 Okay, welcome back to our live event. Hopefully your breakout rooms were good. We had three breakout rooms and we had hosts within each one of them. We had one hosted by Jonathan, one by Ramon and one by Sergio. Roberto and I, we hung out with each other. So we also had a very good discussion. So we're going to take questions now. I'll give it to Roberto right now just to sort of give a real quick recap and then we're going to dive right in, do some of your discussions that you had that we're going to be taking from the boards and digesting and having a little discussion. So Roberto, do you want to lead in for just a minute? Yes, perfect. So just as a recap, the question was in the Pixel Artists case, was the wearable business unit justified in pursuing their own strategy independent from the time-tested strategy of the corporate group? And in the Laminix case, how does accepting or rejecting the video flag proposal would line up with the Laminix business strategy? So there was a question that I think is interesting which is, is there a penalty for defaulting on the contract? And I want to say two things. Number one is this question goes a little beyond what I want you to consider for the question because it refers to once you have already signed the contract, I want you to think before you sign the contract, but it's a fair question. And I think you have to have that information. It's useful to have it in a sense, but not in another one. So it is useful to have it in a sense because before you enter a contract, you want to know what is the penalty if you don't leave up to that contract. As far as I know, there was no penalty in itself. So, but if you enter into the contract with that idea in mind that there's no penalty so who cares, what's the downside? You are having the wrong mindset. The right mindset to have here is that video flat is a strategic customer of Laminix and Laminix is a leader in the area. It has a reputation that it has built through many years with a lot of effort in emphasis in quality and in service, service to the customer, technical service and delivery making sure the product is available. So this is a relationship that is based on trust. So you will be mistaken if you say, let's sign the contract, there's no penalty which I think there wasn't, there wasn't a penalty. Or if you say, let's enter and if there's no penalty, who cares? That's the wrong mindset because the price of this is that the customer would walk away from you, find somebody else and guess who's going to get their business in the future. So just to answer that question with the immediate answer and the bigger picture, more strategic answer. All right, now we have here some answers. For example, breakout room three in the case of pixel artists, they say that the wearable business unit was justified Alexis, do you want to introduce your answers? Yeah, yeah, so Sergio, actually just a quick thanks to Sergio and the two CTAs, Jonathan and Ramon for kind of guiding the breakout room. So it was really great. So we just had a submission by Sergio's room. So they thought that selecting the wearable business unit was justified in pursuing the approach of selecting suppliers, but that they actually thought that they should have collaborated with CSG end to end to see that if they could have sort of a best practices kind of scenario. So they thought that this scenario would kind of lead to lower costs and better compliance. I think this is a very interesting answer, especially the point, not so much about cost because cost for wearables is not a key, is not an imperative, but that question of compliance. And the reason is that people that tend to adopt this wearable technology are the younger generation. And Alexis, you know better than anybody because you're an expert in responsible supply chains. It is also that you're gonna say that I was so young. No. Yes, no, not anymore. So I'm just kidding. But the people that are buying these products are young people, which are also the generation that is more sensitive to things like slave labor and conflict minerals and environmental sustainability. So the issue of compliance is a very important issue. Now, I think this is, one of the things about strategy is that there is no right answer and wrong answer. But I'm gonna say this is a correct answer. There is no need to burn the bridges. There is no need to break the communication. There is no need to stop collaborating. But they were justified in pursuing their own business strategy because their market is the main factor in determining their strategy is their market and the needs and characteristics of their market and their market is fast and requires fast access to IP and fast time to market. So you cannot stop and wait for the corporate group to understand this, but you should not just break out communication, the communication should stay that it will to collaborate should stay but they were absolutely justified. So I think this answer is correct. Yeah, actually a breakout room. So this seems to be a trend that they felt that they were justified in making that decision. Whereas breakout room thought that some things that could have contributed better would be executive buy-in, better communication, coordination and alignment between units and clear chain of command. So those are different, some different components they thought would contribute. And this would be from breakout room one. Yes, I would say this is exactly on the nose. It builds upon the previous answer, even though these groups work separately. I think this is a consensus answer. The executive buy-in I think is important. Better communication which already mentioned coordination and the alignment. Now the chain of command was clear though that the wearable business unit reported directly to the head of pixel artists. They were not subject to the corporate supply group. So that's what in order for the reason led to this break communication because if the corporate group had control over the wearable supply chain, this would have ended differently. So if you notice that the column doesn't make any reference to wearables being slowed down. They were never slowed down because they didn't allow themselves to be slowed down by the corporate group. But it came at a high cost. And this was like what is in psychology is called a multi-stressed relationship. What I agree with this assessments from this group. So actually, on the flip side, breakout two had a totally different take on it. So I'll see how you feel about this. They felt that actually the pixel artist was too quick to the market and the corporate supply chain group applied an efficient supply trade strategy that was actually, oh, actually, you know what? I read it wrong. They were also in agreement. They said it was mismatched for the realities of the wearable market. So it looks like there's general consensus. Perfect. And here, let me highlight the difference in the core business of pixel artists and the wearables business. So for the core business, their strategy for the corporate group strategy for the core business is perfect. Focus on efficiency, on service, on compliance, works like clockwork for the core business. But the realization here and the takeaway is that a corporation has many business units and business units operate sometimes in their own market or their own neck of the market. And different markets can have different needs. And if you remember from the quarter five forces thing that we did, you have to determine your strategy based on the realities of your market and then how you can differentiate yourself in that market. How can you acquire an advantage that is going to allow you to have higher profitability? That's what the five forces are all about. Your ability to increase your profit. And I think the realization from the wearables group here is, look, this market is new, is different, and it needs new rules and new, with new rules come new strategic imperatives. So I think this is, again, right on the money. Right. So we have the three groups on agreement. Yeah, they have one more comment, just if you want to comment on it. They break out rooms who said that actually the Pixel Artist Company could have been more patient and approached emerging key suppliers over time with a more streamlined intellectual property or legal approach. How do you? This is a very good point. And I think it's also something that it is not an either or proposition. They can have, they can do this later, not in the first gold rush of these wearables. They can do this as a second step. But I would advise against waiting and seeing in the following sense. I don't think this is wrong. I don't think what they said is, there's nothing wrong with what they said. But here's my apprehension about that. It's a fast moving market that has no clear leader. And there is sometimes, sometimes there is a first mover advantage. So I think because they were burned before, they were trying to avoid being left behind a second time. Now this is something that sometimes goes and sometimes doesn't. There is this saying that says that the early bird gets the worm and it's usually meant to that if you are the first one, you have an advantage. But there is also this saying that says that the second mouse gets the cheese because the first mouse dies in the mouse trap. So I think this is, you can find in the reality of competitive markets, you can find examples of both. Examples where a first mover had an advantage and you're gonna say, oh, you should be the first mover. But you can also find examples where the first company trail based plays but then failed and a second comer was actually able to succeed. I am nobody to say which strategy would be better but this is a very good point. I do think however that because they were still reeling from the recent failure, Pixelarty was not willing to risk it again. And they would rather have a footprint in the wearables and that doesn't preclude them from negotiating out the line exactly along the lines that this group has proposed for better terms and more efficient contracts and so on as a second movement. It has to do with the maturity of the product whether it's a newly launched product, whether it's a maturing product or a facing out product. I think we should go to the next case, the Laminix case. Yes. But these are all very good answers. I'm very impressed. Great, yeah. So we'll just start with some of the comments from the Laminix case. So actually breakout room three, their thought on a bit, so sort of a reminder on it was whether they should actually accept the contract between for flat video, flat video, right? Video flat, sorry, excuse me. And so actually breakout room thought that they should accept the contract because it would increase their market share, but actually the problem lied in the execution of the project management planning and they really should have stayed the feasibility of their capabilities and plan before they accepted the contract and then whether it actually kind of connected with their overall mission or vision for the company. This is an excellent point. And here I would like Arthur, if you can bring up the after slides, the next two slides, there's something I wanna show you. If you remember, Laminix's business strategy had four pillars. I wanna show you here, this slide that Arthur is showing, if we reject the proposal, if we are Laminix and we reject the proposal from video flat. This is a proposal just to make sure that we are on the same page. We're saying that the markets are moving in a more innovative direction. We have a key customer, strategic customer, bringing us a proposal that requires innovation should we take it or not. In the pillar of retaining our market share, what do you think is gonna happen if you don't move along with one of your strategic customers? There is a risk, I would argue, that you're gonna lose some of your market share because that strategic customer is gonna look and find what they need elsewhere. So you may erode your existing base if you don't serve their needs. The other pillar of growing with the markets, this is exactly what the wider Laminix is. It is a new market. It is a new segment within the market. That is because it's new, it has all the potential to grow. So you want to be there and you want to grow with this if you are following this pillar. So rejecting the proposal would fail on account of retaining your market share and it would fail on account of growing with new markets. Now, what about your ability to command high prices? This is exactly the case of the proposal. They are gonna pay you higher price for this special product. This is what you want to do if you wanna charge more. Remember that this is a market where competitors from China are starting to introduce cheaper alternatives to your product. As those competitors improve their quality, your ability to command higher prices is gonna be eroded if those products are not innovative. So it also fails on this pillar of commanding high prices. If you reject the proposal, you're walking away from a chance to charge higher prices. The only thing where rejecting the proposal makes sense with your current strategy is minimizing final cost. It is cheaper. It is cheaper not to do this because it doesn't disrupt your very efficient supply chain. Now, if you show me Arthur the next slide, let's look how accepting the proposal would play out with a strategy. It would align with the retaining your market share because Videoflat is gonna be happy with you as a supplier. You're gonna give you more business. It's gonna align with the grow the markets because this is a new market segment and you would be a pioneer. You'll be a first mover in this segment. And also it aligns with your ability to command high prices. The only problem is that it doesn't help you minimize your cost. Actually, it will increase your cost. But there is also, if you remember, when we saw the strategy, there was the idea of support and there was the idea of consistency, but there was also the idea of a coverage. Coverage referring to blind spots. You don't want to have blind spots. And a blind spot in the Laminix business strategy is on innovation. They don't have anything on innovation. They are not known as innovators. So if they decide to accept the strategy, they will have to add a new pillar that says we're gonna give innovation a strategic priority. All right, now having said that, let me come back to the proposal from the group. You can turn it down, Arjun, thank you. So the group is saying they should have accepted it because it better aligns with their strategy, but they should have executed better. And this is exactly right. They should have accepted the proposal. I mean, there's no single answer, but I mean, if they are going to accept it, which I think they should have, then they should have made sure that they execute on that promise. How they could execute is something I'm not gonna discuss, because I would be giving away answers to a question that you may or may not be getting. But let me just say that it would be very much aligned with your strategy to accept this proposal. What did other groups say, Alexis? Right, so actually there wasn't as much agreement on this question as the other. So breakout room two thought that they should have actually said no to the specific business and wait for the market to mature and then actually they would step in with sort of their efficiency pitch, because that's their strength. Yeah, I wanna agree partially with them. I think there is a case to be made for rejecting the proposal and it is the following. Laminix had an internal conflict between three imperatives, the service, the inventory and the cost. And they had not reconciled that conflict. So I think there is a case to be made for saying we are not ready to take this proposal now. However, I disagree with the part where they say they should wait for the market to mature because the problem is that you have other people that are better at price competition than you, including this many, what is called the basically the Chinese supply base. You're not gonna be able to compete on price with those guys. Well, maybe because I shouldn't say that because maybe on the economies of scale, you can't compete. But what I should say is that it would be hard to command high prices if you're competing on price. It's kind of a counterintuitive. You cannot have it both ways. So I disagree with that part. What would I would say is they can reject the proposal but not wait for the market to mature. They should get their house in order now and they should get their act together in terms of innovation. Do we have any time for one more comment for the other group? Well, we can do it in one minute, right? Yeah. So the final group sort of walked the fine line of both opinions. They thought that they didn't think that accepting the contract was actually conducive to their culture but that they were probably right to take on the contract because they saw an opportunity in a growing market and really strategies aren't set in stone as we know. So they felt that the execution. This is great. This is what I would say. This is exactly right. And I think that if I had to say this is what I would say they should have taken this but then the moment they took this contract they should have realized we are taking on a challenge here and challenges don't solve themselves miraculously. You have to invest and you have to get your people fired up and ready to support in this initiative and that's where they dropped the ball. Nobody wanted to own the project and they didn't want to commit plans or invest funds. That's where they really failed in committing to a proposal that they later failed to execute. Right. So great answer. Perfect. Okay. Well, I think we are right at our time. So I want to thank Dr. Roberto Perez Franco from joining us from Australia and coming back and visiting us again. We miss you so much and excellent insight on the cases. Also thank you to everyone who joined. We hope it was enjoyable. We thank Sergio, our course lead and SE1X and then also Param, Jonathan and Ramon, our CTA to help facilitate this discussion. So hope you enjoyed this and we'll be hosting one more live event for SE3X and I hope to see you there. Thanks a lot.