Good morning.
I’m in Chicago, where Fortune’s newest conference, Brainstorm Reinvent, got underway yesterday. It’s dedicated to the notion that, as former Cisco CEO John Chambers told the group, all companies today are technology companies, and “if you aren’t disrupting you are being disrupted.”
My task for the afternoon was to interview Allstate CEO Tom Wilson, whose industry is viewed as snooze-inducing by most. But Wilson has catapulted his 87-year-old firm to the leading edges of technological change. Among other things, he is experimenting with car insurance that’s priced based on real-time data on how you are actually driving. He believes legacy companies like Allstate can beat out digital natives if they have proprietary data and loyal customers. The key is creating a culture of innovation—which was the focus of much of the day’s discussions.
Other tidbits from the conference:
—WW (formerly Weight Watchers) CEO Mindy Grossman said a common mistake made by new CEOs of troubled companies is to assume they have bad people and fire a lot of employees. “In most cases, it was the leadership that wasn’t good.”
—Slack CEO Stewart Butterfield said “real success comes when you bring together (talented) people and create an environment where they can perform to their potential.” That requires alignment on goals. “When you are not aligned, it doesn’t matter how much energy everyone is exerting.”
—Frances Frei of HBS talked about celebrating failure and learning from it. “What we usually do when people fail is avoid making eye contact.” Instead, you should “give them all the Scooby snacks.”
—Microsoft’s Peggy Johnson described Satya Nadella’s reinvention of the company: “He said, ‘I need to change the mindset of this company…from a ‘know it all’ culture to a ‘learn it all’ culture.’”
—Affectiva CEO Rana el Kaliouby said the coming age of AI “has to be built on trust. We need a new social contract.”
—Siemens U.S. CEO Barbara Humpton talked about the apprenticeship program her company is building in the U.S.: “It’s not white collar or blue collar. It’s that new collar, middle skills section of the economy.”
—General Stanley McChrystal closed out the day with a preview of his upcoming book on leadership, and ended with a pitch for a program of one-year universal national service—either in the military or in programs like Teach for America: “Citizenship carries rights and responsibilities. Where do you learn the responsibilities?…We need to create a new idea of leadership where everyone feels invested.”
You can read more from the conference here. Other news below.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
Instagram Founders
Instagram CEO Kevin Systrom and CTO Mike Krieger are quitting Facebook, which bought the photo-sharing service more than six years ago. Systrom said he and Krieger were "now ready for our next chapter," but did not explain the decision to leave. This is a huge shakeup for Facebook, which counts Instagram as one of its most important strategic planks. Jan Koum, CEO of the Facebook subsidiary WhatsApp, also left earlier this year, reportedly over privacy disagreements. Fortune
Sears Plan
Sears CEO Edward Lampert has proposed massive restructuring of the chain's debt, in order to stave off bankruptcy. The plan, which would involve a debt reduction from $5.5 billion to around $1.24 billion, would also see Sears get rid of more than $3.2 billion in real estate and assets. GlobalData Retail MD Neil Saunders: "As usual, Sears is focusing on financial maneuvers and missing the wider point that sales remain on a downward trajectory." Wall Street Journal
China Retort
The Chinese government has laid out its gripes with the U.S. in a lengthy paper, accusing President Trump's administration of "trade bullyism tactics" and striking back at American criticism over Chinese subsidies and alleged intellectual property theft. The U.S. also has market-distorting subsidies, the paper said, and is keeping out Chinese companies under the guise of national security concerns. Beijing claimed the "support of all countries in the world that reject protectionism, unilateralism and hegemony." CNBC
South Korea Deal
President Trump has finalized his first trade agreement, signing a revamped pact with South Korea that he described as a "brand new agreement." The new version of the deal exempts tens of thousands of American cars from South Korean safety requirements, and requires South Korea to amend its customs procedures and drug pricing policies. The South Korean parliament still needs to approve it. BBC
Around the Water Cooler
Starbucks Shuffle
Starbucks is to lay off some corporate employees as part of an effort to, in the words of CEO Kevin Johnson, "evolve the direction of teams across the organization in size, scope and goals." Starbucks is trying to expand more internationally, as it faces slowing growth back home. Retail staff are apparently safe from the looming reorganization. Fox Business
Rosenstein Fate
Yesterday it was reported that Rod Rosenstein, the deputy attorney general, had quit or been fired by President Donald Trump. It was clear later in the day that Rosenstein remained in his post following a discussion with the president. But the two will meet again on Thursday, to further discuss reports about Rosenstein allegedly talking about ousting Trump and wearing a wire when meeting him. BBC
Bank Complaints
European banks are not keen on the fact that U.S. regulators give local lenders a light-touch regime while giving foreign banks a tougher time. They also want to benefit from relaxed stress tests and capital requirements, and they have the backing of seven Republican senators who warn that failure to play ball will result in foreign retaliation against U.S. banks. Financial Times
Economic Outlook
The latest quarterly Business Roundtable CEO Economic Outlook Survey shows a slight reduction in sales expectations and capital spending and hiring plans. The Q3 index stands at 109.3, down 1.8 points from the Q2 index, but still the fifth-highest in the last 16 years. Roundtable chair Jamie Dimon: "Business leaders are showing their confidence in the U.S. economy with strong plans for investment and hiring in the months to come. Pro-growth policies have helped unleash this confidence with an agenda centered on tax reform and smart regulation. The uncertainty around our trade policies remains a risk." Business Roundtable
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.
