 Okay, ladies and gentlemen, thank you for joining us here today. I'm Robert Smith. I am humbled and honored to be here amongst this distinguished panel. I come to you as an investor, an inventor, an entrepreneur, and a businessman to focus on one of the key areas of our economy, which is really the digital context. Our panel called the New Digital Context will focus on four specific areas. The first is the digital economy, the Internet of Things, big data, and part of big data, of course, is predictive analytics and cybersecurity, something that's very important and that we are all facing a deal with daily. As a narrator, I will first introduce our cast of characters and then set the stage for a larger discussion. And each of these panel members will then be asked the question where they can actually express their views and perspectives on this digital economy in the New Digital Context. We will then go to a series of pointed questions that I will ask each of the panelists and hopefully we'll have a chance to have some interaction from that. After that context, what we'll do then is then have an open discussion and have a few questions, hopefully 15 or 20 minutes in discussion. So first, let's start with our cast. To my right, we have the architect, Mr. John Chambers, who's the chairman and CEO of Cisco Systems. During his 20 years there, he has effectively pushed over a half a trillion dollars of networking equipment into the marketplace. He's created this backbone, this infrastructure that we now all rely on. And it's kind of an interesting dynamic in terms of this technology-enabled world. As we were talking earlier, he's even more excited about the future than he is of the past. And thank you, John, for leading the way. It's fun to be here, Robin. Great. Thank you. Next, we have the Empowerer. He is a knight from what I understand, Pierre, not to me. So Pierre, during his tenure at Accenture, has now pushed over a quarter trillion dollars of services in stitching together and putting together the context of this digital economy so that businesses and governments can actually effectively change their paradigms. Pierre operates in over, I think, in over 40 industries, over 120 countries. We're excited that he's here and excited the good work that they do. Thank you, and you could call me Pierre, not Knight Pierre. Oh, Knight Pierre. Okay, that's what you told me earlier. We also now have the transformer, Dr. Lou Zirene. Now, Lou has a very interesting dynamic. He is in China. He's created a company called NewSoft, which has actually transformed a number of industries within China. Everything from the telecommunications industry, healthcare, and the financial services and insurance. And we're quite interested to hear how his country and how he is actually transforming those businesses. One of the more interesting elements, he stood up a university, a free university. 30,000 students participate in a university. They've started hundreds of companies, and they are focused on digitizing parts of the economy. So quite interesting, Dr. Lou, we are happy to have you here today. Thank you. And lastly, we have the disruptor, Mr. Max Levchin. One thing about Max is he is an impatient individual from what I understand. He was in college. He found out that the more data he put into the systems, the slower it became. So rather than call the IT help desk like all of us usually do, he decided to then evaluate structured, unstructured data sets, come up with his own cryptography, and develop a little company called PayPal. And then a little company called Yelp. So we're excited to hear him and talk about what his perspectives are in the role of the disruptor. I have to thank you on behalf of all the entrepreneurs out there, because your guiding spirit is the thing that I think keeps this economy exciting and this world a fun place to participate. Thank you. I get to be what I call the involved narrator. I run a private equity firm. We involve all servers in enterprise software. We've now done over 150 transactions. We're about the seventh or eighth largest enterprise software company on the planet. And we have a lot of fun in the front row seat, looking at these fantastic participants do their thing. So it's quite exciting to be here, and thank you all for joining us. Let's set the stage. Today, we can convey ideas across the planet reliably. With certainty, because of the greatest invention in the world, no, it's not a router, it's quantum mechanics. And when I think about that, and what is actually done to transform our economy to become a digital economy, computers, mobile devices, they're interoperable at this point. And it is clear that every single business is now a technology business. The value that's created is based on the technology platforms and the technology that they run. So to give your perspective from what I see in the enterprise software world, seven years ago, there were about, call it 25 to 30,000 enterprise software companies with $1.7 trillion in market cap. Today, there are over 50,000 with over 2 trillion. And the expectations in the next five years will be well over 75,000 with over 3 trillion. So the market is expanding and creating value all along the way. And it's quite exciting. Every company is a technology company. When you start to think about it, if you don't transform, your industry will be transformed. We think about a world where the largest taxi company in the world doesn't own a vehicle. The largest bookseller doesn't actually have a bookshelf. The largest hotelier actually doesn't have to worry about turn down service nor take a dollar of inventory on those little bars of soap. So you think about how these disruptors have come in and changed our world. And our panelists will increasingly share parts of their experience, not only today but throughout this forum, to talk about what you have to do as a business leader in order to ensure that you are the disruptors in your industry rather than being disrupted. Now we talk about the Internet of Things, and as my friend Mr. Chambers talks about, John talks about the Internet of Everything. It's quite interesting how many devices are connected today and to what extent billions, 20, 30, 50 billion I hear, devices will be connected in the next 10 years. Now the dynamic, of course, that creates a mountain of data. And that mountain of data has to be used responsibly. Max, what Max does is he convinces us. Give us some information. And we give him information and he makes our life more convenient. He makes our life more pleasant. And then he starts to give me things that I didn't know I wanted and I start to buy them. He has a responsibility, of course, because now he has my data. And when that data all of a sudden becomes part of a target, then we have a problem. You all know in the last few years, from what we understand, at least in America with JP Morgan and many of the retailers, over 250 million accounts and information with JP Morgan, Target, Home Depot, etc. were breached. The public school math basically says that's about 50 million to 90 million individuals whose information has now been put out in the marketplace. There is now a responsibility that we have, business leaders and entrepreneurs to protect that data. That's one of the other topics we want to spend time on. So with that, what I really want to do is now turn to John. John, tell us what you're saying. Tell us about the dialogue and the conversations you're having with executives. How are they facing these challenges? And most importantly, how are you going to help them face these challenges? Please. So Robert, key enough what you said and kind of laying the architecture for where the conversation may go. The internet of everything and every country becoming a technology country, every company becoming a digital company was something we started talking about eight years ago. Nobody wanted to hear. You had to buy drinks here at Davos to get people to focus on it. However, I've seen this movie before. Today what has happened, you're at an inflection point. Take what happened during the 90s with the internet, multiply it by five to tenfold. That's what you're about to see effect on society, economic benefits, and can lead value to every person on a global basis. Economically, it's probably a $19 trillion cost saving and profit opportunity in the next 10 years. $4.6 trillion of that is in government, half of that in cities. And then it goes across every industry from manufacturing all the way to insurance. In short, what you're going to see is every company, every country, every citizen, every home, every car, every wearable becomes digital. And that information flow is going to allow you to change things that will change our lives, change the effectiveness of business, disrupts the winners from the losers. And it is about fast innovation in this new world. If you don't innovate fast, disrupt your industry, disrupt yourself, you get left behind. What it will be is a series of firsts in terms of what this can do, getting the right information at the right time to the right person. So the right machine or person can make the right decision. But what you will also see is probably 40% of the enterprise business has not survived for the next decade. Wow. You will see basically companies who fail to get the market transition right left behind. You'll see companies who do the right thing for too long. IE, stay with your core capabilities. And don't disrupt yourself and move into new areas. And finally, companies who don't reinvent themselves. So you're really talking about a period of rapid change. You're talking about one that will change society for the benefit and kind of closing out the conversation, going back to the key takeaway. That's the U.S. economy for one year spread around the world. Wow. So its benefit and opportunity is huge to society. But it does take an architecture. Think digital first. Think Internet of everything with all the market transitions of cloud and security and everything underneath that and mobility. And then think about fast innovation enabled by FastID. That's helpful. Pierre, would you talk a little bit about the dialogue, the discussion you're having with your customers in helping them on that transition. People here are interested in the future. They want to understand how you do it. How do you frame it? How do you actually enable them to be successful and protect their data? Yes, absolutely, Robert. And of course, very pleased to be here. We used to say at Accenture that every business is a digital business very much similar to what John just said and simply said 100% of my discussion with CEOs will be around digitalization and rationalization. And sometimes digitalization could play a role in rationalization of the operation and the cause. But as well, digitalization is enabling new businesses. 100%. If I'm just looking at the business we have at Accenture, over six years we built a digital business of $5 billion which is almost the same size of the business in ERP, Enterprise Resource Management Process. We built over 25 years, 25 years, five years, similar size of business. It's just absolutely amazing. Discussion with the CEOs. It's happening by waves, if you will. We have the first wave of digital consumer, much more for the B2C kind of organization and companies and we moved to the digital enterprise. You reinvent the processes of the organization and make them more effective. And now, as John is mentioning and Elodie already, we are moving to the digital operations. The Internet of Things, the Internet of Everything, the industry of Internet, whatever the name is, which is putting the Internet at the heart of the operation and connecting the world and connecting the information. So it's happening by wave. First, the B2C businesses. Second, the B2B will be now significantly impacted especially with the Internet of Everything. First, of course, the commercial business and now the governments which are putting the act together. So it's really prominent in terms of the agenda. And finally, talking with the CEOs, if I had to frame the issues or the challenges, the big questions, probably around five I would mention. One is around the digital strategy. Interestingly, 80% of the CEOs I'm talking with based on our survey would claim that they understand the Internet of Everything will be disruptive. Only seven will have a plan. Second would be the digital organization within the companies. And I'm sure there are going to be many questions on how I organize digital. Is it part of the core? Is it a dedicated organization? Both. So a lot of discussions around how you organize digital to roll out efficiently digital within the organization. Three, and it's a profound evolution for the organization, is how you do execute with the ecosystem. And you will see a lot of discussion around partnership, around ecosystem management. To enable the digital, it's more than one company could do. And we need to partner between us and between us and with our clients. That would be my point, number three. Four skills, skills, skills. We talk about big data. To enable big data, we understand what you need to have to do. But then you need business scientists. You need to drive algorithm of the future. You need this new generation of skills. And only 40% of our clients believe they will never get to the right skills. And we will have to build them probably around the university. And finally, security. Security. Security. And security. It has now become an agenda for the board or for the managing directors, if you will, which is extremely prominent around all the data privacy, data security, data integrity, but as well the famous internet governance we might talk about, which is probably one of the most complex topics the society will have to face in the coming three years. That's great. Hey, Max, what I want to talk about is, these gentlemen talk about the businesses that they're advising going through these transitions. Of course, during the transitions in the waves of transitions, there are gaps and there are opportunities. Tell us a little bit through your lens of how entrepreneurs and how companies are taking advantage of those gaps and opportunities and what are they doing differently that enables them to create billion-dollar, multi-billion-dollar companies in times measured in half a decade as opposed to multi-decades. Right. So I think this is the most exciting time in history as far as nerds like me are concerned because finally data that used to be a amorphous construct is now essentially a currency. You can think of data either as a currency and you can think of data exchange rates or as a commodity, which is the way I prefer to think about it. So John's putting all these devices out there. They're talking to each other. The best way I've found to think about them are as sensors. They're generating this incredible amount of data that they pick up from the analog processes as they transition to digital. They're bringing that into the center of the cloud computing essentially creates an opportunity to build entirely new kinds of services where the centralized coordination enables efficient utilization of resources at the edge. The interesting thing about traditional companies versus the disruptors is traditional companies already have mountains of data and there's a lot to lose by misusing, exposing the data, doing something with it that it wasn't meant to do. On the other hand, disruptors like yours truly have nothing to lose. So as we look at the data that comes off from the edge we have an opportunity to build entirely new businesses. As the data reaches critical mass and this is true for both small companies and large companies you have essentially a naturally forming network effect of data. The person or the company at the center of the cloud knows a lot more about any one participant at the edge than any other participant does. So they effectively become a data monopoly. The concept of a data monopoly is going to be absolutely dominant for the next 10, 20, 30 years. The industries that are getting disrupted the most are the ones that relied on a point-to-point data monopoly. The last ones to go down and get completely rewritten will be healthcare because the data regulation made it very, very hard to change things but now that every thermometer is going to be network connected it's going to be completely different. And finance, where data was always thought of as a currency but it was confined to a very small number of people. The company that is today a lot like what the future looks like for many finance companies is Bloomberg. They've built a natural network effect driven effectively data store where they know everything about everyone using the data at the edge more than they do. So there's just an incredible number of opportunities primarily stemming from the fact that data is aggregated at rates so high and the value with this aggregated data is growing exponentially. The biggest challenge for most companies out there is going to be figuring out how to store this data in a way that doesn't expose them to security breaches, liability, having to deal with upset customers, being able to say here look at my data source or my data vaults, it is encrypted in a way that is better for my customers and for my partners than if they kept it themselves. That is the only barrier they have to clear before they have a chance to survive. I want to get back to that data point because that's an important one and I think I want to get some perspectives from John up here. But Dr. Liu, I think one of the interesting elements of your business is that you take an approach where you can actually, if you think about it, transform entire industries within your country with new software in the way that you're approaching it. I think it would be helpful. Many may not know that he was the first PhD of China to actually get a PhD in computer engineering so he was well ahead of the curve and is taking that technology, that insight back to actually help drive transformational change in existing companies or existing industries there. If you wouldn't mind, please give us a perspective of what you're seeing and what you're doing actually in China so that everyone understands what's coming. Okay, thank you. So if you look at the past 30 years of China, so a lot of people are talking about the driver is a capital, driver is a low cost, but I want to say one of the drivers is IT. I started my business in 24 years ago starting from a campus of university. I'm so lucky because when I started that business the first day, China started having a mobile phone, a telephone. In that time, China is very hard to get fixed for. You must take a very long line to waiting to get this opportunity. But just a few years, the mobile phone got popular. That is because not only Harvard, like Cisco and so many telecom companies come to China, also excellent software. So we are becoming a software provider to billing, to custom care and management of this. And then because we make a transformation of state-owned enterprises, a lot of people lose jobs. The government tried to build a kind of infrastructure for social security. So it's starting to develop software for insurance, for healthcare, unemployment. So everything, so we just spent around six years so that given every people a kind of insurance. So that great help to government to make a big transformation from state-owned, the most of business become a more and more private, the business coming. And then we say the facility, the billing, e-commerce, I think China is lucky in past 30 years not only build a kind of infrastructure like a highway power, they build IT infrastructure. So now if we look at around 400 million people, it's an internet user, almost 50% that the people population uses internet. Around 500 million people use a smartphone. And around 300 million people use a mobile phone to buy something. So a lot of people, the E-Bank has become so popular. Young people, especially young generation, they're doing everything on the mobile phone. Today the millions of young people start up their business. They try to make their own business by apps. A lot of people develop the apps, make a sole success. So I think the internet IT infrastructure is not only digitalize the enterprises of government and also that become a kind of platform offer the jobs, especially for young generation in the next 10 or 20 years. So like we own three universities, around 30,000 students study in our university. They learn the internet software. So we provide a kind of platform like student to start up their business based on our platform. Now every year around a few hundred students and they build their company. They have a CEO, CTO. They're working together 20 people, 30 people. They start up their business. After a four-year study in university, they can have their own real business and after graduation from university. I think the change of China is one of the big, very big drives is because we totally adapt new technology, especially digital type, everything. Manufacturing is very, very important. If you look at it in China, why they can move fast? They can wear high productivity. A lot of investment for IT. I'm going to get back to the comment about the skills, training in the university in a minute. But I want to actually direct this to Pierre and John to talk a little bit about the experience you're having with government enterprises. Tell us a little bit about what you're seeing globally. Who are you seeing on the forefront? What's the amount of spending that you're seeing? Are governments embracing a new digital economy? Pierre, you want to take that first? And John, you want to come in after? Yeah, sure, Robert. When you look at this, again, everybody's talking about going digital. Now, you have different pace when you look around the world. Fact of the matter is some of the new markets, emerging markets, are moving faster. I'm thinking, I'm fascinated, for instance, that a place such as Singapore has been moving digital everywhere, digital health, digital security, digital safety, and so forth, so almost everything in digital. At the same time, in some places in Europe, we're still planning for a digital big plan at the, for instance, European level. We are making some steps, but some are still planning when some are already executing. Of course, when you look at from a government standpoint, you will have all sorts of initiative around creating the single point of contact, a kind of digital website so the citizen can interact with the government. Again, this is wave one. The point for the government is to move to really an e-government kind of organization, e-cities, and then e-countries. So we are more in the e-citizen, if you will, in the first wave. And of course, some of the countries are already built. If you think of Japan, if you think of Korea, some of the countries are already built based on digital. So are digital native. So you can see some steps by government, but I guess a lot, a lot to be done. And at the heart of this digital evolution in the government will be the digital regulation. Because in order to enable digital at government, we will have, and governments will have to go through the kind of digital regulation they need to get. It's very different from the commercial business. I mentioned with the commercial business, B2C is super hot. The big game is more around the B2B business, including the manufacturing, the oil and gas. I'm fascinating to see that recently. Probably something we wouldn't have been doing even five years ago. We're creating a general venture with General Electric, Accenture General Electric, to provide pipeline analytics services. So again, you can see all this wave coming now in the manufacturing. Creating a tremendous amount of data again. John, you talk to heads of state every day. And what are their concerns? How do you think about the digital economy? How do you think about the opportunity and how do they actually evaluate the threats associated with that transformation? It's been surprising how much that's changed in the last 12 months. Israel is probably the first digital country in the world. Their leadership, whether Shimon Perez or Prime Minister Netanyahu, the third party, their finance side, they digitized their country because they were after GDP growth. They were after job creation. They were after inclusion of minorities, the Orthodox Jewish population. They wanted to bring education to broadband to every home. They wanted to change health care dramatically so every person had access to health care. They wanted a new generation of innovation as they did it. They wanted smart, secure cities, et cetera. That's exactly what Merkel's doing in Germany. You talk about developed country that has this act together. They're industrial, Fort Auto, Deutsche Telecom saying where I was yesterday how they're going to play a key role in really changing the economy. They want to take their manufacturing base and become much more competitive on global basis. France, if you want a wild card, I'm going to bet on France. I believe that Medef, their business group, the young startups really get it. At CES just a week ago, there were 70 startups from France. Half of them around the Internet of everything. They won 14 of the top entrepreneurial prizes. And half of those, they won best in class in show. And you get a government who's going to change and willing to create, I think, a more positive environment for a million jobs that I think Medef would deliver on their equivalent chamber of commerce. So you're seeing government leaders get it. Cities, if you want to go to a city in the future, go to Barcelona, or Hamburg, or Chicago. They realize how it's going to change jobs in their cities, how it's going to change transport, deliver on several services, et cetera. But the key is you've got to bring these together in ways that make sense. Healthcare in a way that you deliver it. Chronic care alone is a $146 billion opportunity. China has its act together on how they share the doctors, nurses on a global basis. Pierre hit it earlier, if you're going to do a city or a country, you've got to have partnerships that didn't work before at a different level. One of the winners and losers will be determined by how tightly, in a sense, you're in a Cisco, for example, can work together to help deliver on the capabilities. And the same thing with the business leaders, they get it. They realize they have to be the disruptors. And this is why you've got to have people like Max around you. I spend more time around entrepreneurs now than I ever have. You can tell I'm dressing like him again. They think exponentially. We in traditional business think linearly. And exponential thinking causes you to go out of problem differently. You set audacious goals. You have people I hang out with, and they really help teach my leadership team. And Aaron Levy from Abox, or Patrick Collinson, who you know will from Stripe, PayPal, follow on, if you will. And these all come together in ways that will change economies and change the world in a very exciting way. And I think every country, it's a free fall. Which means everyone can benefit from it, but countries or companies who don't disrupt will get disrupted and left behind. Let's talk about the winners and losers as it relates to the people. Because I think the important thing is it is a people business. It is a smart person business. How do you train them? How do you develop them? Max, you're around these people all the time. You inspire them. Tell us about the types of things that they are focused on. How do they use data? How do they create businesses out of data in a way that can help the audience understand what to look for in the businesses or the governments that they're operating in? There's a tremendous amount of entrepreneurship happening in California. This is my only chance to look like this, unlike John. I don't have to wear a suit most of the time. It's been most of my time in California. It's the first time, by the way. Thank you. It's the first time I've ever been in California. Probably French. Yes. It's a great time to be in California. It's a great time to be in America because entrepreneurship is very much booming. The variety of entrepreneurs that exist today are very hard to cover. The ones that I'm most interested in, the ones that I really care to associate myself with and I invite everyone who has a company that needs to survive in the age of disruption that are thinking 100 years out. There are whole special subclasses of these people that don't look for an IPO, they don't look for an acquisition, they're thinking 100 years from now this company will still have my name on a door or whatever the name is, that's what it's going to stick around. Typically what they're thinking about despite the unpopular world is a creation of a natural monopoly. Something that sticks around for so long because its customers do not want it to go out of business. The typical skill set, the typical mindset that I look for in these people is really figuring out something that the customer wants in a way that inspires them or pushes them to have it built by someone else. Whether it's a consumer business or a for-business business there's always the notion of this will forever be cheaper, this will forever be better if my partner produces it for me. So these are the most interesting kind of businesses. That is naturally expressed in this whole cloud computing which I'm very excited about because I mentioned Uber. Uber is a kind of a cloud computing company. It's a company that replaced humans in the cloud to dispatchers with computers. And it's fascinating because again of the security implications. The thing that again is seen in this whole new crop entrepreneurs they say I can't allow a data disruption to put me out of business in six months. I have to survive 100 years or more. So what they're doing is they're designing with mind of a customer in mind it was security that longevity of their business longevity of their concepts strong set of values that is meant to stay around for a very long time. Those are all values that define a long-term entrepreneur. Max can I ask you a question because one of the struggles we have is companies have to reinvent themselves every three to five years in today's world. And you were able to reinvent your company multiple times. How do you get that into the young entrepreneurs because usually what happens is they stay with the right thing for too long and they don't reinvent themselves. And that's why probably 90% of the startups end up crashing and burning within 10 years. How did you change it and what kind of the lessons learned not just for startups but for all of us in this room? No, that's perfect. I suspect paranoia has a lot to do with it. I think most of the time you find guys like me waking up in the middle of the night and saying I don't know yet something's going to hit me. I don't know what it is but I got to sit around and get a plan for the disruption and the only right answer to that fear is to ask the question what would I do? If I were to be the other guy ready to disrupt Max ready to put him out of business what would I do? And if you paint that picture for yourself you can go into the office and paint it for your employees and you freak them out a little but by the end of the day they have a plan to disrupt themselves. And then whoever is plotting to put you out of business you're putting them out of business and one of the things I think you've done extremely well is find that talent. Tell us a little bit about the university. Tell us a little bit about how you're developing cultivating the types of businesses that are coming from that so that we can all learn. You're training 30,000 people a year and I'm assuming you're continuing that university where certain businesses are training a few hundred a year so tell us about how you get to that scale and governments need to get to tens of thousands and hundreds of thousands a year a year in training young people and entrepreneurs in that context. You know, in my background I was a professor I found this advice for the university just because I was a professor I haven't exactly been working for a university for so long time and then after I had money I tried to build a university to use my own way to develop Thailand. So I think that basically today the education landscape is a big change. So the very much beyond of campus learning the teacher professor is like an integrator of education resources. He cannot deliver the skill anymore because a student no more than a professor no and they must be integrate everything together from outside and to give very much interactive the opportunity like student to dialogue with the professor. So for those kind of purpose in our university I gave him the name called student office winter office. So we spent the biggest you know the space like student can start up their own business. They can simulate a kind of real company after they learn the marketing, sales, organizational business and management everything they can simulate we can give him some money to simulate how to booking how to make a balance how to make even the brand something. So I think it's exactly you can find just like I found my company in campus of university all employees is my student in that time I was professor so I say a lot of young people they can got a more big opportunity than my time in the past. So if you look at the education now I can give you one of example is China for health care. You know it's a big reform now it's because most of best doctor in big city in best hospital. So if you look at second tier city in China second tier city means 60 million population and then rural areas small town it's like a quarter of a million people in there they have very big gap they are not equal to access the health care services and then we build a kind of platform so like rural areas doctor I call him a barefoot doctor they have no medical degree but they already starting to care about people so how to like him to learn from a best doctor in big city so how to like the knowledge of the best experience doctor can be delivered by network to the rural areas doctor and that's real time it's real time delivery most important is data so remote diagnostic without data without full data it's not only blood pressure single data so then we connect few thousands now around you know 10,000 small village and together with a few hundred big hospital and then we sharing big database like each person have a personal health care record and they can sharing by all group doctor I call that is coordinate medicine but that is real learning environment it's teaching each other the sharing knowledge I think that is a new plan for new way to learn make sense Pierre you have some comments on that and I have a question for you about big data I hear a lot of executives talk a little bit about that as you address Dr. Luz I would like to build on what Dr. Luz mentioned to us but just on big data two data on this which are striking based on the recent survey we convene first 79% of the respondents to the survey believe that if you're not able to embrace big data your company will face extinction to that level data only 40% already 40% believe they don't have the talent and I guess it's underestimated so you just imagine if you're putting that together, 80% would believe I need the big data and I don't have the talent and I would face extinction so all of this is so critical then indeed the talent agenda as mentioned by Giotuliu is absolutely paramount as you remember this last couple of years here in Davos but around STEM education, STEM, science, technology engineering, math all the different countries if you want to provide employment in the future we need to pivot education to more STEM, when you look in STEM analytics will be even more critical because this is where we need more talent to drive the algorithm, to do the mining to do the big data some could be sophisticated some would be less sophisticated some might be just a good people these last couple of years we hide a thousand PhDs to drive algorithm and we feel we are extremely short so we had a very consistent with what you said Dr to create a partnership for instance with MIT we are creating with universities many partnerships around the world to create the education and when I'm talking with many companies they all likewise you're doing starting to think about creating their own curriculum around creating partnership to creating the kind of education the public sector is not providing again a good illustration where private could moving forward collaborate with the public to create the education of the future as we speak hundreds of thousand jobs could be created in Europe as you mentioned John with your visit in Europe around analytics and I know this is a place where unemployment is very high so all this big data is source for growth and you have a kind of virtue cycle here scarcity of talent scarcity of places to educate them we have to create that opportunity I know our president has said he wants to create education free at the community college level but part of that has to be driven towards some sort of technology STEM related activities in order for it to be productive for us Max I have a question for you talk about it how do you actually protect it how do you ensure that you're actually not violating the trust that you have with your customers or violating the trust the government violating the trust with their citizens I'll answer that in a second but I have one comment on Dr. Lewis's point the barefoot doctor image really resonates with me vis-a-vis data so one of the sort of little bit off the wall but one of the technologies that I'm super excited about is augmented reality the Google Glass has just announced that it's going to be tooled themselves and that's a temporary setback ultimately the barefoot doctor in China will wear AR device either Google Glass or something directly in his brain and without a medical degree a giant database of information in the cloud will tell him that's not a bruise that's something much worse go get antibiotics you don't need a medical degree to execute a simple shot on someone if you have the precise data moreover you'll have real-time communication somewhere in Beijing where the best universities are that's what the future of big data really looks like between communications and sensors at the ground and distribution of skills at the very edges of the network I'm sure maybe Matt you might add augmented reality together with cognitive computing absolutely it is the most exciting time to be alive but I'm sure every entrepreneur thinks that but on the other side of that is of course the fact that in my country and just a basic idea of privacy particularly popular in Europe at the moment there's a lot of potholes in the land mines the only answer I know and this is my background that's what I studied that's what I love you have to start with security in mind you have to design with cryptography built in from the ground up the basic idea I teach to every person that joins any one of my companies that has to do anything with data to be one-sided membrane data outside it's not your problem as soon as data rolls through the membrane that you control it is encrypted it is protected and it is never to be unwrapped unencrypted unless you must compute on it unless you must make a conclusion as soon as you're done wipe it out only store the data encrypted one more practical advice if you have anything that's truly sensitive anything that an individual can take to the market and turn into dollars and therefore the ability or destruction of your market cap never let one person handle the data have multiple parties that have to act on any piece of data and this will slow you down a little bit you have to invent new processes but it's really important Max I agree with most everything you said I'm going to take exception to that last point we might not disagree on it we might actually see it similar the problems on security are going to go to exponentially this year if you thought last year was bad organized crimes, complexity, etc every company will be broken into, every government will be broken into, that's a given the question is how do you know you're broken into how do you remediate it, how do you handle with your customers as you think through it our studies show that within nine years 60% of the data has been stolen that the perpetrator is after the average company doesn't find it for four to six months when you look at it the average company and including countries has about anywhere from 40 to 60 security players in their environment which means you almost have none because the bad guys find the weakest spot they just come right through it where I disagree with Max and I could be wrong on this is the data is going to have to be available throughout the entire network the majority of quote big data computerization won't be at a central site where you're going to deal with cancer it's going to be at the edge it's going to be at the mining site it will be at the edge of a branch bank it will be at the edge of a health care center in China and most of the data whether it's video, whether it's health data, etc. will not ever get transmitted to a central site so you cannot necessarily encrypt it at the level that we want to get that security max, at least I don't think so because you want to share that data for the patient to do the cost correlations and the key is how do you give the patient the capability of opting out in a way that is constructive even though the number of variables are going to be just huge in it so this is where it's going to take a lot of creative minds because government will step in and do something really stupid and if you think just one answer for security will be the answer we're probably not true we're going to bet a lot on becoming the number one security company mainly because what Max said there's 75 players in here there's nobody over 5% share it's got to be done architecturally and the majority of security violations are the last one are errors where people didn't follow policy that's how networks broke I'll make one point so I don't think we're disagreeing at all I think the again so I think Robert taps me giving practical advice and so I'll try to stick to that plan so one of the perversely good things about the fact that everyone's getting broken into in fact I bet you a dollar each that you've already been broken into the bad guys have to get it right once it's just bad news but the fact that now everyone's on the same level we're all we just don't know how we do it I agree so now that we face this reality we basically have to say look yes it's going to be vulnerability it's never going to be black and white anymore it used to be you've been broken into or not forget the not part now you have asked yourself the question how much do you have to invest in protection and what is an acceptable level of vulnerability my point about the essentially managed part if you think of the value of your enterprise as I certainly do essentially as a function of data that you possess then the spot in your enterprise that is most vulnerable is where most data is stored as you go further and further out on the network the nuggets of data are fewer and far between and therefore the vulnerability and the cost of breaking being broken into goes down once you get to the heart of the enterprise the more you should be investing in that spot you're correct so it's a gradient methodology Pierre you have a comment and then we're going to open it up for questions for the last call at 12 and a half minutes please yeah I just wanted to take the rebound from John and Matt on this with maybe two additional comments I mean the first one the world has changed and probably two or three years ago you had a kind of common wisdom that the benefit of the digital surpassed the security issues and the compromise might have been more in favor of freedom, benefits and then there might be some consequences but you know this is the nature of the internet I think today what you mentioned Matt which is to put at the heart of the design security at the heart of it is the essence of what we have to do so the compromise has probably moved and the balance if you will has moved to something more balance between safety and the benefits if you will. The second point when we talk about data we need to be now super specific and to some extent super technical you need to deal with data security and that's the minimum my data are secured somewhere second the data integrity you can access my data but you can't change it imagine if you can access my blood type it might be highly beneficial if you can access my blood type and change it it's a different story by nature so data integrity is a challenge in itself and then you have the data privacy which is something else and all the techniques going to move from encryption going to move from data aggregation anonymization and so forth so all this data protection over landscape is getting more and more specific from a technology standpoint but as well from a society standpoint and sometimes we're using data with a kind of confusion from privacy to security. I want my data secure but I want my data to be used if there is a huge benefit. If it's in healthcare probably more on an anonymized way so you can predict some of my disease without knowing my name and when you do that data integrity I mentioned the case which is pretty standard as well and we had and I had the opportunity to work in the EU commission on the cloud and on data regulation and we spent a lot of time in defining a charter for each of the three. The kind of SLAs service level agreement you would need to provide and this is at this level you now need to deal with data if you want all this big data to happen. Great that's helpful. Let's do this we have a few minutes for questions please stand up. We have mics in the audience. One behind us please. Let us know who you are. My name is Gisbert Ruhl. I'm the CEO of Klocknau. Klocknau is a steel distribution and service company so as you can imagine a very conservative industry. We started this process of digitalization one year ago we did a lot of things. We have a strategy, we have a vision, we invented a company in Berlin internet company we are hiring people out of this industry but I'm still always curious because I think we are not fast enough. My people are saying to me okay we might be too fast I think we are not fast enough so how fast do you have to be in such a conservative industry to change the industry. I think we are by the way the front runner in the steel industry and what can you do to be even faster what additional ideas I'm collecting the hourly advice on this one. Transform the company please. I'm going to provide some free consulting but it might not be no it's not free. I'll collect. So I guess all this question is exactly and by the way I mean German driven organization as you mentioned John are quite with the industrial Internet 4.0 Berlin as well you mentioned some of the countries where you can see some things happening very please you mentioned France and other places but of course Berlin is trying to put things together in order to have the startups and a lot of creativity. I think it's all the question on where you're putting digital and many of the organization I had in mind BBVA we all know the Spanish bank it's interesting to see how they are driving their digital agenda how they are already deploying some of the on the already known digital capabilities into their organization but in parallel they have set up quite a disruptive organization totally dedicated not to run the current digital but to watch the disruptors like Matt and the others what he's been doing creating venture fund to start investing in some startup related to their business and to try to figure out the what next what might happen in the next 2010 or 20 years making some small and niche acquisition to learn I think the way to move is how you deploying the current digital in your operation and how you anticipate the next move by learning watching sitting some business creating some venture fund I think it's an interesting illustration of a company having this kind of two speed what we're calling at Accenture the kind of two speed agenda the current digital and the next gen so just very quickly understand the top three to five applications in manufacturing and process that you're going to get payback for do what you did get people from the outside because internal you can't reinvent yourself on it as a CEO you've got to be the backer of it you can never move too fast except if you move without process or prioritization behind it next question sir last comment it's Cisco and Accenture to do it for you never miss an opportunity Pierre but hire Max to get his point of view on how to break it it was important that Pierre was about to talk about yeah I didn't know that frankly but as you know we have a work on digitalization for many years and I think the banking system as a whole is under pressure most of the bands having addressed this digital threat my question is one you have the bands having addressed properly the threat on the other hand you have the regulators most of the the startups and companies working working on specific parts of the retail banking value chain are working as are prioritizing the infrastructure the banking sector but they don't want they are not going into the arena where they can be regulated they stop from being regulated you can see any startup in the world you know go into the arena where regulators can work or can put action on them my question is how do you see the banking sector the next 5 to 3 years providing that on the one hand you have a lot of people threatening because the banks are not efficient of course on the other hand you have the regulators stopping them from getting into the arena how do you see Max why don't you take that because Max has a very interesting business that is actually in the banking industry and I think he is disrupting the entire student loan industry at this point but we will hear some more I'm disrupting the entire student loan industry but I'm definitely on my way to disrupt I am working on a banking startup as a matter of fact it's called the firm and that's my current full-time job I agree with you I think the regulatory pressures and regulatory difficulties are a defining narrative in the banking universe worldwide I think the way we found ourselves engaging with the regulators in the United States so far we are just an American focused company has been actually quite rewarding what we have done is we basically said look we are getting a lot of very very interesting information at a much higher rate one of the things that the banking industry has traditionally failed to do because there is so much to lose the fear and the terror frankly of getting yourself too far out on the limb of digitization is real if you have a breach that's a good way to put yourself out of business if you have a couple of hundred million customers it's really scary what we have done is said look we are a great place for very careful very controlled experimentation we bring to the regulator information about how consumers behave how we behave these are the consumers how we interact with them, how we underwrite risk how we take risks to do this to give the attention of the regulator we have to go out there and actually take the risks a lot of the startups that skirt the true relationships with regulators and other banks say well we are going to ride the existing infrastructure and we are going to sort of disrupt it at the edges I don't really think that's the correct path I believe the correct path is to provide value and take the full risk associated with value creation to address the regulatory requirements you have to step in and say we are then you get on the block we are going to take risks we are going to learn on your time but we are going to provide all the learnings and the risk associated with that is going to be a lot lower I think for the banks that have existing customer bases you have to carve out part of your organization and products and services probably true for every company here that the cost of failure is lower we can bring to the regulators and your partners a relationship where you say look here's an experiment it's going to be important to find out what the outcome is but it's not guaranteed protected final part we have one more question and we are going to have a wrap up please I am at Royal Philips in Amsterdam I like your quote about thinking Max about how the other guy is going to put you out of business so you do that every night or every other night so I've got a question to John so how do you apply that to a big and successful corporation like Cisco you say disrupt or be disrupted but how do you do that in a practical sense the speed of disruption is starting to become brutal we made a decision that we have to reinvent ourselves every three to five years we used to say five to seven it's now three you have to anticipate getting the market transitions right you have to have the courage for yourself and your leaders to dramatically change and if I were to give you the cliff notes we've changed more in the last year than we've changed in any five years before we completely changed our whole go to market we completely changed our engineering organization services we used to have 62 BUs that had profit loss capability the way you all buy is outcomes so we got rid of 62 BUs realigned 6000 people 70% of our engineering organization and focused on outcomes more simplistic customer base software all the way through you do the same thing with services and the same thing with sales when you disrupt yourself it's painful you usually get penalized by the market but if you don't disrupt yourself you could put out a business to max this point and that's the hardest thing to do as a leader in a day's environment your company does it very well and you're always benchmarking in terms of what's possible let's do a rapid fire wrap up Dr. Lu please tell this audience what they need to do to ensure that they are embracing all the challenges of the digital economy the right way give us some advice it's very hard I think you know as IT the people look at look at us a little bit fashion and we're doing everything digital but we have a big challenge because digital technology is changing every day so that give a price for the business working for digital technology always have very sought life so we need to face those kind of challenge always curious and also to learning how to disruptive ourselves so how to changing ourselves always to keep to learn max final advice for their audience find disruptors in the organization the ones that are thinking about leaving and starting their own business give them a platform internally where it's safe to fail encourage them to disrupt yourself John you gave part of it any other advice for the rest of this audience yeah we've talked about thinking about first I'm going to challenge the audience to think about last think about the last traffic jam you're ever going to see think about the last time anyone in the world can't get access to a doctor think about the last time you ever have to stand in a retail line think about the last time coming to Davos that you're never going to have to worry did your bag get lost think about when you download video the last video disruption that occurs this can change the world in a very unique way but it requires all the comments that we talked about today Pierre the world will never be the same again so you need to look to the future and no company will have the capabilities to embrace the digital disruption so you need to think about the strategic partnership you will have to create with the different partners in the ecosystem in order to enable your digital journey my last piece of advice buy more software with that thank you panel really appreciate it thank you you've been wonderful