on, on it, uh, for the last several years, not just on the team and the name and the, the, the ownership, but also, which is a larger issue for us is the RFK stadium, which is a pretty storied place, is surrounded by 100 and 70 acres of federal land. Um, that is basically just sitting there falling apart and unused and in a city like ours where we need more housing. Uh, we need more economic opportunity, we have to get control of it. And so that's what we're working on with the federal government now. Uh And you know, if all of the sports gods align, we'll have our team. Um, but we're gonna have a great mixed use development too. There's a little more than uh three years left in this last term of yours. We just have a few seconds left the current term. Uh Thank you for catching me on that. Thank you for catching me on that. Um, besides the stadium and just because we're wrapping up here, but besides the stadium, what would be, uh your one top of your wish list for what the city will look like at the end of this term? Well, I don't know if there's one thing, um, but for sure, I want to make sure that we are strong fiscally and that is what we're focused on. So how we are strong commercial um values and real estate and that people are, are working uh in DC. That's, that's part of our legacy. The promises I've made to the people of the district that include building a new hospital. Um making sure we transfer trans uh form high schools in the district is so important. And I'm known to say, um if I can say to the people who elected me all these years that everybody, we have a government in the city that gives everybody a fair shot and we've been successful. I wish you all the best. Thank you. Thank you so much for sharing it with us. Thank you. Thank you. Thank you. Thank you all very much. We're about to serve uh the next course, table two, do not take my stuff. Thank you all very much.

Dr. Richard Haass, President Emeritus, Council on Foreign Relations (appearing virtually) Jacob Helberg, Commissioner, U.S.-China Economic & Security Review Commission; Author, The Wires of War: Technology and the Global Struggle for Power (appearing virtually) Christopher Marquis, Sinyi Professor of Chinese Management, Judge Business School University of Cambridge Moderator: Polina Pompliano, Fortune

CEO Initiative 2023: Business With China

Dr. Richard Haass, Council on Foreign Relations, Jacob Helberg, U.S.-China Economic & Security Review Commission; Christopher Marquis, Judge Business School University of Cambridge, Polina Pompliano, Fortune

Dr. Richard Haass, Council on Foreign Relations, Jacob Helberg, U.S.-China Economic & Security Review Commission, Christopher Marquis, Judge Business School University of Cambridge

The world's second largest economy is in the midst of a set of an unprecedented set of challenges after decades of GDP growth above 9% a year. China's economy is faltering due to factors that include a real estate crisis, deflation, declining consumer confidence, an aging population and the knock on effects of zero COVID policy add to that corporations pulling out of China due to concerns about new anti spying laws and rising geopolitical tensions. Like we heard earlier today, economists have long predicted that China will surpass the United States and become the world's leading economy. So is that assessment still a possibility or we troubles drag down the rest of the world and how should business leaders approach engagement with China right now? We're fortunate to have with us, a group of folks with decades of insights and experiences regarding China. This is going to be a fascinating panel. Richard Haass is President Emeritus of the independent nonpartisan membership organization, the Council on Foreign Relations. He's a veteran diplomat and a former White House Pentagon and State Department official, Jacob Helberg is a commissioner in the US China Economic and Security Review Commission which offers recommendations to Congress on the national security implications of the trade and economic relationship between the US. And China Jacob is also venture capital tech investor, author and former senior policy advisor at Google Chris Marquis is the senior Professor of Chinese Management at the University of Cambridge Judge Business School. He's an expert voice on entrepreneurship and market development in China. Ok. Quite the lineup. Please welcome them to the stage. Hi, everyone. So Richard, why don't we start with you? Can you give us an overview of the current state of China's economy and its post pandemic recovery and how it compares to the pre pandemic era? Sure, glad to there was a post pandemic sugar high like all sugar highs. That's, that's faded China. Now the economy is facing serious headwinds. You mentioned quite a few of them. What I would emphasize though, in addition to the specifics uh that, that you and others have pointed out is something that the Chinese leadership has emphasized political control much more than economic growth. In some ways, the headwinds are as much the the result of their own policies and their own priorities as anything else China would like the benefits of a free market economy without having one. It's a neat trick if you can pull it off in many ways, obviously, uh they can't. And the question is, what do they do going forward? Do they continue with the sort of economic policies they have now which they're paying a growth price for? Do they introduce greater reform that they've been reluctant to introduce? Do they possibly look to non economic policies to provide legitimacy and public support for the leadership and in particular a greater turn to nationalism? Those are the sorts of questions that China experts are debating and Richard follow up question for you. Um You said something really interesting in a podcast, you said I'm hard pressed to say there's any real difference between the Trump and Biden administration's policies on China. Why do you think that the different administrations have taken a similar approach in their relationship to China? Uh The reason is quite simple for several decades, the United States tried to engage China and really integrate China into the world, letting them into the World Trade Organization, for example, 22 decades ago and the goal was not simply access to this large and growing market, but there was a widespread view that engaging China integrating China economically would lead to a more open China politically, a more market oriented China economically and a more moderate China in terms of its foreign policy. What's happened over the last two decades in particular is that none of these hopes, none of these thoughts have been borne out. So what you see is a, is a bipartisan reaction, a kind of disillusionment with China. It's been exacerbated by the theft of intellectual property, the militarization of the South China Sea growing uh growing provocations if you will against uh Taiwan. So for it's a long list of things. So the Trump administration introduced something of a tougher policy and the Biden administration has kept most of it on including the uh the tariffs. It's continued if you will, the quote unquote, pivot to this part of the world, greater political military emphasis with presidents. The big difference between the two administrations is how they're going about it. The Trump administration tended to be more narrowly economic. The Biden administration has brought about much closer collaboration with America's partners and allies in this part of the world. In particular, Japan, Australia, Taiwan and South Korea, Jacob, you've said repeatedly that there is sort of a tech war between the US and China brewing. Adding that I thought this was fascinating. You said China has a system of civil military fusion while we have a system of civil military confusion. What do you mean by that? Yeah, so um first of all, thanks for having me. Um I just wanna second something that Richard said before I dive into your question and add that 83% of the American public has unfavorable views of China at this point according to Pew research, which I think is gonna cement, you know, a lot of bipartisan continuity across administrations including in Congress on in terms of having a very robust muscular foreign policy towards China, probably for years to come. Um On your question about civil military fusion. China has a system with a web of different national laws like the National Intelligence law and the raft of different laws that they passed just in the last year around the protection of domestic data, preventing foreigners from being able to conduct basic due diligence and so forth where they can basically command private companies to pursue political objectives, which is a very strong deviation from our basic conception of what a private company is in the US, in the US. Our conception of a private company is that their primary motive is a profit motive, a fiduciary responsibility to their shareholders in China. You have this very exotic system where companies can actually be used as instruments of the state and actually pursue political objectives. And the Chinese system can effectively blur the line and erase the line between the public and the private in the US because of our separation. If there is a a deep problematic disconnect between the private sector and the public sector on a lot of really big national security questions, particularly the tech sector. Um historically Silicon Valley has skewed very ideal, you know, um uh ideologically, you know, idealistic. Um it has long seen a world that is quite borderless, you know, as a reflection of the open free flow of information online. And in the last five or so years, it's awaken to a world that is actually gripped with real geopolitical realities and renewed geopolitical great power competition. I think Ukraine was a deep wake up call to a lot of people in Silicon Valley that actually the world is rife with real adversaries that don't share American values. And that fundamentally want to restructure the international system in profound ways that are actually antithetical to uh basic principles that American companies including tech companies rely on like the open free flow of information. So it's been a long road to getting the tech sector to collaborate with the US government. Um I have been quite involved in a forum called the Hill and Valley Forum to try to bring those two communities together to try to resolve what I described as civil military confusion. Um But you know, there's still a lot of work to do and, and what do you think is the outcome of this tech war? Well, right now, we're really seeing a two track race, particularly um in artificial intelligence, we're seeing a race for supply chain independence that's taking place. So obviously, on the US side, you know, there's a whole suite of different expert control rules. Um There is our new partnerships as Richard mentioned being formed with Japan, South Korea. You know, back in January, there is uh there is a collaborative effort with the Netherlands to try to uh broaden and internationalized export control rules to countries that are home to companies like a SNL in the Netherlands to export um to ban exports of uh high end semiconductor machinery to China. Um but China took a lot of people by surprise when it recently produced a seven nanometer chip semiconductor chip, which is actually far more advanced than what a lot of people you know, expected China to be able to produce. So the takeaway is both sides are racing to try to become semiconductor independent in some way. Um And in the US, our definition of semiconductor independence is not reliant on China. Um So the US government has encouraged companies like Apple to reso to places like India and Vietnam. But the chip act in the US was a really big push, you know, on, on our side for semiconductor in independent. And then the other track is really a race for A G I, it's the software side of the race. So both countries are racing towards A G I uh which a lot of people view as potentially one of the most disruptive technologies in 80 years in the realm of specialized A I. Um there is a big push being done in military A I, you know, and the, what the Chinese refer to as intelligent warfare. Um And so you're seeing, you know, uh these different efforts uh advance on all fronts and it's ultimately culminating to um a pretty, you know, a pretty different world uh in which warfare is gonna look very different. Yeah, if anybody has a question, please raise your hand, we'll get a mic too. Um, and I, I'll come back to you in a minute. But um Chris, I wanna ask you, is us businesses kind of explore ways to partner with China. What are the primary opportunities and potential risks that you see in this environment? Yeah, I don't, I don't see a lot of opportunities. I mean, it's a lot of risks. I think for many of the reasons that Richard and Ryan just mentioned, I mean, there's a situation where over these last number of years, the extent to which party control has taken emphasis over, you know, economic development is, I mean, it's just gone through the roof and it has situations where you know, the party is really putting the screws to private businesses. You know, these are Chinese private businesses as Ryan talked about, which are really, you know, very closely connected to the to the state and the party. But then also you have situations where a lot of the due diligence companies, information is being limited. Just recently, there was a one of the executives of Kroll had an exit ban was not able to leave China. There's, you know, a lot of instances of people being disappeared in the business sector. So I think it's a very risky and challenging situation and a lot of uncertainty, you know Xi Jinping and other leaders talk about, you know, China is open for business, but all the actions they take suggest that it's actually a very, very closed environment and clearly they'd love to have foreign direct investment, but actually what they're doing is significantly discouraging it. Do you have any questions? Yes. Right here. I guess I just make a comment from the, um, we've been in China since 1997 and we advise companies. Um, and we're getting increasingly, um, not only the clients who are Western are leaving. I don't mean the companies are leaving. I mean, if they're staying, they're putting local talent in place because of the fear of some of the things that we're hearing about. And I don't know if any of the, any of you want to comment on this idea that um you know, that, that people are being much more closely monitored. If they say anything negative about the regime, if you collect information in the wrong way, you're all vulnerable and that does have a chilling effect and people are also looking on their, what their China plus one strategy is. But if you talk about it in China, you're in trouble. Anybody wanna react to that, Richard. I could say something. Yeah, let me say something that I think a lot of that is true and one is working in a, a more restrictive environment and it's gonna have consequences for, for some individuals or firms. We're seeing that I actually think though the bigger, more fundamental issue for businesses doing business and doing work in China is the technology issue. And even now, uh one is operating in a much more restrictive environment in terms of the ability of Western technology to reach China. And Secretary Yellen talks about the high fence and the small yard, well, the fence is pretty high and the yard is getting bigger. So at a minimum, anyone operating in China has to assume that it's a much more restrictive environment, particularly if there's any technology involved in their economic or business relationship with China. And then there's an added element of uncertainty and I'm not predicting it, but it can't be dismissed as if there ever were a major crisis between the United States and China say over Taiwan, then the economic sanctions and problems would transcend technology and they would essentially nothing would be immune from it. So I think what we now have and a minimum is technology related, uncertainty, almost a premium there. And a more general one given the uncertain trajectory of us Chinese relations, all this obviously has to be weighed against the size and importance of China's market. All of this has to be weighed against the importance of China as a supplier for a lot of companies. But it's become a much more complicated calculation for any firm. Yeah. And one more so Mark Newman with commerce company we're in, in the chemical manufacturing, a lot of chemical intermedia come out of China today. And uh so in the China plus one strategy, you just look to see where you could get those in India, but you know that their infrastructure in terms of these intermediates are so far behind. So it's really not a viable near term strategy. So I'm I'm curious as to, you know, can we continue this in a way that keeps access to certain Chinese intermediates, you know, sort of on the table, what will be the price of that access over time? And then maybe a sort of a derivative question, we see a lot of Chinese manufacturing going into Mexico. And so one of the questions I have over time is, you know, what's the relationship between the US and Mexico because of that over time, Chris do you want to tackle? Sure. So I mean, I think, you know, this has been written about a lot for apple, I mean, you know, where you know, so much of their supply chain for iphones is actually in China, they're trying to move it out. But places like India Vietnam, like you mentioned, just the infrastructure is not there. I mean, I think this is something where you know, the whole US economy is understanding of the systemic risks, the fact that we the dependence on China and over slowly over time, you know, there'll be increasing capacity in those other countries. And I think, you know, for this reason, even though I'm pretty pessimistic and negative on, you know, the Chinese Communist Party and how China is run, you know, being engaged and engaging is so important because of things like you're talking about. I think on the human level two, as I'm a professor in the education space, it's just been totally shut off a lot of the student exchanges. And if we're going to be able to continue to cooper over time, we need that human connection exchange. And so, you know, I would continue working with those partners but try to figure out, you know, over time, an alternative. Um Jacob and I point um you know, for years, I think a lot of people in the business community have discounted a lot of the warnings that folks in the national security have tried to flag about the authoritarian nature of the Chinese government. The fact that the direction of travel of Chinese policies were not going in the right direction, things are getting more authoritarian, things are getting more oppressive, they're asserting more of their control over every aspect of every individual's life. Now they're using technology like artificial intelligence to create this, you know, panopticon surveillance state that can actually try to predict people's behavior. I mean, I would, you know, a lot of people are also as Richard mentioned, uh warning about the risk of the real nonzero risk of a potential serious escalation in Taiwan Strait. So I would urge folks in the audience who are part of the business community to heed the warnings coming out of the national security space that China is an authoritarian country. And that's just the reality. And in an authoritarian country, you don't have due process and you can get arrested and your property can get uh expropriated and, you know, it's, that's just how it works. And so I would really think closely before uh increasing your exposure to China, especially in a context when the leader is, has gave more than four speeches, the space of two months telling his military to prepare for war. He's opening defense mobilization offices across this country. He's doing a lot of different things saying that you know, changes, he's setting changes afoot, the likes of which the world hasn't seen in 100 years. He is exhibiting a pattern that is deeply troubling and that is uh bringing a lot of meat to the argument that he is potentially preparing for an armed conflict. And that should be really concerning to people that have exposure to the Chinese market. On that terrifying note. Thank you for all our panelists for joining us today.

Francois Locoh-Donou, President, CEO and Director, F5 Matthew Prince, Co-founder and CEO, Cloudflare Ian Swanson, Co-founder and CEO, Protect AI Moderator: Polina Pompliano, FORTUNE

CEO Initiative 2023: Unlocking AI’s Potential…Securely

Higher 20 minutes. But the good news is we're coming back to AI, we've been hearing, we've been hearing through the whole day about the power of A I and how it can change the way that we work and live. But it's also important to dive deeper into one of the most important aspects of implementing AI which is doing it securely doing it responsibly. You know, even as we've seen this explosion in use of AI, we've seen that the number of attacks on companies and consumers and applications has been on the rise. And there are a lot of tech observers and insiders who believe that essentially AI security has taken a back seat to Ai's development and ai's implementation. And consequently, that's opened the door to bad actors from whom the threats include data theft and misuse, fishing, malware, the spread of misinformation, the risk of increased bias. So given all of these risks, how do companies deploy and harness the power of A I but still do it safely? I'm happy to say that joining us now for a conversation on the challenges and strategies and solutions around this question are three real renowned experts in the field. Uh Francois LOCA Duo is the president and CEO and director of F five. Matthew Prince is the co founder and CEO of Cloudflare. And Ian Swanson is co founder and CEO of Protect A I uh leading them in this conversation will be Fortune's Deputy Director of live events and the founder of the profile Paulina Pompano. Please welcome them all to the stage. What? Welcome back everybody. Um So I would love to start with all of your perspectives on briefly sharing your view on the current state of generative A I and also the biggest risk that you think business leaders here today should know about. That's why. Well, I I'll start, I think generally we heard this morning it's a general purpose technology that will impact every industry. I think the industries that will benefit the companies that will benefit or be impacted most in the short term are industries or companies that are digitally mature that have rich data sets and can move relatively quickly to take advantage of the new technologies in that spectrum. I think the industry that will accelerate probably the fastest unfortunately, is the cybercrime industry because cyber crime by definition is, is digital and it's largely actors who don't have to worry about, you know, ethical guidelines and safeguards and standards. And so they're able to move very quickly and we're seeing that already, we're pretty much every company here is already being attacked using A I for fishing for malware, uh for social engineering with bots to try and find a way through, through your data and your application. So I think that will accelerate significantly with general A I with the ability to emulate humans and create much more intelligent social engineering and fishing attacks. So better than those emails I get about Alan needing gift cards, they're gonna get, they're gonna get way better and way more intelligent. Matthew. No, I, I think that what Francois, um, outlined is, is, is probably the thing that in the short term is where the risk is. Um, but I'm actually pretty optimistic that we'll get past that. I think that the idea that we're verifying people by what we think are human traits is probably not a very good security implication in the first place like your banker shouldn't wire money just because you call up and you sound like you. And so I actually think that, yeah, that's gonna be a problem. We're gonna read some scary stories about, you know, parents that are tricked into wiring money to their, their kid who it sounds like is in, you know, some Mexican prison or something. But, you know, it turns out it was an attacker. You laugh but that, that's happened recently and, and there's going to be a bunch of those things and they're going to make scary headlines. But I actually think it's going to accelerate us getting away from that idea that we can tell who to trust simply by how they sound or what they look like or those things, I think the longer term challenges for the ceos that are in this room are going to be much more around. How do they take advantages of what A I brings? But they do it in a way which is responsible over the long term. And so what we're starting to see is a lot of times employees at company are using A I to get their job done without understanding that the minute that they send that data off to an A I engine, it's gone for good, right? And it gets incorporated into a way of thinking. It is imagine like a two year old and you accidentally swear in front of them and then for the next period of time, all they're doing is just saying the bad word over and over and over again. AI is exactly like that. You can't get the information back out of that. And that creates a real problem around trade secrets that creates a real problem around data, locality and data compliance around the world. Right now. If you're using an A I system and you're a European based company, you are sending it all back to the United States and it's not even something where if you send a DPR request and say, hey, forget that you can do it. It's embedded in a black box that is almost unforgettable. And so I think the thing that we're talking to our clients about is how do you make sure that as you're using AI you're doing it anticipating that you want to get those benefits. But at the same time, you want to understand what the risks are and make sure that you're only letting the data flow out of your company. That's actually something you want to flow out of your company. And let's talk about the current state. I've been a leader of A I and machine learning at some of the biggest companies in the world and A I I've seen for the last decade. Drive truly Digital transformation. Now, if it's the vehicle of trans of digital transformation, if anything generative A I is just speeding up that car on the highway and it's going super fast, what we are not doing are the basic maintenance, the basic safety and security checks on that vehicle. And so if I'm looking at where the risk is, the risk is really in the supply chain that we've seen. How are, how is A I being built? How are these models being built from the data, the foundational models, the open source libraries within the supply chain. So when we meet with customers, we ask two questions and I please take this back to your teams. I ask, how secure is your A I and how do you know? And how do you know is incredibly important because companies today don't have the capabilities or the ability to audit these systems and have visibility of their ai therefore it's really hard to build, to secure it. Wow, I love that. Um Francois, you said that the number of cyber attacks on companies and applications have increased dramatically to the point where cyber attacks are costing companies $8 trillion a year globally. I found that number absurd but in a crazy way, doesn't A I kind of arm the cyber criminals with tools that can now scale and what what are do companies need to allocate more capital towards security? Well, yeah, the the the cyber crime is the cost. The cost around the world are around eight trillion, which is the third largest economy in the world after the U and China. Uh A I will accelerate that. Um And uh it, it does arm Attackers with more tools and therefore it will increase the speed and volume of attacks, not necessarily the sophistication, but it allows Attackers that would be not sophisticated at all to be able to launch an attack. One of the scary facts, for example is that today somebody that wants to attack you with rent somewhere doesn't actually know, doesn't actually need to know how to code. But if you think about it, it is quite scary because those folks can actually go online and you know, buy tools, there are tools like fraud GP T you can buy for $200 a month and gives you a starter kit for attacking companies which went somewhere and exploiting vulnerabilities immediately. It doesn't mean that companies necessarily need to spend more money on, on cyber security. Uh But it, it means that number one companies to be, need to be using the tools that exist today. I see a lot of companies that don't actually use the current generation of A I. There are a lot of tools today in security for security control, for monitoring logs, for protecting against our attacks that use current generation of machine learning models to protect against these attacks. And too many times companies underestimate the sophisticated nature of their Attackers and therefore don't use those tools and get breached or under attack and don't even know it. And, and Ian, what are some of the inherent risks that generative AI presents if those inputs in the safety belt isn't there when you're first starting? So a couple of things, as we think about generative A I and A I under the hood, it's machine learning again. And when we talk about the differences in budgets that you brought up machine learning systems are different than all the other systems within your company. So as you're thinking about how do you protect your data, your infrastructure, your equipment, you need to think about how you're going to protect your A I. Now. What are some of those differences? The tools, the tools that developers and practitioners use to build models are different. And today, security vendors don't scan those tools with a way to build it detected vulnerabilities. Also the models and the supply chain. Now, when you brought up generative AI specifically, there's new types of attacks, one of them called prompt injection attacks. It's basically like a sequel injection attack where I can go in there and I can try to mislead the model to do something in a malicious way as a bad actor. Now, this becomes a lot more problematic when it's not just, you know, working with chat GPT to send me some information that, you know, is crapping an email. It's when we start to connect these systems to agents, agents that carry out tasks, that's where the real risk lies. And therefore, that's why we need auditability, visibility and security of these systems. And Matthew, how are we seeing this practically uh at Cloudflare? What measures are you taking to make sure that your company and the companies that you work with aren't victims of some sort of attack? Well, I think the, the the first thing and again, to be the optimist on the panel is, you know, the whole thesis of Cloudflare was that if we could get enough of the web behind us, if we could see enough information that we could feed that into what we frankly still are somewhat uncomfortable calling A I systems, but our machine learning systems that could find new vulnerabilities and stop them before they were attacked so that you get the benefit of being part of the collective. That is this cloud play. And what's been amazing in the same way that publicly we've all watched over the last 18 months as it seems like these A I systems went from jokes to, you know, writing sonnets, right? Which is pretty amazing. Um That same thing we've been watching internally where I remember about a year and a half ago, the first time our system found a vulnerability that no human had ever found before. And that went from something that was like, whoa, that's amazing to now, something that's happening on a very frequent and regular basis where we are often times in front of these vulnerabilities. And in fact, you know, have, have a number of those that were working with the industry in order to help clean up right now that we wouldn't have been able to find if it was simply humans that were out there. And so I think that the very value of this and the very value of using cloud services that you can have the benefits of all of the information use that with the algorithms because the winners in the A I space aren't going to, the algorithms are, are fairly, you know, trivial. They're, they're not, they're, they're the complexity, isn't there? The real thing that you need is to feed the algorithms with the right amount of data and in the security space every single day, cloud customers are safer because of the fact that being able to use these machine learning systems in order to protect everyone who uses our network. And, and again, that's where there are going to be some scary stories that are out there. But I actually think that the good guys thankfully do have more resources than the bad guys. We, we have more access to data than they do. And there are ways that we're going to be able to not in the short term, short term is gonna be a little scary. But over the long term, I think the world becomes safer because of A I not, not scarier. Have you ever gotten breached? Oh, yeah. There we are constantly under attack. It's hard to imagine a threat actor that that isn't going after us. But what I really like is that the way that our systems are designed, we have an employee fall for a fishing scam and make sure that even when that happens, there's a belt and suspenders that keeps them from being protected and that is in part with machine learning system. So I'll give you a very specific example. I'm in Washington DC right now. Earlier this morning, I was in New York City. We have an A I system inside of cloud flow that is checking all of our employees calendars to see where they are supposed to be and then automatically feeding rules back into the system where if I all of a sudden logged in right now to one of our systems, New York, it would simply, even if I had my user name and password and second factor authentication and used even my own machine because I'd left it somewhere behind. That would still not let me through our systems because we've been able to actually get smarter and more secure using the A I tools that we have internally and that we also then make available to all of our customers. Got it. Do we have any audience questions? No, everyone is sick of that. Um II I wanna ask Francois, how are you making sure that your workforce and the companies that you work with are up to speed and educated on protecting themselves from potential security risks? Well, so I think this is something every company out there needs to be doing, which is constantly training. Uh Our employees, Matthew mentioned earlier uh training our employee against fishing and always tempting our, our uh employees with fishing scam and see if they were doing that periodically or is it a one time training when they join the company? No, no, it's something that's on a constant basis on a very regular basis. We train and retrain uh against these attacks. We analyze uh employees who perhaps didn't get the training or fail for these attacks uh and go back and, and retrain them on a very, very, very regular basis. That's something that we do today against regular attacks. But we're starting to train our employees on A I literacy because we feel that that's going to be something that every company needs to do to upskill their, their employees and their knowledge to be able to both use the A I in the most responsible way and understand best practice, best practices for prompts. But also training engineers who are building these algorithms to know how to sanitize the data sets and you know, be able to build these algorithms responsibly, you know. And I think that the thing though that I would go even further on that is your employees are using A I, whether you want them to or not. And so the vast majority of employees are using A I and something like half are not telling their employers that they're actually doing it, they're using it for using it for their daily job to get, get work done. Because these are powerful algorithms. If you're having to write reports, you know, or you're having to generate code, it's a very safe place to or very productive place to be able to turn to. What's again scary about it is it's a two year old. And so once you take your company secret and you send it to the two year old, it's gone forever, right? And that bad word is going to get said over and over and over again. And so I think that part of the tools here is not just in training, but actually putting in place a lot of the, you know, almost like DLP systems that say, you know, again, if you imagine there's a whole bunch of support documents, you're probably fine with those going to the AI systems and those learning. That's great because that actually is, is teaching AIS about how your product works. That's fine. You might have some other secrets that you say we can use on AI systems, but they have to be run locally inside of the company. And then there are other things, you know, the sort of bad metaphor is the secret formula to Coca Cola. You may never want that to actually go into the go out. It's really tough because again, it's like the two year old, once these systems have learned something, it's not like a database row where you can go in and just delete it. Unlearning is actually this really fascinating area of A I research right now. And it's almost like a, like a movie. It's like the, you know, turtle sunshine of the spotless mind. Like we don't have that system to have these, these A I systems unlearn things. And what that means is that it's, it's actually a much bigger security threat for a company, even for insiders to make sure that as the data is leaving the systems that it's the right data that's approved to be used. And that means training for sure. But it also means implementing the technical systems that restrict it and thinking about the supply chain, Ian, were you going to add something? Yeah, I think education is critical. I meet with 10 to 12 chief information security officers every week and I was meeting one with a big Pharma company this past week. And he said, Ian, we're early in our A I journey. We're just now deploying A I. My response was no, you're not, you've been deploying A I for well over a decade as you look at drug discovery in every other facet of your business. But it's just now starting to get on to the table of the cyber security experts within the company. These systems again are different. We must educate how they're different and how we need to treat them differently in terms of looking for vulnerabilities, looking for exploits. And I would love to end on a very practical note, what are some tools that the business leaders here today can use to make sure that they're doing this responsibly and ethically other than promoting our own products? I think it's really just asking the simple questions and we heard it from Julie Sweet from accenture as well asking about who's in charge of responsible A I, who's in charge of security of AI who's in charge of the visibility, the auditability of these systems, just like your financial systems have a ledger, your A I systems need to have a ledger. And oh, by the way, I only know five companies on the planet that I've worked with and I've worked with thousands that actually have that capability. That's where I would start. I'm not about promoting my own products, cloud players. A I gateway gives you the tools to be able to control how data flows out of your systems. We're working with some of the largest companies in the world to make sure that they have control over that. We make it super easy for you to tag data and say here's where it goes and also control the budget that you have for your A I spend. Because the biggest thing that we hear is these budgets just blow up out of control in a way that even the cloud budgets seem seem relatively limited. Awesome, great note to end on. Thank you to our panelists for joining us today. Thank you. Thank you.

Marco Alverà Co-founder, Zhero; Co-founder and CEO, TES-H2
David Crane, Under Secretary for Infrastructure, U.S. Department of Energy
Dr. Christina Lampe-Onnerud, Founder and CEO, Cadenza Innovation
Moderator: Matt Heimer, Fortune

CEO Initiative 2023: The Energy Transition

Marco Alverà Co-founder, Zhero;  TES-H2
David Crane, U.S. Department of Energy
Dr. Christina Lampe-Onnerud, Cadenza Innovation
Moderator: Matt Heimer, Fortune

So as we all know, at this point, the transition to clean energy is well underway and in fact, it's got a momentum that hasn't really been seen before. According to the International Energy Agency, for every dollar invested in fossil fuels in 2023 there's going to be $1.70 going towards clean energy. And five years ago, that ratio was still 1 to 1. So the math is going in the right direction. Uh The IAA also says that global investment in clean energy is going to total 1.7 trillion with a T $1.7 trillion this year. So this next panel, we're going to talk about ways that corporate leaders can seize and continue to fuel that momentum and how they can kind of keep their commitments to combating climate change while still best serving their business interests. Uh Joining us for this conversation are three really terrific panelists. Uh Marco Alvera is the co-founder of X and the co-founder and CEO of TESH two. with both of these companies, Marco has been working to drive innovation in the clean energy sector. Uh and also driving the development of cutting edge hydrogen technologies. David Crane is the undersecretary for infrastructure at the US. Department of Energy. David plays a crucial role in overseeing and implementing clean energy and sustainability initiatives for the Biden administration. He also has extensive experience on the corporate side of the energy sector. He was the CEO of energy for quite a while. And Christina lamp on Rod is the founder and CEO of Cadenza Innovation. Christina is a scientist. She's an entrepreneur and an authority on energy transformation. She's also considered one of the pre eminent experts on battery technology. So please welcome them all to the stage and we're so glad to have them. Thank you. All right. So, so glad to see you. Thank you so much for your time. Uh It you up with some uh optimistic statistics about the speed of the energy transition. There are other numbers that do not tell as happy a story and suggest things are not moving as quickly as they could. Fossil fuels, of course, still dominate our energy supply co two emissions globally hit a record last year. They're on pace to do it again this year. So I kind of want to walk down the line and say, you know, what's one thing that you could each suggest that would be a way of flooring the accel and really speeding up this transition to the pace that we want. We'll start with, you know, small versions and kind of expand. But Christina. I want to start with you. What sort of your one great accelerator? Thank you. I think it's stability in policy and a commitment to change. That's stability in policy. That's interesting because as people have been observing all, all day, we've had a pretty unstable week here. Uh, and, uh, Senator, I just got my news alert about, uh, about, uh, speaker mccarthy being voted out, um question for the whole group. Uh Do you worry about there being a sort of a backsliding on uh ESG commitments when it comes to energy? Do you, do you worry that uh that you political pressures, uh social pressures might uh might slow down the adoption of some of the green tech anyone can win on this one. David. What's your take? You're right in the thick of it. No, II, I don't think actually uh this strange coming from a government first, but I don't think any of the political divide we have here could slow down the transition to the clean energy economy. I mean, the, I heard Secretary Ramon backstage talking about chips were more involved with the bipartisan Infrastructure law and the Inflation Reduction Act. But the investment that that's gonna make um in, in, in America across all 50 states, red states, blue states uh I think is uh is, is going to be a real game changer and particularly, you know, one of the aspects of renewable based power is, it's, it's, you know, it's us resources, the wind and sun and, you know, in the unstable global environment we live in, you know, national security, national energy security is a huge plus with what we're doing. So that bipartisanship that, that uh that new legislative commitment, that's sort of an accelerator for now. It is safe to say. Yeah, and I don't want to overstate the amount of bipartisanship there is. But we, I mean, the bipartisan infrastructure law did get votes from both sides of the aisle. That's sure that's encouraging. I want to come back to some of the things you mentioned about geopolitical tension, but I also want to come to Marco. So Marco, you, you know, you and you have great expertise in hydrogen energy often that's stated as sort of something in the far distance that will be a great source decades from now, but not yet. Where do you see movement on that? That's that could be happening faster. No, I I think this this race to the top between the Ira and China both really stepping down on the etcetera is really good. What we need is simply to bring down the cost of the electrolyzer. The electrolyzer is this magic machine that turns cheap and much cheaper than fossil fuel. By the way, solar and wind in very sunny places, we can make solar energy at $10 when oil is at $60 per megawatt hour. So you can get sunny, clean energy at 1/6 of the price of oil today. But to turn that into a molecule that you can store and use like a fuel you need this electrolyzer which today in China costs about 200 outside of China costs about 1000 1000 per $1000 per kilowatt. So so policies focused on manufacturing, on creating jobs, on having this kind of pro industrial approach are the best way to have a multiplier effect. Because if we do what we did with solar, we waited 15 years Europe. Really Italy, Germany, Spain, UK these four countries put €1000 billion on solar subsidies. Over 15 years, China built six factories, the cost of one factory, half a billion, so 1000 billion, 3 billion of manufacturing. But the price of solar went from 1000 to 10 to the benefit of the whole world. So the Ira is going to contribute to doing that. China is continuing to race. The Middle East is racing where a lot of us have been and will be in Abu Dhabi soon. There's cop. So this race is really good but having a European perspective, there is climate fatigue and so all these the world went from being very rich with negative interest rates to being a lot poorer and and and we heard about some of the challenges uh from, from Ian Bremmer. But if we don't address the climate fatigue, dealing with solutions that are cost effective, I think it will become polarizing, at least in some countries. It's interesting that you bring up the cost efficiency in connection with sort of the global outlook. We heard from Secretary Yellen earlier about this tension between the desire to compete with China and the fact that the supply chains including in clean energy are global supply chains. So it can't be sort of a zero seems like it can't be sort of a zero sum where uh where all American energy is solely coming from America, that's just maybe not a not a realistic goal. Um You know, Christina, I know you've worked in, in battery technology where China was dominant for a very long time. Um Do we have to kind of keep the trade lines open for a for a green transition to, to work? Yeah. So I've been around for long enough to be a kind of a back end contributor to portable power. I was a pioneer in the electric vehicle. My previous company had to exit to China because the US and Europe did not commit. Now, I have a company that solves the white elephant in the room, no explosions at lower cost in mass production. However, it relies on standing on the shoulders of where the industry is today. So if we cut off our nose and say we're not gonna trade and we're gonna grow everything inside, it's gonna be really expensive and really slow and we need to be very mindful of the fact that the United States and Europe were very early on solar and wind, but we did not commit to the manufacturing. Today. I also serve as the, the chair for us, competitiveness in lithium Mayan under does initiative bridge and the commitment there. And the consensus was if the United States can commit to getting 30% of this market, we have harmony, we stimulate the innovators where you have new ideas, mine and others where we say ha but for our markets, this is really cool. Like I would like to put batteries in every home. I would like to democratize energy. I would like everybody to engage. You can do that because we have the framework if we decide to do it. But if we're hesitant or if we think that we can collaborate with others, we won't do it. My next question has to do with whether we have been uh beyond hesitant enough. But speaking of questions, I just want to remind the room that your questions are so welcome. For this group. There's so much brain power in these three seats and you shouldn't let me hog at all. So wave and a and a microphone person will come to you. Um So back to the Ira, back to this and to the and to the infrastructure bill as well. You know, this big new commitment. If you know, if 10 on a scale of 1 to 10, if 10 is the ideal amount of commitment. How, where are we on that scale? You mean, in terms of, uh, how much, uh, the potential of the two acts or where we are right now in the process? Well, uh, do, do those two acts together represent a sufficient enough commitment or as a kind of first? Well, I mean, I think if you look at the total financial commitment of those two acts, I mean, it's unprecedented in human history. It's the largest amount ever committed to fighting climate change. And, and you know, if we're, you know, if you want to look at it in historical terms, I think it may be humanity's last great opportunity to bend the curve on, on climate emissions. It has to be implemented, you know, and, and you know, that's one of the reasons as you said, and that's why I've come from the private sector to be in, in the government. And I think uh the early where we are right now, I'm more confident than the day I joined the, the uh government 15 months ago, the the doe is is responding everything we're doing, you know, energy is an infrastructure, a form of infrastructure that has always been private sector led that's not changing under uh these two acts, a lot of it's public private partnership, uh private sector leads, we enable, we also accelerate. I mean, one simple way of looking at it and people talk about costing down, we talk about costing down about 15 times a day. But look at the success of the solar industry, I mean, 90% cost down in the last 15 years. Uh solar industry is on track to add 56 gigawatts of new power in the United States this year. You know, 10 years ago, people were saying it's a fringe technology that will never right now it's not fringe coal is becoming fringe in the in in the United States. So, so it's uh we're right uh where we're going, we just need to make this happen with hydrogen with long duration energy storage. Uh with other carbon capture. We talk a lot about these great new technologies in energy production. But I think you all know there's also challenges in transmission, you know, you have these 21st century technologies connecting to a Carter era grid and that can be a real obstacle. What can the public, how can the public and private sector be cooperating to make the grid work better? And are there shortcuts there that will, you know, make this whole, the whole network, the whole ecosystem a little more efficient. So we live in this cool time where it's hardware and software together, right? So developing cloud technology that puts the data in your pocket, so you have feedback, you have direct feedback of how you use your energy and what it is and the fact that you can have solar on your roof and a battery in your garage means you actually not only get the data or when to use or when to deploy your energy, but you become a generator and of course, there is a chance when you put your battery next to your panel and one yard away the losses and efficiency of that transmission is almost zero. That's a big deal. Yes. And that's storage. Catching up with production is a big deal. You've thought about this a lot too, Marco. I know. Well, I've had the luxury of working in a big uh utility and then in a big oil and gas companies and these worlds are completely separate. It's true PG and E is different from Chevron Xterra is different from Exxon, the Petro China is different from state grid everywhere in the world. The molecules people and the electrons, people are separate. We will only win if we combine these two worlds. And that's what hydrogen does. Uh We need to get solutions where the complexity is dealt with by the energy companies. We were able to get solar to 56 gigawatts and to turn coal into fringe because the consumer didn't noticed we were doing the hard work for them. We were swapping electrons with electrons if we, if we think of having asking everyone to change their habits, their homes, their infrastructure, not only the trillions that you mentioned before, about the IA go up five or 10 fold, but it will just not happen. There's a lot of nimbyism. So our job in test is to turn green hirogen into green e electric natural gas, green methane. So you do a magic molecule which is based on an 18th century technology called Sabatier, which is a methane reaction. I don't want to get technical, but what we're doing is we're turning solar and wind in Texas into natural gas. Exactly like Russian gas, but it's completely renewable. That way you bypass you bridge, you jump all the complexities of transport, of storage, of distribution, of banking, of ensuring because let's face it. A lot of these big projects aren't being financed. So the F I Ds aren't happening. So we need to bridge the infrastructure gap by kind of taking care of the complexity in the energy world and leaving the consumer to get on with his life. So you're converting the newer energy sources in a way that's compatible with the infrastructure. You've already got 100% because converting that infrastructure will take forever and ever. And Elon Musk is beginning to say this, by the way, he's saying I can no longer sell cars because of the chargers. And I can't put chargers because of the grid constraints. And, and the way to get around the power grid constraints is by transforming those electrons into molecules that you can use and move around seamlessly in a very cost effective way using exactly the same storage power and transmission distribution infrastructure, David, I know that your portfolio spans not only working on the, on the, the big company issues and the, and the sort of the big picture of energy strategy, but also supporting startups and some and entrepreneurs with some grants and things. Are you seeing trends in that world that are kind of uh that, that have some novelty to them that have, that are, that seem like they've got a lot of potential to leap closer to the front. Well, I'll tell you, I'll tell you one trend that I see that's enormously encouraging is this actually uh confluence between big companies and, and uh tech innovators. And we announced uh uh $1.2 billion awards for two big direct air capture projects. Uh Both technologies were basically startup technology providers. One of them was backed by Occidental Petroleum, who a week after we announced the award for this big project. Occidental Petroleum bought the whole company for a couple of billion dollars and we welcome that involvement. Not only because everything we do is public, private partnership where the private sector has to provide at least half the money. But you know, one of the traditional skills that innovative new technology companies lacks is the project management capability to do these projects at scale. And what anyone would say is a difficult environment to pull off big. Uh So we appreciate the skill sets that the big traditional companies bring to project management as well as the the capital, they can provide great point. Yeah, they can scale like nobody else. Yeah. Well, that, that, that, that's our model. We partner with total 50 50 we partner with the world's second biggest oil company, we partner with Mitsubishi. So we bring the nimbleness agility, uh acceleration and ambition of a startup, let's say. But combining it with that project management capability and access to capital that that is very much in need. I was teasing a little bit at the beginning of the story, at the beginning of the conversation, uh wanting to talk about uh novelty and and sort of the next breakthrough. Uh I've been covering energy issues and uh and clean tech at fortune for a while. So I'm always curious about geeky about the next thing in batteries. Uh So what is the next thing in batteries? I think we are uh this is always so interesting. So they will be more opportunities to do different combinations of cathodes and anodes. Lithium ion will be the dominant technology for a long time. We have some ideas of long storage which in my mind because climate change is so urgent, we have to use solutions right now. So for example, Nr national labs published a wonderful study. If you combine lithium ion batteries with ice storage, you improve the efficiency with 30%. So if we accept that we are at a catastrophic junction, we must use the resources, we have right now and we must get out of in 30 years, we commercialize, we have to use what works today. The government can help us collaborate more fruitfully establish more confidence from capital markets. The United States wants decide to do this. We can not only be a leader, but we could basically pave the way for how collaborations can work. Win. Win is our secret sauce and we have the opportunity. Our infrastructure is really old. We need to do something. Why not leapfrog? Sure. On the subject of win, win. This is a room where most of the business leaders are in sectors other than energy briefly in two sentences or less. If you could make an appeal to them to help hasten the energy transition. What would be your appeal to a non energy business leader? I think it is to be optimistic and the system we're building because the marginal cost of sun and wind is zero will be a much more resilient, cheaper geopolitically, more our democratic system. So hang in there. Uh Don't worry because we can do a lot of the hard work for you. We need, we need optimism and we need companies to volunteer and start paying for uh green energy and to be proud of it, David, you mentioned something about building that kind of demand. Well, I mean, most of the most world is energy buyers but even energy buyers split into companies for which energy is a huge portion of their cost of goods sold like the data center companies and then the heavy industry companies. I mean, the leadership from the data center companies is unparalleled and heavy industries coming along in a way I never thought for the more casual energy consumer, my two senses would be in terms of your energy procurement, be true to what your company's value statement is. Like I'm not saying everyone can do this, but like five years ago, when Unilever said and, and put the energy industry on notice by the year 2030 you know, we won't buy electricity anywhere in the world if it has, you know, carbon in it here, energy industry, you have 15 years to respond to that. The energy industry historically has responded to market signals as long as they have enough time to respond to. So send those signals is the is the takeaway. I mean, if it, if it's, if it's consistent with your core values as a company, David, I apologize and Christina too, I have to, I have to cut us off every end of our time. I wish we had more, but thank you so much for your time and uh thanks so much for coming. Thank you. Thank you.

Don Baer, Senior Partner, Brunswick Group
Juleanna Glover, Founder and CEO, Ridgely Walsh
Bruce Mehlm, Founding Partner, Mehlman Consulting
Moderator: Phil Wahba, Fortune


CEO Initiative 2023: The Esg Debate

A little earlier, we heard about the backslide on important equity issues, issues that not too long ago were a top strategic priority for many business leaders and still is arguably we want to continue that conversation now on the environmental social and governance factors that are coming under fire. Yes, I said ESG um which has become a toxic trio of letters for some people. But there are critics who call eg policies. On the one hand, capitalism uh that focuses more on pushing social and agenda, political agendas and getting best returns for investors. On the other hand, there are critics who say that ESG policies have only led to an illusion of change and don't really have a substantial impact. They call it corporate green washing and a word that I learned yesterday, Pink Washing as we saw in the wake of all the folly around the Bud Light and Target Sagas earlier this year. So have we entered a post ESG era and what lies ahead for business leaders trying to balance their strategies and stay true to their core values? So joining us to discuss are three people who specialize in helping business leaders like you walk this tight rope and we've seen a lot of people fall off the tight rope lately. We have Don Baer who is a senior partner at the Brunswick Group. We have uh Juliana Glover, uh founder and CEO of Ridley Walsh. She also advises corporate clients on high six challenges across the diverse range of areas. And we also have Bruce Melman who is a founding partner of Melman consulting where he helps leaders and organizations understand, anticipate and navigate political risk and figure all this out. So, uh please welcome them to the stage. Welcome, Don. Thank you. Hi, Juliana. Hi, Ruth. I uh really love this topic because it is keeping journalists um very busy. So let's talk about ESG um it seems that no matter what they do, companies and ceos get big bats thrown at them and we saw that, let's talk a little bit about the LG DB Q saga as we saw this summer. Target's minding its own business. It is a company that has a long history of supporting pride and having merchandise and they did absolutely nothing. Zero, nothing different this year than they have in previous years. And then all of a sudden, you know, what storm descended on them. So I'm just wondering why don't we start with, is it worth it for companies to be vocal about social issues or is it just, you know, somebody's waiting for them to pounce on them and, and create a APR drama or as we saw in the case of a light and target real problem. So should companies stay quiet and just hope that they can dodge everything or do they need to stick to? Um you know, the messages that they've been sharing with people all these years? So why, why we start with? Uh Don so thank you, Phil. It's great to be here, especially with uh my colleagues up here. Um I think that's a false choice. I, I don't think it's an either or question. I think it's a yes and question. Uh And the fact of the matter is uh I don't think companies can or want to dodge any of these issues uh because they recognize uh and this is fundamental to really the theory of eg not to mention the practice uh that it's, it's essential for them to be good businesses and to be able to do their jobs and grow uh in the economy that we're in. And the one we're moving into uh having said that they don't necessarily have to go out on point. And I mean, the two circumstances you're talking about, they were looking at ways that they could build markets, right? They could build growth. It turned out in a couple of those instances that it worked against them rather than for them because we are in a highly of, of uh flammable and dynamic sort of environment now. But I, I don't think that for instance, not running ads about a particular topic, uh, for consumers, uh, necessarily leads to not being involved in those issues quite the opposite. Um, thanks, Bill Don. Uh, uh, Bruce, it's good to be with you all. These are both gentlemen that I've known for a really long time in this town. She uses the term gentleman, very broad. Um, so I, you know, I, I, as a room among a room full of CEO S, I'm not gonna tell you anything you don't know already, which is, it's kind of about the money. So, I mean, every CEO that I work for, um whether it's um you know, someone like or um you know, maybe the CEO S, you know, those CEO S, you know, Indra was sort of famously known for performance with purpose. Um that was put in place before Larry Pink, uh Fink's letter in 2018. And what she was doing there was she was future proofing Pepsico um by embedding um conservation diversity. Um And, and uh more helpful eating into the um into the business model and that stock has continued to just climb and climb and climb in the, I think it, she left in 2018 almost the five years since she's left. Um I think that's a credit to sort of the, you know, thoughtful leadership on her behalf for the 12 years that she ran that business. Um I'll take the CEO, for example, um he's built a business where he first started hiring, uh, uh, refugees and, um, training and, um, you know, offering language of services that business has turned into a multibillion dollar, um, uh, uh, yogurt and, um, uh, dairy beverage business. Um, he's not doing anything other than he believes and he's trying to build a great business. It happened to be that, you know, the refugees in his community he knew would make great workers. Um uh Let's take, you know, so, you know, building a great business is embedded with the, you know, these ESG values, but I'll put one more number out there and I'm kind of hesitant to do so because um I know Bruce is very much sort of the king of numbers in Washington. He's great at this charts and metrics. But um the uh investments in ESG uh is, are going to be about 53 projected to be 53 trillion in companies and um uh uh um equity markets like that by 2025. So that's gonna be one third of the total assets under management. Um There is no way that any leader of any business out there cannot consider how they're running their business under the rubric of that much money chasing um investments in that space. So it's, it's indivisible. Um I'll just say one more thing which is Bud Light that was also about money. Um But it was money on the Republican side. So, um if you saw lots of attacks from the right on about that ad that uh Don Junior tweeted later on that day. Um Don't attack A B and B. They're big Republican donors. Uh The uh National Public Congressional Committee uh put up a tweet where they were Duncan on the, on the advertisement went down moments later because somebody pointed out that EV gave half a million dollars to the NRCC. So, um you know, my hope is that you all as leaders will follow your principles and understand that the noise sometimes being directed to you from the right is not necessarily about those principles. I I'd only add first to be called the King of Numbers in a for a city that has a $33 trillion debt. Uh Thanks. Uh My sense is um there's a right way to do it and the wrong way to do it. And I think uh heading through the very socially volatile Trump years hitting a global pandemic following the global pandemic with the murder or amidst that having the murder of George Floyd. Um There was a real hue and cry for greater engagement and I think some of the backlash, the anti esg backlash we're seeing is leading to what I would argue is a right sizing at the end of the day in the 2020 businesses should be engaged but you're businesses, you're not NGO S and I think important to understand how and when to engage, makes a difference. I think the risks of doing it wrong in a uh in a permanent culture war environment are both bottom line and uh and uh distract you from your mission. So uh you're gonna have to stay engaged. You're not going to be able to duck these things, but there's a way to do it smart and there is a way to kind of haphazardly in your way or stumble your way into mistakes. Well, in, in this super politicized environment, um would it, is it not better for CEO S to take a show, don't tell approach when they want to support? Uh cause I mean, one of the things that jumped out of the meeting last year was I remember when Citibank announced that they were going to provide funding for any employee who had to travel somewhere for abortion services. And it was announced in an eight K like that is so sexy in a SCC filing as opposed to, you know, a blog post or somebody going on on C NBC. And, and so I'm just wondering, is, is uh is that a, a AAA better approach uh to avoid, you know, getting engulfed in flames? And, and does it just make more sense to take a low key profile and more credibility? Well, I i it's, it's a better approach is the right approach. I mean, because again, I want to come back to the fundamentals here. It's amazing how much three little letters, you know, have caused so much controversy. But uh if you go back to one of one of the fundamental uh statements or documents with regard to all of this was the business roundtable statement. It's crazy to think about it, but it's only uh August 2019 when the stakeholder capitalism statement came out from the business round table under the leadership of Josh Molden, who, formerly of the W Bush administration, who is hardly a radical um uh with the leadership of Jamie Diamond, uh Alex Gorsky, formerly the CEO of, of Johnson and Johnson. And I think about 100 and 20 if I can use the term fortune 500 CEO S who signed on to it. And the whole point was that, that uh business, it was a new statement of stakeholder purpose and, and that uh as you all know that it was more than only profits and losses because you had to look beneath that to the role that uh uh businesses are playing in their communities with, with their own employees, with a whole range of other stakeholders. But the point was it was about their business, right? And it's always been about the business and the health of their business, as I say in a fast vastly changing economy. Um And the same with regard to the environment, of course, as relates to sustainability. Um So sure, the statement in an eight K makes a whole lot more sense than taking out a billboard somewhere telling people because you're trying to run a business or a, or a tweet you're trying to run a business and, I mean, these CEO S, that's what they're here to do and, um, it ought to really be as focused on them. Yeah, I imagine it's a little bit harder for consumer facing brands because that's, that's the mass, right. Uh, as opposed to an industrial company that that would uh that would do that. Although I'm sorry, but the point is every brand has stakeholders who have an interest in this, of course, what we have seen in the last four years, in particular is the role that employees play, right? So the the people that CEO S are leading play uh with regard to uh their statement of how they feel about these things. I wanna include you all with a couple um for, for some and a in a moment. But here we are in the capital of this glorious Republic, beautiful city. I do love Washington. But um you know, the political climate here seems to um love drama and, and so I'm just wondering, you know, is, is uh uh you know, is, is, is our political class responsible for, for uh part of the responsibilities for all these uh you know, conflagrations um around these matters. I mean, is that, is that one way Washington could help uh CEO S and big corporations is to cool it a bit. I would not look to Washington for, um, uh, you know, advice on any of this. I will point out that I do think that, um, on the right of center there are, um, you know, whether it's, uh, Rawa or, you know, others I think that they're doing is they're chasing eyeballs on Fox and they're chasing eyeballs on Newsmax and it's an increasingly narrow segment of the population. Uh You know, I know everyone's worried about the, you know, the head to head numbers with, um, Trump against Biden or, or maybe not, um, where, you know, it looks like Trump is um, really competitive against Biden. But if you dig deeper into those numbers and, you know, I should look to you on this too. So, um, if you dig deeper into those numbers, those are, those are complaints about Biden, they're not support for Trump. Uh, and we're 14 months out and I think the Biden record is very much going to be something we're going to hear a lot more about in coming months and there'll be a different understanding of it by then. If you're waiting for Washington to bail you out, you're screwed. They're not, they, they're, I'd say more of a symptom than the cause, but they're not going to help. And if your theory is, this will all blow over, you're screwed. It seems to me it's a four part thing. It's team process words, action. Team have a diverse standing army within the organization that thinks these things through diverse in every way, including ideology, work with others in your sector process. They should practice your supply chain, team practices for Taiwan invasion and every other consideration your team to think about what might happen and how to be ready for it to do the same thing. And if you're asked to sign on to, if you're asked to oppose legislation, you should read it before you sign it. Three words, talking to your employees is a lot more valuable than talking for your employees. So if your employee resource groups only have an engagement with the CEO, when they're upset about something, you're in trouble. If they hear, if they hear you regularly and they know you're listening to them, then you'll be able to dodge some of the stuff where it really isn't the best thing for the company to get involved. And on words externally, stop virtue signaling. This is about value, not values. And if there is no business reason that you're doing it, do it on your own time and on your own dime finally, actions, you know, I think the point you made show don't tell, take actions, don't think about what's your tweet. What's your press release? What are we gonna say? What are you gonna do if you want to support vote rights? Give your employees time off to vote, support voter registration drives. There's so many things you can do in your community separate and apart from when there's a Twitter storm. And since ultimately, you're going to want support from Republican and Democratic elected officials. The worst time to get involved is in a political maelstrom. There's 364 other days, or maybe it takes a week when you can actually do things that make a difference. The panel just before us had two great organizations to get involved in. We have a question over there, Simon, is it working? Yes, thank you, Simon Freakley Alex Partners. Um It seems to me that one of the foundational problems here is that the ES and the G never deserve to be in the same word. And we therefore, uh find that these things get muddled. People manage to the average and of course, environmental issues are quite different to social issues, are quite different to governance issues and so doing good is not at odds with doing well and therefore it uh doesn't mean that it isn't good for business to talk about things that matter and people that get very worried about fossil fuels or not tend to um have all sorts of things to say about ESG when really they're talking about the, but for many of us in the room and maybe even all of us in the room that have um employees or customers who are under 40 unless as leaders of organizations, we don't have something real to say on the environment and what we're doing to be responsible, environmentally have something to say on social issues and what we're doing to be responsible on that. And also on governance, then I think we'll find that we'll lose our followership as leaders. And so the question for the panel is if we were to unbundle the Ss and the G and narrate this differently, how would you suggest that we do narrate it differently? So we don't fall into this averaging trap. I'm happy to start. It's uh I think the G you're right as a brand that's not going in the right direction and they're not obvious that they fit together and a phrase you use then in your preamble there, you know, doing good. I think that's the type of, of language that often gets businesses in trouble. You don't exist to do good. You exist as a business. Now, you should do good if you want to attract and retain employees if you want to uh contribute to your stakeholders. But, you know, I wonder how many folks in this room would say that chick-fil-a is socially responsible because they're closed on Sundays. A lot of Americans would think that's the socially responsible thing to do. It's a, it's a large and diverse country. It's a lot of stakeholders. I feel like the E is going to proceed a pace. Um I'm not sure the S is everybody throws in what they want into in the s and I've never really understood what the G is anyway. Um, I wanna, I wanna sort of add, add to what you just said. Uh Simon, which is, um, I think that there are many, many businesses out there where it, when they, when they do, do you call it virtual signaling? But when you have an emphatic statement of values that actually helps you grow your business, one, there are many customers that are attracted to it many potential employees. And if you're, if you're, if you're meeting your numbers and you're growing in, you know, you're growing in a smart way. I also think that um CEO S can differentiate among other leaders in the analyst community by being articulate and careful stewards of the people around them, their communities and the environment. Of course, you know, I, I think that that can be priced into um how investors look at you, whether it's shareholders or whether, you know, you're looking, you're looking to a court, you know, a private investor from the outside. I mean, I think leadership really matters. Um And I, I do think that the noise on the right right now, um it's, it's unprincipled, it's angry. Yes, it is very, very loud, but I know Bud Light is now selling more than molo again. So, I mean, and all these, these, these will be storms, they can be short term. Um But I, I do think that for, you know, leaders of organizations, you are the embodiment of values and those are going to trickle over as to how you govern the enterprises that you're running. Um Well, I'm not saying tweet it out. I'm not saying I know I'm all for the A K strategy but um you know, there's, it's, it's, it's indivisible from who you are. So I just, I want to pick up on where Bruce was because I think this is not about doing good. This is about the fundamentals of capitalism in the 21st century and about businesses that will work and be sustainable and that will thrive. And in fact, the E the S and the G are important. Let me just talk about the s very briefly. Um That is not about virtue signaling. It is about doing the things where you invest in the communities where you operate and you keep an eye on the health of those communities because they are essential to your success. It's about investing in the people that are essential to your enterprise success. Uh And I would even go so far as to say, making sure that you have diverse employee basis because that is the best way to succeed in the 21st century because you're gonna have better decision making. You're gonna have a, a greater sense and understanding of the lived experiences of everyone that your business is appealing to and the people who are driving that business. So, on that note, please join me in. Thanking uh our panel for, we could have talked for an hour about this. Really, we could have, but uh there's a break now. So uh join me in. Thank, join me in. Thanking them.

Ian Bremmer, Founder and President, Eurasia Group, GZERO Media Interviewer: Alan Murray, Chief Executive Officer, FORTUNE

CEO Initiative 2023: Geopolitical Tensions

All of, you know, we poll ceos on a regular basis at fortune. And one of the things we've seen in the last year is that geopolitics has risen pretty sharply on the priority list of most ceos. No big surprise given Russia's invasion of Ukraine. But, but also we know a lot of it is focused on China, what's happening in China, how should companies deal with what's happening in China? Uh uh and then of course, political pressures here at home as well. So uh all of these challenges and disruptions are leading companies to rethink their footprints, rethink their supply chains and it's creating uh uh uh some uncertainty for businesses as well. So how best to think about it uh to ensure resilience and success. We're going to do that with Ian Bremmer, who is the founder and president of the Political Risk Research and consulting firm Eurasia Group as well as uh G Zero media and is an independent voice on critical issues around the globe. Please welcome Ian Bremmer to the stage. Thank you. Hey man. Thank you. Good to see you. You're doing handheld today. Yeah, and you're always special. I don't know if I'd go that. So, uh, uh, uh, let's start with the news. We had Senator Mark Warner on the stage early this morning and he said, absolutely, we will get support for U Ukraine through Congress. He said that he did say that this morning. Why don't you tell people what's happened since then? Yeah, it looks a lot less likely. Uh, I mean, the vote is going on right now, right? Is he out yet? He's out? So mccarthy is out. Um And we saw eight Republicans uh that joined with the Democrats on that. And what does that mean? Well, first of all, it means that any uh anyone that replaces mccarthy understands what they face. Um if they try to push ahead with this Ukraine aid. Um And if they're at the mercy of those 10 Republicans, they're at the mercy. Uh And then assuming that they push forward eventually a budget uh that uh that does not include it. The Democrats and Senate have to decide if they're willing to shut down the government over it. But I mean, there's no question, this is, this is on the back of Zalenski in Washington being told fairly clearly that there is not going to be the support for a second counter offensive come next year. And that's not because Biden doesn't want it to happen. It's just because it, the, the, the capability uh to push that through, wasn't it? That was before mccarthy's? So that just got a lot worse. Um And there are a lot of other things that are problematic right now for Ukraine. There's the new uh Slovak PM that's gonna be forming a coalition who is strongly pro Russia and has said that they won't provide support for Ukraine anymore. Um There is, of course, the speaker of the parliament in Canada that was forced to resign ignominiously uh after uh lauding as a hero, someone that fought in a Nazi battalion in Ukraine in World War Two. Uh But I mean, all of this, this is the worst week that Lansky's had, I mean, post post invasion, right? There's no question about it changes the dynamic pretty dramatically. I wouldn't say dramatically in the sense that over the last nine months, uh the Russians have occupied roughly 18% of Ukrainian territory and that has not been changing. But the point is that it's not going to change. It's very unlikely that the Ukrainians can look forward now and say we believe that we're gonna be able to take significant additional territory back. So what does that mean going forward? That's what, that's a very big uncertain question. So let's look at the other side of the equation, which is Putin Vladimir Putin, how strong is he, how, I mean, we saw this weird, you know, sort of attempt to do something that, that with the Wagner group and Forgo June. That's right, which fell apart. So what's your sense of Putin's position. You've just described a, a somewhat perilous situation for he has to be feeling, I mean, it pains me to say this, but I mean, he has to be feeling better now than he's felt in a while. Of course, I mean, Putin is not a winner on the global stage. I mean, you see the impact on human capital fleeing Russia, you see the, the freezing of Russia's sovereign assets in Japan and Europe and the United States 12, there's about to be 12 rounds of sanctions. The eu is now debating the 12th round of sanctions. It will include taking some taxes off of money from oligarchs, they're frozen and some diamonds that are going to be taken off of the trading with Russia. I mean, they're, they're having a hard time finding additional things to sanction, right? Plus you've got the NATO expansion and the rest. But if you're Putin you now, absolutely believe, yes, the Ukrainians have gotten all this incredible support. Yes, they're technologically, more sophisticated, advanced. But you Russia have the ability to wait these people out and take more pain, which was always the calculation they would be in better shape and, and is he secure at home? You know, uh we will, he's secure until the day he's removed, right? I mean, no, no one in this room is gonna have any visibility on that. But let us remember that at the moment that he was existential, threatened by the failings of Wagner troops led by pro goin on the way to Moscow. That's a weird day in June, right when that happened, um, there wasn't a single minister, a single general, a single oligarch that came out publicly against Putin, no defections that tells us a lot about the ability of Putin to maintain a very strong grip on power from where you sit, he looks pretty secure and he's in it for the long term and, and it's gonna be harder and harder for Zelinsky to resist. And, and the last week, uh in many ways, I would say uh increases that level of security and if Putin wins. So I want to be clear, I think that we are right now. Let, let's see, two weeks ago, I fear that we will look back in a year and say that two weeks ago, it was peak NATO. Um and, and peak NATO has been fantastic to watch. It's been extraordinary consolidation of all of these very divergent, political and military positions and economic positions and the Europeans taking a lot of pain economically. Um But II, I don't see, I'd be stunned if it stays at this level of consolidation. And what are the implications of that? Um Well, uh one implication is that you're going to see a, are you going to have a harder time keeping European countries feeling like they are as aligned with, as supportive of the United States? So I'll give you one example that's going to be interesting. I would say that the, that the Europeans right now are 90% aligned with the Americans on Russia policy. Broadly speaking, I would say they are about 60 to 65% aligned with the US on China. That's gone up a lot in the last couple of years. One implication is that it's gonna be really hard to maintain that. 60 65. Yeah. So let's, let's let's talk about that because the China issue for business is a much bigger issue. The implications are much greater. Absolutely. Implications are, are, are uh much greater. Uh same question about G that I asked about Putin, how in your view, how secure is he in the course he's on? Um So it's interesting that uh there have been a number of high level resignations slash disappearances over the past few months, we've now not heard from the Minister of Defense. Um In the last several weeks, the Chinese government continues to say that it's, it's for medical reasons which for now by now, it's probably true, probably now true. It's a little dark I know. Um but uh but, but let's keep in mind that when she became a chairman of the Chinese Communist Party, the first major policy he put in place was anti corruption focused on the military. And, and, and these are high level people that are involved in corruption. And the Chinese government is saying that you know, we we need to redouble our efforts. This is this is not acceptable. So there's there is a level of weakness and question as to the loyalty, the capacity of the Chinese military today, which is meaningful when you start playing out scenarios of 10 dash line, South China Sea Taiwan, all that kind of stuff. Um but more broadly, uh the level of the consolidation of power around Xi is is so great that I think the concern is less about social or political instability. And you saw that with just how quickly they were able to shut down post opening zero COVID policy. Um but but also that um the Chinese are just gonna have uh a real hard time getting good information about what is truly happening on the ground economically and and the willingness of people to say, well, actually, uh Mr Chairman, this isn't going as well as you think and you need to take a more a more bold set of policies to deal with the ever ground situation. For example, I think that's the big. Yeah, so something I think you and I talked about in January in Davos. Yeah, so she has consolidated power, but we're also looking at a China that looks economically much less formidable than it did 23 years ago. I mean, I think that in some ways the pandemic underscored the shortcomings of its policy, obviously, the economy is not growing nearly as fast, the real estate debt problems are coming into focus. It just doesn't look like the juggernaut and the, and the notion that was taken for granted for two decades in this century, that they would eventually pass the US as the leading economic power. I don't think people believe anymore. So how does that affect the equation? Well, if we look back in a year and say we just had peak NATO, we might look back in 10 and say actually our views on China have shifted dramatically, peak China as well. Peak, it's hard to say peak China because the country is still going to be growing at 3% ish going forward. There are lots of reasons to believe they can do that. But but I mean, one thing that I would really seriously focus on are us export controls on semiconductors because in some ways, this is a declaration of economic warfare. Long term by the U SI mean, if, if the Americans maintain present levels of export controls, don't tighten them, the Chinese will not be able to develop future A I generations. They can't do chat GP T five or six. I know you've been talking about A I a lot here for those of you that believe it's truly transformative in all of your firms and in every sector. And I believe that a present American policy will prevent the Chinese from being a part of that. And and this is happening at a time when Chinese leadership has actually responded to the Chinese private sector in loosening the way they treat their own. So chat great. So now you've painted a very clear picture. Xi consolidating power. You have the Chinese economy weakening, you have us policy threatening his ability to make progress on semiconductors. And you have this country right offshore, that is the leading manufacturer of of semiconductors for the world. How does it affect the equation about win? Because I do think the question has always been when not weather to take over Taiwan Iii, I spend less time thinking about imminent military conflict because well, uh first of all, because the ability of the Chinese to do that without destroying TS MC and the Taiwanese economy and also the enormous difficulties of launching a 100 mile maritime invasion. Like those are not, those are not things that I think the Chinese are seriously considering in the near term. But even if even without the US being a participant in that, uh even without the US being a president of that battle. But II, I would also say that um it's going to be very interesting to watch the upcoming November A PE C summit between Biden and Xi, which is now being planned, that will include a track 1.5 on A I not so another working group, but this time involving the private sector that the Chinese have informally already said they're prepared to do. Now, they want to do it because they want a road map for what are the ways that we might alter our behavior that would allow us to actually change this us technological warfare against China? How might we be able to have access to some of these chips where everything is dual used such as um, well, I mean, for example, what are the ways that they might be willing to provide transparency into how their um their own A I uh models work? You really think we're headed in that direction? I am, I really think that the Chinese are deeply concerned. They have a problem that they, they know they have a problem and they can't and they can't fix it by taking over Taiwan and they also can't fix it by hitting the world on critical minerals. I mean, gallium germanium, like these are marginal things. They don't want to be in a fight with the US, the Japanese and the Europeans simultaneously. So look, historically, when the Americans put that kind of leverage against the country, there is an internal willingness to say, is there anything we can do to lower the number? I'm not suggesting that there's a deal to be made here, but I am absolutely, that's where their interests are, that a deal is going to be at least preliminarily discussed. So I expect that the She Biden meeting is going to surprise on the upside, the actual meeting, the actual meeting. I feel quite confident about that, but that doesn't mean a lot. And you, you, you wrote an entire book about the economic models, the difference between our economic model and, and theirs. Uh um And now we've made this big headlong dive into industrial policy. We've talked about this some today. Do you actually think we can pull it off? I mean, because that's got to be part of Xi's calculation too. Hey, can they really do this? Well, you ask me what's gonna happen if America pulls away from Ukraine aid right now, the US has a very strong relationship with Ursula. There is more alignment around industrial policy, not just on semiconductors, but also on transition energy. Um You know that that is that gonna last for another two years even never mind. Five. That's an open question on us industrial policy. The US when, when the US decides to put its foot on the gas, it is the biggest accelerant in the world. But that doesn't mean that the US does so consistently. And with the right ecosystem from my perspective, chips. Absolutely the right piece of policy but too small and not only too small uh but also ecosystem challenges. Are you getting the visas? Are you building the stem education? Where do, where are the Americans gonna be on all of this in 10 years time? I and everything you have said in the last 20 minutes convinces me that geopolitics is not going down on the priority list of the people sitting in this room anytime soon. I feel that's true. Well, thank you for that warning. Great to have you here. Thanks so much to see you. Thank you.

Gina Raimondo, U.S. Secretary of Commerce, U.S. Department of Commerce
Moderator: Alyson Shontell, Fortune

CEO Initiative 2023: Great Economic Ambitions

OK, innovation, science, tech, technology, upskilling, transparency, industrial policy. All those are vitally important parts we've been talking about today. We've also heard that this is a time of change in the world. Uh The decisions that leaders make right now now will affect things for decades. Uh Our next guest knows firsthand the consequence of value at the moment because not only are we at an inflection point in business but at a uh an inflection point for government and perhaps for us national security, the Secretary of Commerce Gina Raymondo is on the front lines of the competitiveness struggle. She said we're in a new chapter of innovation, growth, research and development and that this is all an all hands on deck moment for everyone in this country. Very thankful to have her here to share her thoughts and exchange ideas with you. Please welcome to the stage secretary Romano, uh joined by fortunes editor in chief Alison Chantel. All right, secretary, we're closing the show today. So let's make it great. Yes, and we're so glad the government didn't shut down. So you could be here with us today. Um You recently returned from a trip to China. Um it was the first time a commerce secretary had gone in five years and you said that a big accomplishment was opening up lines of communication again. How has communication gone since that trip in August? Yeah. Um First of all, thank you for having me. Good to be here. Uh Good to be with you guys very well. So, one of the things I did was we opened a commercial issues working group uh so that we could try to identify a few concrete things that we could get done. And we've already started meeting, you know, at the working level. Um I'm planning to meet with my counterpart when he's in San Francisco in November. Uh We started a technical group around trade secrets. They've already started meeting. So, you know, it's, it's baby steps. I recognize that, but that's where we are in this relationship right now and hopefully baby steps lead to bigger steps. Um But I think I'm pleased so far. I mean, we've started dialogue, we started to put some issues on the table and that people have said to me, oh, well, you know, it's naive of you to think that, you know, having a discussion is going to resolve all these problems. OK? But I know that not having any discussion will not solve our problems. So we have to try, it's in our interest to try, it's not in our interest to have this escalate too much. And I say so far so good. We had Janet Yellen here this afternoon talking about uh where we are in the economy. And she was saying a big point um that we should note is that it's about de risking, not decoupling. Um And you know, there are a few things that the US you feel have been investing in China tech that could be problematic, that could be putting us in a risky situation from a national security. Um One is quantum computing, one is A I um and one is chips. And so recently, um I think you helped to create sort of a ban for V CS here in the States from investing in those technologies in China. You were a former VC actually, how did you plan the scope of that? Um And why is that important to rising? Yeah. So it's interesting, I was a voice along with Secretary Yellen along with, you know, the White House to say this should be as narrow as possible, but broad enough to protect our national interest. Uh which is to say there's plenty of opportunity for us investors, venture capitalists to invest in China if they want to. But quantum leading edge chip semiconductor chips, artificial intelligence, these are things that are directly related to our national security. You know, China has an explicit strategy of, they know we're ahead in these areas of emerging technology, they want that technology to incorporate into their military. So we would we would be a little bit crazy to, to allow that. Right. And which is what I said when I was there, you know, there's plenty of trade, we can do plenty of trade, we can do, but we are not going to, we're going to do everything we can to deny you our most sophisticated emerging technology that you could put in your military to use against us. That's not in our interest, which is not going to do what's not in our interest. So on that outbound investment, screening what we did in the administration. And this comes from the president, you know, the president has said small garden, high walls, we didn't say no private equity investment in China, no private equity investment in technology in China. We narrowly tailored it to the few areas. Uh we were worried and by the way, it's an active investment, you know, we're not saying publicly traded companies or passive investment or mutual funds, but it's active private investment in these few areas that relate to national security. Um Are you at all worried about what China might be investing in, in start ups here? Um You know, there is a lack of transparency in venture capital in the LP world. You don't really know who's funding what? Yeah. Yes, of course. Um I mean, I'm worried about everything. It's kind of my job but, but uh I do, I do worry about that as you say, you know, we we have uh in inbound investment screening, it's called the process. So we, you know, we want to catch all of that and screen it and only allow what, you know, what makes sense. Uh But you do worry about that because for example, in A I or quantum or chips, um I know from having been in the business, these are tiny, they start out as tiny companies, they're kind of informal, they're friends and family rounds and yet those can be uh you know, that's really special technology. So uh but that's exact, I worry about it, but that's exactly why we do this kind of investment screening. And by the way, on the the outbound investment screening, China has done that for a long time, you know, like some of it is just a measure of reciprocity fairness, you know, they have had investment screening for for years. This is that we're new at this because we think it's necessary. Um So some have actually I would take your point about we need to get the scope right? We can't ban everything that's not healthy, that's not healthy to the relationship. But some have criticized the Biden China strategy in general as being potentially costly and dangerous. They could be pushing our allies actually closer to China. Could we actually be mucking up the supply chain and indirectly buying from China anyways, even though we think we're placing orders elsewhere. What do you say to that? Uh I don't agree with that. I mean, we have a clear strategy which is to invest in the United States. I heard talking about the Chips Act before I came on. I mean, we want to invest in America so we can run faster out compete. Like at the end of the day, that's what we need to do. More important than any defense is offense out, innovate. The world invest, run faster. We have the best entrepreneurs in the world. Let's continue to innovate. So anyway, invest align, align with our allies. We are very aligned. If I compare where we are now to when President Biden took office, we are so much more aligned with Europe, with the UK, with Japan, with South Korea. We are really walking lockstep with our allies and then compete. You know, we have to compete. China is a competitor. China has a civil military fusion strategy. They're very explicit about it, by the way, you know, they everything is military. So I think that we can't be naive. We have to compete, we have to protect ourselves. Um but wherever this business to be done, like you mentioned earlier, de de risking versus decoupling, no one is talking about decoupling to, to pretend that we could decouple our economies is it, it's not a reasonable thing to even say we're too intertwined, but to say that we shouldn't do business in ways that hurt our national security. That's what we have to do. So, President Biden asked you to take a leading role in developing a strategy around A I and building it um in a way that's really safe and responsible for all as we take a leading position. Um Today, you announced the Responsible Innovation Labs, a coalition with a bunch of V CS including general catalysts who spoke today um about how they're developing responsible A I standards for startups. What are you prioritizing as you all are crafting what that should look like? Yes. So uh by they listening to you, it's, it's, you should have some sympathy for me. I'm on top of chips. A I like this is like not a small portfolio. It's a hard job. Um So I get President Biden, I give him so much credit on this. He came to us months and months ago saying we gotta get really get serious about A I, it will take Congress some time to legislate because it takes any legislative body time to, you know, get a law in place. He said, but A I is moving fast. We have to do something. Um And so we did, we brought in the CEO S of the biggest A I companies, you know, Google Microsoft, open A I et cetera. Uh and they signed on to commitments and then we got another tranche of companies to sign on to commitments and these are commitments around transparency uh red teaming, you know, testing the models before they let out to the public um uh water marking. So, you know, what is a, I generated content versus what's a real person. Um, safety guard rails, privacy, guard rails, and huge credit to the administration. But to the companies like they have said, we want to be responsible, we're gonna, we're gonna stay within the guard rails so that we minimize the risk but achieve the upside. So now what we're saying is that needs to be through the entire chain including start ups. Um And again, I know from having been in the business, let's be honest, the temptation is that's a, that's a really hot start up like let's get in that, let's make money on that, which is fine. But if it's in the gray zone and they're not following the same safety guidelines about how they're creating the models, how they're testing the models, the data, they're testing the models on. That's not OK. That's not. Ok. So what we're saying is if the V CS would agree to make their investments consistent with the guard rails that the bigger companies are following, it'll make the whole, you know, the whole system safer. Yeah, I mean, these sort of are growing at such a rapid clip as well. I mean, they're, and we've, we've heard rumors of this as well that the recent valuation for open A I is gonna be around $90 billion. Um So really just hopping there and smart to get ahead of it. Um the chip that another one of the many things you do um that got through about a year ago. We wanna bring manufacturing back to the US. Um How is that going? What are the hold ups? Is this timeline? 10 years. What kind of time frame are we talking about making us manufacturing hub there? It's going incredibly well. Uh I've hired like that. Well, no problems. No hiccups. 00, I didn't say that. I mean, a hiccup every day, the hiccups. Anyone who runs a business notes, the hiccups every day. But you know, it's been a year since they passed the law. We've hired 100 and 50 people, um which is record time in uh in government to hire that many people. By the way, there's a piece in the Wall Street Journal and in Bloomberg about the quality of people we've hired, um we've hired a lot of people from industry who have, I'm so proud of them. Like they have left very high paying jobs in some cases to come serve their country so that we have the best engineers, project managers, finance people working for us. Um We have over 500 statements of interest from companies. We have over 100 applications. So later this year, we'll start to make some funding announcements. I think five years from now, you'll see leading edge chips being made in America at scale. You'll see leading edge packaging in America. Um you'll see a big hub of research and development in America. Uh So it's not tomorrow. I mean, to build one of these is a couple of years but, but this fall, um which I remind you fall ends December 20th. So by the end of the fall, we'll have some announcements out the door. Uh But, and, and I think within four or five years, we'll be able to achieve those goals that I just laid out. I'll say this though, since the bill passed, industry has announced about 100 and $70 billion of investment in the semiconductor industry, which was, I think kind of on the sidelines waiting to see if the bill would pass. So the very fact that we've signaled to industry that we're doing this has unlocked almost $200 billion of capital. Well, I think the, the, the hiccups, by the way, the thing I worry about is workforce. Well, that's, I mean, how are you gonna make manufacturing jobs? Cool. That's what you find enough people. I mean to, just to build, to build one of these facilities is maybe 7000 construction workers. That's one. So let's say we do 10. Um So audience any final questions for Gina for Secretary Roman. Anyone was that one right here? Hello, Secretary Roman. My name is Julian Brown. I'm a recent graduate of Georgetown University and an incoming business analyst at mckinsey and company that said I stand here today as a distinguished scholar and intern of Boulevard, a tech company that's working to address and help close the access gap to pre profess to professional opportunities in the private and public sectors. My question to you today is, what advice would you give to say your 22 year old self specifically regarding identifying and maximizing the differentiating factors that you feel helped you rise amongst your peers to the position you hold today. I would have so much advice for my 22 year old. So, but we gotta keep it to 35. I gotta keep it brief and not too personal. I would say truthfully not to be corny. Just be yourself like don't try to be somebody else only, you know, you really be honest with yourself. What are you really good at? Um and just do that. I find especially at your age when I was your age. You know, we all try to be like each other. Go get the next gold star, we'll figure out what you're better at, like what you enjoy doing and what you think you're really different at. Uh and go do that. Don't be afraid, don't be shy. Thank you so much for your time secretary. We appreciate it.

Alyson Shontell sits down with Johnson & Johnson CEO Joaquin Duato to discuss how AI is being used in cancer cell therapy to attack the cells and turn the cancer into a chronic illness. The company's also using robotics technology to assist surgeons to significantly improve the average outcome of the surgeries.

Here's how Johnson & Johnson's CEO is using AI to end cancer

Alyson Shontell sits down with Johnson & Johnson CEO Joaquin Duato to discuss how AI is being used in cancer cell therapy to attack the cells and turn the cancer into a chronic illness.

Here's How Johnson & Johnson's CEO Is Using AI To End Cancer

First, I should note Johnson and Johnson has been one of 49 companies to be in the Fortune 500 List every single year since we've made it since 1955. This year, they clocked in at number 40. As Alan said, the health care and pharma markets have been booming. Um And you've been in the job for two years, but you've been at the company for 34. So you've seen quite a bit um two years in what's your primary focus and biggest surprise since becoming CEO? Thank you. And um it's, I'm proud to be uh the CEO of Johnson and Johnson in our, 100 and 38 years of history. We have had only eight CEO S uh and I am the first one who is not born in the US. And I'm proud to represent that. And uh certainly it's a great legacy that we have had during this period. So in becoming CEO of Johnson and Johnson, uh I have a dual purpose. One is to uh remain a company that is true to our mission of addressing uh difficult to treat diseases. Um And the other one, it's to be able to continue to be a company which is principal based people based and maintains the reputation that we have had during such a long period of time. Now, is it true that you didn't get the job at first? I mean, not the CEO job, but you initially, when you were interviewing 34 years ago, they said, no, it's true. I, when I finished graduate school, I interviewed with Johnson and Johnson and I didn't make it to the second interview. So um then I, I joined another company, a pharmaceutical company and eventually found my way back to uh Johnson and Johnson and I've been here for 34 years and I'm really a product of the development opportunities that Johnson and Johnson provided me working in different geographies in different sectors, in different functions. So I'm here. Really thanks to the opportunities that Johnson and Johnson provided me. I mean, the longevity of your career there, I think is telling and the attrition rate is shockingly low at Johnson and Johnson. Right. Yeah, it's, it's very low. Uh it's lower than the industry and our pr companies. And I think there's a number of reasons for having low attrition. One is the size of the company that enables people to work in different sectors and have careers within Johnson and Johnson. Sometimes I say Johnson and Johnson has its internal job market. The other one is that people simply like to work for Johnson and Johnson. Uh Our engagement levels are high. People like to work for a company with a purpose in health care. Uh And we are a company that pays a lot of attention to our people, their development. We just had yesterday, for example, we had a, a global learning day. So we gave all employees a full day to develop a learning mission and to get acquainted with the learning resources that they want to use. We are a company that pays a lot of attention to inclusion. So everybody feels good when they come to work. And certainly we like to believe that we are a caring company that we care, not only for the patients, but we also care for each other. So we, we try to have a strong health and wellness offering for our employees. So overall people like working in Johnson and Johnson and stay longer in Johnson and Johnson, our average tenure, for example, in the US is more than a decade so people can do careers and, and we are happy of that. We, we, we are glad that people like to stay at Johnson and Johnson longer. So when you became CEO and even in your memo to become CEO, you said, I think we should spin out the consumer business. Um You know, Johnson and Johnson can compete with l'oreal there, but should it? And so could you speak a little bit about KVI, which is the company that you spun out just earlier this year, it's now publicly traded. Um How you, why you did that? Um why is return to focus important for Johnson Johnson versus diversification of business? Yeah. So is our consumer company. So when you think about the Johnson and Johnson and the brands that you know about Johnson and Johnson Band Aid Tylenol or Baby shampoo? Now, they are all in KVI. Why did we decided to separate KVI and create a global consumer champion with? Because we thought that uh focusing on the consumer market and focusing on health care was going to deliver better results for consumers and for patients. Uh for us, it was very complex to be able to compete with l'oreal, as you mentioned in skin care. And at the same time, competing biologics with biopharmaceutical companies and in surgical robotics with medical technology companies. So we thought there was a benefit for Johnson and Johnson to be exclusively focused on health care, on research and development on innovation. And that was going to create a better platform for us to be true to our mission, not only in the next two or three years or post IPO, but during a long period of time. Um and what's your advice been to the new CEO? And how did you make sure that they were set up with a good culture and you maintained yours? I am, I am very proud of the, of the management team of the entire management team of including the new CEO come from Johnson and Johnson. They are also the product like me of the development opportunities of Johnson and Johnson. And uh I told him, uh you know, be patient and put perspective on things, learn how to listen more. And I gave him confidence that they were going to do great. So I put my emphasis in providing confidence to the management team and to give him some advice about uh be patient and put in perspective in the job of CEO, you have to be patient, you have to put perspective on things and I'm helped myself by being a Mediterranean. And uh I take things with certain perspective and I wanted to transmit that wisdom to him. Um Well, this conversation is short and so I want to make sure we hit on a number of things we've talked about that spin off for a long time. But one thing I do want to make sure I hit on is um R and D is a huge part of Johnson and Johnson. Um What are you seeing in the face? You said that this is the golden era for your business that there will be more change and more positive movements towards curing disease over the next few years than you've seen in the last number of decades. So, what are you seeing? That's exciting. What are the innovations and, and what are you doing with things like robotics? A I how is that all changing the industry? Yeah. So R and D is the, the, the heart of an innovation based company. Uh Last year we invested $14.6 billion in R and D. And Johnson and Johnson, we are one of the largest, if not the largest investor in R and D in life sciences. Um What we see now is a combination of more knowledge on the biology and genetics of disease with an acceleration of that due to technology, things like artificial intelligence, machine learning and now generative A I. It's helping us accelerate drug discovery and it's helping us also making medical technologies smarter. So that combination is what I believe is going to help us addressing some diseases that are considered incurable or diseases that create a lot of suffering around the world. Two examples. One is in the area of cancer. We are being very successful utilizing different treatment modalities in cancer. For example, now we are using in cancer cell therapy in imma tumors, utilizing your immune system cells to attack the cancer cells and we obtain incredible responses in a way that you could think that some cancers Emma cancers are going to become chronic diseases in the surgical side. Uh surgeons are now able to utilize robotic assisted techniques, better visualization, better sensors. They, those instruments are connected, they can provide them insights and they can significantly improve the average outcome of surgery. So those are things that are going to help accelerating discovery and progressing health care in a way that we have not seen in the last 10 years. And one thing we had a lunch previously and you had mentioned, you imagine knee surgery, but being done by maybe a robot versus a surgeon. I mean, think about the precision needed. I might prefer a robot for something like that than someone with a potentially shaky hands. Absolutely. All our instruments now have some component of intelligent intelligence or connectivity. So our instruments now have sensors that can measure pressure temperate to have visualization capabilities, which at the end of the day is software is digital that give an idea of the surgeon of where are they in, are they going to interfere with a critical structure and all that can be visualized and we can even provide uh guidance to the surgeon in real time or where they have to go. So that's gonna be transformational in the way we do surgery and it's gonna help improving the outcomes of a procedure, which is very common. I'm sure in the audience every one of you have had some type of surgery during your life. So that's important if we can improve the outcomes and the quality of surgery. When I think about what we can do as a company, uh we have the range of technologies to be able to do what no other company can do. We can do cell therapy, but we can do robotic surgery. We can do, we can do genetic or MRN A therapeutics and we can do also smart implants. So there's a lot of things that we can do as a company based on the number of technologies and capabilities that we have. So as the leader of a company, he used to lead in good times and in bad and with a company as large as Johnson and Johnson, there are hard things and there are lawsuits. Um You've had talcum powder lawsuits, opioid crisis to deal with um COVID. Um you know, having your vaccine essentially be dismantled. How do you lead in those hard times? How do you encourage your team to not lose morale? Um Stay focused, stay focused on the mission when there's a lot of hardship around? Yeah, we do it with conviction, a conviction on the principles of our credo that by the way, this year is the 80th anniversary of the credo was written. And uh we do it by having a trajectory of uh more than 100 years in which we have always tried to do the right thing for the patient. When we uh make a mistake, we take responsibility and when the facts, uh the science and the law are on our side, we stand by uh our products and we have been able to manage this um this balance during many years. But the people in the company working at Johnson and Johnson have a genuine passion of doing the right thing. And we don't do it for the recognition. We do it because we have convictions and those convictions normally help an organization to manage change. I'm convinced that purpose driven organizations are much better in managing change. And our organization has a strong tradition of being a purpose driven one. We internally, we say we are the original mission driven company based on the fact that our work was written 80 years ago, 80 years ago, talking about putting the patient first, the employees, the communities. And then if you do the right thing, uh it's gonna be good for the shareholder was and very innovative, very different. So I think that that's part of the energy that people at Johnson and Johnson have in order to navigate the ups and downs that anything in life it's going to present you with. Quick question from the audience. Yes. Right over here. Uh uh I wondered with the new legislation. Um what impact that's gonna have on the ability to do the research you're talking about and whether you think that the advantage in technology, sorry, if you can hear me uh will help take a will help um address the efficiency side. So maybe there will be more resources. I just wondered how you looked at that. We always want to be a constructive actor when it comes to health care. The recent legislation that you are referring to. I'm, I'm I'm assuming you're referring to an Reduction Act, right? And the fact that now, uh, Medicare is going to be fixing prices for some products. Uh, on one hand, uh, we believe that this, um, this legislation is misguided, uh in as much that, uh, there's been a lot of, or a number of challenges constitutionally to the law and there's a number of companies that have present the lawsuits. On the other hand, it's gonna have a chilling effect on innovation without addressing the basic issue that we have when it comes to pharmaceuticals, which is the patient affordability and the patient out of pocket costs. So inevitably, uh this will have an effect on, on, on R and D investments because it would make it more unpredictable and it would be particularly acute, not in the big company, not only in the big companies like Johnson and Johnson, but in the smaller companies that are funded by investors because the return for those investors is going to be more unpredictable. At the same time, it's gonna be shaping the way we invest in R and D. So, you know, on one hand, it doesn't address the issue of patient affordability, which is real. And on the other hand, it, it's going to have a chilling effect on innovation. Um Thank you all so much and thank you so much for being here with us this morning. Thank you.

Janet Yellen, U.S. Secretary of the Treasury, 
Alan Murray, Chief Executive Officer, FORTUNE

CEO Initiative 2023: The US Economic Outlook

We, we told you we had a cellar uh program today. Our next guest certainly uh uh fits that description. She has a string of first uh uh next to her name, the first woman to become Secretary of the Treasury, the first woman to become uh chair of the Federal Reserve. Janet Yellen also recently said that she believes something. All of you will be glad to hear the economy remains strong. The much predicted recession doesn't seem to be happening uh And uh inflation appears to be going down. She joins us today to talk about all of that, the path ahead for the US economy. We can get her to talk about A I productivity. Uh Please welcome her to the stage, Treasury Secretary Janet Yellen. So good to see you. Thank you really, really appreciate you being here. So we had a wild weekend. You had a wild weekend. We're waiting to see whether the government would stay open or shut, shut down. And, and really all that happened was they kicked the ball down the road 45 days and moody's is threatening to, to uh to downgrade us debt. So I guess the first question for you is, is this mess going to change the relative optimism you had about the US economic outlook. Uh Look, I'm very optimistic about the US economic outlook. Short term inflation is coming down in the context of an extremely strong labor market, what people would normally call a soft landing, um which is amazing by the way, it hardly ever happens. Correct. And um it, it's great because of course, we want to see inflation come down. It's been burdening Americans, but we want to maintain the good, strong labor market that we have and we seem to be on that kind of path and medium term. Um We are now engaging in a very substantial program of investments to strengthen our economy, to boost our productive capacity, to boost productivity growth, to draw more American workers into the labor market and to address long standing structural problems like climate change and inequality across people, races and places. II, I want to talk about that. But before I do, I suppose I should let this group in on a little secret about our past. Yeah, which, which I hesitate to do because it, it, it highlights uh my age and may then also highlight your age. Uh But, but uh I have a master's degree in economics which I got at the London School of Economics for which was the one year that Secretary Yellen taught there. So she, she taught what little I know about macroeconomics. I learned from Janet Yellen and honored to have you and I have, I have wonderful memories of you drawing Isl M Curves and Philip on that big blackboard. Uh So, so I, I asked this question with that in mind, the people who almost hung us up this weekend are concerned about government spending. We have a budget deficit of $1.5 trillion. If I had said to you back when we were at the London School of Economics that we were going to end up in that place. I think you would have used your curves to show me that's not a good scenario. So how is it that? That's ok. OK. That's a great question. And as treasury secretary, I feel it's my job to worry about fiscal sustainability. So I do think it's critical that we establish spending and revenue targets that put us on a path where fiscal policy is sustainable and a path that's consistent with solid, solid growth. And um I believe at the moment we're on such a path. So one way to judge it because our economy is now all about big numbers and a trillion is certainly a big number. But um our economy has a large GDP and so forth. I think the metric that I think is most relevant to judging fiscal sustainability is the amount that we're spending to service the debt, real net interest payments as a share of GDP. How much of our GDP goes to service the debt and the answer um over the next 10 years in the mid session review, which is the most recent budget forecasts that the administration prepared. The answer is 1%. So real net interest is the share of GDP is about 1%. That's historically completely normal. Um Some guidelines would say try to keep it under 2% but it's 1% for the next decade. Now, I will say that that budget does assume de meaningful deficit reduction over the next 10 years. There were three trillion of deficit reduction incorporated into it along with a significant program of investments in our economy. But ones that are financed by collecting greater revenues in a way that we think is fair where the burden largely falls on corporations and very high income taxpayers. And I do want to come back to the investment piece of it. But before I do, I mean, the other thing that, that assumption depends on is how high, how long to uh to interest rates stay, which is a big issue, not just for the government, but for any company that's carrying a substantial amount of debt. How long, how long are we going to, you know, are we gonna have to roll over all our debt at rates that are double what we initially had? So that's so, so tell them the answer. The answer is, I don't know. And um it, it's a great, it's a great question and it's one that's very much on my and the administration's minds. Um, you know, when the administration came in, it was the pandemic, we had, had, um, a decade of interest rates, short term interest rates were zero, long term interest rates higher, but very much lower than today's interest rates. And the interest burden was, um, almost nonexistent at that point. Now, the forecasts we've made assume that, uh, interest rates will rise to more normal levels. But we are seeing especially over the last several months, a pretty significant increase in not only 10 year nominal yields but also real yields. And uh there's a question mark just why that is um why going back to something that looks more like the history prior to 10 years ago than the last 10 years? That's right. And that's a very, I mean, that's a very important question. One view is that it may take a longer period of somewhat higher interest rates to control inflation to keep it down. But medium term interest rates will go back to more normal levels. It's also possible that um longer term interest rates will be higher than we thought. But I would point out that for many decades, the level of real interest rates, not only in the United States, but in many advanced economies had been moving down and it was felt by most economists that there were strong structural reasons why that was occurring, you know, this is why I loved you as a teacher way back when, because you could explain to the both sides of the equation. But what do you think, give us, do you think we're going to go back to extraordinarily low interest rates or do you think we're going to be living with this for a long time? So I think the structural forces that led us to believe interest rates would be low, they're alive and well. And we're talking about aging population, nations high propensities to save globally weak investment opportunities. Now, you know, there are a lot of investment opportunities associated with climate change. You could imagine a world where we get very serious about um investment in um in climate related investments. And if investment were generally stronger, both private and government that could push up real interest rates, I'm not sure we're on that path. Although in the United States, we are seeing, we're seeing full increase and I am going to get to that, I promise. But the other thing we've been talking about here today is the extraordinarily quick adoption of generative A I technology. I think Eric Brinson said earlier that most ways of technology take like 10 years before you start to see him in the productivity numbers. He thinks this one is going to be much faster. We've seen, we've heard lots of anecdotal evidence of huge productivity gains. If I studied my books correctly, way back then uh big increases in productivity could make a huge difference to all the things we're talking about growth, inflation, et cetera. Do you think we're on the verge of a, we've had disappointing productivity for the last decade? Are we on the verge of something significantly better? So I will say I'm not an expert in A I um from what I understand, as you just said, the progress in this area is unbelievably rapid and I think it could make a significant difference is an administration as a country. We're also working on a whole set of investments that should be productivity boosting over the medium term. We're addressing the problem of crumbling roads and highways and an infrastructure that really hasn't been appropriately appropriately designed for a modern economy. Um We have a huge, you know, we passed really a trifecta of legislation, the bipartisan infrastructure bill, the Chips and Semiconductor Act and then the Inflation Reduction Act. Um So we're investing in R and D um in ways we haven't in decades, uh restoring us leadership in science and technology. Um We, we have a huge program of incentives. So you're betting on a significant increase in productivity. Yes, but let me be careful because productivity growth usually 1/10 or two here or there is regarded as a big, a big thing. So I don't wanna pull numbers out of a hat that are gigantic. Um I think there will be a payoff, but I don't want to exaggerate it. So, so let's talk about the investment agenda. You, because you've focused on it, investment of infrastructure, obviously, that's important to the economy needs to happen. And kudos on making that happen, investment in R and D, we've seen how that pays off. We wouldn't, that's where the internet came from, right? Government R and D. But we're also doing something that in my career we've never done before, which is really a big move towards industrial policy. You know what the, what we're doing with semiconductors, what we're doing on batteries, what we're doing on, on solar, trying to recreate those industries in the United States. I guess my question for you is theoretically, I get the case for that, but that is not something we have much experience or skill at doing. We don't have the institutions to do it. We don't have a political system that can support it over the long term. I mean, we don't know what's going to happen in, in the next election. It could be an administration that's opposed to all those programs. So how can you give this group confidence that those things will work. So I believe, although throughout my career, it's not as though I've been a strong believer in industrial policy generally. I think if you look at the semiconductor industry and the way in which it's evolved globally over decades, what you see are enormous government interventions in virtually every country that plays a significant role and the United States has set back on its hands and allowed other countries to um through massive subsidies to um you know, really, really build their own capacity in semiconductors. And I think this is an issue where there are real national security concerns and there are technology spillovers and interactions that we're fooling ourselves. If we think that abandoning for all practical purposes, semiconductor manufacturing is a smart strategy for the United States. And how many areas like that are there? Mark Warner was on the stage earlier this morning and he was talking about a pretty big expansion from the ones I've already mentioned, he was talking about biotechnology mentioned several other categories. He thinks we have to get in this game in a big way. So you mentioned two and those are the two that I think we're focused on semiconductors in part because it's critical role, both national security and other technological developments that I think that's justified. And in the case of clean clean energy, um you know, partly I think we have developed a huge overdependence on China as a supplier in these areas and China has enormously subsidized its industry. We had a solar panel manufacturing industry in the United States that was essentially put out of business. Um You know, I maybe we'll talk about China. I'm not sure if that's where you want to go, but um I, I'm a believer that we should stay involved. Not, not just couple. Yes, I don't believe we should decouple at all from China. But I, I do think we have, we need to derisk in the sense that we have overdependence on China in areas that are critical to our national well being. And I think clean energy is among those. So um you know, this the subsidies, the tax subsidies in the Inflation reduction act, they provide huge incentives um both to do things in the United States to increase our own domestic capacity, by the way, creating really some good jobs, especially for people who've been losing out in this economy. People who don't have a college education, we've seen um $500 billion in uh manufacturing investments that have been announced because of these three, these three pieces of by people who are in this room today. So we II I wanna open this up. Uh I don't want, I have a lot of questions, but I don't want to monopolize your time if other people are out there who, who have questions here? We have one right here, please. Uh Riley mccormack. Um How concerned are you about the return of the bond vigilantes and the market dictating your borrowing rate versus the fed? Well, I, I mean, I take it that markets um de determine uh bond bond rates. Um The bond vigilantes I think I first came in um heard that term back in the early 19 nineties when inflation was high and uh interest rates were, were moving up in 94 and 95 and, um, nominal, you know, 10 year yields kept rising higher and higher. Suggesting that the Fed's work wasn't done and they weren't doing enough. And the concern was the bond bond markets were, uh, driving the Fed's behavior and that they would, uh, continue pushing the Fed, um, to the point where the economy would fall into a recession. I don't honestly think that that's the case. Now, I think the markets are trying to figure out what is, what is the fed and other central banks going to need to do to make sure that inflation stays low. I don't want to comment from my current perch on the details of monetary policy. But you know, I think, I think we'll see, some people have been surprised that the US economy has shown so much resilience. Consumer spending remains strong. Investment spending is solid housing is usually clopper by tight monetary policy and it has been, but it's stabilized and seems to be moving up. And so I think people are trying to figure out exactly what it's going to take to keep, keep inflation moving down. And the economic resilience that they see may suggest higher for longer, but we'll see and I think it's by no means a give and so last question and we can do this quickly. It's a yes or no kind of question. Uh uh Speaker mccarthy uh kept the shutdown from happening this weekend. He now stands to lose his position because of a group of renegades in his own party. Should the Democrats in the house, uh, help him keep his job? You know, I know it's a yes or no. I'm, I'm going to say neither, yes nor no. Um, uh, you know, it's for the Republicans and Democrats in the house to figure that out. Um, I'm pleased that they were able to keep the government up and running. Yes, we have a lot more to do. We have until mid November to pass appropriations bills or a continuing resolution. It's urgent that we, that Congress allocate funds for Ukraine that hasn't been done. That's really our focus exactly whether the speaker survives or who's, who's speaker and how that, how that happens. Uh I'm gonna leave it. Not the remit of the Secretary of the Treasury. No, it's not Janet Yellen. Thank you so much for being with. Bye.

Julie Sweet, Chair and CEO, Accenture
Moderator: Alan Murray, FORTUNE

CEO Initiative 2023: The Widening AI Skills Gap

So in a recent survey by accenture 79% of CEOS asked, said that the pace of technological innovation is a driving factor in their company's reinvention. In fact, they cited it as the biggest factor ranking it above shifting consumer preferences, inflationary pressures and talent shortages which seemed to be ongoing issues for us. So, uh but our next guest says business leaders need to take some key steps before implementing A I and one of those steps speaks directly to workforce re skilling and its benefits and the other is knowing exactly where your data is. So let's find out more about why those are important. One of those steps. Um So we have Julie Sweet who is chair and CEO of accenture, uh the global professional services company with more than 730,000 employees. That's enough to fill a city in Oregon. Uh But she's also one of the fortune's most powerful women, by the way, our new list is coming out soon. Um Julie joins Fortune Ceo Alan Murray for a conversation on the best practices for business leaders to help drive growth in a changing landscape. Please welcome them to the stage, Julie. Thank you so much for being here. Thank you. You know, we just heard from Eric again that this wave of, of technology change is different from previous waves in a couple of ways. One is it just moved into the enterprise much faster and you know, didn't hang around with consumers and then move in. And second, it's the first in my memory probably since the Manhattan project where the creators said things like this is going to be the best thing since sliced bread or it's going to be lights out for all of us. Jennifer referred to the fear of missing out versus the fear of getting in you. You talk to more CEO S probably than, than anybody. I know. Uh how are they balancing the fear of missing out versus the fear of getting in? What's, what's the calculus? Well, I was waiting backstage and kind of with bated breath to find out if my job was gonna be automated when Eric was saying CEO S. So I'm, I'm uh I'm glad that I still have a job for the near future. Uh It, it is definitely the topic of conversation with every CEO and uh uh last week I was with about 20 CEO S over the course of the week. It was a busy week. And uh what I would say coming out of those conversations is that there is universal agreement that there is more tech enabled reinvention ahead of us than there is behind us. And A I is certainly going to play a role. But for many, many CEO S gen A I is something they wanna look at and understand, but they have a lot of other things to do before they can actually use it at scale. So what do I mean by that? Um You cannot use gen A I, if you can access your data in general, you cannot access your data unless you're in the cloud. 40% of workloads are in the cloud today. That's a lot left. That's not many parts of businesses have to be enabled by other kinds of technology like modern er P or finance systems. And only about less than 50% of companies have put those systems in place and then you go to different parts of the business like manufacturing and supply chain and we call it the next digital frontier, which is a nice way of saying they're really behind, right? So you have three camps of CEO S, those who have, who are ahead are pretty digitally mature and they want to leapfrog and, and really take a leadership. You've got those who are kind of in between. So they wanna make some, you know, take some bets, but they've got a lot to do and then you have those who are very early who are saying, look, I can't spend a lot of time on that. Uh Even though I know it's coming. So you sound like this is going to be much slower than some people are saying it's going to take longer for it to make its way into the enterprise. I think the technology is going to move very fast in getting better, right? And you're gonna have enough companies that are using the technology to make that worthwhile. Uh I think that the excitement has gone ahead of the maturity of the technology and ahead of the maturity of a lot of enterprises, will this go faster than cloud? Absolutely. With one reason, I think why we spent a lot of years just trying to convince companies the cloud was safe. Do you remember those days? We had those conversations, Julie is the security in the cloud. OK. That took years of getting companies CEO S ready. This is very different, right? Yes, there's concern about responsibility and how to do it, but it is not a if it is a when and so a lot of the speed in the cloud wasn't about the technical maturity, it was about the culture, it was about, you know, really embracing and I think that's why this will go faster than prior waves, but you cannot skip over moving to the cloud and having your data before you can have A I of any kind be ubiquitous. You made a really interesting point when we were sitting at the table earlier about all there are concerns about data privacy, there are concerns about intellectual property concerns about hallucinations. But you said that for companies, if you clearly identify the use cases, it's pretty, pretty easy to figure out or not easy. But it's possible to figure out where the problems are and where they aren't and there's still tons of stuff you can do. Can you talk a little bit more about that? Sure. And what, what Alan isn't telling you is that I got a little frustrated because I think sometimes we get so focused on the problem areas which are really important and we need to have that discourse that we're forgetting that A I solves a lot of problems that are are not problematic in terms of data. So for example, safety, we're working with an oil and gas company. Safety is a big, big problem, an area of focus in any energy company and they're using gen A I on top of knowledge management to get safety concerns and actions to the hands of their field faster. That is not an issue of is the data bias, right? It is not an issue of um is there some you know, inappropriate use and there's not even a disruption issue in terms of jobs, right? That's just a classic use case of better use of data to get better actions. So I can go on and on on in the industrial sector, how much I can improve efficiency that will affect workers? So that's something we need to address. Um And so I think as a, as a company, this is why responsible A I matters because you wanna look at, you wanna have policies and you wanna say, what are the risks, things that touch human beings like hiring um uh any kind of assessment of performance, uh things that you're doing to, you know, with consumers that has a higher risk because you do need to make sure the data is inclusive and correct in other, you're not gonna have that set of issues. It's gonna be a lower risk and a different kind of monitoring. So I I'd love to open it up in just a minute because I know you all have lots of questions and this is an opportunity to ask Julie uh a a question without, without the meter ticking. You know, this is like free advice time. But, but before we get started, give me the general advice. What do you say to CEO S about how to begin this journey first education? Right? So I'm spending a lot of time with boards and leadership teams explaining A I and what it is and what it's not like. So we had the earlier conversation where people are saying, you know, doesn't give very good advice. It's not good at certain things. It you don't, you don't go to it for long term planning. Uh you know, have fun looking at what they say your strategy is, but they're just taking uh if you, especially if you're going out to the internet, it's just taking a bunch of things. It's not a strategic thinker for you. Um Common sense, not good. That is not a skill for it. Um Quantitative reasoning and once you first begin the, understand what it is, what it is not. And then how does it fit into the world of A I? There's lots of A II, I often will say use what you have, right? Because many of the organizations we work with are not using the A I they're already paying for. And there's a lot there that being said also understand where is the opportunity and make intentional bets. The one thing we don't want to do is remember the early days of digital and you woke up and there were 100 different proofs of concept in your organization. None of which scaled and they sometimes turn to companies like accenture like how did you let that happen? Well, we're not gonna let that happen. And so we're really clear this is about business outcomes. And when you do A I, you need to know what's the business outcome, what does it cost? Are there alternatives and be super intentional? One other thing before I open it up, you've, you've been a part of this organization, the A CEO initiative from the beginning and you particularly focused on the issue of training, like how do we make sure these waves of technology come through that we create training opportunities. So more people can equitably access the opportunities that are being created with the, with, with A I on the table. How do you think about that? How has that changed? What do you recommend? Um And what would you tell members of this group to do to accelerate uh training? Well, gen A I is a part of what, you know, we say every strategy leads to technology. And because that's true, it means that every person in your organization has to have a certain fluency around technology. So when I became the global ceo of accenture on September 1st 2019, literally, the first thing I did was I announced that something called TQ think that technology quo like IQ because even though we were a technology powerhouse, I said, are people in finance, are people in hr and all of our strategists need to understand basic technology. And so we started training everyone. It started with six, we now have 11 modules that we require. And I hold my top leaders accountable for getting at least 75% of our people through each year. So today we have 600,000 people trained in just the basic fundamentals of A I course. We started that in 2019. So gen A I is the most recent, but we've been talking about the importance of A I for transformation. For years. This year, we'll train 250,000 in the fundamentals of gen A I and use of it responsibly and how to use these tools. And over the course of three years, we'll go from 40,000 to 80,000 of deeply technical people around A I including gen A I. So as all organizations thinking about how you become a talent creator, so there's three basic things in talent. Can you access it? You have to be at your own talent creator doesn't mean you're gonna spend a billion dollars a year like we do. But that, you know, you have the ability to train your people and create talent because of so much change. And then finally, you're able to unlock that talent, talent so that they're working in an environment that thrives. So access being accessing talent, creating talent and unlocking that talent are the three plays you're gonna compete over the next decade. Uh Anyone have questions, comments, observations. Yes, right here, please. Oh, hi, I'm Joy, insight. Nice to see you both. Um Julie, how are you using it internally and what kind of productivity or customer outcome metrics or customer success metrics? Are you driving internally? And how are you doing that? And are you allocating budgets differently than you did last year or not? Sure. So big picture, we're investing $3 billion over three years in A I. So we announced that a while back. So a lot of our investment is gonna be going toward A I, we think of A I in three ways and it's actually pretty analogous to a lot of our clients. So for us, um it's around uh what our clients need. So we're investing to create solutions to help our clients use A I and gen A I in particular, then there's how we deliver our own services. So we're using it and experimenting right on how to do software development. Uh you know, how do you use it uh to make our manage services more effective. It's still early days. Remember, lots of this technology is not even generally available. And what we do is really complex. And so it's really different using um A I to build a website, we don't build a lot of websites. You don't pay me to build a website but to do like complex software development and integration. So we're doing it there and then we use it to run accenture and our priorities there are using it in ways that can help our clients. So for example, we have 730,000 people, we're using it right now in hr to answer questions and to sort of check, check out things at scale. The most important thing is that in each of these three areas, we have very tight governance on what is the ro I you know, how much does it cost? Do you know, do we have the right leadership and bandwidth? And so my chief strategy officer and my coo oversee the um the where we use it in our services and how we use it ourselves. And then in the business, our head of strategy and our head of technology oversee those bets. So very clear accountability so that we at accenture also don't end up with a lot of experimentation that doesn't have a return uh this question right here and then up here. So the last question really related to what I was going to ask, but I'll just rip on it a little bit in the bio pharmaceutical industry. You can see lots of great examples of how we can use this. For example, we've invested decades in developing chemical libraries of compounds that may have failed for toxicology. Now, we have an opportunity to look at those things, find out what's in common and maybe design around those things that cause negative side effects of compounds that otherwise look like they would have worked. The challenge of course is that data, we're very data rich, but it's in a bunch of systems that don't even talk to one another. So the question I was going to ask is, are you able to convince ceos that the cost of going and putting those systems and processes and data in place in order for A I to work, are people buying that? That's going to give them an roi fast enough to deal with the fact that we have constrained P Ken? It's a great point. And it's one of the biggest shifts. So if you wonder why most people don't have good data foundations today, it's because of the problem with RO I putting in a good data foundation is not inexpensive and it doesn't, you cannot pay as you go. So moving to the cloud was a pay as you go because you got an infrastructure cost reduction just by moving to the cloud. The clients we have today who are actually able to use A I were the ones that really said early on. We understand it's not pay as you go. But we know we've got to get the right data foundation. The big shift now is clients recognizing, OK, we're just gonna have to invest. And one of the things that we're doing is like I was just talking to a bank CEO recently and um they were saying, we, you know, we're constrained on budget and they said the one place you cannot stop is your data foundation because there are banks who are ahead and they're already moving to use A I and things like, you know, your customer and fraud. Uh And so that is a big shift that clients are understanding, they've got to spend the money. Uh We still are saying, but know where you're going, right? It's not all data is created equal in your organization, but it's a great point, Ken. And also, you know, one of the frustrations that I have when people are only talking about the negatives and they're being worries is that there's going to be a ton of productivity. We're going to do great things in businesses. Ultimately, gen A I is also going to be together with some other technologies like quantum create breakthroughs in medicine in material science. And it's important that those are not the near term, but they are in the medium and long term and they're going to be super important. So we as companies better act responsibly so that we don't have the backlash against the technology that's going to save lives and be important. You, you said earlier, shockingly, I thought that 90% of the people you asked, can you identify the person who is in charge of responsible A I? 90% of the of the ceos you talked to cannot answer that question. That is true today. And it is changing fast because boards are asking the questions and frankly, people just didn't know. I mean, in 2021 you know, we announced that we thought over the next decade, companies who would embrace total enterprise reinvention, which is using tech data and A I to continuously reinvent every part of the enterprise, we call them re inventors that that was the future. Well, two years in with A I, we're now starting to get more take up on that, right? Because people just didn't really understand the importance of A I and they were so focused on other parts of it. So I think it's going to change fast, but it is the starting point. Marjorie. Can you do it very, very quickly. We have one minute to do this very quickly. Thank you. Um I know that, um, you know, I'm a big believer in this. So my question more is on the human side and with all that you're seeing uh with companies and for yourself, how some people will have new jobs and they need to be trained for that, but some people will not be able to make it. And um I worry a lot about what we do to make this. Um, not a painful, I mean, it will be painful. But what do we do on the two things? First, we have to embrace change because change is coming. And second, we need to embrace that, that change is gonna have downsides face the downsides and then take responsibility as both the public and private sector to address it. There's no perfect answer. But if we do both embrace the change and embrace the downside and then work together, I think we'll be really successful. Julie Sweet. Thank you so much. Great to have you here.

Mark R. Warner, U.S. Senator, Commonwealth of Virginia
Interviewer: Alan Murray, Chief Executive Officer, FORTUNE

CEO Initiative 2023: Working Across the Aisle

Little. You CEO S are such a dour. Come on, good morning. That was good. All right, good to see you all. Welcome to the 2023 Fortune Ceo initiative. Honored to have all of you uh with us great group of minds in this room. I can tell, I'm glad you're here. Uh This is year seven of the Fortune Ceo initiative. It was started in the aftermath of our a, a historic Fortune Global forum at the Vatican in 2016 that some of you participated in. And after that, many of you said to us, you want a forum where you can exchange ideas, exchange best practices on how you maximize the positive social impact of your company as well as uh as the financial impact. Uh And I think we've done a lot in the last seven years have made a real difference in the debate. Obviously, the world has changed a lot in that time. Businesses have focused more on uh on social issues. There's been an explosion of commitments around climate. A lot happened in 2020 2021 around dia lot of people in this group, we're going to talk about it later today, have been personally involved in, in, in the training, the need to do a better job training, recreating the escalator of mobility in society. So uh I think a lot of good work has happened in this room and by you all and, and uh and really appreciate it. But of course, as you know, there's also been a backlash against the notion of businesses getting involved in, in uh social issues. And it's interesting this year to be here in Washington to see how that backlash is playing out. And also to have an opportunity to share ideas about what to do about it. How do you, how do you fight back? I think we're at an inflection point so much has happened. I've said this many times before, but I feel like having done this for 40 years, I've never seen a time where you all have so much coming at you. At the same time, we had the pandemic, which obviously had a profound impact on all of your businesses. But on top of that, we have a crazy technology revolution uh going at sort of an ever increasing velocity. We're going to talk about that today. Geopolitical convulsions, we do surveys that all of you participate in that show geopolitics has risen on everybody's consideration list an accelerating energy transition that affects many of you. And, and perhaps most importantly, a fundamental rethinking of what you do of what we do of the purpose of a corporation of how a corporation should, should be organized and how it should think about its goals. And also by the way, a fundamental rethinking of how we work, uh office work, we'll get into that a little bit today. I think all of us are struggling with the right answer to that. So a lot to talk about again, I think it's in it. It's uh by choice that we're here in Washington today. We're rolling into a presidential election. A lot of things are going to come onto the horizon. I have CEO S tell me uh uh almost every day. Please please keep me out of politics, but you can't stay out of politics. Politics is where a lot of these issues get adjudicated. So we're going to be talking about that today. Great lineup of speakers. Um Please remember that the reason we created the CEO initiative was not. So you could sit there and listen to people on stage, but so you could talk to each other. That's really the core of what we do. So we ask you to engage, uh uh please go to the uh breakout groups. That's where the most important conversations uh take place. Uh and ask questions, challenge ideas. You hear from the stage, we want you to be very much involved in the conversation. Um Some important Acknowledgments before we get going. First of all, the CEO initiative, co chairs, some are in the room some are backstage. Uh Fortune editor in chief Alison Chantel Alison. Are you here? I think she's backstage. Uh Fortune executive editor features Matt Heimer Boulevard co-founder and Ceo Rob Blake and uh uh pager duty chairperson and Ceo Jennifer Taha. Round of applause for the coach here. So he spent a lot of time, put a lot of effort into putting this, uh putting this program together. Um I also want to thank our sponsors. We couldn't do it without them. Uh, they include a ARP, uh, a light Bristol Myers Squibb and top applause for the sponsors too. We can't do this without him. A quick reminder about our reporting rules. What's said on stage or what's said in the round table sessions will be on the record. There are reporters here, both our reporters and from outside news organizations and all of that is on the record. What's set in conversations at your table or at the breaks, uh, of course, will not be on the record unless it's agreed to. Um, uh, so let's get started crazy few days in Washington. We certainly didn't know when we picked this state. Uh, uh, what we were getting ourselves into. Uh, we had a backup plan that, uh, the team kept going over about what we would do if the government was shut down. Several of our speakers said they wouldn't be able to make it if the government was shut down. So, it's, it's been a little bit wild. Um uh But I think it also gives us an opportunity to talk about the role of government and so many of the issues that all of you are involved in and care about. So, so for our first speaker, we have somebody who's been right at the center of all that craziness. Uh He is a democrat, but a democrat who understands business has run businesses, uh uh understands technology and looks at the world kind of like all of you do. Let me welcome him to the stage, Senator Mark Warner of Virginia. Thank you for being here. Thank you, Alan thinking back like when you were going through the litany of how you got here, how many of these sessions? I think the first time I came, saw Island was back in 2015 and I had a whole bunch of ideas around future of work and portable benefits. That's right. It happened. We still haven't made much progress on any of those, but you got a little distracted, got a little distracted. Do you have a nice weekend? I had a, let's put it like this. Uh was working late about 10 30 on Saturday night and it was a little weird. I had to go down to Virginia Beach, Hampton Roads the next day and when people were saying, oh, thank you, thank you. Thank you. And I go, we kept the government open for 45 days. Thank you. Ok, so you're you know, you've run businesses, the people in this room run businesses, explain to them why do we have to put up with this crap? I mean, why does this happen? Why do we have to play this same movie over and over and over again? Well, this one was, um, in my time here, uh, unique in that if we look back from a historical basis, the last couple of times there have been shutdowns, there's at least been the premise that there were two operating principles. You know, we had um you know, the battle over Obamacare, we had, I can't even remember why Trump called the shutdown in 18 19, but it kind of broke down one team versus the other. This was not that at all, this was, you know, you had the president, the Senate Republicans, the Senate Democrats, the House Democrats and the majority of the House Republicans all saying we don't want to shut it down and the, the kind of extreme crowd, they never could articulate what they wanted. And I have some empathy for the speaker because he kept saying, you know, you want this, you want that and they would never agree. And it ended up being, I mean, there was some crowd of this that just wanted to burn down the house. Um But the thing that was so remarkable to me, if you kind of step back from political scorekeeping, you know, the Democrats got more domestic spending than they expected. They got extraordinarily more uh on the uh disaster aid. The one thing where the pound of flesh was extracted was on aid for Ukraine. And yet if you take the house three days ago, four days ago, this was 330 members of the house voted to keep aid for Ukraine. 75% of the house. So you don't think it means that support for aid to Ukraine. I think it is, I think there is, it is diminishing in the Senate. There were over 80. I'm chairman of the Intelligence Committee. Um There could be nothing more worse timing and more stupid in my view in terms of cutting off aid for Ukraine at this moment in time, we have, you know, Russia has had 50% of its military capacity destroyed without the loss of a single American life or single NATO soldier. We have expanded our alliances in a way that's been unprecedented and yet they'll be questioning if we don't maintain and the absurdity of some of the members who say, well, we don't care about Russia and Ukraine, but I'm scared to death of China and Xi if you don't understand that Putin winning in Ukraine is a green light. She, you flunked Ge but they're, but they're, they're trying to put points on the, on the board, right? Say, oh, you know, uh uh uh if, if the Democrats had not passed mccarthy's plan, they would have said, oh, they want to send all the money to Ukraine but, but 10 days from now, 20 days from now, are we gonna work this out? I think we will. Ok. So there has been a challenge. Yes, there's also been a challenge. You know, there were $113 billion approved for Ukraine 62 in defense. We still have not got how much of that is left. It's somewhere between two and 62 and eight. I think we will get it done. You can't have 75% of both bodies realizing this is the moment for us to step up for democracy and walk away and not do it. So you'll figure out a way to do it. OK. So, but let's go back to the big issue, which is the dysfunction of our political system. I mean, you, you talk about the system being held hostage by a small group of people. There's an obvious answer to that, that I suspect the vast majority of people in this room would happily support. It's kind of how we got out of it, which is a bipartisan solution. Hey, there's sensible people in both parties come together and do what's right for people. That's what Kevin mccarthy did. Now, his party is going to try and kick him out of his job. Should Democrats support speaker mccarthy. I am. That's a yes or no question. You not. My first rodeo either ha to me, the house is a little bit crazy no matter who's in charge. And I can't decide right now whether we are seeing a play out of the Hunger Games or the Battle of The Kens from the Barbie movie. Um But I, yeah, but that is not answering the question. Of course, it's not, but it's not. What should happen is we should have a house that not on a one off basis. And both teams have been guilty of this actually say we're gonna put together majority coalitions that include people from both parties. It has been the informal rule of the house under Dems and Republicans alike. But if you can't win with only your party, you don't pass and you broke that with infrastructure. Well, listen on the Senate and let me just, you know, again, you know, these are, are one thing how center is like, that's the real enemies between the people say that jokingly. But if you, I mean, I know you guys, you know, think, oh gosh, you wanna throw a shoot at the TV. When the news comes on, I get inside the TV, sometimes. But, um, the truth is the last couple of years in the Senate have been the most productive since I've been there and it's all been bipartisan. If you look at infrastructure, if you look at, at the chips bill, if you look at frankly, most of the policies and the, the energy bill, frankly, if you go back to all the COVID stuff. There have been a gang, I joke that I work in the only place in America being a gang member is a good thing, but there's been the same eight or 10 of us that have been driving almost all of these policies. So is there a moment here to begin to create something like that in the house? Let me ask you again. Should the Democrats support Speaker mccarthy? It is all a question of how you would then run the house going forward if this is a one off or if there's going to be actually a circumstance when you've got a four vote margin between the house uh Ds and the House R's that maybe you ought to try to, you know, which one of the reasons I think keeping the 60 vote marks on things and some things in the Senate makes sense. You got to force that collaboration. Anything that can systemically move towards more. Count me in one of the reasons why I argue for, for you guys out here. I mean, I have a, I'm in the smallest minority in the Senate. I can actually read a balance sheet. Um But there are a group of us that are trying in minority in your party, but it's also on the Republican side as well. I'm not sure many can read a balance sheet these days, but there is a moment uh that many of you would probably disagree with. I think after the chips bill, the uh infrastructure bill and even some of the, you know, the energy junk um democrats realize you got to build stuff and that means you get regulatory reform. I think there was a new opening on the democratic side for engagement with the business community because let's face it. There was a crowd on the Republican side that is probably more, I gotta tell you it's a big business than then. We, we, we got a lot to talk about very little time and, but we could go down the road. We have to do this. 5 26. You think I can ignore the people backstage are, are, are tough on this. I don't have the privileges of Filibuster. Um uh Look, uh uh uh let's, let's talk about technology because that's something you're deeply involved in, deeply interested in. Uh There is a feeling among many people in the business community that we do need some kind of sensible regulation. But there's also a feeling that given what we just talked about sensible regulation is not something we're likely to get out of Washington. So how do you, how do you, how do you solve that puzzle? Let me give you the one minute perfect speed answer one is we have been Congress has been pathetic for almost a decade on putting any guard rails on social media. I think we all know that was a mistake. Looking back, number one, number two, as recently as six months ago, we put a broad bipartisan, half D's half R's idea about a framework on how you deal with technology from adversarial nations, China Russia at all called the um you know, frankly got blown out of the water when $100 million of tiktok bite dance financing took place. So I'm somewhat, you know, concerned are we going to get, get there on A I very briefly, I spent as much time I think as any member of Congress on this, I have a little bit of a technology background. I've never spent time on a subject where the more time spent doesn't translate into a better knowledge set or more assurance of, of where we are head. Um And I, I've never seen anything two points. I'm, I'm watching your clock. One is, I've never seen anything where the basic economics have so fundamentally changed. If we go way back in time to last November, it was gonna be scale, was gonna win. Who had the most data, the most, the most test that all changed when meta released Llama and countries like UAE could do this pennies on the dollar or you gonna attach your individual app to a large language model. I don't know, I don't think we will do holistic um A I regulation short term. I would argue there are two domains where the two domains that where A I could be the most disruptive tomorrow to any of your businesses and to society that could be disruption and losing faith in public elections and candidly losing faith in public markets. And if we can't find a way to put the capitalists together with the small d democrats to at least put guardrails around faith in our public elections and faith in our public markets. We're gonna, the modest radio that would at least put the guard rails in as the rest of the world races forward, maybe over the top. Ok, China in one in one minute, China in one minute. Uh uh look, we're, we're, we are engaging in industrial policy in a way that we haven't in my lifetime. Uh And there would have never been another chip facility built in America if we had not. So we had to do it. Where is will it work? Can it work? Well, the play out on how, whether it's, it's spent out correctly? Rubber hits the road. Um I spent a longer in technology than I have in politics. Uh Russia was a military and ideological threat. China is the kind of challenge we've never faced before. No nation state America has ever faced has been as investing as deeply in technology domains. My background is wireless, both wall running the table in five G and setting the standards was like a holy heck wake up call for me. Um National security in 2023 is not simply tanks and guns. It is technology domain dominance and China is a great nation and my beef is with the Communist Party and Xi Jinping and it is not with the Chinese people any time a policy maker or business leader doesn't make that clear. We make a mistake. There is a huge opportunity in the rest of the world right now where there's a lot of dissatisfied customers from Belt and Road for America and American business to engage in those nation states. I think we need the same kind of quasi industrial policy that we've done with chips, you know, synthetic biology and advanced energy smo in, in, in quantum computing, you go down domains, maybe not at the same dollar amount but not realizing that uh what China is doing in each of these domains and they are not playing for second place. And I can tell you uh from the, the intelligence standpoint, I'm chairman of the intelligence committee. Um even with and, and obviously, it's not a good sign when a co a country stops reporting data like they did on youth unemployment, but they are not stopping the $600 billion a year of intellectual property theft plus the level of domain investment. All right. Last question. Uh this, you're, this is a group of problem solvers. These are people who run businesses, they want to see things fixed. What can they do to help fix your problem here in Washington? They can hire people that know how to get to. Yes. Skip which party. I mean, there's a whole bunch of folks, guys and gals I work with that. They can tell you what they've been against. Um, but they can't tell you what they got done if all I did was run down my competition and never put out a good product. I wouldn't be in business very long and also don't come in with a fixed set that I'm simply one team or the other. Uh Yeah. Well, and there are a lot of this, I mean, the fact that now the challenge has been when we lose the Rob Portman and Mitt Romneys and Roy Blunt and Richard Burr, that makes it harder but reinforce those of us who can come to us and actually can't understand that this is, you know, technology is not gonna slow down. The rule is not gonna slow down. You're not gonna get rid of us. We're gonna be part of how you run your businesses. So let's make the best collaboration possible. Great advice, Senator Warner. Thank you so much. Next time, portable benefits, we'll, we'll do, we will do portable benefits. Thank you.

Arvind Krishna, Chief Executive Officer, IBM
Cristiano Amon, Chief Executive Officer, Qualcomm
Moderator: Polina Pompliano, Deputy Director, Live Events, FORTUNE; Founder, The Profile


CEO Initiative 2023: Navigating The New Frontiers Of Business And AI

I feel like every few years, Ai makes a splash but this time feels a little bit different. Can you share with us more about your organization and how it currently uses Ai Arvin? Happy look. A has been making a splash for 30 years. Every 10 years, it goes up, it goes down. We've had the winter of AI but this time is actually significantly different. You got to go to the underlying science. These technologies of large language models have fundamentally changed the cost economics of AI you can now while it takes a lot of infrastructure to get your base model on each incremental task is an evening or a weekend of work that is fundamentally different than 100 phds and six months of work. That's a really big difference. The multimodality is a different one. And I think that the use cases of which I'm sure we'll touch on. Many are across the fabric of almost everything we do, not just in tech companies but others. One tidbit in some of our hr transactional services mo people raises moving people, employment verification. We could do 90% efficiency using these technologies. So I'll leave you with that Tisa. Yes, look, um I, I agree with uh Ivin. I think A I has been with us for a while but there are a couple of things that really accelerating in the process. Um You know, the I think the A I revolution we see right now is is basically enabled by, by the development in three underlining technologies. I think computing performance, especially as semiconductors are increasing drama dramatically. You have the availability of data and you have broadband both wired as well as wireless. Combining those three things to create an environment that you actually can deploy A I very pervasively. And I I think we are at a moment that uh we're going to see fundamental changes in actually in user behavior, both a consumer and the enterprise. You know, I like to use this example, like I want to say this could be could be as powerful as one day you have your future phone and then you saw this thing called the smartphone. And you said, well, this is great, this is new and I I think that's probably that order of magnitude change when you think about um changing user experience. But also if you don't want to believe in that, it's almost like the underlining technology of GP F. And then all of a sudden you saw something like Uber as a very interesting application that was enabled by it. I think that's how this thing is going to develop and it's going to accelerate very fast to your question about using A I. We've been using A I for a number of years. I think uh just provide us integrated into the integrated in how we develop our products. I'll give you some examples when we develop our five G modem. Now, a significant percentage of development is using A I just processing a lot of data and helping us develop our modem. We do that for image signal processes for a camera and even gen A I we've been utilizing internally. We have developed our our ability to engineers, consulting documentation, remembering documentation. We've been using GA I to do this with precision and I think the applications is going to continue to expand actually as a company, we started uh to be using uh some of the Microsoft co pilot as well. And we have seen significant gains of productivity and avid you've written pieces uh and talked about how A I will affect white collar jobs. First. Can you explain this a bit more and how you claim that it will help workers instead of displacing them? Absolutely. Look if you look at where all of these technologies can be deployed and you look at it through automation. The first thing you can automate is a repetitive white collar job. People often confuse blue collar work. Blue collar work has had the attacks from robotics and automation, but it's white collar work that will get displaced and I'm using the word displaced, but only for the lower level task. That means for the majority of people, it's a productivity augmentation. It's sitting with them. It's not really replacing the whole human because nobody has 100% of that repetitive work. Now for the 10 20% it does. There is also going to be 30% new work that is created the same way Khan, I used the example of smartphone, I'll use the internet in 1995. Nobody thought there'd be 5 million web designers. There are dito there are going to be people who are going to come into new roles with the advent of generative A I and large language models. Second, I think that the the issue is different in the global south versus developed countries in developed countries. We have a shortage of labor, not a, not a, not a abundance of labor. So we need these technologies just in order to keep our quality of life and the GDP growth going on. Then in the other places as you begin to have more and more customer service, customer experience, the number of roles in those jobs is going to increase. Not to even touch on what the last panel was talking about in health care where the number of workers needed is going to only increase as aging goes on in all societies. So I do think that there will be 10 to 20% displacement in some white collar jobs more than made up by the increase. So we talk about our programmers getting 30% more productive. I don't intend to get rid of a single one if I'll get more because that makes the task of making things that are using more software more productive. That means you can make more of them because they can get more of a market. So that is why people mistake productivity with job displacement. It's not job displacement. It actually makes it more attractive to have those roles. Have you made any changes to departments within IBM? Because of this? Absolutely, we have decreased in certain back office functions and we have increased in more value creating activities. Can you give an example? Yes, I began by saying in our human resources function, a few 100 people were no longer needed in the back office. That is a journey that takes 3 to 4 years. It's not a big bang on one day, but over 3 to 4 years that went away the number of people in uh software delivery and in uh client facing sales went up because we could have more attractive offerings in those areas. And by the way, the increase I think was like 8000, the decrease was like 800. So just to be clear, I mean, as you get more productive, generally people invest more. That's the fundamental issue in business. Yeah, I'll come to you guys with questions if you have one, please raise your hand. We'll get a mic there. Um In one minute Cristiano, you have said that in order for generative A I to really scale and get into people's homes, it cannot all happen on the cloud. It has to happen on the device itself. Can you explain that a bit more? Absolutely. Actually, I would like to spend a little bit of time on this because um this uh it's intuitive like when you look at, for example, especially chat C BT um made uh gen A I very popular and everybody understand it and it's intuitive. You think you go to a cloud and you do a search and, and you get results, but the reality is you should think about A I a little bit different A I is going to develop in a particular way in the cloud, but it's going to develop on devices a little bit different as a new form of computing. Think about anything that requires real time latency, you need a response right away or you need to know the context that you inserted or you have the ability uh you want to protect the data with privacy, then you're gonna have A I running pervasively on the devices and I'll give an example. So I'm going to go back and talk about phones, but I can talk about phones, you know P CS and cars, but phones, it's, we used to have when you look at your smartphone today, you have a computing platform, you have an OS you have applications and then you have the human and the human go and touch his different apps and get data from one app to the other. Now, think about this GE I running and understanding everything that you're doing on the phone and running pervasively and try to predict your every action you take. So then all of a sudden you have the ability to have the co pilot for everything you do. For example, you and I could be texting it something very common with of our phones. I can tell you about my vacation somewhere immediately. The phone can bring my gallery app, identify the pictures from the vacation, ask if I want to share with you or we talk about getting together, bring the calendar app, talks about availability. So think about a co pilot of everything and those things are running pervasively. But then you have some interesting consumer applications as well that happens on the device. Like you take a picture of your phone probably multiple times a day. You take a picture. I said I don't want, I don't want Irwin in this picture. I want to delete him. I want to change the background from this room to Venice and, and then you send it to somebody else. And I think you're going to do this by running many models now on a PC. You think about the use of productivity and, and think about the co pilot exercise and you can do a lot of those things running that on the device based on your data. The car is the one that I'm super excited about because natural language communication is perfect user interface when you are behind the wheel, especially when you think about uh navigation something as simple as I'm going from A to B. But there are so many other things that you want to do or you have done or is in your agenda and the gen A I will be able to plan your trip based on that. So the way I see it is we are seeing two parallel developments happening just because you now have the computing power data and you have broadband, you have seen the development of that in the cloud and you've seen that development on device and they have a point that they intersect, they intersect when you can run models from the cloud in the device. If a model is very well trained. And that's one of the things we have been doing, we of show running billion parameter models running on a phone, we're going to multiple tens of billion parameters and phones and P CS and cars. When you have that model well trained, you have the ability to take advantage of the distributing computer that exists in everybody's devices and, and that's a massive amount of computing power and it saves a lot of cost actually on the cloud. So we're seeing that application as well. Sorry for the long answer, but we're very passionate about this, but there's a whole A I on device coming. Awesome. Do we have any questions? Yes. Sorry. How are you changing? How you are recruiting um for people as you look five years down, 10 years down the road. And how do you think the university should change its curriculum to meet this new A I era? I'll jump in first. I don't think that people, there is inventing A I and there is using A I for using A I. The number of people with skills is massive. We just have to give them a little bit of training on how to use it and deploy it. So there, I think people with skills across the social sciences, across the hard sciences, engineering, they applicable. Inventing A I is where you have a poet of skills today. And that is the classic, either hard physics or computer science or math training. That is typically there. But inventing A I, you need thousands of people in the country, not hundreds of thousands, thousands using A I, we need millions. And I think that a lot more attention ought to be on the using as opposed to inventing I think for universities, I will tell you that uh training people on this the same way as software engineering became a discipline 15 years after the fact, maybe universities should jump in hard in terms of training people on how to use A I and also make them aware of what are the risks on A I. That is something which I think a lot more has to be taught on, maybe just to add one thing to that. And uh when we talk about the many different benefits of A I, one thing that if you democratize A I, it has an incredible powerful um ability to accelerate training and actually to distribute knowledge to the point that you can have workers that otherwise will not be able to be qualified to do certain tasks, be able to do it with the copilot with them. So, and I think that's another interesting aspect of this transition. Any other questions? OK. Um You are both kind of very massive global companies and in a more global context. How do you see China positioning itself in the A I landscape? And, and what impact does do China's A I capability have on competition or your company, Irvin? Well, look, um I wish that there was more peace and global trade. So I'll begin with a basic statement there. I kind of agree with what Senator Warner said about. Let's separate the politics from the, from the nation. Now, all that said China has advanced in A I, let's not make any illusions around that. Their ability to use large private data sets, their ability for the government to push forward on certain use cases are probably not use cases that we are going to push forward here. Now, unfortunately, as this more of a tech war there is going to be more and more development that is splintered across the two nations. In terms of these use cases, China is not going to sit still in terms of what's happening on five G and six G as well as on the intersection of AI and quantum and all those those are going to happen. Now, I'm going to sound a little bit contrarian. I actually believe when I look at it right now that at the fundamental advanced level, the US is ahead. How much ahead we can debate? Is it six months ahead or two years ahead? But the fact that chart GPT came out here got copied than six months. The fact that generative AI came out of places like Stanford and MIT and Google and Facebook is a fact that I think we should all take pride in how much longer we can maintain that lead is an interesting question by the one thing I want to jump in on Christian. I mentioned chip design over 3/4 of the work in the chip designs that IBM does is done by A I today using some of the same technologies that Christian's team does. And those chip design tool companies are also based here in the United States largely. Yeah, maybe. Oh I add one thing a I it's a very pervasive technology that is going to be part of many, many industries. So as a result, I think as industries evolve, regardless where they are, uh you're gonna see more and more of a role of A I look um from a technology standpoint, um it just focus on the technology, not the politics aspect, you know, uh technology seems very uh it is difficult for the technology to see boundaries, especially because the world became much smaller and we are in a very global interconnected economy. I think you have industries that have some point of interconnection and you see A I coming in different ways. Now there's different ways to talk about A I, you can have, for example, A I that you probably already have it in your phone when you take a picture at night and all of a sudden the picture looks very bright like in daylight. The A I figuring out this is the sky should be blue, this is a tree should be green, it's already happening. It's very different and for you to have massive ability of doing training on different models. So I think there's different type of applications, I think it will be very difficult, I think to be able to have a blank statement on uh where A I is going to go and how to regulate that. But the most important thing I think in this whole conversation is what Ivin alluded to. Uh you know, the the United States has a significant lead in semiconductors. I think we often talk about the fact that we wish we have more semiconductor manufacturing in the country. We we don't have as much as we need on manufacturing, but on design, the majority of the global leaders on chip designs are American companies and A I. It's going to require a number of industries that the US as a leadership. So the most important thing we can do is to make sure the US remains the number one place to attract talent because there's some finite number of individuals that can help create a is on those technologies that we have the ability to remain competitive and we maintain our innovation engine which creates that leadership position in the first place. Perfect and note to end on. Thank you, gentlemen, so much. Thank you so much.

Todd Young, U.S. Senator, Indiana Interviewer: Matt Heimer, Executive Editor, Features, FORTUNE

CEO Initiative 2023: The Policies And Opportunities of AI

I mean, welcome to the big screen uh fairly shortly. Uh Senator Todd Young of Indiana, uh We'll get him on there as soon as we can. Uh just want to remind you all that basically, uh we, this is still a dialogue uh even though the senator couldn't be with us in person. So uh if you have a question, raise your hand, raise a paddle, we'll get somebody to you with a microphone as soon as they can. And uh now he has joined us, please welcome to the screen. Uh Senator Todd Young, it is Senator. Thank you so much for being with us today. We're so lucky to have you. Um As you know, the CEO initiative is this gathering of business leaders and business decision makers. And I think at this point, almost a year after the introduction of chat GPT, uh everybody in this room has both an A I fantasy kind of their best case scenario and an A I nightmare of what could go wrong as we roll out this technology. So, Senator Young, what is your A I nightmare. Bye. Well, thank you, Matt. Uh Thanks for having me on it. It's great to visit with everyone. Sorry, I can't be in person, but I do have an A I nightmare and, and uh it, I'm sorry, I'm getting an echo. So I'll just work through that. It relates to uh the democratization of terror. Uh And, and uh you know, that would be the ability for non state actors uh or, or malign governments or, or just somebody in their basement somewhere in the world to cook up a biological weapon. So that's uh I volunteered to you, my, my biggest concern, I don't however want that to overshadow what I envisage as just incredible upside opportunity, economic, social, um uh health, uh and on and on and, and so what, what we're trying to do is mitigate these, these risks. And there's a handful of them that I think send shivers down our spines when we hear about them so that we can continue to innovate. And uh we can all realize that the upside benefits. So, in that mix on that spectrum between the upside and the, and the worst case, what are the right places for the federal government to put a thumb on the scale or to intervene? How much to do? How little, what's the, what's the, what's the sweet spot in your mind? Well, right now, I think it's important to emphasize we're in the process of educating ourselves through a series of A I insight forums that uh Senator Schumer and I Senator Mike rounds and, and Martin Heinrich have convened to educate ourselves uh visiting with the world's best minds on, on artificial intelligence and to educate the rest of our colleagues so that we're prepared to intelligently answer that question and others and, and to make sure we get this right with that said, um It's pretty clear to me that most of the, the fears um in the, in the upside uh opportunities. Uh We, we have won't require new laws uh to address the fears and to harness the opportunities. Instead, the challenge will be to adopt existing laws, existing prohibitions, existing rules of the road to an A I enabled world. Sometimes sometimes that will mean filling some gaps in our existing statute. But oftentimes, it will just be a task of the, of the executive branch to draft new rules or, or new regulations in a given area that in turn, as you might imagine, uh will require us to think very differently about our human resources uh all throughout government. So what's an example of a place where you can see that kind of uh that incremental approach, having a big effect and a big positive effect. Uh drug development. This is actually an agency of government that um based on visit with a number of constituents and others. The FDA is, is certainly not perfect, but they're doing a pretty good job of, of upskilling their workforce uh recruiting, uh who they need to recruit to be able to dialogue uh with innovators, entrepreneurs, researchers and um and, and, and sort of bring that agency into an A I enabled world artificial Intelligence is increasingly important to uh our pharmaceutical manufacturers and, and the rapid development of new treatments. And um so that's, that's one agency we can learn from another is Treasury Treasury. Uh Also, uh you know, has, has expertise with within that agency, they've had some measure of success in retaining that expertise over a period of time. So we can learn from these agencies. We're gonna need it in the USDA. We will need uh more expertise in dod really when you go run, run through the various regulatory agencies we have in government. Uh we, we're going to have to rethink uh staffing for the 21st century. So it sounds like you're looking at a I, not only as something external to government, the government is going to have to respond to but as sort of an enhancer, something that makes government itself more efficient, which is kind of an interesting take. It's, you know, so much of the, of the debate in Congress and we saw it this weekend with the near shutdown comes to, you know, is government wasteful, is government doing too much? This is, this sounds like a chance to let government do less with more. Am I hearing you right on that or more with less? I should say this won't just be an exercise in, in reinventing government, so to speak. Uh We are going to need people within government who can figure out how to apply. Let's take civil rights laws as an example. When someone applies for a credit mortgage application, uh they uh are under the firm belief that in this country, once race or ethnicity will not be uh a negative. Uh When they apply for that credit, that law is going to have to apply to the algorithms to the artificial intelligence algorithms that we are increasingly seeing coming online. How how can our regulators make sure that a new algorithm uh is compliant? Well, they will need people within the regulatory agencies who can interact with industry uh to discuss how to best regulate. Um and, and so that requires a level of expertise, not just in industry but uh within government. So that's, that's one narrow but very important example of how government is going to have to up its game, so to speak, uh to uh adapt to this new challenge. It sounds like that requires, oh, forgive me for interrupting, but it sounds like that requires a certain amount of uh requirement if you will of transparency from the private sector, from leaders like this, about how they're using A I. And there have been a lot of concerns about different A I models not being transparent enough. I know European Union is a little bit ahead of us and having passed some regulations. Around uh around this, you know, within that framework. Are you seeing any models that you feel like you and your colleagues in Congress could, could draw from, could learn from. Yeah, every, every country or in this case region will have to adopt its its own approaches. Um The feedback I I will often receive from members of the business community and, and uh others is that the European Union adopted a model, you know, that that was pretty predictable, pretty consistent with their regulatory and, and legal culture and the United States, I think will adopt likely a more risk based approach. So um less heavy handed in areas which are of, of uh perhaps uh you know, uh lesser societal concern. Uh and then uh in those areas uh that rise to a greater level of, of concern or, or uh impact, there may be less, there may be less um acceptance of air uh and therefore the legal structures will be greater. So that would be a risk based approach. And um I think that that will likely be our load star uh when we finally get down to drafting uh you know, legislation in Congress and, and uh regulating uh the industry so that our innovators can go out there and, and continue to innovate and lead the world in developing A I technologies. Speaking of the innovators, you mentioned the A I insight forum, you had the first one of those, just a few weeks ago here in DC, uh Elon Musk, is there Mark Zuckerberg, Sam Altman from open A I. Um What uh what if anything did you and your colleagues take away from those conversations that uh changed your thinking or added to your thinking in, in meaningful ways? Number one, everyone in attendance at that first A I insight uh forum thought that government had an important role to play uh that, that government should be uh coming up with a regulatory structure to provide some guidance to and certainty to uh our, our developers, uh our investors and uh researchers and so forth. Um The other point of emphasis was on this risk based approach. Uh You know, let's let's try and adopt this flexible model as we can uh to regulation. Uh which means to the extent we are uncertain about how to address a particular challenge right now. And perhaps it's transparency. Uh uh For example, um then, then, you know, there, there's still time, not everything has to be done uh uh Initially. Uh But I think it's, it's fair to say just about everyone in attendance with a couple of exceptions, really emphasize the importance of not unduly constraining our innovative potential in the United States. Uh so that we can continue to, to lead the world and ideally uh to embed within next generation Artificial Intelligence technologies, our own values, our own values around bias around transparency um and explain and, and related challenges privacy on the subject of our values, which is such a great point. Uh Your colleague, Mark Warner was here about an hour ago, speaking with my colleague, Alan Alan Murray and he made the point, you know, he basically said if, if the, if we do nothing else in the short run, we should be stepping in to protect essentially faith in our elections and faith in our faith in public elections and faith in public markets. Um I know bipartisanship can be elusive, but do you feel like that's an arena where you're all aligned? Do you think that's attainable in the, in the near future? I'm on board? We'll start with that. But I, I think most members as I speak to most members of the United States Senate, um they embrace the idea that uh there, there are some fairly obvious sort of rifle shot uh legislative initiatives that we're just going to have to tackle regardless of what sort of uh political dynamics might intervene as we head into the next year. Uh I think one of those is, is clearly elections um in terms of markets, uh that can mean a lot of things. So III I would be interested what precisely uh Mark has in mind there. But um we do seem to be gravitating around certain, you know, obvious things. Uh but I would start with elections. This is something that both Mark and, and um Amy Klobuchar have have showed a lot of leadership on. Well, it's great to hear at a time when bipartisanship can be elusive. It's great to hear about some areas where, where you are finding agreement. Um, Senator Young, I'm afraid we've, we've come to the end of our time, but we're so grateful to you for joining us on the feed and, and speaking to this group and, and we wish you luck in this really difficult job. Thanks so much for being with us.

Erik Brynjolfsson, Jerry Yang and Akiko Yamazaki Professor and Senior Fellow, Stanford Institute for Human-Centered AI (HAI) Julie Sweet, Chair and CEO, Accenture Hemant Taneja, CEO and Managing Director, General Catalyst Moderator: Jennifer Tejada, Chairperson and CEO, PagerDuty

CEO Initiative 2023: Where Do We Start, Pause, Or Stop With AI

Erik Brynjolfsson, Stanford Institute for Human-Centered AI (HAI) Julie Sweet, Accenture, Hemant Taneja, General Catalyst, Jennifer Tejada,  PagerDuty

Erik Brynjolfsson, Jerry Yang and Akiko Yamazaki Professor and Senior Fellow, Stanford Institute for Human-Centered AI (HAI)

CEO Initiative 2023: The AI-Powered Productivity Boom

Hello, hello. Hello, welcome back. So we want to continue talking about A I because what else have we been talking about all day? So right now, uh let's dive further into the impact of A I and LL MS or large language models on productivity and what it means for workers. Eric Brisson. Great Icelandic name is a professor and senior fellow at the Stanford Institute for Human Centered A I where he directs the digital economy lab, Eric led a study on A I and worker productivity and the results show that A I tools like chatbots helped boost productivity by 14% among those organizations queried. And he recently said something pretty profound. Actually, he said it this morning regarding the implementation of A I and how it relates to humanity. If we play our cards, right, the next decade could be some of the best 10 years ever in human history. And I think after the last few years, we could use a few really good years. So let's hope he's right. Um We were fortunate to have Eric participate as one of the discussion leaders at the town hall this afternoon and he joins us again to share his research on bridging the gap between human capabilities and this emerging technology. And after Eric's presentation, I'll be back to join him for a couple of minutes to take your questions. So get them ready. Now, let's please welcome Eric to the stage. Good afternoon. It's great to be here. This is an amazing time in history and this is an amazing group to be interacting with the full quote from Phil. By the way, was if we play our cards, right, the next 10 years could be the best ones ever in history. But if we mess up, it could be the worst. So I just want to get both sides of that down there. I've seen some people quote one half or the other half. I'm actually mostly on the optimistic side. I think it will turn out well because we can, we can, we can do this and I'm putting my money where my mouth is. I am actually, let's see if I can click there. I've actually made a bet with Bob Gordon who's a famous economist, written some great books, but a little bit of a pessimist when it comes to the future of productivity. So we, he's a friend of mine, we have dinner from time to time, but we disagree about the future and we decided to make a long bet so you can go there and weigh in. This was actually made a couple of years ago and at the time, the bureau, the Congressional Budget Office was predicting 1.4% productivity growth. I think it's so I was willing to say it's going to be more than that 1.8%. He said it was going to be less than that. I've updated since then because of generative ai I think actually I was lowballing it back then. I'm up to like 3% productivity growth now more than doubling what the congressional budget office was. And it's because of the power of these technologies. And you heard a little bit about the studies we've been doing. This is not just hypothetical, this is us going in and looking at particular companies that are implementing the technology and already seeing some big productivity gains comes from some core technological improvements that go back about a decade when Jeff Hinton and other colleagues introduced deep learning techniques. And so you can see here this blue line of the rapid improvement in machine vision, recognizing images on image net. But there are dozens of other things that it's just if anything, the pace is accelerating where they are matching or surpassing human level performance in activity, active activity, active activity. And if you're a CEO or entrepreneur or manager and you have two ways of solving a job, one of which is now better and cheaper than the other, you're going to start changing around or you should be changing around the way you do your work. We're seeing companies do that one that I studied in quite some depth that Phil briefly mentioned was a study of call centers where a company called Cresta introduced a tool, a large language based tool to help the operators. It didn't try to replace them. I think we're all, we know it's not quite there yet where it just replaces them. It gets, can be kind of annoying talking to a bot but it, it, it they did an A B test, there was a Stanford team that started the company, so they're into these A B tests. And so you could see that the people who got access to the technology were about 14% more productive within about two or three months. It happened very quickly. But actually, it was more than that the least experienced workers, the newest workers and the least skilled workers had about a 35% productivity improvement, the most experienced workers, it was almost zero. So it's quite a gradient there. In terms of who benefited the most. You can see it, I can show you lots of fancy regression tables and statistics, but you can just see it in the raw data. It's always good when your results are clear enough, you can just see them without having to do any, any econometrics or anything. This is an example of a set of technologies that are affecting lots of different applications, any place where you've got a bunch of digital data for inputs and digital data for outputs, you can do a mapping now from inputs to outputs. It used to be that we humans had to figure out the relationships and those of you who have coded, you know, that you have to be very precise when you do coding and know exactly what you're doing. There's a new kind of way of doing software. Some people call it software 2.0 where we show the machines, the inputs and outputs and the machines figure out the relationships, machine learning. This is so much more powerful and it opens up a lot of capabilities in areas like, you know, the tacit knowledge really that we all have about whether it's how to ride a bike or tie your shoe or recognize your mother, that it would be very hard to codify in a set of, you know, Python rules. But you can have examples and the machine will figure that out. And this is opening up a whole set of things in companies that previously could not be done a lot of organizational knowledge. It's one of the reasons why that call center works so well. The machine looked at literally millions of transcripts and you could see some of them led to happy customer outcomes and some of them not so happy customer outcomes. And it identified what are the common patterns? How do you solve? How do you answer this particular question? That question? What kind of tone of voice should you be using? What words work better and not. And by looking at these millions of data points, it captured the tacit knowledge of the best operators and transmitted it to the less skilled operators. And very quickly got that productivity improvement. By the way, it wasn't just a productivity improvement. We also saw an improvement in customer satisfaction and quality. If you looked at the sentiment analysis, the number of happy words versus angry words, the customers were using a lot more happy words after they were working with the system. So they enjoyed it better and even the workers seem to be better off. There was significantly less turnover, they stayed in the job a lot longer. So it was a win across all those dimensions. There are a lot of other studies that find comparable results now in software coding in email and in customer service applications. So we're beginning to see a lot of evidence piling up that this is a very powerful tool. As I said at lunch, the most general of all general purpose technologies, especially these foundation models or generative AI. And here's some data showing how they can perform on lots of different tests. For instance, over here, you could look at say the uniform bar exam, GPT 3.5 scored about a 10% GPT four scored about a 90% better than most humans on that. Now, that's not the same as actually doing legal work, but it's a good indicator of some of the rapid improvements. And as I'm sure, you know, GP T five is being trained and would be coming out. And not that long after that, probably GP T six, not to mention Gemini and uh Anthropic Clad and all the other tools that are coming out. So which applications are most suitable for machine learning? Well, this is a question I've been working on for quite a while. I wrote a paper in the journal Science a little while back and we looked at which kinds of tasks we'd be most effective. What we did was we took every occupation in the economy. About 950 of them, like ceo professor, radiologist, primary school teacher, truck driver, and each of them, you can break down into a set of tasks, say 20 to 3 tasks for most jobs. And then we scored every one of those tasks, 18,000 of them as to whether or not machine learning could help you with that task. Once we did that, we rolled it back up to the company level. So you can develop an actionable road map for generative ai earlier at lunch, I asked how many of you had a road map and most of you did. Not hardly any of you did, but since I moved from MIT to Stanford, I decided to start a company. Apparently that's the norm when you come to the bay area. And so we do have a company called Wikileaks that takes this research from science and nature and makes it accessible. And I'll just show you a couple of screenshots of how it works. Basically, here's an analysis of one relatively small company that has about a $35 million opportunity. Almost more than half the workforce has some activities that could be at least 100% improvement in productivity by using generative AI. Here are the top five marketing manager, software developer, pr specialist of this company. If you double click on marketing manager, you can see some of the tasks that Gen Ai could help with them, initiate market reach research studies. You could click on that and you an indication that you probably can't read it too well, but it gives pointers to specific tools, particular activities. So this is a first start. I wouldn't just use it without any human intervention. But if you're a CEO and your board is asking you, you know, what is our game plan for generative AI? This is a tool that helps with that, that first draft of that and identifies what the low hanging fruit is. What the biggest opportunities are that you may want to go after as you do that. So even your boards themselves can get generative ai help. It's every task that I decided to ask GPT before I came up here, whether or not what, what questions boards should be asking their ceos. So it came up with a list of questions for all of them as well. So you can share that with your board if you'd like to learn more about any of this. It's on my website at Stanford, you can download all the papers that I made reference to. Um You can also go to the company work Helix for examples of the software or my own personal website. Has a lot of my own research as well. But I'm hoping that you all are leaning in and embracing this opportunity with generative ai I think it's the real deal. I think it's probably the most important technology of my lifetime. And sometimes when I'm feeling grandiose, maybe the most important technology of all of history. Thanks very much. So I tried to leave about a few minutes for questions or Phil. I don't know if you have questions. I do. I do. Thank you, Eric. Um So let me ask you a self-interest question. Um Say you have somebody who is a little bit older um still about 25 years away from retirement is starting to get into that phase of life where new things are a hassle. This is all in theory, of course, does such a person benefit uh more or less from A I and all its promise than a young, a newbie coming up in the professional world. Well, what we're seeing sadly is that for some people, I guess is that that young people are benefiting disproportionately in the studies we did when we did those A P tests, we looked at the demographics and there does seem to be a noticeable measurable gradient where younger people are getting bigger benefits. I mentioned briefly the less experienced workers at the call center people found similar results for coders and for other kinds of writers that said, you know, hope is not lost. I think there's this is a technology that doesn't require a lot of like new training. You don't have to learn a new programming language, you communicate it with it. In English also, as the technology helps with one set of tasks, there's a whole lot of other tasks that now are not being helped by the technology that may be more important. And Julie Sweet mentioned those earlier things like planning, quantitative analysis, a lot of interpersonal skills that other people might have a disproportionate advantage with as well. Are there any questions from the? OK, let's go over here. Oh, hi, Stefan Ch with a light. Um I love the scorecard and the obvious ones are software engineers and so on. But you mentioned the word CEO and scorecard. So any lessons learned for the role, this is one of my biggest surprises because you know, I've been working with the technology for a long time and I used to have this very set under standing. If you look at my book, Second Machine Age, I kind of had a hierarchy of tasks and you know, less skilled, more routine work tended to be the first to be automated. I was surprised with gender I that a lot of very professional workers and even ceos creative workers, you know, about the writers' strike, these tools can be incredibly helpful for them. A friend of mine is a CEO and he was talking about a board meeting he had to prepare for and he was just like having trouble coming up with what do you call them KPIS, you know, for, for, for the next quarter of what he wanted to, you know, to do. And he had his team help him a little bit. And then he turned to chat GPT and he described his company, you can put in some context and it came up with his great list and he said like eight of the 10 that it came up with were like spot on. And I think it's a little spooky actually that, that the kinds of jobs are being affected. I want to stress though that in none of these examples, would I just turn the keys over to one of these machines? It's always a matter of keeping the human in the loop and knowing which of those eight of the 10-K PS are the ones that you probably want to keep and the others that may be a little screwy. I think everyone's heard about hallucination and some of the other problems that these tools can create uh in our uh last minute. Unless there's a question, the audience, um you know, not everybody is all that excited about tech and, and white collar workers. So let's say because there's a couple of retailers in the room, you're somebody who works in a store and really likes that and doesn't want to be bogged down by technology. How does A I help somebody who's working on a sales floor or who's stocking shelves? Yeah. Well, so one of the things that I'm excited about this technology is that as I mentioned, it doesn't require seem to require the same level of training and specialized skills to some of the earlier ways. So I think we heard that chat GPT went from 0 to 100 million users in a couple of months and that's because most of us can just type in English and, and, you know, pretty much everybody has some of those basic skills. Now you can get better at it and better at prompt engineering. Um The thing that's lagging a little bit is on the physical work side. So like robotics is not nearly as advancing as rapidly as gene and L so it's very uneven uh movements here. Um But I do think that it's something that, you know, according to our analysis, about 80% of jobs, 80% of occupations will have some significant effect. And retail employees actually are, are do are in that 80%. Not so much on the stocking the shelves side, although people are working that, but on the other parts of the thing. Uh Yeah, exactly. Um Well, thank you for joining us and absolutely my pleasure. Thank you.

Debbie Dyson, Chief Executive Officer, OneTen, Ken Frazier, Chairman, Health Assurance Initiatives, General Catalyst; Co-founder and Co-chair, OneTen Moderator: Alan Murray, Chief Executive Officer, FORTUNE

CEO Initiative 2023: Leveraging Tailwinds To Navigate Headwinds

Debbie Dyson, Chief Executive Officer, OneTen Ken Frazier, Chairman, Health Assurance Initiatives, General Catalyst; Co-founder and Co-chair, OneTen Moderator: Alan Murray, Chief Executive Officer, FORTUNE

Debbie Dyson, OneTen, Ken Frazier, Health Assurance Initiatives, General Catalyst; OneTen Moderator: Alan Murray, FORTUNE

Right. Everyone in this room knows that 2020 started a mass a massive push to bolstering den I and ESG commitments in companies, uh companies working to make public commitments and to live up to those commitments and entities that didn't factor those considerations into their strategies. Felt pressure both from their own employees and from the outside to, to step up. But what we've seen in the last year, year and a half as we've discussed uh earlier today is uh backlash a political backlash and some backsliding. I've seen evidence that some companies are at least pressing pause and saying, wait, hold on. I don't want to talk about this right now. And so that's what we want to spend a little time talking about now. Joining us to talk more about it and the reasons and how leaders can respond are two people who have put themselves at the very forefront of the dei movement. Debbie Dyson, who is CEO of 110 uh the a coalition that aims to bridge the opportunity divide by creating 1 million jobs for Black Americans in 10 years. And Ken Frazier, who is chairman of the health Assurance initiative but was also a co-founder of the 1 10 initiative. So please join me on the stage, Debbie. Thank you so much. You're welcome. It's been since yesterday. Yeah, we, we Ken and I did this this routine yesterday. So I, I have a preview of, of uh his answers for a different audience. Um But, but look, I, I, I'd love for you, Ken first to start about to talk about why you created this initiative. And I'm gonna get Debbie to talk about how it works. So it's sort of amazing how quick the political environment in the country has changed. But if you went back to 2020 in the wake of the tragic murder of George Floyd companies were asking openly in the Business Council and the Business round table, what should we do about these kinds of issues of racial injustice in this country? And Ken and I were in some of those discussions and people were talking about making donations and putting out statements and all the things that normally happen. And we said, you know, what's in the wheelhouse of our companies is to hire people. And we pointed out that the census said that 76% of African Americans at age 26 did not have a four year degree and more than 95% of the jobs in our coalition, which is made up of 70 leading companies required a four year degree for almost any job So what we said is we really ought to look at the question and it reminded me of the discussion we just had about artificial intelligence where you look at the taxonomy of jobs and decide what the real skills are. And we said, what if we took a skills first approach to hiring for certain jobs instead of acquiring the credential of a four year degree. We said we wanted to actually have people be hired because they had certain skills and uh the goal of the coalition, it was initially to hire 1 million African Americans who lacked a four year degree into family sustaining wage jobs. Important. Basically, that's $50,000 a year or more. It's of course adjusted whether you live in Mobile, Alabama or Seattle, Washington. And that was the goal. And for the last two years, we've been active in that area with some success. So Debbie, how's it, how does it work and how is it working? Yeah, let me start with the latter first in terms of how it's working. So as Ken mentioned, we're entering our third year, we've hired to date about 108,000 jobs in terms of hires and promotes. We have over 70 some odd members in our coalition, representing about 65 different types of jobs. We have 23,000 current profiles that sit on what we call our platform, which is where our employers can go look for talent. So simplistically, the way that it works is we meet with our coalition members to try to understand what their human capital management, talent acquisition journey is. What are the types of jobs that they're looking for? What are the location, what are the skills that they're looking for? Based on that criteria, we post the jobs on our platform. We then work with an ecosystem of what we would call talent developers and talent partners that are really sort of dedicated to trying to skill up the talent so that we can make sure that talent is actually work ready by the time that they're presented. And so, you know, call it a little bit like a match making. So it's, here's the job, here's the talent and hopefully there's a match and then from there we go. And is it explicit? And you know why I'm asking this question? Is it explicitly for Black workers? So at its inception, we, we had a mission of attempting to close the talent gap explicitly for Black talent. But I know why you're asking the question and we've addressed that recently, you know, with the Supreme Court's opinion and the change in the atmosphere, we've been very clear that while that was indeed the initial reason for it, it's open to anybody who needs help. So it's not exclusionary in any way. Um It's really more and more about getting companies to focus on skills first because if they change systemically, how they think about jobs. I mean, again, 76% of African Americans lack a four year degree, but 50% of all Americans lack a four year degree. So the 1 10 goal is 1 million jobs in, in 10 years. Right. Not necessarily just for blacks, but for people without college degrees. Absolutely. And, you know, just to add on to what Ken said, what's been kind of fascinating is as we've been putting together and sort of identifying talent, we are seeing a wide range, it's not just black talent, it is every range. And many of our coalition members have said, once we sort of put this thinking into the mindset of our coalition, they've actually see the benefits that they're opening up the opportunities for others to apply that do not have a four year degree as well. But Ken, let's go back to the race issue because as you know, there's, there's not only the Supreme Court decision, there's been a real backlash. We have a member of this group, Elizabeth Gore who runs an outfit called Hello Alice to help small businesses who is being sued for having a program that pro provide explicitly provides help to black owned businesses. The Fearless Fund is another example which is being sued uh in the wake of the Supreme Court decision for providing grants explicitly uh uh to black owned businesses. What's going on here? I mean, is there a legal case? You must think there's at least some legal risk or you wouldn't have made the change with 1 10. And how do you explain what's happening? So, first of all, I think it's pretty clear that there is a movement afoot in our country against some of these programs and the lawsuits have started to build before the Supreme Court case. I think it's important to point that out. Um, you know, the way that I look at this situation is in our country, we have a couple of challenges. Number one is we want to be a country where we don't judge people by extraneous factors like gender and sex and things of that nature, right? So as an organizing and governing principle, most people would agree that race neutrality or color blindness, whatever you want to call, it is a good thing for a multicultural and multi racial society. On the other hand, I think most people would acknowledge that there are still continuing vestiges of the way this country is run for 400 years that explain why the unemployment rate for African Americans is so much worse. Why life expectancy is so much worse? Why after years and years of red lining neighborhoods are segregated? So the question becomes, how can we deal with those issues? You know, which of course people were worried about when people were in the streets about George Floyd. How do we deal with those issues in a way that balances our need to treat people fairly. But at the same time, acknowledging, not everybody has had the same life experience. If I'll just use one autobiographical example, I'm the eighth of my dad's nine Children, my younger sister and I came along in a birth order where the social engineers in Philadelphia decided to make race conscious decisions about who went to what school he called that school desegregation. So the youngest two of my dad's Children were bused out of the ghetto to better schools. Because if you lived in my neighborhood, your parents didn't, couldn't afford real estate, that was proximate to where the good public schools were. I happen to think that that obviously it benefited me, think it might have benefited Merck at some point. But the fact of the matter is, I don't think that that actually hurts somebody. Creating that opportunity for me wasn't at the expense of somebody else. And so the question becomes, how do we keep these two seemingly inconsistent goals in mind? That is to say, treating people fairly. On the other hand, creating opportunity for people whose lack of opportunity in some ways relates to the history of this country on race. So can't let me, let's push this a little bit further because I, I spend a lot of time talking to CEO S different CEO S different industries, I would guess. And I'm, I, I don't have the data on this, but I would guess 90% of them would agree with what you just said. But I can also tell you 90% of them say, but please, please, please keep me out of politics. I don't want to have anything to do with it. I, I it's, it's, it's broken, it's pernicious, it's polluting everything you, you played a really for, for, for whether intentionally or unintentionally. You played a really critical role in the politics of the last five or six years in, in 2017, you were the one after Charlottesville when the president made ambivalent comments about that, unite the right uh rally. You were the one who said I have to resign from his committees and all the other CEO S and I know this from talking to him and the other CEO S who resigned, resigned because you resigned. So you led that movement. It was a critical point. A lot of backlash 2020 after the election when the Georgia State uh legislature, the Republicans adopted a Voting Rights Act. You and Ken were the ones who called Ed Bastian at Delta Airlines, uh called the CEO of Coca Cola, convinced them to get involved, which prompted a huge political backlash. Um So how do you, how do you think about your role as a CEO versus your role as a citizen in politics? Because I can tell you and I think, you know what I'm saying is correct. Most CEO S don't want to have anything to do with it. So let me just say that while I found myself in a lot of those situations, it wasn't my goal to be a political person. It seems to me that businesses and CEO S don't want to get in the middle of every political dispute, especially given how divided our country is right now. But at the same time, I firmly believe that there are a series of principles and conditions that make our democracy what it is and they are conducive to human beings and they are conducive to commerce. And there are situations where people in elected office, either neglect or abandon those principles, you know, free and fair elections is one rule of law is respect for private property, equal treatment. All of those things that we were taught in grade school are the fundamental principles of this country. It is my view that while I don't want to drag my company into every political dispute that when those kinds of principles are not being upheld by our elected officials, it becomes the responsibility of the citizenss really, it is the government of us to take a position on those things. And I think ceos obviously are among the most influential citizens. So my whole thing is pick your spots. Ask yourself, do you have a right to speak to this issue? Does your company's values speak to this issue? And if so, I think ceos should not be cowed into not speaking because at the end of the day. If it is, in fact, a principle like the right to vote, the fact that someone else politicizes that principle doesn't make that principle intrinsically political. And I'll just make the point that came up this morning. The US business community has acted in unison around democracy in Ukraine. It strikes me as a mildly amusing. I'll say that we have a hard time talking about democracy in these United States. Yeah. No, it's so your message to this group is pick your spots but get involved when you have to get involved. But by the way, and I say to people don't allow your company to be pushed to one way or the other by the left or the right. Do what your company's values say that you're supposed to do. Because at the end of the day, there are a lot of young people in our companies and they're watching us and when we give up on the things that we've said were our values for decades, why would they believe us about anything else you did? I just want to stick with this for a second because you're in a regulated industry, obviously resigning from a government advisory council when you're in a regulated industry. And by the way, the president was already talking about legislation to increase or to control over drug prices is pretty significant. Did you talk to your board about this? Was this this a decision you made by yourself or I'm gonna get back to you, Debbie. I haven't forgotten you, but did, did you talk to your board about this or how, how, how did you handle it? I had an obligation to talk to my board. I mean, the fact of the matter is, is a company that is regulated in that way, not necessarily by the president's tweets though. I want to point that out. Uh, I did call my board and I said to them as a person of conscience, I cannot remain after these comments. Um But when I put out a statement and I intended to withdraw in a public way, I want the board to opine on whether I should speak to my personal conscience and values or should I speak to the company's values? And I can tell you unanimously, they said we want you to speak to the company's values. Every one of every, everyone back you up on it. Anyone have any questions on this before I want to go. Yeah, go ahead, please. I like Wilson Hispanic Association on corporate responsibility. My, my question, um Ken is, can you, um, give guidance to many of the CEO S here in the room who um sometimes on one ear, they may getting guidance from their uh Chief Diversity Officer on the other ear. Their general General general counsel, I used to be a general, you know, and in this environment where, you know, G CS who are not as willing to lean in, um, and stand by those principles out of fear that doing that, I can tell you. So my bottom line is you have to uphold your values. I'm, I'm a lawyer but not in the pejorative sense of the word. And the fact of the matter is that lawyers often feel their job is to protect the company from being criticized or sued. I think when you look at what the law is, by the way, the law did not change around race and hiring the Supreme Court brought the law around education into compliance with title seven. I think there's still a lot of maneuverability here and I think it's a mistake to overcorrect because you might be criticized. At the end of the day, I think ceos ought not be pushed around. If we have values, we ought to uphold those values, but we ought to do them sensibly. That's why we made the change in 110 to make sure that while we originally did it to close the talent gap for Black Americans, we say, but no, we want to help anybody who needs our help. That doesn't stop us from helping a lot of people. Let's get back to, let's get back to 110 because it is important work. And, and you know, we know we've seen the data inequality in our society has increased. The, the there's a sense that the escalator of mobility has slowed or stopped. You have a program to address that. What can the people in this room do to help? Yeah, I mean, a couple of things that I want to make sure just from something that Ken said. So I was retired, I had retired after 34 years at a company called ADP and in, I guess it was November. I had an opportunity and obviously you're all enthralled with Ken as I am every single day. It's like a gift. No, seriously, it's like a gift, brownie points. So why I say that is the case. So this is sort of a long winded way to get to the answer your question. But it was really just through the conversation with him and Ken and the other members of the board that honestly pulled me out of retirement. I could have stayed out of retirement. And my, my answer is it was important for me to, I wanted to say something. I wanted to be something and I wanted to do something. And so when we're meeting with the CEO S and we had a call just recently to talk about the whole scotus, it was probably one of the most inspirational discussions because we talked exactly about this. And what was rewarding was this resiliency and almost like, um and anger to, to be honest with you, of wanting to really lean in further of what can we do as a coalition to spread the word of impact. I mean, we're sitting here as the numbers that Ken sort of mentioned with excellent opportunity of untapped and underestimated potential of talent that is in the workforce today that has just been unseen, unheard and unappreciated. And so how do we as a nation sort of start to see that talent that for whatever the reasons were, didn't have the opportunities to go down a collegiate path for all the reasons that I think we know. And here is an alternative path to say, put the four year degree to the side and look at the skills and the potential of the talent in front of you and offer them the opportunity. So that's the, that's the, it's also a really important collective action effort. Uh because we know what's happened in the past, even with very well intentioned companies have had de i efforts and changed the way they hire a lot of times you end up just competing for the same group of educated people and, and bidding up their wages, but not addressing the problem you're trying to address. So, so kudos for you, uh both uh for doing it. Um by the way, if you're interested in, in, uh if you're as enthralled with Ken as Debbie is, and you're interested and you're interested in hearing uh uh more on what we were talking about earlier. The, the conversation that we had yesterday was for Fortune's Leadership next podcast and that'll be out in a week or so. You can get it on, on Apple or Spotify. It was really a fascinating uh 30 minutes and I would urge you to listen and dig in more and I would urge you to reach out to Debbie uh and get involved in 1 10, any contact information you want to give this 1 10 spelled out as it is dot org. So just, just feel free can make closing comments. We're talking about leadership. You know, I think leadership is about upholding what we think our values are ultimately and we can't let people outside our companies tell us what our values are. You know, my dad worked for United Parcel in the early 19 sixties and the company made a decision that it was no longer going to have segregated facilities. The law and the custom in many American states was that segregation was the right thing to do today. When we look back at that, we can all pretend that we would have been brave enough to make that decision. That was the right thing to do before the law caught up with it. And I think we can ask ourselves, do we think it's the right thing to create opportunities for talented people, irrespective of their race because we know that they can do jobs without regard to their four year degree credentials or not. I think that's the right thing in a country where our working age population is not growing at all in terms of the overall size and it's becoming more diverse here here. Thank you very much for what you're both doing and appreciate you being here. Thank you for having us here.

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