Stanford Leadership Forum 2026: Business Leaders as California’s Growth Drivers

Key Concepts

• Business Climate: The current state of California’s economy, characterized by "anxious" uncertainty due to policy, regulation, and leadership transitions.
• Infrastructure as a Solution: The perspective that building critical infrastructure (energy, housing) is the key to economic growth rather than a burden.
• Liability Reform: Legislative efforts (e.g., Senate Bill 254) to address wildfire risk and stabilize the investor-owned utility model.
• CEO Councils: Collaborative groups (e.g., California CEO Council, Partnership for San Francisco) designed to provide data-driven, pragmatic input to policymakers.
• Breakthrough Thinking: A methodology of asking "What has to be true to achieve this?" rather than "Is this possible?" to overcome systemic barriers.

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1. The Current Business Climate in California

The panel described the business environment as "anxious." While California remains a hub for innovation and talent, businesses are struggling with a lack of predictability.

• Key Challenges: Federal issues (tariffs, immigration, geopolitical instability) combined with local concerns regarding affordability, tax uncertainty, and regulatory "stickiness."
• The Narrative of Departure: While some businesses are leaving, the panelists argued that the trend is often exaggerated. Many companies remain committed to the state, provided they can find affordable housing, quality education, and reliable infrastructure for their workforce.
• Economic Inflection Point: The state is at a crossroads where policy choices will determine whether it continues to lead or loses its competitive edge.

2. Energy Demand and AI-Driven Growth

Patty Poppy (CEO of PG&E) highlighted that energy demand is a positive indicator of growth, particularly driven by the AI sector.

• Capacity Expansion: PG&E is currently processing 16 gigawatts of new demand applications. For context, San Jose (a 1-gigawatt city) is adding 2 gigawatts of capacity.
• Economic Math: Increased demand allows for the modernization of an aging grid. By spreading infrastructure costs over a larger customer base, the utility can lower rates for everyone.
• Modernization: PG&E is utilizing AI to optimize permitting and construction workflows to accelerate infrastructure deployment.

3. Frameworks for Growth and Policy

The panelists emphasized that business leaders must move beyond internal operations to engage in civic life.

• The "What Has to Be True" Framework: A methodology used by PG&E to bypass "is it possible?" skepticism. By identifying the specific conditions required to achieve a goal, leaders can systematically dismantle obstacles.
• The Role of CEO Councils: Jennifer Barrera (Cal Chamber) and Katherine Wild (Partnership for San Francisco) noted that policymakers often lack direct input from CEOs. These councils fill that void by providing a unified, data-driven voice to Sacramento and City Hall.
• Civic Engagement: Katherine Wild noted that San Francisco’s past success led to complacency. The current strategy involves active dialogue with city leadership on critical issues like public safety, transit (MUNI/BART), and housing.

4. Capital and Investment

• Investor-Owned Utility (IOU) Model: Infrastructure is funded by equity investors who provide capital upfront, which is then recovered over the life of the asset. Currently, wildfire liability risks have caused California IOUs to trade at a 50% discount compared to the rest of the sector.
• Legislative Necessity: The panel stressed that liability reform (specifically Senate Bill 254) is essential to restore investor confidence and ensure the state can fund the massive infrastructure required for future prosperity.
• Tax Policy: The panelists warned that unpredictable tax structures and "incremental" tax hikes drive away the tax base. They argued for a stable environment that encourages companies to stay and grow in California rather than relocating.

5. Notable Quotes

• Patty Poppy: "Infrastructure is not the problem. It’s actually the solution."
• Patty Poppy: "No economy is fueled by anything but power. We have to power the prosperity of our state."
• Katherine Wild: "We got very much the government we deserved... [now] we can be the voice to speak to City Hall about what’s needed."
• Jennifer Barrera: "If it’s so important to the CEO, then why am I not hearing from them? [The CEO Council] fills that missing piece."

Synthesis and Conclusion

The panel concluded that California’s future depends on a shift from passive observation to active, data-driven civic participation by business leaders. The "anxiety" currently felt by the business community is a result of policy uncertainty, but the state possesses the fundamental assets—talent, innovation, and capital—to thrive. By focusing on infrastructure as a growth engine, implementing liability reform, and maintaining a consistent, pragmatic dialogue with government officials, California can leverage its current inflection point to secure long-term economic prosperity.