 All right. Good afternoon, everyone. My name is Robert Smith and it's a pleasure to be here today with all of you This session has been sold out for weeks and we're excited about that and I'll tell you what's interesting is Today we came to Davos three days ago With the intent to understand this fundamental change in the business economy This new world order of the Internet of Things and understand this technological revolution That has the potential to change the way we work how we relate to each other grow food Manage and care for our elderly repair the planet and the first couple of days. We were hijacked We were hijacked by a massive sell-off in the equity markets by debt markets It seemed to evaporate by commodity pricing that that seemed to have no bottom and to slow down in markets We thought would continue to grow forever But what we have now done is now get back to the reason that we are here is to understand this technological revolution We are now calling the fourth industrial revolution The interesting things about this are that there are components that are changing their systems that are changing their Dynamics that are affecting every single business on the planet every industry every country and frankly every human being on the planet in one Way shape or another and what we have to do as leaders in this industry is To figure out ways that we will guide this To make it work so that we can become a better Society a more effective manager of businesses and not end up where technology takes us but drive it to the right places So today I'm actually quite privileged to be here with the very distinguished panel to talk about The impact that they are seeing on this fourth industrial revolution through the eyes of the components through the customers and the partners We term this the Internet of Things well as a good friend of mine John Chambers And I like to now call it the Internet of everything everything is connected devices networks People and what we have to do is manage through this in an effective manner So what we need to do today is first introduce my distinguished panel first I have Mike rig war and Mike is a 25 year veteran in the software industry is now the leader of CA technologies and Mike is going to talk a bit about his perspectives on cyber security how it's evolving how he is helping his customers Embrace the opportunity that is his fourth industrial revolution. I also have the good chance to introduce Mike McNamara Who's a CEO of flex flex is one of the main partners in this Internet of everything? Revolution helping customers think about design come up with componentry Systems designs and understand how that works as a true partner in the context of pushing their products and systems and solutions Into mark into the marketplace Andres Rotopolis I got it right on dress Andres is one of those wonderful inventors who is also a disruptor who is also becoming part of This Internet of everything Andres has come up with a wonderful business Matternet that actually is going to solve some of the problems of last mile delivery do it in effective and efficient matter But also to the to the threat of the incumbents disrupt potentially a half bit trillion dollar industry and We have tk curian tk runs one of the largest Software technology outsourcing and consulting businesses called we pro about eight billion dollars in revenues serves over a hundred and seven hundred and seventy five Different industries, and I think close to two hundred thousand employees He has become a trusted partner in this evolution in this industrial revolution And so Tico's tk is going to talk about what he sees and what he has encountered with the customers and how he can help Them and what their challenges are so with that let me just first give a little bit of a Level set first of all what is this Internet of everything the Internet of things it is the connectivity of devices and sensors That ultimately in a fabric of software analytics and technology Give us the ability to understand our world better shape outcomes Determine and predict what it is that we'd like to have happen and actually drive resources toward them It is an industry that first was estimated at six trillion dollars and then 11 trillion Cisco estimated 50 billion devices being installed by 2020 I heard a recent estimate by very credible source in the industry saying one trillion devices by 2025 I Had the good fortune to meet with an executive who builds housing in in Germany and in and in in in Amsterdam Recently who said in one building they have over 60,000 devices so now start to do the math it becomes big it becomes enormous and it becomes important for us to understand how we As a society as business leaders are going to manage this effectively So I'm going to turn my first question to Mike Gregoire Mike. You've been at this for 25 years. You've seen massive Changes in the software industry Tell us a little bit about what your customers are encountering and how you and your company are Looking to shape Exactly the proper outcomes right on comes for them as customers But also how do you ensure that they are thoughtful about what resources they put against embracing the opportunity? Well, I think just about everybody's understood that we've become an application economy And as they start thinking about their own business models and how they relate to their own customers It's really coming to being through an app and in the process of doing that the way that we've built the applications You know for the last 40 or 50 years. It's been this waterfall methodology very serially done But it takes too long and with our economies moving as quickly as we can we need to do something much much faster So the methodology that just about everybody's adopted is agile, which is a completely different cultural change Which means you don't have groups standing by themselves Doing a piece of work and handing it off to the next group you do it together Which means you do iterative development you fail fast you have customer input immediately? And this whole new way of thinking is permeating outside of just software development as they sought work for software development They said why don't we run our company this way? And so you're seeing this whole hierarchy in the in the evolution of a more principle-centered leadership rather than a command and control type of leadership and unwinding You know 50 to 60 years of management training where I'm the boss you do what I tell you to do rather than you are empowered to do The right thing is a big cultural change and most of the CEOs I talked to we start out talking about software We always end up talking about culture right right great So let me turn to Mike so Mike McNamara one of the things Mike you and I've talked about is to what extent CEOs in multiple industries and you have a chance to operate in your business with with industries from from from white goods Manufacturing to you know high-tech What is it that they are facing? What are the challenges they have and in your mind? What do they need to now embrace in order to be effective to compete in the next 20 and 30 years as we've evolved this this Revolution yeah, yeah, let me let me just you know first give you a little context We have like 10 different industries that we have over a billion dollars of revenue So within each of those 10 we probably have 50 different customers in each one So we get there's huge perspective both with inside an industry and across industries of what are the new developments What are the new technologies and one of the things people working on what do they need to be successful? And and without doubt the world has changed. So the world has become faster. It's get become more complicated It's become more distributed Demand patterns are becoming you know driving into emerging markets and it's creating a very fast environment And what what that is doing then it's challenging Companies about how do they get their get their products market faster? They have more disrupt they have more disruptive companies coming at them. They have more international competition. So what it's you know between that and Really taking and thinking about this system economy this after of an economy to be successful today You need not only these sensors and in the field But you also need content and analytics and and applications and new business models as a result drive off of a System that you have to produce so between this faster economy and this system you have to produce you need a you need a go-to-market Strategy that's a little bit different and what we're seeing is a lot of companies coming to us and just in really built around collaboration And when I say collaboration, it's just how do I get to marketplace faster? You know the wash machine that needs the connected now if you want to start from scratch with your mechanical engineers about Who studied how to exhaust wash machines and now all of a sudden you want to connect it to the internet? It's a whole different technology and that technology may be the same kind of technology That's applicable in many different industries. You know, it's got a wireless module. You have to power it What's the user interface you have to talk to it you have to swipe at it So to be successful in this faster quicker economy where demand is more distributed and there's more complexity to be successful You have to find partners who you can co-collaborate with Right in order to get the speed and the the effectiveness that you need good I want to come back to the partnership thing when we talk with with TK Because a big part of what you're talking about and also what I heard you talking about Mike is trust And how is that trust now going to be changed? How does it change and how do we extend it outside of the enterprise? Let me shift it. I'm gonna come back to that in a second. Let me shift to Andreas Andreas You saw an opportunity and decided let me let me go after that opportunity because there is a network in place There is a fabric on which you can build a new business a new business model It would be helpful to us to understand, you know What your mindset was going into it and what challenges that you currently face in order for that business model to materialize? Yeah, so I run a company called called Martinet. We are start up in Silicon Valley. We build Autonomous aerial vehicles what most people called drones to transport lightweight goods between Places over local areas usually and The driver for us to start these was the realization that the way that the world is going We will need to solve mobility, especially logistics of goods in a different way So we made two key Realizations the first was that if you look at the world at the world today Close to 1 billion people do not have access to all-season roads Mm-hmm, and it's unreasonable to expect that we have to wait for five decades for the investments in order infrastructure to be put in place for These billion people to have access to medicine diagnostics and so forth And then you shift on the other end of the spectrum our cities and mega cities Half of the earth's population already lives in cities now and all mega cities have Transportation infrastructure, but it's very dysfunctional So, you know the idea that we had was is it possible to create a new system to move things around? They call us the Internet of flying things and we looked at the tools that we have available and Feeding off the revolution in mobile computing There's now very cheap sensors and very reliable sensors that you can use to have a vehicle to self navigate And then it really becomes interesting when you start thinking of those net of those systems as networks, right? so I see an amazing opportunity here Imagine like, you know, you take any city environment and you're able to lift all that traffic off the road by having these Intelligent agents that talk to each other and talk to a central cloud system on how to reliably move things around in the city And for me, this is a much more natural way to solve the problem. It reminds me much more a flock of birds You know, it's it's much more similar to that than you know any sort of mechanical system And that fluidity of communication and you know, there's one vehicle that is finding rough weather and the reports are to the system So the next vehicle doesn't you know make the same mistake or it learns, right? This is where the excitement is and I see tremendous opportunities not just for us But for everybody that is adopting a mindset of let's build something with the new tools, right? What I want to do is come back to you and talk a little bit about the challenges you face in the regulatory environment And how do we ensure that your drones aren't they're taking down, you know Aircraft causing privacy issues all those sorts of things those are things we want to talk about that's what we're concerned about But let me turn to TK. TK you have a global business You advise hundreds if not hundreds of thousands of companies on how they need to move their business models forward Tell us a little bit about what you're encountering in that market. Tell us a little bit about with the established businesses What are those CEOs and executives are facing and how to what extent you advise them and work with them and transforming their businesses Thank you. Maybe I should just give you a two-minute perspective of what's happening in the space itself Because in many cases what's happened is that with IOT Everybody has fallen in love with the word and the technology behind it without really understanding on how it's fundamentally Shaking up everything from design to aftermarket value So if you'll go back Ten years ago if you had to introduce a product into the market you went out there did market research You figured out what customers wanted you built a product over a say year or two years and you shipped it out When the product was shipped out You found that you would be able to get premium pricing and Then it went into a commoditization cycle and then very soon the value that you created out of design vanished Then what you did was that you went to the market you sold after sales service You've made you know 10% of the value after that if you're a software company you made a little more But that's how you derive value With technology changing and with IOT becoming a reality fundamentally what's happened is you have Smart materials combined with smart communication and a software layer that sits between that's able to manage that So today when you design a product you design a mechanical product that will stay for Maybe 10 years But everything else behind it in terms of how you upgrade the product how you do features in the product is all driven by software On the aftermarket side the biggest opportunity is not just in collecting money of AMC It's creating a network of shared Shall I say? Horses or people who are your allies who can sit down and make money of your product and you can make money of theirs a Classy example would be the iPhone right because when you have an app there every person who writes an app makes money out of it and The phone itself you can upgrade with over the air upgrades So the phone itself a basic phone when you move from iOS 8 to iOS 9 you've changed the features So fundamentally from the same product you're able to derive value Very very few companies in the world are actually thinking this way They still believe that IOT is about connectivity about solving things like you know logistics networks Having something on your hand that tells you your blood pressure That's all fabulous but if companies that are basically in design if they don't think through this completely and Rewire their engineers to think this way Fundamentally I believe what will end up happening is that we'll have a connectivity revolution But we won't have a real IOT or we won't see the one law that determines networks in today's age in terms of monetization Which is Metcalf's law actually taking effect. Yeah, that's the biggest thing Because if you look at Facebook you look at anybody in social media the way they make money out of that is fundamentally Metcalf's law Right Metcalf's law determines value and that's what you're now going to start getting into physical stuff great And let me turn to Michael you and I have actually talked about this when you think about a number of the customers that you've gone into in helping enable them to embrace you know this this this infrastructure on the mindset the opportunity to bring in partners and Develop what I'll call platforms of development on which you can create multiple streams of revenue I think it would be helpful to talk about you know some of your work with some of your customers and what you've been able to Accomplish in that context well, you know most of them are trying to build software I mean and I'll use one that's been in the paper most recently is GE You know what a bold statement for GE to say we want to be one of the biggest Software companies are the top ten software company and here's the punchline by 2020, right? That's how fast this is moving and they are a complete agile shop if you walk into one of their development centers You'll find expert software developers working in conjunction with Internet of Things that's how they're monetizing it and they're changing a whole conglomerate of a company around a single theme is that Applications are incredibly important and we're gonna see more and more companies really brush up against that business model because you can change it Very quickly, you know, it's hard to change a jet engine, right? It's hard to monetize a jet engine Charging on the service because you've got software that understands exactly what that jet engine is doing all day every day And you can change your business model as the jet engine ages You can change the business model as that as the new features come out It's just a new way of thinking through doing the same thing they did before but much much better all enabled through software and at a speed That is unprecedented in terms of the adoption rates the but part of that speed and how they get there is through partners I mean typically you can't do it themselves GE has to do it with partners if it's EA and it's other partners Tell us a little bit about how those partnerships evolve and into what level the trust then has to has to now become much more of a Fundamental part of that relationship. Well, I think you know in today's day and age It's so competitive, especially in software that you have to establish your product It's got to be absolutely better than everybody else's and if you aren't Dedicating yourself to continuously improving your own product You'll be left to the side and what you need to do is ensure a You know your customer that you're investing our business for whatever reason got built where somebody traded a Tape for a fixed amount of dollars and then said I just gonna be like 25 to 30 percent every year and I'll give you the fixes Yeah, that business model got established our industry was really labs came up with that first 35 years ago Absolutely was but that's a whole other conversation. Yeah, well Let's let's thank them or hate them for it But the reality of the matter is is our industry hasn't been really good about giving value for that You know 25 percent every year and customers are pretty adamant now. What am I getting for it? They want to get more software. They want to get upgrades They want to get these fixed I want to make sure that the quality is right then it's continuous to solve their problems But they're not looking for incremental innovation Their businesses are changing exponentially. You know, we have a great startup guy here We can we can ask him big companies are trying to compete with startups and they can't do it incrementally because startups Don't go incremental they go for it all you got it with a great idea Mike I want to hear from you You know you your business you work with again thousands of companies in in in the design cycle often Tell tell us a little bit how the design cycle has actually changed and the pace of design and to a great extent I'm still focused on this this what I call this trust factor because if we don't get that right Then you know all of this, you know collapse ultimately I want to hear more about the trust factor and then ultimately the security elements associated with it Yeah I think you know I'm gonna pick up a little bit of what DK said earlier because what do you described as a different kind of system? You know you talked about the internet of things or the Internet of everything because everything is right gonna be connected But what do you describe is more than that and what we actually called is the intelligence of things So what is new and different and fundamentally different is the end nodes of everything are now connected And as a result of being connected or our smart and as a result of being smart they're capturing real-time data in the field which gives us new source of Analytics of data and what we can do with that data and the disruptive the business model is built around a whole partnership System that takes that data and turns it in to be in predictive it turns it into be in analytical and Immune cognitive, you know you take the wearables that TK mentioned. It's not just about getting your reading It's about getting your reading, but then it's also about getting early warning signs of something might be wrong and then it's also taken it to the next level which is You know Benchmarking that against other data that looks like this that might lead to a particular problem and a recommendation to do something different So it's it's the intelligence of things that actually actually is creating the Disruptive business model so what it means is the trust with companies has to change a lot of times the value in products today Is not in the hardware It's in the software the content the data and the predictive and cognitive new business model as a result of it So a lot of times companies come to a company like flex to actually do the hardware forum Because a lot of times the hardware is just a vehicle to get to where the real value is created Which is in the data and a lot of times the data you need a partner system to go make that happen So when people think about competing in a faster quicker more dynamic world, there's more disruption There's more international competition There's more technology at unbelievably low cost that actually enables the disruption You know the cloud the smartphone those things you have to have a different approach towards customers And you know kind of a long answer to give back to your trust But you have to have a partnership community to help monetize your data assets You need a partnership right community to help you get that hardware out in the field quicker and faster in and So companies have to think differently that the world is at the playground and if I think about incumbents As opposed to startups, you know, it's always, you know, people are fascinated with startups no offense But you know the incumbents actually have the channel and they have the know-how to do a lot of products And if they can find find ways to pivot and use the world as their play playgrounds then go faster Whether then just trying to do everything themselves. They're going to be more effective Moving into this digital area, right? So what we're doing is we are evolving from what I call a component bank based thought process To a systemic thought process That's the real definition or differentiation that this audience this panel is now bringing forward Here's what's interesting and here's what's challenging to me. I think about it I have the good fortune of being in a wonderful software business and and one of the issues that we always tackle as cyber security And I think we've done a pretty good job like all things you never win You can only tie at the server level the PC level ultimately though It's at the application the device level Andreas. I love your business. I worry about your product in that respect I want to hear what are the issues you face? How do you think about it? How do we make sure that you know your your devices aren't hijacked like other vehicles that we've seen hijacked on Videos over the last few years tell us a little bit about how you think about it Tell us a little bit about how the regulatory framework is starting to shape your thinking about protecting us From devices that seem to be you know on their own and controlled by an algorithm Wow, that's a loaded question. So It's my job is a load the question I was in a I was in a security workshop in Silicon Valley a few weeks ago and The question was posed is there such a thing as a secure system and the answer was no, right? So I think we have to learn how to incrementally make our systems more secure And we have to go through these learnings in a way that is safe And I think that's a general sort of as we give access to Devices around us anywhere from like house thermostats to you know a flying object, right? We have to figure out how do we make sure that they cannot be easily hijacked and then I think it's going to be probably a We have to go through a learning kept understand how to really make them robust, but we've seen that happening in computing Right, so we have something to go off from you think we're six months away a year away two years away from having real solutions and Protection where where we can feel confident that devices like yours aren't going to endanger the population so this is a completely now different question right because them The focus on the things that we build is how do you make sure that you don't endanger other? other airplanes and you know how you do not clash with the air traffic right and then how do you don't put people in danger and We have solutions for that stuff already. So, you know, there is a Redundance systems on our vehicles that make sure that we never cross into a space. We shouldn't be so, you know All the vehicles that we fly we'll only fly in the lower part of the airspace that's well segregated from any space That's occupied by big aircraft carriers, and we are very strong in that segregation And then there's other sort of work that is happening with NASA and others Where we participate with people like Google Amazon and a bunch of other players to really figure out how a collaborative? Model of the airspace at the low at this lower segment of the airspace will work Then on the other side of how do you make sure that the machine is safe when it's flying above somebody's home? We have very good ways to do that today, and I think the key is in Mike's inside before right? I mean we watch that device Every second we upload something in hundred parameters per you know per second, right? It all goes up our cloud system, and we analyze that data in real time There's other low level autonomy systems on the vehicles that if something wrong is happening They will pick it up Our vehicles for instance is to give you a very tangible example There's like a watchdog on the vehicle if something goes off it loses control authority because of wind for instance He will shut its motors off it will deploy a parachute It will fall beautifully with the light all children around it, right? So, you know, there's ways in which you can build Mechanical redundancy into mechanical systems to make sure that your Risks you de-risk some of these risks on the on the other side the digital side, okay? I've got two questions for you to take the first I want to talk about the way I think about this market You know you obviously have what I call our our consumer market We've got a government market, and we call you know business, you know, you have that I think the great fortune of mainly across all three You know the the business market and the industrial markets typically, you know viewed as three to four times that the government market But I want to hear a little bit about in your experience. Where do you see governments? Were they doing it right? Were they failing and what are some of the challenges that they face in order to be effective? And what are the shortfalls in the in the infrastructure today that we all need to be aware of and cognizant of? So what I'll do is I'll address that question a fairly broad way at last time I made a comment and the government's like nearly got lynched. Oh, so Stay out of that region, but I was gonna give you I'll give you a broad idea of what we're seeing I think the biggest area of focus right now is the business market clearly. That's where the opportunity is And in that market A lot of people are trying to kind of go back into their own engineering shops And trying to get the concept of platform thinking kind of inculcated Because if you have a bunch of engineers who've sat and designed products, which are unique You know if I'm an engineer, I've got to do it my way and if your engineer you're gonna do it your way If that's the mindset that mindset has got to be broken now once you start thinking platform You think about standardized hardware and then you look at software and say how do I differentiate with software? So that the engineering teams are able to do fairly well now I think large part of the organizations that made the transition Where it kind of where it's kind of getting a little lost is in getting the ecosystem onto the platform So that typically today in most organizations does not sit with the engineering function That sits with the marketing function or the product management function And the way they see it is it's a transitory kind of a Partnership approach, which is that you know, I like you today. You're a partner tomorrow. I don't get business off you go That you cannot have in this environment Because you need to have a partner in The partner has got to make money out of you and you go to make money out of the partner So the choice of the partner and the trust that you put in a partner is very critical when you get into the business market Because you cannot switch today. You can't switch on the fly You might be able to for the commoditized side of the business, but you can't do it on things that are core So that's the area that we're seeing big opportunity and we're seeing clear opportunity in a couple of areas logistics being one of them and The other area that we're seeing but the biggest thing in logistics is that across the world. We don't get uniformity of data Simply because a large part of the world in spite of whatever we hear is still not connected Right, right and the connections are poor So for example, we recently did one interesting project with an earth-moving company And we said we're going to kind of the machine is going to upload data Every I think couple of milliseconds funnily enough the network drops There's nothing you can do about it because in between you have this big dead zones of data So we've had to go back and redesign to make sure that when we drop We are able to kind of store the information and then dump it back when the network comes back Right, but that doesn't give you any sound gets kind of sense of real time In terms of managing data and managing the effectiveness of the machine, right? But it'll get there, but I think that's the first big constraint the second big constraint that we see today is The value chain that is a partnership structure in many cases is done by the firm themselves We have had to step in and help them with partnerships now So that's the second role that we've had to play That's in the business market, but I still see big opportunity in that space and it's evolving in the next couple of years I see this exploding in the consumer market We see some wonderful solutions already around security around energy management around lighting and All this combined together you're going to see a new set of competition coming in in fact yesterday I was with one of my customers who's in the lighting business and he's getting into the security business He's getting I mean and it's quite surprising He's getting into the space management business because he can see if you have an LED sitting out there He can see who's sitting where and he can man optimize space So there are there are adjacencies which are coming up which we never really thought were possible from a conventional player So if you went out there and asked a lighting manufacturer, what do you do best? He would say I make lights now the guy is doing a whole bunch of things And he's is creating a different competitive field. I think that's where the opportunity is coming Let me throw this question out to anyone who wants to feel that you know one of the the interesting Dynamics about this market is the massive productivity When you understand it that can actually be realized by industry or by company within an industry It is it's become somewhat obvious to me I don't see many governments who actually understand that level for productivity let alone Can can capture it or or to somebody quantify it So I'm curious to hear if you've had any of those experiences that that won't get you lynched that you can describe And so we have a better understanding of it talk about a couple positive ones. I'll talk about the most recent one About 12 CEOs were invited to the Pentagon with Ashton Carter to compare notes on security We show up there the night before we have this lovely dinner and we all go back to our respective hotel rooms It could be an all-day think-tank session. I Wake up in the morning get a cup of coffee and that's the day that Russia Goes in bombs Syria. I said well, I guess this is done. I mean, there's no way if Secretary of Defense United States He's gonna be tied up. We all show up there Secretary of Defense Ashton Carter stayed all day never left and he was absolutely Looking for how does business handle security and how can we learn and how can He share what he's learned in security that would be applicable to business It was absolutely fascinating had all of his direct reports there And they were absolutely moving towards a more collaborative view Kind of like what we talked about when you when you started the question. So I've seen that happen similarly in the UK The head of the CIO of the UK with respect to their version of the IRS, right same thing You know we my budget's going down I have to find ways of being more productive and this is a this is the revenue-generating machine of our country Although my budget's gone down. I got to find out ways to doing things better So I've seen more collaboration and they want to bump into this whole idea and not get left behind with it with respect to the You know a fourth industrial revolution, right, right take a you had some points on that So a couple of things I've seen some governments which are way ahead of everybody else I mean a classic example would be Singapore Singapore about About eight or ten years ago came up with an open data standard and how people can collect information and publish that information Out of third-party so government information today is published for example traffic information is published and You can if you want to write write apps on top of that you very well can Now in other governments across the world we found a significant level of interest at the top level Everybody's interested to figure out how they can collaborate with private sector to make things happen the issue that happens is that once you go down the layers and Once you give an idea Which may be your idea suddenly what happens is that you have a request for a proposal that comes in and What was your intellectual property is now out to bed with 50 other people and broken down into components where everyone can understand Right, so that's where the challenge comes in So the government procurement process has to fundamentally change to kind of see whether they can bring in people who can do experiments We don't want that forever But if you can have that for a certain limited period of time, we're happy to kind of contribute from an intellectual perspective And I think that's the challenge but having said that You know the funny thing about governments are no government in the world can stop change, right? They can resist for some time, but they can't stop change. So it's gonna happen. Yeah, it's interesting. Yeah, please Andrews. Yeah, I think the There in order to figure out how you know, what's gonna be successful in this new environment They need to be a lot of experiments and the best way to conduct those experiments is to have a very vibrant entrepreneurial Ecosystem, I think the governments that get this they really understand how they can cultivate that ecosystem or the governments are going to win Mm-hmm. I'll tell you one of the things I'd want to spend a little more time if you if you don't mind I mean your business is to me fascinating I think you can actually actually go through and look at it and say wow the productivity gains in last-mile delivery Urban centers globally, you know, I you and I talked about a half a trillion dollars I think it's multiples of that but that's a different conversation, you know How do you you know can convince and you know, not only in investors? But you know your your team to say listen, you know, this is an area We need to focus on here and then ultimately that you know the regulators because that's one of the challenge You have that this is a worthy pursuit I'm just curious about the dialogue that you go through the regulatory environment that you that you face because you are truly Changing the paradigm in an industry and we need to understand how to communicate to the regulatory agencies a little more effectively about what the productivity gains are in that context Yes, I think as as it is frequently said by founders if you foresaw the obstacles at the time of inception you're reportedly And I think that's the case only here I mean it starts from a place of passion where you really want to contribute something and then you somehow sort of Bring in all the emotional intellectual and then sort of monetary resources to make it happen And then if that's the DNA of the company, which is to really create something that can change the world And you know can can really have significant impact positive info to society That is then the DNA of the team and the DNA of the company and that's how we operate it so far so I Think that I mean, I don't know how else one can operate. Yeah, it's really really tough to make something work In you know that changes the world because that that means disruption and disruption is not you know there's there's a lot of Of agents that are trying to stop that right What is extremely interesting now is that we started in 2011 and people thought we were like completely crazy insane crazy You know to be talking about this and you know, we we were talking about like taking Technology that is not proven yet and put it to a place where you can really solve a huge problem in the developing world, right? So that was a paradigm that is generally You know not right often and What what was like completely unpredictable to me and you know I signed up for this like on a 10-year horizon and I thought you know if in 10 years We get like to see meaningful deployments of these then we're successful two years into the project Amazon and Google Announced their own initiatives exactly on the same path. So then we went from a place of like One type of insanity. What are you doing? Nobody would believe in this so another type of insanity and what are you doing the same space with Amazon and Google, right? But the great thing is that you know, it's the ecosystem is now there and everybody gets it. So I know that all major Logistics companies are thinking about these. How are they going to develop technology or partner with other people that develop technology? Companies that are disrupting mobility are thinking about this, right and they're thinking How can we get into logistics and because we don't have all these baggage of how do we deal with like the legacy systems? Will be something to scratch and we can adopt new technology So, you know, it's a very exciting Time I think well before we get to questions that Mike I have another question for you You know one of the things you and I discussed is kind of I call it this culture this mindset of change and one of the Dynamics that Davos has serviced in my mind is making sure there's a communication to the labor force that you are part of This transformation this industrial revolution this fourth industrial revolution You know tell us and give us some of your experiences and companies who have done that well and to the extent something that's happened You don't have to give the name but where they haven't but I think that's an important part of where we are going to Share with the audience and I'll get to they get to some questions. I'm getting the sign that we need to ask questions So yeah, you know, there's you know, we talked a lot about trust within the government of across partners You have to do it across the supply chain. We innovate pretty heavily across the supply chain and You there's multiple Constituencies that we have to make work when the first one that we have to make work is our own companies And one of the things I was sitting you mentioned John Chambers early I was actually sitting in a meeting and with about 15 very large company CEOs and how he opened it is His opening comment was you know in five years 40% of you won't be here because everybody's seen the statistics about the S&P 500 and how long you last and it was a very you know kind of a striking thing Because everybody was talking about their problems and some guys were talking about India some guys talking about China Somebody's talking about the commodities falling apart and I just said I actually think the problem We have to sell first is with our companies right and the key thing about our companies is is we have to build a culture of agility because you don't know What's going to happen in five and ten years? You know Apple came out with the iPhone just in 2007 Yeah, you know, you know, I think Oracle went on record in 2009 saying the cloud isn't even a real thing and you know You have all these disruptions that have occurred and you're not gonna end and they're accelerating right so the most important thing I said that we need to do in our companies is build a culture of agility Which means we need to be able to recognize change and we need to pivot and our company when we say turn left the companies Needs to turn left and that goes all the way down to the to all the people and I think that's a usually important part of this transformation that we're gonna have to go under because companies are gonna have to figure out how to Use their you know live in their existing model because it generates lots of free cash flow And it's got assets in the ground and it it works in this generating revenues You don't you don't want to get rid of that, but you also have to embrace You know new ideas and new challenges, you know thinking I'm thinking about you know general motors that recently You know, they're not going to give up selling regular cars But they just did an investment in lift of about 500 million dollars So they so I think new companies today have to get their own company first Built-on trust within the company and that when we need to say go left it actually goes left And we don't end up with all this bureaucracy and like you know roadblocks about and that's not how we do it here So I I think that's a usually important Requirement of any CEO and what he needs is driving this company as we move forward into this new digital economy message to the CEOs So you're here five years from now ticket you have want to pick up on that I just want to pick up on that one because Mike How do you how do you go and convince a person in middle management? Whose entire life has been one of maintain stability and you keep your job To now saying embrace, you know change and guess what you may not have a job Because that's the dilemma if you really look at it and that's what a lot of middle management today is kind of fighting So it's kind of interesting when I look at large organizations You'll find enormous congruence in the top Enormous congruence at the bottom the layer in the middle. How do you handle that? Well, I think I think it's a great a great question. That's the challenge, you know That was the challenge I put forward is that that's what we need to build You know, I think in running any company you start with culture You know culture to me is that bridge between strategy and execution and you could have brilliant strategy If you can't execute it doesn't matter cultures the bridge culture is when is how we all rode the boat in the same direction to get Get to execution and I think it needs to be built into the company and I think it has to be in its core What what we've done at flex is we've tried to build that into our company from the very beginning We're a little bit fortunate Because we never know what product we're going to build next and we don't know which place it's going So we're used to just taking the hill no matter what it doesn't matter which industry which location or anything else so we're fortunate and we built a very strong culture built around agility and But a lot of times if you don't have a reason to change if the middle management doesn't Recognize that change is needed That's the first step in a change management process is the recognition of that you need to change Then they won't get it and I think that's the communication that you really need to drive into middle management because I actually agree with you I actually the middle is the biggest problem because you can get the Execs on board no question But people have to feel the need to change and that just comes with leadership and communication Alright, I've got I want to do a follow-up on that I'm gonna ask I think I have to take a question or two so yes Jonathan we have a question here in the front Thanks very much Robert. I suspect we're all looking forward to internet-enabled devices not just being in the supply chain in the enterprise, but being in the home and being Suffusing the consumer environment. They're going to be in our bedrooms in our kitchens are going to be around our wrists And I wonder before we invite them in so ubiquitously If we shouldn't dwell for a moment on some of the principles by which they should Behave because they're going to be Hewing to what far away servers tell them to and an example might be Shouldn't we have the right to know the telemetry that they're sending back all the time About us maybe even to own that data as consumers So that when my Samsung TV or my Amazon Echo is listening all the time just in case I want to change the channel It's not catching everything else or Shouldn't they have to be at least minimally interoperable? So when I buy one Phillips light bulb, it doesn't mean my entire house had better go Phillips or it's all over It's like having a refrigerator that by design would only keep Pepsi cold but not coke Yeah, because of the relationship Or just shouldn't it have Faraday mode in other words shouldn't it be able to work without internet so that if my toaster I just wanted to make toast one morning instead of having a long-term relationship with a breakfast oriented service provider So my question and this is true There are companies that are saying that they're licensing the products to you rather than you owning them So I guess my question is how much would you all be willing to think about developing and Subscribing to an internet of things bill of rights a few basic ideas That you'll say you'll do and if you don't we can call you out on it so that before our houses gets a fused We can feel interesting set of questions. I think you know when you think about it There's a privacy question. There is a question about security and you know and you too I know in particular and you and some idea with numbers of how have your customers been wrestling this are they wrestling with That I mean one of the questions has come out of this whole form here Davos says, you know, what is our you know, what is frankly, you know our design point as to what this now looks like Where are we heading to the on the right compass heading or are we just getting you know directed along the way? But I'd love to hear examples and hear how people think about and what your customers have thought about it Well, you know a good portion of our of our business, especially our security businesses identity management Which is where a lot of this starts from but I take it back to how we started the conversation as concept of trust if you are Service provider or you have a product and You are using data in an untrustful way I just don't think all of us are gonna put up with it and what happens there. We we make it so complicated There is a bill of rights or what it whatever you want to call it But there is an agreement on who owns the data, right? I didn't encourage everybody here if you want to just to find out how this works Just go turn the you know you're on your browser on your on your smartphone Turn the cookies off and all these apps that you got for free watch how many of them don't work anymore You're not getting these apps for free. They're taking that data. They're amalgamating it and they're selling it And I think that there's a lot of frustration with respect to that because you're getting surprised all the time We all know that use Google mail. They're very transparent. They say we're gonna give you free mail It's gonna be it's gonna be safe and secure. You're the only one's gonna read it But we're gonna read it and we're gonna be sending you advertisements based on what your mail says I think that that's you know if you like that that's great But I think Google's been very transparent about what that is if you take a look at Facebook, you know Especially all these publicly traded companies that are in the social space They have to continue to grow just pay attention in the next one or two weeks How many more advertisements you're getting on your Facebook page or LinkedIn pay attention to how much more that's happening It's not for free. You're trading your identity and the information about you for a service And I think that that's been pretty wishy-washy since the inception of a lot of the sharing economy a lot of the social economy and The thing that I think is being the catalyst for making a stop and pause and think about this is gonna be health care Because that's something that is very personal and health care is going to get that right They're gonna make sure that you have your identity and your information and when you think about it for health care You're gonna start asking the question. What about my banking? What about my social media? What about my email? Maybe I'm willing to pay, you know 15 20 X number of dollars a month to have a private email server where it's just me and it's definitely secure so I think we're all learning this and That's the beauty of you know changing these the beautiful revolution, right? That's exactly I'm gonna be winners and there's gonna be losers And we're gonna we're gonna try things along the way much like Andreas told us to do some we're gonna work some I'm not gonna work. This is one where I think everybody's getting pretty smart about I'd like to add just real quickly I think Mike's you know spoke very articulately on this and I and I think it's right But one thing I can tell you is the digital economy the consumer runs it Yeah, it's very different the enterprise doesn't run it anymore The enterprise doesn't say here's your product and I'm gonna get you a new one next year And this was gonna look like the consumer votes right really quick You look at you look at Airbnb look at Uber and you can see how fast the consumer shift So what's good is as they become educated? I actually think there's gonna have to be More communication between what data is being captured and what isn't otherwise the consumer will vote real quick And then we'll then yeah, it'll switch. I don't know if you have any thoughts or I'm just no just one thought here But just you know if you look at the demographics, but I think the demographics themselves today determine Determine what privacy should look like If you go to the kids and you ask them about privacy the answer is don't care Because they're looking for instant value Now as they mature as they get older. I'm sure they'll come down to Come down to the whole issue of saying, you know what maybe as a father. I hope so But I think they'll get there but today that's not an issue for that demographic group that we are dressing But I think what's happened is that the value in an enterprise in the environment today people who actually buy stuff People who actually transact high value stuff how people sitting around this table and for us privacy is critical It's interesting to me. I know being in this business and you know my business We run about a nine billion dollar portfolio private equity or of software businesses And we deal with this every day in policy Around you know data and privacy etc the thing that's interesting in answering your question I see very thoughtful leaders in this space now taking the lead and saying listen You know regulation by definition comes in behind it comes in the rear But I see business leaders saying we have to be thoughtful about it Start to write policies bill of rights type policies in terms of who's entitled to what at what time etc So I'm actually quite encouraged about you know our industry in general But we ought to make sure we also have our compass moving the right direction. Let me see we have time for another question. Yes, sir I'm Yoshi Hori of globe is Japan I heard a lot about technology and platform ecosystem culture government and security and so forth but what I have not heard is about education And when there's so many things happening and people in strategy, you need to change the skillset of technology of the Employees so my question is what kind of education you're doing inside your company? And what do you expect your? Like universities to produce what kind of skills and what kind of curriculum do you expect them to have great great question Any guys want to take that? So I can talk about our business So, you know if you if you look at our business the technology side a couple of years ago We used to be 10 years ago. We used to train people who come out of college They used to be trained on a certain set of programming languages say Now what we're finding is that that entire thing has to change Every person who's got to be relevant in the space today Has to have number one diff programming language and a whole bunch of them Number two, they need to have algorithmic knowledge and algorithmic skills And third and most important they need to have database skills In the past there used to be three sets of individuals who had this now it's one And more importantly what's happened is that the way they cut the cycle times for Deploying software projects have dramatically shrunk So now it's so really in a way. It's a perfect storm for every individual out there And the funny thing is educational institutions Do not produce these kind of people right right so every time they come out We have to literally retrain these guys And it's a crying shame when you spend four years in college and you've come out Again clean them. I'll speak to our portfolio just to give you a sense You know, we have now probably 30,000 plus employees worldwide I'm probably the only private equity firm. I know that has three full-time trainers on staff that when we buy acquire a partner with a company We bring that group in to now build training systems six month nine month boot camps to in fact Infuse our population with these sorts of skills and others and then tune it depending upon what area within the organization They're working with but again the the thing that I want to make sure we're all thoughtful of which has has been quite encouraging For me here at Davos is people are looking at this this fourth industrial revolution as an opportunity for inclusion Creating on ramps for populations who didn't participate in the third revolution But have an opportunity to stay in the fourth and I think we'd be missing a great opportunity if we don't do that So I you know, I've been encouraged by what I've seen what I've heard In the conferences in the panels and and frankly, you know walking along these these cold frigid seats Streets over the last couple of days. Let me ask if we have any other questions that that we can take Yes, sir I just want to follow on the interoperability point that was raised I mean the software industry is notorious for bringing out multiple standards And it's a good thing when you're trying to compete for a winning standard But when you're trying to get all these devices connected from a city manager's perspective, that is crazy Interoperability standards anyone we we will screw it up a few times first guaranteed and and the reason for that is The beauty of standards is that there's so many to choose from and the In the people that build software, you know our egos outpace our our our productivity and We have to manage that but I doubt that we will get that right It'll be an evolutionary path and over time There will be a lot of different technologies that solve this problem. What what do you what can you do today? Today use these things called apis and there's lots of companies that do this very well We happen to be one of them and what it does is just isolates all these these standards So that you can get at the data that you want in a safe secure fashion and then propagate that data to whatever platform that you want But to think that apple is going to give up its platform and not be difficult to deal with with microsoft I mean that war has been going on for 45 years We take a look at just even google docs and trying to move google docs for three or four different browsers Very very difficult and last I checked we're in 2016. This is a solvable problem. We choose not to solve it I'll give you a real real hard example. We have this product called wink, which is one of the almost leading home Hub and what it does allows you to hook up your drop cam and your nest and your echo and your you know Into a simple user interface So there's no real standards for the home. So it has six radios in it So think about the inefficiency from a manufacturing standpoint, but we get everything hooked up You get the inefficiency of manufacturing six radios You get the confusion in the consumer base and also you get the confusion of the general electric light bulb when they You know when those guys say Which system do I hook up to so we actually solved it by six standards The more we can get to a standard system the more in our operability We're going to get the faster we'll get adoption because it'll be easier to use It'll be simpler for the consumer and it'll be faster on ramp for the manufacturers But it's going to take a lot of time apple and microsoft and google are not going to just like Andres you're on the front edge of this thing. Give us your thoughts on standards in your industry as it evolves Um Because it's higher space, you know them. How do we figure out how we use the same space? I think the likelihood there is higher And there has been there have been already been efforts You know, even even though the the industry is at the very end of the stage We already try to come together and figure out how we're going to do it. So it's a very encouraging Image there. I saw a couple more questions, but we're out of time So we'll be around if anyone has specific questions I do want to thank this wonderful and distinguished panel with with with one Observation when people found out that our panel was coming together the market seemed to rally so You know, we will keep that in mind for next year, but thank you, Andres and in my