Professional Documents
Culture Documents
Report Digital - DTR12
Report Digital - DTR12
Report Digital - DTR12
Transformation
Review Twelfth Edition
Taking
Digital Transformation
to the Next Level
Lessons from the Leaders
2 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Digital
Transformation
Review Twelfth Edition
Taking D
igital Transformationto
the Next Level: Lessons from the Leaders
The Capgemini Research Institute is Capgemini’s in-house think tank on all things digital. The Institute
publishes research on the impact of digital technologies on large, traditional businesses. The team draws on
the worldwide network of Capgemini experts and works closely with academic and technology partners. The
Institute has dedicated research centers in India, the United Kingdom, and the United States. It was recently
ranked number one in the world for the quality of its research by independent analysts.
3
28
Torbjørn Folgerø
Contents Equinor
Scaling digital initiatives to build
sustainable solutions in the
energy sector
14 38
Saskia Steinacker Barbara Martin Coppola
Bayer IKEA
06
Advancing digital in health Giving “160,000 entrepreneurs”
and nutrition the liberty and freedom to
drive digital transformation
Introduction
The changing nature of
digital mastery
20 46
14
Industry Leader
Sabine Scheunert
Daimler AG
Accelerating digital innovation
Frédéric Levaux
Legrand
How collaboration and culture
by transforming culture, change have driven new
Perspectives collaboration, and talent digital innovations
4 Taking Digital Transformation to the Next Level: Lessons from the Leaders
52 74 90 Capgemini
Lilian Tomovich Rahul Welde
MGM Resorts International Unilever
Perspective
Sparking the wow factor through Consumer-first approach
digital and human connections accelerates digital
transformation
58 82
Eric Chaniot
Michelin
Views from a
A start-up culture drives digital Thought Leader
transformation at tire and
mobility giant
66 82
Mrutyunjay Mahapatra Dr. Kai-Fu Lee
formerly with Sinovation Ventures
Superpowered perspectives
State Bank of India
from an AI expert, investor,
Taking a 200+ year-old bank to author, and influencer
the digital age
5
Introduction
by the Capgemini
Research Institute
The changing nature of digital mastery
6 Taking Digital Transformation to the Next Level: Lessons from the Leaders
The rules of the game have changed. An array of • The employee experience is increasingly
advanced technologies – from artificial intelligence important. Employees want to be engaged
to the internet of things – are reinventing how and participate in the strategy of the business
organizations create value. However, significant and organizations need to motivate, engage,
questions still remain about what capabilities and excite their people. Upskilling and reskilling
and leadership qualities are required to seize through education and training are key here,
this opportunity, particularly in terms of as well as opportunities to collaborate across
employee engagement, talent, and culture. In functions and share innovative ideas through
this Digital Transformation Review, we interview smart platforms. Unilever’s Rahul Welde outlines
a range of digital leaders, providing a first-hand, why it is important to treat employees like
global perspective on the key capabilities and customers.
characteristics required to succeed in a world where
what we understand as digital transformation is
evolving fast.
We think of our employees as
We spoke to leaders from large multinational consumers. We therefore aim to create
corporations across a broad spectrum of industries, a similar wow effect with learning
including automotive, consumer goods, energy, and culture change as we do with our
entertainment, financial services, industrials, life
brands for consumers.”
sciences, and retail. A number of critical lessons and
insights emerged: – Rahul Welde, Unilever
• There has been a pivot from a top-down
approach to top-down and bottom-up. In our
interviews, Mrutyunjay Mahapatra, formerly with
State Bank of India, discusses the importance of
having digital champions.
7
• New cultural frameworks are pivotal. • There is a need to marry governance
Daimler’s Sabine Scheunert outlines why today’s frameworks with local needs. Governance is key
talent will be looking for those organizations to ensuring accountability for digital initiatives
that can offer a stimulating and non-hierarchical and consistency across geographies. However,
culture. as well as clear global governance frameworks,
digital initiatives need to reflect local market
and organization needs. Michelin’s Eric Chaniot
Establishing a positive, non- outlines why robust governance arrangements
need to be also sensitive to local market needs.
hierarchical, productive, and exciting
working culture, as well as new
working methods, coupled with On top of our strong
ground-breaking projects, that governance, the Digital Direction is
‘move the world,’ is key to both located across the world through
attracting and retaining talent.” our digital factories. This ensures a
– Sabine Scheunert, Daimler stronger proximity to our internal
business partners and a better
understanding of local market
specificities, both from an employee
and a customer perspective.”
– Eric Chaniot, Michelin
8 Taking Digital Transformation to the Next Level: Lessons from the Leaders
• Organizations need to find – and define – their
purpose. Many consumers today, especially
millennials and other next generations, place
We focus on making people
significant importance on sustainability and understand that digital is not a thing in
social issues. They expect to see those same itself, but it is a means to contribute to
philosophies and beliefs in the brands that our vision of feeding an ever-growing
they interact with and support. Bayer’s Saskia world population and fostering health.”
Steinacker outlines how organization purpose
offers a positive vision that key stakeholders – – Saskia Steinacker, Bayer
from employees to consumers – can engage with.
9
Percentage of organizations believing they have the required capabilities
45%
39% 39%
35%
2012 2018
Source: Capgemini Research Institute, Digital Mastery Survey; April–May 2018, N=1,338 respondents, 757 organizations; Capgemini Consulting and the MIT Center
for Digital Business, “The Digital Advantage: How digital leaders outperform their peers in every industry,” 2012, N=391 organizations.
*Calculated based on the average percentage of organizations agreeing to the questions in each category (rating of 5, 6, 7 on a scale of 1 to 7); Questions included
in this analysis are the same in 2012 and 2018.
Our research pinpoints the best practices of a of the Digital Transformation Review offers both
small cohort of high-performing organizations – insight and pragmatic ideas for action. Please reach
the digital masters – who have critical digital and out to us if you would like to discuss any of these
leadership capabilities in place. We hope this edition topics and the implications for your organization.
10 Taking Digital Transformation to the Next Level: Lessons from the Leaders
11
Leader and Expert Interviews
2
1
4
6
7
12 Taking Digital Transformation to the Next Level: Lessons from the Leaders
1 United States
Saskia Steinacker, Bayer
New York
2 Germany
Sabine Scheunert, Daimler AG
Stuttgart
3 Norway
Torbjorn Folgero, Equinor
Bergen
10
4 Denmark
Barbara Martin Coppola, IKEA
Copenhagen
8
5 France
Frédéric Levaux, Legrand
Paris
6 United States
Lilian Tomovich, MGM Resorts International
Nevada
7 United States
Eric Chaniot, Michelin
North Carolina
8 India
Mrutyunjay Mahapatra, formerly with
State Bank of India, Mumbai
9 United Kingdom
Rahul Welde, Unilever
London
10 China
Dr. Kai-Fu Lee, Sinovation Ventures
Beijing
13
Industry Leader
Perspectives
Saskia Steinacker,
Bayer
14 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Bayer’s digital transformation journey
What is your mandate as global head Where is Bayer today in its digital
of digital transformation at Bayer? transformation journey?
Bayer is organized into three divisions – We are in the midst of our digital journey, and we are
pharmaceuticals, consumer health, and crop learning as we go in this fast and iterative process.
sciences. To drive the digital agenda across the Today, technological advancements and evolving
Group, we established the “Digital Excellence customer needs and expectations are compelling
Council,” which has a sponsor from the Board of organizations to think of new and innovative
Management and executive representatives from all business models. For our digital transformation,
the divisions, countries as well as from group-wide we are focusing on three things: firstly, digitizing
functions, such as IT. This council covers the entire the customer experience; secondly, digitizing our
digital agenda – from driving the digital mindset operations; and thirdly, new business models.
and leveraging data to building infrastructure
and fostering partnerships required for digital What does that mean for our customers and
growth. My role is to drive the Group-wide digital patients? In the area of crop science, we want to help
transformation together with this council. farmers make better decisions based on the insights
we get from data provided by sensors or drones. In
the area of health, we want to bring new medicine
to patients more efficiently and much faster. We
To drive the digital agenda
want to tailor treatments to individual patients,
across the Group, we established assist healthcare professionals in getting to the
the ‘Digital Excellence Council,’ right diagnosis, and offer new non-pharmaceutical
which has a sponsor from the Board solutions.
of Management and executive
Operations are becoming digitized across our entire
representatives from all the divisions,
value chain to have effective and cost-efficient
countries as well as from group-wide functional areas. For example, at our pharmaceutical
functions, such as IT.” manufacturing site in Garbagnate, Italy, we deployed
a digital twin-based scheduling program to drive
improvements in our quality-control lab. The site
was just recognized amongst the nine world-leading
smart factories by the World Economic Forum.
15
New business models to maximize the value for the customer
How has digital changed your
In the future, digital technologies will make it
relationship with customers?
possible for us to identify diseases and illnesses
Digital has given us an opportunity to have multi- at a much earlier stage with the help of artificial
directional interactions with our customers. Newer intelligence that recognizes patterns. Then, when
digital channels enable us to co-create with the people are ill, we can provide more individualized
customer – take clinical trials, for example. We could treatment.
use the data of smart health devices to monitor a
patients’ health. The patient could stay at home and In digital farming, we already have a solution, which
would not need to come to a clinic for health checks. makes it possible for the farmer to calculate the
right time and appropriate dose of fertilizer or
crop protection needed for every square meter
Digital has given us an of ground. This is not only making farming more
efficient, but also much more sustainable.
opportunity to have multi-directional
interactions with our customers.”
16 Taking Digital Transformation to the Next Level: Lessons from the Leaders
You spoke about the potential six new startups focusing on AI, IoT, and data and
of AI. How are you leveraging analytics, among others were awarded funding
emerging technologies to improve and expert support in this accelerator program. For
example, one German start-up, Zencorlabs offers a
outcomes for customers?
smartphone software and device that uses artificial
We are doing a lot of work in areas such as artificial intelligence to warn patients of heart failure.
intelligence and machine learning. Our innovation
centers – including our Life Sciences iHUB in Silicon We are also implementing artificial intelligence
Valley – focuses on these emerging technologies. and machine learning to process patient safety-
Established in 2015, the LifeScience iHUB forges related data such as side effect reports more
collaboration between tech companies and Bayer efficiently and faster. To that end, we’ve partnered
to find uses for innovative sensors, AI/machine- with the professional services firm Genpact for the
learning and digital apps for human health, animal development and have embarked upon a multi-year
health, and agriculture. agreement for artificial intelligence applications in
pharmacovigilance. Going forward, the application
Bayer Grants4Apps (G4A) is another global program of AI in pharmacovigilance has the potential to
that offers support to startups and companies uncover new drug-related side effects earlier, and
that are developing innovative solutions in health therefore could potentially further improve our
and care. We offer mentoring and coaching, office ability to better ensure patient safety.
space, networking, and financial support. This year,
17
Digital culture is often the single How do you measure the success
biggest hurdle to successful of your cultural transformation?
digital transformation. What
One of the key questions posed in every
are some of the things that you
transformation is: “what is the KPI?.” Of course,
have done to develop the culture we use some quantitative measures. For example,
Bayer needs to be successful? measuring the success of digital training in terms of
First, we understood that there are employees who completion rate and interest levels. Or measuring
are excited, there are employees who are somewhat how we increase effectiveness and efficiency in
undecided, and there are some employees who our functional areas. However, the key metric is
are resistant to change. We knew that we could how successful we are in rolling out our business
not have a communication and change plan based strategies and driving new models on global and
merely on sending a daily email saying: “we are local levels which ultimately provide maximum value
on digital journey.” We needed to guide people to our customers.
through the different phases of change. We do this
by making them part of the vision and showcasing We often see collaboration as
successful tangible examples of how digital has a key stumbling block for large
improved the lives of our customers. We tailored the organizations. How do you ensure
communication to the specific groups and ensured your teams are collaborating
that the messages resonated with them.
and working across silos?
We focus on being agile to drive our new business
models in our cross-functional teams. We started
We knew that we could not have
an initiative called “5x5” (Five by Five) in 2015 for
a communication and change plan example. This is where five people from different
based merely on sending a daily email functions and backgrounds come and work together
saying: ‘we are on digital journey.’ We for five weeks on a specific business challenge
needed to guide people through the or opportunity. At the end of the five weeks
participants present their final solution, often a
different phases of change.”
prototype to the business unit sponsor. The program
provides our employees with an opportunity to
One of our key initiatives was recognizing individuals step out of their function or business unit and to
who brought in an amazing innovative idea – either understand the dynamics of cross domain teams. We
in serving customers better or making operations have even filed some patents for prototypes that
more efficient. Our “Digital Innovation Award” was came out of this program and have launched and
a very powerful step, as it not just makes brilliant commercialized new businesses.
people visible, but also motivates employees to
be excited about the change. We also offer a lot Our DevOps pilots are another example. They show
of training opportunities – for example, reverse that we can deliver better quality digital solutions
mentoring to foster our digital culture. We know this much faster when we bring people together in cross-
will be a long journey, but we are pleased with the functional teams instead of working in a traditional
progress we have made so far. setup. In one of our pilots, colleagues from R&D and
18 Taking Digital Transformation to the Next Level: Lessons from the Leaders
IT develop a digital platform to support drug target identification. The results are not only better, but it’s
also more fun to work like this!
We focus on being agile to drive our new business models in our cross-
functional teams. We started an initiative called ‘5x5’ (Five by Five) in 2015 for
example. This is where five people from different functions and backgrounds come
and work together for five weeks on a specific business challenge or opportunity”
19
Industry Leader
Perspectives
Sabine Scheunert,
Daimler AG
20 Taking Digital Transformation to the Next Level: Lessons from the Leaders
The Daimler digital transformation journey
Digital is at the core of Daimler’s What was the impetus for creating
strategy. How has your journey in the new digital unit at Mercedes-Benz
Mercedes-Benz evolved over the in 2016? How has it helped to drive
past few years? What is the initiative success of your digital transformation?
that you are most proud of?
Creating the digital unit, digitalONE, was
Having come from a marketing and customer momentous – it was an embodiment of a changing
relationship management background prior to organization where silos are being broken down,
my role at Daimler, I find it exciting to be a pivotal teams and disciplines are merging, and a new
member of Daimler’s digitalization. In saying this, common mindset emerges. digitalONE encapsulates
I mean that the role of IT changed fundamentally our strategy, a team of people, as well as our
by enabling and educating us towards a digital and spirit and mindset. We brought digitalONE to life
tech-driven company. Therefore, it is an essential through various projects, initiatives, and events that
driver of the digital change. With our internal supported our transformation.
initiative, “digitalONE,” we established a program
that I am extremely proud of. Through applying Connectivity, mobility, autonomous
new working methods – driven by the spirit of and electric cars are a key part of your
co-creation – we brought business areas and IT strategy. How have these priorities
together like never before. digitalONE provides a helped to transform your customer
genuine added value for Daimler and contributes to
a successful digital transformation.
experience and your operating model?
What you mention is our strategy – “CASE” –
Connected, Autonomous, Shared, and Electric. As
With our internal initiative, our chairman, Dr. Dieter Zetsche, said: “Each of
‘digitalONE,’ we established a program these has the power to turn our entire industry
upside down. But the true revolution is in combining
that I am extremely proud of. Through
them in a comprehensive, seamless package.
applying new working methods –
driven by the spirit of co-creation – we ”With digital services, for example, we are absolutely
brought business areas and IT together at the heart of our customers’ experience. So
like never before.” much so, that we consider our customers to be
not only Mercedes-Benz drivers, but anyone
who has experienced any of our services and
apps. Ultimately, Mercedes-Benz stands for the
‘CASE’ – Connected,
Autonomous, Shared, and Electric.”
21
highest standards in luxury mobility. And, with the manufacturer to a connected mobility service
new Mercedes-Benz mobility services, we have provider that is able to offer its customers the right
conquered new customer groups for the brand. service, at the right time, in the right place.
This way, we are evolving from a traditional car
22 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Transforming the culture
We’ve found in our research that
organization that iterative processes, in autonomous
culture is the number-one hurdle to
non-hierarchical teams, simply works! That is the
successful digital transformation. Is best internal promotion you can do to create
it your experience as well? And if so, sweeping change across an organization.
how are you changing your culture?
The principles of Leadership 2020, again, serve as
Within most organizations, culture is often the perfect basis since they speed up innovation.
determined by its leaders. They must embody the We, for instance, see our principle “empowerment”
values of the organization – and most importantly as crucial for bringing good ideas to the market
act according to those values. Leadership 2020 is quickly. The success proves us right. A good
our set of principles that all leaders (and of course example, which demonstrates that we at Daimler
the whole team) adhere to. They define how we already live by these values, is our “Digital House.”
communicate and operate and lay the foundation In this sub-unit of digitalONE, we work in a swarm
of culture at Daimler. Customer orientation, for of almost 200 employees in a creative, inspiring, and
example, is one of those eight principles. The beauty agile environment.
of Leadership 2020 is that it also provides a yardstick
for hiring new talent. You’ve mentioned your team works in
swarms. What is this and how does it
help to transform your digital culture?
Within most organizations,
culture is often determined by its Swarms work autonomously, are self-organized,
leaders. They must embody the set goals and roles, have complete end-to-end
responsibility, and include a diverse range of people
values of the organization – and across functions and skill sets. They thrive on two-
most importantly act according to way engagement and constantly shift and adapt to
those values.” the changing landscape. This bold step positions us
to intercept upcoming trends on the digital horizon
How do you accelerate innovation and even predict and anticipate customer needs.
efforts in the digital age? How do
you encourage people to experiment
and accept a very iterative process? Swarms work autonomously,
Extolling the benefits of an iterative development
are self-organized, set goals and
process, that includes our target user in the process,
is something that needs to be demonstrated –
roles, have complete end-to-end
rather than just communicated. When pilot teams responsibility, and include a diverse
are successfully, effectively, and quickly rolling range of people across functions and
out products and services to market in an agile skill sets.”
fashion, it becomes a clear case for the rest of the
23
Indeed, we operate the biggest swarm within How are you measuring success of
Daimler and have implemented this working your cultural transformation?
model, where the team works in an empowered
atmosphere with a flat hierarchy and in a customer- That’s a great question. In fact, there are no hard
centric way. KPIs that can measure the success of cultural
transformation. However, I believe that speed is a
How do you ensure that teams good starting point, which gives you an idea of how
collaborate across silos, product far changes have already come in your company. For
lines, functions and regions? example, working in our digital house swarm, which I
mentioned before, enabled us to roll out “OneWeb”
Technology plays a big role here. We aim to to 42 markets in less than 18 months.
transcend geographical boundaries through open
lines of communication such as video, instant chat, So, we believe in the power of pilot teams, which
and online collaboration tools. Ensuring key players means to test new methodologies and working
across departments are part of the development models in a smaller group to evaluate the possible
process (either regularly or at key intervals and impact for the whole organization. Regardless of
milestones) is critical to ensuring collaboration the methods you decide on, the most crucial success
and effectiveness. Our swarm working model I factor is transparent and open communication
mentioned above is a great example of this. Cross- equally through all levels.
functional players come together to collaborate
and focus on delivering a specific project. This is the
future of work, and a blueprint we want to roll out
to the entire organization.
24 Taking Digital Transformation to the Next Level: Lessons from the Leaders
As Mercedes-Benz moves more
towards a networked mobility Automotive experience is not a
service model, what type of fundamental criterion to entering the
skills and experiences are more Daimler fray anymore. We need people
critical now than ever? from a diverse and global background,
Automotive experience is not a fundamental people who are problem-solvers, people
criterion to entering the Daimler fray anymore. We who have an empathy for the human
need people from a diverse and global background,
condition.”
people who are problem-solvers, people who have
an empathy for the human condition. We need all, we are here to progress humanity forward with
people who can bring in new perspectives. After inventive and innovative mobility solutions.
25
From our research library
Percentage of organizations believing that they have the necessary digital capabilities,
in the automotive sector and globally
Overall
30% 35%
By Category
38%
34% 34%
33% 32% 33%
30% 27%
Source: Capgemini Research Institute, Digital Mastery Survey; April–May 2018, N=1,338 respondents, 757 organizations;
N=174 automotive respondents, 85 automotive organizations.
26 Taking D
igital Transformation
Transformationttoothe
theNext
NextLevel:
Level:Lessons
Lessonsfrom
fromthe
theLeaders
Leaders
How can automotive organizations progress
on their journeys to digital mastery?
Develop a digital culture that spans traditional automotive silos and hierarchy
Design new digital KPIs focused on behaviors rather than successes or failures
Source: Capgemini Research Institute, Digital Mastery Survey; April–May 2018, N=1,338
respondents, 757 organizations; N=174 automotive respondents, 85 automotive
organizations.
28 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Digital transformation at Equinor
What is your digital
We are driving digital opportunity via three
transformation strategy?
technology enablers: process digitalization, data
Our digital roadmap is centered around six digital science, and robotics and remote control. We
programs cutting across the company and three will continue to work in these areas and focus on
key enablers: developing digital capabilities and expanding our scale of digital operations. By 2020,
leadership, utilizing the external ecosystem, and Equinor plans to invest around a quarter billion
developing our unified data platform. dollars in digital technology to create more value
and improve operations.
For example, on this third objective, we recently
built a cloud-based data platform called “Omnia.”
Here, relevant data is made available, irrespective of
By 2020, Equinor plans to
its source or its point of creation in the value chain.
The idea behind this platform is to move from silos
invest around a quarter billion dollars
of data across our value chain – such as development in digital technology to create more
and production, transportation, marketing and value and improve operations.digital
trading – to one common data platform that technology to create more value and
orchestrates all our data. Our onshore, integrated
improve operations.”
remote operations center in the US is already using
this platform to develop machine learning and data
analytics that help with operational improvements What are the most pressing
and making better data-driven decisions. challenges you face in delivering
against your strategy?
While we are progressing along expected lines,
We recently built a cloud-based there are two key challenges that we are currently
data platform called “Omnia.” Here, addressing. First, when moving our data to the
relevant data is being made available, cloud-based Omnia platform, cybersecurity is a
irrespective of its source or its point of key concern for us and we are investing time and
resources into mitigating risks. The second challenge
creation in the value chain. The idea
is delivery time. We are used to long lead times in
behind this platform is to move from our traditional development projects, often several
silos of data across our value chain – years from a discovery to we start producing. Now,
such as development and production, we are delivering value from digital initiatives in
transportation, marketing and trading matter of months, and sometime weeks, by working
incrementally and with minimum viable products.
– to one common data platform that
This is a big change for us as a company.
orchestrates all our data.”
29
Transforming operations
What are some of the most
technical information. We will continuously develop
notable recent digital initiatives
this and scale to other projects.
you have launched?
This year, we established an integrated operations We recently launched an operational planning tool,
center (IOC) with the aim of improving safety, which we piloted in one of our assets in Norway,
increasing value creation, and reducing emissions to improve offshore risk management and safety,
from our installations on the Norwegian continental using cognitive techniques. We created a minimal
shelf. Over time, all our 30 operated, offshore viable product that the asset team is now using.
assets on the Norwegian continental shelf will be It integrates data from five different sources into
connected to the center. So far, three assets are live, one new visualization, consisting of incident data,
with two more coming on stream before Christmas. technical integrity data, and planning data. We are
Here too, we are streaming industrial data from also using natural language processing to tap into
these offshore assets into one physical center. In this previous security incidents in the company so that
center, we have a 90-member team that includes operators and engineers learn from what happened
engineers, data scientists, and software developers. previously before they execute the work. The
Their role is to use the data and continuously system is able to find valuable insight by screening
develop new solutions on production optimization our history of incident records, often written text
and predictive maintenance using machine learning and pdfs in Norwegian dialects! The solution is now
and other techniques. Our ambition is to create being scaled to all our assets in Norway.
value from our operated fields in Norway by more
than $2 billion from 2020 to 2025. We have also launched a reservoir-experience
platform, making subsurface data available in
We also built digital twins for four of our oil field Omnia, which is more than half of our data volumes
projects. The digital twins allow for a virtual, real- in the company. This is used to explore new oil and
time representation of the physical installations. If gas reservoirs and to improve the recovery rates and
we take the example of the Johan Sverdrup oil field, lifetime of existing reservoirs.
there is a lot of data collected during the planning
and operation phase. The digital twin, which we Lastly, we created a team focused on robotic
have built by embedding gaming visualization into process automation. The team has already freed
our 3D models, will help us maximize the value up a significant amount of time; time that is now
of this data to run analytics and provide relevant spent on value creating activities instead of manually
We built digital twins for four of our oil field projects. The digital twins
allow for a virtual, real-time representation of the physical installations.”
30 Taking Digital Transformation to the Next Level: Lessons from the Leaders
moving information from one system to another. Which digital technologies
Our new virtual employees, called Rob and Roberta, have improved operations
are now responsible for executing many routine at Equinor the most?
tasks, thus improving efficiency as well as reducing
human-driven errors. Omnia, our cloud-based data platform – along with
data science and augmented and virtual reality – are
the three technologies that have helped us the most
so far. We built Omnia to give our employees access
Our new virtual employees,
to integrated data across systems and organizational
called Rob and Roberta, are now boundaries and to connect the broader ecosystem
responsible for executing many routine to the same platform. We are already building
tasks, thus improving efficiency as well internal data science capabilities and using AR/
as reducing human-driven errors.” VR on the digital twins to increase our workforce’s
efficiency, which is also an important focus area
for us. Now we are looking into more nascent
technologies, such as blockchain and 3D printing.
31
Encouraging collaboration
What key roles do vendors, working with a range of start-ups to test early-stage
partners, and start-ups play in your technologies. We recently partnered with Techstars,
a start-up accelerator program, which has selected
digital transformation journey?
10 global start-ups to work with us for three months.
Firstly, we see that we must collaborate in new These start-ups have access to our experts and data
ways with our current suppliers – such as the big so that they can work on and create new solutions.
oil and gas service providers – by integrating data The selected companies are representative of some
more seamless between companies. For example, of our focus areas, including solutions within the
by connecting them to Omnia through APIs. We energy sector, new business models, digitalization,
also believe that many of the best solutions may and renewables. For example, one of the start-ups,
not come from Equinor or the big suppliers but DeepStream in the UK, is a tech-enabled tendering
from start-ups across the world, including those and supplier pre-qualification platform for oil and
in Silicon Valley, Boston, Tel Aviv, and Oslo. We are gas businesses. Another start-up, Voyager in the US,
32 Taking Digital Transformation to the Next Level: Lessons from the Leaders
is a cloud-based data hub assisting the commodity we are closely mapping them to gather insights from
shipping industry to improve decision making, their challenges, successes, and failures. Looking
automate processes, and connect systems. at the finance industry, they have done a lot of
interesting work on agile delivery methods, which
Are you benchmarking against or we are now applying in Equinor. So, I have spent time
getting inspiration from companies interacting with CXOs of many organizations, within
outside the energy industry? and outside the energy industry, to share learning
and ideas.
There is a lot for us to learn from industries such
as mining and finance. Mining, as an example, face
challenges that are very similar to ours. Therefore,
Fostering innovation
How are you encouraging your
program. We receive a great response and a lot of
employees to experiment and to people are investing time and funds to work on
accept an iterative process? new ideas. These ideas are further presented to a
Our belief is that if you witness immediate success in group of senior executives and, if given a go-ahead,
every project that you initiate, then you are playing the possibility of funding a permanent project can
safe. It is critical for some projects to fail to be able be explored.
to test new solutions and technologies. However,
these projects need to be carried out in a structured While fostering innovation, we need to stay focused
and safe manner so that one can stop them when on providing a safe environment to our employees.
required and continue learning. We also need the For example, we do not test our solutions in our
infrastructure to test everything, from how we operations that are dangerous, such as our complex
create sandboxes to allowing start-ups to work operations on hydrocarbons. It is critical for us to
on our datasets. To increase engagement across have a clear understanding about how and where
the company – and encourage the promotion of solutions can be tested, where we can experiment,
new ideas – we have an internal entrepreneurship and what are the requirements for implementation.
Our belief is that if you witness immediate success in every project that you
initiate, then you are playing safe. It is critical for some projects to fail to be able to
test new solutions and technologies.”
33
Change management
How did you prepare the organization
for your digital transformation? How are you addressing the challenge
We took both a top-down and bottom-up approach. of hiring and sourcing digital talent?
Equinor’s leadership has three challenging yet We are addressing this challenge in four ways.
simple tasks – shaping the future, empowering Firstly, a lot of our employees have strong
people, and delivering results. These three also fit quantitative aptitude, and many are already working
very well in our digital vision. We are working toward alongside analytics teams. We try to upskill and
enabling our leaders to achieve these goals. For re-skill these employees and engage them with
example, “Taking Equinor beyond 2025 Digital,” was data science projects. Secondly, we target external
launched a few years back involving 11 senior vice recruiting, particularly new software developers,
presidents. Today, our CEO and executive committee IT security professionals, and data scientists. In
spends lot of time understanding and working on the new Digital Center of Excellence, the ratio of
the overall digital roadmap. internal versus external recruitment is almost equal.
We want to attract digital talent in the fields of data
We are also investing in developing the digital analysis, machine learning, artificial intelligence,
skillset among all our employees. We have many and software development. The fact that we are
smart minds working at Equinor and it is our addressing some of the biggest energy problems
current workforce that knows our business and in the world provides a unique value proposition to
the problems to be solved by applying new digital digital minds. Thirdly, we have built digital labs at
technology. Therefore, we have established multiple offices and are encouraging all our data
our “Digital Academy,” where all employees can scientists and software developers to spend up
learn about digital, from machine learning to to 20% of their time on education. Finally, we also
programming to cybersecurity to Office 365. We nurture good relations with universities.
also launched a Digital Center of Excellence in
2017 that is responsible for managing digitalization
efforts across the company through six digital
programs. The center of excellence has employees We have built digital labs at
both from the business side as well as world-leading multiple offices and are encouraging
talents within areas such as machine learning and
all our data scientists and software
artificial intelligence.
developers to spend up to 20% of
their time on education.”
We took both a top-down
and bottom-up approach. Equinor’s
leadership has three challenging yet
simple tasks - shaping the future,
empowering the people, and
delivering results.”
34 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Are employees resistant to high employee participation. Overall, we are off to
this new way of working? a good start. Now we must prove to everyone that
these new methods, processes, and ways of working
My role requires that I gather a clear understanding will drive value before people fully buy into it. Once
of varying perspectives and ensure a seamless that is achieved, we need to ensure we deliver those
integration across different parts of the solutions with sufficient speed and accuracy.
organization. At large, we have witnessed high levels
of curiosity and engagement from our employees.
Whenever we host large-scale digital events, we see
35
From our research library
Across the world, digital plants have generated
a lot of enthusiasm among utility players
Adoption: Europe and US are the early adopters while India and China plan to catch up
US UK France Germany
30% 50% 33% 33% 32% 68% 39% 50%
Source: Capgemini Research Institute, digital utilities survey, February-March 2017; percentages indicate the share of
organizations in each category
36 Taking D
igital Transformation
Transformationttoothe
theNext
NextLevel:
Level:Lessons
Lessonsfrom
fromthe
theLeaders
Leaders
How can utility companies increase their digital
maturity to realize full potential of digital plants?
38 Taking Digital Transformation to the Next Level: Lessons from the Leaders
IKEA’s digital transformation journey
Can you tell us about How has IKEA’s digital
IKEA’s digital vision? transformation journey evolved
IKEA’s vision is to “create a better everyday life for
over the past few years?
the many people” and I think it has digital at its core. Our digital transformation is about embracing a
The true measure for our vision is that customers digital DNA in all aspects: digital touch points for
should be able to conveniently interact with us customers, internal solutions for co-workers, and
across various touch points and channels. These embedding digital in our ways of working – which
interactions should display IKEA’s uniqueness, is agile, cross-functional, and collaborative. We
values, knowledge, products and be personalized for have been making big improvements using digital
each customer. in e-commerce and fulfillment across our various
countries. We have embarked on this journey
There is also a big aspiration to use the incredible towards digital and are working on our technology
amount of knowledge our company has about life landscape, architecture, structure, and skillsets so
at home. For example, we want to have a positive we can deliver at the required speed.
impact on both people and planet. As part of our
ambition to inspire and enable more people to Can you tell us about some of the
live a better everyday life within the limits of the specific initiatives you have launched?
planet, we recently piloted an app around a healthy
environment at home. We strive to think big in order To achieve our vision, the first step is to simplify
to deliver solutions at an affordable price for the our technology landscape. We have focused on
many people around the globe. simplifying our technology architecture via a
modular approach and parallel processing.
39
Another important step is to utilize digital to run the center of every transformation. We need to
our internal operations in a more efficient way – be ensure that we allow for agility and cross-functional
it finance, human resources, store operations, or empowerment and instill accountability for business
supply chain. We have, for example, an ambitious outcomes in our structure. For example, every
development and innovation agenda in terms of week, we discuss current experiments, lessons from
automating handling, storage, and picking activities previous tests, and new things we would like to try.
across our entire fulfillment process, where we are We also maintain a ratio: 70% of efforts are devoted
currently exploring different solutions. to scaling initiatives that are successful, and 30% of
efforts are focused on developing new ideas and
The underlying part is to align these digital technologies. We are already seeing some fantastic
objectives to how we work and to the way we are results, as it keeps people motivated to grow and try
structured from an organizational and technology new things without 100% risk.
perspective. We are already making strides in these
aspects and will continue to do so.
40 Taking Digital Transformation to the Next Level: Lessons from the Leaders
customers the ability to experience our products in think of new possibilities for the physical-digital
a 3D virtual rendering which can be mapped to any channel interactions, which can create useful and
room in their own home – from their own home. magical customer experiences. Take, for instance,
when a customer walks into a store – be it our
Our augmented reality (AR) app, “IKEA Place,” allows traditional store or a newer, digital-format store,
customers to visualize how a piece of furniture fits if we can identify their intentions, interests, and
into their real space and environment. We do have delivery preferences from their online activity, we
plans to consolidate our different apps to allow can offer a totally different level of service. This
customers to browse our catalog, plan store visits, added intelligence creates truly useful experiences
and virtually decorate from one app. We are also for our customers.
experimenting with virtual reality (VR) to showcase,
for example, how a customer’s kitchen will look with
different cabinets and configuration. Today, 80% of all customer
journeys start online, this highlights
Our range of smart products and other connected
the importance of digital to build
products is another step towards embracing digital.
We are exploring multiple possibilities of AI and relationships with both new as well as
data intelligence. Our product recommendation existing customers.”
algorithm, for example, has raised our conversion
rates incredibly. These technologies help us to You acquired Task Rabbit, which
create very simple, yet useful, digital experiences for had been set up to let users hire
consumers.
temporary workers to deliver
purchases, clean homes, and assemble
Our augmented reality (AR) furniture, in 2017. How do you see
app, “IKEA Place,” allows customers to a services start-up like TaskRabbit
visualize how a piece of furniture fits fitting into IKEA’s digital future?
into their real space and environment.” The acquisition of TaskRabbit is working well for
us on a few different aspects. The first one is that
You spoke about the new format people in the physical environment can now choose
stores and integrating digital with the service they need and get it handled, assembled,
physical. How important are these and delivered. Also, from an online perspective,
TaskRabbit’s platform is a part of our checkout
digital-led channels for you today?
process and allows consumers to connect directly
Today, 80% of all customer journeys start online, to individuals who help them assemble their IKEA
this highlights the importance of digital to build furniture. This makes customers move from a “you-
relationships with both new as well as existing do-it-all” to a “tech-does-it-all” approach. TaskRabbit
customers. The customer will decide what touch has now expanded in Canada, the US, and the UK,
points and channels are suitable to his or her needs. and we plan to continue the expansion.
Reimagining customer touch points requires us to
41
Unleashing the power of “160,000
entrepreneurs” to drive digital to scale
You spoke about the importance We have seen that digital culture is
of technologies such as AR and often the single biggest hurdle to
VR in IKEA’s digital landscape. successful transformation. What are
What is your talent requirement some of the things that you have
for these technologies? done to develop the culture that IKEA
There is a two-pronged approach for talent. needs to be successful in digital?
We have technology experts for AR, VR, and We believe people and culture play the most
3D-modeling in Sweden, China, and elsewhere. We important part in the transformation. IKEA places a
focus on nurturing our internal talent via training as lot of value and focus around entrepreneurship – we
well as hiring externally for the required skillsets. say that we are “160,000 entrepreneurs.” Bringing
For example, we have extensive ongoing training in those positive aspects from our values and
on DevOps methodologies for the engineering embedding them with the digital DNA is required to
organization to adopt new ways of working. successfully transform. We also need to ensure that
there are no digital islands. So, reorganizing intra-
Secondly, we also work with external partners functional dynamics and integrating business and
to co-create experiences for our customers. For technology knowledge together is truly important
example, we work together with Space10, our to us.
research hub and exhibition space that brings
together designers, artists, and technologists to
innovate tomorrow’s new products and solutions.
We call it a future-living lab, where we can explore
We believe people and culture
ideas to create better and more sustainable ways of play the most important part in
living. Space10 works on wide-ranging ideas, such the transformation. IKEA places
as autonomous urban farming, upcycling products a lot of value and focus around
and how to re-use materials, autonomous vehicle entrepreneurship – we say that we are
design, and 3D printed meatballs. So, we leverage
innovation both inside as well as from outside
‘160,000 entrepreneurs’.”
the company.
We believe that digital DNA is based on performance
as well as on empowerment. Performance implies
Our future-living lab, Space10 giving full responsibilities to cross-functional teams
works on wide-ranging ideas, such as to have the liberty and freedom to decide on what
autonomous urban farming, upcycling they want to test and develop along the way.
products and how to re-use materials, So, whatever they do, they need to get that to a
measurable deliverable. In other words, “the North
autonomous vehicle design, and 3D
Star” that we have defined. It’s also a philosophy of
printed meatballs.” starting small, slicing the problem into small chunks,
42 Taking Digital Transformation to the Next Level: Lessons from the Leaders
and being action oriented. Empowerment of our Our past research has found that
co-workers, and learning from failure, is also a key organizations often struggle to take
part of this. digital initiatives to scale. How do
What are some of the unique you scale your digital initiatives?
challenges in digitally transforming The key to scaled digital initiatives is to approach the
such a large organization? How challenge or opportunity as an iterative process. This
do you overcome them? is about testing, building, learning, getting feedback
from customers, and analyzing data. We scale what
The most important is to get co-workers to learn works, and what doesn’t we take the learnings
and practice new ways of working that push them to from it and continue. As I did mention, particularly
go outside of their comfort zone. If this critical part for digital, it is important to have a clearly defined
is well managed, an organization can do incredible vision – a North Star. Empowering the team to work
things. Then it is to align the whole organization to in a dynamic and flexible way allows them to try
the digital strategy. All parts of the organization new things. However, throughout the testing, it is
need to be orchestrated together, and this is where important to always be clear about the North Star
digital brings the intelligence together to provide and set parameters to ensure we’re measuring what
a single view of the customer and more efficient works and what doesn’t.
operations. Another success factor would be the
speed at which we can train people and acquire new
talent. And, finally, legacy systems and technology
are a challenge, but we are on the way to overcome
this.
43
From our research library
17%
4%
Use cases share (%) by broad function Source: Capgemini Research Institute
analysis; Analysis of Top 250 retailers
based on 2017 revenue from
26% Bloomberg, October 2018.
Operations-focused
Operations-focused use cases are
defined as use cases impacting
operations of retailers, not necessarily
74% visible to the end customer, for
Customer-facing example, supply chain optimization,
procurement, etc.
44 Taking D
igital Transformation
Transformationttoothe
theNext
NextLevel:
Level:Lessons
Lessonsfrom
fromthe
theLeaders
Leaders
How should retailers leverage AI to yield most benefit?
Treat AI as a
Focus on
strategic
quick
imperative
wins
Increase
investments in AI
46 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Legrand’s digital transformation journey
What was the impetus for Legrand’s
able to leverage this data to improve the customer
digital transformation?
experience and identify ways to connect an entire
The history of Legrand is a traditional industrial ecosystem. With this experience, we are now able
company focused on manufacturing electrical to connect all the dots and accelerate our efforts.
switches and outlets in a slow-moving industry. However, I would say that we are still in the first
Digital was not on top of the agenda. But everything half of our journey. We are now making sure that
changed a few years back with IoT. A big realization everything is connected and that we have a single
for us was when Google Assistant and Nest view of our end user and that all the necessary
emerged. It showed that a company could come in steps regarding security and privacy are taken
from scratch, create a domestic thermostat, and sell into consideration.
it directly in what was a traditional value chain that
involved the manufacturer, wholesalers, installers,
and end users. We reacted very quickly in
2015 by launching the Eliot program,
a worldwide program that aims to
The history of Legrand is a accelerate the deployment of the IoT
traditional industrial company focused within the group’s product range. By
on manufacturing electrical switches 2017, Eliot had more than 30 connected
and outlets in a slow-moving industry. product families and generated sales
Digital was not on top of the agenda. of almost €488 million from
But everything changed a few years connected devices.
back with the IoT.
47
sensors, and microphones. That data will make your and outlets –you must find ways to differentiate.
smart home assistants more intelligent and will also Design is a great way to do it. Our design teams
make your home safer by monitoring any electrical now work at the product conception phase with the
hazard, for example. Coupled with usage data and engineering teams.
artificial intelligence, our products could improve
your quality of life tremendously in the home as well We created a Group-level website for collaboration
as contribute to substantial energy savings. across design teams in Europe, Asia, India, and the
US. These design teams employ a user-centered
design approach, which is a framework where
Connected switches and things like usability goals and user characteristics
are studied at each phase of the design process.
outlets are part of a larger
For example, what do our users do when they come
connected home ecosystem... home from work? What parts of their home do
Coupled with usage data and they often touch? The designers think about how
our end users might interact with our products –
artificial intelligence, our products through voice, touch, or motion – and how they can
could improve your quality of life use that information to build designs for new user
tremendously in the home as well interfaces. We believe that focusing on voice, touch,
as contribute to substantial and motion in this user-centric design approach
energy savings.” differentiates us.
48 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Leveraging strategic partnerships
How important are strategic Based in France, Netatmo had already collaborated
partnerships to your with us in 2017 on “Céliane with Netatmo,” our smart
switches and power outlets solution. The solution
digital transformation? could allow you to build a house with a smart
Early on, we saw the need to build a partnership electrical installation from day one and is compatible
strategy and so that it is one of the key pillars of our with many technologies, such as Google Assistant
acceleration program – building an open ecosystem and Amazon Alexa.
where our products are interoperable. We started
out with voice assistance because we decided not
to build our own voice assistance technology. It is We are partnering with Marriott
already out there with Apple, Amazon, and Google International and Samsung to launch
and we saw potential for partnering as they do not the hospitality industry’s IoT hotel
have the products that we offer. room. The IoT Guestroom Lab explores
concepts that have the potential to
We have been making sure elevate the guest experience and create
that our products are compatible with more efficient hotel room design and
whatever system the customer chooses construction.”
to put in their house.”
Is there a particular initiative
We make sure that our products are compatible you are most proud of?
with whatever system the customer chooses to put
in their house. In addition to technology partners, As a result of our partnerships, we decided to open
we have many business partnerships. For example, the ecosystem with a program called, “Works with
we are partnering with Marriott International Legrand.” This is a website where any developer can
and Samsung to launch the hospitality industry’s download our APIs and build their own app to pilot
IoT hotel room. The IoT Guestroom Lab explores with our products. It has been up and running for
concepts that have the potential to elevate the a year. Deciding to open everything up was a big
guest experience and create more efficient hotel cultural change. Opening the Legrand ecosystem
room design and construction. It has multiple has resulted in many more potential partners.
responsive IoT systems, creating devices with Through this program, we have carried out projects
sophisticated voice control technology that allow
the guest to alter lighting, arrange a wake-up
call, and even turn the shower on at the desired ‘Works with Legrand,’ is a
temperature. The lab helps the industry serve website where any developer can
guests better and optimizes hotel operations. download our APIs and build their
own app to pilot with our products…
We are also working with start-ups to build an
ecosystem around the start-up community. Most Deciding to open everything up was a
recently, we acquired smart home start-up Netatmo. big cultural change.
49
with companies such as La Poste, Renault, and BNP connecting to switches, but who are now looking
Paribas. We see companies and developers who for these sorts of connections and data to build new
we would not have thought were interested in services.
50 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Looking to the future
How do you see digital
Therefore, since growth rates are not doubling every
transformation helping Legrand
year, many leaders tend to have the perspective that
evolve in the next 10 years? it is okay to go slow.
In the next five years, I hope we will be able to
achieve a lot of our plans in terms of setting up the What key recommendations would
infrastructure and rolling out connected products. you give other large organizations on
This means that in the next 10 years we could be how to maintain momentum during
one of the biggest consumer home data producers a digital transformation journey?
in the world. I think at some point there will be a
shift where software will become Legrand’s main My number-one recommendation would be to
focus and first source of revenue as the mechanical drive the digital agenda and have sponsorship
parts become less and less important. What will from the top management. It will not work without
remain important is the user interface, the design, that. The CEO must be the strongest advocate for
and of course, the intelligence around user habits change. He or she must be convinced and believe
contained in the home data captured by those in digital. Secondly, top management needs to set
switches and outlets. I can envision a future where the example – meaning they have to know and
we might be selling insights to other companies to practice what they promote. If leadership tells the
build better homes or energy management systems. organization that it must digitally transform – and
The opportunities are many and I believe we will that employees need to understand data better,
be a key player in providing data to create larger attend training, build mobile apps, and so on – they
connected environments, from connected buildings must also do these things themselves. Otherwise,
to connected cities. the workforce won’t be on board. We strongly
believe that our leaders must lead by example.
Why do you think many organizations
today are yet to make substantial
progress on digital transformation?
My number one
I think trends do not move as fast as they appear recommendation would be to drive the
to, particularly in our traditional B2B industry. For
example, we’ve talked about digital disruption
digital agenda and have sponsorship
for the past 10 years. However, when we look at from the top management. It will not
IoT adoption in connected products, it is still not work without that. The CEO must be
significant. I believe only about four percent of the the strongest advocate for change.”
total market is connected products versus non-
connected products. We are still selling a huge
majority of non-intelligent switches and outlets.
51
Industry Leader
Perspectives
Lilian Tomovich,
MGM Resorts International
52 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Customer experience at the center of digital transformation
What is the impetus for creating
the chief experience officer role In early 2017, we realized
at MGM Resorts International? that there was an opportunity for us
We predominantly view ourselves as being in the to invest more heavily – not only in
business of experiences. We have hotel rooms, existing digital channels like web and
casinos, entertainment venues, restaurants, spas,
mobile, but also to explore customer
and retail. Everything we do is about heightening
consumer senses – whether it be through food, data platforms and marketing
music, massage, or the thrill of a casino game. We technology. This would help us to
are very clear that our role is to wow every customer have a 360 view of the customer and
who walks through our doors. The idea behind my ultimately help drive better guest
role is to enable a holistic, integrated approach to
personalization.”
ensure the delivery of exceptional guest experiences
through both analogue and digital services. In early 2017, we realized that there was an
opportunity for us to invest more heavily – not only
in existing digital channels such as web and mobile,
We are very clear that our role but also to explore customer data platforms and
marketing technology. This would help us to have
is to Wow every customer who walks a 360-degree view of the customer and ultimately
through our front doors.” help drive better guest personalization. While we
have been focused on digital transformation for the
How has MGM Resorts past few years, the program really picked up steam
International’s digital when I hired our first chief digital officer in October
transformation journey evolved? 2017. Their mandate was to create MGM Digital
Ventures, which we have been building for the last
As with many hospitality companies that are not 12 months.
digital natives, we were – and always will be –
very much focused on the physical experience.
However, we recognized that in order to continue to
transform and grow our business, we must leverage
I hired our first Chief Digital
the digital ecosystem. And when we think about Officer in October 2017. Their mandate
digital transformation, we really think about it from was to create MGM Digital Ventures,
a digital capabilities’ perspective, and largely about which we have been building for the
addressing the gap between marketing and IT. last 12 months.”
53
What are the key priorities Digital Ventures is already bringing noticeable
of Digital Ventures? benefits. Since moving to agile, the rating for the
MGM Resorts International mobile app has increased
Digital Ventures has four key strategic priorities. The from 1.7 stars in the App Store in 2017 to 4.8
first pillar explores how we can continue to optimize stars today.
our existing digital touch points. Predominantly,
these are web, mobile, kiosk, and email. How do
we make those best-in-class digital touch points, We are exploring solutions
not only from a look and design perspective, but a where customers can order drinks by
performance perspective? the pool using their phone. The lounge
The second pillar explores how we build the
chair would have an RFID tag, so the
marketing technology stack and the customer data server would know exactly where to
platform that will allow us to do things like hyper- deliver the drinks among the hundreds
personalization and push notifications. We have of guests relaxing at the pool.”
been focused on agile software development,
bringing different teams together virtually, which Which digital initiative are
has allowed us to develop digital capabilities faster.
you most proud of?
We are already seeing results: our delivery cycle of
pushing updates on the web has been significantly I am particularly proud of what we have done with
reduced and increasing page load times is having a our mobile check-in services. A lot of hospitality
positive impact on customer conversion rates. companies require guests to do their mobile
check-in 24 hours in advance. With us, you can do
The third pillar is what we call self-service, which your mobile check-in at any time, even after arriving
focuses on how we are building self-service at the hotel, and go straight to the door. You can
capabilities in our industry for the future. For tap your phone against the door, unlock it, and
example, we are exploring solutions where enter your room without ever having to speak to a
customers can order drinks by the pool using their staff member. While this seems simple, it provides
phone. The lounge chair would have an RFID tag, so a great seamless guest experience and, when you
the server would know exactly where to deliver the think about the scale in which we operate in, it
drinks among the hundreds of guests relaxing at the is remarkable. An average-sized hotel has a few
pool. Another example of a solution in development hundred rooms, but our average hotel has roughly
would allow a guest to control the temperature in
his or her room even before physically entering the
room. You can do your mobile check-in
at any time, even after arriving at the
And lastly, the fourth pillar is what we call future- hotel, and go straight to the door.
state technology. Under this pillar we are focused on
You can tap your phone against the
emerging technologies such as AI and augmented
reality for enhancing the customer experience. For
door, unlock it, and enter your room
example, using chatbot services to personalize the without ever having to speak to
guests’ experience. a staff member.”
54 Taking Digital Transformation to the Next Level: Lessons from the Leaders
5,000 rooms. The logistics behind ensuring the aligned and Digital Ventures helps to drive our
room is clean and funneling that volume of traffic marketing objectives, which is to use data insights
through our mobile device to do a seamless check-in, to deliver personalized experiences. We are jointly
is complex. It took us about 16 months to build this working towards a future where personalization,
solution because of all the systems integration and automated marketing, and trigger-based marketing
the complexity around the scale that we operate in. become central to our methods of attracting and
retaining customers.
How does Digital Ventures
align with the IT and marketing The Digital Ventures team works very closely with
functions of the organization? our IT teams, especially on the back-end services and
the support required to enable a lot of these guest
Currently, the chief digital officer reports to me experiences I mentioned. There is a real partnership
and Digital Ventures rolls into the marketing between IT and Digital Ventures.
organization. This means the teams are very well
55
Digital vision and leadership
What is MGM Resorts How do you mobilize leadership
International’s digital vision? around this vision?
Our broad vision is to provide the best digital With our leadership team, we started with
experience possible to our guests in the industry. clearly articulating a strategy, making sure that
The entire digital vision is focused around how we we obtained the necessary funding and then
simplify the guest experience, leveraging digital showcasing and talking about it as frequently as we
channels to do so while driving greater share of can. For example, we send out five- to seven-minute
wallet. It starts with web and mobile and progresses videos, every two weeks, to the senior leadership
into using data for personalization. How can we team. We call these “DV Minute Videos” and they
leverage the data that we have to provide better talk about what is new in Digital Ventures and what
offers and experiences? For example, if one of our the team is working on in that week. This is useful
shows is 50% empty, how can we alert a consumer to the leadership team as we provide quick snippets
who is walking by a Cirque du Soleil show that there communicating the strategy and the latest updates
are tickets available? How do we offer her or him on a frequent basis, and it gets people excited. They
last-minute, discounted tickets? This is the type feel part of the process. Since they feel in-the-
of personalization we want to implement in the know, it also helps with their support to ensure we
future and we are already taking steps to get to this have the right talent and budget to fully execute
level. For example, we use in-room tablets to send these projects.
personalized triggers to our guests, be it purchase-
related recommendations or timely breakfast
options, suited to their liking, based on data already
collected.
We send out five to seven-minute videos, every two weeks, to the senior
leadership team. We call these “DV Minute Videos” and they talk about what is
new in Digital Ventures and what the team is working on in that week… it gets
people excited.”
56 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Digital talent and employee experience
What are some of the unique How have your digital transformation
challenges for the hospitality efforts affected employees?
and entertainment sector when We are looking at ways to respond to challenges
recruiting digital talent? on the employee front. One of the biggest
challenges is to communicate business needs to our
The challenges for us are the same as for every approximately 80,000 employees. Like quick service
other company pushing on the digital front. Talent restaurants, such as McDonald’s or Subway, we have
is scarce and in demand. We are hiring designers, a lot of frontline staff who are not in the corporate
engineers, and product managers. I believe that office and not on email daily. To address this, we
talent is industry agnostic and we have hired talent recently launched a mobile app named LEO, the
from many different industries, be it food and name of the lion in our brand logo. LEO is designed
beverage (for example, Starbucks) or technology exclusively for all 80,000 MGM Resorts team
(for example, Microsoft). In fact, most of our hires members so they can stay informed and connected
are not from the hospitality industry. to the MGM community. We can communicate
the latest news, inspiring moments happening
throughout our properties, tips for working smarter
I believe talent is industry and living better – pretty much everything. The
app has been a big win for us and has allowed us to
agnostic and we have hired talent
innovate the employee experience.
from many different industries, be it
food and beverage or technology. In
fact, most of our hires are not from the
hospitality industry.” We recently launched a mobile
app named LEO designed exclusively
for all 80,000 MGM Resorts team
members so they can stay informed and
connected to the MGM community.”
57
Industry Leader
Perspectives
Eric Chaniot,
Michelin
58 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Michelin’s digital transformation journey
Where is Michelin in its digital
leading player in France, Allopneus. While tires sold
transformation today?
directly online represent only a small part of the
After three years in this role, I can see that our market, customers often use the web as a source
investment in creating a cross-functional digital of information prior to purchase. Our platforms
department at Group level has paid off. We provide access to user advice and help guide those
have succeeded in mobilizing the workforce by purchasing decisions.
demonstrating that digital tools make their work
more interesting, simpler, and more value-creating.
Our digital factory has revolutionized the way Given how different a digital
we develop and deploy our websites. We have operating model is compared to our
expanded our investment strategy to incorporate traditional business of selling tires,
many digital players, including start-ups and public
we constantly need to find creative
platforms, such as Bookatable, Europe’s largest
online restaurant reservation website, which we solutions to compete in the digital
acquired in 2016. space.”
59
We have many initiatives for connected tires, some pressure for the vehicle’s tires within dry, damp, or
of which are already on the market, while others wet driving conditions; it gives the driver real-time
are in the R&D phase. For example, we have a fleet information about the pressure and temperature of
management trial involving 200 buses for the city each tire, and it will indicate what adjustments need
of Venice, aimed at improving maintenance, safety, to be made prior to returning to the circuit. It is like
and fuel consumption. We launched PresSense in having a Michelin expert next to you.
2017, the first connected tire for aircraft designed in
conjunction with Safran, to facilitate maintenance You are undergoing a major CRM
operations and manage stocks more efficiently. initiative. How has that contributed
Also, in the mining industry, we have developed a to the customer experience?
complete monitoring and reporting platform for
tires, trucks, mine haulage, and vehicle cycle analysis. We realized that we needed to become a technology
company if we were going to seriously compete in
mobility. In 2016, we launched a worldwide CRM
Using RFID technology and modernization program called ENGAGE with the
sensors on the tire, the objective of the goal of better serving our customers. The program
is based on Salesforce cloud solutions and gives the
connected tire is to monitor – in real
sales, marketing, and customer services teams a 360°
time – a wide variety of parameters view and a better understanding of our customers.
relating to the driving experience, the Now our staff can use one platform to access
road, and the tires themselves. For real-time customer data. When we devised our
tires, this could include, for example,
temperature, pressure, or wear.” We realized that we needed
to become a technology company if
You recently launched Michelin Track
we were going to seriously compete
Connect. How does this further
in mobility. In 2016, we launched
expand your connected tire solution?
a worldwide CRM modernization
Yes, we continue to build on the connected tire program called ENGAGE with the goal
as it’s so central to our digitalization. Just this of better serving our customers.”
past April, we launched Michelin Track Connect.
We are the first manufacturer to sell a connected development strategy, we made sure to co-design
solution for the private car tire sector, which we the new Salesforce systems with our sales reps and
co-developed with driving enthusiasts during an customers, such as tire dealers and fleets, rather
18-month lab workshop. We asked them what than just handing the project over to the technology
improvements they would want to see in the team. Once a month, we had sales people, tire
behavior of their vehicles, and how to enhance dealers, and the digital teams working together on
their performance and their driving pleasure. The the solution. We were focused on design thinking
application can support drivers before, during, and with the different parts of the business. It’s because
after circuit runs. It recommends the most suitable of this approach that we have an adoption rate of
60 Taking Digital Transformation to the Next Level: Lessons from the Leaders
more than 80%. Since speed of innovation is critical
in our market, we were able to complete the first
phase of the rollout in under six months. [Of this Salesforce CRM
program], we have an adoption rate of
more than 80%.”
61
Fostering a start-up culture
How can large companies such as objectives. We grow them and test their viability on
the market. Our ambition is to create a portfolio of
Michelin accelerate innovation
businesses or projects incubated at Michelin. Every
efforts in the digital age? project is sponsored by a Michelin business unit
After my first meeting with the Group Executive director and we make sure they have strong link to
Committee, I had five priority projects that our existing work so that it’s rooted in reality. To
the committee believed digital would help to begin with, we focused mostly on internal initiatives,
accomplish. At the time, the digital group was but we’ve branched out considerably to investing in
only six people, but I started to build small cross- external partnerships and start-ups. For example,
functional teams so that we could go fast and some external projects incubated in IPO include:
reduce delivery from months and years to weeks. Symbio F Cell, a start-up specialized in fuel cells,
Within four weeks, my team had accomplished Wecare, a Chinese smartphone app offering global
three of the five projects and was hailed a success. vehicle maintenance services, and Luli Information
It was important for me to build credibility as well as Technology, a Chinese start-up specialized in
speed to delivery so that I could begin creating that innovative car sharing.
start-up culture from the very onset of my tenure.
As we continued to achieve our initial successes, I How else have you instilled
had many teams coming up to me to request our a digital culture?
support.
We have launched a comprehensive set of initiatives
to develop the culture, the required competencies,
It was important for me to build and also to assess our digital maturity of our local
credibility as well as speed to delivery organizations. This upskilling plan is a joint effort
so that I could begin creating that with our HR department and our internal business
partners.
start-up culture from the very onset of
my tenure.”
We’ve been successful in developing an innovation We offer an online training platform with more
culture at Michelin and this has significantly than 15,000 registered employees. Last year, we
contributed to our cultural transformation. In 2014, also partnered with a business school in Europe and
we launched an Incubator Program Office (IPO). The offered a digital certificate to 150 highly motivated
role of the IPO is to identify relevant projects that digital transformers. It’s something that employees
can support growth at Michelin in the future. We are excited about and makes them proud. At our
are looking for ideas, both internally and externally, headquarters, we have a very innovative agreement
that can be quickly implemented and have definite
62 Taking Digital Transformation to the Next Level: Lessons from the Leaders
with our unions to incorporate digital culture online How do you ensure that your teams
training in the employees’ profit sharing scheme. are collaborating across silos, such
as business functions or countries?
Another example is our creation of FactoLab in 2017,
a public-private laboratory dedicated to the industry It can certainly be a challenge. We try to provide
of the future. In partnership with three university the digital tools necessary for our employees to
institutes in the Clermont-Ferrand region in France easily collaborate and change the way we work. One
(Institut Pascal, Lapsco, and Limos), the research example is our corporate social network, which we
and development program focuses on man-machine launched in 2013 and which now connects more
cooperation, particularly in the fields of cobotics than 40,000 employees. The tool is used to share
(i.e., when people and robots collaborate) and new good practice, work in agile mode, codevelop offers
digital technologies. Our research partners mobilize and services with clients, and promote change,
their research laboratories and their expertise in among others. With more than 800 communities,
fields such as cognitive science and we offer an employees can exchange ideas every day. It’s
application and experimentation framework, fast designed to support our digital transformation and
prototyping tools, and international visibility. allow a higher level of collaboration and improved
agility and efficiency.
63
From our research library
40% 27%
Leadership and
employees disagree
on the existence
of digital culture in
their organizations 40% of leadership believe that Only 27% of employees agree
their organization has a digital culture
Source: Capgemini Research Institute Survey, Digital Culture; March-April 2017, N = 1700, 340 organizations.
64 Taking D
igital Transformation
Transformationttoothe
theNext
NextLevel:
Level:Lessons
Lessonsfrom
fromthe
theLeaders
Leaders
Blend top down and bottom up approaches to
code a Digital DNA
Take a systems
thinking approach to
culture change
Design new digital KPIs
focused on behaviors
Coding a rather than successes or
failures
Digital
DNA
Invest in the digital
skills that matter
Make digital culture
change tangible
66 Taking Digital Transformation to the Next Level: Lessons from the Leaders
SBI’s digital transformation journey
What does a successful digital journey, then I am not keeping them sufficiently
engaged. Through a platform developed by the
transformation mean for you?
bank on its own – or through a partner ecosystem
We believe that a successful digital transformation – customers should be able to access the majority
means a complete digital reimagination of all of solutions required for taking a home loan. This is
essential business verticals. Let us take the example what I call as reimagination, which we have achieved
of transaction banking. A digital transformation in through our YONO app at State Bank of India.
transaction banking involves reimagining around
300 customer journeys. One such journey is the SBI launched YONO (you only
account-opening process, which typically takes need one) in November 2017 as an
around 35 minutes. How can we complete the integrated app that offers financial
process using digital technologies in five minutes? and lifestyle products to customers.
This requires an IT stack that is completely attuned
to new technology. How can I do this when I have
Could you tell us about it?
already invested millions in my legacy stack? That YONO is a mobile app that has four ingredients. First
is digital transformation. Reimagination is like a you have the digital bank. Second is the financial
caterpillar becoming a butterfly rather than a young superstore, where a consumer can purchase a
man becoming an old man. That is how I look at it. It variety of financial products. Third is the end-to-end
is a proper metamorphosis. digitization, which is meant for internal employee
consumption. And fourth is, of course, the cross-
Or, look at a typical mortgage-buying experience. selling and cross-monetization (e-commerce). Given
In the past, getting a home mortgage loan from a the Reserve Bank of India guidelines, we are not
bank used to mainly revolve around two things – allowed to sell non-financial products or services.
interest rates and the amount of finance required. Therefore, we facilitate purchases through a
Today, however, we find that the customer journey network of around 81 partners.
begins much earlier – when a customer first thinks
of buying the house. There are a lot of factors under Who are you targeting with
consideration when deciding to purchase a home. this app? Digital natives?
Does the location have hospitals, schools, health
clubs, or parks in the vicinity? What is the reputation I see consumers in four broad buckets – digital
and track record of the builders? If I am asking the natives, digital migrants, digital front-seaters, and
customer to travel to various platforms to fulfill this the digitally averse. We all know who digital natives
are – they are the ones born in the digital age, and
naturally comfortable with digital technology.
We believe that a successful Digital migrants are people who have understood
digital transformation means a the value of digital as a result of their job or
professional requirements and who often have some
complete digital reimagination of all
wealth. Digital front-seaters are those who might
essential business verticals. undertake an occasional digital transaction but will
67
never do deep digital customer journeys. They will all four segments if we are to build a universal bank.
still come to the physical branch. And, finally, the And we need to create a combination of assisted
digitally averse are those who think technology is journeys and digital journeys.
a fad. Unfortunately, wealth distribution is skewed
toward the digitally averse. We need to take care of
downloads the app, completes the account opening Any digital initiative must make
form on their mobile, and comes to the branch
where the application is validated. In five minutes
the life of the employee easier – only
flat, a new bank account is opened. The convenience then will they adopt it.
of opening accounts and the time saving is
encouraging employees to open more accounts
using YONO rather than through traditional means.
68 Taking Digital Transformation to the Next Level: Lessons from the Leaders
How to measure success in digital transformation
To succeed in digital If ROI is not the right metric,
transformation, what are the can you share how you measure
factors you must get right? the success of digital platform
The first is senior leadership buy-in. Digital initiatives such as YONO?
transformation projects are not IT projects and I do believe ROI is not the right measure for an
require business buy-in. Top leadership needs to be innovation such as the YONO platform. That is
invested right at the outset of the program. because you cannot establish financial ROI early
on. Rather, we deploy a measurement matrix to
Second is choice of partners. Your partners should track progress. For example, one measure that we
be equally passionate in committing resources use is how many new people are coming to the
to the program as you are. Those partners with a platform. Let us say that we get roughly around
transactional approach are bound to fail because two million log-ins a day into YONO. Of this two
they are unable to make a correct assessment of the million, how many are new customers? How many
resources required for these kinds of projects. new types of transactions are being completed?
How many of them have tried more than three or
The third area is the organization’s readiness four products because of the ease of transaction?
quotient. This varies based on individual maturity What are the comments being posted and where are
levels and should be completely internally they clicking?
driven. Every organization needs to set its own
transformation ambitions by undertaking an internal
assessment of organizational readiness. I do believe ROI is not the right
measure for an innovation such as the
And fourth, of course, is that you should have the
budget! Money spent on transformation will not
YONO platform.
give you immediate ROI. Organizations should
be willing to write off the digital transformation The qualitative benefits I referred to earlier include
investment based on a set of qualitative returns, not an important upside from this sort of initiative –
necessarily quantitative returns. brand building. By launching digital initiatives like
this, we are seen as a more digitally-savvy bank.
In addition, the adoption of new transformation
Money spent on transformation disciplines – such as hackathons, agile project
management, and collaborative ways of working –
will not give you immediate ROI. helps drive culture change across the organization.
Organizations should be willing to
write off the digital transformation
investment based on a set of
qualitative returns, not necessarily
quantitative returns.
69
If ROI is difficult to prove, how do have achieved based on what I described previously,
you make the case to leadership and then ask for the next tranche of funding. It has
for innovation investment? to happen incrementally. However, it is important
to be agile and have a minimum viable product in
You have to put a cap on the amount of money you the form of a quick-win. Without that, it can be a
will invest in a digital transformation initiative and bottomless pit where you continue saying, “no, no,
establish a timeframe. That way, you are capping don’t ask me about ROI.” Nobody will buy that.
the risk. After a certain timeframe, I showcase what I
You have to put a cap on the amount of money you will invest in a
digital transformation initiative and establish a timeframe. That way,
you are capping the risk.
70 Taking Digital Transformation to the Next Level: Lessons from the Leaders
The importance of trust to SBI
In the context of a very large financial
decision. So, there are cultural nuances that
services organization in a country such
differentiate the Indian consumer.
as India, what do you believe are some
of the challenges that are unique? You mentioned that you have to
impart trust. Earlier, you also spoke of
One unique challenge is that the payment system a minimum viable product (MVP). How
and the transaction is the first touchpoint of any do you balance agility with ensuring
general customer to an institution. In our context,
the institution imparts trust. The institution imparts
you are seen as a symbol of trust?
authentication. We have to first impart a sense of An MVP does not mean that we compromise on
robustness and a sense of credibility. Culturally, security at any stage. Our minimum viable product
Indian consumers are very, very value conscious. also has to pass the security test, user application
They may spend a little more time for a lower testing, system integration testing, and a variety of
cost. And if you are too jazzy then people will not other processes. It’s important to bear in mind that
stick with you. Another thing typical to the Indian we cannot be as nimble-footed as a startup. People
customer is that family significantly influences which will forgive a startup, saying they are yesterday’s
bank you have a relationship with. The children’s child. But how can a 212-year old organization mess
decision about keeping an account for a long time up? We have that adverse burden of proof on us. We
is influenced by the father’s decision or mother’s just have to be more careful. Sometimes, that takes
more time.
An MVP does not mean that we compromise on security at any stage. Our
minimum viable product also has to pass the security test, user application testing,
system integration testing, and a variety of other processes.
71
From our research library
Intelligent automation in financial services
offers more than just cost savings
Share of organizations by benefits from intelligent automation
37%
33% 34%
Share of organizations that have seen Share of organizations that have improved
2%-5% revenue increase customer satisfaction by more than 60%
Source: Capgemini Research Institute, Automation in Financial Services survey; February–March 2018, N=750 companies
$ $
72 Taking D
igital Transformation
Transformationttoothe
theNext
NextLevel:
Level:Lessons
Lessonsfrom
fromthe
theLeaders
Leaders
$
Automation transformation roadmap for financial services
3. Scaling-up
Establish an automation Center of
Excellence (CoE)
Expand automation from easy to
complex use cases
Secure and sustain employee
engagement
4. Industrialize Intelligent
Automation
1. Vision and Leadership
Processes re-engineered
Set a compelling vision and
get leadership backing Business metrics driven
Automation for
Transformation
74 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Unilever’s digital transformation – the journey so far
Can you tell us how you are programmatic trading desk “ULTRA” or U Studios
which is our content capability. We are also using
steering Unilever’s digital
a variety of tools to enhance the quality of our
transformation journey? investments, embedding a test-and-learn approach,
Unilever has the unique privilege of being a company greater experimentation, and continuous-learning
that touches over 2.5 billion people every day. This loops. We are going beyond communication and
strong physical presence is powered by many brands using these to fuel innovation across the business
that are global market leaders. The landscape is system. We now have data centers in many
changing dramatically with digital technology. locations, enabling us to deploy modern tech and
We are thus transforming our brands to win in systems. All these initiatives form the backbone of
this digital ecosystem – we want to reimagine and the multi-faceted digital transformation of Unilever.
revitalize our brands, both from a communications
and commerce standpoint – and drive this
transformation through data at the core. We have laid a strong
Which digital transformation foundation through our 5C framework
initiatives are you most proud of? – consumers at the center, with great
content and connections, building
There are quite a few initiatives we are proud of. We communities, and powering commerce.
are seeing the benefits of transformation across a
number of business areas – in driving impact for our
brands as well as efficiencies. What surprised you the most
in your journey so far and
We have laid a strong foundation through our 5C
framework – consumers at the center, with great what did you learn from it?
content and connections, building communities, One of the things that has grown faster than
and powering commerce. This framework lies at the expected is e-commerce. People’s need for
heart of our transformation. This is showing great convenience – along with the friction-free nature
impact across our presence in the digital ecosystem. of platforms – has led to a dramatic increase in
Equally, we have stepped up from a technology and consumers embracing e-commerce. It is very
tools perspective. This drives simplification whilst liberating for consumers to make their own choices,
bringing new tech into our plans. For example, the and where and when they want to shop. The second
work we have been doing through media and our area which has taken off is in social influence. The
75
impact of social influencers in shaping consumer So, are you a social-first organization?
interest has been much bigger than anyone Instead of thinking whether we are social first, or
imagined. The key learning is that we have to keep a mobile first, we keep reminding ourselves that we
sharp eye for the changes that are taking place and must be “consumer first” – we should always be
as we are a part of that fast-changing ecosystem, we “people first.”
need to respond rapidly.
76 Taking Digital Transformation to the Next Level: Lessons from the Leaders
There is a new crop of consumer How important are the values of a
goods companies that directly reach company or its brands for today’s
consumers on digital platforms. Do consumers and future consumers?
you believe this will be a new form
Extremely important! Over half of consumers
of competition for large, traditional already buy or want to buy sustainably. We have the
companies like Unilever? unique privilege of having great brands that are not
only super-efficient and have great propositions but
There is no doubt that the internet allows a are also led by purpose and our sustainable living
democratization of services or products. Thus, a plan. Causes that are good for every one of us are
large number of companies have now found it easier at the heart of many of our brands. And consumers
to enter the market. At the end of the day, what will want to be a part of this themselves. So, every time
matter is how close we are to consumers and how they use one of our products, they are really helping
we fulfill and service their needs. Many brands are to do good. Take, for instance, our brand Dove –
now also evaluated on their purpose – how they which addresses social change through real beauty.
live and what values they represent. For instance, For over a decade, Dove has been working to make
how sustainably do we source raw materials? How beauty a source of confidence and addressing issues
do we ensure fair work practices not just for our of self-esteem. Or Domestos – which is improving
employees, but also those of our partners? How are access to toilets. Or our new brand, Love Beauty and
we minimizing the impact on climate, and so on? At Planet, brought to market last year, is made with
Unilever, our Sustainable Living Plan and purposeful natural ingredients and using bottles made from
brands are at the heart of everything we do. These 100% recycled materials as well as being recyclable
are some aspects which differentiate our brands and after use. People love products that stand for and
our company. It is not just about directly reaching believe in a purpose. We have over 25 sustainable-
consumers – it is the totality of your proposition, living brands and they consistently outperform the
what you have to offer, and what you stand for. average.
77
Taking the employees along
How have your employees responded
both these groups. For senior leaders, it demystifies
to digital transformation? How readily
technology and improves their knowledge
did they embrace the change? base. More importantly, it also creates a cultural
Digital is touching everyone, including employees intervention. It sows the seeds of a culture that is
who experience the dramatic changes in their much more accessible, open to experimenting with
daily lives. It is easy therefore to understand the fresh ideas, and willing to learn. It is also a way for
change. A cultural transformation underpins digital leadership to signal to the entire organization how
transformation. It is also about skills – we have serious they are about are making the change.
been driving a large-scale skills transformation
program across our organization. In Marketing
alone, thousands of our employees are constantly Our leaders are enrolled in a
upgrading their skills, while other functions – such reverse-mentoring program, where
as finance, supply chain, procurement, HR – are some of our younger digital-native
reskilling thousands more. These initiatives are employees act as mentors to these very
driving empowerment, greater agility, greater
collaboration, and greater experimentation.
senior leaders… it is very exciting for
both these groups.”
78 Taking Digital Transformation to the Next Level: Lessons from the Leaders
manner. The design must engage, must prompt
employees to participate, and then must deliver
We think of our employees as
against expectations. Most important is to build a
learning culture – we continuously strive for that. we would think of consumers – internal
There can never be enough learning. customers but the same principles.”
79
From our research library
Rational elements
Emotions analyzed to Brand values analyzed
analyzed to create
create Emotions Index to create Values Index
Rational Index
Source: Capgemini Digital Transformation Institute survey, The Key to Loyalty; August–September 2017, N=9,213
consumers.
80 Taking D
igital Transformation
Transformationttoothe
theNext
NextLevel:
Level:Lessons
Lessonsfrom
fromthe
theLeaders
Leaders
Emotionally engaged consumers spend more
70%
of consumers with high
emotional engagement spend
up to two times or more on
brands they are loyal to
Source: Capgemini Research Institute survey, The Key to Loyalty, August-September 2017, N=9,213 consumers.
Rational
Rational
Emotional
81
Views from a
Thought Leader
Dr. Kai-Fu Lee,
Sinovation Ventures
82 Taking Digital Transformation to the Next Level: Lessons from the Leaders
AI and organizations
With the advent of new technologies, revolution in the world, larger and faster than
such as AI, 3D printing, blockchain, the Industrial Revolution. It’s not necessarily for
everybody though. An organization must have an
and AR/VR, do you believe that application scenario where there are measurable
we are at an inflection point objectives as well as a large amount of data to
where large organizations need implement AI successfully.
to embrace technology to a much
greater extent than ever before?
The four waves of AI: Internet
All the technologies you mentioned will eventually AI, Business AI, Perception AI, and
be important. Right now, AI is by far the most
Autonomous AI.”
important because it is pervasive; it will hit every
industry. To my mind, AI is to be applied most
immediately to businesses that have a lot of data.
How do you define these
And that data can be used to make smart decisions, four waves of AI?
improve conversion rates and profitability, and Internet AI is pervasive today and is fueled by
lower cost. Soon enough, AI will have perception. user-submitted data such as clicks, likes, and
Computer vision and speech and machine comments. For example, a recommendations engine
translation and language are just at the inflection that collects your browser data and offers you
point of becoming mature. We see things, such customized information based on your behavior is
as autonomous stores and speech interfaces, all part of Internet AI. In the future, technologies such
beginning to hit the inflection point. Looking slightly as natural language processing and computer vision
beyond is autonomous AI, that is the use of robotics along with data analytics will take Internet AI further
in manufacturing and agriculture as well as in to fully personalize the worldwide web.
autonomous vehicles.
Business AI works with data recorded and
submitted during interactions with financial,
Right now, AI is by far the most healthcare, legal, and business organizations.
Leveraging data analytics, Business AI can predict
important [technology] it is pervasive;
your future health and wellness, financial status,
it will hit every industry. To my mind, and social behaviour – for example, predicting your
AI is to be applied most immediately to capacity to repay loans.
businesses that have a lot of data.”
Perception AI blends digital and physical
In my book “AI Superpowers,” I call them the four environments using technologies such as IoT, AR,
waves of AI: Internet AI, Business AI, Perception and VR combined with artificial eyes, ears, and other
AI, and Autonomous AI. And, I predict that each of sensors –for example, paying by scanning your face
these will have a 10% impact on GDP and a 10% instead of using a credit card.
impact on jobs. It could be the biggest technology
83
Lastly, Autonomous AI is the final frontier. cost by half and increase conversion rates twofold.
Powered by all the sensory and intellectual abilities, It could increase profitability margins. Those
machines will be capable of operating on their own organizations that adopt it will survive and those
as separate entities. This is already in development that don’t will just die.
with the development of self-driving cars from Tesla
and others.
84 Taking Digital Transformation to the Next Level: Lessons from the Leaders
How can organizations What do you think are some
encourage adoption of AI? of the most important things
that organizations should bear
The best way to encourage adoption is to
in mind before they embark
demonstrate a ROI that comes directly down to
the bottom line. To broaden adoption, you need to on their AI journeys?
convince your organization that you are focusing If possible, I think organizations should find
on areas where there is immediate benefit to the partners that have the experience, so they can pick
bottom line. Take, for example, a bank. If it can the right area to sink their teeth into. I think they
demonstrate its asset allocation and how that
will yield better performance, those numbers
will speak for themselves. And even conservative
When it’s measurable, the
organizations, including banks, could try AI on
initiatives such as new customer prospecting tools benefits of AI can be demonstrated
(for example email campaigns) and see if this very quickly – it moves from something
helps yield increases. If an organization is afraid abstract and high level to something
to integrate their core products with AI, at least concrete and value-added.”
they can take areas where there is no risk to their
core product.
should start hiring data science teams and start
with some packages that are fairly easy to use,
To broaden adoption, you need such as Salesforce or Microsoft. To get the journey
underway, organizations should pick a specific
to convince your organization that you area with clear metrics where they can very quickly
are focusing on areas where there is and clearly demonstrate a benefit. Organizations
immediate benefit to the bottom line.” should identify an area in the company where there
is a specific function to be maximized, whether
it be revenue, usage, or customer satisfaction
ratings. When it’s measurable, the benefits of AI
can be demonstrated very quickly – it moves from
something abstract and high level to something
concrete and value-added. This would help make the
case for adoption.
85
Attracting AI talent
There’s been a lot of research and
improving people’s AI competencies. Secondly, the
discussion on the talent gap for
tools are becoming easier and less complex to use.
AI scientists. Do you believe that With both developments, I think that the issue of
there is indeed a shortage, or is this the talent gap for AI scientists will be overcome.
similar to other new technologies, Certainly, some companies might still believe that
where supply will increase over time they have to hire a famous professor, but to my
mind, that is not needed for standard enterprise
and there is just an initial crunch?
applications. Of course, AI as a frontier continues to
I think this issue is being resolved on two levels. First, move forward. If an organization wants a complex
there are many more educational opportunities, dialogue application for an autonomous vehicle,
including university programs and open courses they would still need a lot of experts.
86 Taking Digital Transformation to the Next Level: Lessons from the Leaders
What are the dominant sectors using Also, AI in government is going to be very big –
AI and the most exciting use cases? for example, AI used by governments to check
against tax fraud and using AI in predicting criminal
The uses of AI are endless and cover many different behavior. AI can be used in law to verify evidence
sectors. Financial services, retail, manufacturing, or to even provide input to ensure that the judge is
and agriculture are the most common industries being fair and consistent.
we see. Financial services is the fastest sector to
adopt AI because of the wealth of data available Are there examples of Chinese
and because AI can provide immediate, measurable, companies that are already
and valuable outcomes. My view is that banks, credit making rapid progress in
card companies, and insurance companies will be tackling these use cases?
eliminated unless they reinvent themselves.
We have a portfolio company that’s building 100
autonomous restaurants in China. Because there
Financial services is the fastest are no people involved, their prices are about one-
third of McDonald’s or Kentucky Fried Chicken. So,
sector to adopt AI because of the
that will appeal to people who are cost conscious.
wealth of data available.” The restaurant will be staff-free and leverage apps
to provide a futuristic dining experience. When
In manufacturing, AI can be used for inspection on a you go into the store, you scan the digital item
simple assembly line. There are AI technologies that list and menus to place orders with your phone. In
can be used in agriculture and farming (for example, just a few minutes, you see your food and drinks
picking fruits) or in food and beverage (for example, being prepared at robotic stations. Not just basic
washing dishes in restaurants). Autonomous sandwiches or pizzas, but hot noodles and hot
restaurants and autonomous convenience stores lunches.
that are without human participation are emerging.
I believe those are coming next, but penetration
might take three or four years.
We have a portfolio company
Healthcare will also be a big one. AI will be used to that’s building 100 autonomous
improve healthcare in many ways, including helping restaurants in China. Because there
with diagnosis, radiology, patient history, and drug
are no people involved, their prices
warnings. This will take a little longer because of the
impact it has on people’s health and lives. are about one-third of McDonald’s or
Kentucky Fried Chicken.”
87
We have an investment in a convenience store in the US, such as Walmart or Costco. It’s harder
that will use AI for sales forecasting, inventory to disrupt these large players in the US. In China,
management, customer traffic and merchandising building cost-effective convenience stores and
optimization, and restocking alerts. In a year or restaurants will quickly generate adoption and
two, we will begin implementing sensor-based and even build new brands that were not there before.
computer-vision tracking. The face recognition Similarly, China’s banks and hospitals are quite
technology will be able to detect customers’ behind. So, again, AI can jump in and elevate the
expressions, emotions, and eye contact to glean level of service.
detailed knowledge of what each customer is
thinking and feeling about specific product items What is to stop these Chinese
in the store, and how that relates to their shopping entrepreneurs who have already
behavior over time. The plan is to open 1,000 stores perfected their AI solutions from
in the next three years. coming into other markets?
That’s not likely in the near term because there
are major cultural usage and language barriers
In a year or two, we will begin preventing Chinese AI companies from going
implementing sensor-based and abroad. This is a giant market that is not developed
computer-vision tracking. The face today. The priority needs to be to conquer and win
recognition technology will be able in the local market.
to detect customers’ expressions, Where do you see Europe in this race?
emotions, and eye contact to glean They are not really in the race. The UK, Switzerland,
detailed knowledge of what each and France all have very good AI talent, but what’s
customer is thinking and feeling about happening is much of this talent is going to the US
specific product items in the store, or working for US-based companies from Europe.
I think that US companies have continued to use
and how that relates to their shopping
its magnetic pole to attract the world’s smartest
behavior over time.” people. To my mind, that’s a key advantage of the
US and so Europe doesn’t really have full control of
China is adopting AI a lot faster for a number of their talent.
reasons. The first is the sheer size of the market,
which means that there are more venture capital Secondly, Europe has fewer high-quality VCs
firms willing to invest because the rewards are compared to the US, China, and even Singapore. In
larger. Second is the large amount of data that this type of situation where there are few VCs in a
is available because of this size. Third is the fact fragmented market, entrepreneurs are less inclined.
that China happens to have an underdeveloped
infrastructure in several areas where AI can help
the country leapfrog. For example, in China’s retail
sector, you don’t have such strong brands as exist
88 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Looking to the future of AI
Do you see any company that will So, AI is still open for a
come in and dominate the AI space variety of startups and other
as Google has done in search? companies to compete?
No, I do not. I think the strongest company is clearly Right, it is. As I mentioned, our top five investments
Google. Google’s advantages are leverageable in in AI are valued at $23 billion – and that’s just in
the internet and cloud space, but they are not as three years. Imagine the next 10 years at that
leverageable in many vertical domains. We talked valuation. Plus, there’s more than China, there is the
about healthcare and manufacturing and retail. US. I think the opportunities are huge and I definitely
Those are areas in which Google’s advantages are wouldn’t say that it’s at all closed off.
weaker. There is opportunity to have many giants,
several per vertical domain. I would expect Google
to be very successful, but I wouldn’t expect them to
be dominant.
89
Capgemini Perspective
90 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Understanding digital
mastery today
Why companies are struggling with
their digital transformations
91
There is no doubt that organizations understand the advancement. Organizations are still struggling
importance of digital transformation. Worldwide to turn their investments into business successes.
spending on digital transformation technologies – This might reflect the difficulty for organizations to
hardware, software, and services – is expected to adapt to the dizzying pace of change in technology
cross the $2 trillion mark by 2021.1 The investment innovation (e.g., artificial intelligence, internet of
commitment to putting the infrastructure in place is things, automation). Moreover, business model
not in question. disruptions in many industries are challenging
traditional value-chains. But, it could also be that
But, are organizations turning these investments organizations were overly optimistic in 2012 and
into successful transformation journeys? In our 2012 have now realized the magnitude of the challenge,
research with the MIT Center for Digital Business, coupled with rising expectations of markets,
we established that a high-performing cohort of employees, and customers.
organizations – digital masters – outperformed their
peers in every industry.2 Six years on we undertook In this report, we focus on three key areas:
new research to gauge whether large organizations
have mastered the art and the science of digital • An assessment of how organizations have
transformation. progressed with their digital transformations in
the last six years
We surveyed more than 1,300 executives in over • The major challenges that organizations face as
750 global organizations and interviewed senior they implement their digital transformations
executives responsible for their organizations’ • Key recommendations for how organizations
digital transformation programs. Six years after can sustain their digital transformation journeys
our original research, organizations have had based on what digital masters do differently
time to build capability and experience in driving today. 10101
01010
digital transformation and one would expect the 01101
010110
level of digital mastery to have progressed from 010101
0001100
2012. However, our research does not find a clear 1001010
1010100
0001111
110101
0100011
0101
000
0011
1111
0101
0100
00011
0101010101010
10101001101010
00001111110
10101000001
101010101010
1010101001101
01000001111110
1010100000110101
01010101010101001
100101010000010011
0010101000001101101
92 Taking Digital Transformation to the Next Level: Lessons from the Leaders
35% Percentage of organizations
who have the leadership capabilities
required in 2018 for their digital
transformations
Figure 1. Organizations that have the digital and leadership capabilities needed: 2012 versus 2018
45%
39% 39%
35%
1. IDC, “IDC forecasts worldwide spending on digital transformation technologies to reach $1.3 trillion in 2018,” December 2017.
2. Capgemini Consulting and the MIT Center for Digital Business, “The Digital Advantage: How digital leaders outperform their peers in every industry,” 2012.
3. Ibid.
93
To explore this finding more deeply, we looked 1. Digital capabilities
closely at the two dimensions: digital capabilities To understand how organizations have progressed
and leadership capabilities. in terms of building digital capabilities over the past
six years, we examined the average ratings of the
two included categories – customer experience and
operations (see Figure 2).
Figure 2. Organizations that believe they have digital capabilities in place: 2012 versus 2018
40%
36%
34%
*Calculated based on the average percentage of organizations agreeing to the questions in each category (rating of 5, 6, 7 on a scale of 1 to
7); Questions included in this analysis are the same in 2012 and 2018.
Organizations made the most significant progress Sephora, the French-founded cosmetics company,
on customer experience, which in the 2012 has made significant progress in optimizing its
definition encompassed things like: analytics, social customer experience and blending physical and
media, location-based marketing, mobile channels, digital. It opened its first digitally-enabled store in
and connected products. Paris in 2015, and it offers all the perks of online
shopping combined with hands-on experimentation,
For example, 43% of organizations today are using like sampling products and participating in beauty
mobile channels to sell products and services, workshops. Sephora’s use of technologies like
compared to 23% in 2012. Moreover, nearly 40% virtual try-on tools, skin scanning devices, and digital
of organizations are improving their knowledge of shopping carts are not only inspiring and educating
markets and customers through devices embedded customers, but also giving them the confidence
in products, compared to 17% in 2012. These to purchase.4 The North Face, an American
gains are not surprising given the widespread use outdoor product company, personalizes product
of mobile channels and apps among consumers recommendations through IBM Watson technology
which has helped to drive customer engagement.5
94 Taking Digital Transformation to the Next Level: Lessons from the Leaders
36% Percentage of organizations
who said they excelled in operations
Figure 3. Organizations that believe they have leadership capabilities in place: 2012 versus 2018
45%
42%
36% 38%
35% 34% 35%
*Calculated based on the average percentage of organizations agreeing to the questions in each category (rating of 5, 6, 7 on a scale of 1 to
7); Questions included in this analysis are the same in 2012 and 2018.
95
Achieving the balance between business and
technology is a difficult game” - Enrico Maria Bagnasco,
head of Technology Innovation at Telecom Italia
IT and business relationships the necessary culture to make that possible. For
have not kept pace with need example, today, fewer organizations agree that
there are possibilities for everyone in the firm
While the relationship between the CIO and other to take part in the conversation around digital
members of the leadership team is critical in a digital initiatives (36% in 2018 compared to 49% in 2012).
age, there appears to still be a disconnect. “This is the most intimidating part for many companies,
[companies] need to enable employees to participate,”
• For example, in 2012, 65% of organizations felt says Tariq M. Shaukat, President of the Customer
that the CIO and senior business executives have Team at Google Cloud. “You need to create an
a shared understanding of the role of IT in their environment where leadership is available for people to
organization, compared to 37% in 2018. Enrico ask questions and get feedback. By giving employees
Maria Bagnasco, head of Technology Innovation the permission to speak, to collaborate, and to
at Telecom Italia echoes the sentiment, “There contribute, organizations end up moving people towards
are always new ideas in the market. You must be a more digital culture.”9 We explore this challenge in
proactive rather than market-reactive, and there is more detail later in this report.
pressure on the technical team to deliver. Achieving
the balance between business and technology is a Vision is still not a core focus
difficult game.” 6 Aligning the organization around a common
• In 2012, over half (59%) of organizations felt that vision is a key first step in articulating the digital
the CIO and senior business executives have a transformation journey. Today, few organizations
shared understanding of how IT can be used have that clarity, with only 31% agreeing that
to increase productivity of the organization’s senior executives share a common vision of
operations, versus how the business should change through digital
35% in 2018. technologies (compared to 44% in 2012). As Ethan
• In 2012, 53% of organizations agreed that the CIO Bernstein, assistant professor, Harvard Business
and senior business executives have a common School says, “Vision, values, and strategy help senior
view of IT investment priorities, compared to management ensure that the collective attention of
36% in 2018. These trends may suggest that the employees is focused around the organization’s
optimization is still occurring in silos or that raison d’être.”10 In addition, only 36% of organizations
business leaders are impatient with the pace of believe that senior executives have a radical digital
IT and are spinning up shadow IT (i.e., IT devices, transformation vision that is a departure from past
software, and services outside the ownership practices (30% in 2012). Not only that, only 34%
control of the IT organizations) to lead their of organizations say that senior executives have a
initiatives. In fact, it is estimated that 38% of digital transformation vision that crosses internal
technology purchase is managed, defined and organizational units, compared to 41% in 2012.
controlled by business leaders (up from 28% in
2015).7, 8 Governance still presents challenges
A strong governance structure will help to translate
0
Engagement is a key challenge the vision into action; however, organizations remain
0
It does not appear that many organizations are challenged even on that front.
bringing their employees along with them on
their digital transformation journeys and creating
1
6. Capgemini Research Institute, Digital Mastery Interview with Enrico Maria Bagnasco, Head of Technology Innovation, Telecom Italia, May 2018.
7. Gartner, “Make the best of shadow IT,” January 2017
96 Taking Digital Transformation to the Next Level: Lessons from the Leaders
• In 2012, 38% of organizations felt that roles and operations. On the leadership front, organizations
responsibilities for digital initiatives were clearly remain challenged to drive substantial progress. Six
defined within the company, versus 32% in 2018. years on, they might have realized just how difficult
• In 2012, 40% of organizations agreed that it is to create an aligned organization and a strong
processes exist to ensure that all digital initiatives governance model that supports the vision, and to
are aligned with corporate objectives, compared ensure employees are engaged in the journey.
to 35% in 2018.
• Organizations have made progress on ensuring
digital initiatives are assessed through a common
set of key performance indicators (26% of
organizations in 2012 versus 33% in 2018).
1
0
enthusiasm for digital transformation in 2012
0
1
1
1
0
has been dampened by difficulties encountered
1
0
0
1
1
0 0 0
1
0 0 0
in implementation. Organizations have made
0
0
1 1
1
1
0 0
1
0
0
1
1
progress in customer experience. But, the lack of
0
0 0 0
1
0
0
0
1 1
1
1
key competencies and increased complexity of the
1
1
0 0 0
0
0
1
1
1
technology appear to be slowing down progress in
1
1
1
1 1
0
1
1
0
0
0
1
0
1
1 1
1
0
1
0
1
1
1 110
1
1
1
1
0
10
1
0
0
0
0
1 1
1
0
1
1
1
0
0
1
0
1
0 0
0
1
1
1 1
1
1
0 0 0
1
1
1
0
0
1
1
1
1
0
0
0
11
1
0
0
1 0
1
1
1
1
11 1 1 0
1
1
1
0
0
1
1
0
1
0
1
0
0
1
1 1
0
1
1
1
0
0
0 0
1
0
1
1
0
1
31% Percentage of
1
1
0
1 11
0
1
0
97
36% Percentage of
organizations that say there
are possibilities for everyone
to take part in the conversation
around digital initiatives
36% 36%
There are possibilities Senior executives and
for everyone in the middle managers share
company to take part a common vision of digital
in the conversation transformation
around digital initiatives
Source: Capgemini Research Institute, Digital Mastery Survey; April–May 2018, N=1338 respondents, 757 organizations.
*Based on the percentage of organizations agreeing to the question (rating of 5, 6, 7 on a scale of 1 to 7).
Organizations do not leverage must plan for the future. With advancements in
analytics to understand digital technology and analytics, talent management
processes and structures should equally change. For
their skill needs example, one might expect to see more scientific
2017 Capgemini research showed that the majority approaches in the way people are managed and
of organizations agree that the lack of digital talent skill needs are identified. But our survey shows that
hinders their transformation efforts.12 In addition only one in four organizations use data and analytics
to understanding current skill needs, organizations to understand their employees’ preferences (e.g.,
11. Capgemini Research Institute, Digital Mastery Interview with Mats Munkhammar, SVP and CIO/IT director, Green Cargo, May 2018.
12. Capgemini Research Institute, “The Digital Talent Gap: Are companies doing enough?” October 2017.
98 Taking Digital Transformation to the Next Level: Lessons from the Leaders
career development, training) or to identify the skills needed both today and into the future.
Figure 5. Few organizations use data and analytics to identify skill sets needed
27% 26%
We use HR analytics to We use HR analytics to
identify current and understand the needs
future skills needed and preferences of
our employees
Source: Capgemini Research Institute, Digital Mastery Survey; April–May 2018, N=1338 respondents, 757 organizations.
*Based on the percentage of organizations agreeing to the question (rating of 5, 6, 7 on a scale of 1 to 7).\
Organizations are not strong digital skills and 38% say they have a
upskilling employees formal program for digitally reskilling employees.
A recent study found that 74% of companies are
To reduce skills shortages, organizations need to only investing $500 per employee on learning and
put effort into attracting, developing, and retaining development.14 Jeremy Walsh, senior vice president
digital talent. In Capgemini’s 2017 digital talent at Learning House, a sponsor of the study said,
research, over half (58%) of digital talent said that “It’s just ridiculous to see that amount of money being
their next job change will be a result of the new spent,” he said. “I think we will start to see a shift in
organization offering better skill development.13 how much [companies] are willing to invest in skilling
In our current research, only 39% of organizations and reskilling.”15
say they actively recruit and hire new talent with
Figure 6. Organizations are not actively working toward narrowing the digital talent gap
Source: Capgemini Research Institute, Digital Mastery Survey; April–May 2018, N=1338 respondents, 757 organizations.
*Based on the percentage of organizations agreeing to the question (rating of 5, 6, 7 on a scale of 1 to 7).
13 Ibid.
14. The Learning House, Inc. and Future Workplace, “Closing the Skills Gap,” 2018.
15. Ibid.
99
Organizations are not paying doing things poorly,”18 according to Ethan Bernstein,
enough attention to the crucial assistant professor, Harvard Business School.
ingredient – digital culture “Culture evolution is a critical building block of a digital
transformation, almost a prerequisite,” says Pete
2017 Capgemini research found that a majority of Blackshaw, global head of Digital and Social Media at
organizations (60%) point to culture as the number- Nestlé. “Larger organizations can be very codified in
one hurdle to digital transformation.16 By digital their ways of working and calcified in their habits. You
culture, Capgemini means seven attributes: agility therefore need to liberate the thinking, soften the silos,
and flexibility, collaboration, customer centricity, restructure the incentives, and ultimately take much
data-driven decision making, digital-first mindset, bigger leaps forward.”19 However, our survey shows
innovation, and open culture.17 “Culture is the glue that only a minority of organizations are displaying
that either keeps us doing things well or keeps us the attributes required (see Figure 7).
38%
35% 35% 34%
Source: Capgemini Research Institute, Digital Mastery Survey; April–May 2018, N=1338 respondents, 757 organizations.
*Based on the percentage of organizations agreeing to the question (rating of 5, 6, 7 on a scale of 1 to 7).
Collaboration is one key component of digital But as Figure 8 shows, fewer than 40% of
culture. Vala Afshar, chief digital evangelist, explains organizations say that employees can collaborate
the culture at Salesforce, “We are first and foremost digitally with other employees as needed. In
an incredibly social company, and this is one of the addition, only a third of organizations say digital
key determinants of our culture. We, for example, use technologies improve communication between
Chatter – our internal collaboration tool – more than we leadership and employees. With increasing
use email. Our social nature means that we have complexity and changing expectations toward
a culture of transparency, collaboration, and continuous communication and involvement, collaborating and
learning.”20 communicating digitally accelerate the speed of
change and engagement and increase transparency
in the organization.
16. Capgemini Research Institute, “The Digital Culture Challenge: Closing the employee-leadership gap,” June 2017.
17. Ibid.
100 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Figure 8. Fewer than two in five organizations arm employees with the right tools and technologies
Source: Capgemini Research Institute, Digital Mastery Survey; April–May 2018, N=1338 respondents, 757 organizations.
*Based on the percentage of organizations agreeing to the question (rating of 5, 6, 7 on a scale of 1 to 7).
18. Ibid.
19. Capgemini Research Institute, “Digital Transformation Review 10th Edition – The Digital Culture Challenge: All On Board,” 2017.
20. Ibid.
101
Know your customers more intimately market research to gauge their customers’ needs
Digital masters have a better understanding of (see Figure 9). Nearly 60% of digital masters also
their customers. Given that customer preferences offer an integrated cross-channel experience, using
change so fast in a digital world, organizations need digital technologies. Only 22% of beginners can say
to continuously monitor their knowledge of the the same. Sprint, the US-based telecom, created a
market. Close to 70% of digital masters use analytics Hadoop-based data lake to analyze customer data,
to better segment their customers and more than to improve the way it recommends products to
three out of five digital masters regularly conduct customers.21
45%
29%
We use analytics to better
38%
segment our customers
57%
68%
32%
We regularly conduct customer research 11%
to update our understanding of the 28%
needs and behaviors of our customers 38%
63%
38%
We use digital technologies
22%
to integrate different channels
together 41%
41%
59%
Source: Capgemini Research Institute, Digital Mastery Survey; April–May 2018, N=1338 respondents, 757 organizations.
*Based on the percentage of organizations agreeing to the question (rating of 5, 6, 7 on a scale of 1 to 7).
102 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Align customer experience and operations priorities into their vision and 71%
and internal operations use digital technology to link customer-facing and
operational processes in new ways. The Lego Group
Digital masters align their operations to meet links customers directly to their product design
customer demands. They realize the importance process. Through its Lego Ideas website, Lego
of organizing consistently around the needs of allows users to design their products, and then the
the customer. As Figure 10 shows, 73% of digital company builds an actual Lego product from the
masters incorporate both customer experience most popular design.22
Figure 10. Digital masters ensure their operations are customer centric and linked to the vision
38%
The digital transformation vision 15%
incorporates both customer experience 46%
priorities and internal operations 29%
73%
38%
15%
Digital technology is allowing us
38%
to link customer-facing and
operational processes in new ways 37%
71%
Source: Capgemini Research Institute, Digital Mastery Survey; April–May 2018, N=757 organizations; N=244 Digital Masters.
*Based on the percentage of organizations agreeing to the question (rating of 5, 6, 7 on a scale of 1 to 7).
22 FastCompany, “The secret to Lego’s social media success is in the creative power of crowds,” June 2017.
103
Stay abreast of innovations masters claim they are looking for innovations in
in your market their value chains. To accomplish this, digital masters
(66%) work with a wide ecosystem of partners,
Digital masters constantly explore emerging compared to only 22% of beginners. Digital masters
technologies and business models. They are always also test promising ideas quickly (see Figure 11).
on the look-out for new ideas. Two in three digital
Figure 11. Digital masters constantly identify innovations and test ideas
35%
We are constantly identifying 13%
innovations in our value chain 41%
due to digital technologies
28%
68%
38%
We actively work with a wide
22%
ecosystem of partners (start-ups,
incubators, technology firms, 33%
competitors) to co-develop solutions 24%
66%
35%
We test promising ideas quickly 16%
as proof of concept/minimum 33%
viable products 33%
65%
Source: Capgemini Research Institute, Digital Mastery Survey; April–May 2018, N=757 organizations; N=244 Digital Masters.
*Based on the percentage of organizations agreeing to the question (rating of 5, 6, 7 on a scale of 1 to 7).
Set a vision and tie it to vision of where they want the organization to go.
strategy and governance Such a vision should directly align with the business
strategy. They also need to explain the importance
Digital masters have aligned their strategy and KPIs and the need for the transformation
with their vision. To drive an organization-wide program across the firm. While digital initiatives are
change effort, Leadership should also explain a clear often supervised by senior management, it is middle
104 Taking Digital Transformation to the Next Level: Lessons from the Leaders
management that is typically involved in the day-to- a result, Under Armour quickly mastered the digital
day execution. Organizations must also ensure these capabilities needed to transform successfully.23
employees are accountable by aligning roles and
KPIs to the digital transformation objectives. Sixty-one percent of digital masters also adjust
their role descriptions and KPIs to align with their
Close to two in three digital masters agree that transformation objectives. Mark Jamison, global
the vision for their digital transformation is well head of New Product Development at Visa, Inc.
integrated into their core strategy. For example, says, “Successful companies understand the purpose
when Under Armour, a US footwear and apparel of their existence. They really understand what their
manufacturer, set a new vision to transform itself purpose is, the ‘why,’ and they don’t get caught up over
into a digital health and fitness company from an the long term in the ‘what.’ I call it ‘ freedom within
athletic apparel company, they developed a strategy a framework,’ a strategy that tells you where you are
to acquire technology-based fitness companies. As going.”24
Figure 12. Digital masters have a strong governance program backing their vision
32%
The vision is well integrated 11%
into the core strategy of our 39%
organization 24%
65%
33%
We have adjusted the role descriptions 14%
and KPIs to align with our digital 43%
transformation objectives
22%
61%
Source: Capgemini Research Institute, Digital Mastery Survey; April–May 2018, N=757 organizations; N=244 Digital Masters.
*Based on the percentage of organizations agreeing to the question (rating of 5, 6, 7 on a scale of 1 to 7).
105
69% Percentage of digital masters
that know which new skills they need
to develop in the next 3–5 years
Empower employees and two in three digital masters agree that customer
put customers first centricity is at the heart of everything they do,
compared to just 11% of beginners. Sixty percent of
Digital masters work on setting up a digital culture. digital masters say their employees take ownership
Organizations cannot truly transform themselves in the operational implementation of new and
without transforming their culture. As Ian Rogers, innovative ideas compared to just 16% of beginners
Chief Digital Officer for LVMH says, “The big moment (see Figure 13). Australia Post, the government
for an organization is when they have embraced the fact postal service, drove cultural change by creating a
that digital transformation isn’t a technical issue, but a new division – Digital Delivery Centre (DDC). The
cultural change.”25 Digital masters establish a digital DDC leads innovation and integrates digital practices
culture in their organizations by focusing and agile approaches, rapid prototyping and
on data-driven decision making, experimentation, design thinking into the organization’s traditional
and customer-centricity, among others. Nearly processes, culture, and infrastructure.26
Figure 13. Digital masters empower their employees and focus on the customer
66%
60%
55%
49%
41%
33% 35% 34% 34%
33%
30% 28%
16% 19%
11%
To bring out the required culture change, Continuous feedback is also important to culture
organizations can reward the behaviors that change. Mats Munkhammar of Green Cargo explains
comprise their unique digital culture, like data- the importance of feedback when driving a cultural
driven decision making or digital-first mindset. change. He says: “To help bring about a culture shift,
These rewards could be financial and non-financial we must ensure we are giving good feedback on our
such as recognition or privileges.27 “You have to employees’ performance especially when we expect
create an environment where there are incentives them to do things in a different way than they are doing
and rewards for collaboration as well as no penalty today. We need to encourage the new behaviors for this
for someone speaking their mind,”28 says Vala Afshar new way of working.”29
of Salesforce.
25 Capgemini Research Institute, “The Digital Culture Challenge: Closing the employee-leadership gap,” June 2017.
26 Forrester, “Case Study: Australia Post embraces digital business transformation,” 2017
106 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Proactively narrow the half (55%) of digital masters say they have the
digital talent gap learning infrastructure to upskill their employees
compared to just 16% of beginners (see Figure
Digital masters focus on talent development. 14). Darren Shimkus, general manager, Udemy, a
Organizations need to take digital talent seriously learning platform, emphasizes the importance of
and equip themselves with the talent and skills understanding skill needs from the employees.
to succeed. 2017 Capgemini research revealed “Corporate learning programs were all based on what
that over half (54%) of organizations agreed that the company thought an employee should know,” he
the digital talent gap is hampering their digital says. “Now we are seeing much more employee-driven
transformation programs.30 Digital masters are learning. Employees can decide. ‘Do I need to learn
being proactive in understanding their needs and the principles of data science to do my job? Do I need
upskilling their employees. to learn digital marketing campaigns to do my job?’
Employees are the ones who really understand what
Nearly 70% of digital masters say that they skills they need in order to accomplish their goal or to
know what new skills they need to develop in get to the next level in their career.”31
the future compared to 26% of beginners. Over
Figure 14. Digital masters develop their employees and plan for the future
69%
55%
51%
45% 46%
37%
37%
33%
26%
16%
To ensure a focus on talent development and atmosphere. This support could mean providing
appeal to digital talent, organizations should also digital talent the required tools to collaborate, have
create an environment that prioritizes and rewards a flexible workplace, or an open and flat culture. As
learning and establish a supportive and cooperative Gert Stuerzebecher, partner at DHR International
27 Westerman, George, Bonnet, Didier, and McAfee, Andrew. “Leading Digital: Turning Technology into Business Transformation,”
Harvard Business Press, 2014.
28 Capgemini Research Institute, “Digital Transformation Review 10th Edition – The Digital Culture Challenge: All On Board,” 2017
29 Capgemini Research Institute, Digital Mastery Interview with Mats Munkhammar, SVP and CIO/IT director, Green Cargo, May 2018.
30 Capgemini Research Institute, “The Digital Talent Gap: Are companies doing enough?” October 2017. 107
31 Ibid
Neumann, a global executive search firm says, “Some very important for the CIO, IT, and business teams
companies do not give their digital experts the power to be aligned with the objectives of the program.
to revolutionize. Therefore, resistance is built up against This is certainly the case for Atif Rafiq of Volvo
these people, which limits their success. Young digital who combines consumer-facing innovation and
talent are ambitious and want to work in a certain technology with the digitization of the internal
atmosphere. If organizations are too old-fashioned, enterprise in his joint CIO/CDO role. From his
digital talent will not succeed.”32 vantage point, Rafiq is better positioned to connect
the dependencies between the two, such as
Break silos between business platforms that serve both consumer and enterprise
and technology use cases like the connected car platform. He says,
“By combining the consumer and enterprise digitization
Digital masters’ business and technology functions efforts in my role, we aim to leverage common
work together. The business and IT teams both capabilities more effectively.” 33
play key roles in digital transformation, thus is it
Figure 15. Digital masters are satisfied with their IT team’s performance and can organize across silos
33%
The IT unit's performance meets 13%
the needs of the company 36%
24%
65%
35%
19%
It is quite easy to self-organize
cross-functional teams throughout 32%
our organization 25%
63%
Source: Capgemini Research Institute, Digital Mastery Survey; April–May 2018, N=757 organizations; N=244 Digital Masters.
*Based on the percentage of organizations agreeing to the question (rating of 5, 6, 7 on a scale of 1 to 7).
32 Ibid
33 Capgemini Research Institute, “Digital Transformation Review 11th Edition – Artificial Intelligence Decoded,” 2018.
108 Taking Digital Transformation to the Next Level: Lessons from the Leaders
Conclusion
Despite six years after our original research, we • It is difficult for organizations to adapt to
find it is just as hard today as it was in 2012 to make the dizzying pace of technology innovation
digital transformation a success. While we see (e.g., artificial intelligence, internet of things,
progress on customer experience, organizations automation)
have not kept pace on building the necessary • Organizations might have been overly optimistic
capabilities in operations, IT-business relationships, in 2012 and have now realized the magnitude of
vision, engagement, and governance. Today, the challenge
many organizations might face the realities of • There are business model disruptions in many
the complexities of their journeys and realize just industries which are challenging traditional
how challenging successfully transforming can be. value-chains
Organizations have not moved forward fast enough. • The rising expectations of markets, employees,
We believe this to be the case for a few reasons: and customers put significant pressure on
organizations.
109
Research Methodology
Organizations by country of headquarters
We surveyed 1,338 business leaders at the manager level or above at 757 organizations. Seventy one percent
United States 22%
of organizations had reported revenue of more than $1 billion in FY 2017. The global survey took place from
Germany 11%
April to May 2018. More detail is below.
United Kingdom 10%
France
Organizations by country of 8%
headquarters
United StatesIndia 8% 22%
Germany
Australia 6% 11%
United Kingdom Italy 6% 10%
France
Spain 6% 8%
India
Canada 5% 8%
Australia
Brazil 4% 6%
NetherlandsItaly 3% 6%
Spain
Sweden 3% 6%
Canada
Belgium 2% 5%
Brazil
Norway 2% 4%
Netherlands
Mexico 1% 3%
Sweden
Others 2% 3%
Belgium 2%
Norway 2%
Mexico 1%
Others 2%
Source: Capgemini Research Institute, Digital Mastery Survey; April–May 2018, N=1,338 respondents, 757 organizations.
Organizations by industry
17%
15%
14% 13%
Organizations by industry
12% 12% 11%
17%
15%
14% 13%
7%
12% 12% 11%
7%
Banking Retail Telecom Consumer Utilities Insurance Automotive Others
Products
Source: Capgemini Research Institute, Digital Mastery Survey; April–May 2018, N=1,338 respondents, 757 organizations.
$5 billion– $1 billion–
Organizations by revenue$4.99 billion, 22%
$9.99 billion, 17%
$5 billion– $1 billion–
$9.99 billion, 17% $4.99 billion, 22%
Source: Capgemini Digital Transformation Institute, Digital Mastery Survey; April–May 2018, N=1,338 respondents, 757 organizations.
Respondents by designation
Individual Contributor, 1%
Director, 30%
Manager, 38%
Respondents by designation
Executive, 31%Contributor, 1%
Individual
Source: Capgemini Research Institute, Digital Mastery Survey; April–May 2018, N=1,338 respondents, 757 organizations.
Director, 30%
A note about the analysis: • Section 2 entitled “Employees are not being
invited on the digital transformation journey” only
Manager, 38%
The digital mastery matrix (Figure 5) was includes questions that were used in building the
constructed using 77 of our survey questions out of digital mastery model.
a total of 116 questions. • Section 3 entitled “What can we learn from digital
masters to sustain digital transformation?” only
• Section 1 entitled “Many organizations are finding includes questions that were not used in building
their digital transformation journeys a struggle” the digital mastery model.
only includes the 43 questions that were asked in
the exact same manner in 2012 and Executive,
2018. 31%
111
Digital Transformation Review
Guest Contributors