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AS Watson is approaching AI as an enterprise transformation—not a series of IT pilots. Its CEO-led, cross-functional approach embeds AI in workflows, decision-making, and performance management across the business, rather than leaving adoption to a single technology team. To support this effort, the company has appointed 31 global strategic technology partners to accelerate its AI-powered online and offline retail transformation.

In this one-on-one conversation, Group CEO Malina Ngai discusses what this shift means in practice—from smarter warehouse operations and more connected customer experiences to the leadership choices required to make AI integral to the way the business operates. How can companies turn AI investment into compounding value? And what must leaders be willing to change to achieve it? 

Malina Ngai, Group Chief Executive Officer, AS Watson Group 

From Efficiencies to Reinvention: Navigating the AI Transformation

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Thank you, Andrew. Doctor Molina and I, thank you for joining us at Leaders Forum. In this session, we're going to discuss AS Watson's approach to AI transformation. And how this 185 year old company is reconfiguring for the intelligent age. But before we go into the details, um, I want to start at the beginning. Was there an aha moment for you? Was there a moment of realization when it became apparent that AI wasn't just another technology, but had the power to reshape your business, your entire industry, and therefore, it would require an entirely different approach? What did that moment look like? Well, as you said, we are 185 years old. So imagine that uh back in 1841, there's no electricity, no telephones, no internet, and certainly no AI. Uh, and, uh, over the past 185 years, well, basically it wasn't is as old as organized retail, I think. So we went through all the changes, you know, from an independent store to a chain store, and then the chain store becomes a category special. List, and then you from a local retailer becomes an international retailer. And then when the digital age came, and then we have to transform ourselves so that we have we have an Opus model which is offline, uh uh integrated with online and giving that customer experience. The interesting thing is, for all those changes over the two centuries, the change is mainly about like where you sell and how you sell. But then AI is very different. AI is very different because When you think about retail, it's a lot of processes. Oh gosh. You have to manage all the supply chain, move thousands and thousands of products, you have to manage promotions, you have to, uh, execute a lot of, uh, procedures in the company to get it running. In the past it's 10 hours a day, now it's 24/7. Now with AI. It's the first time we are able to look into how we reinvent the model so that we don't just focus on processes, OK. AI can do that, but we focus more on customers experience and problem solving. Now this morning, for example, when you wake up, You told me you run, right? When you wake up, you wouldn't be thinking about that. I need a bottle of vitamins. You think about, ah, today I need to be very energetic, right? On a good day. And when I wake up, when a customer wake up, they wouldn't be thinking about, I need a skincare product. They will be thinking about, oh, I need a healthy Younger looking skin. So that's what customers want. They don't want thousands of products. They just want retailer who understand them and being able to provide the right solutions. So with AI this is the first time that I told my team, this is the first time that we can look beyond just efficiency. It's about reinvention, how we relocate the way we serve customers. So that's when we think AI is transformational. So there wasn't necessarily one moment of friction. It was a kind of overall realization of this how expansive the influence of artificial intelligence would be. Um, so let's talk about how you're doing that. You've made the case that, that leadership, culture, organizational design is going to be what determines the success of implementing AI at scale. Um, and therefore, you've said in past remarks, it must be CEO led. So tell us about AS Watson's enterprise mandate around AI and what CEO ownership really looks like. When, um, decades ago when I led the digital transformation at the time, meaning that we have besides our physical retail experience, we have to build online. And at the time when we integrate technology, uh, either CRM, uh, e-commerce, and a lot of different types of technology. I will call it is vertical, it's top down. So we, we were in the boardroom, we decided we need to have go for this strategy. This is the investment, and then we pass that on to IT and pass that on to HR for example, for training. So then you go function by function and market by market. So that's what I call is vertical. But for AI what I What I see is my vision is that the whole organization needs to move together. So I would call the AI is horizontal. I can't afford the time to let a silo department or one department or a couple of departments to lead it and then try to roll out market by market and function by function. So then I started to um Uh, chair all the meetings. I talked to every market. I have 30 markets, and then I, I talked to every function to start everyone to understand and give them the transparency. There's still some companies where, um, the, the people who work in the company, they are They hesitate whether they should use AI or not use AI. But in AS Watson, we have announced our strategy, uh, last year is a human AI, uh, partnership strategy. And everyone, you should bring the AI assistant with you to work, help you to think faster and smarter. So that's step one. That's why I call it. COLED meaning that I, I would have to lead it because this is not the time to delegate. If you look at AI, I, I know we talk about AI like opportunities, but at the same time you look at AI, it's like crisis. Crisis meaning that technology develops so quickly, both from uh customer and consumer adoption and also all the companies. So if you, you don't do it in the right way quickly, it could be a crisis. But every crisis has opportunities. And at the same time, it allows me to bring in um a different meaning to agility, agility, because when we talk a lot about uh AI and everyone talks agility, we need to be very agile, the world is very uncertain. But agility is not speed. And this is what I told the team. I have a, I brought a video. OK, can I show a video? Yes, please. I think we have a video to demonstrate, uh, what Melina is talking about with regards to agility. Let's cue that. But Holland comes in for a pit stop. Time to refuel and change tires. Lou Moore himself changes the tires. Only 4 crew members, including the driver, are allowed to work on the car. It's a tense time. Holland stays in his seat, anxious to get away. Let's watch. Remember this 67 seconds. Mhm. Oh, just in case you didn't see it the first time. Yeah, this is the world record now is 2 1.8. So here we're looking at AI speed. This is not AI, this is real. Right? But I mean, this represents that, that agility. So, Normally when we see, even if you haven't been to F1, you have seen it on news, for example, you think, wow, Formula One is all about speed. Yeah. But in Formula One, when you have a car running 300 kilometers per hour, if you ask an engineer, Actually, the F1 engineer, the first thing they think about is not how to build a faster car, it's how to reduce the drag. So the weight of the car or the dirty air from the front and other car in the front, or they have uh some radio, uh they can't. clearly, so every millisecond decisions, it's like a drag if you don't do it right. So in an organization, if I can use this example, is that back in the 1950s, it's not, it's not slow, it's 67 seconds, but today it's 2 seconds. So when for an organization to look at AI it is not about how AI bring you speed. For us in AS Watson agility is acceleration minus friction. So, you've mentioned just now that you uh want to move from AI being a source of crisis to AI being a source of opportunity. You've given yourself as CEO the mandate to bring that together across your 30 markets, across your 17,000 stores um worldwide. So, let's talk about a specific Example of how you're doing that, the impact AI is making and and how you're measuring that impact as well. Can you give us a specific example of how you've reconfigured a workflow, a team, or maybe a whole business unit around AI and also the benefits you've seen as a result? Let's get into the weeds a little bit. Sure. Going back into that formula first, when I talked to the team, when I, I, I now see that every function like every, every two months. So the, the, the first question I ask them is not how you use AI. It's like, what friction have you identified? Because that is very important for us to take AI to the next level. And when you talk about ROI, a lot of people will think about AI investment is quite expensive, it's, it's, it's not cheap. So then what is ROI? Now if we focus just on AI efficiency, then we're trying to measure how many hours you save and so that will only just change the percentage. But what we are trying to do and think about is how to reinvent with the human and AI partnership so that we can change the equation. I brought you some equations, so share with you. I hold that up. So traditionally in, in, uh, in any organization. Then you have a, you have a perfect strategy in the boardroom which I pull up the image for Melina please which I would say is like you have a 100% perfect strategy but then as you move down the different levels of the Organization, every hands off, there's some discount to it because it's either uh communication scare people, how do they understand your strategy in the boardroom versus uh some inefficiencies or maybe capabilities. So if you look at the first number. is 50.4. Right. So meaning that if you, if you have a 100% perfect strategy in the boardroom, it could become 50. My customer can only experience like 50% of what we want to do. Now with AI you see the middle, this illustration is when you apply AI to organization, then it improves efficiency, right? And it could be even better than efficiency can cut off one of the process. So you see the formula actually have one less number in it and then that's nearly perfect. So then you get 99, quite close. So meaning that AI efficiency will help you to improve the percentages. But what we are trying to do in AS Watson is The human plus AI partnership because when you use AI to give us the speed, the scale, the intelligence, and the human brings, you know, that that context, we know how, what our customers need at what time. We, uh, we, the human also have that meaning and connection, how we provide a human touch to the surface. Then the formula is the equation completely changed. We can generate more value than just improving the percentage of every step. So this is how I explain this within the company. Agility is acceleration minus friction. You can't accelerate the pedal and then you have friction. So when we transform, we also need to look at the whole new way of doing every process and then focus much more on our customers. And what metrics are you looking at to measure the success of that? What we try to do, one, first of all, the first one, maybe a lot, maybe not a lot of companies do that. We measure the colleagues' engagement rate. So we, since we started um to promote human AI strategy in the company, we always do colleagues engagement rate, meaning that we, we ask the colleagues, you know, how they, whether they like work, what is the part they like, etc. But then the score has jumped up a lot in further to be in the uh several departments because the team leaders told us that when we started to use more AI. The colleagues love their job. They, they are able to have more interactions than facing the screen and that changes the engagement of our people working in the company to start with. And then we started to then put through into more customer front uh initiatives, then we measured customer love score. So for example, if we are able to free up more time for our store, our colleagues in the store to service the customer, then if you If you have shopped with Watsons, for example, then we will be asking you right after your shopping to give us your experience. How was that service? And we continue to see that customers love score improving. And this is uh not the usual way that people would measure AI because score, yeah, customer love score and our people love score in the company. So, let's talk about that engagement among your staff. So, as we mentioned at the top, AS Watson this year is celebrating its 185th anniversary. Um, it's an incredible achievement, almost two centuries. So, how do you tool and retool for new technologies while still keeping that heritage, that culture, that DNA that has driven your success for almost two centuries? How do you get that balance right between um embracing what's new without throwing out what has gone before? We actually start with the purpose of the company. Um, back to a decade ago, and we, we are Asian-based international company. So in the early days, we don't, it's not like some of the, uh, maybe the European or US company where you have a vision statement and a mission statement. We're very focused on like generating profit. So then, but then a decade ago, I started to see that we, we needed to transform the, the company. And it's not just a company that is just in Hong Kong. We're in 30 markets in Asia, Europe, and the Middle East. So how do you link everyone together in terms of their focus without losing focus, whatever technology you put in a company. So then we, uh, I put in a team of young managers, not for a consult consultancy, but then we would brainstorm what what should be our purpose in AS Watson and in one hour they came out of the room and they told me with a flip chart at the time, sorry, still like 1010 years ago, a while ago they have flip chart and then a smiley, they said, Melina, I think the purpose of AS Watson. should be to put a smile on customers' faces. It's easy to understand what in whatever languages, it's easier to understand whether you are working in the office, you're working in the warehouse, or you work in the stores, and this is what we believe in. And within 30 minutes, we said this is going to be our purpose. Hence the customer love score. Exactly. So we don't have mystery shopper, it's customer love score, we just ask our customer. So we, we basically, we put our purpose in the center of everything we do. So here is AI when we even when we put in, we have to do supply chain optimization a couple of years ago when we start to have, have our Opus or model, etc. Then even you go to the warehouse, I, I talk about customer love, because if we are able to manage all the inventory on Time and being able to do the right delivery, we put a smile on customers' faces. And then the and then the the warehouse team start to understand what they do. They are not hiding somewhere in a very hot uh um premises to move products. They're actually putting a smile on customers' faces. Likewise, every function we go through that everyone knows this is the thing they do has a contribution to customer love. I, I believe when the company has a purpose. Whatever technology is not going to take away that focus. Absolutely. So customer satisfaction, customer love being a single-minded obsession that drives every decision you make, whether that's staffing, whether that's technology, and that being at its core. Um, I want to move on to talking about um employee love and, and engagement there. So you've talked before about AI as a tool for inclusion, which is interesting and, and counter. some oft-cited narratives around AI and how it could potentially um exacerbate existing human biases and so on. But at AS Watson, you've reported that AI powered automation at a warehouse in China has actually helped to increase the female workforce. You're, of course, on our most powerful women Asia list, uh, Melina, tell us about this and, and tell us the impact the tech has had. I was in Foshan two months ago. Uh, I went to our stores and then I usually try to make time to go to the warehouse. It's a bit remote, but then it's important. When I, I, I have read a lot of documents and videos and everything about the, the, the automation and the AI we put in the infantry forecasting, etc. I've seen that, but until the time that I was, I walked into the warehouse. I look around, it's not like you have many people moving boxes anymore. Everything is so orderly because we put in the different automation. And the thing is, the team told me that in the past, the warehouse, like a typical warehouse, we, we have 8 in in China and 80 around the world, but usually it's about 80% of our team would be males because we do require a lot of heavy lifting. We have big boxes. But now because of automation, uh, all, all, both males and females, they don't need to lift anything very heavy. We ensure that the robot can do that because it's for for our colleagues' wellness. So then in that warehouse, we have 62% of our colleagues, they are Now females and that was something that really positively surprised me of how technology can also bring more diversity in the company and actually in our technology team in AS Wilson we are our senior leaders 50% male and 50%. And females we have evolved that over the years uh for even for the technology team. We're here, Melina at the Fortune Leaders Forum. So I want to close by asking you a question on the leadership choices you've had to make enabled to do everything you've just been talking about. What has been the hardest leadership choices required to land that AI transformation? What must leaders be willing to change to get an ROI on AI? The hard decision for a lot of leaders, or maybe I'll start with the biggest risk of all the leaders with this type of AI, um, technology is We put AI to improve uh today's process. So basically you get a better version of yesterday. Uh, but we lose sight on how we can use AI, which is really transformative technology, to help us to reinvent how we serve our customers. Um, and the choices sometimes we will have to make is we focus a lot on the numbers, like how much we need to invest. But my starting point was actually focus a lot on human. What's the role of human going forward? Uh, is it really that we with AI we're going to cut out 30% of our workforce, or actually it's going, we are going to increase the quality of our people intelligence. Uh, in the past, it's just not possible to handle that amount of data within a quick speed and to analyze things and make decisions. But now with AI help people can actually play a much higher quality role. So initially there was something that is not easy to explain to the board. And what we are trying to, to think about also is not just an ROI for, for this year, how many hours we save. It's about how many, how many new ideas we have generated. Since last year October, we, we, we launched our strategy, our human AI strategy last October. And since last October, Not even a year. We have generated a lot more new ideas that we can put out in the market for the customers and for the way we, we serve. This is the kind of value we are trying, we are trying to, um, to reinvent. So this is, I, I, we have a lot of leaders in the room. And I do hope that you can focus more on the human side. And for me, my, my vision for AS Watson is that I would love to be able To create a sustainable company that's powered by technology. But with a human soul and going forward, I think retail is going to be more human. It's not going to be less. That's a perfect note to finish on. Thank you so much, Melina, for talking to us about AS Watson CEO-led enterprise level AI transformation, about customer love as a metric for success, and finally the difficult leadership decisions required to get there. Please join me in thanking Doctor Melina Nay. Thank you. Thank you so much.

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Gaming is the most popular form of entertainment on the planet. It is also on the cusp of radical reinvention, fueled by changing player preferences, shifting business models, and the rise of generative AI. Xbox CEO Asha Sharma oversees more than 500 million players across some of the most iconic franchises ever built, from Minecraft to Call of Duty.  What does it mean to "game" when the very concept is evolving faster than publishers can envision it?
 
Asha Sharma, Chief Executive Officer, XBOX 
Allie Garfinkle, Senior Writer, Fortune 

To the Next Level

So I want to ask a question of all of you really fast. Who here plays video games? Raise your hand. Oh wow. That's a lot, more than you were expecting, less than you were expecting? You know, a couple of weeks ago I would have said more than I was expecting, but uh the study just came out and said 70% of Americans play 1 hour of video games every single week. Which, you know, per this room, it actually might be more than 70%, as it turns out. Um, you know, Asha, you took on this job a few months ago. Uh, you were not historically a gamer. What was the first game you ever played? On an Xbox. Oh gosh, um, well, the first game I ever played that in, in memory, I kind of, I'm not a gamer, but kind of casually grew up with Star Fox and, uh, you know, hockey and Sonic, and then I think the first game I played on an Xbox was Halo. It was on Halo. It was Halo, OK. There was, there are some Halo fans out here, um. You know, over the last few years, Xbox's future has never been more in question. Um, you just had your first showcase, the CEO. How do you feel? Oh, it was incredible. So Showcase is our annual game show where we show off the trailers and the lineups to come. Uh, we have more than 25 creators that that showed up to do it. And honestly, it's, it's one thing to, to watch it. It's one thing to hear about it, but it's another thing to feel it. These are our fans that have committed 25 years to Xbox. And to see their excitement and to feel the energy for the next 25 years was pretty special. What did you want that showcase to telegraph about Xbox's future? You know, when I took the role about 100 days ago, I talked about my 1st 100 days was about listening and learning and really understanding what makes Xbox Xbox. And so I made Three commitments along the way. I wanted to to preserve great games. I wanted to be about the return of Xbox and I wanted to talk about the future of play. And so it was only fitting that uh my first showcase we got to to really do that and we had a lot of great games. Uh, we had the return of Xbox with the reintroduction of two new. Exclusives as well as a new special edition, uh, 25th anniversary console, um, and it was just such a, such a wonderful environment to, to bring everybody together. Now one thing about your tenure tenure is that you have killed a lot of things fast. So this is an Xbox campaign co-pilot. It seems like the mobile store might be in flux. What's the pattern? Look, I think that clarity is kindness, and so as I'm learning, I'm trying to be decisive about the things that we need to invest in, the things we need to prioritize, and the things that don't represent our brand, and we're doing that as fast as we can. There's still themes in that as we go, but It's starting to really create a direction for the team to understand the principles on which we stand for how we make decisions to really have all of them go follow that same path. Now this wasn't something you killed, but it was a cut. You did drop prices on Game Pass, longtime Xbox pillar. What went into that decision? Look, I think GamePass is at the heart of gaming. It's the way that players can access our, a lot of catalogs, day one content, great experiences with us, and we had raised the prices 50% last year, and we were on the path of seeing a decay in subscribers. And so it had just simply become too unaffordable. And so we adjusted the. Price, uh, for players and the, the offering as we went through with that, um, and we're starting to see a return to growth we're starting to see more subscribers we're starting to see more importantly, uh, better retention, um, and we've got more work to do so we'll be doing more this summer in order to create more flexible offerings to meet all the types of players that we have and we'll continue to iterate on that now who here considers considers themselves an Xbox fan? Raise your hand. OK, so there's some very enthusiastic hands out there. You like me maybe have been on Xbox, Reddit recently then, um, where people are saying things like, when do we put up the statue of Asha, um. There's definitely a sense you've turned the narrative around on Xbox, um, but what has truly changed in these first few months and what still needs to evolve? Look, I think that. Uh, I've, I've had the opportunity to take a look at everything with fresh eyes, and, uh, the team is putting a lot of wins on the board, starting with our players that we have one of our, our operating principles is that we earn every single player and so we've shipped more in the last few months on our platform than we have in the last year. we've been able to see a return to growth on GamePass. We had some great games. Forza was absolutely crushing it, um, and I think that momentum is really contagious, and we're starting to, to really go back to some of the core principles that made Xbox great. At the same time, we know that the industry at large is going through a lot of headwinds. Um, it pulled a lot of demand for during COVID and it hasn't really been able to re-accelerate. Uh, there's compression happening at almost every level of, of the stack, and there's a new generation that plays very differently than the core generation. And so, um, we've got, we've had a great 100 days. We've begun to revive Xbox in the next 100 days about resetting Xbox. To that end, the narrative has shifted, but the numbers are tough. Gaming revenue down, but hardware revenue down is 33%. You've previously said you can't raise prices through the crisis, but you also have memory storage shortages to contend with, um, and they are driving up prices across the industry. How do you think about balancing that, and does that limit growth potential for consoles? Yeah, look, it's going to in all of these spaces there are no silver bullets, um, so I will, we will have patience and we will, uh, execute in days but expect that it will take a while to show up on the scoreboard. Um, look, on hardware it we are in a crisis right now the entire industry is there's a. Shortage of memory and storage and the costs are uh exponential um they are usually at this point in the generation about 50% of the cost and uh we're we're seeing they're up 2.75x. They're up 50% since I started they're going to be up effectively 7.5x and so. Yes, pricing is a lever of course but we must think about other options as well we must think about other ways to think about the cost construction of the console we must think about how we, uh, create different plans so more people can participate in the. So we must think about, uh, partnerships that will allow us to have better distribution and reach, um, and we must think about the experiences that we're creating outside of that as well to reach new audiences. What are some things you're considering that you would never imagined would be the case five years ago? Or that Xbox would have never imagined to be the case five years ago. Hard to tell because I wasn't, I wasn't there, but I think that we will, you know, continue to look at new business models. I think is what is needed for console rather than just the most premium high performance console in. The world, I think we've reached a point where it will be hard to imagine that mass audiences can afford thousands of dollars to spend on a console generation. And so I think we will start to see radically different business models that we never expected start to come into orbit later this year. One of the things that I think is really interesting about the business moment you're in, um. Is through the prism of something like Project Helix. It's expected to be a top tier premium offering, there is definitely interest in it, but previously Xbox executives have recently said that it's going to be hard to meet demand. How do you sort of balance that? Yeah, well, we're having a hard time, uh, now. There's more demand than there is supply for our Gen 9 console, um, and I suspect the same will be there with, with our, our Gen 10, uh, console. I'm excited about it. Um, it's. It's a console that's also going to allow you to play your PC games. It's going to have backwards compatibility. It's going to have leading end performance, um, but there's material work to do to make sure that it is available to the people that want to want to play. And so we're working on that. To this end, you have warned about a coming crash in consumer electronics. What does that look like in gaming and beyond? Look, I think it's pretty interesting because if you, you think back, uh, gaming was really the proving ground for compute and AI. So it's, it's pretty interesting that now 25 years later, um, with the AI infrastructure happening that we are, uh, in this position. But I, I actually see it as great that every industry now gets to benefit from advances in computation and so for us. I think that we have to think very differently about storage and memory going forward. We will have to apply new techniques so that we can compress that. We will have to empower customers to have very flexible storage offerings. We will have to empower new types of games so they can fit on device and so there's going to be a lot of innovation. This will take years, not days, not weeks, but we'll go through it together with the community. Now we're gonna turn to the audience for questions soon. Um, one thing I've been very interested in is the question of exclusivity. Previous Xbox leaders took exclusivity off the table. It seems like after Showcase, it's back on, Clockwork Revolution and Gears of War e-Day, both exclusives. What led to the pivot? Look, I think that we are, uh, the #2 publisher in the world, and when you do that, you want your games to be everywhere. You're stronger when the world plays with you. At the same time, we are increasingly becoming more of a platform, and it's hard to find examples of platforms out there that don't have exclusive services, uh, and content, and so, um. This is a journey for us. Our, our business isn't particularly healthy as you noted, uh, or as you noted, and so, uh, we're starting by introducing 1 to 2 signature exclusives and as the business is healthy, we will look to try and do more. Questions for Asha in the audience. Oh, we have a lot of hands. OK, hello in the front here. Your name and who you're with. Oh, we have so many questions for you. Um, hi, Kathy Hackle, um, CEO of Future Dynamics. I've got a question for you around world models and kind of the role that gaming plays. You've got, for example, Roblox introducing Roblox Reality, going into video world models. How is Xbox gonna start to kind of start to use the infrastructure of gaming to power the future of AI? Yeah, great question. So just in terms of a priority set for me, I'm very much focused on core before more at the same time. Kind of going back to what I said, AI has always been part of gaming, right? The GPU wasn't invented for researchers to train neural nets. It was invented for, you know, better spaceships and dragons and better, better frame rates. And so in many ways, I think that gaming will continue to lead the way on a lot of this technology. I look, coming from the AI world before this, I, I, a bit, bit of a different point of view. I don't believe world models will replace AAA games. Um, I believe that AI can certainly invent a new genre of games, but they're just going to be different. I can, you know, if you think about GitHub copilot or codex or cloud code, you can maybe single shot a vampire survivor game because the parameters are pretty defined and understood. But when it comes to economies and matchmaking and social dynamics, this is a systems problem, not a content problem. And in my 1st 100 days I've really come to appreciate the depth and the complexity of art. And so um I think AI will be really important in production pipelines and prototyping and things like that. I think it will be really important for new forms of content that come up, but I, I don't necessarily see world models being the replacement for 50 to 80 hours of gameplay in a really complex universe that gets created in AAA. A quick follow AI slop in gaming, how do you keep it off your platform? I think we just have to be really principled. I think there's this misnomers like gamers, uh, the gaming industry hates AI. That's, I, I actually believe that's absolutely not true. I think that they have demanded, uh, the industry to push computation forward. They've always been at the frontier, real-time networking, online infrastructure. It's all started with gaming, and I think that, uh, because of that, they're just very protective of. Adding technology for technology's sake, we have to solve a problem. And so anything that we will do will be to solve a problem, to solve a developer problem, to solve a player problem, um, not to just paint it all over the experience. Other questions for Asha? Oh man, we have so many hands. Alright, we have a question right over here. Hello, your name and who you're with. I'm Asher and I'm with my dad. When you were a kid, what were you building or obsessed with? Did you see yourself being a CEO of a large company? Great question, Asher. When I was a kid, um, Honestly, I, I never obsessed on what I wanted to be when I grew up. I only obsessed on what I wanted to do, whether it was selling coupon books, uh, or, you know, putting on concerts so I could raise money so I could have my lunch money, whether it was, um, you know, being the best at taking out the trash at the park that I worked at. I just tried to obsess on being great at what I was doing so I could earn the next job, um. And I think it's really special to be the CEO of Xbox. It's beyond my wildest dreams. Other questions? We have time for one more. Maybe we have time for Steven Wolf from Alpha Governance Group. Uh, I'm so curious, you spoke about makers over managers and obviously the creator economy is so important. How do you view creators as a part of your strategy going forward? Great question. I, I think they're incredibly important part of our strategy. I think that, um, you know, the way I think about it is we've got. Uh, incredible studios that are in-house and they need to be our first customer so we can rapidly iterate. We've got an incredible platform of third-party developers and the next generation of creators. I, I envision a world where Xbox is where the world plays and creates. Increasingly we're seeing that players want to participate and so we need to open up. Our platform and have the tools for, you know, customization and extensions and all of those things and maybe even in game creation as well, amateur game creation so I think there's a ton of opportunity if you look at um kind of gaming akin to entertainment. The top two box office hits right now are from YouTubers and so I think that um this is a special space. I think the more types of creations will bring more types of players. We actually have time for one more hand back there. Hi, I'm Tarun Chandrashekhar, CPO Syndical. So, you have 50 million plus active devices running Xbox today with increasingly better silicon, right? A lot of the framework we've had so far is about how does AI get into gaming. But my question is, how does Xbox get into AI? You have edge computing, you have Microsoft building the largest AI infrastructure. And if I was to expand the idea of gaming, this is the biggest time we're thinking where You know, when we were 30 years ago, we were all building PCs and starting to write our own code and writing our own learning programming. It's that world today when it comes to local influencers, right? I can tell you a number of us here have probably gone and built a new RTX 5090 box, not to game, but to actually run a local GEMA. 14 billion parameter. Is there, are there any plans to expand the scope of what you would call entertainment or growing gaming to actually allow for that next generation of AI development that becomes more and more edge compute. Yeah, so great question. This is definitely not our all birds moment where we're going to turn excise. AI, um, so, uh, you know, look, that said, I think there's, look, you could certainly locally inference today with the GPUs, on, on an Xbox, and developers can, can do that if they so choose. Um, I think my focus right now has to be on winning the core of gaming, and if that so means that the game developers and gamers want to to locally inference, we'll make that available. That hasn't been the top ask, especially with a number of other devices that are on the market, a number of the other, uh, innovation that Microsoft is making available, um, but we are, you know, we're, we're part of Microsoft, and so it should that need arise, we'll, we'll take a look at it. As we wrap up this conversation, um, I should tell you, as I was preparing for this interview, I talked a lot to my friend Ryan, who's a very serious gamer, owns 6 Xboxes, um, and he pointed out to me, 25th anniversary coming up in November, and gaming is so identity driven. Mhm. So what does it mean to be. As opposed to a PlayStation player or a Nintendo gamer, what does it mean to be an Xbox gamer today? Look, I'm still getting to know our community. It's vast and it's really special, but the thing that I've really come to appreciate about Xbox in my 1st 100 days is it's always been a bit different. Like the, the players and the, the teams have always dared to do something no one else did. They put an Ethernet on the Xbox before anyone believed in. Online gaming, uh, we launched Xbox Live before people understood social, um, and they are really rooting for each other and have come to the table to help each other through, um, good times and hard times, and I think that's incredible and unbeatable. Asha, thank you so much. Thanks for having me.

Today's travelers and consumers expect more and have more options than ever before. The companies winning their loyalty aren’t just keeping pace—they're making big operational bets and executing under pressure. The operational leaders of Southwest Airlines and MGM Resorts have both been inside major transformations: reinventing legacy systems and reimagining the guest experience end-to-end. They'll share what it takes to stay ahead of shifting consumer expectations and bring an entire organization along for the ride. 

Ayesha Molino, Chief Operating Officer, MGM Resorts International
Tony Roach, Executive Vice President and Chief Customer and Brand Officer, Southwest
Moderator: Ruth Umoh, C-Suite and Leadership Editor, Fortune; Co-Chair, Fortune COO Summit

The Bold Bets that are Reshaping Customer Experience Today

How they've been saving the best for last. Aisha and Tony, thank you so much for joining us here. We're happy to be here. All right, Aisha, let's start with the news, the big news that broke yesterday. Uh, Barry Diller's takeover bid for MGM at an $18 billion valuation, as you already know, he's essentially saying the market is undervaluing the company and there's more growth to unlock. So from your seat as COO, do you agree? Do you think the market has been underestimated in MGM? So. We did receive a takeover offer yesterday and our board of directors is now going to begin its work of doing its fiduciary responsibility in terms of maximizing shareholder value. And you know, from my perspective, the trick is really to make sure that we keep our 60,000 employees focused on what they need to do every single day, which is deliver the best guest service possible. And at our scale that is, you know, it is a big task to keep that kind of population focused, but I think our leaders are well positioned to do it and everyone is very zoned in on the task at hand. I'm gonna push. Do you agree with the sentiment? I'm not gonna comment on that. Fair enough. Uh, well, let me add this question, you know, because in his April letter to shareholders. Dillard did talk about MGM's combination of real world assets and digital growth opportunities. So as you think about reshaping the customer experience, which of these opportunities excite you the most right now? Oh, you know, uh, we are at MGM Resorts. We're in the business of delivering fun. It is fantastic, and that is something that we truly get to do every single day. And from my perspective as COO, that's where the magic lies, right? And so one of the things that I've been really focused on, especially in a business like ours which is all about delivering experience, is how do I get my leaders laser focused on that proposition, get them back on the floor, get them engaged with the customers, get them anticipating customer needs, and then ultimately differentiate, delivering a differentiated customer experience. We're going to dig into and. What that looks like in practice. Let me turn over to you, Tony, uh, at Southwest, which is also going through its own organizational shifts, certainly another period of transformation. The company announced recently you're now going to oversee not just brand and customer experience but also people leadership and development, fairly unusual combination you don't see all too often. What's the thinking behind putting the employee experience and the customer experience under one sole leader? Yeah it's it's, it's, it is complex in terms of how it is designed from an organization stand standpoint but the actual principle is simple we're trying to elevate the employee experience and their journey so that they can deliver the type of customer experience that our brand and our business essentially is counting on. And so as we've been making transformation, especially on the customer facing side we wanna elevate the transformation for our employees which is, you know, we have 80,000 employees who are the lead actors in everything that we're doing and so this new role just brings these together and essentially joins these two efforts in tandem, uh, so that we don't miss a beat. Southwest is in this period of reinvention. About two years ago, the company pivoted, uh, did away with assigned seating, or it announced it was gonna do it with assigned seat in July 2024. Um, also got rid of course corrected, uh, on its two free checked bags policy which was long known for. For, uh, and was really one of the most recognizable parts of the brand you're now in the process of doing the work actually on the ground doing the work. So what have you learned about leading and bringing customers along through a transformation, especially one where some customers were a little iffy about the changes that were coming to a company that they've known for for decades. Yeah sure if you guys haven't known we've been going through a few changes at Southwest. I don't know if everybody in the room has seen those, um, but it's been the talk of the industry and at the root of it you have to understand what led to the changes you know we are a brand that's been iconic, um. Uh, but we wanna be sustainable and so fundamentally we needed to change our business model so that we have the future to look forward to and so when you anchor into that you then go and pick and choose where you wanna change and our, our, our position on this is you have to change the ecosystem around. Uh, the heart, but you don't change the heart, meaning the heart being the people and the service that we provide. So we went from open seating to assigned seating in, in, in any industry that's like changing the engine in a car from an airline standpoint, um, because it's a revenue change in terms of what you sell, but it's also an operational change. I mean how you turn airplanes and how you seat them matters and so we did both of those at the same time. And I would say when you look at what's going well, both the revenue has, has been exceeding our expectations operation actually is running better than it was before and now you have customer and people sentiment that typically trails those. And so what you see is doing now is really turning our attention to post-transformation. It's about the transformation of the brand and the culture, um, and I think when you look ahead that remaining piece I think really puts us in a position for the next 50 years to be. Uh, just as beloved as we were in the 1st 50, let me follow up with you before I turn to you, Ayesha. There's what I call this like corporate dead zone where a company is no longer cheap enough to be a budget retailer, but they're not seen as elite enough yet to compete with the legacy first class experiences. So how are you defining Southwest's unique version of premium, uh, so you don't get trapped in this forgotten middle. Yeah, and travel is occasion based, especially the airline, and so there's enough occasions to meet, uh, different needs. And so when you think about the Southwest product, it's always been middle basically middle class to lower class in terms of what we've been adding and all we're doing is widening in the aperture to be able to add more premium into the mix doesn't mean we're trying to be Delta because we don't think we need to be Delta to be successful, but when you look at how people travel. Travel, you may have a different product that you prefer by the occasion, and we think that we can add some more premium into the mix that will serve those needs and be accretive to a kind of the base business that we've been, uh, that we've created over time. Aha, you have a similar balance and act that you're navigating. I mean, MGM owns a massive portfolio of hotels on the Vegas Strip, and especially as consumers are more cost conscious travelers, they're scrutinizing the cost of a Vegas. Yet they still expect more luxury, more personalization, more entertainment, more convenience. How are you thinking about delivering value for price sensitive guests without also diluting this premium brand and and alienating some of those luxury customers you have? Yeah, absolutely. Differentiation such as we have in our portfolio creates complexity but also opportunity, and we had to really redefine what value means in the context of our portfolio. And that redefinition is what? So at a property like Bellagio, um, it really means, again, an ultra luxury customer experience that is personalized and unparalleled for Luxor and Excalibur, which were, which are two of our more value. Oriented resorts. We actually launched an all-inclusive earlier this year. It's a package we're very proud of, and it includes room, resort fee, parking, 3 meals a day for 2 people, including alcoholic beverage, show tickets, roller coaster rides, so really the entirety of the Vegas experience at one fixed price. And we understood, we heard loud and clear last year from our customers that they felt like they weren't getting that value proposition from Vegas anymore, particularly at our core properties. So we, we listened, we heard it, and we changed. Following up with you, you know, guests don't think in terms of hotels and restaurants and rewards apps and loyalty programs. They think about whether this trip felt effortless. Um, so how do you design an experience that feels seamless across so many different touch points from beginning to end? Just think about the full customer journey. Yeah, it's a real challenge, you know, the customer journey, of course, begins when the customer starts actually searching for their destination, searching for their trip, right? And so it's from that point on that we really think. About how we make the customer journey as smooth and frictionless as possible. So that's everything from looking at our marketing to redesigning and reevaluating our booking flows, to once the customer lands at the airport, we work very closely, Tony and I were just talking about this, with our airport authority to make sure that facilitation of passenger traffic through our airports and on our roads is smooth and seamless. Every part of it has to be considered when they enter the property, and the all-inclusive was A great example of this, you know, we are a massive company that is not designed to be an all inclusive. We had to reverse engineer that and at the back end stitch every piece of that together to really create a product that to the customer felt like that, felt seamless and was technologically enabled, but we really went through every piece of it as a customer would to make sure that we could deliver on that promise. Of course deployment of standard technology like mobile check-in, kiosk, check-in, check out. Um, but also enhancing the in-room experience in terms of making sure that In-im requests that go to our housekeeping team, for example, are delivered faster and that service can be delivered smoother and quicker as well. So you just have to look at every part of it but walk, walk it as a consumer would. So it definitely has become more complex. Yeah. Similar question for you, Tony. Southwest has also said the customer journey extends far beyond the flight itself. So as you also look at that entire journey, where are you most focused right now and what tells you where you need to invest in the future? It customers clearly tell you where you need to invest because you're looking at where behavior is changing. You can also look at what makes or makes the trip in terms of retention and growth and so we, we follow that very closely, um, and for us it's similar to ISIS. I mean you customers travel and there's a lot of time in between travel where they're considering traveling again and so for us the journey is that entire ecosystem. Um, so the way that we prioritize though how to make sure we're getting the seams correctly is really where the commercial side of the business has to partner with the operational side because that's usually where the seams are broken. It's something we are selling that the operation has to deliver and we created a team that that that is their sole job is to create a joint commercial and ops team. And they pick those experiences that often get broken on that handoff, and their job is to try to fix it and remove friction out of that. You were telling me earlier that Southwest is in this era where it's going back to its roots and it has to make its brand very clear. What is the new Southwest? Similar question, what is the new MGM? Well, the new Southwest is the old Southwest. Um, back to your roots, when you look at, people used to, people fell in love with Southwest because we, it was fun. It was fun to fly. The service was great. Before we gave away two free bags. People loved Southwest for the flight attendants and, you know, we had a sense of humor and our, our ads were. etc. and we think that there's a lot of history that actually is the bones of where we have to be back again. So in this, in many cases the the revitalization of what actually created the love we have a heart at the bottom on the bottom of our airplane is that's very rare and so we think that is actually the secret to the future and so you'll see a revitalization of that. So some of the or changes you talked about at the beginning is if we're gonna market that we gotta deliver that. My job is to try to marry those two things together. And very similar for MGM, you know, I think, especially what we're seeing from our customers today is that what they value is a place where they can come and feel special. At our scale, that can be hard to deliver, but our focus is really, really on that. I mean, I said this earlier, but we have spent an extreme, extremely significant amount of time thinking about how we get our leadership teams, refocused on our customers and our employees and not sitting in their offices on teams calls, right? How do we free up the time and how do we create the intention to engage and make sure that when we talk about what our customer wants, we're actually going out there and talking to our customer. Millions of them walk through our doors every single day, and we have this incredible opportunity to get that immediate feedback and that's really so much of where our focus today is, which is much how the industry operated 30 years ago. Much of that customer's feedback, as you already alluded to, is certainly in person meeting with the customer. I meet with those who are coming to your various properties, but both of your organizations also sit on a treasure trove of customer data and feedback. How do you go about turning that information into action, into meaningful improvements? Give some examples. Yeah, absolutely. I mean, like most companies in our industry, we obviously use NPS as a really meaningful indicator of how we're doing, and it provides a lot of empirical data on really key issues about the customer experience and we utilize all. That to engage both in terms of big picture sort of policy and procedural shifts, but also direct engagement with the customer. And so that's a really, really meaningful data pool. Ultimately that will tell one part of the story, but it really is our customers who directly give us the narrative, right? And you need to, in my experience, we need to marry the both of those in order to really compellingly understand how we need to change, especially when we're talking about major shifts in the operating business. very similar, it, you know, NPS data is certainly there. AI allows you to listen to all channels now. I try not to listen to Reddit because it's just inherently negative. We can see everything, and the thing is you see it very quickly. What do you do about it is actually how you prioritize what actually is mattering the most. Our employees adding them into that mix typically leads to the actual solution when we launch. Assigned seating on day one we knew we were not boarding the airplane correctly. People did not like the boarding groups. They hated them. And so we almost the first 2nd day we started working on changes. We're on iteration number 7 now until we get it perfect and that's just a matter of you take feedback, you use the right people and the experts to solve solutions, and you need a mentality in the organization that that's OK. Any questions from the audience? If you have a question, raise your hand. We'll bring a mic over to you. Any questions please remain a few minutes. Let's end with this. Um, if you could leave this audience of fellow operating chiefs with one principle for leading customer centered transformation at scale, what would it be? Perhaps Tony, we start with you. Say, would you repeat the question please? Uh, if you could leave this audience of CEOOs with one principle for leading customer centered transformation at scale, what would that be? Yeah, I think, I mean, for our business and, and very similar probably to yours is the outcome of the experience we want is only what we enable our people to do, and, uh, we can design as much as we want on paper, um, but it's a matter of equipment and empowering our people to be able to do it with clear expectations, the right infrastructure, so they're incentivized to continue to do it. Uh, and then the motivation to give them something to believe in. Please closing salvo. Yeah, absolutely. You know, for us, what we've realized that with our scale and our number of frontline employees, we have to keep it very, very simple, and the core foundation of our operating business is that our employees have to be empowered to say yes. They, at our scale, things go wrong, they go wrong every single day. We know that. We can't always prevent that, but we can 100% influence how we recover from it. And to make sure that that is really the operating foundation that's distilled. Throughout the organization, whether you've been there 30 years or a day is really the core of what we focus on. Yeah, well, both of you are certainly correct in that everyone's always thinking about their next trip. I certainly am itching for my next trip. Uh, Tony, Ayesha, thank you for a thoughtful discussion on leading transformation while still keeping customers at the center. Very much appreciated.

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