RS Legacy

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RS Legacy (RSHCQ): Company Profile, Stock Price, News, Rankings

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RS Legacy | Fortune

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Financial institutions are grappling with unique challenges in the age of AI, including keeping up with head-spinning innovation at legacy organizations designed to manage risk. How do these leading COOs in finance lean into long-term stability while staying agile in the face of change? You’ll hear about how these global institutions are using ground-breaking tech to modernize the customer experience, detect fraud, conduct cutting edge research, streamline processes and more. 

INDUSTRY DEEP DIVE: HOW FINANCE COOs ARE LEADING THROUGH TECHNOLOGY’S RISKS & RETURNS

Conferences

Well, OK, as Diane said, AI has the potential to be transformative to the finance to the finance function. So I want to start by asking both of you. You, you, you're both in big financial institutions. Where does your institution, Jack and we'll start with you. Where are you on your AI? Path Thank you. So let me start by just providing a brief background. RBC Royal Bank of Canada, uh, is one of the largest global financial institutions. More than 100,000 employees as part of our AI journey, happy to say that we started our MLAI journey almost a decade ago and where we are just recently earlier this year, we shared in our investor day and made a very bold, ambitious goal that by the end of 2027. We will generate $700 million to a $1 billion of enterprise value through AI-based initiatives. And the reason we were able to make such Uh, bold back is based on how we have, uh, responsibly invested in technology over the period of last decade starting from Whether data analytics, API, private cloud, public cloud journey, uh, machine learning, AI, and now what we all are really hyped about generative AI. Bye. Yeah, thank you, Rashmi. Same thing. Yeah, so you know, TIA is primarily a retirement company. We oversee about $1.4 trillion in assets. I'll walk you a little bit through our AI journey. We are a very mission oriented company. So it was important for us to ensure that when we innovate, we innovate in a responsible manner. So one of the first things we actually did was establish a responsible AI policy which tells our employees the dos and don'ts of AI essentially. We also then created a center of excellence for AI. We have 3 major business lines. We have our retirement business, Novien, our asset management arm and wealth management, of which I'm a part. Each of these businesses identifies the use cases based on the, you know, their work process and what they need, and they work with the center where we govern those use cases. We train employees, we monitor the usage of AI, we deck the right capacity to it. So really setting up, I would say first and foremost the controls, the governance was important. The second thing we wanted to do was obviously create uh the ability to build AI solutions. So we set up our own in-house proprietary AI platform called TIAA Gate. Um, it's in-house, but I will tell you our strategy in this space is to be hybrid, to be hybrid hybrid, yeah, because you know, the best solutions are not going to always be in-house. So the approach we're taking is to say. We'll leverage third party solutions with providers we already work with, for example, you know, we may work with Salesforce and use one of their agents, and then where the solutions are unique, for example, our lifetime income products are pretty unique in the industry. So for those solutions, an AI option is best done on our own proprietary platform. So really our strategy is going to be hybrid, um, and I would characterize the evolution of AI is. We set the tools. We've got the governance, we've got the controls. We've started the training, upskilling. We've experimented with use cases. I think the next phase is really beginning to do the use cases at far more scale. Yeah, yeah, hybrid for you also at RBC. Yeah, it's very, very much aligned and I think as I, as I was saying, right, as part of the last 10 years of journey. All the lessons we learned from the previous technology that came and we all were talking in various conferences, right? We learned a lot. We harvested all those lessons learned, whether it's related to data privacy, the security aspect of it, making sure we understand the ethical nature of uh using the technology, being responsible about it. So similar to what Rashmi is saying, right, we, we applied that as part of our cloud journey because in order for us to leverage public cloud, we had to go through the same rigor on top with respect to data privacy and security. We use this foundation to build a similar level of governance for our AI, and now we are taking that for JNAI, right? And as part of that AI JN AI journey, we also have, uh, responsible AI principles that we have established and it's publicly available. So if anyone wants to check it out, you can, you can access it. It's a publicly available information for RBC and as part of it, we have also invested and created Borealis AI Institute. Which is basically, uh, employing 100+ PhDs, world's best, I would say AI scientists, and 800+ machine learning AI developers and data engineers. Uh, and, and the reason for that is that has helped us. Understand not just the business applications and the power of AI, but also understand how we can Leverage all the investment we have made over the period of the last many years using technology because at the end of the day with the recall of AI GAI or agent T AI, it has to tap into your ecosystems of the data which is your primary asset that you are hosting uh related to your customers across the line of business. Um, and then what we have done is we have created a very, uh, detailed development and governance framework. To allow various teams in a large RBC organization to understand, learn, design, develop, and test AI and AI model in a very responsible manner, and there is a very clear guidance and governance when they can make a decision how and when to take this to the production, so there is a very well laid out structure. Got it. So let's get very specific this time. What are the current use cases that you are working on now? Yeah, you know, I would categorize the use cases we typically see in wealth management in three different patterns is how I describe them. Uh, content summarization, content generation, and large scale data analysis for the purpose of insights. There's also core generation, by the way, but that's far more, I think, in the tech space. So these are the patterns we see. The impact of a lot of these use cases is AI as a co-pilot and AI not as an autopilot necessarily for our employees and advisors. So I'll give you an example of a use case. We are working on a meeting preparation. A use case for our financial advisor. So when an adviser is meeting with their client, they often have to spend time preparing for that meeting, right? What were the last notes from the last interaction? Did the client call between the last meeting and this meeting, and did they have a service issue? Are they on track with their financial plan? Are their life events likely to happen? This takes time, so we are actually. Looking at a solution where we can use AI to create a summary for the adviser that saves them time and then frankly go the next step and say give them recommendations on the next best action to have a conversation with the client on and by the way, Jeff, we think there is tremendous value in this because there are studies that have said financial advisors are spending 40% to 50% of their time on non-client facing activities. And close to 15-20% of that on administrative tasks. So the opportunity is clearly there to get more productivity. Yeah, and a follow up there, what you're describing would be equally valuable to many other financial companies. Are you creating your own? Are you using some that at least have elements that are being used elsewhere? We are definitely using creating some new ones and then leveraging others that we see can be applied enterprise-wide. So an example of another use case that's very common in the investment spaces you want to be able to summarize the investment researcher portfolio manager. uses to make investment decisions. By the way, our asset management firm Nve has to do the same thing, as do our wealth management investment advisors. We don't need two separate use cases, and that's where that center comes into play so that we can govern and leverage core capabilities. Yes, use cases now at RBC. Yeah, so. The way we look at AI and AI is two ways, I would say. One, how we can provide, uh, services, products and services we are offering to our. Our clients and the experience we are giving to our employees, how we can do this thing better. And secondly products and services or the experience that we wanted to offer to our clients and employees that were not possible that something now AI and GNAI is making it possible now. So these are the two different buckets. So when we talk about use cases for the period of the last 57 years, we have, uh, Made AI machine learning AI based products and services available to our clients across different line of business. Uh, if I talk about capital markets, we have Eden, uh, that's a brand name, uh, that is a MLAI based model that helps with equity trading, and it allows our client to have a better efficiency and Uh, quality of their trades. Now we are taking to the next level and it's all helping us with the research and insights and as, as Rami mentioned, right, enabling our frontline, uh, team basically to focus more on engaging with clients and having a quality, uh, conversation versus doing a lot of backend research work by themselves. If I talk about from a retail perspective, uh, through our RBC mobile app, uh, we have made available know me insight. Uh, what it does is basically it looks at all your financial cash flow transactions and allows at an individual level to avoid you to go below a certain balance and it automatically if you if you're given permission to move money from savings to checking because you have set up autopay. And it knows that there is a bill coming and it's roughly about this amount. So we don't want our clients to go through insufficient fees type situations. So we are leveraging technology to make our clients' life easier and same way to small market customers, they are able to look at their cash flow and understand and predict and help them properly run their business and and focus on their business rather than worrying about the, the financial cash flow aspect of it. If you, if you go into the broader enterprise side, same way there are a lot of use cases, but the foundational is. What we are most proud of is this BorealS AI and and 800 to 900 top of the best of the best world's talent have created a proprietary large transaction model, we call it atom. It is Running across 1 billion events that we generate every day, and it was trained using 65 billion client transactions. So we are, we are sitting on this intelligence that is allowing us to unleash the power to help our employees better serve our clients and our clients receive the product and service. That they were hoping but we were not able to provide so far the quality and experience that they were hoping for. Yeah, super exciting. There's a human element in this as in everything, it does seem to me that whenever there is something new like this, especially profoundly new, uh, and I think especially so in the finance function, there will be resistance to change, right? It's inevitable. How do you respond? So you know, I would say. Given the nature of the use cases we're seeing AI as a co-pilot, it, it really means humans who use AI will replace humans who don't. And so getting the human element right and getting them ready to use AI, I think is to your point, the biggest focus area now, and I think you need 3 things for that. You clearly need to give them access to tools. You need to give them the skill set. Right. Um, and then you need to, frankly, in our experience involve them in the creation of the solution. So co-creation is a big lever. um, so to give our folks access in March, we took our proprietary AI platform and created an associate version of it where people can now and we're rolling out access throughout this year so our employees can go in and use AI for their day to day tasks. Whether it's editing documents, writing emails, creating meeting notes from a Zoom session, you know, whatever it is, um, but it gets them comfortable from an upskilling perspective, we have focused a lot on, it's an interesting concept. We've established guilds. There are about 9 different guilds. These are informal networks in the company where employees come together, learn, and experiment. We've got over 5000 employees already members of the guilds. And then I will tell you co-creation we had, you know, we have estate planning attorneys who create, uh, give estate planning council to our clients. They spend a lot of time going through the estate planning documents and they're testing two different AI solutions, giving us a lot of feedback, and their involvement in it has been, I think, instrumental in driving adoption, you know, for both of you. There is also a leadership element here. I mean, you are at the heads of large organizations within your organizations. What's the leadership lessons you've learned so far in this very uh, profound change, so. All the, I would say leadership lessons that we all have aggregated over the period of many years, 1020 years when new technology came, I would say all that applies one or the other way, right, because I, I think your question is specific to AI AI, so I'm going to switch and say, assuming that we are not chasing technology for the sake of technology, we are applying business plans, we are being responsible about it. We are thoughtful about it. We are thinking about hybrid and not just going one way and then learning later, right, that this was the wrong path. So all those given what AI and GAI, if I, if I make it specific leadership lessons, is one is around. being in a highly regulated industry as a global FI. How do you, how do you create an ecosystem? Where the individual end user, the client, customers. is also trying to figure it out what does AI AI means for them. So we have partnered with a company called Kohre. Which is basically, uh, helping us create uh a financial services GNAI framework platform to allow, uh, creating a platform where our end user and client can develop their product and applications using GNAI. Why? Because we want to make sure that there is an independent party, uh, who we are partnering with who is protecting the security and privacy aspect of the data. We are sharing the relevant information, uh, and the, and the learning that we have. And the second part is as part of the broader journey. First, you have to win hearts and minds of your employee when you are going through this change. But same thing applies to your client, same thing applies to your community as well. So we have established respect AI. As a portal, as a framework where we are openly sharing tutorials, framework, knowledge article, that is also something available in public. So if anyone wants to to check it out, to help yourself, help your company, do that. And the reason is this is where we are. We cannot just take this new technology and say. Smart enough, we understand, we figured it out. Let's just use it. We need to think about the overall ecosystem. Great, Rami. So I would, I would echo, don't do tech for the sake of tech. I would say focus on the foundational. I've called it fix the leak. Don't just patch the drywall, do that. The other thing I do want to say is the skills of the future are going to be different. There's going to be a premium on certain skill sets, so speed or structure. Insight over title, judgment over certainty and frankly clean slate thinking or continuous improvement. So we as leaders need to ensure we are evaluating for these skills, hiring for them, performance managing for them. That's where the future is. Uh, that's a great note on which to end. And so I want to thank Jakin and Rajmi so much, really good. Thank you. There you go.

Xerox CEO Steve Bandrowczak’s rise from working on the railroad to taking the helm of Xerox is the kind of career story that reads like a movie script. Now, as CEO of one of America’s most iconic brands, he’s leading a transformation that will define Xerox’s future—with AI at the center. In this candid conversation, Bandrowczak reveals how his hands-on operations background shaped his leadership style, why he believes AI is the key to unlocking a new era of workplace productivity, and what it really takes to steer a legacy company into the digital future. 

SUCCESSION SPOTLIGHT: STEERING XEROX THROUGH A HIGH-STAKES DIGITAL REINVENTION

Next speaker hails from a company that is much more than a household name. It is a brand that is so iconic that it is used as a standard moniker for the product in its category. It's not a photocopy. It is a Xerox copy. But how do you bring a company that was founded in 1906 into the tech technological age of AI? That is exactly what CEO Steve Barazek is tackling today. This interview is part of our succession Spotlight series, as you'll hear about Steve's journey from humble beginnings as a railroad worker up through COO and now into CEO. Please welcome him to the stage along with Fortune's Dianne Brady. Hi everybody, um. So Steve, as Kristen mentioned, you know, Xerox has this mythic properties. I have to say in my own life, my dad used to play poker once a month with the head of Xerox Canada, and my first big feature in the US was on a guy named Rick Thoman way back, I think '99, and there are two things I remember. He said the word digital dreams and he liked French cooking, and here you are, 2018, your approach to be the present. COO for Xerox. Lots of history, lots of tough times too. What was your first reaction? What an incredible honor. Really an honor when you think about the iconic brands around the world and you think about the environments that we've built, the impact we've had on countries, on families, on environments, on the workplace, right, when you think about the mouse and you think about all the things that Xerox Xerox Park, how about the researched, but that was a case study. In lost opportunities. It is, it's got to tell a bunch of good things. They invented a variety of different technologies that ultimately other companies took to market, so we're still part of the foundation, right? So if you think about changing the workplace and the position that Xerox has had through the years around the world, and you think about the families, you think about the environment, you think about the jobs we've created, it's an honor to take on this brand and a famous sales force. Well, let me ask you, um, being in a CEO. because then you became CEO under quite tragic circumstances, you know, the CEO died when you had that vision initially going and you spent a couple of years in that job, you have to be aligned with the guy in charge. At what point did you say, OK, now it's my, my ballgame? What did you see as the opportunity for you to put your own imprint on it? Clearly, sadly when John passed, the CEO at the time, and I took the role of CEO in August of 23. Um, the world had changed. The office had changed. COVID had profoundly changed supply chains, what we saw with the Ukraine-Russia war and so lost $2 billion of top line, uh, when the company was going through COVID and the supply chain challenges. So when you think about it. It was a unique opportunity to think about how do we reposition Xerox for the future but still stay close to our values and what we've always done and we've always driven productivity in the workplace. So how do you think about the workplace in the future? Workplace when you're working from home, you're working from from Starbucks, you're working from the air around the world, and then you think about the dynamics of data. Whether it's AI, how we think about data with AI, how we think about changing the way we work with data and motion and sensors, so we had to come up with a view of how do we play in this world of print, but how do we diversify our revenue in the workplace and still become relevant to our clients. What was it that was different? I mentioned Rick Thoman in digital Dreams because he saw the power of the data that Xerox had, and of course there are many different leaders Ursula Burns, many great leaders at Xerox, but What is it that you see as the unique opportunity right now because you're facing a lot of headwinds and you're carrying on, so give us the vision. A big shift, right? We've become an OEM manufacturer of print, and we could generate back 1015 years ago, we could generate a billion dollars of revenue by the next great device. And so when I took the CEO role, I realized that we had to be client-focused, client-centric, meaning we needed to understand what was happening with our clients, what was happening with our partners. Everything that we did was taking digital information and putting it on paper and printing it out. Well, if you think about just paper as paper, you're losing the whole fact. Today AI without data is like a cell phone without a network connection, completely useless. We play in billions and billions of data environments today. And so we help our clients aggregate that data. It's physical data from paper to digital, whether it's data in motion, help them and then serve it up into AI world to be able to change the way that they work. You make it sound so easy, so let me just, I just want to talk a little bit about the environment. One thing that happens first when you're going through a profound change, a lot of companies go private and they sort of say. I'm so glad to have these people off my back, whether it's a shareholder activist, you had that share price that. The wind is in your face, if that's a good way to put it. What's the value of being a public company right now? Do you ever contemplate maybe this would be easier to do behind closed doors? Look, when you're reinventing a company, it is always a lot easier to do it private because you can do certain things that you can't do in a public world, very specifically quarter on quarter pressure. However, we rebuilt an incredible board. Our board today. Second to none with CTO from Dell, CTO from MasterCard. We have incredible people on our board. Tammy Irwin comes from Verizon, people who want to make this company successful, but more importantly, understand the shift from an OEM company to a services company and a software company, right? Our mixed shift will come from IT solutions, digital services, and then growing and expanding in our print arena. And so when you do that, you reinvent the board, you set your vision, but more importantly, I want to reward the shareholders that have stuck with us for so many years, right, as opposed to you go private, the people who are going to take advantage or get the most out of it is whoever acquires you from a private company. They will get all the upside. I'm taking my shareholders on that journey. But you're, but you're also making some tough choices, and I, and you, you recently suspended the dividend. It sounds like I'm putting you on the spot. You're actually a story of bravery. Let me step back. We'll talk about your dividend in a second. You started out as a railway worker and I, your, your backstory to me is probably one of the. I hate to say purest Horatio algebra, but talk a little bit. You grew up in Long Island. You worked in the railway, you went to school part time. You just did a commencement speech not long ago. I mean that must give you some grit for this situation. Yeah, Diane, I, I am a, a, you know, a rags a success story. I grew up, got disowned by my family at 16. Uh, was going from garbage to garbage scraps and getting enough money that I can get gas, put it into a car and I can go to a 2 year school at night while I was working full time. I worked on the Long Island Railroad and then ultimately got to this career and so that progression gives you a sense of I can go through. It took me 10 years to get my 2 year degree because I'm working at night part time. Um, and so, you know, during that progression, yeah, um, during that progression, you know, you learn an awful lot. You learn an awful lot about hard work, resilience, but more importantly, I don't fear anything. I don't fear anything. So as we're going through a transition and we think about hard times and the things we got to go through, because I've had that background and a lot of the team around me have had a very similar background, there's nothing that we fear. And so we don't worry about the quarter of a quarter of challenges, we don't worry about the challenges when you're going through a reinvention. I always say this and I said this publicly, reinvention is difficult, OK? And the hardest part of the second half of the reinvention, which is what we're starting right now, literally. But when you lay out everything that we've done to date, whether it's around how we changed our largest activists on our board, how we changed the board, how we donated Palo Alto Research Center to recent acquisitions, 30% of our revenue will come from non-print over the next 20. 4 months. All the things that we're doing growing in IT solutions in areas that people never would have thought of us as cybersecurity, security as a service, all those things you have to transition your company. If you got any fear and you worry about quarter over quarter challenges, you'll never get through it. Fearless in in an environment that's tough. Many people here are feeling it. Let's let's talk about Lexmark, for example. You need approval from both China and the US for that. Discuss how's that going? Yeah, look, Lex is owned by a Chinese company today. It's on the CFRus. We're taking two great American brands. If you remember, it came out of the IBM. Organization when they spun Les off. We're now putting two great American icon brands together and we're going to become a powerhouse in this industry, you know, we've got obviously regulatory approvals both on the US side, which was pretty much done. We'll get the China regulatory approvals done here in June and we'll put these two together. I am. We'll get these two companies together. Is there anything you want to say about tariffs? Look, I think tariffs today, everybody is dealing with tariffs. Everybody's dealing with not just tariffs, but the geopolitical and the economic issues that are around the world. We've been here 100 years. We've gone through the dot-com crisis, the financial crisis. We'll navigate through it. We'll be fine. Obviously the changing environment to which you're in, some people will thrive in it, some people will be challenged by it, but you know, we see it as an opportunity and we'll thrive through it. Talk about how you thrive in it, and I'd be remiss not to acknow it's a succession, you know, it's, it's a, so you went from the COO role to the CEO role. What did that feel like first of all, because all of a sudden you're in charge, you're now it's your company. Big challenge. Uh, you know, I was a CIO for many years and you always think you're ready for the next role. As a COO, you think you're ready for the next role. I've sat in board meetings as a CEO. I've sat in committee meetings. I've presented, I've made materials. The reality is, once you're in that seat. Dramatically different. OK. Building a board is different than working with a board. Owning committees is different than working and being on committees. And so when you go from a COO to a CEO, there's a dramatic shift, dramatic change. However, you bring a lot of experience with you. COOs drive change. COOs make cultural shifts, drive outputs. The difference is the CEO role is you're now the leader in the face of the company, right? So you've got to be able to drive the culture with shareholders, with employees, with partners, but more importantly, Understand the things that you did not know and the admission of the things that you did not know. So one of the things I would tell COOs who want to be CEOs, there are board classes. Go take a class on understanding how to be on the board. I do. I teach today. You know, um, what is your message to your students as to how to succeed in these roles? Yeah, I think there's a couple of things. First of all, I always start with today is the slowest change you'll ever be in our life, and you can either be slowest change. You either be fearful of change or you'd be excited. About change, right? And I know a lot of our audience is thinking about AI and where AI is going to fit. If you're not excited about that and realizing that you can change industries, you can change your companies, you will get changed, right? So the first thing is today is the greatest opportunity you may ever have. Second thing is you own your own destiny. You don't like it, look in the mirror. If you don't like what's there, you got to change it, right? And then the third the mirror, put down the mirror. Then the last piece is the wall. The last piece is, and I think all too many people don't realize is you have to own your own destiny. You've got to build it. I think one of the things that's unique about the situation you're in is you're continuing this path. Your stock price has taken a hit in part because you said no dividends. We need this money right now for this acquisition. That must be tough. Those, those are your bosses. Look, it's hard. Anytime you make a dividend change or anytime you make a shareholder policy shift change, but priorities change, right? Interest rates have significantly changed over the last 18 to 24 months. So we prioritize paying down debt. We prioritize getting the deal closed with Lexmark. We prioritize and shifted a little bit away from dividend, uh, in terms of what we paid previously as a percentage of our equity value. It'll come back. We'll be fine and, uh, we'll be just fine going in the future. Paint a vision for us. Of you said you're halfway through now. What does Xerox look like? I mean, I, I know we talk at the 30,000 ft level. How does it feel different? What is it that you want us to think of it still as a copier? Yeah, look, I think there's three areas. One is print is not dead. People don't realize the billions and billions of pages and print happens, uh, print on boxes, print on farmers, you know, pickets, rin happens still a tremendous amount. But more importantly, if you think about print. There is a tremendous amount of value in print, whether it's around marketing, whether it's around legal docs, and Xerox will play in intelligent documents, right? The documents are there, there's intelligence on it. How do we take that information and serve it up to industries, law firms, uh, universities, hospitals. We're gonna play in hospitals like we've never played in hospitals before in law firms. So that's the first piece. Second, IT solutions. People don't realize we now have, you know, a large IT solutions business that is. Growing significantly in cyber as a service. Security is a service desktop is a service. We are platinum with some of the largest OEMs, whether it's Dell, HP, HPE, Cisco, Palo Alto Networks, right? And so we're driving and helping our clients specifically in the mid-market that don't have the capabilities to be able to go through these technology advancements. The last piece is digital services. We play significantly in the world of AI with digital services. Why? Because there's a tremendous. The amount of data that's sitting on paper. How do you take that paper? How do you take your SharePoint documents? How do you take all the information you have, serve it up to an LLM privately with your data so that you can actually have actionable outcomes. Now we have about 53 seconds left as you can see you've worked at places like Nortel, Lenovo. You've been in brands that have been in trouble. What, what, what have you learned about that that you would convey to others about leading through these tough times? You've got to love it. You gotta love change. Uh, you gotta love, I mean, I'm prideful about building Lenovo. When Lenovo came out of IBM, uh, it had a high, high degree of failure, high degree, uh, what we did at HP, what we did at DHL. I mean these are all brands that were a dramatically different set of companies before I arrived and not just me but the team, uh, and you created a brand that sustained, you know, you take a look at where Lenovo is today or HP is today or. DHL is today, uh, even we spun out a company out of Aon called the Light, uh, just extremely private, but you got to love it because it's happens and bring it on. That's your, thank you very much. Please join me in thanking Steve. Great story.

In this episode of Leadership Next, cohosts Diane Brady and Kristin Stoller speak with Kate Johnson, CEO of Lumen, about her bold effort to reinvent a legacy telecom as the digital backbone of the AI era. Johnson shares how Lumen is capitalizing on its vast fiber network to support the explosive data demands of artificial intelligence—and how partnerships with innovators like Corning are helping supercharge that capacity. 

Johnson opens up about the cultural overhaul she led inside the company, shifting Lumen’s mindset from “play not to lose” to “play to win,” and implementing leadership frameworks like Brené Brown’s Dare to Lead across tens of thousands of employees. 

She also reflects on her personal evolution as a leader, the phases of AI adoption she sees ahead, and why she believes human creativity and empathy will remain central in an AI-driven world. 

The CEO Turning a "Sleepy Telecom" Into AI’s Fiber Backbone

Photo Courtesy of Kate Johnson; Graphics by Fortune

Leadership

Lumen’s Kate Johnson on redefining infrastructure for the AI economy—and the cultural rewiring that made it possible. 

Media has undergone a monumental transformation over the past decade, with traditional business models disrupted, consumers migrating to new platforms and formats, and declining trust in mainstream outlets. In this new landscape, how do media companies—both legacy institutions and startups—turn a profit while also building loyal, cross-platform audiences who trust the accuracy of their output? A conversation about the future of journalism and media more broadly.

Media's Next Chapter: Building Trust and Navigating Disruption

Good afternoon everyone. How's everybody doing here? Good Awake great. All right, here we go, um, so we have a lot of history on this stage actually somewhat of a cool thing about being a woman in business is there's a lot of firsts you can have whether you set out to have a historic career or not. Here we are. So Rashida was appointed as the first ever black woman to run a major cable news network in the United States. Um, Jomanna is the first woman CEO of a media organization here, and I got to be the first woman editor in chief of Fortune in 95 years, so incredible. So all of us have never really seen this media industry in the days of the martini lunches and the really thick magazines that sounded so glamorous. It's been nothing but change for the decades that we've been in it, and now is no different and perhaps we're facing the biggest change yet. So I'm curious though, as you look at the media org that you've run and are running from a global perspective, what do you see as the biggest challenges that we're up against and maybe Jamon, I'll start with you. Um, thank you, Alison. It's such a pleasure to be with you all here today sharing the stage with two remarkable women who are pioneers, um, um, in the media industry, very much paving the way for all of us and the younger generations to come. But I would say. You know, the way that we decided to look at it is that we're embracing challenges opportunity. Of course everyone's talking about the next big disruption, what's happening with AI and how it impact journalism in the media and monetization of our platforms, but ultimately I think fear will result in us losing um our positioning, our credibility, um, and the trust that people have very much put in us. um, we're very excited. About this next chapter, however, excitement means being prepared. Excitement only means that it could work if you have the right strategy in place. Ultimately, I also believe that we live in such a great, um, a time where everyone is digitally connected, so it makes that sort of content creation process easier. Um, we also are empowered by AI and technology that allows you to understand your audiences. Their preferences, what they want to read what they want to see, when they want to see it, but ultimately again it goes back to ensuring that you have the right strategy in place and the right upskilling and reskilling ongoing throughout the year to ensure that your journalists, your media practitioners are also capable to dealing with that challenge. And Rashita, what do you think? Is it, is it the First Amendment being challenged in the United States or is it this business crazy model that we're all trying to sort through? Yes. No, I think it's exactly, um, it's all of those things and, and, and, and I think similar to what uh Javana said in a world where there's a lot of challenge, there's a lot of fear, there's a lot of change, there's a lot of uncertainty, uh, we don't have a playbook for how to navigate this kind of change, but we do know how the business has evolved we do know how the industry has evolved if you, if you take this. Moment in time and you're in the middle of the of the the storm and you see all the change happening around you it can be disorienting but I think as you look at the industry overall and look at the evolution over decades and decades and decades you'll see we've been resilient. I mean I I know um for many of you you cannot imagine a world imagine a time where we didn't have streaming. I'm old enough to remember that. Or a world where we didn't have the internet or a world where everyone didn't even have cable and we've been able to survive and evolve in those moments and I have no doubt that in this moment of time while it feels disruptive, the people who figure it out, which many of them are women because in the US at least most news organizations, television, digital whatever are run by women including Alison, um, the women are gonna figure it out and we'll be better for it. Who better right? we solve things. So what do viewers and readers want? It seems like it's getting ever more complicated. The viewing habits are changed. I know here in Reno we have a population that is significantly young, um, like 2/3 of the population we were talking about stage are under the age of 30, um, and I know in the US. The younger audiences are consuming media completely differently than the older generations, and that's something we think about at Fortune all the time. It's how do we cater to the legacy audience that we have and also bring up the next gen who want completely different things. So how are you seeing those viewership changes generationally and, and what are you doing to make it happen? I think we live in a in a world that has been dominated by the scroll um and that's what we're very quickly having to adapt to um attention spans have also become shorter, uh but ultimately that doesn't mean that the content that you create or the journalism that you produce has to be any less important and it doesn't mean that it loses. And it's editorial integrity. um, however, we do have to adapt to changing audience, uh, or, or consumer trends and behaviors and where they want to get that content. We believe that, you know, with the printing press, um, that was a major big disruption and then with social another disruption of course prior to that internet, no, I don't. But I do remember the days of the internet and that dial um and that changed everything for us um and then of course with social media and media companies or organizations saying how are we now going to compete with that platform, how are we going to compete with the likes of X and Snapchat and Instagram and now TikTok but what what we've realized is that if you embrace it and if you make it part of your core strategy, you no longer have to compete for with it. You are embracing it and becoming a part of it, um, I think ultimately. In the Middle East specifically, you have a population, the majority of it is under the age of 30. Therefore, a very young demographic that lives on the internet. They're digital natives. They want content that they can consume via their screens. They no longer want to watch something on demand or want to watch something that is pre-scheduled for them. You need to cater to them on the platforms that they use in the formats that they are now familiar to. I think we lived in a world 5 years ago where you. Content strategy was a one size fits all, um, where you did not repur you simply repurpose content that you were creating for TV or for social across the board that no longer works um you very much need to create native content for these specific platforms that your audiences want to engage with and you have the immediate analytics to tell you whether that's working or not and I think um as an example of that is the power shift and so we've seen the power shift from the content creators from the distributors. To the consumers and so your example, um, about young people consuming content on a lot of different platforms is now driving all of the strategies that news organizations across the world you know we heard leaders from TikTok up on this stage we heard leaders from Microsoft on this stage talking about how they're adapting their distribution tactics, uh, to address that and I think as content creators, as news organizations, as media organizations we have to make that adjustment or we or we're not gonna survive. And what about the crisis of trust that we're facing as an industry, um, you know, it seems like nobody, everybody has the alternative facts. Everybody's getting their information from they don't even know where they're seeing it on their fees, but they don't know the original source of it, if it's been vetted, if it's been checked, and. You would think that's an opportunity for us as journalists and media orgs and yet mainstream mainstream media is really being challenged about how we produce what we produce and how we know what we know so I'm wondering how you all think about this crisis of trust, what that opportunity is for journalists like us and also um what how we can be better at fixing that. You know, I think well it's both a crisis it's an opportunity and so I think because you're seeing a bunch of different um dynamics converge at once it's why it's been such a challenge. There is just the, the fact that there's so many different news or new sources out there that are not vetted. Some people don't even know you have to vet the source. Some people think, well, uh, it made it to TikTok but it must be real like there or there must be a kernel of truth to it. So there's the, the, the increase of. Of content coming in that's not necessarily sourced there is the concerted effort by some entities to convince the public not to trust us like there that is a business model for some entities in in some places and then there's also just the hard work that we have to do as content creators like news organizations have to continue to ensure that they're the content that they're putting out meets all of that criteria. I think we're seeing it at such a um a pace right now because all of those things are happening at once. My thought there and and this is how I, um, guided my newsrooms was we have to just do the work and it's every single day it's every single story it's every headline, it's every script it's every platform every single time and I think sometimes allowing the distraction of the narrative and the messaging get in the can get in the way of the work that you're doing but when you're consistently delivering again this is a moment in time when you look at the totality of the of the business and the and the the public service. that we've all committed to doing it's not gonna change that work it's not gonna change the need it's not gonna change the mission. You just have to be consistent. I do believe that this is one thing that you cannot compromise. This is one thing that you cannot say let's just simply leverage AI or let's, you know, it's on X, so let's report it. I think newsroom 101 is two sources. Do you have two sources, then yes, confirm it. You can go ahead with that with that piece of news, um, but I also, I also do sense that. A lot of social media users or generally your consumer and your population are now reverting to traditional sources of media to confirm that news, especially with this the widespread of misinformation and especially during um breaking news or or live events um everyone's going back to those mainstream traditional platforms. Uh, but ultimately I think you know what these new technologies and these new tools and social media, what it allows us to do is to become more efficient and quicker, but it doesn't mean that it compromises our editorial integrity and I do feel it's an opportunity for media organizations to reemphasize their important role on informing the wider public on the issues at hand. Yeah, I think so much of it is about continuing to educate about how great journalism happens and that it's not just made up or we're not making up sources. Um, one thing we've started including in our articles is like if we do we have a whole anonymous sourcing policy and we also need to say why we're allowing someone to be anonymous. Also, by the way, that fortune knows the identity of the person because that's not even clear sometimes. It's like if you say an anonymous source, a reader might think it's anonymous to fortune. We're like, no, no, no, we really know who we're talking about. We know and we do a lot of work to verify, which is, by the way, ever hard in the world of deep fakes and and videos can be manufactured and everything, so it's a wild time, um. What do you think about the business model of the future for journalism, and do you think that journalism alone can be a business model or does it need to be propped up by something else? Like if you look at Bloomberg, they are a terminal business that funds great journalism. Um, the New York Times, most people spend time looking about cooking and, and, uh, games, which are great things, but they're not the core, you know, news journalism. So do you need something to subsidize it or can it be, do we think the consumer will come back to paying? I don't think you can separate the business and the journalism part of of the organization, you know, you mentioned New York Times and and while they have a lot of different verticals, you also have the athletic which is profitable and it's a content business. So I think it's less about having something to prop up the journalism and more about finding ways to diversify the monetization of the content whether it's through subscription, whether it's it's through a. Advertising whether it's through a diversity of distribution I think the business model of tomorrow is not gonna be as dependent on any one thing you're gonna have the flexibility to bring new streams of revenue in using your content as your core. The core and in your value proposition is the IP of your brand and your business, and I think again that those who do it well know how to diversify that know how to monetize that. And know how to, I would also say be nimble and keep up with the changing times and follow the consumers where they are, where they're consuming content today and and we've talked about this today, um, it's all changing so quickly maybe a different place um where they're consuming tomorrow and I think those news organizations that can be nimble and finding ways not only to move to the new platforms but to monetize on those new platforms are the ones that will survive. I think what we're doing, especially at SRMG is that and then we're not reinventing the wheel here, but we're creating new sources of revenue, but ultimately the foundation is that content creation process that you have and that's why your audiences or your clients or advertisers are going to continue coming to you, but you do need to evolve and you do need to be nimble and agile enough to allow for a diversification of monetization across your platforms. We cannot again have. That one size fits all model and simply rely on archaic ways or traditional business models, um, we have, you know, at SRMG we've now created an events company that is very much an extension of our brands and why we've done it is that we simply did not want to to enter enter the events business which is highly lucrative and has high profit margins, but we wanted to leverage the strength of our brand equity. Um we have 30+ titles under the umbrella of the group. A lot of these types. Or have um loyal audiences and loyal readers but then why don't we create events such as um this event that we're sitting here right now so that you can turn that monologue into a dialogue, hence creating more opportunities for engagement, hence creating more opportunities for advertisement and subscriptions or simply a diversification of those uh revenue. We've also created FRMG Labs which is our in-house creative arm, allowing us to better cater to our advertisers and our clients. And provide them with that premium storytelling very much uh leveraging are the data that we gather via the number of people that are visiting our platforms and our websites. Therefore, now you're able to curate and tailor more that will result in higher monetization and higher profit margins and I think Rashida will agree with me, you know, it depends on the platform and it depends on the topic and it depends on um the business that you're running. There are ultimately more um. With lifestyle, it's a much higher profit margin than it is for example with news and that's why platforms such as the New York Times would have to go into a new product and that's exactly what we're all adopting. Those who fail to adopt are the ones who are not gonna be able to monetize. So I want to open it up for a question from the audience if there are any, if there are, raise your hand, otherwise I have a pile of more. Any questions? OK, um, good, and I get a hug all the time, um, so when you're looking ahead, what are the biggest trends that you're gonna be leaning into? I think along the way there have been a lot of distractions. Actually one of the things that's benefited Fortune the most is I think, um, we were so slow to digitalize, um, there was not even a website for Fortune until 2014 that we missed the whole run up on the attention economy where. Everything was about clicks and and kind of pulling people in um and not about the quality and so that is fundamentally helped us moving forward to get away from the the the mass scale approach of attention um so missing that trend was great um what are the trends here that you think are just buzz and what are the things that you think you're gonna lean into in the next few years of your media careers? I think we're very much leaning into AI. Um, I truly do believe that it's not just the future, it's currently the present. Um, I must say that when I joined the group of over 4 years ago now, um. SRMG has always been a pioneer and SRMG has always been a market disruptor. Uh, we've always had the first websites, the first, um, female only magazine, the first we've had so many firsts, yet when I joined, I did feel that we were way behind when it came to digital transformation and we've embarked on a, um, very detailed comprehensive digital transformation strategy at the time I think. didn't really understand what that transformation entailed. It's not simply about boosting uh viewership on your website. It's not simply about being more interconnected. It's about creating formats that are done in a digital first to cater to your digital audience, and that's what laid the foundations and the groundwork of the groundwork for where we are today of embracing and adopting AI. However, I do. I mean, I sit in meetings now and we're discussing the next big tool in AI and how we're gonna use this versus that, but that is relevant to us today. It could not be relevant not just a year from now, a week from now, um, but, uh, again embracing technology and digital transformation is something that we're most excited about and I think it's a trend that we need to lead and not be as scared of. I'm watching um I would say the race to next who will be the first major news organization to do something revolutionary with AI? Who will be the first to figure out a new monetization model? Who will be what, what entities will be next to converge their efforts and become a bigger, stronger version of themselves? I think, you know, we're in this, this disruptive period and and we'd like to throw that word around. Disruptive, right, but we're in a period where the business itself will look nothing like this in a few years. It will look nothing like this in a year even. And so one of the things I'm watching and it's been really interesting and I think really helpful to watch it from 30,000 ft is what we're we're all on the precipice of change what happens next? Who goes first and who drives it? Well, thank you ladies so much for your insights. Um, I'm looking forward to figuring out the future of media with you, um, and who better to do it with. So thank you very much.

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