page. on saturday the nation's governors gathered for the second day of their summit in nashville focusing on an education system to provide students with the skills they need for today's work force. the guest speaker was the head of operations for an international consulting firm. he talked about what states can do to compete in the job market. oklahoma governor mary fallin made introductory remarks. this is about an hour and ten minutes. >> good morning, everyone. i think we had such great timesh last night that everyone's a little slow coming in this morning. [laughter] but good morning. we're glad to be able to start our saturday session off. i'm governor mary fallin, i'm the chairman of the national

governors association. we appreciate everyone joining us this morning, and governor has lumbar, is he here yet? he is still out probably making arrangements. have we had a great time at this meeting? i tell you, it has just been absolutely fantastic. [applause] the governor and his wife havee done such a wonderful job in planning, not only have we had great meetings and productive meetings, but we certainly haved had wonderful entertainment. i don't think we've ever probably had the opportunity to go to one place and see so many superstars as we did last nighti and just talent and history and the ryeman theater, it was just so much fun. governor, as you may have seen, we're having quite a little rile live because he's -- rivalry because he's invited a lot of to our oklahoma talent to perform, and he's claiming them as his people here this nashville. that's not setting very welll but we'll work it out

before we leave. we're happy to share a love of music and entertainment, so we a appreciate the governor. and tonight we have another very special evening in which we'll be going to the hermitage and the wonderful, historic place. one of our past presidents, and certainly we'll have another oklahoma-talented person, carrie underwood, which he'll claim again as nashville's, but that's okay. i raise 'em up, and then he gets to have 'em for a while.or tonight will be an outdoor event, so be sure and wearmigh something comfortable and cool because it might be warm. i'd like to thank our executiveo committee members that work very hard all during the year gettin prepared for both the summer meeting and also the mid-winterr meeting we have in february. this particular i want to start with our vice chairman of the. nga, governor john hickenlooper. governor, thank you very much. it's been a great pleasure toto

work with you. tomorrow is your day to take over, and it's been a lot of fun to work with john. john and i have been to each other's states, we've helped on various initiatives whether it's been on education or energy policy, and that's what the national governors association about, working together to try and find solutions we can agree upon. i'd also like to thank governor jack markell from delaware is also here this weekend. governor branstad, is governor branstad in the room yet? some of these people have been in committee this morning. governor bullock is here, thank you very much. he's on the executive committee. governor herbert, we appreciate the governor.we a and governor scott walker, thank you very much for being on the executive committee also. governor beebe and governor dayton who were not able to join us are also on the executive committee, too, so we appreciate them. i think i got everybody.

didn't miss anybody, did i? good. well, thank you very much.ve i thought you might find it interesting, but we're very ver grateful that the vice president came yesterday to talk to us about work force training and skills, and the importance to america. but we've been reading through the press clips this morning,e and the you didn't know how important governors are getting us back on track, fun to read the vice president's headlines. i'll share a couple with you this morning. biden bemoans bitterness in d.cn we heard that yesterday. that was a lot of fun. fun one says biden calls upon the nation's governors to help endn' the er' of poisonous politics. calls upon the governors to help with that which we are grateful to.ful. here's another one, vice president biden ask governors' help during nashville trip, oncen again calling upon thece a governors. let's see, i've got one more here. biden calls upon governors to lead the nation.like

don't you like that, guys? i think that's pretty good.etty but anyway, it was wonderful having vice president here -- oh, here's another one, this ise a really good one too. biden to governors: only you can save us. [laughter] [applause] we do have a lot of work to do as a nation. that's why the national governors association is about pulling both political parties together and having us build a stronger national economy. i want to start by beginning to talk about my chair possibly should have -- chair's initiative. picking out a particular issue i t washt important.

i chose education and training for tomorrow's jobs. america works is not making significant improvements to our education system and our workforce training program and aligning those systems with the needs of business and our label or market. it's an issue that's critical to our states and economic success. it is certainly important to the united states and our nations economy. this is an education initiative and a workforce initiative, but also a jobs initiative. all of ouro help states achieve prosperity. it begins by recognizing some very simple truths. today's world is more complex and is changing faster than ever. since the time our parents were growing up, especially with technology and all the ways companies change so very rapidly and have to be able to adjust. those changes are making new

demands on students, employees, employers and our state leaders. individuals need more education and work skills for today's jobs . businesses need a deeper, more diverse talent workforce. states must make very targeted investments in the workforce make sure we are helping to spur economic growth. in order to be able to compete at the state and national levels , we have to adapt to an ever-changing economy. as governors, we are in the key position because we are response will for the education systems in our states and responsible for economic development. responsible for creating jobs and a stronger economy in our state. we are uniquely positioned to be able to lead this effort and

lead our nation back and build a stronger connection but when our employees and employers and industry. the leadership begins with starting to recognize the very simple truths and understand the challenges we face as governors. all, as a nation, we are losing ground internationally. both terms of our students competitiveness and our workforce. it is not necessarily because we are getting worse, but because our competitors are moving ahead quicker than the united states. while we were once the world leader in student achievement for 15-year-olds in our nation, reading,nk 20 thin 23rd in science and 30th in math among the 34 industrialized nations in the world. from 2012 are

much lower than they were from the time of 2008. we have lost ground versus making up ground. we cannot expect to be able to lead the world in innovation and job creation if we can't keep up academically. nor can we provide our citizens access to a middle-class life were beyond if they don't have access to good paying jobs. when i started this initiative last year, i shared with all of fewer jobs inthat our economy are available to individuals that only have a high school degree. we talked about the importance of having more than a high school degree to be able to compete. listen to you just to this fact. today, 35% of the jobs in our economy are filled by people with high school diplomas or less. did you catch that? only 35% of the jobs in america

require a high school degree or less. two thirds of those jobs will pay less than $25,000 a year. that is not going to lead one to a good living wage. based upon these facts come i'm more convinced than ever that education beyond high school degree is critical. people either need a two-year degree, four year degree or some type of workforce training certification. that is now the new minimum of educational attainment level for a successful, good paying job in .ur nation and in our states unfortunately, the u.s. is falling behind. failing ourare students and our citizens and we ourfailing our states and nation. here are more unpleasant truths and challenges we face.

too many students still don't finish high school. only 70% of our public high school students make it to graduation. the percentage is much worse when you look at minorities or lower income students. today, students who go to college or underprepared. many of them have to take remediation courses when they begin their first year in college. too many employers continue to tell us as governors that they can't find the employees they need to expand and grow their businesses and create those jobs. as governors, we have to create pathways to prosperity to the middle class on the notion that a post secondary education is no longer a luxury for some, but in in necessity to help our employers find the higher skilled workforce they need to be successful. for the american people to be able to achieve the american dream and reach the middle

class. today's fast-paced world, those pathways have to be more flexible and have to be innovative and efficient. they have to be able to reflect of ever-changing needs our nations economy. it will require us as governors working very closely with our leaderss and education and industry sectors and workforce training programs and the private sector itself so that we can build education develop work skills that are relevant to today's jobs. most importantly, we have to also be able to meet the needs of our students. and make sure we're putting them on the right pathway. the challenge is very clear. the one that we face. too few americans are succeeding in posting their education and to view of our students are graduate from high school careerd to enter into a

or college self. we have some goals that are important if we are to continue to move forward. first, our states must continue to develop high academic standards. all governors are committed to higher academic standards to make sure that our high school students are ready to enter into college or enter into a trade school or enter into a career without remediation by th. to help work on successful programs like complete college america in which we can have more degree completion in our workforce and be able to help our students and our returning adults who want to go back to school and better themselves and want to have a different type of career so they can successfully complete a degree or enter into some type of career training program that will lead them to better jobs.

states are going to have to work very closely together. with education leaders, the private sector and public policy makers to close the skills cap. we hear a lot about the skills gaps we have in our nation. we want to better align our education systems to meet the needs of our employers. america works and its initiative is about identifying components that will help us reach these goals and attain these different things we need to reach. first of all, as governors, we have to be able to articulate a very clear message to our people back in our states. that connects education, connects the dots, basically. kenexa results with our state's economy. connects results with our states county. if you don't know where you don't know where you're going, anywhere will get you there. we have to gather data and

information and we have to know where we are. we have to track the progress itself and be able to measure the results so we can know that we're are getting the results we need to have. we have to create high-quality public-private partnerships. that is something great we have been doing all across the nation and you will see that in this report. we have to have more flexibility with our federal and state funding and our incentives we have and other resources we can better realign our education and workforce training programs in the nation. over the past year, my initiative, america works, has brought together governors, education leaders, employers, workforce training programs, economic development professional leaders, private sectors so we can spur innovation and have collaboration and have a national conversation about how we can create the vibrant economy, more opportunities,

raise up the middle class and give our children the opportunities they need so they can be successful. here is the result. over the past year, we have d 31-on-one meetings to talk about best practices that are already underway across our nation. .e hosted to regional summits one in connecticut. thank you very much for hosting the first summit for us. one in new mexico. i was also proud to be joined by governor herbert. thank you so much for coming. we appreciate that. we released an interim report at the winter meeting that described to governors about the program itself and the benefits. ae benefits of having i

better educated workforce. provided you with specific data and information so that you could look at your current educational attainment levels. look at your current industries and businesses. we could identify those areas where we mismatched. where we have a skills gap within our different economies. we also heard from one of our , the ceoin our nation duringame to speak to us our winter meeting. he articulated that we need a better educated skilled workforce in our nation. national summit in oklahoma city. we presented the various components for our comprehensive aproach so we could develop

type line of workers for our states economies. i was very proud to be joined by governor branstad and governor nixon. thank you very much for joining me in oklahoma city. and so we've had a very productive time this past year meeting with all of our various officials, bringing together all of our state leaders, and it has been a great year on america works and training for tomorrow's jobs. i frankly think it's probably one of the most important issues that our nation faces right now, and we're very proud of the tremendous work that the national governors association has done on our behalf. excuse me just a moment, i'm looking for hi next paper here -- my next paper here because i got a little bit out of line here. there it is. so what i wanted to show you was the book itself. and i think each of you have a copy of this on your, on your desk. but it also lists all the

different components. it has some great examples of what's being done across our nation. this is a wonderful guideline, i think it's something that'll really be helpful to all of us, so i'm proud to be able to present this to you and glad to have it in front of you. this book also describe cans four policy components, lays out the elements that each of you can actually take and use as a guideline, some very specific suggestions and ideas. you can imelement back in your individual -- implement back in your individual state. it provides, as i said, example, illustrates best practices and also offers guiding ideas ask answers a lot of questions that policymakers have to help us be able to set priorities in our state. so before i conclude all this and introduce our speaker, i want to thank all of our foundations that have made america works education training for tomorrow's jobs possible, because it's a lot of work to put this information and data together, to host the various

summits. so i want to thank this particular if you'll just raise your hand and let us recognize you and thank you, lumina noun noun -- foundation, ge foundation, carnegie library of new york be, noise foundation, bayer corporation. those are all the corporations that provided financial support, expertise and helped us be able to put the chair's initiative together and helped us learn important lessons and opportunities that we can improve upon our states. and finally, just in closing this session on america works, we have to have gubernatorial leadership. i can produce a report, we can have meetings across the nation, we can outline the steps and the components that we can all take as governors, but it's all up to you. it's all up to the governors across the nation to be able to take this great information to learn from each other. and that's probably one of my favorite things at this meeting

is that when the governors come together and they talk about what's happening in each of their individual states, we really are doing great things as governors. and this report proves that governors are taking the lead and creating jobs and opportunities, they're focusing on education, they're focusing on work force training programs. we're listening to our employers across our nation that are telling us that they have job openings and skills gaps, and we're working as governors to address those needs. so thank you all for your input, thank you for your work on this report, and now we're looking forward to implementing it. so thank you, governors. [applause] all right. now we're going to move on to the next session of our program, and i'd like to introduce steve rohleder who is here with us today. we're very pleased to have him. steve is a group chief executive of north america for accenture. he is responsible for the

overseeing of accenture's business in the united states which is the company's largest market, and he also is in canada. he works to insure that the company remains well positioned for continuous growth in important markets which means insuring that he has the right employees with the right skill sets to be able to fill those jobs. prior to assuming his current position, steve served for five years as the group chief executive of the health and public service operating group. under his leadership they delivered double-digit revenue growth in the local currency in the fiscal years 2012 and 2013. between 2004 and 2009, rohleder served as chief operating officer leading the company's business strategy and geographic operations and insuring company-wide operational access. i was going to say lieutenant governors, gosh, so many of these used to be, right? we're all governors now.

but, governors, we are very fortunate to have someone who not only experiences what we've been talking about all year long; that is, building a stronger, educated work force. but he actually has to work in the private sector, so we're very fortunate to have steve with us. let's give a national governors association warm welcome to steve rohleder. [applause] >> thank you, governor fallin and hickenlooper, appreciate it very much. i also wanted to thank governor has lomb. i'm from austin, texas, and we pride ourselves on live music, but after last night's show, i know who is the king. [laughter] there's no doubt about where country music is centered, governor, so thank you for your southern hospitality. appreciate that very much. i'm delighted to be here today to talk with all of you about one of the most critical issues we face as a nation. and that's the battle for talent.

governor fallin, thank you for your leadership on the nga's initiative on work force and education. and congratulations on the progress y'all have made in oklahoma. with your dashboard, you're providing a powerful example of how states can address the disconnect between sly and demand. and with -- supply and okay. and with ok job match, you're helping show states how to improve the way job seekers are matched to jobs based on skills and competencies, not just on job descriptions and resumés. so it's very, very leading edge. governor hickenlooper, i'd like to recognize colorado as well for doing a great job with a blueprint that ties together agencies, businesses, education and work force development. that kind of approach will be crucial to attacking the work force challenges ahead, and it's exciting to see the progress being made. but today i want to push you a little bit further on the topic of talent and work force

development. i strongly believe this is one of the top three issues that each of you as ceos of your states will be forced to address in the next three to fife years. -- five years. i want to talk about how accenture has dealt with this issue and what we've learned in the process. i want to recognize some states that are making progress, and then i want to share some strategies to help build on the efforts that you're already having underway to help you attack this issue. and attack is the right word for what states need to do. our companies, our commitments, our states -- our communities, our states and our nation are in a battle for talent. one that none of us can afford to lose. this issue affects all of you as leaders of your states and even more directly in your role as governor. i know that all of you have made work force ask talent issues a priority, but my message to you

is this: no matter what you're doing or how well you think you're doing, you've only just begun, and chances are you might not be doing enough. losing the battle for talent will lead to diminished economic prospects for our states and our communities and ultimately, it'll result in a lower standard of living for our people. for most of our history here in the u.s., we could take talent for granted. we had plenty of it. but in the future, it will be a scarce resource. strategies that have worked in the past when talent was plentiful are not going to work in the future. as oklahoma and colorado and many states have shown, there are individual strategies and tools that we can use in the battle for talent, but it'll take your leadership to put all of those strategies and tools together if we're going to win this battle for talent.

before we kill into the action -- before we dig into the actions you might consider taking, let's ground ourselves in why we care about this issue in the first place. we may not know for certain the full economic benefits of focusing on this battle for talent, but we can be sure what is likely to happen if we don't make it a priority. let me share some sobering findings from the research we've just completed to drive that home, and there's a draft copy, i believe, in your seats. and we'll get the final one to y'all as soon as it's complete. for decades the u.s. economies produced sustained growth in our standard of living allowing each generation to be better off than the one before. but our analysis showed that by with 2030 our standard of living instead of rising as we've come to expect could actually fall to the level it was 15 years ago.

in other words, the standard of living for the next generation could decline to what it was for the last generation. and unfortunately, we're headed that way because of trends we're seeing in three areas; population, participation and productivity. the first trend is oplation. not -- population. not enough people who can work. for the first time in our history, the working age population is shrinking as a share of the total population, and the reason is simple; baby boomers are retiring and not being replaced at the same ace. by 2030 the percentage of the pop haitian that's working age -- population that's working age will shrink by 9%, roughly to the level it was in 1970. the second trend involves participation, not enough working age people who do work. participation among those old enough to work is declining. the decline is particularly

pronounced among our youngest workers. since 2000 the percentage of those of working age who are actually working has declined by almost 7%, and now it's the lowest it's been since 1977 with the largest drop among young people age 16-24 years of age. the final trend is productivity. not enough worker productivity. on top of the population and participation problems, we're facing unreliable growth in work force productivity and, in fact, in five out of the last ten years it's been below 1%. productivity is critical because if we can improve productivity fast enough, even a shrinking percentage of people at work could generate enough economic activity to sustain a growing standard of living.

so if each of you as governors, as ceos of your states, need to recognize that work force development is a critical component of your business and a key element to running your state. the competition for talent is fierce. everyone sitting in this room, whether you recognize it or not, is competing to attract, develop and retain talent in your state. and let's be honest, those that do this well will have a competitive advantage. those states that are able to consistently develop tools and pools of talent will be more successful in attracting businesses. of. .. with states, but collectively, we are all competing in a global talent who'll. -- level talent pool. pool.bal talent

there are new countries ready to step into the fray. countries in southeast asia and sub-saharan africa will emerge of educated,s low-cost talent in the next 5-10 years. as a country, we have to address this head on. the u.s. can't beompeti if the u.s. can't be competitive, then global businesses are going to source talent from other parts of the world. so yes, there's competition between each of us in the room, but also ultimately this is about americans competitiveness on a global scale. at accenture we dealt with this talent issue first and. when i was coo of our company we grew from 103,000, to 177,000 people. i'll admit at one point really didn't fully recognize the talent management was a key priority of our business.

now as ceo of north america i can show you are talent strategy and how we're developing has never been more important. we now have more than 293,000 employees in 123 countries. we hire over 65,000 people a year. we have to compete every day to get talent we need, and it's only getting harder. but we are not unique. no matter what their size and location, every company is in a constant battle for talent. businesses are constantly looking at and evaluating talent pools. just to share a couple of quick examples from our company. in 2006 we created a delivery center for technology projects to serve clients nationwide. we did extensive research and scouting around the country, and we narrowed the selection to a couple of geographic locations. as the evaluation ran down --

wound down, we looked at criteria. we considered the standard of living in the area in the labor cost, look at basic things like accessibility and a close the area was to a major airport. ultimately, the deciding criteria was education infrastructure and our assessment of the continued pool of educated talent. today, that center houses and employs over 1200 people. in oregon you are working with the confederated tribes on the indian reservation to help create technologies, 100% native american owned i.t. sourcing center that serves clients across the country. here again we saw an untapped potential pool of talent and have provided business, technical, and leadership develop and train on an ongoing basis to its 300 full-time employees.

what's true for accenture is true for most businesses today. we are all in a constant search for those talent pools. so if you're not spending money to develop talent pools they meet employer needs, then you might be wasting your money. they key for states will be identifying those pools of talent and matching them up with the capabilities and the employer needs. and i can tell you as one ceo to another, that you have the opportunity to be that hinge that joins together businesses that are looking to a partner. this battle for talent is just as important as managing your health care costs or dealing with natural resources issues or focusing on revenue generation. and we know that states they get it right will ask sal. those that recognize -- will exhale. those that take steps to aggressively attract, develop and deploy talent will be our

country's economic leaders. those states that get it right will be the most competitive. they will attract both businesses and workers, and those states that don't will increasingly find themselves falling behind. we've seen examples of some states doing things right. and making progress. take new york. when new york was trying to land global foundries, a leading manufacturer of semiconductors, the state had to show that its deep talent pool could meet the company's needs. a research organization called burning glass technologies used its analytic tools with the state employment system to pin point a talent rich location in upstate new york. that's where an $8.5 billion computer chip manufacturing plant is now under construction. proof positive that real-time talent information can be a competitive advantage.

or take south dakota. governor daugaard pulled together and workforce cabinet of all agencies that deal with workforce issues. they just can finished -- across the state bringing together business, education, government and community members. as i mentioned earlier oklahoma has its dashboard, colorado has its blueprint, minnesota has career one-stop shopping work. in everyone of your states come you taken an important but only initial step to compete successfully in the battle for talent. we know the winners will be those states that you this challenge as a constant journey and not just a single destination. there's also some international examples we control. take germany, for example, which is acted aggressively on its talent strategy.

2003 germany faced an unemployment rate of 10.3%, well before the great recession. at the time the german federal employment agency was considered bloated and bureaucratic, and the german government set out to completely redesign the approach to labor markets. they want to move away from legalistic administrative agencies to performance driven organizations. they wanted to focus on meeting employer demand, not just job seeker needs. and they wanted to integrate job seekers into the economy as quickly as they could. their ultimate goal was to become the most effective broker possible between labor supply into the and. by bringing together a combination of policy modifications, process changes and new technology, it worked. within 36 months germany lowered unemployment by 33%, going from

4.5 billion, to 3 million while doubling the number of jobs filled per year. as a result of the reforms in the last five years when most of the countries in europe experience a fiscal volatility of the great recession, i think we all know germany has had a relatively low and steady unemployment rate, and the german economy was the engine for recovery in europe. we need to be similarly aggressive in our talent strategies if we're going to win the battle. one governor we interviewed was very direct and said, i'm spending hundreds of millions of dollars on workforce development, and i don't know what the hell i'm getting. that's as direct as you can be. that's the right challenge. we need specific actions that deliver clear outcomes, and that has to be our north star. so where do we start? coming up out of a research weight in the fight for strategies that we think

governors can deploy now and win the battle for talent. ultimately, it's about four things. and the legs, pipeline, -- analytics, pathways, pipeline and focus. let me walk you through each one. first, analytics. this is about real-time information and insight into supply and demand of talent. you'll notice i'm not talking about jobs data. we have lots of data on jobs. but little information on talent. let me give you two examples of why this matters. let's start with a job, a welder. in virginia over the last year, there were 1102 jobs posted to hire welders as defined by the standard jobs classification system. that's a pretty healthy number. but it grossly understates the demand for talent in welding. our research partner identified that in the same year there were 1102 welding jobs posted, there

were another 3318 postings that required welding talent. the landscape for jobs in welding looks much different when you look at talent needs rather than just job title. or consider another job, close to our company, computer programmer. most job systems still use a single classification for computer programmer. but hardly anyone hires just a computer programmer these days. instead they are looking for system administrators, network administrators, java programmers or doesn't other collection skills in public tuesday related to computer technology. imagine the competitive edge you could gain if you have analytics producing real-time information on the skills and competencies that are in demand. another thing you could do with the up-to-date talent

information is assess the degree to which your education system is producing the talent that your economy really needs. and i'm not talking about whether you getting the quantity of graduates you need. you already have the data to answer that question. i'm talking about using real-time information to assess whether or not your education systems are producing the quality of talent and you need. when i say quality, it doesn't always have to mean a four year college degree. this is about skills and capability. governor fallin mentioned. google, for example, has said publicly that they will hire people with the skills they want regardless of whether they have a degree or not. businesses, frankly frankly, are increasingly skeptical about the value of degrees being handed out in our high schools and our colleges, and they won't workers with skills, certified skills, not people with degrees, but no

cover to seize or capabilities. the second idea around pipeline, this is about rolling reliable talent supply systems are talent pipelines for employers. only 18% of employers surveyed in our research reported that they had a great deal of access to job candidates with the right skills. this is especially important in your small and medium-sized employers. collectively, these companies are critical to your states economy, and individually, however, they are at a competitive disadvantage in the battle for talent. you can help them come together, combine their demand for skills and competencies, then build supply pipelines with your education, workforce and nonprofit organizations to fill those talent needs. allan peiper line partnerships like this can help address employer needs, specially and

high-growth sectors. we've seen how this can work with that this is a higher education forum called cyber out. the forum is made up of fortune 500 ceos, college and university presidents and other leaders. they saw a demand for qualified cybersecurity professionals grow 74% from 2007-2013. more than two times faster than other, all other information technology jobs. in responsibly develop a program that enabled the business and higher education communities to work together to recruit and prepare and place low income and under -- underrepresented minority students in cybersecurity jobs. last month the forum received a million dollar grant from the u.s. navy to support expansion of the program and the greater washington, d.c. and tidewater, virginia, areas which has a very

large navy-cyber presence. i know in the past business has been reluctant to come together like this, but the past is over. in fact the u.s. chamber of commerce foundation is launching a nationwide initiative this fall to get to businesses engaged in building these kinds of talent supply systems. and they are applying lessons learned from supply chain management to deliver better results. the business community recognized this, and has to change its approach to find talent. businesses are more ready than ever to partner with governments that they can count on for the talent needs that they have. third is about what we call pathways. in the battle for talent, every job seeker needs a personalized roadmap showing how her or his talents can be put to work. in a survey we just did, 46% of

college graduates reported they were underemployed and working in jobs that did not require their college degree. another 13% were simply unemployed. no graduates and no job seeker, for that matter, should find themselves lost in today's job market. we have the technology and we have information to actually provide every job seeker with personalized roadmaps showing them employment pathways that are open to them given their individual skills and competencies. these roadmaps show job seekers what they could do with their skills based on what others have done. they provide real-time information on how to navigate the jobs market place and get the most out of their skills and competencies. they also show them how to get the skills and competencies they might need for the next job that they want. how does that happen?

again, we work with a company that has build an inventory of millions of resumes that allows them to look at the skills and competencies of an individual, and tell them what path others with those same skills and competencies have already taken. this really opens up a world of possibilities for job seekers and gives them to think about the full range of possibilities open to them. the same pathways also show them what skills they will need to acquire their next job. finally, states need to focus on outcomes. today the federal government operates 47 different workforce programs with budgets of more than $18 billion annually. these programs drive funding at the state level, and within states, multiple departments and agencies have their own funding to make their own decisions and implement programs across the state, regional, and local

levels. individually any of these programs may be great. collectively, they don't add up to a winning strategy. now is the time to get all of these programs and funding streams focused on a small set of central outcomes. and one outcome that we should start with is raising the standard of living. the workforce innovation and opportunity act which just passed this week asia a greater authority and flexibility to do that. as part of the chairs initiative, nga recommends coordinating strategic planning processes to integrate the missions of key state agencies. it also recommends establishing incentives to increase alignment between education and the workforce. those are great ideas, but building on those recommendations you could also develop a single measure of return on investment for workforce and talent spending.

you could use this to compare programs and also to show taxpayers the value of those programs. you could create a unified enterprisewide budget for workforce and talent related programs. this would include workforce development, unemployment, human services, and education. and use that budget to get the greatest return you can. you might consider creating a workforce, italic have a or an executive level coordinating role, a talent czar to steer in a white policy and resource allocation. the bottom line is that states with an integrated and unified approach to talent, focus on a single outcome of increasing the standard of living, will be better equipped to compete in the battle for talent. ultimately, it's about four tools. analytics, pipeline, pathways, and focus.

so where and when do you start? as you bring together your secretaries and commissioners involved in workforce and talent agenda, ask them a few questions. what is our state's talent strategy for the next three to five years? how well it made the skill and competency needs of our economy and ensure our future prosperity? how will we get real-time information and the analytic insights we need? how will we ensure employers that we have pipelines to the talent they want? how will we provide job seekers with roadmaps showing the possible pathways for putting their talents to work? and how we integrate and focus all that we do on a single set of outcomes? let me make one prediction. right here in the.

they will tell you we've got discovered, we've done a study, we've built a strategy, we've deployed programs. while they may be doing a number of good things, they are probably not doing enough and they're not getting the results to convince people that you are winning the battle for talent. and, in fact, in a recent survey, 72% of the respondents said they were very skeptical that government was acting fast enough to meet future employment in skills challenges. meeting those challenges is tough. we learned the hard way at accenture, trust me. it's been a long, difficult journey before we found the way to get right. during my six years as coo, personal experience the boom and bust of the economy, and it became crystal clear we needed a more aggressive approach in finding and acquiring talent. we need a talent strategy that was second to none.

today we have a three year plan outlining steps to become more successful at securing the talent we need. we have analytics that forecast our needs across our business and we have a recruiting organization that is constantly challenging themselves to get the best people on the planet. and we have to do that to survive. your state might consider that kind of tenacious, lead from the top focus and commitment to talent. start with a strategy that code spells out how your state will attract, develop, and deploy talent in a meaningful way, beyond the talent strategy, dig deeper into what you're spending and what you're getting in return. on your workforce and talent programs. again, pick up the phone and ask the tough questions about where the money is going and why. find out how your programs and budgets align to that strategy. winning the battle for talent is every bit as important as other

key issues like health care, natural resources and taxes. it's crucial to your states prosperity. win states make real headway on workforce issues, i believe they will see economic expansion well beyond the average. as ceo of your state, make those calls on monday, ask those challenging questions, and don't accept quick comment easy answers. because when it comes to talent, there is no easy answer. thank you very much. [applause] >> thank you, stephen. that was great information. i appreciate you sharing all that. as i was sitting here thinking about all the different steps you with her, and that they get matches up with a lot of what governors are doing right now, but all governors want to know

what employers need as far as talent, work skills. you have certain things that you need within your company, a different industry may have certain skills they need. what's the best way for we as governors to get that specific information from you? we talked to the energy sector, the health care sector, manufacturing sector, whatever it might be and they may say when the wild, computer technicians, nurses, whatever. how do we get those specific numbers, and our companies willing to share that private information? are you willing to share that information? >> first and foremost yes. i think companies are increasingly willing to share that information. i think that they are because they don't have a choice. i mean, trust me, if they are not, they'll probably already on a path to moving their business elsewhere. i would suggest that if a company is not willing to share that information with you, is

they've already developed a talent strategy that will either move their talents to another state or offshore. in terms of aggregating that talent, it's a great question because you have very disparate industries as you point out. i think the way to start is really from an economic standpoint to understand top down what are the industries, what's the prime industries that your state is with focus on. i know in oklahoma our energy guys are moving into oklahoma city, and the fact is they said we just need energy talent. that's what we need. we don't need financial services. that's where their focus. and i suspect that most states could prioritize two or three areas where you could really focus on specific industries. i wouldn't walk by the challenge of aggregating small business and meeting business talent

needs. while it may be more fragmented, having something focused on aggregating their needs and giving them a chair at the table and a voice at the table can go along way toward retaining that talent. and quite frankly that's probably the fastest growing segment of business in any given state. >> governor nixon. >> thank you for your focus presentation today. one comment, one question. no, would be come i would hope that you and other significant leaders in business would continue to press our higher education committee with the same level of focus you have a. i think there's a joint responsibility all of us are tiny get our colleges thinking more about correctly kind of business as opposed to that theoretical way that often times college campuses conduct, handling the duties. it's important to from

significant business leaders about the specificity and the requirements, and appreciate, i know you said about i'll ask you to keep repeating. it helps us. a quick question, talk to us just a second about wage rate, compensation, things of that nature. at one point to talk about educated low-cost talent and whatnot because i think there's a whole lot of folks that are trying to figure out relatively simply had to make money, how they raise a family, how make more money later and all that sort of stuff. from our perspective often times in the with businesses is that the initial cost that we deal with. bucklew the people in the talent pipeline are folks that try to get more economic independence as they move through the pipeline. give us a sense as what you have learned and what you've seen on things that work well, not only in the wage or where we're going, we shifted as a country in the pension system and health care and all that sort of stuff,

kind of want about how much we pay these folks and what kind of things you see in the future in order for us to pension to a growth. >> great question. i think i start with wage determination is tied in a business context, is tied specifically to skills that are needed and in demand and that are possessed by those people. what i mean by that is that if a pipeline of potential workers is focused on increasing their human capital value, right? how do i as a person increase the value that i'm going to bring to my employer versus just coming in and being trained on the job. as an employer i value that a lot more. people talk about manufacturing environment in the u.s. whether you believe it or not in the last 10-20 is, it's move to a technology environment.

the days of manual manufacturing are done in vietnam and they do in china and announce what do. the reason those jobs are coming back is because we been able to supply the manufacturing world with high-tech, educated people the work on the factory for. 20 years ago that didn't exist. so my point is, governor, that we have to understand that there's a direct correlation tweet and the wages being paid and education at the top of that person. we hav had to constantly push te talent level to be more relevant to what employers really want. so it's employers see high-tech manufacturing and computer system skills, if you will, more relevant in that environment, then we have to move the talent coming out of high school, coming out of our community college, coming out of college in that direction so you have that will tell them. does that make sense?

then you have a fair wage for a fair scale. >> governor walker. >> thank you. just to follow up on governor nixon's kind of -- the forefinger outlined in the support i think a pretty consistent probably, each of us have variations of this which is good and we can always be encouraged to be more as you mentioned. i was thinking into presentation, particularly in your answer to the last question, it really is focusing and always managed to a better job of connecting the skills that people are either looking for a job or in many cases looking for a better job, the skills they need to match up with the jobs are open will be in the next few years, particularly for. those four things are key. on your chart you start it out with that's one part of it, but an observation or maybe a suggestion is, you talk about the big drop off in the future. in the four things you mentioned which we tend to talk about a

lot are helping connect people currently today looking for work or a better job or the skills they need to fit that, but that still doesn't fully address the drop off that will occur in the next few years a people that just aren't there, whether they are trained are they are trained on nikon just not having enough. and so the suggestion i would make and we talked of these things in the past, but three particular categories. military personnel, there is we have about double the unemployment rate amongst military personnel coming back from iraq and afghanistan and other places like that. tremendous opportunity, far too many sitting on the sideline. it's more than jus just a skills gap. it's trying to figure out how to get to them. secondly, certainly people with disabilities. i know jack markell talked about last you. we've implemented a better bottom line in our state but there's a committee opportunity to take people who are currently on the sidelines with, because there's a disconnect between matching their unique abilities

instead of the disability into whether workplace is, and oftentimes i think they are overlooked in terms of workplace opportunities. then the third group, and some of us -- back to the '90s when the injury was involved with welfare reform, over the years a lot of states have gifted and granted a waiver for the work requirements or childless adults when it comes to things like food stamps. we just opted out of the waiver, for example, this past year. it's costly. it costs us about 17 million which is why most days, i think there's 46 that still have a waiver that don't take that but that's because you have to pay -- they don't take the waiver yet to pay for employability skills. i begin to me groups like that, people who are currently temporary help let on government assistance to waste to transition them to the workplace, those are all for groups that could help move your chart up there in terms of people who'll be in the workforce in the future. future. >> that's a great observation. we were talking about this

before, before the session store with a number of the nga staff. i think you have to crawl before you walk, before you run. if you go back to the two industries that have gone on similar journeys. you look at financial services and you look at retail. both have kind of gone through a very fragmented, data rich environment, and now applied analytics more aggressively to get predictive. getting predictive information, to your point, governor, looking forward, is going to be a 10-20 year journey. what we have to do first is get the matching your talking about and identify those polls and stand up first to get the underemployed and unemployed busy, if any, predictive with where we think businesses are headed and what their needs are. it is goin going to be a to our three-step process, and i don't think we can get -- this is literally a 10-20 year journey.

you don't have to look any further than industry to see how they have evolved over time. >> governor herbert. >> thank you. and thank you for being here and talking about an important issue. i had the opportunity as governor of utah to meet with many of the ceos in our state. we meet with different sectors of our economy, try to stay in touch with what their concerns are, what we are doing right, what we can do better. and clearly as we talk about the talent pipeline, it's probably the number one issue for the business entrepreneurs in utah. we are trying to come in fact address that issue with education, skill gap areas where we're trying to improve that and minimize that emphasis on s.t.e.m. education, the trade, things that we really need a better alignment. i look at your challenges in

your book here though. and let me just challenge on a couple of areas, if i could. the first is job seekers cannot find the jobs they want, understand there's a challenge. and do not look to government for help. my experience is that, in fact, many look to government for help. we have department of workforce services. we help people with identifying where they are lacking in skills, help them get back to school, community college, vocational training. we have a significant outreach with our veterans. and expect i'm no different from any other states year, but my point is i think there's many people out there that look to government to help them get back into the workforce. another point, it says employers who can't find the skills they need. i understand. that's what we have observed. but then you going to say, do not look to government for help.

again, my experience has been that they do look to government for help. they are putting increased pressure on us to, in fact, improve education, to eliminate the skills gap, to have better alignment with what they are looking for. we have custom fit programs with our community colleges where businesses and manufacturers will say, we need to have help for specific needs, kenya in fact put some together, some kind of education experience to help us train employees that are prepared even coming out of college. we have got some custom fit work and look to government for help. i do agree with your last point, we are very skeptical about government acting fast enough. in fact many are doing their own thing because they don't think government does act fast enough. or maybe not as effectively enough or as efficiently enough. but i do think that they are looking to government. i'm just wondering, what an amazing your?

at least and mike strange because i think people look to government even sometimes too much. >> you. i think you would have to segment the population were talking about, governor. so the people that are looking and leaning on government for help in the unemployed and unemployed, i think i'm going to be a different segment than a college graduate or the community college graduate that is out on monster.com every single day just looking for jobs, looking for jobs. very few of those people are coming to government for unemployment insurance or unemployment benefits to at least in our experience so far. maybe that's different, but if you look at the less skilled, less educated, they absolutely are relying on government. so you have to kind of bifurcate the segments of the population that we're talking about. we probably should've been more specific in the report about that to get specific about him still is going on government and who isn't, to your point, so

point taken on the. on businesses not relying on government, i would tell you the same thing. i think there's a lot of business that will meet with government. but, frankly, if i were restauranteur and i have 60% turnover in my bar or restaurant and i'm not going to government to ask for help in terms of developing new skills, that's just not going to happen, right? i'm going to continue to go out and use any resource i can to replenish that out when i needed. so i think businesses have started dialogue. i think the larger businesses really want to source talent in the country. i know for a fact. we personally higher roughly 5100 people per year off college campuses. and another 6000 in the u.s. just opaque strings from the market. we want to source our talent. the challenges that we have is

just competing and finding that talent in the marketplace. so my point is, look, if businesses are going to have that dialogue, we have to connect them close. ready to make them closer and actually tie that to actions. this is where you guys can really stepping. if a senior business person sense is that there's a commitment from the top of the state to really change input change on the table and do some creative innovative things. trust the, that partnership will form and will flower. >> thank you. >> thank you so much. let's give steve rohleder a big round of applause. thank you for the great information. [applause] >> former vice president dick cheney will be joined by his wife and daughter today for discussion with politico chief white house correspondent mike allen, we'll talk about a range

of topics of the u.s. border security and the 2014 midterm election. that will be live at noon eastern here on c-span2. >> today, the senate homeland security and governmental affairs committee will hold a confirmation hearings for nominees to serve on the u.s. postal service board of governors. the hearing followed postmaster general patrick donahue's announcement that the postal service will consolidate up to 82 mail processing facilities starting january 2015. live coverage begins at 3 p.m. eastern on c-span3. >> the national governors association summer meeting concluded sunday in nashville. and ceo of best buy, hubert joly, was the main speaker to talk about the store stays competitive. this is about 50 minutes.

>> [inaudible conversations] >> good morning, everyone. everybody survived the wonderful entertainment we had last night? governor haslam, what a fantastic way to close off. let's give governor haslam a wonderful applause. such a wonderful job. [applause] >> i think she should sing for us. [laughter] makes you want to sing after coming to nashville. a kick in your walk, you know, just being here. but it's been a fantastic trip and certainly it would've made we want to also thank your

staff. i know your sponsors, your host who have help for this wonderful meeting. certainly along with our nga staff. this is a closing session of our 2014 the nga summer meeting. and it's been a great pleasure to be able to serve as your chair. one of the reasons why i chose my chairs initiative as "america works: education and training for tomorrow's jobs" was to ensure that the changing business climate that we have in our nation matches the education needs, and also our workforce needs at home. all government i keenly unaware how technology and innovation have forever changed and altered our national economy, how it affects our schools, our daily lives. as governors we must pay attention to our large cities, small cities, rural cities, and our employers both large and small. our businesses on main street have long been the bread and butter of our economy.

so we are very pleased this morning that our next speaker comes from a very unique perspective, leadin leaving a cy that is succeeding both on main street and on the street. beginning of the company in 1966 as the sound of music, its name was changed to best buy. in 1983, the company now has more than 140,000 employees globally, and more than 1400 retail locations in the united states. each year about 1 billion people shop online at best buy.com, and 600 million shoppers visit best buys u.s. stores. so it is a great pleasure that we have with us as a guest speaker the president of best buy -- i want to say this right -- hubert joly. that i do good on that? all right. i've been working it all week. [laughter] especially look forward to

hearing to his talk about the future of america's brick and mortar stores. i think it's something that the governors focus on and talk about a lot in the companies ranging from lack of best buy to our local stores can succeed in an ever-changing innovative economy. he has a very strong reputation of being able to turn around companies, to be able to transform them, bringing his expertise and also certainly as his past work, and the french division of electronic data system. in his three years that the company reversed its revenue slide am 1.3 billion, and annual revenue of to .1 billion while significantly increasing its profit margin. prior to joining best buy, he was ceo of carson's where he led all the bases including its restaurant and hotel division, and before becoming to carlson he also led a unit and grew its

sales from 8 billion to 25 billion in four years. that's quite a remarkable history. so to our governors that are here today and all of our guests that have joined us, let's give a warm nga welcome to hubert joly. [applause] >> thank you so much, governor fallin. and governors, for a limited speak with you this way. indeed, i am hubert joly and despite my accident -- accent from minnesota. a place where about 254500 copies are headquartered and a wonderful place to live but we also have winters but we won't talk about that. i am the fourth executive officer of this company, best buy in his 50s, close to 50 or history. and for me it's a great honor to have the opportunity to speak

with the governors of the states that are united in this great united states of america. and the topic of a future of main street is really an important topic we are speaking about. it's an important topic because of course of the importance of the retail industry and the economy of all of the state. globally speaking retail is about a quarter of the gross domestic product of the united states. a quarter of the gross domestic product of the united states. ..

>> some retailers are active memben the communities in which we operate. beyond the jobs that we provide, we contribute to various charitable causes. $300 million is what best buy has given over the last 15 years. 140,000 hours of volunteer time by our employees per year throughout the states. we also have a recycling program. probably most of you know that, you know, the citizens of your states can come to our stores, and we recycle the electronics. therefore, helping the planet. so really a wig impact in -- big imact in many, many different

ways. it's also a timely topic. why is it a timely coppic? because of the rise of e-commerce. e-commerce is significantly transforming the retail industry throughout the u.s. e-commerce started 10, 15 years ago. it's now about $260 billion of revenue through the u.s. in 2013, growing very rapidly. last year it grew at about 17% compared to the previous year. in our industry, consumer electronics, e-commerce is about 20% of the industry. so it is now very, very significant. and beyond that, it goes beyond that because the shoppers with the information that's now available online, in 80% of the cases when you buy something significant, let's say more than $500, in 80% of the cases you start your shopping journey online by researching the product, getting information about the products, comparing the products. you may or may not complete the transaction onen line, but in

80% of the cases, the journey starts online. and that's growing rapidly. now, in contrast, more traffic is going down -- mall traffic is going down. during last holiday mall traffic in december was down 14% year-over-year, 14%. and given the importance of, again, retail, that's very significant. therefore, you know, the question is, you know, is there, in the future the death of main street? we have to ask this question. or more positively, what does main street need to do to thrive in an environment where technology is significantly transforming the shopping experience? what do we need to do to be successful in that context? so to answer this question, of course, with the benefit of the experience of the transformation of best buy that we started two years ago when i became the ceo there, and my message this morning is going to be to say, of course, this is not the best

of main street. main street can thrive provided it innovates the customer experience in really marrying physical brick and mortar with what we can do on line through a multichannel customer experience. so i'm going to base my remarks, of course, on the transformation of best buy. governor, you highlighted a bit of our history. we're very proud of our history. best buy's one of these amazing american success stories. founded by dick schultz this 1966, and now in the u.s. it's a $35 billion company and been very successful. fifteen years ago i was the ceo of a video games company that was providing games to best buy, and i saw how great of a company it was. it was the best in the business. it continued to grow. and then probably five, six years ago it started to go to sideways. that sometimes happens to companies that are very successful. you can become complacent. you can become complacent. that's a grave danger.

and at the time there was the growth of a number of amazing competitors. amazon started to grow significantly, apple got into the retail business and, of course, we're competing with some of the foremost companies on the planet, walmart, costco and so forth. and probably with this complacency, we stopped our emphasis on the customers. we got distracted. we had leadership issues, and all of this led to a bit of a drama two years ago that was highly publicize inside the media. so this is when i joined because i love challenges. so i was not suicidal. [laughter] and so in the fall of 2012, we did a diagnosis of the situation, and we saw that we had two problems. we had declining sales and declining margins. only two problems, so that was the good news, but they were significant. [laughter] and, but we also took the time to identify our assets. and we had some amazing assets. we had an amazing customer base, and i know that many, many of you are, most of you are

customers, an amazing employee force. passionate about customer service, passionate about what they do. our stores, great asset. 70% of the american population lives within 15 minutes of a best pie store. that's an amazing -- best buy store. that's an amazing asset. and this combined with the relationship we have with our vendors turned out to be a great opportunity. we're very significant for the tech community because we're the only place of scale where they can really showcase the fruit of their billions of dollars of r&d investment for customers. and increasingly, products are complex, difficult to understand, and so they need a place to showcase this. and, of course, we had our web site which was quite significant at the time. so we had these assets, but we did need to transform the company, and this is when we renewed transformation efforts. and at the heart of renew blue is a refocus on the customers. so to illustrate what main

street needs to do, let me take a few examples from our playbook. the first thing we did in the fall of 2012 was to decide that prices needed to be competitive. you know, in a world where information is pervasive, where we sell other people's products, there was no way we could not be price competitive. and there was a lot of talk at the time about showrooming. so showrooming is this phenomenon where people go to a store, they spend 30 minutes with one of our blue shirts to learn about the products, and then in the end they decide to why on the internet. that's very frustrating for the blue shirts. so with the traffic we have in our store, 600 million visitors, these are people who come to our stores with great intentions, so they're ours to lose. the decision we made at the time was to match internet prices. so come to our stores, and we will provide the price that you can find on the main web sites. but, of course, that was not good enough because it's not just about price. and so we studied a strategy focused on providing advice,

service and convenience at competitive prices to customers. in particular, to customers who are interested in technology products but need a bit of help. i don't know about you, but i need a bit of help when i'm shopping because it keeps changing all the time. so advice, service and convenience. advice, starting on this side, so we are reinventing our web site. you have to be able to find a shopping guide, how do i, you know, choose a tv, how do i choose a tack let, how do i -- tablet, what information can i have with rich content videos? it can provide a lot of advice on the site. advice in the stores. we have invested significantly in the training of our blue shirts, associates. we've also worked with our vendors to make the hopping experience -- the shopping experience a great shopping experience. companies like samsung, microsoft, google, intel, sony have invested hundreds of

millions of dollars in our stores to be able to really display -- it's really impressive -- they're newest -- their newest technology and how everything works today, and we have supertrained blue shirts to be able to talk about these products. so today if you walk in a best buy store, you probably don't know that you need a 4k ultrahigh definition tv. you don't know. but you walk into the store, and then you get to the samsung or the sony vendor pad, and you talk to one of our blue shirts, and after 15 minutes i guarantee you, you will know that you absolutely need that tv. [laughter] and the only question is which one and when. but that's the only question you're left with. so advice, service. this technology is very complex, so in terms of help with the design of your home to theater solution or your home network, setting it up, transferring data from your old phone to your new phone, we will really take care of you and make sure that you walk out working from our store with all of this technology ready to go. also help when you have to use

the products, troubleshoot, help with troubleshooting, help with repair. we have a big service focus, and we're very proud to be celebrating the 20th birthday of the geek squad which is one of our secret weapons, and, in fact, the geek squad will be ringing the bell at the new york stock exchange tomorrow in celebration of that birthday. so advice, service, convenience. convenience of being a multichannel retailer. about this, it's an interesting fact. about 50 percent of the orders on our web site the customers decide the pick up the order in one of our stores. now, get this, we have free shipping on our store. and the customers decide to go to -- excuse me, we have free shipping from our web site. and the customers decide to go to the store because of the convenience. you can get it now. now is really good from a customer standpoint. you can make sure that, you know, you like what you're seeing, you can get the help and the advice. so that's very significant. we've also instilled or

established what we call ship from store. so, you know, we have throughout the country 12 distribution centers, but we also have 1400 stores. and all of our stores now can ship to the customer directly or to another store. so we've unlocked about $2 billion of inventory, and when people go to the site even though we may not have the product in one of the central distribution centers, we'll get it for them from one of the stores. or if you're in a store, we don't have the product in that particular store, we'll get it to you. that's a significant development. convenience with returns. you have bought the product, you get it at home, you don't like it at home, you can return it very conveniently. on the way you have this big, you know, crt tv that you don't know what to do, we'll take care of it for you. so advice, service and convenience is how we fight be the battle. -- fight the battle. now, that means a significant transformation for every function of the company, if you think about it. i think i've highlighted some of

them. across merchandising, marketing, e-commerce, the stores, the supply chain, everything is being transformed very significantly. let me illustrate that with a marketing function. ten years ago marketing was very focused on analog, so it was tv, the insert in the sunday newspaper. this now, with the data we have about our customers, we have the opportunity to develop some targeted, highly relevant digitalized, digitized marketing communication, really develop a relevant communication with our customers. so you bought a ps4, playstation 4 last summer, i can talk to you about some games. you bought a cannon dslr camera, maybe you want to talk about lenses. or you're moving, i can talk to you about how we can help you move and get equipped in your new place. so this is something that's

really transforbe missional. -- transformational. we have leveraged to be helpful to customers, so it changes the game very significantly. now, not all of the transformation is fun and painless. we have taken out so far $860 million of cost out of the system to be competitive. we are committed to a billion dollars. but because we're most, you know, we're or very advanced with our cost takeout, our focus now is shifting to growth. and our aim is to be able to -- although it's not always easy because you have product cycles, you have deflation, the tv from this year is much cheaper than the tv from two years ago, but we're determined to grow the top line. great opportunities around new technology. so there's a lot of talk about wearable, health and fitness technology. technology can help reduce health care costs, and we have a summit next week with an insurance company, hospital

system, a chain of fitness clubs to see how we can work together to the benefit of customers and reduce health care costs and improve people's lives. the connected home, everything in our homes is now connected. how can we help our customers take advantage of that? appliances with the housing recovery, we're focused on growing, and, of course, again, my 4k ultrahigh definition tv, so significant growth opportunities for us. so hopefully, this gives you a flavor of the kind of transformation we're going through. frankly, we're not unique from that perspective. there's many retailers who are going through similar transformations. companies like cabela's from nebraska, you know, is -- their stores are becoming amazing destinations. you want to go to their store to discover what you can do from a fishing, hunting standpoint. they're also a great company from a direct to consumer standpoint. this is how they grew up. a company, of course, very much emphasizing service as well as a

direct relationship with the customer. williams-sonoma has transformed themselves, 50% of their business is now direct to consumer. and all these companies provide stores and online to the benefit of their customers. so from that standpoint, if i generalize the key drivers of these transformations, a refocus on the customer, building an amazing customer experience, leverage, you know, a retailer's unique assets, you know, i told you the best buy story. everyone is going to be somewhat different. building new capabilities. we need to innovate to the benefit of our customers. and from that standpoint, this is, you know, still early days in that revolution, and i have the image, you know, from jim collins, the thames business author -- famous business author, about the need to fire bullets before you fire cannonballs. so the idea that you have to try a great number of things, and in retail you can experiment because we have 1400 stores, so

we can try things in a number of stores and then see whether this works. i call this, also, the boik theory. it's very -- bicycle theory. it's very difficult to direct a bicycle that stands still. you fall. but if the bicycle is moving, if it's not moving exactly in the right direction, it's not a problem because you can always, of course, adjust. so there's a lot of experimentation that needs to take place. now, in that context, of course, my comments about main street and the future of haven street would be incomplete if i didn't talk about the help we need there the governors. and this is about marketplace fair beness. today, in 2014, in this country retailers who don't have a physical presence do not collect the sales tax. retailers who don't have a physical presence do not collect the sales tax. and this is not -- and the customers are supposed to voluntarily report it and, of course, most of them don't. this is not about the internet versus brick and mortar because on best buy.com we do connect the sales tax. again, it's by retailers who

don't have a physical presence, who don't contribute to the livelihood of these commitments, to the fire department, the schools and so forth. and so we think it's an unfair situation, and i though that the national governors association has been at the forefront. you were the first ones to raise that topic ten years ago, and many of you have led the fight individually, and one of the things i wanted to do this morning is thank you for your leadership on this matter. this is clearly an issue that needs to be fixed. i don't know that anyone in the government should be picking the winners in this country. we are ready to fight, you know, when the playing field is level, but the government shouldn't pick the winners. this is also a states rights issue. the last revenue, according to the university of tennessee -- governor haslam -- >> [inaudible] >> okay, it's right. [laughter] the foregone revenue, the last opportunity for revenue from this state is about $25 billion.

now, what the states will do when they collect that, it will be up to individual states. many states have said we will lower the taxes. and, in fact, a famous economist, art laffer from the laugher curve, has concluded based on a study that if we change the law, this is the opportunity for the country to create 1.5 million jobs. 1.5 million jobs, because many states will reduce the tax burden be, and this will that facilitate economic growth. it's an issue that needs to be solved because of jobs. the number of stores that have closed, 15,000 store closures in the past few years, 5,000 announced for this year. our operating income margin at best buy is about 3 or 4%. while we match internet prices, i cannot match the sales tax. i cannot fight with an 8% price disadvantage. and so jobs are being lost every day, decisions about store closures being be made every day

influenced by this situation. so it's a situation that must be solved. it needs to be solved urgently because of the pace at which the business is moving online. the good news is that it's an issue that can be solved, and i think it's an issue that can be solved and must be solved this year. i know senate alexander, lamar alexander, was here earlier this week and spoke to you about this. and i was in washington last week meeting with various members of the to house. -- of the house. it feels like we are on the -- [inaudible] i know today is the final game of the soccer world cup. now, the united states, france, we don't like that game, we get beaten by the germans every time. [laughter] not good. so let's talk about football. we're on the 5-yard line. i think the we all work together, we can push this over the finish be line this year and create a great outcome for the employees, for the economies, for the states and, therefore, for the country. and so i know that you're

committed to this. i think speaking to your delegation, speaking to leadership in congress is an opportunity to be very helpful. the governors have a huge voice on this, and so i am delighted to hear that you're working on this. this is a fight that has got an almost partisan support. this is a fight that's supported by an extremely broad mainstream coalition. there's businesses, organizations, trade associations, amazon is in favor, the u.s. chamber is in favor, mayors, economists, and so this is something that makes sense. it's a common sense solution to an old problem. so in conclusion, i want to again thank you for inviting me and giving me the opportunity to speak to the governors of the state and talk about our industry. it's an honor for me, and i'm very happy to take, time

permitting, any questions from any one of the governors present this morning. so thank you very much. [applause] >> governor haslam? >> thank you very much for coming. this is a critical issue for all of us, i think. what percentage of your all's existing business is done online now? >> so for best buy it's, depending on the quarter, it's in the high single digits, let's say about 7 or 8%. >> okay. >> market share online is lower than the physical world -- >> right. >> -- and we've established the goal to get to parity from that standpoint. >> governor herbert? >> thank you for being here, mr. joly, we're honored to have you here. what do you see the obstacles, you say we're on the 5-yard line, and we can probably push it across the finish line this year. be what do you think the obstacles are? because there are some out

there, and they're going to try to put up a stiff defense on that goal line stand here, i expect. can we get a vote on this before the august recess? who's going to be opposed to it? where are our challenges? >> this is an issue, my sense is that there is broad agreement that this issue needs to be fixed. i've not met anyone saying the current construct makes sense. nobody designed the current situation, and the clear decision of the supreme court in 19 92 was made before e-commerce existed and talked about i how important e-commerce is. so everybody agrees it needs to be fixed. the senate voted last year in may, it's now in the house. there is a congressman from utah, jason chaffetz, who's done terrific work. there was some perceived issues this the senate bill. he's -- in the senate bill. he's worked, each of them, to make sure that the solution is simple, is fair be, can be

implemented, that it can be phased, that the states then have some influence on how it can be done. so there's excellent work that has been done. my understanding, i think the senator has talked to you about this, there is an important law that expires on november 1st which is the not taxing internet access. so i think in the house this coming week the house will have the opportunity to extend the moratorium on not taxing the internet, send this to the senate. my understanding is that the senate then wants to attach an -- [inaudible] bill. is it the original bill or what's coming from the house? it's not for me to say. so i think it's a brilliant move because it makes it clear this is not about taxing the internet, it's about not taxing the internet, it's about establishing fairness in the marketplace. and so then it comes back to the house, and i think leaders of

the house will have to, you know, make sure it gets done either in september or in lame duck. you know, the obstacles, instead of talking about the obstacles, it's good to talk about what we can do. i think each governor talking to their delegation can have -- both on the senate and the house side, highlighting the urgency, highlighting, many states have highlighted, you know -- [inaudible] with the tax rate. in some states that's very impactful. in fact, for us to discuss how the states should use the proceeds, there's a great thing in this country which is called democracy, and it's a federal system, so it's for the states to decide this. so for the governors to clearly talk to their delegation, talk with leadership in both houses and press the urgency of the matter. there's no technical obstacle today to solving this. the reason why the supreme court

20 years ago decided against it is because they felt it was too complex. we are the country that took men to the moon, that, you know, does these extraordinary things. calculating the local sales tax, software can do this. there's eight available companies that provide the software. it's not difficult. in fact, we do this every day. and they have limited the ability to audit, because it was a concern about, you know, so many states auditing small companies at the same time. i think the work that has been done in the house will solve this. so there's no technical obstacle. so i'd like to say that defining what to do is often easy, defining how to do it sometimes is more difficult, but you can get to doing it. what's hard usually is just doing it. that's why i take this -- [inaudible] if we all push together and talk to everybody who's got an influence -- i'm not the decision maker on that, we know who the decision makers are. let's just get it done, it's

going to be good for the cup. so that's how i see it now. i'm not a a politician, i'm just sharing with you what my perception is. all of you have done so much, and after ten years it can feel, you know, that you're tired. no, no, no, this is the 5-yard line, so this is the time to push. >> any other questions? >> i just say one more thing? it's an interesting time we live in, and we talk about, you hear talk about corporate greed and some of the challenges that we have in the marketplace out there. best buy is a remarkable story. started in 1968, really a success story that we all can learn from. p -- i do note that "forbes" magazine named you, like, the best top company in america here a few years ago. just as impressively, they named you the top ten most generous corporations in america. tell us a little bit about your

philosophy at best buy and how it is you're giving back. i think here in the national area you probably have three or four stores right here in tennessee. so what is your philosophy of giving back to the community as part of your corporate mission statement? >> governor, thank you so much for this question. this is something that's very dear to the heart of everybody at best buy. we feel that, you know, when you lead a major corporation, we have responsibilities vis-a-vis all of the stakeholders. of course we have a big responsibility vis-a-vis our shareholders. we completely get that and so forth. we have a big responsibility for our customers, for our employees, and we believe a big responsibility for the communities in which we operate. we are, you know, very grateful for the hospitality that each of your states provide, and we feel that we're in the boat and rowing together. i think this comes in part from the genes of the dna of minnesota. when i moved to minnesota six and a half years ago, i felt

very clearly that there was this sense of common responsibility for the well being, the common good. of the community. and everybody in minnesota gets in the boat and rows. and so how do we make this happen? so we have our charitable activities, we have the best best buy children's foundation. we're very focused on kids and technology. each year we do a big fundraiser in minneapolis. we ask all of our vendors and partners to contribute, and we raise several millions of dollars to contribute from that standpoint. it also means getting involved. many of us, you know, involved in the local institutions. the ram that is the most remarkable -- the program that is the most remarkable, i think, at best buy is this recycling program. recycling, of course, the planet, we really care about this planet. and being able to recycle in the last four years one billion pounds of electronic products is a great contribution to the common good and the planet.

because of our relationships with various vendors and so forth, we then take the raw materials that are in these products, and we then recycle them. it's not just we get them off of home, we do something with them. so we feel be that -- and i know i'm not alone speaking. many corporations in america and around the world feel the same. this is not just about making a buck, this is about contributing to the common good for the jobs we provide, but also through the impact that we have on the commitment. so we're very passionate about this, and we thank you for your question, governor. >> okay. >> i'd just say based on your hospitality -- or your generosity, i appreciate particularly my neighbor in minnesota, in particular the twin cities, some people may not know this, but it was just announced by the nfl that the super bowl's going to be in the twin cities, and i said i particularly feel generous because it makes my commute to

watch the packers in the super bowl much shorter, so i appreciate that. [laughter] >> and we're not at all competitors with that. i think you have -- do you have a professional football team in your state, governor? [laughter] >> i think the 13 world championships that we have compare with zero i think there are in minnesota -- [laughter] but i also at the same time when i said that a about the commute, i also was probably a little bit more of a dig. i'm a good midwesterner, i think it's only right for our neighbors because it's probably the closest a vikings fan will ever get to the super bowl, so that's good as well. [laughter] >> thank you for telling that story. this was a great case, this was the great case of the community in minnesota, getting together to get this outcome. so the governor and the top companies in minnesota all got together and said we want to get this done. and my friend, you know, who got the super bowl 20 years ago and

richard davis, the chairman and ceo of u.s. bank, got all of us together, and we provided the ipads for the presentation and so forth x this was a case of -- and this was a case of a team effort to get this done. so we like to, we like to get together and do great things and, yes, i know, we have some work to do from a results standpoint. [laughter] we'll keep working on this, governor. >> all right. well, thank you so much. we appreciate your time today. very exciting to hear how the transition of your company into integrating e-commerce with main street and how all that works. you gave be us some great ideas to take back home. >> thank you so much. >> we appreciate you. let's give a round of applause. [applause] thank you very much. and we all like to shop at best

buy, so we appreciate that. well, we are coming down to our final few moments of the closing session of the national governors association, and may i just say it's been a great honor this year, i really have enjoyed getting to know even better our fellow governors across our nation. it always headaches me very proud -- makes me very proud of the great work we do together in a bipartisan way, both democrats and republicans, talking about our best rackses, public policy issues -- practices, public policy issues and certainly working with our corporate sponsors that are here today, our different organizations that also belong to the nga. we appreciate your attendance as well because it gives us great insight, great expertise from your various industries to have you as members of the national governors association. i also, before i leave today, have to thank someone that has stood by my side during this year because, as you can

imagine -- governor hickenlooper, you're going to find this out -- it does take a little bit extra time to be the national chair, but that is my husband, wade christianson. [applause] i appreciate it, honey. thank you for everything. and i also want to thank our executive board. we're getting ready to change over the executive board, and i know some of the members have already had to leave, but our incoming chair, governor john hickenlooper. governor hickenlooper and i have worked together very closely over the past year on many different issues that we can find commonality on. thank you, governor hickenlooper, looking forward to your service. governor branstad, we appreciate your service on the executive committee, governor bullock, governor herbert, we appreciate your service on the executive committee. governor walker, thank you so much. and then we also have governor beebe and governor dayton who has already left, too, that are on the executive committee. so thank you for your service on

the executive committee. once again, thank you to governor haslam and his team, your staff. i know that it's not only you and christy, but your staff that have worked very, very hard to make this possible and all the tennessee hosts and sponsors as well as all the people that are in the room today as our corporate sponsors. i also want to thank the nga staff members because it takes a tremendous amount of work to put on these conferences, and there are many of them across the nation. not only our summer meeting, our winter meeting, but all the summits that we have on various topics from health care, transportation to homeland security to education. you name it, cybersecurity. they cowork all year -- they do work all year round in providing great seminars for our staff. i also want to recognize our great team with the nga, and there are a lot of people, but i want to start out with the top executive leadership. dan crippen, dan, thank you forr being our executive director, we appreciate you. [applause] where is he?

[inaudible conversations] >> well, you tell him great job. we appreciate him. [laughter] david quam, david moore, jodi omar. [applause] did i say that right? thank you all. shelley irving and also on my project, america works, richard lane, garrett groves and iris palmer did a knockout job. thank you. [applause] i don't know where they are, but thank you. they did a super job putting together all of our materials and giving us something that we can all take home with us. and then i have to tell you that when i was nominated to be the national chair, i went back to my staff and i said, guess what? we got nominated to be the vice chair which means that in a couple years we'll be the chair. i won't repeat the words of what my be chief of staff said to me, but she did say she wouldn't be with me think longer.

but she is here today, and we spent 20 years at various positions, but my chief of staff, denise authority run, i want to give her a round of applause. [applause] thank you very much. katie who is our policy director, worked very hard with all your staffs across the nation. chelsea barnett, alice, our communications director who's taking pictures right now, doing a great job. travis bauer who has put together all of my too material, there are many other people, but these are the people who are here today. thank you to my staff. [applause] it's been a great pleasure. i know, governor hickenlooper, you're going to have a ball. it's a lot of ton to work with our fellow -- fun to work with our fellow governors and corporate partners throughout the nga. so now i'd like to call on our chair of our nominating committee, governor tomblin, who is going to share with us our

executive committee nominations. >> well, thank you, madam chair. and on behalf of your nominating committee, we would like to say thank you for your great leadership of this organization over this past year, and we want you to know that your committee has worked very hard, very diligently over the last 72 hours to come with the recommendations for leaders of this organization for 015. 2015. we look north and we look south, east and west. we did background checks -- [laughter] we did, you know, what is it, peer reviews, we did all kinds of things. [laughter] but it is really my privilege and and honor to officially nominate the following governors to lead the organization through 2015. i'll start with the nga executive committee. governor terry branstad of iowa, mark dayton of minnesota, pat mccrory of north carolina, steve bullock of montana, you, madam chair, mary fallin from

oklahoma, dan malloy of connecticut and scott walker of wisconsin. and as nga vice chair, governor gary herbert of utah and as nga chair for 2014-'15, governor john hickenlooper of colorado. and, madam chair, i move the acceptance of the nominations en bloc. >> thank you for your work. all those in favor say aye. >> aye. >> all those opposed, nay. motion carries. governor hickenlooper, congratulations as the new chair of the national governors association. [applause] all right. i turn it over to you. >> well, thank you, mary. you have been a truly outstanding leader for the national governors association, and i'm excited to continue the work that we have started together and looking forward to work with our new vice chair, gary herbert.

we have a history of working together on other organizations. i think together we are all committed to that role that we can influence and stress the ons of governors and states -- the importance of governors and states working within the nga. i think we each believe in governors and their role this directing the laboratories of innovation and democracy. we believe in the nga, that the nga's role in helping governors do percent. there's certainly -- do better. there's certainly never been a greater urgency, and, governor fallin, you have done that. i know from our work together over the last year that governor fallin has been remarkably dedicated to the work of the nga and to better connecting the educational systems of our states to the job markets of the future. and on behalf of all your colleagues -- and i can tell you i have never had so many people come up and just say what a great job someone has done -- i'm honored to present you with

this gavel commemorating your year as the chair of the nga. >> oh, wonderful. [applause] >> don't hit it yet. [laughter] during the last year, mary and i both sounded a consistent message. states are leading this nation forward. governor, from across the political spectrum and from literally all parking lots of the country -- parts of the country are working to improve the way government operates, putting policies in place that improve the lives of our sides in every -- of our citizens in every corner of this country. some of us may believe government should be larger, some smaller, but we all believe the government has to work. the work that we do collectively through nga so important and so valuable to that enterprise. as we've seen this weekend, sharing our stories and our best practices with each other really

help each of us to do a better job managing the challenges we face. each year the nga chair chooses an initiative of importance to them and importance to other governors across the country. and i think this year we're going to broaden the focus a little bit. state government today touches imnumerable aspects of people's lives and delivers an array of services from building and operating new highways to broad social programs. government -- governors are poised to make these operations work in the most cost effective, cost efficient and the host efficient -- the most efficient, cost effective way possible. in colorado we've been saying efficient, effective and elegant just to drive home that part of customer service at the end. so that's why i've chosen to focus for the year 2014-2015 the national governors association chair's initiative on what we're going to call delivering

results. as the stewards of revenues collected by states as well as those that flow from the federal government, governors oversee significant operations in both scope and scale. that expansion makes it even more important for governors to harness the human talent, innovative management practices, new and emerging technologies and sophisticated analytics to increase performance and deliver results. some of my fellow governors are already taking advantage of recent innovations to address the fundamental issues of how do we deliver better results. and there are truly some cutting edge ways to do this, including recruiting the best and the brightest to work in their administrations, employing modern management practices to keep government lean and then, last but not least, using technology to drive results, track progress and really create innovation. there's a large commitment,

including academic leaders, businesses, think tanks and a broad array of skilled consultants who have assisted governors in this work, and this community helps governor withs generate success across the country. by showcasing these successes in various states and providing an opportunity to share best practices with each other, we can work together over the next year to streamline state government and improve the lives of people across the nation. i know we in colorado have ideas and innovation to share, but i think like all states we're going to gain much more than we give. during the next year, my initiative will convene several meetings of experts from state government, from universities and innovators from the public sector including nongovernment organizations to explore the cutting edges of innovation and state operation and in policy making. the knowledge gained from these meetings will lead us to a summit in 2015 which i hope many

of my fellow governors will attend and be able to call attention to the promising and best functioning practices and, frankly, to borrow -- and quite nakedly -- to steal from each other. i'm looking directly at governor haslam and governor walker. i know each of you believes in this mission. every governor's working on it, but i think by focusing on that ability to share best practices, we can make some, we can accelerate our progress. and i look forward to working with each of you on this and all the issues over the next year. again, thank you all for being here for the 106th nga summer meeting, and thank you, governor haslam. bill, you have been an amazing host. you know, i think this will go down in history as one of those turning points where now people are going to be elbowing each other to make sure they're at each summer meeting. thank you so much for doing that. we are now adjourned.

[applause] [inaudible conversations] >> today a house veterans affairs committee hearing to examine the process for evaluating disability and benefit claims. this is one of a series of hearings investigating veterans health care after reports about wait times for veterans seeking medical care. live coverage begins at 7:30 p.m. eastern on c-span2, and you can comment on the hearing as it happens on twitter using the hashtag c-span chat or post a comment on our facebook page. in or -- today the senate homeland security and governmental affairs committee will hold a