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Power Sheet – November 4, 2015

It’s funny how the big issues for leaders change over time. Here we are at the Fortune Global Forum in San Francisco, heart of the digital revolution, talking about our theme of Winning in the Disruptive Century – and virtually every discussion sooner or later returns to the issue of culture. Sometimes we hear it from the leaders of big, established companies like Levi Strauss’s Chip Bergh, Lockheed Martin’s Marillyn Hewson, or Charles Schwab’s Walt Bettinger. Sometimes the message is coming from cutting-edge tech entrepreneurs like Salesforce CEO Marc Benioff or Lending Club’s Renaud Laplanche, and sometimes it’s coming from the CEO of a 168-year-old heavy equipment maker, Siemens CEO Joe Kaeser. They’ve all concluded that regardless of their company’s age or industry, whether it makes jeans or software or loans, the key to its success is its culture.

“The most important thing I can do is get the culture right,” says Comcast CEO Brian Roberts. Benioff is building “a culture of trust” at Salesforce. Campbell Soup CEO Denise Morrison is deliberately changing her company’s culture to include “leadership courage” – willingness to take greater risks on new products and ideas as consumers grow more skeptical of Big Food. When Ram Charan and I asked attendees for their biggest concerns, many of them, across industries, said they were trying to build a culture of innovation.

That’s kind of surprising. We might have expected just the opposite – that quirky, unquantifiable human issues would become less important as the digital revolution remakes the economy. But in fact this is happening for a good reason. In the old industrial economy, work was more likely to be strictly defined and regimented; think of the assembly line worker tightening the same bolt in the same way as each car passed by, or the office worker who had to add columns of numbers or re-type letters all day. They either did the job or they didn’t. They were, in effect, human machines. Culture didn’t mean much, and most CEOs of the time weren’t interested in talking about it.

Today few workers do such work. Technology has advanced to the point where machines can now do much of the machine work in the economy, and people do jobs that aren’t nearly so strictly defined. Exactly what employees do from moment to moment and how much discretionary effort and ingenuity they put into their work is increasingly up to them. CEOs can try ordering them to be more engaged or creative, but it won’t work. Only the culture – the norms and values that are in the air they breathe, the kinds of relationships they have with other workers – can do that. Little wonder that every business leader now wants to talk about the company’s culture, and frequently wants to change it.

Siemens’s Kaeser said it well in explaining his culture-change efforts. “When I explain what I want to do, experts tell me to change our incentive compensation because people are motivated by money,” he says. “That is complete nonsense. You have to touch their hearts.” Believe me, CEOs didn’t used to talk that way. An unexpected effect of the digital economy is that now, they all do.

Main-stage sessions of the Fortune Global Forum are livestreamed at Fortune.com/globalforum2015. For information on specific sessions and timing, visit www.fortuneconferences.com. Full sessions from the main stage will also be available on demand on our Fortune Magazine YouTube channel. You can follow what’s being tweeted about it at #FortuneGlobal.

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What We’re Reading Today

Republicans target Clinton charity

The Clinton Health Access Initiative, a program created by the Bill, Hillary & Chelsea Clinton Foundation, said it erroneously filed tax forms that misstated the amount of its funding from governments compared to others in 2012 and 2013. The mistake may be in the millions of dollars. But the charity stated that it won’t refile the forms. Now the Republican National Committee has urged the IRS to audit the charity. Foreign contributions to Clinton programs have come under heavy fire as Hillary Clinton campaigns for president. Reuters

SABMiller, A-B InBev land another extension

For the second time, British regulators have agreed to extend a deadline for discussions as SABMiller’s Alan Clark and Anheuser-Busch InBev’s Carlos Brito continue conversations to merge the world’s largest and second largest brewers. It’s a sign that conversations have progressed, even with another delay; it’s a complicated deal valued at $104 billion. A-B Inbev now has until Nov. 11 to make a formal offer. MarketWatch

Obama will decide on Keystone Pipeline

TransCanada asked the White House to delay a decision on a cross-border permit it needs to run the pipeline between Alberta and Nebraska. President Barak Obama declined the delay, saying he will make a decision before the end of his presidency. Environmental advocates are pressuring him heavily to deny the permit while supporters of the pipeline say it’s cheaper and safer than shipping oil by rail. Washington Post

China, Taiwan presidents to meet 

It will be the first meeting between the two countries’ leaders in 66 years. In Singapore this weekend, China President Xi Jinping and Taiwan President Ma Ying-jeou will discuss promoting development between the two countries. Meanwhile, discussions between diplomats of the U.S., China, and Southeast Asian nations ended without a joint statement. Talks broke down as the two sides still have not come to agreement over monitoring South China Sea islands. NYT

Building a Better Leader

Instead of performance reviews…

…create a way to provide regular feedback. SmartBrief

Campbell Soup CEO Denise Morrison discusses…

…how to respond to change by listening to consumers. By doing so, you will avoid becoming a “victim of change.” Fortune

What’s the key to Mountain Dew’s success?

The mystery. No one really knows what flavor the green soda is trying to create, and that’s how Mountain Dew wants it. Buzzfeed

Car Troubles

VW’s emission cheating extended into non-diesel engines

Stop us when this begins to sound like a broken record. Volkswagen announced it misstated the CO2 emissions on an additional 800,000 vehicles, including gasoline models. This is a separate finding, beyond the emissions cheating software discovered in the diesel engines. The company targets a potential cost of $2.2 billion. The only upside for CEO Matthias Müller, and it isn’t much of one, is that VW did not wait for regulators to announce the misstep. Fortune

Honda dumps Takata airbags

CEO Takahiro Hachigo and Honda came out strongly against Takata on Tuesday, saying the company would drop the airbags from all vehicles and order a third party to review test data provided by Takata. Takata was fined on Monday for the faulty airbags that have led to 19 million recalled vehicles in the U.S. and at least eight deaths worldwide. CNNMoney

US auto industry posts best sales in a decade

Amid Volkswagen’s crisis and cheap gasoline, U.S. auto companies had their best October since 2005. Mary Barra‘s General Motors said it sold 263,000 vehicles, a 15.9% rise from a year ago. Mark Fields‘s Ford Motor Company achieved similar gains with 213,000 vehicles sold, a 13.4% jump from 2014’s October numbers. NYT

Up or Out

Lumber Liquidators named board member John Presley CEO, replacing founder and interim CEO Thomas Sullivan. CNBC

Tesla has tapped Google VP Jason Wheeler as its new CFO. WSJ

Fortune Reads and Videos

Former NFL exec wants to bring back the USFL

Jim Bailey wants to give new life to the pro football league, which died in 1985 under the leadership of Donald Trump. Fortune

Anti-AirBnB measure in San Francisco fails

AirBnB spent $8.4 million to encourage voters not to restrict short-term rentals in the city. Fortune

Marissa Mayer’s move to restrict telecommuting at Yahoo… 

…was based on employee feedback.  Fortune

Comcast CEO responds to customer service mistakes

Brian Roberts said the company is “making steady improvements.” Fortune

Today’s Quote

“Picking the right people is an art…One of the traits we look for in founders is determination.” – Ron Conway, founder of SV Angel and an early investor in Google, speaking at the Fortune Global Forum.  Fortune

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Produced by Ryan Derousseau
@ryanderous
powersheet@newsletters.fortune.com