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Power Sheet – May 13, 2016

Talking with a big-deal CEO recently, we got onto the topic of how technology would revolutionize his company’s operations and how it would change employees’ roles. Finally we reached the issue of how many employees he’d need. He lowered his voice and said, “We’ll have fewer people, and they’ll be doing different things. I don’t talk about that with our labor force. It’s not motivating.”

Every leader will have to think about this issue, and in many cases it won’t be easy, which makes thinking about it all the more important. Three reminders from recent news:

-The University of Minnesota law school is reducing its class size as fewer qualified students apply, reflecting a marked nationwide trend. Several law schools have closed, and others have reduced admissions or cut tuition. Why? “People are turned off on legal education because of a lack of suitable paying jobs,” former vice president Walter Mondale, a Minnesota Law alumnus, tells the New York Times. And why are there fewer high-paying lawyer jobs? “The rise of machine intelligence is probably partly to blame for the current crisis of law schools and will certainly worsen that crisis,” writes Northwestern University law professor John O. McGinnis. Software is increasingly doing work that law firm associates used to do, notably the job of screening documents in the discovery phase of lawsuits, and doing it faster, cheaper, and better than humans. As some major law firms downsize, the concept of the firm is being rethought.

-Defense Secretary Ash Carter visited Silicon Valley this week for the fourth time in his tenure, emphasizing his message that U.S. defense will rely increasingly on infotech in general and artificial intelligence in particular. He has been clear about why: The U.S. military almost certainly won’t match its Russian or Chinese counterparts in headcount, so to maintain its advantage, it must develop technology that can do the work of more people. The initiative is underway in several areas, including autonomous vehicles, increasingly autonomous weapons, systems to sense and respond to the mental state of service members, and much more – plus tech for cyber defense and warfare. Leaders are deeply rethinking the concept of defense.

-Whole Foods will open its first 365 store in a couple of weeks, in Los Angeles, and it’s clear that the new retail format will include technology where you’d expect to find people. If you want a wine recommendation, you’ll consult a wine app (called Banquet) rather than a human. If you’re a tea drinker who despairs of getting decent tea anywhere but your own home, you can step up to the teaBot, which will blend and properly brew a cup of high quality tea. It’s one way Whole Foods hopes to create an upscale experience in stores that will be smaller and lower-priced than Whole Foods supermarkets. So what’s up-market and what’s down-market now?

The revolution in the role of people is accelerating. Leaders are better off participating in it than just trying to respond.

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What We’re Reading Today

Apple invests $1 billion in China’s Didi Chuxing  

The investment in Uber’s main competitor in China brings Apple into the ride-hailing business. The companies said they would work together on technology, which could provide Apple with data for its autonomous car project. For Tim Cook‘s company, it’s also about increasing Apple’s standing in China, where there’s growing concern about the government shutting down its services.  Fortune

Facebook leaks Trending Topic guidelines 

They show that humans intervene and make editorial decisions. Mark Zuckerberg says he wants to meet with conservatives to discuss the process after analysis suggested that editors suppressed conservative news, raising concerns of bias. The Guardian

Department of Education to issue transgender rule for schools

In an announcement set for today, Education Secretary John King, Jr. will tell school districts that students must be allowed to choose the restroom that’s consistent with their “gender identity.” The guidance says not allowing them to do so violates Title IX, which could lead to lawsuits or loss of government funding. USA Today

Russia’s Olympic triumph came from state-run doping 

So says Grigory Rodchenkov, former director of Russia’s anti-doping lab. Rodchenkov says he fed athletes a three-drug cocktail mixed in alcohol. Then, at night, anti-surveillance and doping experts snuck urine samples in and out of the lab through holes in the walls. Russia won the most medals at the 2014 Sochi winter Olympics, in which President Vladimir Putin took a major personal interest.  NYT

Building a Better Leader

Collecting biometric data from employees…

…could get you sued. Employers must get proper consent, based on state law. Inc.

The open office concept has become passé 

After research uncovered productivity problems with open offices, they’re being  replaced with a hybrid version. Fortune

More flexibility doesn’t need to mean less pay

Studies have shown flexible hours don’t decrease the amount employees work. Flexibility is increasingly seen as an incentive to keep employees longer. Knowledge@Wharton

Political Murmurs

Paul Ryan meets with Donald Trump but…

…stops short of endorsing him for president. He no longer framed the issue as Trump vs. great Republicans of the past, like LincolnRyan instead discussed how the gaps between him and Trump can be bridged, opening the way to eventually endorsing Trump. The Atlantic

The Clinton Global Initiative funded friends of Bill

In 2010, the non-profit committed $2 million to Energy Pioneer Solutions, owned by a number of Clinton friends and Democratic party figures. Bill Clinton reportedly also recommended to then-Energy Secretary Steven Chu that the  company receive a federal grant, which it received. The issue raises a potential  legal problem, as a non-profit isn’t allowed to act in the interest of private individuals.  WSJ

Trump retaliates against Jeff Bezos

The presidential candidate said Amazon doesn’t pay enough in taxes and that Bezos bought the Washington Post to scare politicians from trying to extract more taxes from Amazon. The accusations followed reports that the Washington Post has 20 people looking into Trump’s real estate deals. Fortune

Up or Out

Progressive CEO Glenn Renwick will retire from the position in July. He will be succeeded by COO Tricia Griffith and remain as executive chairman.  Cleveland Plain Dealer

Linda Kozlowski has been hired as Etsy’s new COO. MarketWatch

Fortune Reads and Videos

Could Alibaba be the next Enron? 

Fund manager Jim Chanos, one of the first to point out accounting problems at Enron, sees similarities with Alibaba’s books. Fortune

Trump’s VP shortlist includes…

…Arizona Governor Jan Brewer, Oklahoma Governor Mary Fallin, and former House Speaker Newt Gingrich. Fortune

Nordstrom reverses efforts online

Turns out it’s hard to make money when products are priced so low. Fortune

McDonald’s considers a drastic change to its beef

It’s testing fresh beef instead of frozen at some Dallas locations.  Fortune

Happy Birthday

Ohio Governor John Kasich turns 64 today.  Biography

Facebook founder Mark Zuckerberg turns 32 tomorrow.  Biography

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