 Am I starting? Well, good morning, and thank you so much for joining us. My name is Stephanie Ruhl. I'm an anchor at Bloomberg Television. This is my first time at the World Economic Forum. I'm honored to be here with everyone. And with this esteemed panel, I'm actually going to go down and let everyone introduce themselves and their organizations, even though it needs no introduction. But when people think about disruptive innovation, which is why we're here today, I don't think they think of extraordinary corporate CEOs. They think of young hipsters. Yet innovation goes on every single day, and you four men are truly innovators. So let me allow you to introduce yourselves. Doug? Maurice is a young hipster. He is. I mean, a black, sexy turtleneck. He is. My name is Doug McMillan, and I work at Walmart. I've been with Walmart for about 23 years. And the last five years have been responsible for our international business. And in February, I assume responsibility as a CEO. Maurice? My name is Maurice Levy. I'm working at Publicis since about 40 years, slightly more. And I'm about to change company, because I thought it was the right time at this point in my career to move to another job. And I will step down from a position of CEO to be a co-CEO at a company called Publicis Amnicum, which is about to be born in the next few weeks, months. Paul? Paul Jacobs. I'm the chairman and CEO of Qualcomm. And I've been at the company since basically since the beginning. We started in 85. And I've been a CEO since 05. And I'm just about to step down as CEO and remain executive chairman so I can spend more time focusing on technology and innovation and less on some of the other parts of the CEO job I didn't like as much. Here? OK, I have a pair of shots. CEO of a company called Kaizen. We're in the area of life sciences. We work with genetic information. I've been doing that now for 20 years. Also built a company basically from its start. We are in particular active in the area of personalized medicine and using genetic information for health care and particular diagnosis. And for many people, they hear about disruptive innovation all the time. So we thought we'd begin with a little visual to help you understand what Bloomberg thinks it means. OK, so I got a story. It's about this buddy of mine. His name's Andy. Actually, I'll be honest. His name isn't Andy. His name's Max. And he's an engineer. Meet him. Max is his name, right? Max. And he wants all engineers to start a company. And he wants to start one that makes limbs. No, no, no, no, not limbs, prosthetic limbs. You can't make limbs. It's crazy tough. And he's got a business plan, which is pretty good for an engineer. And he thinks, like a lot of guys do, that he can make it big. But first, he needs cash. We all do. So his obvious answer, go to a bank, go for a loan. But that's just going to take too long. So he has this idea. List it on a crowdfunding website. And then let's say euros. Well, maybe it's American. The dollars, or even bitcoins, come flooding in. And it's success. It's a real success story, an American, European success story, whatever. But now he needs a prototype. He's nowhere near. So he thinks he needs to send it to a lab. But again, time, right? Time's the enemy in all these things. And it's expensive. So he ends up making his first prosthetic, artificial leg on a 3D printer. Crazy, I know, stay with me. The clock is ticking, though, in terms of the customer. Or, wait a second, is that the phone ringing? Yep, that's one of Max's, good old Max's first customer. And he's getting a word out about his company because of an online viral campaign. Now, Max, he's always chatting with clients. That's how he manages to give them exactly what they want. Well, that's breaking down disruptive innovation. In the end of 2013, I made a pledge that I was no longer even going to say it anymore because I was so sick of it. I felt like it was overused. And lo and behold, I arrived. And they said, disruptive innovation. That's what you're going to participate in. I want to help the audience get an understanding. I want to put some meat behind it. What does disruptive innovation mean to you, Doug? Creativity and change is what comes to mind first. In our space, the customer in fulfilling consumer demand is changing rapidly. I've talked to a lot of people here this week and over the last few months that are going through this same type of disruptive change. What the internet makes possible, what technology makes possible today, and what it will make possible tomorrow is very different than what we could have done before. And so for us at Walmart, our responsibility is to connect customers with products. How we do that, the speed with which we do it, the price at which we do it at, is all going to change a lot in the future. And our job as leaders is to navigate from yesterday to tomorrow using what's possible today. And so as I think about our job, that transformation is very much on my mind. Maurice, what does it mean to you? Creativity is what is at the core of what we do. And in everything we do, we have to think creatively and to try to invent new ways of working and to be at the forefront of all innovations. So innovation for us, it's our daily bread. We have to think innovatively. And we have to think innovatively on everything we are doing, including the organization, the way we work. And particularly when it comes to service our clients, we have to think how we can help them connecting with the right target at the right time and making sure that they get the right idea of what the brand is all about. And all this, particularly in nowadays, at the cheapest price. So innovation is not only using the most innovative tools and being on the internet or on the cell phones or whatever. Innovation is on everything we do, and creativity is on everything we think about. Was your merger really a defensive merger to protect yourself against disruptive innovation from Silicon Valley, from the Googles of the world, really taking over the advertising space? No, not at all. Our merger has been directed by an offensive move, which is to be part of the future and to lead the future, particularly in this area. Obviously, the fact that we will see big data becoming one of the most important aspects of the future, this requires that we invest heavily in this field and that we have the size in order to invest at the right level. So we are partnering with the Google, the Facebook of the world. We have extremely good relationships. We have been the first to sign strategic agreements with DC innovators. And we believe that we are part of the same group of people. We, you cannot think about delivering a message without putting together the medium, the client, and the advertising agencies with all these constituencies. So it's not a defensive move. It is an offensive move. Obviously, in all moves that you are making, there is a part which is defensive. But the most important one is offensive. Dr. Paul, what does disruptive innovation mean to you? I mean, the mobile industry moves so quickly. So you've got to keep on your toes. And I think for us, we want to make sure that so many people are putting a lot of money into R&D in the industry. And we want to make sure that we're not thinking linearly about where we're going to go, because our competitors are going to go there. So to me, disruptive innovation, it's really about doing something people didn't expect and changing the game. And in this industry, when we have an idea for technology, it might take eight years after we go through the standards body and get the wireless operators to do it and the handset manufacturers to do it. So we're having to think pretty far out into the future about what a mobile device can be, what our experience of interacting with digital technology and doing it in a very personal way. And it's worked so far for us. So it's really about not getting commoditized and changing the game. You've got 45 patents alone. Is it a race to own the technology that you create? Yeah, I mean, the idea is that you've got to get out there early. You have to invent the future. If you're not doing that, if you're just following, you're not going to be able to build that patent position. And we both sell the chips, and we license the technology. And the reason why people pay us for our technology is because every year we're coming up with the next new thing, because they don't want to get commoditized either. If they're commoditized, then they're not being able to have the margins that they want to do to continue and invest in research and development and drive the future. Pierre, personalized medicine, that is the next new thing. What does disruptive innovation mean to you? Well, you know, in the life sciences, we're currently seeing an exponential increase in knowledge. We are generating more data this year than we have generated in all of mankind together in the life sciences. And this is just going to increase going forward. So 20 years ago, we were young hipsters. We disrupted an industry. We created solutions that are today ubiquitously used. So we're suddenly in this, well, solutions to process nucleic acids or genetic information are today pretty much standardized around certain technologies that we created. But we're constantly faced also with new technologies emerging that potentially could disrupt future applications. So we as an organization, we're trying to disrupt ourselves constantly. So we are challenging ourselves to disrupt our current businesses to try to find new ways to create better solutions than what we created before in which we standardized. And this is new for us as an organization that traditionally came from the innovator phase and is now also assimilating other technologies or trying to disrupt its own businesses. Is disruption innovation good for companies or only good for the consumer? In your case, Doug, the consumer has more power than ever in choices and prices. Does it have you just racing to catch them and you've lost control? It's good for companies that stay ahead. And we've got a history of doing that. And what we're trying to do right now is to make sure that whether it's the digital aspect of the relationship and to what degree we can provide some level of personalization to help people save time, get the information they need together with the physical side of it so they can have what they want when they want it, how they want it. Bringing all those things together is where the opportunity is. And in our case, we see the opportunity to win in the future is that connection, that merger of digital and physical, which in some ways will blur to just be one customer relationship. So being truly customer-centric, I think, is what the market and the customer will reward. Maurice, how important is it to have this personalized advertising? And can you see numbers-wise an actual effect on it? The most important aspect in advertising is to make sure that you are talking to the right person and that he or she has got the message and is reacting to this message and changing its behavior. With all the new technology, this kind of quest of gruel, the holy grail that we have been looking for for many years, is something which is about to happen. We can now understand exactly where the consumer is, who he or she is and what she is doing at the very moment. I'm saying she because 85% of what is sold on the world is bought or the influenced by women. So women are extremely important. Extremely important in our world and in yours. And we must define exactly how we can get hold of her and make sure that we deliver the right message. The new technology is offering a lot of opportunities. You can reach out to the consumer by cell phones, smart phones. You can reach her when she's shopping and you can deliver the right message in order that she acquire exactly the product you would like to. It's not happening all the time, fortunately, because this makes the challenge more interesting. And we can measure all the steps. This doesn't mean that the media which are not digital have no future. This does just mean that all the digital media and all the digital tools are helping us to define strategies which are extremely fine-tuned and which help us to deliver exactly the right message at the right moment. As businessmen, it's clear you can see the positives in all of this personal information, but as humans to all of you, are you comfortable with the fact that because of technology, we know exactly when we're in a parking lot, what we're thinking about, what our hand is on. At some point, do you start to say, I'm not comfortable with this? We've been building technologies now which actually preserve anonymity because there are these issues where you wanna get access to information, but we've actually built, for example, a beaconing technology which would tell you when I am close to the end cap in a store or something like that. We actually have built it in a way where there's codes that you can't find out unless the person opts in. And they say, I'm willing to say this code is something that I'm interested in and I'm willing to go back. Did people even know if they're opting in now? It's going to happen. It is the next phase. You will get notifications, whether it's to your phone, to your watch, because it's much easier when you get it on your wrist. You don't have to unlock your phone and everything. And you'll be able to say, yes, I want this or no, I don't want this. And if you don't want it, you drop those bits on the floor and nobody knows. Sorry, Paul and Amy and Reba. I think what people need to understand is that we are people, we have families, we do care about these things. And ultimately, we understand that trust is a huge issue. And if you lose it. When you say we, you mean as a company? As a person, as leaders within the company, companies are really just made up of people and we have these conversations all the time, not only about the law or what requirements there are, but what's right. And I think what we understand is that trust is the ultimate asset. And if you lose it, all of your business is at stake. So as we think about opt-ins and transparency and clarity, what we've got to make sure is that every step along the way, we're building customer trust. They do want to save time. They do want to have access to information. They want some of these things and we want to provide it to them. But we have to do it in a way that causes them to be comfortable and trust us as we go. I think that people are much more worried about what NSA is doing with their data, that what an advertising agency or a Walmart company will do with their data. They know that the worst thing which can happen is that we are trying to sell something and they know the rule of the game. And the fact that we are using technology is something which is extremely useful because instead of sending tons of messages, we are sending the right message to the right person at the right time. And that is something which is much better because they know what they like and the advertising and the promotion message that they can receive can be extremely useful for them. They have needs and this is helping them. So provided that we do it rightly and we are all responsible people, as Doug said it, we are husbands, father, grandfather, friends and we understand that intrusion is not something positive and we don't want to be rejected. So that's the reason why we are doing this extremely carefully and extremely effectively. But, you know, people love to say in theory they have issues with privacy and they don't want people infringing on their business but at the end of the day, you have the big data. What is more important to the consumer? A coupon that he or she likes, a great deal for their privacy? I think that's an individual answer. You know, people are going to process this new world in their own way and make trade-offs. But I think for business, if we don't take advantage of the opportunity to serve people more effectively using data, we'll get left behind. So we just have to take a step at a time and make sure that we're not getting ahead of where the customer is as it relates to this issue. Pierre, when you look at personalized medicine, the idea of it for people don't know, they think of it as something high-end, something people couldn't simply afford. But really, if you have personalized medicine, you could be saving those patients money. They could be getting something specifically for them and there isn't any waste. Do you think people realize that? I think it has to do with the term. Personalized sounds like tailored, sounds like expensive. What it actually does, it dramatically reduces the cost in the healthcare system. Let's face it, we're currently working with healthcare systems that are up to 18, 19% of GDP and growing. They're going to bankrupt our systems going forward. And one of the reasons why we are facing these rising costs is because we're not using information adequately. The use of information in the healthcare system to guide better decisions is about one and a half percent of healthcare costs. Just to compare that, the IT departments in banks are typically 9% of their costs, up to 10% of their costs. There's a small fraction of what other industries are using is being deployed to better allocation of 18% of our GDP. It has to change. Now, obviously in personalized medicine, what we're doing is we're currently trying to understand disease. We're not as much looking at the patient. So we're sequencing tumors. We're sequencing bacteria or viruses that are causing disease or we're analyzing the disease itself. These are not necessarily protect worthy genomes but these are culprits of disease at the moment that don't have privacy issues or shouldn't have privacy issues because they're disease, they're pathogens. And we're allocating then the appropriate therapies towards these diseases or these pathogens or these tumors. And this, in my view, has very little to do with protecting privacy even though this is often misunderstood. At some point in time, we will definitely have to go to elucidating more of the patient. But for that, I'm very much looking forward to better technologies like many here are developing. And I'm very, very confident we will have those and be able to protect privacy to a substantial degree. There will obviously be issues, continued issues going forward, but as a citizen of the world community, I see the major issues that we have with healthcare and the necessity to use information better than what we're doing today. Paul, what industries do you think are the most vulnerable right now because of advanced technology? When the internet first took off, it was somewhat obvious. The newspaper business, record labels, the travel industry. Now, as you look ahead in the coming years, what do you think could really get hurt? I don't think hurt. Chip makers. Chip makers are in a great position. You know, it's not necessarily about getting hurt. I mean, I think mobile is now an enabling technology for many industries. And actually healthcare, I think, is one where we're going to see massive improvements because you're going to have real-time monitoring. Not that your doctor's gonna be watching you all the time, but if some out-of-norm condition happens, somebody can be notified and something can happen to you. Or if you have a chronic condition, a lot of times the issue with chronic conditions, which there's a lot of the money you get spent on chronic conditions, is just that people aren't necessarily following the treatment regimen as well as they could. So if you're diabetic and your glucose levels go out of range, you actually are much less healthy and you're much more expensive to take care of. So if your watch is watching that and it gives you a little notification or something. You are loving that watch. No, I'm telling you, this is the future. This is the future. We have this idea about the internet going into phones many years ago. People used to laugh at me at cocktail parties. We said, I want to make phone calls on that. I don't want to play with it. Now everybody thinks that's normal. The future is going to be, you're going to get notifications all the time for things that are around you, for breaking news that you're interested in, for health, for things that you can control in the environment around you. And it's not going to be because you're going to pull your phone out because it takes you 15 seconds to unlock the screen and do stuff. It's going to be because it's coming to your wrist, coming to your ear, coming to your glasses and I can interact with it in a second. Yes, I'm interested. No, I'm not. I flick it away and things are going to happen like that. So health though, that's really a critical area because there's so much money being spent in healthcare and it's not being spent efficiently enough and that's bankrupting the developing country, the developed countries and the developing countries can't afford it. So we need to make fundamental changes there and I think mobile technology will do that. How does management embrace the future? Don Barton of McKinsey said technology moves five times faster than management does. So in the healthcare industry, for example, as you have these extraordinary advancements, doctors, can they keep up with what you're doing? That's definitely one of the issues that we currently have. So if you look at the typical education of physicians, it happened 10, 20, 30 years ago and for the average physician. So there's a certain amount of reeducation that you constantly have to do in a very disseminated market. That is definitely a major issue. Innovation can be created by companies but the translation into broader uses is always a major challenge. Healthcare is a very regulated industry. It's a very sluggish industry. It is one where decision making is extremely decentralized because of the significant decision making authority of physicians. So while we can have great ideas in our ivory towers, the translation into practice is really what we're focused about. The promise of these new technologies can only come to utility if we create it in a way that it can be broadly applied. If it only creates utility for a few very wealthy people, it will not create the disruptive change in the healthcare system that we need. And this is a balance we always have to focus on. Doug, Walmart is a behemoth. How can you stay nimble and embrace technology when you have to run such a massive organization? When you walked into Walmart in 1984, you couldn't have imagined your job would be running this type of business today. Yeah, it is amazing. And it's one of our big challenges in figuring out how to manage a business well and change it at the same time as something everybody I talk to is thinking about. And I think as leaders, we have to be forward-looking. We have to think about who we talk to, what information we put into our minds so that we can develop a vision. But we also have to think about the role that our teams play and who's working on today, who's working on tomorrow. How do you make sure that those teams work together in a way that's seamless? Because at today's pace, which I think is extraordinarily fast and probably only going to get faster, you have to be able to do both at the same time. And Clay Christensen's book, The Innovator's Dilemma comes to my mind all the time. And how do you manage through that change, manage through that disruption so that you are ready for the future? And I think it's a huge issue and a big part of our challenge. I think that we are probably discounting the speed at which consumers and people in the streets are using the new technology and changing them to have the world. We are part of a society and I think when you look at the speed at which they have adopted the smartphones and how they are using it and the speed at which they are changing their own communication system, how they are communicating with the other one, relating to the other one. This is changing the society at the speed which has never been seen before. And we should not be worried about the fact that there are some changes in which we will be slower than maybe a technology company or maybe a classic industry company simply because society is changing at such a fast pace that the only thing that we have to do is to cope with the change of the habits of the consumer. Think one second about what is in your own environment kids of seven, eight years old, you give them a smartphone five minutes after they know how to use it. You don't tell them anything, they know how to use it. You give them a computer at age of nine, they know how to use it and they find ways to use it smartly. And I think you should have a much bigger confidence in the people and we as CEOs of companies, the only thing we have to do is to make sure that we are always on our toes and always ready to change and if we don't, the society will change us and we will be behind. When you look at all the transition which has been made in the last two centuries, there has been a lot of saying, we said, okay, this will hurt that business or this will change dramatically the situation of this category of people. At the end of the day, this has been good for mankind and that is what we should look at collectively. What is happening with this new technology is that it will be good for mankind. Think one second when we were talking about people with diabetes. Unfortunately, in my family, I have someone who has this problem. She is every single day looking at all the news and when she's going to the doctor, she has more news to share with the doctor that he would have sold. And so he cannot do as he was doing in the good old days which is to give a prescription without explaining anything. He has to cope. He has to be himself with the right information. And I think this is what's happening. We have, think one second what's happening in the developing market and the use of smartphones. They are using it much better and in a way which is more sophisticated than the developed market. They are using it for paying the grocery shop. There is no infrastructure for the bank system and they are using the smartphone to pay, to connect and to learn. So it's something which is much better used than what we do just to send SMS or MMS or anything else. So it's something which is really changing the way people are living. And this is, I think, something truly positive for all the companies of the world. But Paul, are we moving too quickly in terms of disruption? Bitcoin comes to mind. People are so crazed for it. And others say it simply doesn't work. Just because something is disruptive or innovative, does it mean it's smart and it's gonna have longevity? Of course not. I mean, there's plenty of technologies which are in the dustbin of history. But it feels right now we're just in this disruptive fever if it's new and different. Everyone just wants to buy into it. I wish that was true, that every new technology we came up with, everybody wanted to buy. But we'll see. And what happens often with these technologies, you have an imagination of what the consumer may wanna go for, but it doesn't end up that way. And like I said earlier, we start maybe eight years ahead of time developing these new technologies. You're not gonna get that right every time. We had a system which I thought was going to work. We built out a whole television system in the United States for cell phones. And it had great quality and you could get all the stuff that you wanted on it. But it turned out consumers weren't very interested in paying an extra fee on top to get that size screen of video. So what we did was we took that technology and we now merged it directly into the cellular system and made it so that the operators can use a broadcast technology when there's a thing like a game or breaking news or things like that. And the rest of the time just gave a lot more capacity so that people can get access to YouTube videos or whatever on-demand kind of videos that they wanna do. So we learned from some of these technologies that we think are gonna be great. They turn out that you gotta sort of take a slightly different path. And I think that's what happened in the technology industry. Generally, we're very good at being flexible and adaptive to what actually turns out to be acceptable to people. Pierre, you've had 30 M&A acquisitions on your watch at Kaigen. Do you think acquisitions are the best way for innovation for you? No, I think acquisitions only really work if you have a solid foundation of organic capability and organic innovation. They can be used to catalyze certain things but the organization itself also has to be able to adapt by itself. I think few people appreciate that companies are constantly betting the farm and companies that do not do that, they risk becoming obsolete. Certainly in the high technology area because we're constantly challenged with new technologies. We're constantly challenged by new business models. And if we are not part of the game, we will lose out. So we have to think ahead and we have to make big bets for the organizations and we don't do that. We go under like the innovators dilemma typically would apply. I'll give you an example. We started out as a chemistry company. We then saw that our technologies were used in biology. So we became a biology company. We then saw that people wanted to use our biology machine so we became an engineering company. We then saw that our machines were being used in hospitals and clinics so we became a medically oriented company. And now currently we are in a fascinating shift again where I personally believe that tools to analyze information sensors are going to become commoditized and we are becoming a software company where increasingly a large part of our employees are today in software to analyze information to be able to interpret it. So companies have to go through these changes over time while still staying loyal to their core competency. And if they lose one of these mega shifts in technology they potentially become obsolete or sell out. So Kiogen's a software company. Doug, do you think Walmart is a different kind of company than it was just a few years ago? How would you categorize it? Yeah, I do think we're becoming even more of a technology company. We've always been a logistics company. I mean, would you ever think just a few years ago Walmart, a technology company? I mean, doesn't that just blow your mind a little? You haven't seen our information systems budget. It's big. And we have a team that does a great job there but they do have to reinvent what we're doing every day. And so I think this use of information the way you optimize supply chains requires math and a different skill set. So the people we're hiring and the way we think about our business is changing and has changed a lot. Help us understand when we read Walmart labs when I see labs Nike has the everybody's got labs it does make me roll my eyes. What really goes on just because I don't know what really goes on in there? What does it mean the Walmart lab? Well, in this case what it means is we made an acquisition with a small team to build a capability for us to help us be able to use information through social headed towards personalization. So you might have in the past thought there is a conflict between personalization and relevance to a customer and cost structure but today's situation changes that math. So we have the opportunity again through the acquisition of talent the development of talent to be able to apply the tools of today in a way that add value to the customer and ultimately that's the way we look at it not from Walmart out but from the customer in and what she wants is great value service that is morphing into different types of service. Many of those aspects being digital. She wants to save time. Some people don't wanna spend an hour and a half in a Walmart store wondering around they'd like to get in and out. We were in the UK on our way here and we have a retail business there under the brand name Asda and we were walking through our drive-throughs and looking at how a customer can order through a mobile device which is headed through the roof in terms of growth within the UK. Half of our orders that we receive digitally this Christmas were on mobile devices rather than online. And then they wanna come through the drive-through at Asda and pick up their groceries and other items. So customers are coming through they have an expectation about how fast they can pop the boot and get things loaded in and get out of there. Moms in particular. And so this intersection of physical how do you get them through the store because sometimes they're not home for a delivery. We do grocery home shopping and delivery in the UK as well. And we've been doing that for many years. We've seen that grow and reach an important level in terms of how much of our business it is. But we're also finding that people are saying well I'm not at home I wanna do this on my schedule not yours. So please create a situation where I can order online at the beginning of the day pick up in my drive-through on the way home. If I forget something I'll come into this form and pick it up. Otherwise I'm just gonna sit in the drive-through for three to five minutes and then I'm out of there. So I think that is an example of how markets will mature on the UK being more mature than our business in China or Brazil for example. Maurice Doug says mature. Where is sort of the marriage or the divide between these young technologists or social media gurus and those who truly understand business who have been in business for decades because it sort of makes you feel so tense when you watch CEOs in the last year all stand up and give their 2014 outlooks and they talk about the importance of social but you can watch their next tense up because they're saying God don't ask me a question about it because I don't use the Facebook. Where's the marriage between the two? It depends on. Whenever they say the before Facebook you know they're in trouble and that's when you're ready as an interviewer. I will tell you something. I'm not on Facebook and I'm not on Twitter. However, I understand extremely well Facebook and Twitter but personally I consider that I have nothing to do and they cannot use it and they don't want to use it. So this doesn't prevent me from understanding what's going on and to try to be on top of what's happening. If you look most of the CEOs we are working with they are all concerned by the future and they are all thinking about what's happening with society, with the consumer, with their own people, with their own staff and they see what the change in the behavior of the people so they are absolutely conscious of what the technology is happening. If you look at our own business we have been through, I don't know how many restructuring how many changes, how many transformation since I have been in this business. This every two, three years something disruptive is happening in our industry and we were known for being very IQ and EQ and creating the combination between this IQ and EQ and now we have to integrate the TQ, the technology quotient and we are at the crossroad and I guess that we are the best place where we can combine intellectual capacities, understanding the strategies and understanding the marketing and the issues of our clients, understanding the people and delivering the emotional message that will make them moving and understanding the technology by which this message will go through and when you look at publicist group as it is today we are slightly more than 60,000 people and we have more than 20,000 people in technology. We would have thought that we would have more than one PhD lost somewhere in our organization and today 40% of our businesses in the last quarter has been on digital so we have transformed ourselves and we are ready for the next transformation and we have to be open and we are open to all the new transformations and to all the new technologies otherwise we will not be able to serve this kind of guys because we will be lost and we will be useless for them. So if we want to really best serve our clients we have to challenge ourselves, we have to adopt all the new technologies and we have to give a very important position to all these youngsters we are going to challenge ourselves. If you go through any office in the publicist group anywhere in the world you will see that there is people of 25 years old who are challenging all the people and all the certainties that we have been working on for decades and that is what's good about life. This is what is keeping you on your toes and this is what's keeping you alive. If you want to stay alive you need to question yourselves all the time am I doing the right thing? Am I connecting correctly with the new world? Am I still able to understand what's happening and to be of some use to my clients and to my people? Is this a year of technology curation? Maurice doesn't use Twitter and Facebook not because he doesn't understand them he doesn't see a need. In the last few years with the explosion of the internet and social media we all just wanted our hand in everything. Is this a time where we're going to see consumers start to say I see all these offerings I just don't choose to participate in them? I think at any time or as I was saying earlier I mean the consumers are going to make their decision about things that they find valuable to themselves. It's natural that people in different parts of their life are going to choose different things and I even see it in the generations where I see one child of mine versus the other use different technologies. So things will stratify very quickly but there are other things that will be very unifying. We all use smartphones now we all accept that there's a camera in our phone which by the way was a very radical notion not that long ago. So I think there are some technologies that we'll all sort of coalesce around it and use more fundamental technologies and then there's going to be just lots and lots of experimentation because these platforms are huge. You take wireless technology I mean it's over six billion wireless connections in the world it's mankind's largest platform and that's why we're all talking about how smartphones are being used for this or that or the other thing and it's not that everybody has to use all those things. We build a platform that's flexible enough that allows people to do what they like. They download this app they do this they download that app they do something else. So yeah people will make their decisions and we got to build platforms that are flexible to allow that to happen. Pierre how do we break down all of this big data that we have now? There's so many people are talking about the importance of big data how valuable it is that we have it now. How do you break down what within that big data is valuable is real is useful. That's the absolute critical question and obviously we are today in a situation where we can create more data than we ever imagined and the tools to create data are just becoming more and more ubiquitous and we have a data overload. Seving through that data and selecting what is important is what is absolutely critical. One of the things that I think is one of the near term disruptive technologies is the automation of knowledge where we can basically apply overlays to these large databases that will help us see through that and select data that is important. In the healthcare system what we are looking at are tools to be able to interpret billions of different data points and to try to interpret them in terms of potential disease outcomes or potential disease causes and potential outcomes. These are extremely complex knowledge resources combining scientific knowledge combining public databases combining all kinds of other interpretation resources to be able to help our users see through that data and select the right data points to use for their decisions. There is currently, we are otherwise going to see a significant loss of economic value due to use of the wrong data going forward because of simply having too much data if we don't work on selecting the right data to use. Doug, how do you approach this? When I think about Walmart, the amount of data you must have has to be staggering. How do you break down where the valuable data is? I think part of the key is to define the problem statement or ask yourself and your team good questions and then use the data to help steer that strategy. So if you just think of it as a C of zeros and ones it's overwhelming. But if you can distill down into what problem are we trying to solve? What are you hiring the data to do? What customer issue are you working towards? Then you can approach it more strategically and parse out what you really need to use and put to work. What data can you trust? What people like or what they pay for? There is a difference between behavior and intent. And I think that's one of the reasons why testing is so important. It's dangerous to guess. Having multiple paths in parallel processing different solutions to use real information. We do it all the time with what items we sell. When new technology comes out, like the watch Paul is wearing, you can't guess as to whether or not the customer wants it or not. You gotta put it online, put it in some stores and let them respond to it. You may not invest $10 million in inventory yet. You may test it and then respond. And I think ideas informed by data are kind of the same. Maurice is liking and buying tricky and advertising because advertising is about desire. And you want people to desire things and strive for them. But you wanna advertise for things that they're actually going to pay for. I like Gucci shoes. I shop at J. Crew. That has been always a story of advertising. So you must make the difference between attitude and behavior. People can say, I like, and this is true in commercial terms as well as in political terms. People can like someone and do not vote for him. And can like some product and buy some other for rational reasons. Or can think that they are rationalizing a buy. And in fact, they have made that decision just on impulse or because they like it or they desire it. Trying to make a rational decision between a Gucci and the Hermes. And I think you will have a big difficulty. And the reason is not because of the tissue, the leather is this or the shape or whatever. It's simply because of the idea that you have of the brand. And so this is, I think this is the most interesting part of our business. And I hope that it will remain difficult and obscure because I think it's very important that there is this part of humankind which is I do at the end of the day what I want and you advertising people, retailers, technologists go to hell. I do what I want and how I like it. And this is making our job extremely interesting because we have to find the emotional link and we have to find the right way of delivering the message. So I don't believe that we will, through mathematical formula, find the magic solution. I think that there will be always some uncertainties. There will be always some areas of experience which will last or not. You were mentioning Bitcoins. May remind you what was happening a few years ago here in Davos, everyone was talking about Second Life. And Second Life will be the thing of the future. Where is Second Life today? Where are the avatars? Where is the money of Second Life? Vanished, disappeared. So we have to accept that a lot of people will experience a lot of things because they are something which we should never forget about that. They are human beings. They have the right to change. They have the right to think differently and they have the right to think with their emotions. And this is where we have, we, as advertising people, a role because we understand that much better than anyone else. I'm sorry to say that, but this is because we are the convergence of a lot of people, areas, technology, sociology, et cetera. And at the end, there is a kind of alchemy which is delivering this message to the right person. So it will be always a difficult combination and the idea that a good mathematician will find a solution, I think it's not yet born. You're all in different industries, different businesses. Do you believe that decisions are made based on desire and not necessity? Because the way you talk- I would say they are made on both. They are, again, it's not all, it's end-end. It's not, people are making decisions based on necessity. I dream to have this car, but I have not the money for, so I will have this one, which is a low-cost one. That's simple because that is what life is all about. So you have to make trade-offs and sometimes you cannot acquire something, but you will make trade-off on the other aspect of your consumption because you want absolutely it. And that is always what I consider being the good uncertainty of life. You cannot measure, you cannot put into boxes the people and you have to accept that they have a different behavior according to the moment. And I'm sure that you yourself, you are behaving differently, not only on stage, but in some moment of your life, there are things that you think you will be doing and there are things that you will have to do differently simply because there are some impulse. Doug was mentioning the fact that people are ordering and by cell phone, and then taking the product at the drive. That's nice and this is growing. The problem is that how are we managing impulse? And impulse is important. And I don't know how many, what is the share of the sales of Walmart who have not been predicted by the people. They entered into a Walmart store with the idea of buying one thing and they are getting out with a full caddy. I think it was like three at the end. I was telling him my Walmart experience. I would like, it is my desire to control the rest of this conversation, but there are people behind those glass windows screaming at me to let everyone else in the room get their chance. So I'd like to open it up for Q and A. And when you have a question, someone will come to you with a microphone. And if you could first introduce yourself and your organization. Thank you. My question is about the cost of so-called disruptive innovation. Innovation is great. Everyone is very exciting about innovation, but all the innovation means you have to discard the past. Just like Walmart, you have a lot of offline shopping center and those established business model. So how do you balance the cost and the benefit of innovation? That is one of the big challenges. I think the alternative of not investing is even more concerning though. So you have to find a way to make the right capital investments and manage your operating budget so that you can steer the company for the future. And it's very important to keep your current business, your core business, the historic business strong so that helps fund the future. And as leaders, we get a lot of help from investors and from our own finance team helping make those trade-off decisions. Claire, do you have to discard the old? I think it, well, I think you do. If you look at classical investment, financial analysis, what you typically try to discard is the sunk cost. You don't include the sunk cost in the analysis of the opportunity going forward. So by simply applying that basic method, you should not look at what it means for a business, but look at what it means for the future, for the investment. Because somebody, at least in technology, will choose that path. So if you don't do it, somebody else will do it. And if you do it, you have a chance to potentially mitigate the impact, potentially synergize with the rest of your portfolio and make it a lot more positive for you than if somebody else disrupts the market for you. So that's why I typically ask our people not to look at the impact that a new technology or a new business model has on our existing business, but to actually try to create the maximum impact for their own new franchise. Dr. Paul, you want to weigh in? I think if you look at things that you've built in the past, technologies you've built in the past, sometimes those technologies are foundations for the next technologies that you are going to build in the future. So the radio technologies that we started, our company building, those radio technologies are actually still on the phone. They've morphed a little. They've gotten more sophisticated over time. But the newest things that we're doing today about this merging of the physical world and the cyber world, those have their roots in that stuff that we did way in the past. So you have to choose. You have to pick and choose what of the past that you retain and you build upon and what of the past that you need to discard. And I guess the other aspect of that is, there are a lot of cell phones out there and they continually come out with new ones and people discard those. And so it's a question of sustainability. As an industry, really try and focus in on that more and more. And that's a very, very critical thing too when you think about discarding the past and disruptive innovation. Let's talk about your ability to reinvest and also satisfy shareholders. Clay Christensen, who you referenced earlier, said companies need to redefine the way they look at success. We should be more Amazon flavored so you can make huge bets in technology so you can be that next great company. But many companies don't have the benefit of doing that because they have shareholder demands every day. We're all facing that pressure. I think the obligation that we have is to clearly explain our strategy and what we're investing in so that investors and others can evaluate us and hold us accountable appropriately. And we have to describe the timeframe and in our case, as we make investments, it'll be our responsibility to say, here's what we're doing, what we expect to get and when we expect to get it. But again, the business's ability to be relevant in the future and to fulfill our purpose, to help people save money and live better, to deliver on what we've always done, we just know we have to change. So there are periods of time where you invest more to be able to do that. There are periods of time where you enjoy those returns if you made the right decisions. And I think transparency and communication, given this disruptive change, become even more important. Pierre, is this a constant struggle for you because you need to invest big and clearly you're not the size of a Walmart, but you're also publicly traded. How do you balance this? Well, in our industry, and I think we're lucky in that sense, in many technologies industries, we're more worried about small companies and garages and less worried about big companies with large financial resources. So I think incumbents have a certain advantage that they can, even with all the pressures from Wall Street, with all the restrictions that we have, we can invest significant resources and compete to a certain degree also with this type of innovation. I think that the key thing, the key restriction that large organizations have versus the small ones is not necessarily the financial resources, but is the agility. The ability to create subcultures that can react very quickly to new trends and embrace something also in a culture that otherwise in a large organization is more difficult to do. This is, I'd say, the more important restriction than the financial restrictions. All right, we have time for another question. Hi, my name is Boudai from Kuwait. I have a question that I heard last night over dinner at the Future of Design, and it's kind of a riddle for everyone in here. What makes a company like Apple that had nothing to do with mobile phones to become a leader in this industry, far exceeding Nokia and other names in there? Or what makes a company like Tesla, a car manufacturer, electrical car manufacturer, start up with a very limited budget way ahead of big names like Ford, GM, even Toyota and Nissan. Thank you. The new technology software company, Walmart will answer that question. I think it starts with a leader and a vision. You know, not everyone has Steve Jobs, but hopefully there's a little bit of Steve Jobs in all of us. And being able to identify the opportunity in that segment and then just be aggressive and go after it is what comes to my mind. Being creative, trying things, believing in what you're doing, being persistent, all of those ingredients come to mind. And in some instances, in our instance, it takes a team because one person can't do it and you have to become like-minded to be able to deliver against it. But isn't it hard to do that as a team? In Steve Jobs' example, one of the reasons people believed he was so successful is because there was a team, but there was one voice, there was one decision maker, and it was him. Yeah, there has to be clarity on the big things. I did have the opportunity to meet him a few times and he was dogged in his determination to deliver. All of us, if you think back to when MP3 players and music was being pirated and Napster and all that stuff, all of us were trying to figure out how to marry up and solve this problem. But he solved it, I think, because of high expectations, determination and persistence. And I think those are the ingredients you have to have today. Dr. Paul. Oh, I think the answer to that about those questions is that those companies wanted to be different. They saw what everybody else was doing. They saw the set of assumptions that people were making. They said, okay, well, I'm gonna make a few different assumptions here. They didn't throw out everything. Obviously, the iPhone was built on a lot of technologies that had already been out there in the past. I mean, we started AppStores in 2000. You know, we built the first smartphone in 1997, 98. But Steve Jobs took that, and he put others, you know, his special sauce around it. And a lot of it, I think the place where you were going was, a lot of it was around the design of it. He created an object of desire also, and he created a mystique around it. And he did that in a way that really made something mainstream because he articulated that there was a difference to that product from what you had seen before. And I think the same is true of Tesla and Elon Musk. I mean, Elon wants to be different. He didn't want to build a good car. He wanted to build the best car he could figure out how to do. Does that car share characteristics with other cars? Of course it does, but he looked for places where he could differentiate. I don't think he has a choice. He is different. We have one more. We have time for one more. I'm going to pick you only if there's no woman with a question, because we haven't had any girls. Oh, sorry. There's two. You're going to lose out then. Here you go. Okay, so I'm lucky. I wanted to talk, ask you about, I'm Yael Ifra from Paris. I work in a retail design firm. And the question about innovation. I read a book about innovators and the thesis was from a Harvard professor that innovators usually fail in business. And it's usually the strong number two company that takes over the idea and turns it into a success. And I think economically that makes a lot of sense. But I also think our society and our consumers are looking out for new ideas and real signatures. So I just wanted to hear what you think about when we talk about innovation and the powerful businesses that you have, what your strategy is on those really good initial ideas and how you can capture those. Okay, I will take a short at it. Innovation is probably the most difficult decision that the CEO has to take because it is a disruption. And the easiest thing is to say, okay, I'm going to what is disruptive. But disruption doesn't work all the time. So it is always a trade-off and you have to make the right decision. We were talking about Steve Jobs. But Steve Jobs has been out of job at Apple for good reasons. He failed. And he had to come back because the other one had failed even worse than him. And there was something which was incredibly strong with him. I had a meeting with him only once. And one thing was absolutely transparent with him. It is his obsession and his focus. So he was an innovator by essence. We are not innovators by essence, not all of us. And we have a company which is running in a certain way. Walmart has been an innovating company in his own right and in the world filled, and now is moving to new disruption and disruptive ways of working. The same is happening with Publix's group. The same is happening with Qualcomm, the same with you. And I think that you have to accept failures. And you have to have people who are supporting the idea that you can accept failures. And your investors, your board, must accept that you can fail. And it's only at this price that you can succeed. But obviously if you fail too often, then you have a problem. So making a decision on innovation is probably one of the most difficult things that you have to do when you are running a company. It's not the same when you are a startup. A startup can make some inroads in some areas, they fail, they fail, and they start something else and they go and maybe they will find one day something. But when you have a legacy business with thousands of people or million of people working in the company, you have not the right to fail too often because what you are putting at risk is the life and the jobs of many, many people and also the trust that a lot of people have in you and your shareholders. So it's very complicated and making the right decision when it comes to going in an terra incognita in an area that you don't know anything about it, you must feel very strongly and this is where your guts are very important. Either you have the feeling that it will work and you understand how this will contribute to the future or you don't feel it enough and you don't go and maybe you made the wrong decision not going. So it's complicated. All right, we are going to end on the importance of your guts. I want to thank everyone for participating and gentlemen, Pierce Shatz of Kaigen, Dr. Paul Jacobs of Qualcomm, Publices, Maurice Levy and our own Doug McMillan of Walmart. Thank you all so much. Disruptive innovators, they don't just have crazy haircuts and hoodies. It's these guys, thank you. Thank you.