Shutdown Flights, Moonves Fights, Tesla Cuts: CEO Daily for January 18, 2019
Good morning.
If innovation is the key to business success in today’s economy, then what is the key to innovation? What makes it happen? Companies today spend a lot of time on this, encouraging workers to “think outside the box,” empowering them to pursue their interests, tearing down hierarchies, sponsoring hackathons, celebrating failure, etc.
But for all the effort spent on institutionalizing innovation, the truth is, no one has come up with a clear formula for success. Innovation turns out to be stubbornly serendipitous. And some industries—notably, Big Pharma—stand out for their costly failures.
That’s why I find Rick Tetzeli’s story on ethnobotanist Paul Cox, released on Fortune.com this morning, to be so fascinating. Cox isn’t a physician, and doesn’t work at a big drug company or academic medical center. Yet some think he may be closing in on a cheap and effective approach to preventing Alzheimer’s. And he’s done it, in large part, by studying the diets of indigenous people. If he succeeds, he’ll skunk all the giant drug companies that have spent many years and many billions of dollars developing Alzheimer drugs that didn’t work.
To understand how Cox got there, you should read Tetzeli’s story, here. It’s fascinating. But just as fascinating is to contemplate why Big Pharma hasn’t gotten there. “The problem is the way science is done and funded,” Zaven Khachaturian, editor of Alzheimer’s & Dementia said. “It’s populated by people who follow the orthodoxy. To get continuous support, scientists must follow existing orthodoxies. Everybody says they value the individual or the maverick, but nobody will fund them because they say it’s a fishing expedition.” Caution is rewarded at the corporate level, too, Tetzeli says. Pharma companies moving a drug from discovery to approval face a daunting and expensive process that can take a decade or even two, and cost hundreds of millions of dollars. That doesn’t encourage big risks.
Somebody should fix that…if only they knew how.
More news below.
Top News
Shutdown Flights
Latest developments in the eye-roll-worthy argument over who gets to travel during the government shutdown: After Nancy Pelosi urged him to delay his State of the Union address, Trump stopped her from using military aircraft for a bipartisan congressional trip to Afghanistan; Melania Trump then used an Air Force jet to travel to Florida on vacation; President Trump then cancelled the U.S. delegation to Davos, which he himself wasn’t going to join anyway. CNBC
Moonves Fights
Ousted CBS CEO Les Moonves is apparently unhappy at being denied his $120 million severance package. Moonves, who was found to have violated company policies after being hit by a string of sexual harassment allegations, intends to seek arbitration over the payoff matter. Wall Street Journal
Privacy Rights
The big streaming services, from Netflix, Amazon Prime and YouTube to Apple Music, SoundCloud and Spotify, have all been hit with complaints under the EU’s strict GDPR privacy law. Veteran privacy campaigner Max Schrems and his organization claim the services fail to give users all the information about them that they’re legally obliged to provide. Fortune
Tesla Cuts
Tesla is letting go 7% of its full-time workforce, and cutting ties with many of its temporary staff and contractors, as it seeks to reverse what turned out to be excessive headcount expansion last year. Elon Musk said the cuts were needed in order to get the cost of its cheapest cars down, to make them more competitive. Fortune
Around the Water Cooler
China Threat
If Canada joins the trend of blocking Huawei from participating in its “5G” mobile broadband buildout, there will be “repercussions,” China’s ambassador to the country has warned. Tensions are already high after Canada arrested Huawei CFO Meng Wanzhou last month, at the request of the Americans. Financial Times
Ghosn Claim
Nissan and Mitsubishi’s joint investigation into Carlos Ghosn—the currently-detained former chairman of both companies—found that he took “improper payments” from their joint venture, to the tune of $8.9 million. He apparently signed the contract for the cash with the JV but without consulting Nissan and Mitsubishi’s CEOs, who were also board members of the venture. BBC
Jamie Dimon
JPMorgan Chase & Co. posted bumper profits for 2018, and gave CEO Jamie Dimon a 5.1% pay increase as a reward. His total package includes $24.5 million in restricted stock tied to performance, plus a base salary of $1.5 million, plus a cash bonus of $5 million. Bloomberg
Best Cities
Which U.S. cities are regarded as the best in terms of job satisfaction? A survey from the job site Kununu sees Miami take the top spot, followed by L.A. Of course, job satisfaction is largely due to the nice things that employers do, but sunshine and the beach clearly factor in there, too. Fortune
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.
