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Power Sheet – August 27, 2015

In a world of too much downbeat news, it’s refreshing to watch the development of two youngish leaders running two of the world’s most important companies. This morning’s news brings more reasons for optimism about the progress of Microsoft CEO Satya Nadella and Wal-Mart CEO Doug McMillon, CEOs with curiously parallel careers.They’re both 48 years old; each has worked at his company virtually his entire career; McMillon became CEO on Feb. 1 of last year, and Nadella became CEO three days later. Microsoft is America’s third-most-valuable company, behind only Apple and Google. Wal-Mart is No. 14.

Nadella is steadily repudiating much of the strategy that built Microsoft into one of the world’s most successful businesses. Yesterday the company announced that its newest operating system, Windows 10, had been installed on 75 million devices in just four weeks, which is pretty impressive, but remember – it’s free. The idea that Microsoft would ever give away its operating system was unthinkable until Nadella did it, acknowledging the new reality that Windows no longer rules the world; giving it away enables the company to reach more customers with other products.

Nadella has made other bold decisions, for example facing the unpleasant reality that the company’s staggeringly expensive phone strategy was a bust. Last month he took a $7.6 billion charge and announced 7,800 layoffs, acknowledging that buying Nokia’s handset business had been a blunder. Last year he cut 18,000 jobs, mostly related to the Nokia acquisition. Also unthinkable, pre-Nadella: developing apps and services for Google Android devices and Apple iOS devices; and abandoning the online display advertising business, another hoped-for winner that failed. Investors like his iconoclastic leadership; the stock has handily bested the S&P during his tenure.

McMillon was in the news yesterday when Wal-Mart announced it would no longer sell military-style rifles. The company said the decision was based purely on declining demand, and it preceded yesterday’s shooting of a TV news reporter and cameraman in Virginia. But McMillon had told CNN, after June’s church shooting in Charleston, S.C., that he wanted to reduce sales of assault-type weapons. It’s one of several moves McMillon has made to align his company with today’s reality on issues that affect it.

In February he announced Wal-Mart would raise starting pay to $9 an hour in April and $10 next year; in June he announced across-the-board raises for about 100,000 U.S. workers. Though Wal-Mart already paid more than the retail average, it had been perceived as stingy. In April, when the governor of Wal-Mart’s home state of Arkansas was deciding whether to sign a bill restricting same-sex marriage, McMillon publicly called on him to reject it, which he did. In June Wal-Mart announced it would stop selling Confederate flag products – once unthinkable for a company that started and grew in the South.

Nadella and McMillon are turning aircraft carriers, making major changes in two of the world’s highest-profile companies. That takes courage. It’s still early in both CEOs’ tenures. They’ll be worth watching for a long time to come.

What We’re Reading Today

Walmart ends sales of assault-type rifles

The decision was made before the murder of two TV journalists on live television yesterday. The company said it was based not on politics but on the bottom line. It will stock more lower-priced, entry-level firearms instead.  Bearing Arms

Windows 10 boosted by free offering

Yusuf Mehdi, vice president in charge of Windows, says the new operating system was downloaded 75 million times in the first month of the offering. It’s a big first step in CEO Satya Nadella‘s bet to get more developers to build apps for Windows. NYT

The deal that wasn’t

Monsanto has pulled its $46-billion bid to purchase seed maker and pesticide producer Syngenta. It’s the end of a four-year effort by Monsanto CEO Hugh Grant. Monsanto will turn its focus to “growth opportunities built on its existing core business.”  Nasdaq

Facebook packages its AI alternative

In an effort to combat Siri and Google Now, Mark Zuckerberg‘s company launched M to a select number of people in California. It’s a quasi-AI system that  people can use by typing questions into Messenger. Facebook employees will “supervise” the tool to ensure questions get a timely answer. Quartz

Amazon slows down consumer device development

Instead of trying again with the failed Fire phone, Amazon has laid off dozens within the division that develops handheld devices. It’s the first round of layoffs since the division launched 11 years ago.  WSJ

Blackrock buys a robo-adviser

With its purchase of FutureAdvisor, it appears Blackrock will offer robo-adviser tools to banks and advisory firms. Fortune

Building a Better Leader

Google’s secret recruiting tool

Some employers wait for resumes to come in. Google uses its search engine, finding those asking the right questions. Re/code

Stopping rudeness before it spreads

Turns out it’s contagious. To keep it at bay in the workplace, you have to look for changes at the organizational level. Fast Company

To find people that fit your organization…

…look for EQ, not just IQ. That’s what Apple’s head of retail, Angela Ahrendts, does.  LinkedIn

Worth Considering

The email time-suck isn’t going anywhere

In a survey of white collar workers, nearly 50% said they expect email to increase in the next few years. On average, the workers estimated they spend over 6 hours a day checking personal and work email.  Reuters

Don’t use your cellphone during a meeting

If you’re walking down the block, it’s okay. But rings, clicks, or vibrations during meetings will turn off those around you, says a new report. We needed research for this? Pew Research

Make money, money

A new survey shows that future workers believe they have to make more than today’s employees in order to become successful in life. Let’s hope they haven’t seen the latest wage trends. CBS News

Workers value their wealth over their health

We would rather see our 401(k) grow by 15% than lose 15 pounds, according to financial services company Charles Schwab. Press Release

Up or Out

Y Combinator, a business incubator, has named former Google executive Qasar Younis its COO. Re/code

Garret Camp, an Uber co-founder, announced he would become the majority shareholder of content discovery tool StumbleUpon, a company he had co-founded and then stepped away from.  Medium

VMWare, the virtualization company, appointed Ray O’Farrell chief technology officer and chief development officer, meaning he will oversee both the technology and R&D sides of the business. ZDNet

Fortune Reads and Videos

Walmart kicks off holiday layaway program…

…signaling to the competition that it’s ready to fight for customers’ business this year. In other news, it’s still summer. Fortune

Researchers want to inject microfish into your body

With their 3D printer, they can print hundreds of microrobots smaller than the width of a human hair. Fortune

New Orleans tourism’s lost decade

A close look at the numbers reveals that the city is just now back to where it was before Hurricane Katrina.  Fortune

Chinese prosecutors accuse 11 executives over Tianjin blast

The charges range from “dereliction of duty” to “abuse of power.” Fortune

Today’s Quote

“You asked for direct feedback. Women power your retail engine. They buy diapers. They buy books. They buy socks for their husbands on Prime. On behalf of all the people who want to speak up but can’t: Please, make Amazon a more hospitable place for women and parents.” – Former Amazon employee Julia Cheiffetz, responding to Amazon’s work culture and CEO Jeff Bezos by detailing her experience having a child and fighting cancer while working at the retailer.  Medium

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Produced by Ryan Derousseau