Good morning.

I spent some time yesterday speaking with three chief human resource officers–Diane Gherson of IBM, Peter Fasolo of J&J and Michael Fraccaro of Mastercard–to further probe how the pandemic may change the future of work. They agreed the last five months have shown the power of working virtually, and have had some significant benefits—such as creating a more inclusive environment for decision-making, and bringing down silos.

But the lockdown also has exposed the shortcomings of work-from-home—chief among them is its effects on collaboration and innovation. Fasolo was the most pointed on this. He says Johnson & Johnson has made clear to employees that “when it is safe to do so, we want you to return to the workplace. We believe collaboration and innovation is fueled in large part by the connections of people.” Gherson referred to the “bank of trust we all build when we work together physically. It doesn’t have to be five days a week, but it sure needs to be once a month, or one day a week.”

All agreed that attention to employee well-being, heightened by the pandemic, will continue once it has passed. “The blurring of lines of work and home life–that’s a challenge,” said Fraccaro. “We are working through what we can do to help employees from physical and psychological and emotional standpoint.”

But the most interesting takeaway was their views on the effect the pandemic has had on the fundamental nature of the corporation, and the leadership needed to run it. “Hierarchies have flattened,” Gherson said. “Everyone has access to the same information, everyone is more digitally connected. You can’t micromanage anymore. You aren’t managing by walking around. You have to focus on outcomes, not inputs.” The result: “You have to, as a leader, focus on team collaboration.”

“The way that leaders will lead in the future absolutely is going to be different,” Fraccaro agreed. “During this period they have had to adapt to working virtually and continue motivating their workers. There also has been a change in their level of vulnerability. It has brought out a human side. For the most part leaders have stepped up.” In addition, “leaders will need to think about how they need to engage around other societal issues as well.”

More news below, including the tech leaders’ drubbing on Capitol Hill.

Alan Murray
@alansmurray
alan.murray@fortune.com

TOP NEWS

Tech grilling

Google and Apple's CEOs may also have been there, but members of Congress yesterday directed their antitrust-related fire mostly at Facebook and Amazon. Facebook was accused of cloning competitors' products, and Mark Zuckerberg agreed the firm has "certainly adapted features that others have led in." Jeff Bezos was tackled over Amazon's treatment of rivals and access to third-party-seller data. Fortune

Apple complaint

The makers of messaging and microblogging app Telegram have filed a formal antitrust complaint against Apple in the EU, arguing that Apple should allow users to download software from outside the App Store. Spotify and Rakuten have also previously complained to the European Commission about Apple's use of its "monopoly power" on iPhones and the like. Financial Times

Fed concern

The Federal Reserve sees the current economic downturn as the most severe "in our lifetime", per Chair Jerome Powell. That means leaving interest rates near zero and using all the Fed's tools for as long as necessary. Powell: "Even if the reopening goes well–and many, many people go back to work–it is still going to take a fairly long time for parts of the economy that involve lots of people getting together in close proximity…Those people are going to need support." Bloomberg

Huawei success

Huawei has overtaken Samsung as the world's biggest shipper of smartphones, on a quarterly basis (it already achieved the feat on a monthly basis earlier this year, twice.) Not bad considering U.S. sanctions have forced Huawei to forego Google services and fall back on its own Harmony operating system. Fortune

AROUND THE WATER COOLER

Samsung profits

Samsung may no longer be the world's smartphone champion, but its Q2 profits were up 23% due to strong demand for its memory chips. Samsung's explanation: "The Memory Business saw robust demand for cloud applications related to remote working and online education as the impact from COVID-19 continued, while demand for mobile was relatively weak." BBC

GE loss

GE lost around $2 billion in the June quarter, with revenues down 24% due to the aviation slump – airlines are delaying their orders with Boeing and Airbus, so GE's engine unit had to cut production and jobs. Nonetheless, GE and analyst had expected a far bigger quarterly loss. CEO Larry Culp: "Based on what we see today and the actions we’ve taken, sequential improvement in earnings and cash in the second half of the year is achievable." Wall Street Journal

Cash death

PayPal's record revenues ($5.26 billion for Q2) are, the company claims, a result of "the death of cash" becoming a real thing. CEO Dan Schulman: "Consumers no longer want to handle cash or any forms of payment that require physical touch at checkout." Fortune

Buffett and Friedman

What could Milton Friedman and Warren Buffett teach us about the current market exuberance that seems to defy the grim economic reality lying beneath? Fortune's Shawn Tully dives into that question with this conclusion: "The scenario that many on Wall Street are selling, that the S&P has plenty of room to rise from here, runs headlong into both the Buffett Indicator and the Friedman earnings-to-GDP metric. It gets an F on both tests…A reckoning is coming." Fortune

This edition of CEO Daily was edited by David Meyer.