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IBM CEO Ginni Rometty and Well's Fargo CEO John Stumpf on disruptions and speed of change | Fortune — Transcript

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0:00uh so the the theme of the the theme of
0:03the conference is winning in the
0:06disruptive uh century and and you know
0:09the disruption is a word that is
0:11frequently used these days those of you
0:13who came to lunch saw uh the Mackenzie
0:15book no ordinary disruption that was
0:17handed out maybe it's a little overused
0:19but I know you use it I do you use it
0:22with your staff regularly I've heard you
0:24do it always disrupt yourself you tell
0:26them what do you mean when you say that
0:28yeah it it is one of my favorites and
0:30and I think partly because uh we are 104
0:34years old John how old is Wells 164 but
0:37who's counting ex me okay excuse me okay
0:39he's older than you're just a puppy yeah
0:41we knew this already um but I I always
0:44say 104 you know if you've got to you've
0:46got to reinvent yourself many times and
0:48we are the only one still here after
0:50this period of time in reinvention and
0:53if I think back of all of the lessons
0:54I've learned and what I keep saying to
0:56the teams a couple things one is I say
0:58you know never protect your past if
1:00that's what reinvention is never protect
1:02your past and so this is why um I've
1:05divested even in my time as you know $8
1:07billion of businesses of ours because
1:09they're not part of the future they're
1:11better in someone else's hands and or
1:13you're not at scale for them and so
1:16semiconductors which while Hardware is
1:1810% of IBM today uh we did
1:21semiconductors for 60 years 60 uh but
1:24this is part of better we'll do the R&D
1:26someone else can do the manufacturing um
1:29so don't protect your past I think
1:31perhaps one of the I find most valuable
1:34lessons is not that it is this idea of
1:38don't Define yourself as a product and
1:40um you know while you might we both have
1:42products this idea if you think of
1:45yourself in our case I think what I do
1:47is Enterprise Innovation for companies
1:49like Wells and but the ingredients
1:51change they keep changing and we'll talk
1:53a little bit about how much they've
1:55changed in the industry uh and you know
1:58today everyone wants to be digital
2:00tomorrow I think the next business model
2:01is cognitive and then the third thing is
2:04you have to Steward for the long term
2:06John and I were just talking about this
2:07what the pressure about making decisions
2:09that are for the long term is part of
2:11disruption which means you've got to
2:13make big bets and uh you make big Bets
2:16with where you allocate your Capital
2:18your resources yeah and we should keep
2:19talking about that I just want to point
2:20out a couple of things to the audience
2:22uh one is uh Don Barton said at
2:24breakfast this morning the average age
2:26of a of a S&P 500 company these days 18
2:30years 55% of those on the Fortune 500
2:34weren't there 20 years ago so the fact
2:36that the two of you have have made it
2:38for over 100 I mean we're the only one
2:40we are the only one in Tech that's made
2:42it yeah you the only one by the way you
2:45mentioned uh a while back the bunch yeah
2:48yeah I I was just say I was reminded
2:49over the weekend as I was I'm a pretty
2:51voracious reader and I was looking at
2:53things and it was the 1960s and70s and
2:56the article was about the bunch and it
2:58was um burough
3:00univac NCR CDC and Honeywell of which
3:05you know and and I'm reminded today when
3:06HP is no longer HP others are
3:08consolidating things are happening and
3:10there have been many more in between
3:11that we're going to be there but some do
3:14I mean so Industries do reorder and
3:15there'll be some that that come and some
3:17that go but but there is that one common
3:19thing we are the one time and time yeah
3:21so John help help me tell me how you
3:23think about this because when you listen
3:25to that uh Mantra that Jenny just
3:27repeated always disrupt yourself don't
3:29let your products Define you uh uh don't
3:32be Place big
3:34bets big bets it it's it's he's a great
3:37role model of a number of those by the
3:38way but you know we think she's right in
3:40all of that we we think of your bank as
3:42being
3:44conservative cautious some people even
3:47say boring which you when the the
3:51there's nothing boring about me let me
3:52tell you no but so how do those things
3:55fit together I think companies that get
3:58in trouble
4:00about their future lose the
4:03understanding of reason and result
4:05what's the reason that 265,000 get up in
4:07the morning it's different than the
4:10result the result is we make money the
4:12reason is wey try to provide products
4:14and services that'll help our customers
4:16succeed 18 years ago we didn't have an
4:19internet offering Al Gore had invented
4:21it we had not heard about it you know in
4:23Minnesota where I was from jesz it's a
4:26stuffy crowd but uh come on guys that's
4:28as good as it gets here um 5 years ago
4:31we didn't have a mobile offering I don't
4:33know what it'll be
4:34tomorrow but there are a Litany of
4:38companies who protected the
4:41result they protected and and I don't
4:44want to name them here because we all
4:46know who they are and they are now
4:48nothing but footnotes in in history so
4:52what Jenny and I have to do and and we
4:54try to do is anticipate what is it that
4:58our customers will want tomorrow the
5:01next day 10 20 and 30 years and even
5:04might be cannibalizing some of your
5:07results so there has to be that
5:10intellectual honesty and and I say you
5:13know capacity to suffer shortterm
5:16results for long-term have you had to do
5:18that have you disrupted yourself well we
5:21we all do that some of times it happens
5:23it's easy to do that when the short-term
5:25results are really good it's hard to do
5:28that when the short-term results are not
5:30so good and you know you need to make
5:32some significant bets big bets
5:36intelligent bets for the future I mean
5:39if we didn't make those bets we'd have
5:40stage coaches on the freeway but but I
5:42don't recall people talking like this 20
5:44years ago I'll bet none of your
5:46predecessors said always disrupt
5:48yourself which is kind of a
5:49revolutionary concept when you think
5:51about it I I I'm not sure they might
5:52have used those exact words I think
5:54there is one thing different today and
5:56the one is the speed of change that
5:58sounds a bit sort of uh like a trite
6:00sayings to say but there is in my mind
6:02no doubt when I look at technology and I
6:04would go back several years and I would
6:06say if I asked everyone in this room who
6:08wants to be a digital company how many
6:10people would raise their hand if you're
6:12honest do you have a company who would
6:15no one we have a room of there's
6:17somebody back there but I could the
6:20question is the question is how many
6:22people think their company should also
6:23be a digital company your company
6:25digital company raise your hand I don't
6:26think they understood there you go sorry
6:28my English so should you be a digital
6:30company and I think underpinning that
6:32and why it's everybody you know there
6:35are these technology shifts you have
6:37Cloud you have big data you have
6:38mobility and there what's different I
6:41think in this moment in time and when
6:42you go to compare it is there are three
6:45and they're happening at the same time
6:47and that has accelerated the pace of
6:49change the three I just said cloud data
6:52mobility and I think there's a fourth
6:54about in front of us and so that rate of
6:57pace and change that is different but if
6:59I go back and look at the news and I I
7:01was saying I was saying to Allan earlier
7:03I said I I was doodling around and
7:05reading a lot of stuff on the weekend
7:06and I found an article written on 2000
7:092000 November November 2000 sort of
7:12almost to the day where we are now and I
7:15could have sworn It Was Written today
7:16and it was about how one set would
7:19obliterate another set and that the
7:21amount of change and the disruption that
7:22was happening so I actually do think
7:24they would have talked of disruption but
7:26I think the rate of pace of it is far
7:29more and it's far more active on
7:31business models today you agree with
7:34thatn absolutely in fact like I said 5
7:36years ago we did not have a mobile
7:38offering today over half of our
7:40customers are mobile and not only are
7:43they mobile it's her number one
7:45predominant Channel if we weren't in the
7:47mobile business we would be out of
7:49business so that happened in five years
7:51our industry hadn't changed that much in
7:54the last 500 years and today we have to
7:57be real time dig I ized using data
8:02mobile and have to provide intelligent
8:05solutions to people on the go so I mean
8:06it's it's changed so rapidly and and in
8:10and when things are changing that fast
8:12who you know standard business school
8:14question who's your most dangerous
8:15competitor how do you think about that
8:17question who is your most dangerous
8:18competitor is it someone you see out
8:20there or someone look I I I think that
8:22that is dangerous I think the answer is
8:24you are defined by your clients you are
8:26not defined by your competition now does
8:29that mean you are not respectful but I
8:31think in today's age we all live at this
8:33intersection of Business and Technology
8:35and so on one hand you could say it's
8:37any company on the other hand I think we
8:40also live in a world where your biggest
8:41competition is a new business model and
8:43so a new business model come from can
8:46come from or can be from someone you see
8:47can be yourself can see from others and
8:49I think the sort of the attributes of a
8:52business model uh that are persistent
8:55today that weren't before would be
8:56things like Partnerships right I mean
8:58you know I I know people made a big deal
9:01when we partnered with apple as an
9:02example but we've gone on whether it be
9:04apple or box or Twitter or Facebook and
9:06the list goes on so Partnerships John
9:09mentioned data is an key piece and then
9:12I think there's another idea on of uh of
9:15this whole point of competition and
9:16business model which is platforms that
9:18people will build more and more
9:20platforms upon which they'll interact
9:22with others how about you John who's
9:24your most dangerous competitor we have
9:25Jamie Diamond here on Wednesday do you
9:27want to there there are triy compan I
9:29think I I'll turn the question around
9:31though the people who who influence us
9:33the most are outside our
9:35industry the ibms the the Amazon the
9:40apples they're building they take
9:42complexity and make it simple they're
9:44changing the way people deal with
9:47retailers the way they deal with their
9:49with their daily lives and that has huge
9:52influence I mean think about this if we
9:55can't tell a customer exactly what's in
9:57their account after they've had 25 year
9:59relationship with them and they can find
10:01out anything they want in the world in
10:03three nond on Google how do we look in
10:05comparison so there is a a mindset and a
10:09shift going on there that's not
10:11happening by any one industry or any one
10:14company but it's a collective thought
10:16process that's changing all of us see I
10:19I think this point about
10:21consumerization uh that has influenced
10:23what everyone does and there are many
10:24people in the room that have established
10:26companies uh but I know as an example
10:28everything we do whether it's B2B or B
10:30to C really the word is b to individual
10:33B to I and that what you do is you've
10:36got to put this idea of design thinking
10:38and everything you do so no matter what
10:39it is it's got to be made so that no
10:41instructions required no matter what you
10:43do and how you interact with that and in
10:46my own company you know we today have
10:4910,000 designers right and for even my
10:52own internal consumption the actual real
10:55design uh we hire 500 a year now and so
10:58these are not not the typical folks you
11:00would think right but it's because
11:01everything you do is got to be
11:03consumable to the point that John just
11:04said I I have two standing meetings a
11:08month that I will never miss one is on
11:11cyber security on the defensive side
11:15because what we go to market with every
11:16day is trust people trust that the
11:18digits they see on their phone if they
11:20get print you know whatever then it's
11:22there and on the offensive side it's all
11:25the things that allow for the platforms
11:28to provide on the offensive side whether
11:31it be you know Mobility digitization uh
11:34uh whatever it is new things new things
11:37new things you know new ways of
11:38authenticating so you know another
11:40interesting thing about the two of you
11:42is that you have you are both basically
11:45lifers with the company you work for I
11:47mean in a way you're talking about
11:48Industries conflating sound like aison
11:51oh I meant that in a good way I do feel
11:53old uh you know you're talking about all
11:55these industries crossing over coming
11:57together you've worked at IBM pretty
11:59pretty much your whole career you worked
12:00at Norwest and Wells Fargo pretty much
12:02your whole career is that in this world
12:05that's changing so rapidly and ideas are
12:07coming at you from so many uh different
12:09directions is that a good model is that
12:12an advantage is it a disadvantage that
12:14you've had to fight against uh I I think
12:16it is uh actually I think it can be good
12:19and it can be bad depending on where you
12:20are and so you have to balance those
12:22things good in that you know how to
12:24change an organization and work with it
12:27uh what it's capable of at its soul I
12:29mean because I think part of what it is
12:30that we do is I would say you have to
12:33have the wisdom to know what must endure
12:35and what must change and so because you
12:38build on top of that uh on the other
12:40hand extremely open to things and ideas
12:42on the outside and so you know I look at
12:45our company with almost 400,000 people
12:48and greater than 50% are millennials 81%
12:51of the hiring Millennials I don't think
12:52people think of all that new idea coming
12:55in and many folks from the outside
12:57Blended together and so I think that
12:59that is that is a fact of life of how we
13:02live is that these ideas come from all
13:04different places and you have to embrace
13:06them you to be open to them and you have
13:08to be open to them I mean and I think
13:09part of what drove that for us is you
13:11know now even in my tenure I think I've
13:14done close to 40 Acquisitions right if
13:17and we've done 150 over the past 10
13:19years you got to embrace these different
13:21ideas to move forward and so I think
13:23that doesn't matter what industry that
13:25you are in and it's how you balance
13:28those things what do you think than yeah
13:29I I'm I'm where jinnie is I think that
13:32it can be a strength and a weakness I
13:33think the more important thing is the
13:35culture of the company do you have a
13:36learning culture and you have a
13:38collaborative culture and a culture
13:40that's willing to disagree without being
13:42disagreeable and if you have those
13:45attributes no one person's going to have
13:47all the information it really is a team
13:49sport but the companies that are I think
13:52the most uring the ones that have the
13:54best chance at winning in the future
13:56have the ability to to be able to
13:59reinvent in a way that's managed chaos
14:03and and you can do that with people you
14:05trust I want to come back to oh go ahead
14:07no I was just gonna say um I think uh
14:10one of the things that I have learned
14:11over time and I have to and I've
14:13credited John with this many times
14:15because when I had first become CEO I
14:17had uh gone and talked to John a lot
14:19about because he has done a great job
14:20with the culture of wells and uh I could
14:23give I think the speech of importance
14:25here about Employee Engagement and how
14:27the engaged employee drives the client
14:29experience and drives your results not
14:31the other way around and he's done a
14:33masterful job with that and that's why
14:34Wells has I last time I looked it was
14:37six or seven products per per customer
14:40right versus the average in the industry
14:41is maybe two two or three two or three
14:43I'm giving his his talk and a wonderful
14:45job on this and so I wanted to fast
14:47forward to you said well how do you
14:49drive change in some ways I often think
14:52about our jobs as the chief engagement
14:55officer yeah right not CEO Chief exe You
14:57Know Chief engagement officer
14:59and in this day and age with the kind of
15:01social tools within our own companies
15:03your ability to react and interact with
15:05so many and get the truth about I always
15:07say it takes me like a nanc to find
15:09something out because of the way the it
15:12all the structure kind of goes away with
15:14these tools and now you open that up and
15:16those channels up and an ability to
15:18drive change and I don't think that
15:19should be underestimated as a way to
15:21harness these large workforces how much
15:23of your time do you spend communicating
15:26in that engagement with the with the I
15:28bet you 20 25% I mean I leave tomorrow
15:30morning to go to Charlotte and I'm going
15:32to do a town hall I do a town hall every
15:34quarter yeah and it's webcasted and
15:37whatever it's alive with a couple
15:38thousand people any question is a good
15:40question and and if you can get large
15:42group of people to be moving in the same
15:45direction but not lose their critical
15:48thinking and their critical challenge to
15:50the process in that there's magic in
15:53that see I I think this is an era where
15:55you on the percentage you 25% more oh
15:59probably a little bit more even I mean I
16:01I even every uh first Friday of every
16:03month we do something called think
16:04Academy IBM's motto originally in the
16:06time was think and as we've been going
16:08through all this change in our strategy
16:10which was a digital foundation around
16:12data Cloud mobility security and now
16:15going to cognitive I mean every first
16:17Friday of every month I teach it and so
16:20it's you know say going to church we go
16:22church every first no no it's it's the
16:23largest probably the largest moo in the
16:25world actually that actually operates
16:27and so I think think that's a part of
16:29what interactive right I'm teaching I
16:31can see what everybody's saying at the
16:33same time you know good or bad what they
16:34say and uh it's part of how to engage a
16:37Workforce so you have these social tools
16:39to do this engagement and the word I was
16:41going to say Ellen was um co-create I
16:44think as you talk about the next
16:46Millennial Workforce that we both have
16:48they live in a world of co-creation and
16:51so uh we just redid all of our
16:52Performance Management and uh it was
16:55co-created with the entire Workforce
16:57right on what it is that we would do
16:59they voted they looked they saw the pros
17:01the cons and so now they'll adopt it and
17:03you'll get execution on scale yeah so
17:06one of the reasons we decided to do this
17:08Fortune Global form in San Francisco the
17:10previous 12 forms have been done outside
17:12of the United States we did this in San
17:14Francisco because we heard from so many
17:16CEOs who said we want to understand
17:19what's happening in the startup culture
17:20I mean we now have what
17:23142 uh unicorn companies companies that
17:26have been funded by venture capital and
17:28have Market values over a billion
17:30dollars uh and sometimes it seems like
17:32the rules of the road uh for that world
17:36and for some of the West Coast
17:37technology companies are different than
17:39the rules that the two of you have to
17:42live by how do you think about that
17:45world the Silicon Valley growth tech
17:50companies you well I can start I I moved
17:55here 13 years ago and at the time there
17:59were there was almost a demilitarized
18:00zone at the airport everything South was
18:03Silicon Valley everything North was
18:05something else yeah and today you
18:08wouldn't know where one stops other stop
18:10we have companies as greatest Salesforce
18:13headquartered here and there's a ton of
18:14other ones that were small companies at
18:16one time which all become large
18:17companies and that magic of working
18:21together really has made a difference I
18:22don't know that sure the those you know
18:26companies that are small and and have
18:28different things day to day but we're
18:30all in the leadership business we're all
18:33trying to create uh a customer solution
18:36to something either present or the
18:38future and we're looking to engage the
18:42constituents that matter communities
18:45customers team members ultimately
18:46shareholders so yeah now there is a
18:49difference in the shareholders I mean
18:50the shareholders of tech companies are
18:52looking for growth uh IBM has had 14
18:55straight quarters of decline manag
18:58decline
18:59yeah yeah manag I mean I would um
19:01because this is there's a couple
19:02differences I mean let me deal with this
19:04one first and then another I would
19:06suggest is that um one is it's really
19:08knowing what you are and what your value
19:10proposition is um I feel really good we
19:13are about Enterprise Innovation and it
19:15is about moving to higher value now
19:18higher value doesn't mean G I'm G to
19:20cling on to something and charge more or
19:22the John is going to pay more for
19:23they're very good negotiators that's not
19:25what that means it means you know that
19:27you have to keep Reinventing yourself
19:29and moving on to the next thing and uh
19:31that's what it is we do and so you have
19:33shareholders both clients that know what
19:36you do for them is not only do the new
19:38but what I would say he's got core
19:39banking systems it's core systems these
19:41are not commoditized they have to
19:43modernize they have to be more efficient
19:45but they're not going away tomorrow
19:46corre they are critically important but
19:48those are not necessarily high growth
19:50areas so I think alen um are there
19:52different rules I think it's a different
19:54business model in our case if I look
19:56back over the last decade you'll find
19:59IBM's growth was flat to 1% and the
20:01profit doubled or tripled in that time
20:03frame it's because it's a business model
20:05to move to higher value and while the
20:07water level stays constant what's
20:09underneath it changes and that's how but
20:11that is the business model we chose and
20:14so as I as I say to my own team in
20:16managing through a time of change and
20:18transformation I keep them sort of
20:20focused on perspective that says look
20:22guys you're 90 billion company margin's
20:24improving but the portfolio is 30%
20:28different than it was before and that's
20:30why when IBM started making cheese
20:32slicers that's not what we do anymore
20:33we've gone through 10 different
20:35Renovations and moving to higher value
20:37so that is I would trade that off the
20:40move to higher value versus growth we
20:42have growth in the right places because
20:44of course some of the new businesses
20:46they've an aggregate they're ended last
20:48year at 25 billion and they grew greater
20:50than 30% through the first nine months
20:52of the year right so it depends where
20:54the growth is and I want I want to talk
20:56about the new businesses but you were
20:57going to add something I was going to
20:58say I think the hardest
21:00thing uh for investors not investors so
21:04much but surely analysts is to focus
21:06what are the
21:07real
21:10uh genetic compounds of long-term
21:13shareholder value
21:15creation and so many times people look
21:17at the top line or the bottom line and
21:19they
21:20miss what's really in our business more
21:25customers more deposits more loans
21:27deeper relation
21:29ships is is the winning
21:32combination sometimes that doesn't show
21:33up in the Top Line in growth or the
21:36bottom line because of external factors
21:38at least in our business we have low
21:39interest rates it's undervalued but if
21:42we weren't focused on those things and
21:44helping those things happen ultimately
21:47nothing happens out here so so when
21:49people say gez you're not growing and
21:51and people want to growth out of our
21:52business also they miss they look at the
21:55intermediate step they don't look at the
21:56initial step so like said there might be
21:59some businesses growing really well in
22:01things don't show up yet because over
22:03investing or or needed overinvestment or
22:06whatever it's not mature whatever the
22:07case is that these are really powerful
22:09business models yeah but but I but I
22:12would I would flip your your question as
22:14well though and say what's there to also
22:15learn from a startup world right and I
22:18think this idea about speed is a big
22:20deal and that is whether or not you're a
22:22small company or a startup company I
22:24think there's many lessons about how
22:26that kind of company operates that are
22:28applicable in big companies and so
22:31that's
22:32valuable it is I think there's really
22:34some very good practical things you can
22:36do you know we were saying that when
22:38people typical in a in a company people
22:41say well I have a budget and I spend an
22:42amount well you can instead if you were
22:44in a a different a small business
22:46startup Capital they'd say here's money
22:47where there's an outcome there's more
22:49money I mean you can run the same way in
22:51a big company so I think there's ways to
22:53pull all this in to learn from I I want
22:55to open it up in just a second because
22:57we've got a lot of CEOs out there in the
22:58audience who I know have different
23:00perspectives on this and I I I warn you
23:02I may cold call on you and make you uh
23:04uh jump in so run from the room if you
23:06don't want that to happen uh but before
23:08I do that Jenny you sort of dropped a
23:10tease a minute ago you said that there
23:12were three these three big disruptive
23:15shifts digital cloud and mobile and then
23:18you said there was a yes yeah allow me
23:21I'll just because I do really believe so
23:23strongly on this and you heard it even
23:25in some of John's words when he was
23:26describing what they were doing and I
23:28said you know this world if you go back
23:31even the last couple years we talk about
23:32cloud data Mobility we all talk about
23:35that it's digital and I said it's a
23:38foundation you must do those things and
23:40for us I said a minute ago those were 25
23:42billion last year growing at 30% this
23:45year big business but it is a foundation
23:47and when everybody becomes digital what
23:49next and there is a fourth era and I
23:52really believe it is right Upon Us
23:54called cognitive and it is a business
23:56era and a technology era it is now
23:58living in a world where you can create a
24:00business that learns and it is because
24:03of these systems that you don't program
24:05them they they both understand all sorts
24:07of information and heck 80% of
24:10information in the world is actually
24:11dark to computers they actually don't
24:12know what it is it's a song it's a video
24:15what is it really mean and so they can
24:18understand it they reason and they learn
24:21and the world is Rewritten in code as a
24:23result you'll Infuse learning in any
24:26product any service anything we do so to
24:29me this fourth trend has got the
24:32capability to be most disruptive and
24:34most transformative how long is it how
24:36long is it going to take it'll play for
24:37a decade or more out in front of us
24:40right and I think I mean I see it with
24:41clients already from the beginning and I
24:43said I I was telling alen uh a client
24:46that is doing work obviously not
24:49obviously Watson was one of the first of
24:51these things out there that uh actually
24:54it learns over time of an insurance
24:56company who they're now in out in live
24:58in 34 different states because when
25:00someone is filling out an insurance form
25:02the interaction it's helping them it
25:04knows them knows what to do he's telling
25:06them giving their context how to look at
25:09this how to answer the closure rate on
25:11that insurance I just s the client sent
25:13me a note this weekend is 10 points
25:15higher than their base closure rate now
25:18they're already World Class 10 points
25:20that's a different economic base I've
25:22got another world-class retailer on a
25:24supply chain and it is again in a pretty
25:26big pilot sales two to 10 points higher
25:29margins two to five already world class
25:32this idea that you will learn and then
25:35it can actually in that time Infuse
25:37whether it's a product and service
25:38whether it would be how you do
25:39engagement you scale expertise how you
25:41run an operation how you do Discovery I
25:44think there's a wonderful opportunity in
25:46front of us and that is the fourth shift
25:48it builds on the others but it's this is
25:50what Watson is all about well Watson
25:52would be sort of the hero in that story
25:54in uh in one element of it but it is
25:56about actually changing your business
25:57model and that's what to me is so
25:59exciting uh questions or comments
26:03who John can I put you on the spot
26:05because I know G is wrestling with a lot
26:07of these same issues if you could uh
26:09give John rice the uh microphone
26:15um what have you heard here that
26:17resonates with your own experience at
26:19General Electric well I you know if I
26:21pick up on Jenny's last comment I think
26:24that this notion of of a digital mo
26:27mobile uh
26:28cognitive is clearly where we see it
26:32going we think all industrial companies
26:35have to become digital companies and
26:36digital companies will in some way or
26:39another become industrial companies so
26:41for us it's the it's the third leg of
26:44the stool it's been equipment for 140
26:47years and services for 30 years and now
26:51digital for the rest of our lives see I
26:55I know very few people who have a
26:56product that don't want it to be a
26:57service right because and for some basic
27:00economic reasons one is that it develops
27:02an annuity relationship with a customer
27:04that you get closer and deeper with and
27:06over time so I think all these things
27:08fuel these different business models
27:10that are quite common sense why they're
27:12there when the product puts off
27:13information and the information goes to
27:15a cognitive system we have the Watson
27:18we've formed the Watson Health platform
27:20and this is why we've done some
27:21Acquisitions about 100 million medical
27:23records 30 billion images we have
27:25analytics customers bring it and their
27:27data so what is a J&J doing healthy
27:30knees instead of just sending selling
27:32you the um knee piece instead it's a
27:34relationship that says what are the
27:36things you should do before your knee
27:37gets replaced when it happens after that
27:40turns it into a service and so whether
27:42it's them or it's metronic with a
27:44Diabetes pump or whether it is CVS in a
27:47m mini clinic that they have everybody I
27:50think is going to start to move to that
27:51world Ellen I would just say that for
27:53most service
27:55businesses our primary product is
27:59information you simply can't be in the
28:01information business if your stuff's old
28:04you can't be in the second day batch
28:05processing a paper yeah and if your
28:07information is going to have any value
28:09add to it has to be real time intuitive
28:12it has to be enriched with with the way
28:15you use your data and and I absolutely
28:19agree with the cognitive uh so I mean
28:22it's you just got to get over the
28:24digitizing of your Enterprise it has to
28:26be there it it's a ticket to play in
28:27virtually everything everything I can't
28:30imagine a company that that that can uh
28:32hide the ball Mark benof can I put you
28:34on the spot uh uh give a give a West
28:38Coast perspective not that John isn't
28:39from the West Coast but you know he came
28:41out on the on that uh Wells
28:43Fargo uh hor and hor and uh the Pony
28:47Express he Mark hey John thank you for
28:50the call out I appreciate it I didn't
28:52even see you I would have done it more
28:53formally if I had seen you there you
28:55know I would just reinforce what you're
28:57saying and you know I speak to this from
28:59the technology industry point of view
29:01which is that we're in the age of the
29:03customer the customer experience has
29:06become Paramount that's number one for
29:08all of us right now you've proven that
29:10you've rebuilt all of your customer
29:12experiences I appreciate that
29:14partnership and we have the opportunity
29:17as we move into the internet of things
29:19and that everything is getting connected
29:21to build these incredibly High Fidelity
29:23one-on-one relationships with these
29:25customers and it's not about the
29:28technology it's hard for me to say that
29:29being a technologist and a technology
29:31company it's not about the cloud it's
29:34hard for me to say that it's not about
29:35service it's hard for me to say that or
29:36be having an annuity it's about the
29:38customer relationship and it's about
29:40that one-on-one and I think that when
29:42you said that you know I tweeted it
29:44actually which was that there you go did
29:46you use the fortune Global hashtag I did
29:48I got you covered
29:50Allan you owe me all right but I think
29:54that that's you know you know and I
29:56think we have to re conceptualize how we
29:59think about the world that we have to
30:00Pivot to the customer you know we've
30:02been pivoted too long to the shareholder
30:04pivoted too long maybe at times even to
30:07the employees pivoted too long to other
30:09stakeholders in the company we have to
30:11Pivot back to the customer and I think
30:13that you articulated that really well
30:16and I think if we don't do that and if
30:17we don't double down on that um we're
30:21not going to be able to fully maximize
30:22our our customer value yeah yeah Mark I
30:25I agree and we have we do business and
30:28three Americans and guess I've never
30:31heard one of our prospects or customers
30:33say to me gez I bank with you because
30:35you're so big and I'm so unimportant to
30:39you I'm just a number I'm Number
30:4112255 3 I've never heard that they all
30:45say I'm a customer set of one you know
30:48I'm unique you you should know me yeah
30:50you know you should help me you should
30:52reward me uh and you know that's what
30:54they want you know it's almost like
30:56going into a a museum where you see that
30:58photograph and your picture the eyes
31:00keep following you customers want that
31:02kind of intimacy with their providers is
31:05size we were talking about this earlier
31:06is size an advantage or a disadvantage I
31:08mean here we are you know uh I think uh
31:11HP is splitting into today or tomorrow
31:14uh Alcoa is going to split into on the
31:16other hand we have these massive mergers
31:18fizer and and where's David Patt fizer
31:21and Alec Allergan you can tell us about
31:23that one um or Walgreens and and rid uh
31:28uh is size a good thing a bad thing or
31:30it depends I I think it depends I don't
31:32think size is a strategy uh in fact I
31:35think you've got to have a strategy
31:36first and then sub size supports it or
31:38doesn't and what it is that you do and
31:40in fact if you take a look at certain
31:42businesses I mentioned earlier we had
31:44sold our semiconductor manufacturing
31:46business it was subscale better with
31:48someone else that's where you'd say okay
31:50someone in a commoditizing business
31:52something that is really scale-based
31:54you'd put it with someone else and
31:55reallocate your Capital somewhere else
31:58on the other hand if you need size
32:00because your pieces need to be
32:01integrated for a client and a client
32:03wants it then then size is going to make
32:06that one out of every three Americans
32:07banking with you is not a bad statistic
32:09not a bad deal but if we don't do a I
32:12mean we have 12,000 customer
32:13interactions a minute in our company I
32:16mean even if we do it right 99.99% of
32:19the time right we do it in aggregate a
32:22lot of people get disappointed for them
32:23it's 100% wrong so so scale I think I
32:28agree with everything Jenny said I think
32:29scale can matter and does matter in some
32:31cases but you have to be nimble enough I
32:33mean the biggest challenge I think we
32:35all fight is our lack of nimbleness in a
32:37very Nimble value Society we have a
32:40question right back
32:42here Alan I'd like to follow up on a
32:45point that you made Jenny and John
32:46you're both lifers in your
32:48company um could you talk specifically
32:51on a personal level what you do to keep
32:53refreshing yourself
32:54to alter your view of the world to keep
32:57yourself up to date to not get my myopic
33:01in in your industry and in your company
33:03yeah well I I for one I mean I am a
33:06voracious reader so anything and
33:08everything I drive my team's nuts with
33:10any magazines you particularly like of
33:14course anything with the starts with an
33:16f and so uh you know I mean I am
33:18voracious in in magazine that starts
33:21with an F I am voracious with that but I
33:23think it is more about where you choose
33:25to spend your time uh whether clients of
33:28all kinds partners of all kinds but the
33:30other thing I want to go back to
33:31something I said earlier um the social
33:33aspect of how you know you communicate
33:36with everyone and flattens your company
33:38completely I'm telling you hear things
33:40from all different alleys and ways so
33:43between clients a ton of time I mean
33:45that's how I know John so very well and
33:47so but between clients being voracious I
33:50mean you've got to be willing to be
33:51curious I guess that's the bottom line
33:53word right it is curious curious curious
33:56and uh and get your information from any
33:57so it's probably not too different than
33:59what you do I would suspect right yeah
34:01I'm in the same place for Jin is I read
34:02eight or 10 newspapers a day uh only
34:05read parts of them I call a team member
34:08yeah and a customer or Prospect
34:10unannounced every day so I get you know
34:13because by the time things come to me
34:15through five levels of management you
34:17know even shoe polish tastes like ice
34:19cream by the time it gets to me it's all
34:20so sweetened over you know and but I do
34:22get some strange responses I'll call up
34:25I'll say is this bill whatever and he'll
34:28say yeah sure this is John stump who put
34:30you up to this you know and it's like
34:32but anyway but but I I think you have to
34:35continue to learn you there's an old
34:37saying you know give someone a fish they
34:39eat for a day teach them other fish they
34:40eat for a lifetime teach them how to
34:42learn they'll eat more than just fish
34:44yeah you know and and and every great
34:47leader I know uh has a good sense of
34:50humility and humbleness in their in
34:52their idea that they don't know
34:53everything so we're always learning
34:56Jenny John you've gotten us off to a
34:57great great start thank you very much a
34:59lot there to chew on round of applause

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