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Power Sheet – August 31, 2015

I continue to be impressed by the leadership of Defense Secretary Ash Carter, who on Friday announced a new alliance with technology firms in Silicon Valley. This effort is almost invisibly small by Defense Department standards; DoD will contribute $75 million over the next five years, while funding by the alliance partners and local governments will bring the total to $171 million. You must trek far right of the decimal point to express that as proportion of the defense budget. But the symbolism counts big.

This is Carter’s second high-profile visit to the Valley in four months. In April he announced the formation of Defense Innovation Unit-Experimental, basically a Valley office to give Defense a permanent presence. The office was up and running less than five months after being announced, a feat of blinding speed for the Pentagon. It’s based at Moffett Federal Airfield, now run by Google on a 60-year lease.

Carter’s larger objective is to rehab Defense’s dowdy reputation in the Valley, where the department is widely regarded – with good reason – as hopelessly slow and bureaucratic, speaking a language that entrepreneurs and venture capitalists barely understand. It’s emphatically the right move as technology becomes increasingly decisive in battle. It’s also a gigantic project.

Can Carter succeed? A criticism when he was nominated for the job was that he was a lifelong academic with no real-world experience. It’s true that he spent much of his career in academia, but in fact he may be uniquely well prepared to improve the Pentagon’s relationship with business. As Deputy Secretary of Defense from 2011 to 2013, he oversaw more than $600 billion of annual spending. I believe that means he directly managed more spending than any other manager on earth. It also means he worked with many of America’s largest companies. Having served three years in the Pentagon in the Nineties and two years as an undersecretary before becoming deputy secretary, he knows how the place works, especially how it works with companies.

I have no idea whether Carter can significantly increase the value the Pentagon gets from business. That bureaucracy may be mightier than any human. But, far from being a stereotype bureaucrat, Carter is as demanding a manager as I’ve ever met. His efforts bear close watching as a case study in leadership.

What We’re Reading Today

‘Unconscionable’ not to pursue a Fiat/GM merger

That’s according to Fiat Chrysler CEO Sergio Marchionne. He believes the merger works so well for both auto companies that Fiat must pressure GM to consider it. GM’s board, which includes CEO Mary Barra, rejected a proposal earlier this year.  Automotive News

VW and Suzuki break up

After a four-year divorce proceeding, a tribunal formally ended the ill-fated relationship between the German car manufacturer and the Japanese company. CEO Osamu Suzuki said Suzuki will buy back VW’s 20% stake.  U.S. News & World Report

An odd proposal 

Republican presidential candidate and New Jersey governor Chris Christie has suggested that the U.S. track immigrants like Fed Ex tracks packages. Yesterday, he called criticisms of the proposal “ridiculous.” Reuters

Fixing a glitch

BNY Mellon executives raced this weekend to fix a software glitch that messed up pricing of approximately 1,200 funds and ETFs before the market opened today. Last night, CEO Gerald Hassell said the problem “has taken far longer” than expected, but the company gave the all-clear this morning, just as trading began WSJ

China blames the media…

…for its market problems. It has punished nearly 200 for “online rumor mongering” including Wang Xiaolu, a reporter for Caijing magazine, who publicly confessed on state television to causing “panic” by reporting a conversation he heard. The world, however, still waits to hear from President Xi Jinping Financial Times

Building a Better Leader

Growing slowly has its benefits…

…like reducing risk. Fast Company

Time to ditch the business partner

If he seems more like your twin, then it’s okay to break ties. Fortune

To develop a more diverse workforce…

…make sure to set internal goals. Make them public only if you want. Mercury News

Public-Private Partnerships

The Pentagon teams up with Apple, Boeing

U.S. Defense Secretary Ash Carter announced $75 million of funding to a consortium of tech companies to improve flexible and wearable technology. Reuters

Tesla calls for President Obama’s help

When Chinese president Xi Jinping visits the U.S. next month, Elon Musk‘s company has asked the Obama Administration to press him on making it easier for car companies to work within China. WSJ

Restoring workers rights from the White House

In the last two months, President Barack Obama has increased the amount of people eligible for overtime pay, his National Labor Board Relations appointees extended collective bargaining rights to some contractors and franchises, and a panel approved the extension of minimum wage rights to home care workers. NYT

Up or Out

Charlie Miller and Chris Valasek, the hackers who took control of a moving Jeep, will join Uber’s research lab. Fortune

Former top adviser in Bill Clinton‘s White House Chris Lehane will become head of global public policy for AirBnB. The Hill

Fortune Reads and Videos

TLC wants OMG with heart

And, ideally, less scandal in its new lineup of shows. Fortune

Shooting down drones

Boeing is developing a laser cannon that can shoot down aircraft to prevent snooping in sensitive areas. Fortune

Bad sign for Jeb Bush

The presidential candidate has lost three of his biggest fundraisers. The unexpected resignations follows a slowdown in Bush’s fundraising efforts as he has slipped from second to third in polls. Fortune

Economy class paying more to fund first class perks

From private entrances to onboard nannies, the first class options keep getting more extravagant while economy class flyers are coughing up higher ticket prices to make it all possible. Fortune

Birthday Wishes

A happy belated birthday to Senator John McCain (R-AZ), who turned 79 on Saturday.  Biography

Ditto to Warren Buffett, who turned 85 on Sunday.  Biography

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Produced by Ryan Derousseau