CEOs Drop Warm and Fuzzy in 'Ruthless' Push to Squeeze Workers

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1:31Carol Massar:Thanks to genius from Global Payments. Scheduling, personalized. Checkouts, instant. Absolutely genius. Big League reliability for any business. That's genius. Bloomberg Audio Studios. Podcasts, radio, news. This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus, global business, finance and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenevek on Bloomberg Radio. The focus now building on performance cultures where expectations of workers are dialed up, B player risks getting managed out, and executives losing patience with the usual bureaucratic strangleholds on efficiency.

2:26In other words, Carol, CEOs are done pretending to be nice.

2:30Carol Massar:Yep, thing of the past. Matt Boyle writes this. He's Bloomberg News senior reporter for work in management. He joins us here in the Bloomberg Interactive Broker Studio. So well-written. Yes. You know, apologies for just completely just ripping off your entire nut graft there, which I did. But it was so good, I had to read it. Carol makes a really good point, and that's exactly where we want to start, which is this piece does such a good job of illustrating the change in power dynamic between executives and sort of the labor force. And I think it really speaks to where we are right now. Yeah, exactly.

3:00I mean, we started to see it like with the RTO mandates, right? Get back to work. And we were seeing that in 2023 into 2024. Then all, you know, AI hits and, you know, the white collar recession. So all these things are kind of building. and we looked at each other on our team and said, you know, we're starting to hear a lot more CEOs talk about performance cultures. And you hear high performance culture. You're like, oh, I've heard that before. You know, they do that on Wall Street. They do that in startups on Silicon Valley. But what struck us was we were hearing this from like Nestle. We were hearing it from Unilever, Novo Nordisk, you know, 3M.

3:35All these companies from different sectors, not Wall Street, not Silicon Valley. So we're like, there's something going on here. So we started looking into it. we found that, you know, the mentions of performance culture were rising on earnings calls and in annual reports when they were like, oh, we got to hear from these CEOs. How, what are they talking about? How are they justifying it? Like, why are they doing this? Right. And why now? Is it because they're all watching the same Instagrams about grind culture? Well, there's a bit of that. And a lot of these CEO, I mean, but they're not all American.

4:04This isn't all just, you know, American hustle culture. Yeah. You know, one of these, you know, the CEO of Nestle, the CEO of Novo Nordisk, grew up in America, but he's born in Iran, spent his entire career in international operations. So essentially the commonality is these are CEOs. A lot of them have been inside these companies for years and they're tired of what they feel is a sclerotic, slow, you know, bloated culture, too much bureaucracy, too many excuses given for, you know, B and C players. And for them, they're saying it's over now.

4:38Carol Massar:Matt, is it about CEOs acknowledging that, or is it just a case of, we want to be more profitable, and we've got AI that we can do more with less? There's a bit of that. I mean, new financial metrics are always a part of this. Layoffs are always a part of this. And we all know what happens when you lay off people. Your stock goes up. Your labor costs go down. So that's usually good for margins. But the ones who do it well, anyway, really want to get into the muck, into the inner workings of the company. Now, not all of them are successful at doing that, though. It's a really interesting statistic in that 85 % of cultural transformations are not deemed successful internally.

5:16Wait, what was that saying? 85%. So only 15 % of the time are they getting this right. And you ask why. And here's the reason. The reason is that often people are told what to do differently, but not told how to do it or why. I got a great analogy from a performance coach who He said, this is like a basketball coach saying, I want you guys to score 100 points this game. But he doesn't call any plays. So it's just faster. Go do it. Exactly. Go do it. Faster, faster, faster. Leaner, leaner, leaner. And everyone's thinking, OK, well, what do we do? Now, there are examples of really good cultural transformations.

5:49Microsoft is one. And there, the CEO, Satya, along with the head of HR, they trained 27 ,000 managers on what they were expecting, how to do things differently. So it wasn't just a memo from on high, you know, thou shalt do this. At Ford, they created these sort of cultural, what they call street teams, which is basically ambassadors, people running around the company, middle managers and VPs and the like, who knew exactly what the CEO wanted to see and so was able to model that. So that's what these cultural transformations require, not just a bunch of speeches. You mentioned Novo Nordisk's CEO, Mike Daustar.

6:25What does he want to do at Novo Nordisk? He wants to get rid of, I think, all of headquarters if he could. We had him at an ed board back in January here in New York. He said he just cut the ranks of senior vice presidents in half. But they're in a unique position because of what happened with the rise of GLP-1s and how they controlled the market. Exactly. They were early to the GLP-1. I mean, they were the Danish economy. Yeah, essentially. Essentially. And if you got a job in that, you were set for life. But then Eli Lilly comes in and starts eating their lunch. So CEO of Novo Nordisk is ousted.

7:02Mike gets thrust in. He had been doing an amazing job. He started there at like 21 or something. Yeah, 33 years he's been there, right? He's a lifer. And he immediately says, I can't stand this headquarters culture. He said something like, it takes five meetings and three committees to make one decision. And I mean, everyone I've talked to inside Novo Nordisk and some outside now because they've been laid off. but a lot of, there was a lot of truth to what he was saying from what we heard.

7:26Carol Massar:Amen. Right. You know, exactly. Too many, like, like you've heard about Amazon talking about, we want to get rid of the meeting before the meeting. There was a lot of that. And this is a Danish culture where it was consensus driven. They call that Novo nice. You know, don't speak up. If you've got a different opinion, we're going to come to a conclusion here. It might take eight meetings. Mike's like, this is all gone. I'm sick of this. That's a tall task. It is exactly at a very, at a big company. It's one thing to do this at a startup with 30 people, doing this at a massive company. But CEOs are trying to do this.

7:58A company we didn't even talk about, Bayer, another European healthcare company, their CEO is also trying to get leaner, faster. It's happening everywhere.

8:07Carol Massar:Mike, how much of this is people watching what happened, for better, for worse, but the federal government being shook up and shutting, essentially, complete department? What did I say? Did I call you different? oh did I call you Mike? It's okay we're talking about Mike DeNovo Nordic CEO I've been called worse you know this I'm like did I actually say that? I know Matt really well Matt is it all right going back think again what happened but the Doge stuff yeah the Doge stuff and what Elon Musk did I mean some of this predates Doge I'm not going to say though people weren't looking at that and going wow that's interesting I mean what Elon did at Twitter when he basically laid off you know half the company people certainly looked at that and were like hmm, I wonder, you know, and now we're seeing it like a block, right?

8:53With Jack Dorsey laying off tons of people. So I think that's certainly happening in the backdrop and it's giving people more maybe, you know, freedom or allowance. But I'm probably not inspiring everyone because there's enough problems inside these companies that they don't even need Elon's inspiration. Just to go kind of tie things up, Matt, I'm just wondering about the low hire, low fire environment and to what extent the sort of macro environment has. Well, it's true. There's the low hire, low fire. And one thing we haven't mentioned, shockingly, is AI as well, you know, giving CEOs sort of the freedom or the AI washing where they say, well, we're going to lay off people and, you know, say it's because of AI efficiencies when it's really just people maybe they didn't like or people they overhired three years ago is a big part of that, certainly.

9:38So there is the sort of backdrop of if you don't like it, lump it. I mean, a lot of these people, maybe 10 years ago, five years ago, might have been able to say, I don't like what this crazy CEO is doing. I'm out of here. But now in this job market, you might have to just sit there and take it.

9:54Carol Massar:He is Matthew Boyle. Yes, he is. We love him here at Bloomberg. We're back in a moment. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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13:02Yeah, Stellantis and Qualcomm expanding their multi-year collaboration, integrating Snapdragon digital chassis systems on chips across the next generation of Stellantis vehicles for cockpit connectivity and advanced driver assistance systems. Non-binding letters of intent for AI motive to join Qualcomm technologies. geez, that's owned by Stellantis, that bought AI Motive, that's the hungry-based AI and autonomous driving software company. That was back in December of 2022. So a little bit of a background for this partnership.

13:29Carol Massar:Try to explain it, because we've got a great voice to talk about it. Let's head to San Diego right now and to Qualcomm's head of its automotive robotics and IoT businesses. Nicole Dougal is with us, joining us. Nicole, so great to have you here with Tim and myself on Bloomberg. Tell us about this partnership, and I want you to kind of go into exactly what this means by expanding it for those who understand your world and maybe for those smart investors who don't totally understand it. Break it down for us. Thank you, Carol. Thank you, Tim. Great to be with you. Yeah, you know, our business in automotive has been on a tear over the last many years.

14:08Carol Massar:We are going to exit FI26 at a$6 billion of annualized revenue, which, you know, has grown up 8x over the last six years. The partnership with Stellantis is actually one of a kind. We've been building for the digital future of cars for a number of years and physical AI, as you know, is coming into every single vehicle. The digital chassis that we build essentially allows an automaker to be able to modernize all of their vehicles across the board from connectivity to the in-cabin experience to the driving experience of a vehicle. And this partnership with Antonio and Ned at Stellantis is a one-of-a-kind.

14:48Carol Massar:This essentially means we get to deploy, starting in model year 28, across all of their platforms, from Chrysler's to Fiats to Dodge to the Peugeot brands, the Citroen brands, across every global footprint the Stellantis vehicles are deployed in, which is really every market outside of China, our entire fleet of products. This This is a new change in the way Stellantis is developing their vehicles. It's one single architecture that gets homogenized so that you can move fast, you can become a software company, working with partners across the board to be able to bring self-driving capability, AI into every single cabin, and of course, connected vehicles.

15:32Carol Massar:We've been building this for really the entire industry over the last many years, and this is what we're going to do with Stellantis. So if somebody buys a Stellantis after that model year, any vehicle across Stellantis' portfolio, as you mentioned, after that model year, will Snapdragon technology, this technology that you are talking about right now, be included in that vehicle? That's right. That's right. And we are already a supplier to them, and this is now going to happen across ADAS, cockpit, and telematics. So what does that mean for the driver experience? You know, you are starting to now see AI essentially come to the fore, especially for platforms like a car, which is a physical platform.

16:10Carol Massar:It's your daily driver. It's something that you spend a lot of time in. And bringing AI into the in-car cabin experience essentially allows your personal space to be completely transformed. We've been preparing for this with the entire ecosystem. We've been working with this with companies like Google, with, of course, our automotive suppliers and partners. and Snapdragon cockpits are now AI-ready. That means the experience that you will have in your in-car cabin experience will be no different than what you're starting to see on your smartphone. You can have a conversational experience with your car.

16:43Carol Massar:It chops for you. It sets up your appointments. It entertains you. That experience in your car changes the entire way that consumers will engage with the vehicle. And then the same thing extends over to the driving experience. So as you're starting to see technology like FSD get deployed very broadly, this is also something that's part of the partnership that we've built with Stellantis, where we will power their self-driving stacks along with our silicon. And this essentially is a brand new type of product that starts to get deployed starting in 28. Nicole, it's an expansion. So you guys were already involved, right, in terms of not only kind of the AI or experience.

17:26Carol Massar:That sounds like it's taking it to another level, but you were already involved in kind of the mechanics, if you will, or the inner workings with Stellantis. Is that correct? No, we've been working with both Fiat Chrysler and Peugeot for a number of years. I think this big shift is really as the technology transforms with AI becoming such a central part of the transformation of the car, this allows us to be able to help Stellantis move into this new architecture. And to do this across the board, as you know, the car industry is complex, a lot of different architectures. This is going to be a one-of-a-kind change because this is one common harmonized architecture across their entire global fleet of vehicles.

18:08Carol Massar:So any change that is made brings that experience to every tier of vehicle deployed across any part of the world. And that is what makes this partnership very unique. Is it exclusive? I know it's an expansion of the partnership. exclusive or are there other companies, AI or tech, that are doing similar parts? This is a partnership between Stellantis and Qualcomm on all of the silicon and all of the self-driving software capability and, of course, all the connectivity that we are building. So it is something that we are building. We are the ones that are their dedicated supplier for this next generation.

18:45Carol Massar:Why expand it and why now? And talk to us about the financial opportunity for what it means for Qualcomm? You know, for us, we've been growing our business in automotive, actually, by looking at the car architecture and thinking about it in the context of what is the digital product mean for a car. And to do that, you really have to be able to envision what type of technologies a car is going to deploy. AI has now become very central, both for driving, but now also in-car cabin experiences. You have to focus on every tier of vehicle that you have to supply it to. We have to focus on the global nature of this business in that this is 90 million cars produced all over the world.

19:25Carol Massar:Automakers are designing for a software product. We are growing our business. We've been growing at about 25 % plus over the last many years. We really see automotive as this definition of what a physical AI product looks like. So far, it's really been going great. We We are super happy with the way that the business is growing. We're going to share more at the Investor Day that we have coming up in June. We will talk a lot about what we are doing in automotive and, of course, other areas. Well, you've done a lot of automotive for a lot of years with a lot of different partners, of course, apart from just Atlantis.

20:00You're working with Chinese EV makers as well, Toyota, Honda, BMW, Mercedes-Benz, among others. Since you have such a good view on what you are calling an embodiment of physical AI, What's a realistic timeframe for you to tell us that we as drivers will be removed completely from the equation when it comes to this technology?

20:20Carol Massar:You know, I would say that the driver completely removed is probably much farther out because this is at the end of the day a safety product. But I think the car essentially taking over for a number of scenarios where the driver is involved but perhaps not deeply engaged, that is upon us now. And maybe let me describe it like this. I think the rate at which AI is accelerating, even I would say in the last 12 months, the capabilities of the models, what they can do both for conversational AI, the human-facing AI, but then also the machine and the physical AI. The car is probably one of these products, one of these parts of our life that is so central to where you spend time, your personal time, your time with family.

21:08Carol Massar:It is a global product. You will start to see, I would say, in the next two years, AI entering the digital cabin and cars becoming much more intelligent in terms of the way that they are driven. This will drastically accelerate because all of the other pieces are in place. The SOCs, the silicon, is in place. We've been building that for a number of years. We've standardized the architectures. We have made them such that they can be applied to any tier of vehicle. We are obviously doing this globally. This is not specific to any region. This acceleration is something that every automaker has been waiting for.

21:45Carol Massar:I think the Stellantis deal is a reflection of how quickly can automakers leapfrog a legacy way of working, a legacy way of thinking, and just embrace what is bound to happen. And this deal for us was actually an indicator of how fast this is actually coming. I would expect by 28, you will start to see this get deployed across multiple parts in the Western world. Yeah, we're going to stop soon calling it a car, I think. We're going to call it, I don't know, we're going to have to come up with some other name Because if you think about the amount of technology that are in our vehicles today, it's just pretty astounding.