Also: CEOs' biggest worry, Chemours scandal, Vanguard CEO steps down.
Good morning.
I spent much of this week at the Lake Nona Impact Forum, held in partnership with Fortune, with a focus on health and wellness. As at every executive forum I’ve attended recently, much of the focus was on AI. But while executives in other industries talk about double-digit productivity gains in marketing, technology, finance, supply chain management, sales, etc., health care executives talk about gains in research and development that have a different order of magnitude. Here’s what Emma Walmsley, CEO of GSK, said in her interview with me.
“The biggest problem our sector has to face is the productivity of R&D. It costs billions, it takes decades, and 90% of it doesn’t work.” Applying AI to research “is the holy grail for us. That is where we can create real material value.”
Walmsley, who sits on the board of Microsoft, acknowledged that gains in research, while potentially huge, may take longer to realize.
“Like most extraordinary innovations, we underestimate how absolutely massive the transformation is going to be, and we probably overestimate the pace at which it is going to happen.”
I also spoke with Chip Bergh, who just stepped down as CEO of Levi’s after 12 years on the job. As CEO, Bergh increased the company’s market value five times over, but also was attacked as a “woke CEO” for taking strong stances on gun violence and voting rights. Bergh was unrepentant:
“This is not about me. This is about the role of the CEO at Levi Strauss and Company. We have a history. We’ve been around for 171 years now. Going all the way back to our founder Levi Strauss…the very first year he made a profit he donated a percentage of it to a church orphanage in San Francisco. And he always believed that, yes, we make bluejeans, but we are here to do more than just make a buck for the shareholders. We are here to make an impact on society.”
Jeff Bezos also spoke at the forum, which was held just 50 miles west of Cape Canaveral, about his space company Blue Origin. He said the real reason he is interested in space travel…
“…is to protect this gem of a planet. If you look at it, by almost every metric, our lives are better today than ever before. If you think about the whole world, literacy rates are way better. Child mortality rates are way better. Global poverty is way better. All of these things have gotten better over time. And there’s one exception. The natural world has not gotten better….We can’t go backwards. We need to go forwards. But what does this mean? We need to continue to use more and more resources and also protect this gem of a planet.”
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
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The biggest worry for CEOs
The top concern for CEOs isn’t rising costs, disruption or even geopolitics, according to a recent survey of chief executives from BCG. It’s talent, with 60% of CEOs citing finding, hiring and upskilling workers among their top two long-term management concerns. The AI boom is making talent more important, as both executives and employees worry they don’t have the skills to manage generative AI. Fortune
A scandal at Teflon-maker Chemours
Shares in Chemours, the company behind Teflon, crashed over 30% on Thursday after it put CEO Mark Newman and other top executives on leave. The company will also delay the release of its audited financial reports. In December, the Securities and Exchange Commission said it was looking into some of Chemours’ non-standard accounting measures, some of which were tied to executive pay. The Wall Street Journal
A new CEO at Vanguard
Vanguard CEO Tim Buckley will step down at the end of the year, after spending 33 years at the asset manager. Vanguard’s assets under management grew to $8.7 trillion under Buckley’s six-year tenure as CEO. Vanguard has benefited from the decade-long boom in index investing, with clients shifting to low-cost passive funds pioneered by the asset manager. Bloomberg
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Tech Poised for a Comeback Deloitte's 2024 Technology Industry Outlook predicts modest growth driven by lower recession risk and a focus on innovation. Areas of growth include investment in cloud computing, AI, cybersecurity, diversifying supply chains and navigating regulations. Read more.
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