CEO Daily: Wednesday, 7th June
What’s the biggest challenge facing Fortune 500 companies?
That’s the question we put to CEOs of all 500, and gave them a list to choose from: skilled labor shortages, competition from China, competition from start-ups, cyber security, shareholder activism, management diversity, employee diversity, geopolitical risk, and increased regulation.
Last year, in the final year of President Obama’s eight-year term, it was increased regulation that had them most concerned, with 69% of those responding saying it was either their single biggest challenge or one of their top three or four challenges. But this year, with a new man in Washington, that concern has subsided, with only 40% ranking it so high.
The bigger concerns this year: The rapid pace of technological change (73%, up from 64% last year) and cyber security (61%, up from 59% last year.)
Technology is very much top of mind for today’s CEOs, with 71% agreeing with the statement, “These days, I consider my company to be a technology company” (up from 67% last year). Asked which technologies are most important to their futures, they give cloud computing, mobile computing, and the Internet of things high marks. But the big change from last year is that 81% cited “artificial intelligence and machine learning” as either “very important” or “extremely important” to their company’s future, up from just 54% in 2016.
You can see more of the survey results here. A word on methodology, since my former colleagues at the Pew Research Center will ask. We sent an email survey directly to each of the 500 CEOs, and asked that they personally answer the questions. Seventy-two of them responded—a response rate of 14%. Given the busy lives these folks lead, that’s not too shabby. If you would like to try the survey yourself, you may do so here.
Take some time this morning to play around with the new, digital Fortune 500 list, which has a wealth of interesting information, data and video about the companies listed. And be sure to read Beth Kowitt’s story about Howard Schultz’ tenuous “retirement” from the CEO spot at Starbucks.
By the way, Schultz told Kowitt that he “doesn’t have any plans” to run for President—a less than Shermanesque statement.
More news below.
• Polls Open for U.K. General Election
Millions of U.K. voters will head to the polls today for a general election that will help determine Britain’s path forward following an eventful year dominated by fallout from a shocking exit of the European Union as well as recent terror attacks. Prime Minister Theresa May, who called for the snap election in April, is trying to increase her Conservative Party’s tight majority in Parliament as she faces a challenge from the Labour Party and its left-wing leader, Jeremy Corbyn. As of Thursday morning, global stocks were mostly trending slightly upward, as investors around the world kept an eye on the election, as well as on the outcome of the European Central Bank’s latest meeting and, in the U.S., the highly-anticipated congressional testimony from former FBI Director James Comey. BBC
• Comey Will Testify That Trump Demanded Loyalty
Comey’s much-hyped appearance before the Senate Intelligence committee will take place on Thursday morning. But, the world got a preview of the former FBI director’s testimony on Wednesday after his release of a prepared opening statement ahead of the hearing. According to that statement, Comey plans to testify that President Trump told him, “I need loyalty, I expect loyalty” during a January dinner. The statement reiterates what has been reported previously, but was attributed to anonymous sources, with regard to Comey’s private meetings with the president before Trump fired the former FBI director last month amid the bureau’s probe into Russia’s alleged meddling in the 2016 presidential election. Wall Street Journal (subscription required)
• Uber Fires Top Exec Who Obtained Victim’s Medical Records
Uber has fired Eric Alexander, president of the ride-sharing startup’s Asia Pacific division, who reportedly obtained the medical records of a woman who was raped by an Uber driver in India in 2014 and shared the records with other Uber executives, including CEO Travis Kalanick. Alexander was seemingly dismissed only after Recode reporters began questioning the company about the incident this week. His name had not been among the more than 20 employees Uber said it fired in recent months as part of its investigations into more than 200 claims of workplace misconduct, including sexual harassment complaints, despite the fact that Alexander’s alleged actions involving the woman’s records were reportedly included in the probe. Recode
• Elon Musk Owns Past Mistakes that Helped Shape Tesla Model 3
Tesla CEO Elon Musk has made a habit of using his company’s annual shareholder meeting as a forum for admitting how he’s learned from past mistakes. This year, the tech billionaire (and, newly-minted Fortune 500 CEO) reflected on how missteps his company made with the Tesla Model X SUV have influenced its rollout of the Model 3 lower-price sedan, which is on track to be delivered in July. The Model X, Musk admitted, was too complex in terms of the number of available customizations. The Model 3 is cutting back on the number of configurations, with wheel-size and the color of the car being the only options available for customization. Fortune
Around the Water Cooler
• The Only Alphabet Shareholders Who Matter
Shareholders of Alphabet gathered in Mountain View on Wednesday for the Google parent’s annual meeting. Several shareholder representatives stood up and argued in favor of their respective proposals, which included a call for the company to produce numbers on pay equity between male and female employees, as well as a proposal related to cutting down on the spread of misinformation online. But, as Fortune‘s Mathew Ingram noted, the proposals were “largely window dressing” due to the fact that Google founders Larry Page and Sergey Brin were the only two shareholders in the room whose votes really mattered. That’s because Page and Brin together control 51% of the company’s votes, thanks to their large ownership of Class B shares, which count for 10 votes apiece. Not surprisingly, none of the external proposals passed. Fortune
• Microsoft Cloud Chief: “You Can Never Be Paranoid Enough”
It doesn’t matter how much money tech giants spend on guarding their cloud data centers against hackers, because no one can guarantee that their customers’ data is safe, says Microsoft’s top cloud executive, Scott Guthrie. “You can never be paranoid enough,” Guthrie said at a cloud tech conference on Wednesday. “If people say, ‘If I sign with you, can you guarantee I won’t be hacked?’ If I say yes, I’m lying.” One issue is that hackers don’t always have to break into the cloud data center, especially if hackers can exploit vulnerabilities in the applications. Fortune
• Spending on VR, Video Games, and Streaming to Spike in Coming Years
Video game sales are projected to reach $28.5 billion by 2021, while streaming video services like Netflix and the burgeoning virtual reality industry will also see revenues soar over the next four years, according to the latest forecast for the media and entertainment industries from consulting firm PwC. Virtual reality, a sector that has captivated Silicon Valley investors, is expected to see that interest turn into more tangible sales by 2021, when PwC forecasts spending will reach $5 billion annually, up 64% from current levels. Meanwhile, the rise of streaming media will not slow down over the next few years, as Internet video revenue (including subscription services as well as on-demand purchases) is expected to grow by 10% annually to reach almost $19 billion by 2021. That should easily outpace the growth of Hollywood studios, while traditional broadcast and cable TV revenue could actually shrink by 1% each year, according to the report. Fortune
• Boeing Is Studying Pilotless Jets
We already know that self-driving cars could be the future of the automotive industry, but should we also expect self-flying planes to take over the sky? That’s an idea that Boeing, the world’s largest plane maker, is at least exploring, according to the company’s vice president of product development, Mike Sinnett. Ahead of the Paris Airshow later this month, Sinnett (who is also a pilot) said he plans to test the technology in a cockpit simulator this summer and fly on an actual airplane using some artificial intelligence as a stand-in for pilots sometime next year. While planes already make use of onboard computers to handle aspects of flight like take off and landing in normal conditions, a self-flying plane would need to be able land safely in an emergency situation similar to Captain Chesley “Sully” Sullenberger’s landing on New York’s Hudson River in 2009, Sinnett said: “If it can’t, then we can’t go there.” Reuters
Summaries by Tom Huddleston, Jr.; firstname.lastname@example.org @tjhuddle