What makes a great company | Investment Conference 2025 | Norges Bank Investment Management

Estimated read time: 1:20

Summary

The 2025 Investment Conference by Norges Bank Investment Management delved into what makes a great company, featuring insights from industry leaders and experts. The sessions covered aspects from corporate excellence, investor perspectives on standout companies, to leadership and corporate culture's impact on creating extraordinary firms. Highlights included discussions with top executives from companies like Goldman Sachs, Nova Nordisk, Ferrari, and more, sharing their strategies for success, culture cultivation, and leadership in uncertain times.

Highlights

David Solomon of Goldman Sachs emphasized the importance of culture and client service in maintaining a strong, enduring company. 💼
Lars Fruergaard Jørgensen from Nova Nordisk discussed innovation in healthcare, focusing on driving change and meeting societal needs. 💊
Judy Marks from Otis highlighted operational excellence and the significance of discipline and innovation in sustaining a 172-year-old business. 🏗️
Benedetto Vigna of Ferrari stressed the blend of innovation with maintaining iconic brand values, steering Ferrari into a future of speed and exclusivity. 🏎️
Mark Schneider, former CEO of Nestle, talked about the slow, steady process of cultural change and the value of diverse and inclusive leadership. 🌍

Key Takeaways

Innovation and adaptability are crucial for long-term success. Companies need to innovate continuously and adapt to changing environments to stay ahead. 🚀
A company's culture and leadership heavily influence its ability to weather crises and emerge stronger. Leaders must foster a resilient and learning-oriented culture. 🛡️
Strong leadership involves balancing humility and confidence, promoting a clear vision, and encouraging diverse perspectives to drive company progress. 👥
Public and private markets have different strengths, but both require a strategic long-term vision and the ability to nurture and grow successful enterprises. 📈
Effective crisis management is not just about damage control but also about learning from the experience and leveraging it for future growth. 🚧

Overview

The Investment Conference 2025 by Norges Bank Investment Management examined the DNA of great companies, bringing together top leaders across industries to share insights. The conference's theme revolved around innovation, adaptability, and the crucial roles of leadership and corporate culture in navigating modern business landscapes. Notable speakers included executives from Goldman Sachs, Nova Nordisk, Ferrari, and Nestle.

The discussions emphasized the need for continuous innovation and adaptability as key drivers for enduring success in any industry. Leaders like David Solomon and Lars Fruergaard Jørgensen shared their approaches to cultivating cultures that support risk-taking, learning, and resilience in their organizations, highlighting the importance of aligning company values with strategy and market demands.

Exploration of leadership underscored the importance of balancing creativity with structure, guiding companies through times of change while maintaining a strong, stable culture. Speakers stressed the value of diverse leadership and long-term vision in both public and private markets. The session concluded with reflections on crisis management as a catalyst for growth and a testament to strong company leadership.

Chapters

00:00 - 08:00: Introduction to the Conference and Speakers The chapter introduces the core question of what makes a great company, which is central to the investment philosophy being discussed. A NBIM portfolio manager has shared their insights on corporate excellence. The speaker emphasizes the unique opportunity to delve into this question further with input from inspiring minds and company leaders, setting the stage for the conference discussions.
30:00 - 80:00: Speaker 1: Erica James on Crisis Leadership The chapter begins with hosts Shelpi Nanda and Patrick Duplaci welcoming the audience to the session featuring Erica James on Crisis Leadership. They express their excitement and appreciation for both the live audience and those watching via live stream, setting a warm and inviting tone for the discussion ahead.
80:00 - 120:00: Speaker 2: David Solomon on Culture and Leadership at Goldman Sachs In this chapter, titled 'Speaker 2: David Solomon on Culture and Leadership at Goldman Sachs,' the focus is on a series of sessions designed to spark imagination, provide inspiration, and offer valuable insights. The chapter outlines three sessions: the first involves hearing from top companies, the second provides an investor’s perspective on distinguishing great companies, and the third delves deeper into these topics.
120:00 - 180:00: Speaker 3: Lars Fruergaard Jørgensen on Innovation at Novo Nordisk The chapter introduces the topic of leadership and corporate culture in shaping successful companies. The opening speaker is Dean Erica James from the Wharton School, who is an expert in crisis leadership and management strategy.
180:00 - 240:00: Speaker 4: Judy Marks on Operational Excellence at Otis The chapter titled 'Speaker 4: Judy Marks on Operational Excellence at Otis' starts with an introduction that highlights Erica's diverse board roles and contributions to women's education and advancement in business. She is warmly welcomed by the audience, as indicated by an applause.
240:00 - 300:00: Speaker 5: Benedetto Vigna on Ferrari's Innovation and Culture The chapter begins with Benedetto Vigna expressing gratitude to Nikolai for gathering a group of talented leaders and inviting him to speak. Vigna acknowledges the incredible and uncertain times they are living in, emphasizing staying focused amid distractions and variables.
300:00 - 360:00: Speaker 6: Morten Hansen on Great Companies The chapter explores the dynamics that contribute to making a company great, focusing on insights from industry leaders.
360:00 - 420:00: Speaker 7: Adena Friedman on Technological Transformation at NASDAQ In this chapter, Adena Friedman discusses the impact of technological transformation at NASDAQ and how organizations navigate uncertainty and upheaval. She shares insights into the foundational elements that determine whether a company succeeds or fails and reflects on her own scholarly pursuits in analyzing organizational responses to crises. With decades of experience speaking with leaders, she emphasizes that successful navigation of volatile, ambiguous, and unpredictable environments is key to organizational success.
420:00 - 540:00: Panel Discussion: Investment Perspectives with Chris Hohn and Christian Sinding The chapter focuses on a panel discussion involving prominent investors Chris Hohn and Christian Sinding. It highlights how successful companies and their leaders respond to adversity, emphasizing the importance of not just attempting to return to normalcy but instead using their networks, knowledge, and resources to make strategic adjustments. This proactive approach during challenging times allows these companies to create new pathways and opportunities.
540:00 - 630:00: Session 3: Leadership and Corporate Culture In this chapter, the discussion centers around how organizations that strive to become top performers must embody adaptability. The speaker shares experiences from their career, noting that organizations in various sectors, including finance, culture, and technology, that prioritize setting high standards and adapting to challenges, ultimately emerge stronger and on a path to growth.
630:00 - 675:00: Speaker 8: Erica James on Leadership in Crisis Erica James discusses the importance of continuous improvement in the context of leadership during a crisis. She reflects on the concept of a learning organization, popularized by Peter Senge in the late 1990s, which emphasizes the need for companies to engage in experimentation and create structures to learn from successes and failures. This concept is deemed highly relevant in today's world amidst technological advancements, including artificial intelligence.
675:00 - 720:00: Speaker 9: Mark Schneider on Corporate Culture Transformation The chapter features Mark Schneider discussing the impact of global political changes on corporate operations, emphasizing the importance of adopting a learning mindset for survival. Mark stresses that companies must be able to learn, unlearn, and relearn to mitigate the risk of becoming obsolete in the rapidly evolving business environment. He draws from his experience at the Wharton School to illustrate the significance of fostering a culture of continuous learning.
720:00 - 765:00: Speaker 10: Merete Vadum on Culture as a Value Driver The chapter titled 'Speaker 10: Merete Vadum on Culture as a Value Driver' features a discussion about the influence of culture in driving value. Speaker Merete Vadum discusses the unexpected areas of research tackled by the Wharton School's faculty, highlighting topics like human trafficking, climate change, and the industrial prison business model. Vadum emphasizes that despite these topics not typically being associated with a leading business school, they underline the institution's commitment to tackling pressing societal issues. The chapter underscores the role of Wharton faculty in influencing ideas, leadership, and companies towards creating significant societal impact.
765:00 - 880:00: Panel Discussion: Leadership Approaches The chapter titled 'Panel Discussion: Leadership Approaches' focuses on the preparation of current and future leaders through executive education and innovative curricula. Topics such as leadership, artificial intelligence, and finance are emphasized to equip leaders with the necessary skills for facing present and unforeseeable challenges. The conversation highlights the speaker's dedication to leadership development through a multifaceted career as a researcher, leader, and board member.

What makes a great company | Investment Conference 2025 | Norges Bank Investment Management Transcription

00:00 - 00:30 What makes a great company? That is the question that lies at the heart of our investment philosophy. And you've just heard from one of our talented NBIM portfolio managers as to what they think corporate excellence looks like. Today we have the incredible opportunity to take a break from the world and the market events and explore this question in depth with some of the most inspiring minds and company leaders. And so it is
00:30 - 01:00 with great pleasure that we welcome you all. I am Shelpi Nanda and I am Patrick Duplaci. We will be your hosts for today and I must say Shelby there's a lot to look forward to and in particular that we get to share it with you the audience. I feel the exact same way Patrick and so we would like to extend an extra warm welcome to the thousands of people watching us via the live stream. It is our hope that today's
01:00 - 01:30 sessions and speakers will spark your imagination, inspire you and bring you some valuable insights to take home. We have three sessions lined up for you. In the first session, we'll hear directly from some of the best companies present with us here today. In the second session, we'll shift our focus to the investor perspective on what makes truly great companies stand out. And in our third session, we'll dive deeper
01:30 - 02:00 into the very important role leadership and corporate culture plays in creating extraordinary companies. So without any further ado, let's kick off our first session on great companies with our opening speaker. It gives me great pleasure to introduce Dean Erica James from the Wharton School, an organizational psychologist by training. Erica is a leading expert in crisis leadership and management strategy. In
02:00 - 02:30 addition to her academic work at Wharton, she also serves on the boards of Morgan Stanley, the Philadelphia Orchestra, and various other institutions that look to foster the education and advancement of women in business. Everybody, please join us in giving Erica a very warm welcome. Good morning or I think I should say
02:30 - 03:00 good afternoon. Uh I want to start by saying thank you to Nikolai. Thank you for bringing this incredible group of talented leaders together and thank you for inviting me to be a part of it. It goes without saying that we are living in an incredible time period. In these moments of uncertainty, it's easy to get distracted and thrown off course by all of the variables that we're surrounded by. But today, we have the
03:00 - 03:30 opportunity to come together to explore the underlying dynamics about what makes a company great. Over the course of the afternoon, you will hear how industry leaders leverage their brand, their culture, their innovation, their operations, and their people to dominate their respective fields. You'll learn what it takes to rise to the top, but more importantly to stay there, a feat that is becoming
03:30 - 04:00 increasingly difficult in today's environment of uncertainty and upheaval. The foundational elements that drive a company to succeed or fail have always fascinated me and fed my own scholarly pursuits analyzing how organizations and leaders respond to crisis. As a researcher, I've spent decades speaking with leaders about how they've navigated volatile, ambiguous, and unpredictable environments. And what I found is that the most successful
04:00 - 04:30 leaders and therefore the most successful companies were steadfast in the face of adversity. Meaning they didn't just hunker down and try to get back to normal. They really wanted to mobilize their networks, their knowledge, and their resources to make strategic and wise adjustments amid their crucible moment. Doing so allowed them to create a new
04:30 - 05:00 normal and set the standard in fundamental ways. In the end, they and their companies emerged stronger and on a path to growth. As a director, I've worked on behalf of organizations that span from the world's largest and most influential financial firms to leading cultural institutions and firms in the technology sector. And through those experiences, I've observed that top performing organizations embody adaptability and
05:00 - 05:30 strive for continuous improvement. You might remember the learning organization, which was a phrase and a concept popularized by Peter Seni in the late 1990s. It's the notion that companies should engage in experimentation and provide structures to actually learn from success and failure. And it that concept is highly relevant to the moment we find ourselves in today. Technological advances like artificial intelligence and the plethora
05:30 - 06:00 of political shifts around the world are fundamentally changing the way companies and societies operate. Companies therefore have to adopt a learning mindset because the ones that fail to learn, that fail to unlearn, or that fail to relearn will face a tremendous risk of extinction. As dean of the Wharton School, I'm fortunate to spend every day in a learning organization, both
06:00 - 06:30 figuratively and literally. I'm fortunate to be surrounded by incredible faculty who are vanguards of their fields and whose research influences the most pressing problems of society. Human trafficking, climate, the business model of the industrial prison context, not necessarily topics you would associate with the world's leading business school. And yet, the Wharton faculty are no strangers to what makes an idea, a leader, or a company capable of reaching
06:30 - 07:00 the highest echelons of success. And by serving our corporate clients through executive education, we're preparing today's leaders and challenges for challenges in the here and now. And through our innovative curricula such as leadership, artificial intelligence, and finance, we are preparing future leaders for what is currently unimaginable. So my life's work as a researcher, a leader, a board member has
07:00 - 07:30 led me to conclude that there are many, many paths to corporate success. And I have no doubt that today's discussions will uncover even more perspectives, present new business perspectives and unlock a world of possibilities. So I encourage you, I invite you all to soak up this time together, take in all of the knowledge, all of the insights on display with the leaders you will be introduced to today because the future belongs to those who are committed to learning faster than
07:30 - 08:00 the pace of change. Thank you. valuable insights. Our next leader leads one of the world's most influential financial institutions. David Solomon is the chairman and the CEO of the Goldman Sachs Group.
08:00 - 08:30 David's journey began in Goldman Sachs in 1999 as a partner. Over the years, he's taken on increasingly important roles from co-head of investment banking to president before stepping into the CEO position. Under his leadership, Goldman Sachs has continued to evolve while maintaining its position at the forefront of global finance. Please join me in welcoming David Solomon.
08:30 - 09:00 Thank you very much. Good afternoon everybody. I'm delighted to be here. Nikolai, thank you for having me. I I enjoyed the evening last night and and delighted to be in Oslo today. I've been asked to talk a little bit about culture at Goldman Sachs and on this theme of
09:00 - 09:30 durability of an enterprise. Goldman Sachs has been around for 156 years and I am incredibly proud to steward that organization, but it is certainly clear to to me and to the leadership of Goldman Sachs broadly that it's very unusual for a company to survive for 156 years. There aren't a lot of them. The culture of Goldman Sachs has
09:30 - 10:00 evolved over a long period of time. And as I think about how to articulate some aspects of it that might help you understand how we think about it at the firm, I'm reminded of a story that highlighted for me at a different stage in my career how important culture was in the durability of an organization. I was promoted to run investment banking in 2006. Before that time, I did not spend a lot
10:00 - 10:30 of time talking to outside investors. But when I was promoted, I started to go see investors to talk about that business, which is a very important business for the firm. I was in Boston meeting with a big shareholder of the firm, and he was drilling me on a number of different areas of how we were running the business. And I was listening very carefully as I heard,"Well, why aren't you doing this and you should be doing this and why aren't you doing that?" And after about 45 minutes, I said to him,
10:30 - 11:00 "I appreciate all the questions. Why do you own the stock? Why do you own Goldman Sachs?" And he looked at me and he said, "That's simple. I believe you have one of the most strong, enduring, differentiated cultures." And when you look at my five core holdings in my portfolio, they're all companies where I believe that to be true because a strong enduring culture leads to better relative performance over time. And I
11:00 - 11:30 never forgot that. And I went back and I thought a lot about some of the things that differentiate Goldman Sachs. So in the few minutes I have today, I wanted to point to a couple of things that I think our organization has gotten right over the years that have made a difference for us. First, we went public after 133 years in 19 99, 26 years ago. The leaders at the time did something that was different.
11:30 - 12:00 They didn't just go public. They went public, but said, "We're going to retain a partnership structure." At the time, everybody said, "Well, you can't do that anymore. You're no longer a partnership. You're a public company." But the leaders at the time said, "We're going to value this partnership because the partnership allows us to live to and collaboratively support the values of the firm." What are the four principal values that Goldman Sachs strives to live to every day? Client service, partnership,
12:00 - 12:30 integrity, and excellence. And there was a view that if we took in our population, at the time that we went public, it was 13,000 people. in that 13,000 people and we identified the top one one and a half% as true leaders to carry the firm forward. If we could retain that, the firm could be a differentiated and more powerful organization. So over the last 26 years, we've retained a partnership. It's not a pure economic partnership like a
12:30 - 13:00 traditional partnership in a law firm or what Goldman Sachs was before. But every two years we elect new partners and those partners which are approximately 1% of the firm lead this organization forward. We take it very seriously. There's a collaborative nature. It's about subjugating your own interest for the interest of the whole and we work hard to protect it and invest in it. What's an obvious way to see the investment that goes into it is to look
13:00 - 13:30 at the process we use to select those partners every two years. There would be lots of ways that you could do this, but we've developed a process that really goes back to when it was a true partnership. We've developed a, for a lack of a better term, unique process of what we call crossruffing. What is cross roughing? We organize a group of partners to go out and talk to all the existing partners of who they want to bring up into the partnership.
13:30 - 14:00 And so last fall, as we do every two years, a group of 40 partners went out and interviewed 360 existing partners and did over a,020 to 30 minute interviews to basically look at approximately 160 candidates to ultimately choose 95 to enter this partnership. And despite the fact that we're a public company, the aspirational nature of participating in this partnership remains incredibly high and
14:00 - 14:30 the effort that goes into these selections is incredibly rigorous. That's an investment and a representation of how important we as a firm take this and I think it's one of the reasons why this is perpetuated for 26 years as a public company. I can't think of another public firm that has something that looks quite like this, but it works for us and we're going to continue to invest in it because at the end of the day, the 460 partners that we now have of Goldman Sachs wake every day
14:30 - 15:00 feeling like they have a leadership ownership interest in doing the right thing to drive the firm forward. Now, when you talk about culture and how culture sustains itself, one of the things I've learned over time is you can never take it for granted and you have to constantly invest and reinvest. The pandemic was a very difficult time for all of us. It was a particularly difficult time for professional services businesses and
15:00 - 15:30 Goldman Sachs is a professional services business. At the end of the day, our business thrives on people being together. Our business thrives on apprenticeship. One of the things that's unique about Goldman Sachs, we have 47,000 employees. 50% of them are in their 20s. The culture and the ecosystem of the firm is that young people come to the firm to learn, to be mentored, to be groomed. A small slice of them stay and develop their careers. The rest of them go out in the world to do other things.
15:30 - 16:00 That is our model. Pandemic very tough on that. And just culturally our firm is one of constant open transparent dialogue, collaboration, getting different views. You know, of course on video you can do some of that, but it's not the same. As we were coming out of the pandemic, we felt that the culture of the firm had lost a step. And so a group of us as leaders sat down and said, "How can we reinvest? How can we
16:00 - 16:30 reinvigorate? How can we take an action that will send a message that we're deeply committed at a time like this to strengthening our culture? So, we came up with a program that we called the cultural stewards program. And we decided that we were going to take all the partners of the firm. We were going to put them in cohorts of 25 people. And over the course of a 15-month period of time, we were going to force every cohort to go offsite for two days to
16:30 - 17:00 talk about the importance of the culture, their responsibility in stewarding it, and what were the actions that they could take to reinvigorate it and continue it. And so over a 15-month period of time, we set out the partners to do that. And I made a commitment to go have dinner, a two to three hour dinner with every single one of those cohorts all over the world. And I did that not so I could communicate my strong passion for our culture, but
17:00 - 17:30 rather I could listen to every single one of them communicate to me as the leader of the firm why they thought it was important and what they thought needed to be done to continue to strengthen it going forward. It was a difficult 15 months from a travel perspective, but it was one of the most enriching things I personally have done during my seven years as CEO. The learnings I took away, but the reinvigoration, the re-energizing of our
17:30 - 18:00 culture permeated through the organization and this army of 400 partners that went through this program loved it. and they went out as an army into the firm to the other 45,000 employees and basically took on their responsibility to talk about and support that culture and invest in it. And so it was a great example of taking a conscious effort to say this is important. We're going to take time and we're going to arm our leaders to go out
18:00 - 18:30 and push that down into the organization. And it worked incredibly incredibly effectively for us for our organization. Another important part of our culture that we have to live with and think about and worry about every day is risk management. We are at the end of the day a financial institution and we do have a 1.7 to$ 1.8 trillion balance sheet and we are a risk-taking business. We take risk, we respond to risk, we have to manage risk.
18:30 - 19:00 There are all different ways that organizations try to deal with the risk that they take on. But for us, the collaboration, transparency, and kind of intellectual rigor around which we try to develop a culture of risk management in every daily interaction has been paramount to trying to make better decisions rather than bad ones time and time again. Now, of course, if you want to risk business,
19:00 - 19:30 you're going to make mistakes. You're going to make bad decisions. The question is, when you make a mistake, how do you respond to it? How do you create a culture where people run to problems instead of looking to point others towards problems? How do you create a culture where everybody believes that if they see something that's not right, they believe it's their inherent responsibility to elevate it, shed more transparency on it, and make people more aware of it. You do that by every day thinking about
19:30 - 20:00 those things, talking about those things, incentivizing those things, and rewarding those things. And our culture of risk management has been deeply, deeply important to our firm's success over a long period of time. One of the things that all of us at Goldman Sachs are humbled by is the fact that we've been around for 156 years. I keep in my office a copy of the perspectus for the Ford IPO which was in the 1950s. One of the reasons I keep it and I look at it
20:00 - 20:30 periodically is because if you look at that perspectus, okay, there are very few companies on that perspectus that still exist today. The financial services industry is filled with companies that come and go. In fact, even more recent to that point, if you go look at the Goldman Sachs perspectus, when Goldman Sachs went public 26 years ago, there were 13 companies on the cover, I believe only four of them still exist today, one being Goldman Sachs. So, it's a very dynamic industry and at
20:30 - 21:00 any point in time, if you don't have the right culture of risk management, your viability is threatened. And so, that's why we spend a lot of time focusing on that. The last thing I want to touch on from a cultural perspective is this foundational value of client service. We are a client business. Our business rises and falls with the experience our clients have when they interact with the firm. If we don't wake
21:00 - 21:30 up every day trying to really think about how we can enhance the experience our clients have with us, we will not strengthen and grow our business. One of the things we're incredibly proud of and I think it's a great lesson in trying to simplify messages to get a result to incentivize a result is a program that we launched on October 1st, 2018, my first day as CEO that is called
21:30 - 22:00 one Goldman Sachs. This was an experiment that in the months leading up to this leadership team starting in October 2018, we said that we wanted to find a way to really improve the client experience our clients were having at the firm. And we said one of the things that was happening was our clients were getting bigger and more complex and they were touching the firm in lots of different ways. So we said let's do an experiment. Let's take the 30 largest, most
22:00 - 22:30 important clients of the firm and let's put them in a pilot and let's call that pilot one Goldman Sachs and let's announce that we're going to incentivize the organiza incentivize the organization to improve the experience of those 30 clients and let's see what happens. Well, the funny thing about one Goldman Sachs is you don't really need to put a paragraph underneath it for everybody to know what it means. It's a very simple statement. one Goldman Sachs
22:30 - 23:00 and everybody had their own interpretation of what that meant and how to execute on it. But the result was extraordinary. The organization kind of got behind it. Everybody wanted to participate and so now one Goldman Sachs has become a cultural operating ethos. The program for clients that started with 30 now has 130 clients that are a part of the program. But the whole firm inside and out operationally with all clients whether they're in that program
23:00 - 23:30 technically or not thinks about delivering a one Goldman Sachs coordinate experience that always starts with how does the client experience us and how can we make it better. It's been hugely successful and I think it's a great example of if you want cultural change, create a message that everyone can repeat over and over again, that everybody can grab on to and where people can understand clear, definable results.
23:30 - 24:00 So what I've tried to do in 10 minutes is give you a couple examples of how passionate we are in using the culture of the firm, these four fundamental values to protect and enhance our business. I think it's hugely important. I think without that focus, our business would not be as strong as a business it is as it is. But we do not take it for granted and we wake up every day knowing that we have to continue to do that if we want to sustain Goldman Sachs for
24:00 - 24:30 generations ahead. Thank you all very much and have a great day. Thank you David. That was extremely interesting. Our next speaker leads one of the world's most innovative healthcare companies. L Furugard Yurgensen is president and CEO of Nova Nordisk where he's worked for over 30
24:30 - 25:00 years of his career. Under his guidance, Nova Nordisk has transformed health care for millions of people living with diabetes and obesity. Their breakthrough treatments are not only changing lives, they are redefining what we believe is possible in these critical areas of healthcare. The stage is yours,
25:00 - 25:30 L. Thank you very much for that kind introduction and also uh thank you for the opportunity to be here today. Uh it's a great honor. Um we're talking about what makes great companies. Obviously you would all feel that return to shareholders is one. Uh I would claim contribution to society is another. And for a company like Noah Nordisk and all farm tool companies that is linked to innovation and that's what will be the topic of uh of my speech today. We
25:30 - 26:00 typically look at companies uh at a snapshot and assess a company. But when it comes to innovation in our sector, these are actually journeys that takes 10, 20, 30 years. And as was mentioned, my speech will be built on the more than 30 years of experience uh I have from Noisk. I'll start by talking a bit to uh what are some of the choice you can make when it comes to uh innovation strategy uh
26:00 - 26:30 because strategy is about making choice and you cannot be everything for everybody. So you need to make some choice to build uh deep uh strength and then I'll give a few examples of how we have applied that in some real uh innovation uh programs. So starting first on the innovation strategy uh for me that's linked to having a clear purpose an opportunity to to address some real unmet need in society and then you have to figure out
26:30 - 27:00 how do you address that purpose and uh at noon noise we are very keen on making some selective choice about some core capabilities where we still where we develop distinct capabilities with the eye to be the best or among the say few best companies in the world within that narrow area. So if you unfold purpose first the purpose of noises is to drive change to defeat serious chronic diseases. So
27:00 - 27:30 there's a chronic disease part and there's a drive change part. If you look at healthare systems today they are typically designed for acute care. I typically say that the best way to enter the healthcare system is to arrive in an ambulance with know a lot of lights around you because then the whole system gets in effect in a very effective way right away. So that's how we designed healthcare. The reality today is that most burdens uh to the healthare system
27:30 - 28:00 come from chronic diseases, people living with diabetes, cardiovascular disease, obesity etc. And these are complex diseases multidisciplinary in terms of how they are treated and the systems are not designed for that. So in most countries the the state of chronic disease is actually jeopardizing the longevity of healthare systems and that is the exact purpose that we're trying to address uh to take the burden of the healthcare system and of course strength the health
28:00 - 28:30 resilient for the individual citizens. The driving change uh we also take very seriously. Obviously our largest contribution is the innovation we make but we're also focused on preventing the diseases we serve. So how can we organize large cities in a way where we prevent type 2 diabetes, we prevent obesity uh to create capacity in the healthare system to actually pay for the products we come up with. And if the system is challenged in doing that today uh prevention is as important as coming
28:30 - 29:00 up with innovation. So that was our purpose turning to uh core capabilities. Uh we have a painful experience in innovation that has taught us that when we actually uh make the clear choice, stay within our core capabilities, we are more likely to succeed than when we are tempted by the latest and the greatest innovation and chase some new technology in a disease area we do not understand
29:00 - 29:30 that well. So over the years we have focused a lot on working with the molecules in the areas we are in and building leading technologies to do that. So when it comes to to protein engineering taking an insulin molecule taking a GP1 molecule or another large biological molecule being able to modify that to improve the pharmaceutical benefits of that we are among the leading companies uh in doing that. So we have a very simple strategic
29:30 - 30:00 innovation grid where on one axis we have technologies. So a select few technologies we master really really well and then we apply those up against a few set of diseases, diabetes, uh you know a 100 year commitment and then we have based on adjacency thinking gone into obesity, cardiovascular disease and a few other diseases that are linked to that whole cardium metabolic space and you can say
30:00 - 30:30 the same in uh a few rare diseases where we also had unique capabilities. So a very tight strategic innovation map where we can build strength and it actually also leads to synergies across our value chain where those capabilities lend itself for uh synergy across that value chain. Now that sounds maybe a bit tight and based on Davy's comment I'll also bring in culture uh because we do allow for a bit of say experimentation and I have to
30:30 - 31:00 admit that while this grid is really good at guiding our researchers uh behind most products there's actually a very stubborn researcher that divi that decided to break some of the rules on the way uh to uh a bit go against what management thought was the right uh thing to do. And if you think about uh our whole JL per one venture which I'll talk a bit about in a in a minute that came after seven years of success in insulin. So you can imagine when
31:00 - 31:30 somebody suggested let's focus on something else most of management felt maybe that was not a a good idea. I would say however that it was driving against the same purpose the same unmet need and it was leveraging the same set of core capabilities. So it was actually on strategy I have to say. So leaving uh a bit innovation strategy and then going through some of the examples. Uh I already started on GLP1 glucagon like peptide one. This is
31:30 - 32:00 the molecule behind uh say the strong growth of no noise right now. Uh it's a natural hormone that all of us have in our body right now. It helps regulate your glucose level after lunch. It also has a lot of other additional benefits which creates it creates one of the biggest opportunities in terms of addressing many of these cardabolic diseases. The natural gap one you have in your body if you extracted that and want to use that a medicine it doesn't
32:00 - 32:30 work because it only lasts for very very short time. So our bodies are designed to produce it all the time. Uh so from a research point of view it doesn't work as a medicine because if you take it uh somehow uh it would last only for a few seconds. So that's where our core capabilities came in. So the protein engineering modifying first to make it last for one day so you can make it a daily injection and then continue the innovation game to make it a once
32:30 - 33:00 weekly. So a weekly injection with even improved pharmaceutical benefits and uh also safety benefits and also the quest to make it a tablet which was from a textbook point of view impossible. So if you ask any scientist if you take a protein formulated into a tablet put it in the stomach will that be absorbed into the bloodstream? People say no because the enzymes in your stomach that just broke down the steak you had will
33:00 - 33:30 also kill this tablet because it's a protein and enzymes will kill it. So uh an example of how our core capabilities come into play is what you then do with that. How can you actually make a unique formulation uh together with a partnership with a biotech company that creates a local pH environment that actually uh you know fenders off the enzymes so there's time for the GLP1 to be released go through the membrane and into the bloodstream. So that was a major revolution and that is now in the
33:30 - 34:00 market for type two diabetes and we have submitted it for approval in obesity in the US. So the J1 journey started in in diabetes. We saw that you also lose weight. Uh we were worried about actually pursuing the obesity indication because back then uh development of medicines for obesity was a graveyard of failed interventions. Some of the products even turned out to be dangerous and were taken off the market. So we had this fantastic hope in type two diabetes
34:00 - 34:30 but we saw that patients also lose lost weight. So we felt we actually had to study that and was actually a bit say a decision made uh uh from a say a respect for patients because if if there was a weight loss observed we knew that it would be used for weight loss. So we had to study it to show what was actually the safety of that. So it was actually a risk taken to support patient safety and then uh I think as we all know it turns
34:30 - 35:00 into a fantastic commercial opportunity because it actually turned out to be a very very attractive weight loss agent and we have uh down the road also shown that it reduces risk of cardascular disease, kidney disease, uh liver disease and later this year we'll have data on potential use in Alzheimer's disease. So the quest to continue invasion in J1 continues. We have more great ideas and we also now combining it with other
35:00 - 35:30 biologies bi biology we believe lot is is is amalain. So we believe it's complimentary to GLP1 and uh we have late stage clinical trials going on there. So the journey continues. Another example of how the core capabilities and the purpose comes into play is weekly insulin. So no noise is a 100 year history of making insulins as we all know and uh when you live with type one diabetes or type two diabetes you need to inject insulins uh on a
35:30 - 36:00 regular basis because you no longer produce insulin or you no longer produce enough insulin and that takes place once a day or several times a day and obviously it's a big burden for for the patients because you have to combine that with constant glucose monitoring. So would it be possible to make a weekly insulin that would take the burden away from these daily treatments? And again, most of the key opinion leaders, the clinicians we work with say that's impossible because who would like to inject insulin that stays for a week because that's dangerous. Uh you can get
36:00 - 36:30 too low glucose level, it can kill you. Um so we said, well, let's again work a bit with this insulin molecule. How can we leverage our protein engineering capabilities? And we actually made it. Uh we're now launching the first the world's first weekly insulin where people with type two diabetes goes from 365 injections to 52. We proved that it regulates glucose level as well as daily injections and even at a very attractive
36:30 - 37:00 safety profile. So there are many of these uh impossibles that when you have a strong purpose in terms of serving a defined set of of patients where the unmet needs and you have the deepest capability in the world in a narrow field you can overcome uh conventional uh barriers. The next quest when it comes to insulin is actually developing a glucose sensitive insulin. Um, when you live with diabetes, wouldn't it be fantastic to get a
37:00 - 37:30 insulin injected that's actually glucose sensitive? So, when you eat, it will switch on, bring the glucose level down, and when it's brought down, it switches off. So, a smart insulin. Uh, I have parents writing to me, uh, I have a particular parent who already lost one child because of a very, very difficult to control type 1 diabetes. and he's really really interested in our clinical development of this because he has another child with type 1 diabetes. So any buffering effect can be very very important for
37:30 - 38:00 these patients. We are proven that we can make the switch work. So it start releasing insulin and it stops releasing insulin uh when the glucose level is high. It's still too shortlived to be a drug. But going back to the first example I gave with GP1, we we solve that down the road. So uh I start blossoming when I talk about it because this is very emotional for these uh patients. So I hope I made the point that uh innovation is uh essential for our industry. Uh I took over 7 and a
38:00 - 38:30 half years ago and during this tenure I've seen the advent of obesity market opening up uh being the only company more or less uh our share price eight doubling and then coming a bit down. It's still a three times up since I since I took over. So clearly there's link between innovation and shareholder return. I hope I also made the point that by having guidance by clear purpose addressing unmet need for patient and society and also having a deep focus on
38:30 - 39:00 a set of core capabilities where you're distinct uh compared to others uh you have a a better likelihood of success than others. And uh by saying true to that I'm quite uh convinced that no one noise will be a successful uh company uh for the future also and hopefully be uh one of the best companies for the future. Thank you very much for
39:00 - 39:30 listening. Thank you so much Lash. Our next speaker leads a company that moves over 2.4 billion people each day. Well, not literally, of course, but as the chair, CEO, and president of Utis, Judy Marx oversees one of the world's premier manufacturers of elevators and escalators. In a world that craves
39:30 - 40:00 connection, Utus has been connecting people and places for over 170 years. Since joining in 2017, Judy has successfully led the company through its spin-off in 2020 while continuing to build on its legacy of innovation. Please join me in welcoming Judy Marks to the stage.
40:00 - 40:30 Good afternoon and and thank you Nikolai. It's a privilege to be here. You heard David speak about culture. You heard Lars speak about innovation. They are certainly foundational at Otis. But what I want to share with you today is a little bit about operational excellence and discipline. To do that, let me provide some context on who we are. Uh, as Shipra said, in September, we'll celebrate our 172nd anniversary of a
40:30 - 41:00 company, a company whose founder, Elijah Otis, invented the safety break that allowed all of us to feel safe riding up and down. It allowed cities not just to emerge, but to grow and thrive. And here I am today to share with you how we do that as the industry leader for the past almost 172 years. Building on a spirit
41:00 - 41:30 of innovation, but most importantly building on operational discipline, very much discipline every day in 200 countries and territories around the world. How do we do that? We do that through a team of 72,000 colleagues, of which 44,000 are field professionals. Field professionals who are out installing, but most importantly servicing our product and keeping the world moving. 2.4 billion people we
41:30 - 42:00 touch every day. And I can't control or train any one of them. We have to have a quality product, a safe product because we are in the life safety business. You trust us every time you use our product in an autonomous manner every day without thinking. A ubiquitous product and a ubiquitous service that we don't care what the building purpose is. It may be your residence. It may be a hospital. It may be a school. It may be an office building. But for us, it's all
42:00 - 42:30 about completing that journey for you safely. Every day somewhere in the world we are doing 10,000 equipment installations. And every day somewhere in the world we are doing 200,000 service calls. Little higher yesterday with Spain and Portugal. Crisis management. Crisis management. Um, but think about what that takes in your homes, in your
42:30 - 43:00 businesses, in your travel, in infrastructure to be able to repeatably provide that with a workforce of 44,000 field professionals who work independently, who represent us by wearing our our brand, our iconic brand right over their heart on their uniforms, and who do this universally through the same processes and through the application of technology a little different than Elijah Otis used where we
43:00 - 43:30 continuously innovate and disrupt ourselves but not our processes not our mission and that's what's important to us. So how do we do this? We do this through uh a very focused business model. You'll rep you'll recognize a flywheel. There's probably no other industry or certainly no other business that lives this religiously every day. We show up every morning focused. We show up and that's
43:30 - 44:00 everywhere in the world except sanctioned countries. We show up focus to make sure the world moves. To do that, it's all about our service engine. We sell new equipment to be able to secure the service for 15 or 20 years. We then modernize that equipment because while an elevator will move up and down and an escalator will move diagonally and a moving walkway will go this way, they never leave the building. So we have to come back and do technology
44:00 - 44:30 infusions. We have to come back and replace elevators in live buildings beyond the 10,000 construction projects we're doing every day. And we have to do that through proven processes, through independent workforces who represent us and who have to understand our purpose. So we do innovate, absolutely innovate in products and in services, but we sell that new equipment. We install it in buildings throughout the world. And then we have the ability
44:30 - 45:00 again to maintain it on a scheduled maintenance. We're in a regulated industry. to service it and repair it when it breaks, a break fix business, which we also do, and then as the cycle goes to modernize it and keep it in our portfolio. There are 22 million elevators and escalators in use in this world. We service 2.4 million of those. We are the largest service provider anywhere. Of those 2.4 4 million when we spun in April of 2020 in the midst of
45:00 - 45:30 the pandemic. And being an essential service, we were just under two million units. We are growing at about a 100,000 units every year, which had been stagnant when we were part of our former parent. We were part of a large conglomerate where operational excellence was important, but it wasn't the critical motivator. where our colleagues were humbly proud, but they didn't understand that it's all about
45:30 - 46:00 the service flywheel that allows us to maintain that customer centricity, that customer excellence, and that ability to prove ourselves each and every day with each and every service call. You don't think about our product, and we're happy you don't think about it typically until there's an issue. And then whether you're entrapped or you don't have use, you think about us. So now the application of technology and being more customer centric is about
46:00 - 46:30 applying IoT. We've got a million of our 2.4 million units connected. Huge data lake, incredible AI that today allows us to do preventive maintenance. So we're when we're doing schedule maintenance, we can repair something before it breaks and impacts you as a customer or the riding public. And that will lead to prognostics as well. We have incredible traffic algorithms that use predictive AI, but we will balance AI with the ethics of AI
46:30 - 47:00 because your life safety is involved. We will use it in every part of our business because it is revolutionary. But we will also balance making sure we don't have one of our field professionals on the top of a car maintaining it and making sure you're not in it when we're doing it. So that's the balance that we hold. This flywheel has provided really incredible results to date because everyone's focused on it. We're a service company. Of course, we're an industrial. We have 17 manufacturing plants. We manufacture
47:00 - 47:30 local for local. That's just that's just table stakes as an industrial. But a service company and as culture, we focus on our we call them absolutes. We don't call them values. We call them absolutes because if you don't follow them, you won't be part of our company. First is safety. We work at heights. We work in buildings. As you can imagine, in construction, as well as in service, everyone goes home safe every night. Zero is the only acceptable answer for fatalities or serious
47:30 - 48:00 incidents. We focus on ethics because that is what has made our company a quality lasting company. And we focus on quality because you depend on us for reliability and for safety. So, as we do all this, the flywheel works its magic. And in our business today, a little over 60% of our revenue comes from service, as you would imagine, but over 90% of our profits. You can think of a razor razor blade where we make money on the razor
48:00 - 48:30 as well. So, our new equipment business is profitable, but nowhere near the profit of our service business. And you may ask, is this sustainable after 172 years? Have you innovated enough? How have you disrupted enough? Does your operational cadence get you to tomorrow to 2030 to 2050? I'm here to say yes because we consistently reinvent ourselves. We consistently apply technology so that our mechanics will have the best
48:30 - 49:00 technologies. It's not a a grease and lube and and a mechanical structure anymore. It's about the passenger experience. It's about being customer centric and again having preventive information to help you as you go. What we've seen is is really that incredible focus and discipline gives us our retention rate which is in the 92 to 93% level for customers. They stay with us day after day, year after year and they have that choice in our contract
49:00 - 49:30 structure. And then when we hit about 15 or 20 years, the flywheel starts all over again because then we refurbish and modernize the equipment in a live building. And so many other companies have to go adjacent. Everyone has to innovate. We don't need to do that. We have enough organic growth in front of us. Of the 22 million elevators in this world, over 8 million are over 20 years old and in need of refreshment, in need of potentially full full replacement.
49:30 - 50:00 that market will be larger than these 10,000 construction jobs we're doing every day uh before the end of the decade. So we have organic growth in front of us in our service business which is maintenance and repair and this modernization and refurbishment business will be an evergreen opportunity because by the time we finish this cycle it'll be time for another cycle to be able to keep buildings in the asbuilt world moving. the results since since we
50:00 - 50:30 became independent since we became focused uh when I joined Otis in late 2017 to to turn the business to be prepare for this even though the board decision hadn't been made it was being discussed we had a few activists in the stock we were in our seventh year of no earnings growth as part of a conglomerate would never have survived as an independent company 2018 was our eighth year by 2019 19. We turned the
50:30 - 51:00 business. We've got all of our colleagues focused. We're up significantly in terms of topline, but we're steady. We're we're not the we're not the three times growth and and we're steady. Operational excellence provides for steady results. Our uh our margins are up 220 basis points in the five years since we've spun. We have had service operating profit growth in all 21 quarters and we have
51:00 - 51:30 had operating profit growth all five years. And you can see the results when you have discipline a simple but elegant business model I like to call it which everyone in the company understands and they understand our purpose. So our mission very simply is to be a world-class customer- centric serviceoriented business. Our vision is we give people freedom to connect and thrive in a taller faster smarter world. The world
51:30 - 52:00 is getting faster. It's certainly getting smarter with AI. It's certainly getting taller with urbanization as it continues. And we are well positioned as a foundational company, as a foundational disciplined industrial company, a service company to continue to provide the returns. Over this same period, we have taken everyone, every dollar primarily that we have generated
52:00 - 52:30 and returned $6 billion of cash to our shareholders either through dividends or share repurchases. I'm proud of our purpose. I'm proud of who we are and I'm proud that we touch every one of you every day of your life and keep the world moving. Thank you very much. Thank you, Judy, for some very interesting insights. The next company we're going
52:30 - 53:00 to hear from is Ferrari. Perhaps the most iconic brand in cars, renowned for its engineering excellence, its design, and not least, its racing heritage. Our next speaker became CEO in 2021 after a successful career working in micro electronics and sensor technology. As a guest on the podcast in Good Company, he told Nikolai Tongan, "Ferrari is not a car, it is a dream." Please join me in
53:00 - 53:30 welcoming Mr. Benedetto Vigna, the CEO of Ferrari, and Nikolai Tongan, our CEO at NBIM. Well, I have to say this is just so much fun. So, I heard um I heard that uh the founder of Ferrari, Enzo Ferrari, once uh was stuck in a lift and and and lost
53:30 - 54:00 a race. Not obvious. Not obvious. Not obvious. He lost the race and never took a lift again. That's true. You studied very well yesterday. Yeah, it's true. Absolutely. It was in Piscara. So um uh Benedto, you say that uh Ferrari is not a car, it's a dream. And um in 1 hour and 35 minutes, you will bring out a new dream. Yeah. Because you have a car launch today. Two dreams with two car, two special version of a car coming out today. Yeah. So good timing
54:00 - 54:30 with this seminar. Yeah, very good. Uh you should have been waiting and we couldn't show you. But we can't show any pictures because it's like 1 hour and 35 minutes early. But what can you tell us about these two new cars? Look, we have innovation is very key. I was listening to the presentation of David and Judy. Innovation is key and uh this year is very important for us because we will have six new model that will propose to the world and the first two will be announced in a few minutes.
54:30 - 55:00 So if you had to if you had to say something about them four wheels one steering wheel some aluminum some glass. No you you you have to wait because we had a meeting with our with journalist everything is under embargo. So if I I say something you know but I can tell you that is special version of hybrid car and it will be I drove it several times it's very
55:00 - 55:30 funny I have a lot of client one of them was texting me now can I see something can I see something I said you have to wait also Nikolai is asking something you have to wait a little bit I cannot make a friends. Okay. Uh what uh just coming back to uh to Patrick's comment. I mean what is Ferrari in in your mind? What what is it? Ferrari I mean we have been working in the last years since I I came over there because Ferrari was missing if you
55:30 - 56:00 want a formal brand bible. So we clarified the the purpose of Ferrari and this was done listening to all the people in the company and we the purpose of our company is very simple is the following. We audaciously redefine the limit of possible. I as you said I mean I was working in a in a different world in a different space for 25 years in a space we were we were making I was working for
56:00 - 56:30 a company making chips and that world is moving at very high pace very high pace when you go in a company such as Ferrari that is a luxury company you see something that is really unique is the human dimension the human dimension the passion the sense of belonging that you see in people in Ferrari but also all the stakeholders and the people around Ferrari is very unique. So I like to say that Ferrari is the glue around the people putting them for
56:30 - 57:00 the people pushing them toward redefinition of of what is possible that that's but I mean in your previous job where you do microchips you reinvent uh yourself every 18 24 months or whatever new new models and so on. Now, with Ferrari, what are the what are the things that you do reinvent and what are the things that need to be the same? I mean, you got some you got some iconic things, right? The yellow clock in the middle, all that kind of stuff. Yeah, which of course I don't know so much
57:00 - 57:30 about, but you know much more a little bit. No, look, I I can tell you something. I share with the team after the capital market day. It was 16th June 22 when we had capital market day. The day after we did deployment in all the company and I was with the the leader the management of the company and I said look you believe you are fast I told them I told them you are not fast silence a lot of said you are fast yes if you compare yourself with automotive companies you are fast but if
57:30 - 58:00 you compare with high-tech companies you are not fast and then I told them three things one the speed of automotive companies is one the speed of Ferrari is 10 the speed of high-tech is 100. Do we need as a company to go to 100? No. Because high-tech companies don't care about the past. The past in high-tech company is a burden. In a luxury company, the past is a fundamental ingredient. So where we
58:00 - 58:30 are aiming to be as a company for me the indicator is 30 35 where we are in terms of speed after three years and a half I would say around 18 20. So what does it mean? There are opportunities for us to improve on the operational efficiency. There are opportunities for us to improve on on innovation. The company is doing relatively well. But I always push the team to stay really with the four wheels on the ground. Nowadays more than
58:30 - 59:00 ever it's important to be prudent to understand what are the areas where you can improve. So it tech company have a different mindset, different culture. The company I don't know maybe some of you have been working over there. It is a speed for the sake of speed because otherwise you don't you lose the you know you lose the grip in a in in a luxury company does not make sense. So you would destroy yourself. So where in the company where
59:00 - 59:30 in the company do you need speed? I think that there are a speed on speed we need to achieve by deleting something that is not bringing value to client that is important. I think there are different areas. It goes in in production. It goes on the on the the marketing. It goes in the communication. I mean there are different areas. I think no company is perfect. Nobody will no company will be ever perfect. It's always an improving process. I think
59:30 - 60:00 that we have to to be conscious of this and we have to work on that. Have a you know humility I would say. Absolutely. How have you changed the global culture since you came in? What are the things you've changed? But what I understand I changed if I listen to what people tell me is that I am and this is not a critic at all for all the people before me because each leadership style is good I think for each historical moment. I think that uh the attention of of the company to employee has been always there. I have to say that one of the
60:00 - 60:30 reason why also I selected to join Ferrari is because attention of the company to the grow and development of employee. I remember when I had the discussion with the board member and I saw the program and investment on the growth employee that that was for me an important decide I mean factor. There is also another point is the uh how would you say there's mutual respect is there I think two things I brought one is more open communication
60:30 - 61:00 I don't I I spend I would say 1% of my time in my office I am always with people and I I talk with all the people across different organizational level I mean you actually like people right I yeah I like people because I think that's the easiest and the best way to learn you can read books. But the point is that uh takes more time and then how many how many how many people do you speak how many people you speak to
61:00 - 61:30 because I generally because I generally speak generally speak I don't think we speak with enough people. I agree with you. But look, I I I had the luck to have I was working for this company I was telling you before and the CEO that now is 89 years old before stepping in the role, I call it many friends, young CEO and old CEO, old in the role I mean and I got some advices and this CEO, the previous CEO of the company I was working for, three CEO before he told me talk to the people onetoone. So when I
61:30 - 62:00 get in the company I asked my assistant to arrange 300 interview one to one to be to do in uh let's say 90 days and that's what I did. I mean all levels of all levels I think why why is that important? Because you need to see the reality from different angle. If you want to have a clear picture of the reality you need to see from different angles. I mean if you see an object like this is the same from your point of view but the company is not so symmetric. It's very asymmetric. So you needed to have a different point
62:00 - 62:30 of view from different people and for me it was very easy. I mean without their input without really their insight I don't think I would have been able to to lead the company with the team in this way. How would you if you were to describe your management style? What would you say? I would say that I have a very direct I am maybe scientific in the sense that uh I go in a meeting and
62:30 - 63:00 I like to hear what the people tell me. If I have my point of view and they demonstrate my point of view is wrong, I I don't have any problem to change it. I would say that this is the feature that the people uh at least do to what they tell me they like. They don't you know I would say more really scientific I do not enter meeting with my point of view that is already nailed down carved out I mean I would like to I like
63:00 - 63:30 to to dance with the people allow me to say so I have my point of view your point of view let's discuss let's see which are the fact you're a good dancer my wife is telling me I'm not good okay um How do you get your ideas across in the organization? How do I get ideas? Because you can sit at the top and you can have great ideas, right? But I mean, how do you get uh everybody in your direction? When you have a when you have
63:30 - 64:00 people, okay, when you have people and you have a relation with those people, you discuss also about business most of all, most importantly, you discuss about them as people. So I know what the people do. I know for example Yakopo is the son of a a guy that was born a few weeks ago. So I keep asking about Yakopo or I keep asking what the son or the daughter is doing. This kind is bringing some link so they don't see me far away.
64:00 - 64:30 They see me close. So but does it help? So you all live in the same village, right? I mean Marlo is that that is a big advantage. No doubt that is a big advantage. But I can tell you it's not a village by the way. Yeah. Don't offend please. No look but when I was also in the other company my people were spread over 21 location and I can tell you that I have the same link that I have Marinelo Marinelo is easier because we are on the same place you're right but also when I was in the previous company I was
64:30 - 65:00 traveling like hell like some colleague here in the room I you can have the same kind of relation I have some friends in some in Czech Republic I'm regular in touch but do you think but do you think being Italian is something different. I mean is it more there is more uh you know focus on family, friends, uh food of course you are very good at you're very good at cutting the reindeer by the way. Um but do you think there is this focus on family and which makes it into
65:00 - 65:30 I I don't think is a matter I have a lot of friends I see a lot of business people from all over the world but they are very good. So, so what you the only things you can say that maybe some some for some Italians especially from south of Italy they may have the advantage to be a little bit more direct but I don't know not more direct more in the human relation more easy to to start I mean
65:30 - 66:00 but where where do you want what are you trying to change now at Ferrari what part of the culture are you working on uh I'm working on two dimension. One, I want to find a way to increase this speed because I still need the 12 points to go from 18 to 30. I think that uh I am identifying together with the team some areas that it makes sense for us to delete because they do not add value. So this is if you want on the process side on the on the on the
66:00 - 66:30 client side I think that we start we need like like I say we need to expand beyond the classical you know we have a lot of repeaters that is good we the team also so you mean repeaters repeat client that are buying the same the same client that are buying cars so they are around 75% we have your biggest Norwegian client in the audience today thank you for your trust you I would like no I think that we need also to
66:30 - 67:00 expand the client base we are doing good progress because 40% of new client are younger than 40 years and uh but I think there is still opportunity here and I think we need to do some progress also in the experience we provide to our client because in a luxury company the product is important but also the experience is very important so this is another dimension what do what do you mean by that look we're organizing regularly special event special experience on track on road with the
67:00 - 67:30 client. In the next few weeks we will have client that will join all together in Spain or in Patagonia driving the Ferrari. But we will also experience people that are fun of driving. They buy their racing uh cars and they're fun of driving in um on the track. So this is the experience that we want to bring on the track on the on the client. Mhm. So um last question. What do you um where do you see where do you think Ferrari will be in 10 years time?
67:30 - 68:00 What I think uh what I want the Ferrari to be is a company that is faster that is uh continues to be more and more open where uh really the mutual respect stays there as a value where we listen and we anticipate we continue to anticipate which are the product the client is willing to to have from us. So I would like that we continue to do and we improve we keep improving in
68:00 - 68:30 delivering emotion-driven innovation. No technology push no market pull emotion-driven innovation because only in that way you make a difference. If you wait too much or if you push the technology is not innovation it's cutting you know copy and paste and you have said you don't want to have too many screens. No why there are a couple of them already. Why don't why don't you want to have too many screens in a Ferrari? Look, I coming from semiconductor companies, I know that uh what is useful, what is not useful in a car, what is useful for the client, what
68:30 - 69:00 is useful for a supplier. I think that screen are very much useful for the supplier more than for the client. Yeah. And you think you are in a Ferrari to drive not to watch TV. I believe Ferrari is a car that people like to drive. It's not a sofa on wheel. is not a mobile phone on for is not a data center on for whale. Some of people here present became part of the community. Thanks for their trust and uh you will have you will continue to have
69:00 - 69:30 fun when driving Ferrari. You will not see cinema. Very good. Thank you. Thanks Benetto and Nikolai. That was really interesting. Our final speaker for the first session on best companies is Professor Morton Hansen from the University of California, Berkeley. Morton is a New York Times best-selling
69:30 - 70:00 author who has transformed our thinking of business excellence through his influential books, Great by Choice and Great at Work. Named as one of the most influential management thinkers by Thinkers 50, Morton helps organizations and individuals become truly great at work. Morton, the stage is yours.
70:00 - 70:30 Good afternoon everyone. It's great to be here. This is a place I grew up in Oslo. Four amazing companies. Tremendous to hear from. Um what makes a really great company? This is a fascinating question that I spent decades researching. And one of the things we have done is that we have done three studies published in three books. Built to last, good to great and
70:30 - 71:00 great by choice. And uh pro Benadetto probably would take quite a bit of time to read all three books. I hope it's worth your time. Uh so uh what are these all about in built to last? What we did was to say what are some of the enduring principles of great companies over the long hall and we studied that in the context of United States and we're looking at those companies that have endured for decades even more than 50 years and we
71:00 - 71:30 heard from many of them today and we're using cumulative shareholder return over the long haul as a metric compared to the market and industry that they're in and as you can see from this graph many of these rise rose above the crowd to become a truly great company. That was the first study. In a second study, the question was, can a good company become great? And if so, how? And of course, not all companies are born great. They have to transition like
71:30 - 72:00 in this hockey stick that you're seeing here. And in the third study, we asked a different question which was in a world full of change and uncertainty like the one we live in today, what do you do as a leader to navigate that circumstance to become a truly great company and attain that kind of extraordinary performance over the long hall. So these are the studies that we have done and we have to sit you at what we just heard from these four amazing
72:00 - 72:30 companies into some of this research. First characteristic that is important is that we have to look over the long term when we think about what makes for a great company. We're not talking about short-term performance three years, 5 years, 10 years. We're talking beyond that. That's all of the studies that we have looked at. You have to stand the the test of time. And these four companies we just heard from stood the test of time. I plotted them here on the timeline. Utis being the oldest one
72:30 - 73:00 founded before the American Civil War. Then we have uh Goldman Sachs also this era back then and Nova Nordisk and the youngest company we just heard from is Ferrari but is more than 100 years old. Why is that important? They have traversed circumstances of hardship, recessions, even a depression, wars, downturns, industry cycle, and yet they have come out great. That's the
73:00 - 73:30 first characteristic. The second we have to look for is to ask compared to what. We can't just look at successful company and say what did they do? In academic research, we call that selecting on the outcome variable of success only and that's a bias. So we have to look at what have they done that was different and better than what industry peers did at the same time.
73:30 - 74:00 Industry peer that had the same opportunity back in the day to become great but became only merely good or worse. So what we're looking for are principles that separate the great from the good. Let me share a few of those principles and relate them to what we just heard. So the first principle is that these companies had this duality about them. On one hand they focused on preserving the core core purpose values
74:00 - 74:30 and principles and we just heard that today. Nova Nordisk about chronic diseases, Goldman Sachs customer excellence and partnership and so forth. It's a very clear purpose that remains stable over time. So that's one part. The other part of the duality is everything else is up for change and progress and relentless innovation like we also heard innovation in Ferrari no
74:30 - 75:00 Nordisk the flywheel of Otis everything done in Goldman Sachs right there's that duality about these two companies now what is interesting is that many companies and leaders they confuse the two what should remain constant and stable over time and what should not here's an example of that many years ago The leaders at IBM decided that they corporate their salesforce and employees should dress like their corporate clients. And back in the day, the
75:00 - 75:30 clients were wearing a suit and a tie. So then the salesforce started wearing a suit, a tie and ideally a blue shirt and that become the matching because they were in a customer service business and the idea was to gain respect and credibility with the clients they served. Good idea. Then years passed by and they started dropping the clients started dropping the suit and the tie and so forth, particularly in the tech sector. But the
75:30 - 76:00 IBM dress code marched on decade after decade until one day a new CEO from the outside, Lou Gersonner, walked in the door and asked, "Why are you dressed like that?" And he had no good answer because 30, 40 years ago, it was a good answer, but no longer. It had become dogma a practice. That's the way we do things around here. That's kind of culture to dress like that. Of course not. Gerson stopped it. That was a
76:00 - 76:30 practice that got confused by what was the culture. The culture was customer service. But the practice addressing like that was just a practice that had become obsolete. Leadership implication challenge the status quo. what should change and what should remain stable over time. That's the first principle. The second principle I'd like to share is this idea that this company had a pierce and clarity about the operating model. And I'm so glad we heard from
76:30 - 77:00 Otus today because you just provided a fantastic example of this idea. You call it the flywheel. Those of you are familiar with the book Good to Great, you will recognize these three intersecting circles. What this company had going for them was very clear what they can be the best at in the world and that's what we heard today the excellent of Goldman Sachs what Nova Nordis can do Otis can do and Ferrari right you you answer this question but then there is a second question and that is passion that
77:00 - 77:30 the employees coming to the working for the company feels the passion for the company they feel passion for what they're doing they feel passion for the customer but in that I mentioned so much about the employees and the passion that they have coming and working at Ferrari. Then the third thing is having that profit model economic engine. And when you answer these three questions, you get an operating model. Here's an example. Great by choice. We studied Southwest
77:30 - 78:00 Airlines. This is their business model. Bus on wings. Just to be clear, that's not an actual bus. That's an AI generated image by my slide designer. Uh what does that mean? They figured out that this operating model is going from A to B, no frills, no luxuries, free seating and so forth. We get you there. Many others that copy this model later on. Historically the most successful business model in in the
78:00 - 78:30 airline industry in the United States. Some years ago, the then CEO Howard Patnham described the model. What was the upbringing model? This is what he wrote in the Wall Street transcript. He said, "This is what we do. Under two hours only, you 737s only, quicks, 10 minutes at the gate, in and out in 10 minutes. Low fear, high frequency, keep it fun, no interlining, no food, people, not mail, no seat assignment, bags, fly free."
78:30 - 79:00 It's a brilliant articulation of an operating model for an airline, right? Everybody can understand it. You're that flight attendant. You understand it. Of course, some of these things have evolved over time. You apply fly wells, you evolve it, you expand it, you become better at it. But it's that kind of piercing clarity and what we're about and what we're not trying to do that really makes a difference of these companies. Third principle driving
79:00 - 79:30 progress and particularly how did this company drive progress. Here's another company we studied which is progressive insurance in United States and one year they decided that they were looking at the market to enter of insurance for trucks big cars. They did an exhaustive analysis and they figured out this seems attractive and they decided on aggressive investment into that market.
79:30 - 80:00 Turned out to be a failure and they had to pull back for a variety of reasons. Then a few years later they decided to go into the market for safe drivers. Here they can't the approach was completely different. Let's do experiments. Let's start small. Let's start with a thousand subscribers in Florida. next year Texas and so on. And after three years of experimentation, they then figure out this is how we can make money in this market. We have a good pricing model and
80:00 - 80:30 then they launched aggressively across the United States. Very different approaches and the key here is that in markets uh that characterize uncertainty there is a premium of experimentation. experimentation and not just analysis gives you empirical validation for what works. So these companies we studied and I think we heard it from today of innovation experimentation but in that I remember
80:30 - 81:00 on the podcast when Nikolai you talked about in electric vehicles and how you have experimented with that for several years right it takes like a long time to experiment you got to be patient but doing that creates a culture of experimentation and that's what we saw in these companies and that is that you got to have starting a lot of exper experiments both in products and processes pilots, test marketers, demos, and so forth. Going to kill the bad ones. Then you're going to have the courage to go all in on some of the very good ones and
81:00 - 81:30 scale it aggressively. This means that you have to have a culture of appropriate risk-taking and learning that professor James talked about in the opening remarks. Having that openness to learning and being able to have that culture that drive the progress forward. So three principles preserve the core stimulate progress a very clear operating model and a premium of experimentation to drive
81:30 - 82:00 progress. So what do we not find in some of our research? Well, one thing is were these leaders visionaries? No, it's not the idea that they could see where the business is going to be 10 years from now. I mean, who can predict where we're going to be 10 years from now in any industry and sort of point the company toward that destination? Absolutely not. We do not see that. Another one that comes up is this one. Were the leaders charismatic? Well, some
82:00 - 82:30 were. We saw that today. And some were not. It's a nonvariable. And then finally, what about luck? Maybe this is just a random walk that the great companies that we see are just we're just lucky the right place at the right time. And our answer is no. Why? Because we studied luck. We had these great companies and then we had
82:30 - 83:00 the merely good one, the average industry peers. And over the long time all these companies had a fair amount of bad luck and good luck. And the question is, what are you doing with that luck? What are you doing with the good luck and seize the moment? And what are you doing to be prepared to weather the storms? And so therefore, let me then close since we're in Norway, a quote by our great Norwegian explorer Ru Ammonson, who said, "Victory,
83:00 - 83:30 um, there we are. Victory awaits the person who has everything in order. luck. Some people call it greatness is not a function of circumstant luck. Greatness is a function of the lead the choices that the leaders have made over time to build a great company culture as we heard from today of these four amazing companies. Thank
83:30 - 84:00 you. As financial markets continue to evolve in complexity and technological sophistication, few companies have transitioned as effectively as NASDAQ. Adena Freriedman is the CEO and chair of NASDAQ. Under her guidance, she has transformed the company from a traditional exchange to a leading global technology company servicing the financial markets. Joining Adena on stage for a fireside chat is our very own chief investment officer of NBIM's
84:00 - 84:30 market strategies, Marlon Nordbach. Please join me in welcoming Adena and Marlin. How are you? Hi, great to have you here today, Adina. As the CEO of NASDAQ, you must have some really, really unique insights into companies. No pressure. No, it's great
84:30 - 85:00 to be here. So, we've just heard about what makes the best companies. So, do you want to start by telling us what makes NASDAQ a great company? Well, thank you for that. Um, so I always think about it from the eyes of the investor and of course that ultimately res, you know, results in the financial performance of the company. So just a quick recap of our finances over the last year. So we've grown about 10% in the last year. We have a 57% IBIDA margin. So that if we were a SAS company, we'd be a rule of 67, which is
85:00 - 85:30 pretty good. And 102% cash flow conversion in our business. So it's a very cash flow generative business. And all of that, I think, allows um us to have the latitude to continue to grow and expand the business because we're delivering great performance. But when we say, well, what really underpins that? like what results what how do we drive those kind of results. The first thing is that we really focus on having a very very strong northstar that really guides all of our strategic decision-m and our northstar is our purpose really
85:30 - 86:00 which is quite big and broad is to empower economic progress around the world which is a very big and broad a broad purpose but our northstar is our vision and our vision is to be the trusted fabric to the world's financial system and when we talk about that we look at that really through the lens of technology how do we make sure that our markets are as technologically advanced as possible. How do we provide leading software that really allows for us to help the the industry manage risk and really maximize our opportunity in the
86:00 - 86:30 markets along three key vectors of liquidity, transparency, and integrity? And then how do we also make sure that inside the company um we're we're staying humble and confident at the same time. So we talk a lot about that kind of what we call humble confidence or I think it's it's important to recognize that there's so much to learn all the time. The minute a company becomes complacent is the minute they begin to decline. And it's particularly in this world of technological transformation that is changing really every industry,
86:30 - 87:00 every part of what we can be. We can use technology differently to drive our business forward. You have to be a constant learner. You have to make sure that you're always bringing new capabilities into your organization and you're pushing to be better all the time. And I think that with that northstar and that humble confidence, I think that's really what we see as being the underpinnings of what what we're trying to achieve as a great company. Yeah. And the point about learning is really important. And you've learned a lot. You've been in NASA for a long
87:00 - 87:30 time. You started as an intern back in the days and you've had a quite a remarkable journey to CEO. So can you tell us what learnings have you made along the way and uh how has NASDAQ transformed under your leadership? Well, NASDAQ really was quite different when I started 32 years ago. So um and you were kind not to tell people how long that would been. Um, but yeah, I I did start in the trading division at NASDAQ. And at the time, you know, we were of of course then a a great market, but we were still
87:30 - 88:00 really a very young company trying to figure out how to be a commercial enterprise, how to drive markets forward in a different way. And we've been on a journey now for for that entire period of time to really try to transform our business and to have a bigger impact in the industry. So we've gone from being a really transformative market operator within the United States um to growing and expanding into multiple asset classes with equities and options in the US expanding into Europe and we'll talk about that. We own and operate most of
88:00 - 88:30 the exchanges in the Nordics with the exception of Ozor. Um so we we are um a very scale player here in Europe and then we've really expanded to um go into the software business and it started actually with the acquisition of OMX which was the Nordic operator where they had um a market technology business within their organization and it was kind of this hidden gem but it really what it did was it globalized the business and the impact that the company had on markets around the world. So
88:30 - 89:00 today we provide technology to 135 markets around the world. We provide technology to 3,600 banks and brokerage firms around the world in all of their key vectors of of risk management and trade operations. And so with that, I think we've become a much more scaled business, a bigger partner to the clients. And it's interesting because by helping them maximize liquidity, helping them maximize the transparency within the system and the integrity of the system, that really occurs to the
89:00 - 89:30 benefit of markets. And so it kind of comes full circle back into us being um even more equipped to be a great market operator. I think you're touching a bit on that, but NASDAQ, well, I think most most people still think of NASDAQ as mostly an exchange, but you do much more than that. and uh you're for example very involved in in complexity of the financial system and uh prevention of financial crime. So what why is that important? Well at the end of the day if
89:30 - 90:00 if we have uh integrity in the system people will trust the system and we want ultimately for investors to feel a great deal of trust when they're putting their money putting money at risk um to to drive savings and and wealth creation for themselves. So we want to make sure that the system itself works for them and we focus a lot on those three key pillars of liquidity, transparency, integrity. Those are the underpinnings of a great market but they're also the underpinnings of a great financial system. And uh our view is that that as
90:00 - 90:30 a market we can do so much to kind of drive that. But as a technology provider to markets, as a technology provider to the financial the financial players, it it kind of it allows us to spread those three key pillars across the system more effectively. And and frankly if we are looking at some of the emerging markets where we operate our solutions both our market our market technology and our broker dealer and uh financial uh the banking technology it allows that whole economy to lift itself up to be to be
90:30 - 91:00 able to um be more innovative themselves drive innovation in their country drive foreign investment into their country because people trust the system more which then of course creates that positive flywheel of economic growth. So, it's very important, but I think that at the end of the day, we'll talk more about financial crime, but it is such a big problem within the industry that it requires great technology to be able to help solve that problem. And and we're really proud to be one of the technology providers to to work on that.
91:00 - 91:30 So, thinking a little bit about the theme of the conference and what makes great companies. So, NASDAQ lists some of the most innovative companies in the world and uh many of the biggest tech companies. So, what would you say? What separates a good company from a truly great one? Yeah. Well, first I I would point to technology. Um, companies that lean in to technology to help drive and disrupt themselves to really think differently about how to solve a problem
91:30 - 92:00 with the technology that exists today. And then really, as I said before, is constantly learning and striving to be better at deploying technology to solve problems. we see as in in any sector that's not just as a technology company but leveraging technology to solve a problem differently and to drive to drive the business forward we see as definitely one of the ingredients. The second is making sure that you operate a resilient you in a in resilient manner. Um, and it's interesting, you know, when you meet some young entrepreneurs, they
92:00 - 92:30 they get very excited about what they're doing, but they you also have to think about what are you doing to create a resilient business. And to me, uh, as I mentioned, our cash flow conversion, you know, cash is king. So, getting to a state of profitability and cash flow, a positive cash flow state is, I think, should be the goal of every company while they're still driving growth and innovating in technology and technology now can actually be an enabler of that. You can leverage technology now to become to drive growth more efficiently to become more resilient and then to
92:30 - 93:00 make sure that you have a very strong mission and a northstar that you can communicate to investors that you can then talk about the milestones that you're going to take to achieve those great ambitions and that you al obviously have to execute against those. So so that investors feel trust that you're taking them on a journey that they that they can understand and they can see in front of them. but always always striving to be better um in terms of how you're solving the problems that you've decided to solve with your business. So you you're meeting with
93:00 - 93:30 companies be way before they choose to go public and way before they list and as they're working their way towards the public markets. uh what are there any lessons to be learned and can you can you see who will uh going to be who is going to be great and who will ultimately well a lot of it comes back to what I just said in terms of making sure that you're driving towards a really important goal making sure you're building a truly resilient company and that you're leveraging technology in
93:30 - 94:00 every possible way to be able to achieve your vision and your mission. Um and but even then you know not every company is going to be able to um uh you have to recognize the fact that you also have to look at what's the total market opportunity in front of them and there are other ingredients that also go into an investment thesis like what is a total market opportunity how fast is that growing how well positioned are they how quickly can they open the doors but then lastly I would say making sure from a resiliency perspective that they're also thinking about that
94:00 - 94:30 integrity you know sometimes you want to break something you want to break a system to make it better. Uh, and I think that's actually frankly been the quintessential element of of a lot of technological advancements and and the innovation ecosystem that exists in the US. But you also have to reflect on are you ultimately providing a lasting benefit to the end client or end consumer and are they um you know and are you breaking things that matter and making sure that you're working within the system when you need to and you're trying to kind of create a new system
94:30 - 95:00 where you have the opportunity to but ultimately for the end benefit of the consumer. Yeah. So you often talk about the Nordic stock markets and uh you operate many of them not region as we heard but um the fact that the Nordic stock market stand out compared to many other European markets and we're here in Norway now. So I'm curious what makes the Nordic capital market so dynamic compared to some of some other markets. Well, right now in Europe, there's a big debate and discussion about how do we
95:00 - 95:30 improve and make the capital markets in Europe more vibrant. Um, and and also really to drive economic growth and innovation within within the economies here in Europe. And I've I've been saying very consistently, you do not need to look to the United States to answer that question. You need to look to Sweden and to the the broader Nordic markets. And I use Sweden because we have we own and operate the Swedish Stock Exchange and we're very engaged there. But we can also look to Denmark, Finland, and Norway as being exemplars
95:30 - 96:00 of this. So if I u but I've studied Sweden the most. So I'm going to start there. Um so with Sweden, it's we love to think that having NASDAQ as a market operator there helps. Um and I do think that the technological advancements and things that we've done to really promote the market ecosystem there have been an ingredient to success. But it starts much it's much bigger than that. Um, first I think that the the countries here in the Nordics have recognized that they're small countries but they want to have an outsized impact on the world. They've decided, you know, very early on
96:00 - 96:30 um in the modern economy to be global businesses to really promote global trade and to go beyond their borders. So that that notion of constantly looking outside the system you're in to say what impact can we have on the broader economy around the world and to really promote global businesses, number one. Number two, to have a great university system that really um kind of drives towards the modern skills that are needed to succeed in a modern economy. I think that's one of the quintessential elements of the Nordic system. The third is the ability for ris like this
96:30 - 97:00 risk-taking culture and we talked about in the United States. I think here in the Nordics, the Nordic countries have created this great social safety net. And that as a result, if you're a cons a citizen of the country and you have this safe social safety net, you should be taking more risk with your discretionary capital. You should be re realizing that as a result of having that great system around you, you can take your capital and take and and invest it as opposed to just putting into a savings account and
97:00 - 97:30 drive wealth creation and give yourself even more opportunity in life. And I think that as a result they've done these very specific tax um oriented um uh program. So the most uh influential has been the ISK program in Sweden. It's a tax advantaged savings account. Um you can invest in any as long as you put your money into public equities. That's that's your only obligation. You you get you pay about 1% tax on your total holdings every year and there's no cap gains tax. And the result of that has
97:30 - 98:00 been the ownership of equities within the citizens of Sweden has been straight up and to the right since 2012 since that program was implemented. So it's really kind of given it's actually encouraging citizens to invest in equities to to take that risk to d to own their own financials to be financially literate to help them kind of drive their future and that then creates a retail ecosystem inside the country with a great pension system inside our countries um that really drives for that flywheel of economic
98:00 - 98:30 activity growth expansion we have 1200 companies listed in the Nordics um we've had 450 companies go public just in Sweden alone. Oh, I'm sorry, across the Nordics in the last 5 years. So, it's really an it's an amazing system on the back of a lot of intentional action. Long answer, but really important. No, but I I think that's a really important point and probably of interest to to the people in this audience. So, um well worth spending time on. Um so, going back a little bit to technology and and
98:30 - 99:00 some of the technology advances that's happening now. So how are you using technologies like AI and cloud to power and shape the future of the financial markets? Yeah. Well, I think we we are using it in two different ways. I would actually point to the markets and then I'll talk about our anti-financial crime business where we have a lot of advanced AI that we're using there. So in the markets um we use we use AI to actually make sure that we're managing our capacity planning u in a very dynamic way. We manage an enormous amount of message traffic through our systems. For
99:00 - 99:30 example, in the first two weeks of April, we had our peak day ever of 550 billion messages that flowed through our markets in in a day. Um, and so we have to make sure we're managing our capacity on a very dynamic level. So, we use AI algorithms to help predict capacity needs. The second is we have AIdriven um order types in our markets um to really kind of enhancing investor experience in our markets. And then I think that the the third is to use the best of cloud capabilities. So, we have AWS as a partner. they've come into our data
99:30 - 100:00 center. We've we've been moving our markets to cloud technology now for a couple of years and it's been a great experience in terms of improving even the scalability, the latency and all the key characteristics of great markets with part in our partnership with AWS. So we know that that's really the future of markets and we're excited to partner with them now to bring all of that into our Nordic markets and then to bring that across the world to our market tech clients. But AI I think is actually the most effective use of AI within NASDAQ
100:00 - 100:30 has been in an anti-financial crime. So we have a co company called Verafin that we acquired um four and a half years ago and they uh that that business and our team really uses AI algorithms to root out criminal actors. We bring all of the data together. So we are allowed to share data in the United States. So we share I have a data consorcia across the banks. to 2,600 banks in that consortia. And it allows us to look for patterns and practices of criminal behaviors and be very specific in the topologies that
100:30 - 101:00 we write to to make it so we can be more effective in rooting out criminals. And then we use Gen AI um on automating workflows. So as you're researching a potentially bad actor, which by the way there are thousands and thousands of alerts that come out of your systems every day. Um how do you make that as efficient and automated as possible? So we have this entity research co-pilot that automates the process of researching entities to look for criminals um and then writes the report um and so that all you have to do is
101:00 - 101:30 review review the report and submit. So very cool. Yeah. So your NASDAQ you mainly operate in public markets. So for a while now there's been a global trend that fewer and fewer companies are going public. They're staying private for longer or forever. So what's driving this trend? And uh in your view, why should companies work toward public markets? Well, I I do think that there's a cyclical element to that and then and then a structural element to that. So, you know, cyclcally speaking, you have a
101:30 - 102:00 world where we have a lot of company a lot of private capital that's growing. It's growing at about it's about 15 in 2023, there's about 15 trillion of private capital growing 15% a year versus $115 trillion of public equity capital, but only growing 3% a year. So you've got kind of a shift towards some private private capital and that I think goes towards um just the the trends within within the the investment ecosystem. But to fight that trend, you
102:00 - 102:30 have to therefore realize that there's more competition. You know, you want the public markets to be where everyone is excited and strives to come into the public markets to make their companies accessible to everyday citizens, everyday retail investors. and that the only way to really do that at scale is to go public and to to make it so that the citizens of your country are engaged in the growth of your country and you create that virtuous flywheel of that engagement through investment. So um we have focused on a lot of policy issues
102:30 - 103:00 that exist in the United States. Um so everyone talks about the US as being great markets and they are but we still have had a decline in public companies as well. And so we talk about um disclosure obligations. Let's streamline those. let's take some of the burden off the companies there. Proxy reform which is the the process of voting for its different proposals and really really frankly rethinking the entire proxy process. Um and then thirdly on litigation reform and other things that really keep companies from actually maximizing returns for their
103:00 - 103:30 shareholders. So what our view is that if we can make progress on those three things, it will change the u what being public means and it gives us an opportunity to get more companies into the public markets because as you say that gives uh access for the retail investors for the average investor to to actually take part in that value creation. So with with companies staying private for longer, uh are you concerned about the um abilities for the general
103:30 - 104:00 public to take part in that value creation? And um it's a it's a major issue. I I think we have to recognize that um really 56% of American adults own equities in the United States. Um but but only, you know, a very small fraction of them have access to private private investments. And you could say, well, should you make private investments more accessible? I think there are ways to do that, but the the real strength of the economy is in those public markets where you get the the broad-based citizen involved in driving
104:00 - 104:30 the growth of the economy and and frankly, they benefit when the economy benefits. That's what really creates a virtuous cycle and we're we want to be stewards of that. Um, and so we're hoping to get some reform done there. I think that's a great point to end them. So, thank you so much for all your insights and um thank you. Thank you very much, Min. To add more flavor to this investor perspective, I'd like to invite our next speaker. Christopher Horn is the founder
104:30 - 105:00 and portfolio manager of the Children's Investment Fund Management, a hedge fund known for its valuebased approach and active engagement strategy. Named as one of Time magazine's hundred most influential people and hedge fund manager of the year in 2007, he was knited in 2014 for his contributions to philanthropy and international development. Nikolai thinks he's the best investor Europe has
105:00 - 105:30 seen. Today he'll be joined by Daniel Baltaser, NB's co-chief investment officer, active strategies for a fireside chat. Please join me in welcoming them to the stage. Welcome everyone. We are privileged to be joined by two truly great investors today. I'll
105:30 - 106:00 start the conversation with Sir Chris Horn and who will later then be joined by Christian Syninding, CEO of EQT. Chris, it's a privilege and honor to have you. Welcome. I have to say I completely agree with Nikolai, probably the best investor Europe has ever seen. To back it up with numbers, 9% returns above the market every single year over a period of 21 years. Wow. On on average. Not not not every single year
106:00 - 106:30 but on average. On average. So share your secret with us. Well um strategy has been to invest in great companies. Um um but over time I've come to refine and understand better what what that means. and a lot of
106:30 - 107:00 uh um but that's just point one find the great companies point two is being concentrated as um um George Soros uh said once it doesn't matter if you're right or wrong all that matters is how big you are your position size when you're right and and and your position size when you're Yeah, if I'm right on a 1% position, it
107:00 - 107:30 kind of doesn't make any difference. So, we'll take positions of 10 to 15% in the past, even 25% of the fund. And that's a double-edged sword. If you're right, it's it's it's fantastic. If you're wrong, it's uh very painful. So, concentration is an important uh facet. um because there aren't hundreds of of of of uh of great ideas and um and and
107:30 - 108:00 companies and you might say that sounds risky then it is and uh and then I would uh look at um I ask you well what how do you define risk and the best definition of that was for me given by Warren Buffett who we all love and he defined risk as not knowing what you're Now the uh um a lot of investors and
108:00 - 108:30 then the third component I would say is long- termism. Mhm. Yeah. You can be you can find a great company but if your time horizon is you know very short you're you had the vagaries of of what Kane's called the voting machine. He said in the short term the market is a a voting machine and only in the long term is it a weighing machine and um going back to
108:30 - 109:00 Warren Buffett he was asked was Coca-Cola a risky investment when he first made it and he said depend on on the time horizon over one year one month very risky he couldn't sell where the price would trade at in in it um it doesn't necessarily reflect fundamentals uh in any short or even medium term And so I do think time horizon is um a critical thing and even intelligent
109:00 - 109:30 investors are are unable or unwilling to to to uh have a a long-term horizon and so and I would put engagement as another component o of that for us of adding value. So those uh and so we we we um so find the great companies focused or concentrated portfolio long-termism and engagement act as an
109:30 - 110:00 owner in simple terms. Um but you know a lot of investors get confused that the thing that you want is growth. Yeah. Yeah. You know, a and if you look at industries like airlines, they've been growing for 100 years, maybe 5% a year, you know, fantastic growth, but collectively and cumulatively, the industry never made any money because competition was too strong. And so
110:00 - 110:30 growth per se, growth by itself is is not a um a a guarantee of of of making money. Um so you need um critically barriers to entry to competition and sustainable value ad and high value ad. So that um so it's actually a combination of barriers to entry and and and um high value added um that you you
110:30 - 111:00 can charge for and uh and of course then growth has a value. Um but the but so everybody would agree with those statements but the the interesting thing is uh um going back again third time to Warren Buffett he said most moes aren't worth a dam because you think you've got a moat but and then it erodess and so the real thing is sustainability
111:00 - 111:30 of moes you know so how do you find out whether a great company remains a great company over time Yeah. Well, one of the things is to understand the um so you know the forces of competition and and substitution and disruption are are very powerful and and we've learned just as in the same way people underestimate complexity
111:30 - 112:00 structurally, most investors underestimate the forces of competition and disruption. Why? because they're short-term. Mhm. Keeps going back to the same root causes and um we're um um so we learn through examples and uh uh through sometimes experience and suffering. Um, one of my investments 30
112:00 - 112:30 years ago when before I started TCI was with a European media company that um, Bane Capital had bought control of and uh, uh, it was a monopoly and uh, they boughted control. It was like a billion euro valuation and uh um and the stock went to a 50 billion valuation 1 billion to 50 billion and then it went to zero and it was a a yellow pages company in Italy because
112:30 - 113:00 the internet hadn't been found. It was people thought it was a resilient monopoly but you know something Google destroyed the company. So we we sometimes don't know. Yeah, we can't know what hasn't been invented. So then how can you know anything? You might say, yeah, was uh training said, "Yeah, unknown, unknown." So you know the you don't know
113:00 - 113:30 what you don't know. But uh the um so but certain industries are more prone to disruption than others. your risk is much higher and uh and so we try to avoid those those sectors because you're asking for trouble or limit our exposure and um one of those sectors uh is technology. Yeah. So what are the ones
113:30 - 114:00 you like? I've always liked as one example infrastructure. Mhm. where there are which is bit unusual you know um it's not that sexy it's a bit boring owning toll roads and airports and transmission lines um cell phone towers and uh but I um I
114:00 - 114:30 I was born into a poor family and uh so I always wanted to get my capital back. I thought that was a good starting point. Don't lose your capital. And so I I sort of believed in physical asset backing. Yeah. Which most investors don't look at tangible book value. That's something you know forgotten in economic textbooks as a as a as a as a metric but or a placement value. But um you know an
114:30 - 115:00 example is uh maybe 10 years ago, nine years ago um um the Spanish government approached us and and about taking an anchor position in an IPO of their airport Aena and uh um airport was basically brand new, huge under capacity um and 75% of the the the value was in
115:00 - 115:30 unregulated shops and car parks and uh you know complete monopoly unregulated and uh huge growth potential and they sold it at a 15% free cash flow yield and uh and what we could see is that you could never replace these assets Madrid airport and Barcelona airport and irreplaceable and um and they sold at the right price. Valuation matters. they sold it at 15% free cash flow yield. Um and um so I learned I learned at
115:30 - 116:00 school that a great company is not necessarily a great investment but you look at something like cash flow yield to tell you now it's a good time to buy and sometimes people say it's things are cheap for a reason. Mhm. Now people were concerned about government ownership in this case regulation and um and the government did uh impact it. They limited the compensation of the CEO to €200,000 and ultimately the CEO left. He
116:00 - 116:30 was a very good CEO, the original. And so um but I it didn't matter because the monopoly was there, the assets were there. So I like asset backing um of infrastructure. Another sector that we've Can I just ask you one question on this? If you like an asset, a physical asset, does management quality matter? Is it important? Less so. Mhm. It matters for
116:30 - 117:00 reinvestment risk. And but one of the things um I mentioned that we do is we're actor as owners. We have people have different terms for that constructivist and activist but I really think fundamentally he's acting as an owner and in the case of and and we were worried we didn't
117:00 - 117:30 have any control and um but we had influence I I I I was asked to be on the board. I was on the board for three years of the Vehina, the airport company, and we went to the government and to the board and and and said, "Look, you're throwing out all this cash flow, billions of euros of cash. You don't need it. We want to propose an 80% dividend payout ratio." And for you, that's dividends you can spend. And and and they agreed to it. And so my reinvestment risk of
117:30 - 118:00 management was limited then, very limited. and uh and so there are things you can do if uh to mitigate risk. Mhm. Um and but it does matter. You know, another infrastructure asset uh we've been invested in is is in the toll road sector for OVL. It's where there's a family that have about a quarter of the stake and they're fantastic capital allocators. They just reinvest. They sold Heathrow airport
118:00 - 118:30 recently and uh you know at a low return and they reinvesting in Monopoly toll roads at high returns and they just really know their business and uh have high alignment of interest. So um but you know again Buffett said you've got to in ideally you should invest in an industry where a monkey could run it because one day they will. Mhm.
118:30 - 119:00 And so, you know, I I I I want to find an asset where because, you know, there's no guarantee the CEO's comes back. Yeah. Yep. And so, I think you have to invest in an in a business where it's a great business and uh it doesn't depend on the manager. Um because there's no, you know, the assets are ultimately more reliable than the than the manager. So um but you know so in in this sort of where are the moes you we
119:00 - 119:30 talked about infrastructure and physical non-replicable assets another space we like as an example is aerospace things like aircraft engines and um manufacturers like G aerospace and saffron and we like that space because the barriers to entry are extremely high um in terms of intellectual property the the it's so complicated to make this product that there have been no new
119:30 - 120:00 entrance for 50 years. Yeah. So new entrance is a sign of uh the barriers to entry. It's one of the the uh the criteria you can look at. Um so um and um the uh and why is that? Not only is it very complicated um you make the money in the spare parts. So once you've got this installed base, you know, the the the the new engines are only a small percentage and the airframers only want one or two
120:00 - 120:30 engines. It's too complicated otherwise who there isn't the room for for for multiple competitors. Mhm. Uh and so um and then for various reasons uh that uh it's very difficult for competitors to enter the the replacement parts and so the switching costs. Yeah. So that's another uh space where very intellectual property is uh can be of a barrier. Fascinating. And now I'd like to invite
120:30 - 121:00 Christian Syninding, CEO of EQT to join us. Under his leadership, EQT has quadrupled in size, became Sweden's fourth largest listed company and a leading forwardinking organization in private markets. Welcome Christian. Thank you. Thank you to be here. So Christian, what defines a truly great
121:00 - 121:30 company for EQT? It's the favorite question uh of the year, I would say. uh so interesting actually that I did a poll of uh of my colleagues uh the that call it the top investors at EQT and um and it came out very consistently actually into three three different categories. Um the first one has to do with the industry or the sector that the the company is in. And uh what we've sharpened over time is is
121:30 - 122:00 to find long-term themes in society that are not dependent necessarily on the economic activity but on some other drivers like digitalization of society, decarbonization of society, aging society, those kinds of broad themes that are uh you know going to run for a long long time. Uh behind that infrastructure actually is spot on in there. Um then you go to the company uh and we're looking for companies that have a
122:00 - 122:30 great business model uh recurring revenues in some form some kind of competitive moat if you want to call it that to use your language um competitive advantage uh and something you can continue to build on um that has lots of opportunities to grow both organically through acquisitions and change. So that's kind of category number one. Category category number two is um leadership. So a couple of colleagues said CEO CEO CEO
122:30 - 123:00 and um and of course we own the companies, we control the company. So we can install the board, we can install uh the management if if it doesn't already have a great one. But I think it's broader than CEO. I think it's the leadership group. It's the uh it's the organizational design of the company. It's a cultural health. We we heard a lot about these things earlier today. um you know culture beats strategy for breakfast as they say and I think we heard that from David and others uh very much true for EQT uh so that's kind of that's category number two maybe also
123:00 - 123:30 ability to attract and retain talent very important category three is we also heard about from Otis and others um and even over Nordisk it's actually the ability to take you know the position that you're in the strategies that you have the leadership group that you have and execute relentlessly um and drive, you know, a culture of continuous improvement. So, it's not good enough just to be a visionary, great CEO or have a great team. You also actually, you know, to drive execution every single day. Um and if you think
123:30 - 124:00 about the four companies that we heard about this morning, uh you find those themes across all of them in in various forms, right? Yeah. It sounds like they put a bit more emphasis on leadership than Chris does in his approach. What are you looking for in a CEO and in the leadership team? Uh I'm looking for someone who has a vision. Doesn't have to be vision area, but someone who has a real vision. Where are we taking the company and why? Um someone who can
124:00 - 124:30 bring people together uh who can inspire uh but also be sharp enough to execute. So combining those two elements I just talked about um I think uh the ability also to to change your mind if a better argument comes uh and have this mindset you talked a little bit earlier about how do you deal with technological change and threats um and to have the mindset of we we call it a future proofing what does the company need to stay ahead of the curve what threats are
124:30 - 125:00 coming what opportunities are coming right now it's AI then it'll be AGI and then maybe quantum computing whatever all these things are impacting business, sustainability, uh decarbonization, all these, you know, how do you deal with that? Do you wait to see what happens or do you take the bull by the horns and actually drive change? Mhm. Uh those are some of the elements that we're looking for. Um and then not complicating things too much. Mhm. Sticking to what's important. Mhm. You mentioned long-term themes.
125:00 - 125:30 Chris, is this approach that Christian takes on investing in long-term structured themes something that resonates with you? Yeah. The the average life of a of a holding of our current portfolio is 80 years. Mhm. Now, the average holding for a of a US stock is less than one year. So investors are absolutely on mass short-term um trading oriented and so
125:30 - 126:00 why you know it it but we should ask well why is long-termism is it a good strategy? Yeah. Is it why and why? I'd like to think it is. Yeah. Well we should ask the question why. I always say justify. Yeah. Yeah. And if you look empirically, it turns out that the very best companies, high
126:00 - 126:30 rises, they they stay good. They don't disappear o overnight generally. Yep. And bad companies stay bad. Lower stay low. I totally agree. We have an expression. Good companies are better than they seem. Bad companies are worse than they seem. There's persistency. It's better. You got to get rid of the bad ones and just double down on the good ones. Yeah, there's persistency and and the value of that company is only seen over the long term. So you get they say there's no free lunch in
126:30 - 127:00 finance, but actually I do think long-termism in a great company is a free lunch because the the if you look at any sellside model, they'll go out three years if if or or or two years. And that's why because that's the time horizon of the typical buy side investor. One, two, or three, one or two years. But what if it can keep being good for 30 years? Then you're completely undervaluing that company. We, you know, we um
127:00 - 127:30 and and people don't look at it because there aren't most companies 95% of mediocre or bad companies. Yeah. And they meet their cost of capital, but they're not super companies. you know, one of the companies I mentioned, aerospace, we invested in Saffron. We've owned it for 13 years now and in in in we're actually one of the largest investors in the company and uh um and we made around more than a 20% IR
127:30 - 128:00 for 13 years. It's a long period that duration. Very long. Yeah. Very long period. What company was that? Saffron. Mhm. Yeah. They're a joint venture with G Aerospace in aircraft engines and um and so um we have investors who come in and say well we want new things. Yeah. Why is it so hard for investors to be long-term? I understand they're commercial pressures but there must be they think new is
128:00 - 128:30 better. I think you volatility. Yeah. Yeah. Yeah. You know the one of the Yeah. I'm obviously interested in the private markets. One of the benefits of the private market is you're kind of forced to invest for the long term. We own companies. We own them for 5 to 10 years at a time. Now, we're actually starting to own them for longer because we realize that winners need to be owned longer to really uh get the maximum value creation out of them as well. Um but but you're kind of forced to invest for the long term and and even in these products that now individuals can invest
128:30 - 129:00 in in our industry uh they're also very long-term in their nature and um you know our valuations aren't as volatile. You can discuss why but uh but it is because that we're not that interested in what it's worth right now. We're interested in what the companies are worth. You know when we buy a company we're interested in what it's worth in five years or in seven years and what we can do with that business in the meantime. Yeah. And in the extreme, we don't even care what it costs so much today. As long as we know that we can take it to here or we're highly
129:00 - 129:30 confident we can do that with time. That's that's actually more important than what we pay 100 or 110 today. Doesn't really matter if you create four or five or 600 up here later. So how do you do that? You identify a company that you want to buy. Y pay a price that you're happy to pay. Yeah. And then what's the playbook to create the value? Well, the the playbook that we're trying to industrialize is is we create a full potential plan for the business. We kind of dream say if this company had every resource in the world uh to be able to grow develop and go to the next level uh h how what could it look like you know
129:30 - 130:00 if you did all the M&A you wanted to do all the innovation uh you get rid of the things that aren't working upgrade the organization improve the margins all that kind of stuff um okay so that's the full potential uh what can we actually get done in in a reasonable time period with the people that we have involved either globally or in the company or whatever um we bring lots of resources it for the company whether it's governance or IT skills or AI skills or sustainability skills or expansion or
130:00 - 130:30 M&A whatever the company needs we try to bring those resources in uh and and then we push the gas pedal pretty hard and and and we go for it and we very often don't meet the full potential plan but that kind of mindset helps you drive the company forward um and uh and and really and also really deciding which are the big things a little bit like Nova Nordics Nord Nordics we heard earlier um what are the big initiatives that can really make a difference and then making
130:30 - 131:00 sure that you put the best people behind that enough capital behind it and those things that's that's what we can do in the in the private markets and it's a lot of fun what can you do in the public market as an activist and your approach has evolved a little bit over time yeah it's an interesting debate private versus public um and you know what, um um because I do think the very best
131:00 - 131:30 companies in the world are public companies. Mhm. Um not everyone but generally and one of the reasons is um in many industries scale and scope matter. Small is not beautiful. Um a and um you you you um um an example of this is uh um video conferencing where Zoom new
131:30 - 132:00 innovator brought out video conferencing and Microsoft launched teams and just distributed a free integrated in in in their bundled office product. Now people say Zoom was a better product, but Microsoft won because they had this bundling strategy and they had scope. They had, you know, advantages of scope and and Yeah. and and and and uh the
132:00 - 132:30 ability, you know, customer relationships and and and so I think people underestimate sometimes these powers of big companies of incumbency to uh crush a competitor and and uh so I um um the but the a public market investor doesn't have no influence. Okay? if they're
132:30 - 133:00 willing, they can uh they can influence and sometimes um stopping stupid things a and an example of saffron you know we had this great company reported eight times earnings it was compounding at 20% and then one day they came out and tried to make an incredibly stupid acquisition of a company called Zodiac
133:00 - 133:30 a wild overvaluation using shares which were half their intrinsic value. So it was doubly bad. Um and we fought the deal and in the end they cut the price in half and then paid only in cash and the share price doubled. You know we got sued by the seller. I was sued personally for hund00 million euros and the uh my CFO came to me very stressed one night
133:30 - 134:00 saying it's all right for you. You can afford it but they're going to bankrupt me and um because the seller lost a billion euros and uh and but few investors will act like that. Mhm. Yeah. Most just accept it. But in the end they they they they cut the price and blamed us which was fine. and uh and all's well that ends well. They they they never did silly things again. Um but but then you have to jump in. You you have to have a big
134:00 - 134:30 enough ownership stake to to actually have that influence, don't you? In some form or at least a real voice that they uh that they will listen to. Then the challenge in the public markets, if I may challenge that, is that often the companies become run by the the management, right? because they're ultimately ones then with with no active shareholders they effectively point the board and you you have a bit of a governance that's a big risk other side of the coin it's a big risk and in general well I would maybe the journal is there are many companies with bad
134:30 - 135:00 governance that become badly run and I'm you know I'm not a believer in being an activist in a bad industry or bad company that doesn't make any sense but um and So, but there is a I don't actually think the shareholding necessarily is everything can matter. We we went recently on the board of a company called Snell next cell phone towers and we we had 10% and so it mattered because there were four comp four shareholders with 10% each and
135:00 - 135:30 so it was very concentrated but um I think the power of the argument can win you know shareholders are not stupid you know bank is not going to be an activist themselves but if an activist makes a good case they'll support them they'll listen yeah they'll they'll support them whatever stake the activist has 1% 2% it doesn't matter. So I I And can we go back can we go back to the this this statement that you had
135:30 - 136:00 that the best companies are public? Um I don't really appreciate that one. Uh so maybe I give some examples. You know we but I do agree with you that having companies that are uh you know strong large winning beating the competition whatever. Uh one is a very interesting that we own which is the world's largest private education company. It's a $15 billion company. It's uh but it's only got 5% market share around the world, growing organically through acquisitions, super purpose-driven, doing very good for
136:00 - 136:30 society. Um and uh the competitors are, you know, moms and pops all around the world that don't have the resources to invest in AI and the next generation of education and stuff like that. Um that is a brilliant uh company. We've actually had it public twice, but the public market didn't appreciate it. So, we've taken it private twice and now we're just going to keep it private hopefully for as long as we can and just build and build and build. So I think the world is also changing because private equity has gotten so large now um and t and we can move companies into
136:30 - 137:00 longerterm ownership structures. So we can actually I think we're going to see more and more of the best companies in the world either stay private or go private and and grow. Um and that's a big difference and that's one of the things we're seeing in the market while you heard you know number of public companies is shrinking a lot over time. And you alluded to the importance of control. You tried an approach, a private equity approach in the listed market with the EQT listed. I hope we didn't have time for that one. Some reflections on lessons learned. Yeah, we did. We tried to start a mini
137:00 - 137:30 version of what you do and we failed miserably actually. It um we you know after we shut the fund down last year, we we delivered back like 90% of the capital that was invested or something a little bit worse than that. And uh luckily it was very small and uh when we realized we weren't good at it, we actually did shut it down and uh focus on what we're good at which is private markets. Um I think we tried to apply the models that you've heard me think about here and talk about here uh in a public setting where we didn't have we
137:30 - 138:00 didn't have the toolbox. We didn't have the understanding of how to drive influence. We thought we would have more impact being who we are and uh it didn't work. So, it's really about it's a it's a lot a lot of learnings in there. Back to really sticking to your guns and doing what you do well and more of that. There's like everything there's pros and cons, arguments for and against, but in private equity, you you you pay a price for control. You pay a premium.
138:00 - 138:30 Yeah. Can be big. Mhm. So, so you know every don't get me wrong control has a high value has a value let's say it has a value but is it worth 40%. Yeah. Or whatever premium you have to pay in a competitive auction. You know in public markets there's an offer every day. Yep. You can take it or leave it. and and and
138:30 - 139:00 so it's um um I think the the uh so I just think that that point is relevant entry price matters and yeah do you think do you think liquidity is overvalued in the markets well the thing is why why do people need liquidity as much as they think they do all the time you can be wrong that's something um I learned the yellow pages example was Yeah. And if
139:00 - 139:30 you're and um the if if you're wrong in private, there's no way out. Yeah. In a short term. And um if you're wrong in a public, you have a chance to get out. Yeah. You have a you have a a chance, but you don't really have a chance to repair and improve what you do in private. Right. we can we can huddle down, change the management, change the board, divest underperforming operations. So, it's a it's a it's just
139:30 - 140:00 a completely different mindset to to a point. Yeah. There there's um we were investors in cable. Yeah. In in the US and yeah, we own a lot of cable charter and uh communications and uh before that Time Warner Cabled and and it it was a great in investment for uh eight years. We made I know five billion a P&L and I know five times our money. But then the industry started to deteriorate. It became saturated and more competitive
140:00 - 140:30 and people started overbuilding private equity. Yep. We bought we bought lots of those companies. So it started over one of our best sectors actually and yeah I sold. Yeah because it it changed. We were buying. Yeah. Yeah. Unfortunately we are in the end of the session already. I would love to continue for much longer. Chris, you shared many of your secrets. You shared more in a podcast that you recorded with Nikolai which will be released on the 14th of May. So I encourage everyone to
140:30 - 141:00 listen to that one. We'll take a break now. So please be back in this room at 15:25. But first and most importantly, a big big thanks to both of you for sharing your insights. Nice to meet you.
141:00 - 141:30 We now turn our attention to two crucial
141:30 - 142:00 aspects of great companies. Leadership
142:00 - 142:30 and corporate culture. For even if a
142:30 - 143:00 company has breakthrough products,
143:00 - 143:30 market dominance and strong financials. Without excellent leadership and a vibrant culture, even the most promising company may falter. What role do leaders play in exceptional organizations? How does culture lead to long-term success? To help us answer these crucial questions, we'd like to welcome back to the stage Dean Erica James from the Wharton School. Erica, the stage is yours.
143:30 - 144:00 Think back to the year 1999 2000 in the United States. Something very interesting was happening. The dotcom bubble burst. I was a young assistant professor teaching at a business school. mainly MBA students, many of whom were
144:00 - 144:30 expecting to enter a career into an industry where they would get to explore the role of technology and this new.com universe. And all of that goes by the wayside. The following year, Enron collapses and then you see a series of CEOs trapesed across the news media, either in handcuffs or headed to court because there was just a collapse of the business sector in the United
144:30 - 145:00 States. As a business school professor, looking out at the scores of young impressionable minds who all thought they were going to enter this industry, I was really grappling with what do I say to these young people? How do I convey that to them that business actually is and can be a force for good when everything they see is that business is bad, that leadership is bad, that something in the system is
145:00 - 145:30 broken. Well, fortunately for me, that led to an interest in understanding organizational crises, but not so much because I was curious about what goes wrong. I really wanted to answer the question, how do those companies that come out of organization that come out of crisis, how do they do that? How do they succeed? What are the leadership characteristics that are necessary to drive organizations through the most tumultuous times?
145:30 - 146:00 So that led to decades of research for me and studying organizational leadership, organizational culture, particularly in times of crisis. So I want to share with you a little bit about what I've learned. The first thing I've learned is that we have to be really clear about what we mean by a crisis. Raise your hand if you have said or have heard people say as they go into the office, "Well, what crisis are we managing today? Anyone hear that? Anyone
146:00 - 146:30 said that? How many fires do we have to put out this week? Right? We use this language as if everyday problems that are inconveniences are actually crises. And when we do that, we make impotent our the ability of our workforce to actually manage something that is significant. So what is significant? A real crisis is any negative event that
146:30 - 147:00 has the potential to threaten an organization's financial well-being, reputation, or legitimacy. I think it's pretty safe to say that what we're experiencing now, the tumult across the world, there are real crises that people are dealing with. That is what we should be focused on. How do we help people and leaders operate in these kind of environments? Not the daily barrage of inconveniences
147:00 - 147:30 that we'd rather not deal with. But we also talk about crisis as if all crises are the same. And I want to have you think about two different types of crises. One is well, we talked about the financial well-being, talked about reputational risks. Look familiar? And I've talked about the legitimacy. We're going to go into a little more detail on all of these in just a moment. Two different types of crises. Sudden crises and smoldering
147:30 - 148:00 crises. Sudden crisis are those kinds of events that are typically externally imposed on an organization. something happens to the company that for the most part you have very little responsibility for or control over. Natural disasters, a terrorist attack, CEO death, etc. These are sudden events that happen that sort
148:00 - 148:30 of throw you off kilter. How many of you spend your time thinking and planning for a sudden crisis? Raise your hand. Handful. Okay, another type of crisis, smoldering crisis. Smoldering crisis are those things that start out small and internal in the organization that should be spotted as a problem, but oftentimes go ignored because we think, "Oh, that's a little thing. It it will
148:30 - 149:00 be fine." But because we've ignored it, it tends to grow and fester and over time can erupt into something more significant. You see on the screen examples of sudden of smoldering crises, product defects, labor disputes, safety violations, class action lawsuits. All of these things are signals that something is not right in the organization. How many of you spend your time planning for these
149:00 - 149:30 events? For those of you on the screen, very few hands are raised, right? We plan largely for the salacious events, those things like a natural disaster. We don't often prepare ourselves as leaders or our organizations for these kinds of events. Which are you more likely to encounter? A sudden event or a smoldering event? A smoldering event? Right? These are much more common place in
149:30 - 150:00 organizations. The good news is that we as executives, as leaders, have a bias for action. So when something happens, we immediately want to go into containment mode. We want to engage in damage control. Makes perfect sense. But I would argue that containment and damage control is a necessary but
150:00 - 150:30 insufficient aspect of leadership particularly in times of crisis. That's all we focus on. We're not creating a culture of a workforce that understands and knows how to deal across the crisis landscape which happens before the event happens, not just once something happens and you have to go into response mode. So I want to spend a little bit of time talking about what are the characteristics, what are the actions that leaders should be engaged in to build a culture of resiliency in
150:30 - 151:00 order to respond to crisis. So, first is paying attention to the signals in your environment. Those signals could be uh information that you're receiving from employees, could be insights that you're receiving from your customers or clients, it could be feedback going on in the industry, it could be something that's happened to a competitor. Right? All of these are pieces of information that leaders
151:00 - 151:30 should be paying attention to recognizing that what's happening in the environment could just as easily happen to their organization. So paying attention to the signals. Next, once you have that information, what do you do with it? Great leaders actually take the time to work with their teams to prepare for some of those eventualities. Of course, we can never identify or predict or prepare for everything that could possibly go wrong. But getting into the
151:30 - 152:00 practice of even thinking about one possibility or recognizing some signal that is happening within your industry and going through the exercise with your teams, what would we do if it's the scenario planning, it's the preparation and the planning for something that goes wrong. By doing that, you're building muscle, leadership muscle, crisis leadership muscle, so that when something does happen, you've already
152:00 - 152:30 got some foundation from which to to start. Now, inevitably, you will face, you will have some kind of experience that you'd rather not, some crisis, and at that point, you do need to go into response mode. You need to think about damage control. How do I manage this impression? How do I deal with how do I stop the bleeding of what's happening in this moment? That's the stuff we're generally already really good at. But what happens after we engage in our recovery practice or in our our
152:30 - 153:00 containment practices, we wipe our brow and we think, glad that's done. Now we can get back to business as usual. Now we can get back to normal. But here's the problem. If this were a crisis that only happened to your company and you exist in a broader industry, what is everybody else doing while you were managing your crisis? They were continuing with their
153:00 - 153:30 strategic objectives. So if your goal post crisis is to get back to normal, chances are you're going to come out of that crisis many more steps behind your peers who were able to leverage that time to continue to advance their strategy. So the focus around containment, containment and damage control isn't about getting back to normal. It's about thinking where can we go from here? What is the phoenix rising from the
153:30 - 154:00 ashes after this mess that we've been a part of? Asking yourself, asking your teams those questions. How do we recover from this circumstance in a way that will position us to be better, to be stronger, to be resilient? Right? And then lastly, something we've been talking about all afternoon, learning. The best leaders and therefore
154:00 - 154:30 the best companies are those that take these moments of crisis, of tumult of extreme change and recognize how do we engage in an activity of reflection. In the military, they call it the afteraction review. How do we go through this methodical process to understand what lessons we should take from what we've just experienced? What role did we play in creating this
154:30 - 155:00 crisis? What ways were we prepared or not prepared? That process of learning will position you for both preventing or mitigating something like this from happening again. And even more importantly, it can enhance the likelihood that you will use these learnings to actually innovate. You've all heard the phrase never waste a good crisis. I don't particularly like that phrase because I phrase because I think it's kind of trit, but what underlies it is actually
155:00 - 155:30 true. Those companies who have come out of really tumultuous circumstances the best are the ones who have gone through the learning reflection process and identified opportunities to lead to create a new product to be innovative to drive the sector forward in ways that they never would have considered doing had it not been for the crisis. This this is crisis leadership.
155:30 - 156:00 all five of those stages, not just engaging in the damage control or the response. So what does that mean for you as a leader when you think about over a period of time? What is your response mechanism? If our focus is on damage control, if our focus is on simply responding to or reacting to the here and now, we might fix that problem, but we're not setting ourselves up to really reap the benefits that could come
156:00 - 156:30 from the learning that takes place from those situations. The management behaviors, you see them here. You're reactive. You're focused on damage control. It's a short-term focus. limited stakeholder engagement because you surround yourself by a very small group of people and you hunker down in the war room and you say, "Here's what we're going to do." Right? Some of what we heard earlier today is how do I engage more people? How do I go to the person who's five levels down from me but is on the ground floor and
156:30 - 157:00 understands what or why we're in this situation and how do I build that information into my decision-making going forward? Okay, these management practices are not bad. They're not wrong. They are in fact necessary. But if that's all we do, then we're not building a culture for success. If instead we think about, yes, we have to be responsive in the moment, but over time there's still more work to do. We need to identify what the
157:00 - 157:30 opportunities are around the business recovery. We need to start engaging in learning practices. That's what differentiates those companies, those leaders who are successful in managing a crisis from those that are not. Here are some examples of leadership behaviors during crisis. You're building trust into your system. The worst thing is if a crisis happens and you have not created that foundation of trust within your
157:30 - 158:00 workforce or with your clients or customers. when something happens and you then need them to be there for you. If you don't have that foundation of a trusting relationship, they don't want to be in that context. They don't want to be stuck in a really bad situation, that's when most people find the door and exit immediately. But if they've been with you all along, if they trust you as a leader, if they believe that you've had their best interest at heart, that's when you get the team of people that you need and you go through this together.
158:00 - 158:30 Building trust is a critical aspect of leadership and building culture. Again, being prepared, thinking about what are the possibilities that might come from this experience, engaging in reflection and engaging in learning. This is what we teach our students and this is what I know the best companies and the strongest cultures engage in. So, what are the opportunities to be realized? one, decreasing the limit the
158:30 - 159:00 possibility or likelihood of future negative events or two increasing the possibility of future positive events. It's that simple. You operationalize what those outcomes are, but it's either going to be good or bad. I will end by sharing that we think about the triple bottom line. I like to think of it as a quadruple bottom line. One of the things that we must be thinking about as leaders is preparing.
159:00 - 159:30 Preparing ourselves, preparing our teams, preparing our organizations for the unexpected. And Lord knows we are in an environment right now where a lot of things feel unexpected. And those who have been prepared are the ones who will come out of this context the best. Thank you. Thank you,
159:30 - 160:00 Erica. As we dive deeper into leadership and corporate culture, I'm pleased to announce our next speaker, Mark Schneider, the former CEO of Nestle. From morning coffee to evening treats, Nestle touches billions of lives each day. Under Mark's leadership, from 2017 to 2024, Nestle went through a remarkable transformation. Prior to Nestle, Mark was the CEO of the Fresnius Group for 13
160:00 - 160:30 years. With over three decades of leadership experience, Mark brings unique insights into how corporate culture can transform business excellence and long-term performance. We can't wait to hear from you, Mark. Please join us on the stage. Well, thank you so much for the kind introduction and also thank you to Nogus Bank for this invitation. And it's a new
160:30 - 161:00 situation because in the past when I had speeches like this, I would be supported by lots of samples in the back of the room, KitKat, chocolate, espresso coffee, what have you. Today, I have to convince you just by the strength of my argument. So, it's a bit of a higher hurdle. And um I'm asking for your understanding. Um I wanted to blow out Norris Bank for not just the invitation but also for adding leadership and culture to the roster and the agenda of
161:00 - 161:30 this conference because many of you in the room are experts at running your DCFS, valuing a company, valuing a business opportunity. But I do believe that having a handle and having your own thoughts about a business's culture and leadership is an important consistency check. It's another dimension that helps you tell apart a story that just sounds good on a PowerPoint from a story that is true quality and that's more likely to be resilient and sustainable. We heard in the previous panel, you know,
161:30 - 162:00 quality companies are hard to find. And I do believe that one thing that all quality companies have in common is this strong culture. Something that creates a legends between the executives working for that business and the company and also among the executives between each other as a team and uh hence it's important. Now I wanted to share a few thoughts on this. So first of all to put in the overall perspective of a CEO's job um there's lots of things you're doing day in day out. I would group them
162:00 - 162:30 into three major buckets. And this is not by order of importance just to enumerate them. The first one is portfolio and strategy. So what is it as products and services you're selling and why do you believe you have longer term sustainable competitive advantage in it? Second part is structure and incentives. So basically how do you group the teams in your company in ways that all of these good things are being
162:30 - 163:00 brought out the door in a successful manner. And the third one is culture. And um culture is something that is somehow different from these first two in the sense that you can't just every once in a while revisit it. You have to live it every day from the moment in the morning you walk into the door to the last email at the end of the day. What you have to watch out for is not just the factual answers you're giving or the factual announcements you're making. You also have to watch out for the
163:00 - 163:30 consistency like what signals am I sending into the organization and uh does that make sense compared to what I said yesterday, last month, last year because if you change your tune um every so often, I think you do confuse the organization. So that consistency and being somehow in sync with where the culture is coming from and where you wanted to get to over time is really really important. Sounds pretty obvious, but look, I mean, CEOs are no robots. I mean, we're humans and we're subject to
163:30 - 164:00 um moods of the moment. We're subject to different, you know, exposures over time. And so bearing and and and displaying that consistency over time is more difficult than it sounds. Now, as you as investors look at culture, um a few things to think about. First one is culture is incredibly sticky. The larger and the more historic and iconic an organization, the more
164:00 - 164:30 sticky it is. And the reason that's important to you is when you have CEOs telling you that for a large long-standing historic company, they changed the culture in the course of two or three years. At the risk of giving you a provocative statement here, sell the stock. Okay? because honestly either these people don't really know what they're talking about and are out of touch with what's really going on inside the organizations or they're vastly
164:30 - 165:00 overselling uh their own achievements. Both of these are not good. Uh culture change does take a lot of time and uh the best way for you with your exposure to financial industry to judge that think back to all these banking mergers in the 1990s and early 2000s. To this day with many of these large financial institutions when you walk into these companies you can sometimes tell apart you know one part from the other in those mergers coming together.
165:00 - 165:30 So cultures are incredibly sticky and industrial firms are not different from that. Next one um culture in most attributes is not a wish list. So if someone presents to you a culture and it has only positive attributes, it's a good moment to be suspicious. On most attributes, there's a spectrum. So think about, for example, speed versus stability. So if someone
165:30 - 166:00 claims that their organization can turn on a dime and react in line with fastest ones in the industry, what does that mean for resilience in the face of bad news? What does this mean for the ability to sit out a poor quarter or a poor year and not lose sight of some of your longerterm objectives? And most of these things do happen on the spectrum. You can't just pick the positive one of each and claim that that's your culture going forward. And so when you have these conversations in the future, when
166:00 - 166:30 you hear too many of the good ones, ask for the bad ones. Ask for what it means for the other side of the spectrum. And you know, is there something in the conversation that's missing? Next one I wanted to talk about is as a CEO how do you actually change and shape culture and um in my view there are two levers a short-term one and a long-term one the short-term one is using the soap box for lack of a better word that every
166:30 - 167:00 CEO has inside the organization outside the organization where essentially you indicate the way you want it to be And then in addition to all the communication events that you have, whether it's small groups, individual meetings, or large group meetings, when every time you're facing a decision, you're trying to essentially link that decision to some of these attributes you're talking about. And this way, you kind of reinforce it. But that's communication. And um while it travels
167:00 - 167:30 pretty fast in an organization, you can only you can only go so far when it comes to the sustainability. Uh the long-term part, the true stickiness that lasts over generations is the one that happens through people. And there it's about selecting and promoting the people that you believe embody the cultural attributes the best way that you would want to see for your organization or in your outside hiring selectively
167:30 - 168:00 advancing those attributes. And there you see why it takes a lot of time because you can't turn over entire large groups of leadership teams at the same time. So this takes patience and it's always a balance between the change you want but then also not destabilizing the organization and hence that's the reason why it can easily take 5 10 15 years as you know not just your senior leadership team but also the next layers of the organization um get changed in that
168:00 - 168:30 regard. That's the more lasting one. That's the one that leaves a legacy behind. And then obviously as you change from there, as your environment changes and you would want to evolve and migrate your hers, you again have to be very patient about that. There is no shortcuts. Uh again, those short-term situations usually um do not have staying power. It's important to keep that in mind. Now when it comes to large organizations um let me highlight two common pitfalls
168:30 - 169:00 and this is not a specific reflection on any specific company but from many conversations with CEO peers simply what I heard and what I also experienced in my own professional life and large companies may have many strengths but there's two common weaknesses to watch out for the first one is inside focus in many large companies especially the ones that have a deep vertical structure. You may spend a long time in your professional career before you really
169:00 - 169:30 have to deal with the outside. Remember, a salesperson, a junior salesperson may see a lot of the outside, but they're applying decisions that are made at the senior level like a price list for example. So, it's only at the top of the organization where you get into these trade-offs like raising prices versus market share or some other key decisions that link the outside of the company to the inside of a company. And the larger a business is um the
169:30 - 170:00 longer it takes executives to get to that level and before all of your advancements, your your your career progress usually gets determined by playing the inside game. And um that's why I believe when it comes to schooling senior leaders usually a smaller company tends to be the better breeding crowd and with larger companies that whole notion what do you do from the top to counter that inside thinking that requires constant attention. The other one is
170:00 - 170:30 accountability or the lack of accountability. And here again, the larger, the more complex the organization, the more matrix the organization, the more you find that people oversell the good things, like 25 people claiming that they were the ones who created the good news and underell the bad things, look the other way, hoping that it doesn't get attached to you. And that's also a very common pitfall and one where like with the inside focus there is no simple recipe
170:30 - 171:00 for how to counter that. What you have to do as a leader day today is to try and call out these situations. Try to be sure you instill that outside thinking. try to be sure that you do find the people that were responsible for the good things but also for the things that didn't go so well and that there's justice in the organization because once people feel that they can get away with a lack of accountability it goes downhill from there. So those were some of the high
171:00 - 171:30 level thoughts I wanted to share. I wanted to leave on something that's a bit of a gear shift from what I was just covering before and that is I wanted to tell you that um in total I've been serving as a public company CEO for 21 years and when I look at how leadership teams have changed over those two decades I've seen a remarkable change coming from diversity inclusion and I've seen very significant changes not just in the sense of correcting historic
171:30 - 172:00 wrongs but also I've seen tremendous benefit to the businesses because the quality of the discussion has improved so much. It's a whole different discussion that brings different views to the table, a lot more bandwidth and kind of enabling organizations that are designed to serve society to actually do that because society does come with a much broader cross-section than what leadership teams used to have in the past. And um what I wanted to tell you
172:00 - 172:30 is obviously in the current debate it is important that for a large company everyone follows the local laws in every jurisdiction where they work. But I do hope and I also hope that you as investors pay attention to that that the overall spirit of what can get done with more diverse more inclusive leadership teams that that doesn't get lost because I do believe that is one of the true areas of progress over the last few decades. And I do I also believe there is ways to go and I do believe that in
172:30 - 173:00 addition to the moral ethical standards I do believe there's also business rational with it. I stop it here and look forward to the panel. Thanks. Thank you Mark. That was excellent. Our next speaker is Maretta Vadwin, CEO of Vizma, a leading European supplier of business critical software solutions. Moretta also serves as a
173:00 - 173:30 board member for the Kongsburg Group and sits in the corporate assembly and election committee in Ecuin. Maretta became CEO in 2020 after having served as a deputy CEO and chief HR officer. She has solidified Vizma's position through her talent focused approach, recruiting and retaining excellent people while at the same time skillfully navigating acquisitions and organizational restructuring. In 2024, she was
173:30 - 174:00 recognized by Thinkers 50 as one of the world's most inspiring leaders. Her direct leadership approach combined with her focus on execution means that Maretta is a role model not only at Visma but also for the broader technology sector. Please welcome Maretta Vvin. Thank you very much for that nice
174:00 - 174:30 introduction and thank you Nikolai for letting me present uh Visma today. Uh that is a true honor. Today I will be talking about how we in our company use culture as a value driver to drive our success. And I have to say that in Visma we have a strong culture that we are immensely proud of. But culture in Visma is more than warm words. It's not just warm
174:30 - 175:00 words. In addition, it's more than soft input to financial outcomes. In Visma, we quantify and we operationally execute on how we drive the culture and how we make sure that the leaders are equipped to drive the business in the way that it should be. Recognizing that some of you do not know Visma, I do appreciate that I want to spend just one minute on our
175:00 - 175:30 company today. We are the largest privatelyowned company in software in Europe and we are present in 33 markets both in Europe and in Latin America. We do pride ourselves in making a lot of acquisitions. Now in uh 2024 we acquired 33 companies and that's a normal year for Visma. After I became CEO in 2020, I
175:30 - 176:00 have been a part of more than 180 acquisitions. So this is an important part of our growth journey. Definitely. What do we do? Well, you mentioned that really nicely. We provide missionritical business processes and the core of our deliveries is accounting, payroll, e invoicing and tax. And our customers, they're SMBs and their local governments. And our products and our product suites are perfectly tailored to the local needs in
176:00 - 176:30 the markets in which we operate, giving them a competitive advantage. This is our passion and through our story, it's gone pretty well. So looking at our performance, we are younger than several of the companies that have been presented today. Great companies I have to say. So, we've not been around that long, but we've been around from 1996. And as you see on the chart, we were delisted back in 2006 and have been
176:30 - 177:00 privately owned ever since. When I joined Visma back in 2011, our revenue was 247 million euros. Today, we are closing up to three billion million uh billion. And in addition, we have increased EBA by 14 times in that period. So I have to say that we are quite proud of uh our results and I'm confident that we will
177:00 - 177:30 continue that journey going ahead. So what is the reason for our success? I usually say keep keeping it simple. It's twofold. First of all, it's about our strategic positioning. I talked about how we deliver missionritical business software to the markets that we are present in. We pride ourselves in having the latest technology. We have been on a cloud journey for many many years and now more
177:30 - 178:00 than 90% of our revenue is cloud and with AI coming wow like like Nikolai stated it's a really nice time to be alive. So many changes so many positive changes going along. Definitely in addition to our strategic positioning and stren staying true to that we enter in to new countries through acquiring stars with the latest technology, great products within our strategic positioning and we try to make very good
178:00 - 178:30 companies become great companies based on our competence and what we know staying close to the core. In addition, our culture is a second reason for our success. We have a very strong culture in Visma. Through acquisitions, we today actually present uh the largest entrepreneurial network in Europe. 70% of our the founders, they stay put in Visma after 5 years. And you can think
178:30 - 179:00 about how you would describe the culture of Visma actually with all of the entrepreneurs. I don't have time to go through that today but the pace is quite fast and as was mentioned by Mark yes we make mistakes a lot but we learn from them we experiment and we fail fast and these two parts growth and culture they are two sides on the same coin we do believe that focusing on culture drives value so let me showcase
179:00 - 179:30 how we do this in Visma I'll present another flywheel today where culture is a massive driver of our business and since we do a lot of M&A let me give you an example on how we operationally work with M&A within the business and drive culture. So first of all, when we look for companies, we look for stars. We look for already successful entrepreneurs that have a proven track record of a great product
179:30 - 180:00 that the customers like. And of course, when you meet these entrepreneurs, several of them we have been talking to five, 10 years. We're talking to them about thinking about giving their baby a new home. And for all of you that are parents, of course, you want to make sure that that home is the best home for that baby. So, the first thing we do when we're talking to all of these amazing companies is that we put our sales hat on naturally and then we dig into the
180:00 - 180:30 DD. Several of you as investors, you probably do a lot of DD and I have the privilege of doing lots of DDs myself. I've been a part of more than 300 acquisitions and of course lots more DDS than that. And we do all the regular stuff. We do the DD ourselves, the legal, the tech, the commercial. The list is long. But in addition to all of those natural tracks, we also do a very thorough people DD. And to cut it short, there are two things that are immensely important for
180:30 - 181:00 us. First of all, it's very important to have clear expectations. So companies in a process when you do when you when you meet them, they always have a business case. And of course in the DD process our job and your job as investors is to make your own business case. When we have done that based on our knowledge we focus on having the tough discussions in the DD where we showcase what our business case looks like. Where do we
181:00 - 181:30 believe they should focus? Where do we believe that they will grow? How much growth do we see in the next five years? And we have all the tough discussions there to clarify the expectations. And if we do not see in those meetings that we find common grounds, we walk away from the deal. If we see that we do not see the same going into the future, we walk away from the deal. If we see in the negotiation that it's tough, we walk
181:30 - 182:00 away from the deal. And we showcase our business case. And that actually becomes the budget creating mutual trust, no surprises, all the tough discussions taken while we do the DD. The second thing that we do is that we do a lot with respect to trying to figure out who are you, what is your culture, is it a cultural fit, can we work together? And that's not about being the same. We have lots of subcultures in Visma, but it's
182:00 - 182:30 about coming together with the same core values because all of us are looking to work with people that we trust. So, we talk about that as well and we look for patterns. Do we find facts based on what they're telling us? Can I trust the data points coming in? We also talk a lot about oneto ones with the talents. What needs to be in place for you to stay put in five years? Because these wonderful entrepreneurs, these wonderful employees, it's a successful company
182:30 - 183:00 already and all of you know how costly it is to recruit and possibly wrongly recruit. We want to keep them put. So addressing this and figuring out if we're able to deliver on these promises, that is also something that we really double click on. And when we figure out that it's a cultural fit, the strategic position works, we agree on the business case, well, that is when we onboard them to the Visma family. There are no
183:00 - 183:30 surprises. We onboard them to all the KPIs that are important to us. Of course, in addition to people, uh, we have tech, we have customers. I don't have time to go through that, but we're very data hungry. So we roll them onto the system so they get a lot of intel on what kind of statistics actually will drive growth into the future because in general financial results are just a consequence of you focusing on what really drives the business. We measure, we reflect and of course we follow up
183:30 - 184:00 and take action. And just to give you some flavor as to how we do that in Visma, we have people dashboards that are live that they get all the time giving you the natural KPIs. In addition to the people dashboards that we have made ourselves, we of course measure engagement. We know that engaged employees and the right employees, they provide a lot better performance. And here you see our statistics. Many of you
184:00 - 184:30 probably are aware of the uh engagement net promoter score. Our score is 63 which was represents the 5% top of the tech industry which we are definitely proud of. But most importantly is our leaders. They get the measures. They're transparent. All the employees see it. We do it monthly. So you take a pulse on the organization all the time. Not taking a lot of time to get in the data. It's just six questions and they tra
184:30 - 185:00 change depending on where the business needs to be and what kind of KPIs you need to get in so that they get valuable input that they can act upon and that they can address. They get facts to have good discussions with their teams and what is the massive driver of engagement that is their leaders. People follow leaders. They don't follow companies. So we measure this as well. We have a leadership index. All of us
185:00 - 185:30 are measured. 1500 leaders including myself. I always find it immensely interesting when I get the feedback because the feedback is often unspoken. So you get a lot of interesting input and it helps you to figure out actually what to focus on. And being a leader all of us know it's not a popularity contest. It's hard work definitely. But getting this input very important and it's not as though it always needs to be high. We change a lot
185:30 - 186:00 in Risma. I usually say that change is our stability and of course in the midst of a transition and especially if it's not a welcomed one of course it will drop but in the long term we cannot have the leadership index being weak because then the talents will leave because the people they follow leaders they don't follow the companies and this is not to fingerpoint for anyone it's for development and we coach them and we help them we have
186:00 - 186:30 leadership development tools we need to equip our leaders Because a lot of the leaders today, they didn't educate themselves into being a leader. They became leader because they were great with regards to the field. So we do spend a lot of time making sure that we help them and follow up with respect to actually getting the tools you need to be a great leader for your people. And then in addition, we uh also of course in addition to getting your
186:30 - 187:00 feedback and also looking at like-minded companies, you don't only get feedback from your own company, you get it from everyone. We put together like-minded companies, like-minded managing directors so that they can learn from one another. They learn from their successes, they learn from their mistakes. So typically we often say that we actually we celebrate also when we make a mistake because then we can put master classes out to everyone making sure that they don't make the same mistake again and then we put master
187:00 - 187:30 classes with the best successes so that the others can copy. It's a very fast way to be quite successful early out. And how do we make sure that we are innovative and that we experiment? Of course we make mistakes a lot. I share my mistakes. so important actually to foster this culture. In addition, of course, to putting companies together and people together, there's lots of mobility within the
187:30 - 188:00 firm. And then you go back to the flywheel and we show the value and the value you perceive. If you look back the recent three years doing several acquisitions, uh it's quite easy for me to showcase the value that we provide for our companies. We acquire very very good companies and in tech we're always measured on the rule of 40. You add up the margin, the EITA margin, and in addition you add up the revenue growth.
188:00 - 188:30 And on average, you see here the light blue is all of these 100 acquisitions that we've done these recent years and what their rule of 40 score was when they entered in. The second bubble is what their rule of 40 score was after one year in Visma and that actually increased eight points. That's pretty nice. So I will go back to where I started. We have historically done pretty good.
188:30 - 189:00 I'm very very proud of that. And why do I feel confident that we will continue our journey going forward? We will stay very focused on our strategic positioning. I like what was commented early you earlier. You can't be everything for everyone. Uh we are very niche. We're very true to our strategic positioning. And in addition to that, even though we are a tech company, we will be continuously working to build this culture which is so so strong in
189:00 - 189:30 Visma because at the end of the day, people want connection. They don't want perfection. Thank you. Thank you so much, Meritta. Could I invite you to take a seat as we transition into a panel discussion? I'd like to invite Mark and Erica to join us on the stage again.
189:30 - 190:00 Erica will be guiding this discussion on how different leadership approaches can transform organizational culture. Thank you. I feel very fortunate to be able to moderate a panel after having heard both of you. As you know, we had questions in advance, but I have so many
190:00 - 190:30 more questions now that I've heard both of your remarks. And I actually want to start with something that was a theme through both of your your comments, and that is around the people. Um, Moretta, I'll start with you because I find it interesting that prior to becoming the sole CEO, you had a a career in HR or that's not typically a job that is promoted into the CEO role. Tell us a little bit about what you learned about leadership by leading the human
190:30 - 191:00 resources function. Well, uh, I know it's a little bit of an odd way to enter in as as a CEO and and stepping back, it was previously talked about, you talked about Enron. Uh, I was working in Arthur Anderson at the time. I was a financial management consultant and it led to the dissolution of an of Anderson and in Norway at that point in time, we were merged with EY. Uh, we were approximately 200 2,000 people in EY, 2,000 people in Arthur Anderson. And
191:00 - 191:30 everyone thought that this merger was going to be great and simple because the two companies they provided the same services. And I was asked to analyze and to uh to get the possibility actually to to merge these two and colllocate 26 offices. And during that time I did the math afterwards. Some of the collocations were were were great. Some of them were not so great. And the pattern was this. where we had great
191:30 - 192:00 leadership, where they were able to come together from a cultural perspective because at that point in time the culture was quite different in these two great companies but it was different and sticky where they were able to work together that actually worked and we got financial great performance where they weren't we had a struggle so that actually made me want to move over to working with HR and and since then uh also during my studies I I studied psychology I've and coaching and and I'm
192:00 - 192:30 very passionate about the area. So, um I usually say that winning in most businesses is more about having the right people than anything else. I feel lucky that I have been able to actually see how performance is so tightly linked to leadership and I learn something new with respect to leadership every single day. Uh so as as long as you're able to sort of speak of these warm words culture and actually operationalize it in the way that we have in Visma uh it
192:30 - 193:00 runs really nicely. Yeah. Thank you. So Mark, I want to pick up on what you ended on and that is um what the insights that you've had around the role of diversity and inclusion in the workforce and as you also alluded to certainly in the United States that's something that is under tremendous pressure at the moment but I'm wondering given your journey your leadership journey now across multiple companies 21 years as a CEO how did you come to
193:00 - 193:30 identify that um engaging and and and finding ways to build a culture around a diverse community was so central to the success of the companies that you've run. Look, I think like most leaders and most corporations, it happens step by step because those 20 years with a lot of company, a lot has changed and um when I compare you know today's executive leadership team, whether it's Nestle, Fzenius or any other large company I'm aware of to what it was like
193:30 - 194:00 uh 20 25 years ago, it's certainly a lot more diverse. it represents the globe in much better ways. There's better gender representation and um I found that in addition to bringing these different perspectives to the table, the tone of the table also changed. It's no longer just about ramming something through and trying bulldozing, you know, other arguments. It's about a true competition of ideas and also frankly most of the time a more civilized debate. And um so
194:00 - 194:30 when you see that and when you see better decisions, better results coming out of that uh over time, step by step, you become a true believer. Uh I do want to highlight nonetheless and this is important to me. I mean we were doing two things all of us over those years. One is we were correcting historic wrongs. Let's not lose sight of that. Diversity inclusion is not a business tool only. Okay? It delivers results. It's it's one of these perfect cases of doing well and doing good at the same time. And that's important to me because
194:30 - 195:00 let's not belittle it to just being a strategy. Thank you for sharing that. Um Merit, I know that part of what's important to you around the diversity space is women and you talk about the role of or your your desire to ensure that women are actively engaged in the work at Visma and other places. Tell us more about why that has been important to you and how you've seen it evolve. Well, specifically, I think it's uh the most important part of diversity. You
195:00 - 195:30 mentioned it very well, Mark, and it's really important to increase the talent pool. And what we have experienced, especially in tech and especially when you acquire a lot of amazing companies in general, the entrepreneurs, there are very few female entrepreneurs. Uh I unfortunately can hardly remember uh many companies that we have acquired where the females uh were entrepreneurs. Um and I think that also is maybe on average a gender difference that that
195:30 - 196:00 that men are more risktakers. If I look at the portfolio of all the companies we have as the companies grow and become more sizable and more structured we have more females coming in uh and actually professionalizing to a larger extent. There's lots of uh I'm just trying to sort of average it out, but for me it's been extremely important to increase the talent pool. It's been interesting to see how you need to tailor ads and how you approach females
196:00 - 196:30 versus male because we have different preferences. uh we have always these past years been spending a lot of time making sure that we poke people uh on on their shoulder if we believe that they should actually apply for a job because on average a lot of males can look at a description and say I know 50% I'll go for it while the females go I know 90% I'm not going to apply so so actively
196:30 - 197:00 pinpointing to get more people and a more diverse group in the process that has had a really good result and now we're actually at 36 and a half% of female leadership in Visma. Could I just build on that? That meshes incredibly well with my experience. So the number of times I was actively motivating, encouraging women to take a promotion where they felt they weren't ready. I've never heard that from a man. And so clearly there's something here that um you know you actively have to kind of push for and work forward to make it
197:00 - 197:30 happen. That same dynamic happens in the NBA classroom as well. see that quite regularly. Um, so one of the outcomes of a diverse workforce is innovation. There's plenty of research that says that the more diversity you have in in the decision- making and the the idea generation, the more innovative, the more creative outcomes will will result. But at the same time when you have that diversity it's it's because there are differences in how
197:30 - 198:00 people approach the world that it can become contentious or challenging. It can take longer. How do you balance the benefit of the great outcome from a diverse environment visav the the tension that is oftentimes created when you have people from disperate perspectives. Erica the risk of twisting it slightly when it comes to innovation. I mean obviously no one here in the room would disagree. It's a positive thing. Everyone loves innovation. Um the moment of truth is when it goes wrong. Mhm.
198:00 - 198:30 Okay. Because every time you try something new um there is a certain risk depending on what you're endeavoring to do that it may fail and then what at that moment and that separates in my opinion the Sunday pep talk we all love innovation from walking the talk. Um, so if someone with the best of intentions, no matter whether this is a diverse leadership team or not, whether some if someone with the best of intentions has been trying to advance the organization, has been trying new things, product
198:30 - 199:00 innovation, R&D, whatever, a new marketing campaign and it falls flat. How do you handle that situation? It's usually bad news. It's usually something that, you know, becomes visible. Uh, you may have announced the product. Uh, you may lose market share. you may not meet your quarterly results but nonetheless I mean those are the moments where all these good attributes about culture and you know integrity and being supportive and all of that that's what's being put to a test and if you then treat it like
199:00 - 199:30 the world is coming to an end people will basically go back to their old behaviors and uh this is what I talked about earlier like moving away from the accountability like it's someone else's problem you like to add anything to Well, in in Visma, we we have a difference between experiments and projects. And I would say that projects are typically me delivering on the budget. Uh that's something that we can't miss. But underneath the hood, we
199:30 - 200:00 can do a lot of experiments. uh and uh and I agree that um it's how you respond and how you drive the business and actually figuring out that experiments are great and we even experiment on acquiring companies. Sometimes that goes wrong as well. And then it's more about what now? How to how to react? Because when things go wrong, if you fingerpoint and don't focus on okay, it's gone wrong. What do we do now? What can we learn from this? Then we will continue to innovate and
200:00 - 200:30 experiment. So, so I think it's a balancing act and it's not a simple one. when it comes to your question on speed uh versus sort of experimenting I think it's important to uh depending on the line of business naturally but but but we have a lot of pilots going on and instead of making everything perfect we let several customers try the pilots and we get the feedback and then we fail fast so in general when we have experience we know
200:30 - 201:00 that we have succeeded when we know if it's a success or a failure instead of waiting to the perfect launch h and then suddenly things go wrong because then you actually become more resilient and you're able to do all these experiments at once without this huge process that actually underpins the results. So I want to pick up on this concept because you both represent different types of of firms. Uh BISMA is relatively new. It's still in high hyperrowth mode etc. You spent many years at Nestle which is a
201:00 - 201:30 stable long-standing company. what at in Nestle over the time that you were there um what have you seen as some of the biggest challenges? So I spoke about crises what were some of the big tumultuous events that you had to navigate when you were at at Nestle? Well, obviously a good one to talk about in general that uh touched all companies was uh how were you dealing with a once in a century event like CO and um good
201:30 - 202:00 example of the power of decentralization because there was no way from one place on earth to try to manage that situation. uh there's a few things that you know you can give out as principles like uh you know you trust that people will follow those principles but uh all the laws locally were different and um the timelines were different and then you really I mean this is one of those moments where in my opinion culture shown because um you handle your own situation in our case Switzerland where
202:00 - 202:30 the company is based and then you try to place some of these principles in the organization but then you have to trust that in 197 countries people will make it happen. one of the events I literally remember from late 2020. Um the first time we were with all 197 back together on a video. Um I wanted to talk about the next stage of the crisis and um I noticed everyone was talking about that year and what it meant to them and I was
202:30 - 203:00 getting a little impatient and one of my dear colleagues he was sort of tugging me on the shirt and saying let them talk. They need to talk. I mean they did something really really amazing and that is adjust to this once in a century crisis with flying colors. Um they need everyone have their traumatic experience that need to talk and then we'll transition to you know what are we doing in 2021. Um but this is one of those where clearly in a broadbased global corporation um if you're trying to
203:00 - 203:30 handle this from one place you'll fail and this is where culture takes over. Absolutely. So if I have my timing correct, you started at Visma in 2020. Uh the CEO 2020. I started in Visma in 2011. Yes. But I started as CEO CEO in 2020 when society locked down. Right. So I want to I want to have you talk about your experience as a leader coming into an environment. You'd been there. You you had relationships, you knew the company, but you were coming into the
203:30 - 204:00 prominent leadership role at the time when the world was being turned upside down because of the pandemic. Walk us through how you observed culture helping Visma navigate that time period and what role you played as a leader in that. Well, it was definitely special times. I think all of us experienced that people need to connect. They need to meet up and that was close to impossible in that time. So I spent a lot of time having meetings virtually naturally speaking to
204:00 - 204:30 the whole organization, speaking to the different leadership, having tailored meetings to the different countries where we were in because there were different challenges depending on where you were. Uh we have some of our companies that were were sort of um more scared than others because people were pulling out of some of the countries. So it's I think the most important thing I did was communicate, communicate, communicate. Make sure that uh our
204:30 - 205:00 employees felt safe, that we would continue, that we would do our business as we always had done, being the safe haven. Uh and addition uh taking care of our local communities and our customers. And we had been working virtually a long time, naturally a tech business, but our customers, so many of them, they weren't used to this. So it was an immense pressure on the employees and trying to figure out of course making sure that especially customer support they were so heavily loaded with
205:00 - 205:30 work uh trying to find these small openings making sure that we have walk and talk with people that move that live close to to one another. We have mentors coming around. So we did a lot of operational things just being very close to the organization speaking to people speaking to a lot of people speaking to the talents uh and and in general I guess you can say in a time like that either the culture comes together where it sort of falls apart and and luckily
205:30 - 206:00 for our sake we we really came together. I'm I'm really proud of what we accomplished but I'm so proud of what society accomplished in such an immense shift. Yeah. One of the things that uh I teach in business schools is culture and what that actually means and where it comes from and and Christian mentioned culture strategy for breakfast which is something that we've all heard um but we don't often pay attention to how culture is truly developed and one of the things
206:00 - 206:30 that we explore with our students is that culture is a component of three different things. It's sort of understanding the environment or the context that your your company your organization is in. It is the leadership and the values that are propagated by the leader in that company. And it's about the strategy or the processes or the policies that exist. And culture, a strong culture is created when all three of those things are in alignment. when
206:30 - 207:00 the environmental context that your firm is operating in is aligned with the leadership values which is aligned with the strategy and the policies that are put in place and that's when you create a strong culture and that's what leads to results. Have you experienced or seen times when there was a breakdown in the alignment of those three areas that led to challenges that you faced with keeping the culture together?
207:00 - 207:30 I have to say I haven't. So, uh, going back to when I became the CEO, 2020 society lockdown and I think from 2020 up until now, it's been one extreme after the other, I have to say. And every time we we have been able to come together and and work together, but it does take a lot of time. Uh, making sure that you just actively communicate and make sure that people understand. Not everyone needs to agree all the time. Everyone has a voice, but not everyone
207:30 - 208:00 has a vote. But but just explaining where we are, keeping calm, thoughtfully prepared and ready to act and making sure that people understand why we do what we do. Um I I haven't had that opportunity luckily I have to say. Uh but maybe you have because you have been a CEO longer than me. It's been longer but look I also haven't witnessed that complete meltdown. Uh do keep in mind I agree the consistency is important to bring all of these three dimensions in alignment is not something that happens on one day on a drawing board. It's
208:00 - 208:30 something that you kind of move over time and then hopefully it stays close to each other. Um and the minute something prize lose it's usually because of some sort of change in the environment. Something's changing your industry, something's changing among your people. um something that really kind of brings it into a state of imbalance. And I think it is important then to react early to that before it disintegrates. So it's one of those where first you might just hear a little noise and then all of a sudden goes
208:30 - 209:00 poof. And so it's important to recognize that early and do something about it because afterwards it takes a long time to put it back together again. Absolutely. We have just a couple minutes left and I want to ask a question for each of you and that is as you reflect on your own leadership journey. Were there or has there been a pivotal experience for you that really was a demarcation in terms of being a transformation to how you thought and act as a as a leader?
209:00 - 209:30 Do you want to go first? Yeah. Um so look when you mentioned micromanagement earlier and uh talking about Nikolai that kind of rang a bell with me and uh it was a situation about um 20 21 years ago. It was my first year as CEO at Fzenius and things were going incredibly well. I was very proud of how things were going. Had a fantastic relationship with the chairman uh who's very supportive and um gave me all the support and advice and um and and coaching I needed. and at one point
209:30 - 210:00 after a board meeting took me aside and basically saying look I couldn't be happier as a chair with you as a CEO you're hardworking you're transparent you're on top of the facts I'm not sure I would want to be one of the people working for you okay nice to hear that from your chairman um the way he shoed in it was absolutely spoton because and this was not out of bad intentions when you get promoted to a job like this age 37 you don't want to fail you're working hard
210:00 - 210:30 and uh you you're basically trying to ensure everything works just so and in that process unfortunately you become too prescriptive for the next people working for you. So it's it's not out of bad intentions. I don't think generally for the rest of my career I was a micromanager. It needed that nudge and he had a point and I remember that was probably the best cup of coffee in business I ever had. I don't remember what brand of coffee it was but the advice I got was super super helpful and as a result of that over the years uh
210:30 - 211:00 you know as long as I'm convinced that people are pulling in the same direction let them figure it out in their ways and uh you know they will take the pride in it'll create more allegiance to the business on their side and uh as um you mentioned earlier I think you know that pride for as a leader of them finding ways that you weren't aware of you know that that's something wonderful no one has are all the time, right? Absolutely. Anything for you, Maretta? Uh very quickly, I think my most learning
211:00 - 211:30 experience was I hired a managing director back in the days. He had been a CEO uh another company. He had the whole strategy planned out. He was amazing on all aspects, but when he joined, he made all the right decisions, but he wasn't able to get the people along for the ride. So, I had to fire that person one year later. And uh for me that was a very important learning experience. You have to as a managing director, as a leader, you have to make decisions with speed and conviction, but if you don't
211:30 - 212:00 get the people along for the ride, h you're out of a job. Well said. Thank you both very much.