 What is a strategic inflection point? I would argue that a strategic inflection point was actually a term that was invented by Andy Grove back in the 90s when he led this shattering transformation at Intel from the manufacturing of random access memories to microprocessors. It was really an existential transformation that they were pursuing and it got me really interested in thinking, you know, how do these things look today? Like what are we dealing with? And I would argue that a strategic inflection point is something that changes in the environment that causes the assumptions underlying your existing business model to no longer be true. In other words, what happens is the balance between the way that you've run your business or run your organization and the reality of what you're dealing with now is it sort of gets farther and farther apart. So I thought, and one of the blind spots that we develop is that we're so used to doing business in the way that always has historically led to success, that it can really create a real blind spot in how we see or don't see strategic inflection points. So I thought just to give it some life as an example, I would use the example of men's shaving, men's shaving. I see varying degrees of commitment to the practice. Some of you are kind of into it. Some of you are not. And of course, the dominant and highly successful player in men's shaving going back for decades is Gillette, right? And Gillette was known at a business school, case studies, everything you could want to know about Gillette was dominant, dominant player in the men's shaving world. So one of their big innovations in 1990 was the launch of the Sensor razor. Remember the sensor? Two blades. This was amazing, right? And they had this great cartoon that went with the advertisement for the sensor razor. The first blade would kind of come along and pick the hair up off your face, and the second blade would slice it off. It was amazing. Two blades, right? And it led them to great success over a whole decade. So Gillette's whole business model was we invest in R&D that allows us to come up with things like the sensor. We then can charge higher prices. And what we do then is we use armies of representatives to get these products into retail channels, and we undergird the whole thing with hundreds of millions of dollars of mass market advertising, and it works, and it works really well. So Sensor goes on for about 10 years. Next big innovation. Three. Three. Yes. Three. The Mach 3. You remember this, right? This thing was so cool, gentlemen. If you bought a Mach 3 razor, you too were cool enough to sit in the cockpit of a fighter jet. That's how cool this thing was. And this is amazing. And then, and then. Strategy calamity occurs. SHIC, which actually gets bought by a company that cares about the razor business, comes to market with the world's first. You can only imagine the consternation in the boardroom at Gillette. You know, for years we've been telling the public three blades, better than two. Two blades, better than one. And now a competitor has the world's first four-bladed razor. This is a disaster. What do we do? Well, of course, you unleash all the lawyers. You tie everybody up in patent infringement suits. And then you rush to the market with the world's first. All right, blade and razor. Awesome, right? So here's my hypothesis. If you're an executive in the Gillette organization, this is what is on your mind, right? You're thinking about two blades, three blades, four blades. That's your traditional pull and tug and competitive analysis. Meanwhile, bubbling up where you can hardly see it is a little entrepreneurial business. It started by a guy named Mike Dubin. And he met his friends with this guy who has this really weird job he buys things from one part of the world and resells them for a profit in another part. And this guy, who turns out to be the co-founder of Dubin's business, has scored 150,000. Not great, but okay. Here's from Korea, and he wants to know about, you know, how do we think this could make him a profit? And as they're talking, and this whole evening is going on, and they start to talk about what are all the deficiencies, what are all the things that are wrong with the model that Gillette has developed and honed over years? What's wrong with that model? Right? When you think about it, they're expensive. That is by design. They're supposed to be expensive, right? Because they're expensive. These things are catnip for shoplifters. So they lock them up, right? The retail stores all lock them up. And you have to go find, imagine, use your imagination now, you have to go find the friendly retail person with the key, right? These are the people that you hear before you see them, right? They come clunking up with the key, unlucky. And then they sort of check you out, right? Are you going to actually take this thing and buy it? So it's an unpleasant experience. And so Dubin has this epiphany. He said, wait a minute. What if, instead of selling these razors through retail channels, what if we went directly to the consumer? In fact, what if we had members instead of customers? And they invaded this thing called the Dollar Shave Club. Now the reason I think this is an interesting example of an inflection point is that the cost, and this has been alluded to a couple of times today, the cost to do what Dollar Shave Club can do is a fraction of the cost to do what Gillette did. So 2005 Procter & Gamble buys Gillette for $57 billion, right? Dollar Shave Club, we use YouTube to create a hilarious viral video, right, that gets repeated over and over. Third 20,000 subscribers, day one. We use Facebook to recruit ambassadors. We use Amazon Web Services to create our technological infrastructure. We don't need all that investment in assets. And as Jane McNerney said, it's reduced entry barriers, right? Now, here's the thing, if you are an executive at Gillette or anywhere else, and somebody tells you about YouTube, it's this website where you can post videos and it's kind of free and it's, you know, are you quaking in your boots because it is going to destroy your established basis of competitive advantage? What was YouTube when it first started? That video is totally... What was Facebook, right? Ill-advised pictures of college students with the solo cups, right? These things... And it wasn't until you kind of take a step back and you say, wait a minute. If I wanted to get a message to hundreds of millions of people, I needed to buy mass market advertising. I needed to own all these things that were big asset intensive and expensive. Once you have these breakthrough technologies, now any guy in a garage, kind of literally, can compete. And that's exactly what Dollar Shave Club and Harry's and a bunch of these other kind of enterprises did. So what we've got now is this major inflection point in terms of how you reach an audience, how you communicate with an audience that has conventional competitors really, really, right? And in the case of Procter & Gamble or Gillette, they went from about 70% market share in the US and most of the world to about 59%. Now, this is still really good. Let's not misunderstand. This is still a powerful competitive thing, but what they had thought of as an unbreachable moat kind of was taken away. So what I thought I'd do is just spend a couple of minutes just on how you can think about these kinds of futures. So the first thing I would observe is that when you're making decisions about the future, there are always three kinds of indicators. Lagging indicators tell you a lot about what's already happened. You can't change them. Event indicators might be things like your net promoter score. They tell you where you are. Hardest thing to get a hold of are leading indicators. What's a leading indicator of what might, I'm not saying it's going to, but what might be happening? And I think the challenge for all of us in this room, thinking about transformation and how does that connect to these sort of weak signals and early warnings are, do we have enough of these leading indicators to really transform our organization? So here are just three examples from one of the most difficult contexts in the world, retail. So Best Buy, 10 years ago, Best Buy was given up for dead. And what their CEO of our Julie said was, wait a minute, no. We still have a function to play. So if manufacturers want to put their products in our store, guess what? They can pay us for the privilege. If consumers need help, guess what? We can be your partner. And they have transformed Best Buy into a very consumer-centric, very popular organization. Klockner was mentioned earlier, German metals distribution company. Kind of saying, we are going to be at the forefront of digital transformation. That's a pretty stretch. And one of my all-time favorites is Microsoft, where Satya Nadella basically said, look, in the world of the cloud and the world of the future, what's going to determine our success is not whether we maintain a monopoly in our traditional environment. What's going to maintain our success is whether we have usage. And we don't have usage if customers don't like to do business with us. And we only have usage if we can get customer love. Can you imagine Microsoft talking about customer love? But that was the leading indicator that he chose to focus on. So when I think of paying attention to weak signals, the metaphor I'd encourage you to think about is, if I can see what's happening in the distance, I can make a course correction with a relatively small turn of the steering wheel. If I wait till it's right upon us and all of a sudden, whoa, I didn't see that coming, now I've got to be making a huge turn. So how do you get at some of these weak signals? And I'd like to offer you a framework for doing this. I call it the early warnings model. And the first reality is, in the beginning of some kind of inflection point, the noise is incredible. It's very hard to know what it actually means. And then it gradually, the signal gets stronger and stronger until you have facts. You can take pictures. You can actually input into your computer spreadsheets the reality of what you're dealing with. What's the problem? It's too late, right? Because there's always this other line. So your degrees of strategic freedom vary inversely to your ability to change what that future really tells you. And you don't want to be making decisions too early. And I see a lot of companies that make a mistake by doing that. They move too early. You also don't want to be making decisions too late. So I think the challenge facing everyone here is, how do we make our decisions in what I call the period of optimal warning? You don't have facts yet, so it is going to be risky. And it is going to involve some possibility that things won't work out. But it's also not too late. You can take some educated risks when you're going along. But I think that relationship between those two things is really important. Now, the early warning is really about what I call time zero events, where a time zero event is just some future circumstance that could have a big impact on your business, whether that's plus or whether that's minus. And in my book, I talk about the future of the energy business. And one of the big time zero events that I identified might have a big impact in the book was two-thirds of all future energy investments would be made in solar and wind technology. That was one scenario that I pointed out. And that turned out to be exactly what happened. Solar, wind, renewable sources have dramatically declined in price. And how did people respond to that? We saw the effective responses from companies like Equinor in Norway, the Danish oil and gas company, who turned out to be on the wrong side of this inflection point was GE. Without really planning it, they made a double down bet on fossil fuels, even as this other scenario was becoming more and more reality. And I'm not being critical of them. I'm just saying this was a possibility that perhaps had not been part of the strategic discussions in the GE power business at the time. So I'll conclude with a couple of observations. The first is, when I started in the world of strategy, all the cool kids were doing industry analysis. And we were doing order of entry, and it was all about your industry. And those of us doing innovation, we were huddled in the corner for warmth. We were doing case studies and trying to understand that what's happened in the intervening years is I think strategy and innovation have really come together. And increasingly, you can't really talk about innovation without talking about digital in some meaningful way. So I think that's really pretty important. So last kind of thought is inflection points feel sudden if you haven't been paying attention. They are not sudden at all. In fact, if you look at a major inflection point, very often these things literally take decades to actually materialize. So if you get on it early, if you're making small exploratory investments early on, you can actually be prepared when they actually manifest themselves. Last observation we've been talking about, how do you get the organization to get mobilized on this? I think to the extent you can get people to look at those early warnings, look at those leading indicators, it can really help align the organization and galvanize it toward looking for new ways of thinking, new ways of change. So that concludes my formal presentation. And I'll turn you back over to Ricardo and the team. Thank you. Thank you.