Winning in 2025: Digital and Data Transformation: The Keys to Success

Praise for Winning in 2025

Michael de Kare-Silver brilliantly takes us through the much-needed digital transformation journey that all companies need to travel, but few excel at executing. This book is an indispensable reading for top managers

-Mariano de Beer, Chief Commercial Digital Officer at Telefonica S.A

Every business leader looking at how digital will transform their business should read this. They may find some of the conclusions challenging but they may be spurred into further action to embrace the future.

-Mark Read, CEO of WPP

Business Managers need to think about what Michael’s vision will mean for their business. The increased knowledge and speed of access that is at the beck and call of all customers is certainly opening up new market opportunities. But it is also increasing competition beyond recognition. Profits come from retaining an advantage against competition. How will your firm protect its position?

-Professor Ken Simmonds, London Business School

With the unprecedented speed of change, there is a huge need for us to rethink how we transform organisations, engage our people and foster cultures that are future-fit. I recommend Michael’s book as it gives great perspective on how we might succeed for 2025 and beyond.

-Leena Nair, Chief HR Officer, Unilever

Digital and Data transformation is now widely recognised as a significant opportunity for most every organisation. Michael’s new book provides a valuable guide and roadmap to help companies navigate these key challenges.

-Archie Norman, Chairman, Marks and Spencer

Digital transformation is an ongoing journey. Whilst many are daunted by the scale of change required to compete; in my view that change can be exciting because the benefits and added value can be so significant. Most importantly, transformation must be for the benefit of the customer. Organisations need to put the customer at the heart of this journey. Those that truly do, will succeed as they transition to become more digital businesses. Michael’s book makes this point – and other great points – strongly and is full of best practice examples from which we can all learn.

-Ashok Vaswani, UK CEO, Barclays Bank

Also by Michael de Kare-Silver:

Digital Insights 2020

e-Shock

Strategy in Crisis

Stre@mlining

Building the 2020 Digital Team

Copyright © 2019 Michael de Kare-Silver

The moral right of the author has been asserted.

Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms of licences issued by the Copyright Licensing Agency. Enquiries concerning reproduction outside those terms should be sent to the publishers.

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ISBN 978 1789019 681

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This is dedicated to Deborah and Alexander

– best friends, muse and inspiration

Contents

Digital & Data Transformation

Chapter 1

Winning in 2025

Chapter 2

Digital + Data: the twin imperatives

Chapter 3

Building an effective Data & Analytics capability

Chapter 4

How Machine Learning is changing the game

Chapter 5

InsurTech case study: how AI/ML is changing the game

Chapter 6

The still untapped potential of effective Customer Data & Analytics

Keys to successful transformation

Chapter 7

Digital and Data Transformation: 10 keys to success

Digital HR

Chapter 8

What is the HR impact of digital on future talent needs and hiring?

Chapter 9

Employee engagement is the key to digital change and transformation

Chapter 10

How measure employee engagement

Chapter 11

Winning in the talent wars

Chapter 12

Using the recruitment process to benchmark candidates and resolve uncertainty

Chapter 13

5 keys to finding the best digital talent

Chapter 14

Technology impact on employee and talent management

Digital & Data organisation and structure

Chapter 15

Hub ‘n Spoke

Chapter 16

Spotify – case study

Chapter 17

Building the Digital team

Chapter 18

How to structure and organise the digital team?

Chapter 19

Digital evolution of Marketing /Marketing Department organisation structures

Chief Digital Officers and eco-systems:

Chapter 20

A market perspective on Digital leadership roles

Chapter 21

Digital eco-systems and incubators

B2B Industry 4.0 transformations

Chapter 22

Industry 4.0

Digital and Data IQ

Chapter 23

Digital IQ

Payback and the Courage to Care

Chapter 24

Does investment in Digital pay back?

Chapter 25

Courage to Care

Chapter 1

Winning in 2025

Leading organisations today are asking: what’s it take to be a winner in 2025? If we were to build our company from scratch in today’s digital technology world, then what would that look like? What new products /services might we have, what new partnerships and alliances might we form, what kind of digital eco-system would we establish, what new investments, stake-holdings, even acquisitions, what would our Business 2025 look like?

To drive towards this, most every company nowadays is on a journey, a journey to transform, to change, to take advantage of new technologies, new innovations new ideas. Some of that work is focussed on costs and efficiency, and that’s especially true in B2B and in Manufacturing. However, a lot of the work is also focussed on future growth, finding new revenue streams, new options for business and development, new ways to engage with customers, new techniques to drive customer immersion and conversion. It’s all about how to rewire the business, how to establish the future operating model, how best to organise, where to focus investment and resources, how to build the talent pool with the right skills and know-how, how to motivate employees and the entire workforce for this new digital age.

IDC Research and Forbes estimate that c. $1 trillion is being invested annually by corporations globally on technologies and services that will enable digital and data transformation. IDC comments that: some of the strategic priority areas include building cognitive /AI capabilities, data-driven services and benefits, operationalizing data and information, digital trust and stewardship and omni-channel customer engagement. In a Gartner survey, 94% of executives- in other words, just about everyone – say they have increased focus on digital growth, and 90 percent say digital plays a central role in their overarching business goals. Everyone is being told to go digital, and the reaction is to throw ever-growing amounts of money at technology solutions. On average most multi-national corporations of scale will have at least two major technology-led transformation programmes taking place in each department and in each country /business unit. There’s a lot going on!

This activity is fuelled by the rapid advancements in Tech which challenge existing business models and suggest new futures. Retail is an obvious example now in which the shift to online and e-commerce has meant large scale physical bricks ‘n mortar estates may no longer be viable or necessary. Retailers are now rushing to close stores and shift to the new multi-channel model. And this kind of seismic shift is happening in many B2C /consumer-facing businesses. Traditional channels and means of communication are no longer the business drivers and key levers they used to be. So how to adapt, how change, how reinvent, how do this quickly, how do this quickly while maintaining levels of sales and profitability, how do this at a pace that will maintain or increase shareholder value and not allow a substantial collapse in market value, how make sure that the investments in digital and data technology are the optimal ones that do deliver the targeted value and RoI?

It’s not just a micro-company challenge. There are also macro forces at work as countries vie for economic advantage and success and look to advance their infrastructure and networks that will enable private enterprise to succeed. China is at the forefront of channelling investment into key areas and looking to build global market leadership. Xi Jinping, as President of China, announced that: Supremacy in AI is a core strategic goal and we have directed plans to dominate global AI by 2030. China has also made bold statements around Made in China 2025 which will focus investment to upgrade core manufacturing sectors such as Robotics, Aerospace and Energy-saving vehicles. This investment program in China will channel significant government subsidies, government-sponsored (paid-for) R&D and setting targets for local manufacturing content.

Japan is another country proactively stimulating and encouraging investment in targeted key industries. Announcements have been made by Shinzo Abe as Prime Minister about focussed investment in Life Sciences, ICT (Information and Communications Technology), Sensor Technology and Nano Technology. We are looking to take full advantage of advances in genome and biology research, wearable devices (eg smart contact lenses), and big data insights driving advances in medical care and we aim to reinvigorate the contribution from manufacturing to our GDP as we advance towards 2025.

As exciting as it is to read of all this activity and investment and tech-led opportunity, it’s also a worrying time for people at work. There are many headlines about how robotics and automation will replace people, how there will be fewer jobs and how the types of jobs available and skills needed are changing. That might perhaps be of less concern to a young millennial embarking on their first career and able to hopefully develop the future skills required. But these sort of technology changes are less helpful for someone in mid-career who may have to retrain in order to secure future employment. It’s a very difficult area and in an economic environment which boasts lower unemployment in a number of developed economies and hard to find and recruit people, those forecasts of robots doing all the work seem far way, almost science fiction still. Except that competitive forces will compel companies to examine these opportunities and may often be required to change just to survive.

It’s hard to predict the future of course but what we do know, as Bill Gates has so aptly put it, is that we tend to overestimate the short term but underestimate the long term. Forecasters will often talk about immediate impact but in practice things do take longer to unfold. What does happen, is that when for example innovation reaches some kind of critical mass, then its development can be exponential. The oft-cited example is the smart phone, launched in 2007 and in ten years, global and ubiquitous.

For companies today, the challenge is immense, how navigate through this fast-changing world, how anticipate what to invest in, what new tech to embrace, what future operating model to adopt, what sort of competitive landscape to face in 2025 and how succeed, how find those sources of competitive advantage which will ensure the company becomes /stays a winner? As companies face up to these challenges and opportunities, they are reminded just how many transformations do fail, just how difficult it is to make this navigation successfully. McKinsey research shows that c. 70% of digital transformation programmes fail. Cognizant research showed that 53% of execs interviewed felt that their company was not ready or able to digest and take advantage of new tech investment and change. Only 26% of people in research by BARC felt their company was taking advantage of the data they had available. In GE, at one point there were over 200 major transformation programmes going on with an estimated near $500m technology investment behind them. Most every function and country had embarked on its own change initiatives, significant amounts were being spent on consultancy and contractor support, there was so much going on there that very little was being effectively implemented, projects were not joined-up, resources were over-stretched and BAU (business as usual) activity was being side-lined given the focus on delivering change. As one exec there put it: we were in chaos. While GE is now coming through that period with a new focus, the company in the meantime, is struggling to still be a winner.

This book then examines these challenges and opportunities. It looks at what does a company need to do now, today, to make the right decisions for tomorrow. It considers the keys to drive transformation successfully, ways to most effectively engage employees and all the workforce, how best to organise and structure to unleash the energies and empower employees to own and embrace change. It’s not an easy journey, but there are many case studies described in this book that will show the pitfalls to avoid and the better practice steps to take.

Chapter 2

Digital + Data: the twin imperatives

First, let’s consider some core stats and headlines:

Whoever becomes the leader in Data and Artificial Intelligence will rule the world

-President Vladimir Putin

China has made supremacy in AI a strategic goal and has announced plans to dominate global AI by 2030

-Financial Times

The internet economy in China is forecast to be more than US$1 trillion in 2020

-Center for Retail Research

Amazon.com revenues are close to US$ 250bn and 40% of all US e-commerce

-USA Today

In China, e-commerce is reaching towards 25% of all retail sales, in the UK it’s getting close to 20%, South Korea is at 16%, USA at 15% and Denmark at 12%

-Statista

5 billion videos each day are watched on YouTube

-BrandWatch

More data was created in the two years 2017 and 2018 than in the previous 5,000 years of humanity

-Forbes

Annual data creation today is approximately 16 Zettabytes (that’s 16 trillion gigabytes or 16,000 exabytes), by 2025 that is expected to increase 10-fold

-IDC Survey

We live in a world where we now take for granted immediate global connectivity, immediate interaction and response and we accept no limits on availability, service and supply

-Marc Andreessen

Data is expanding across every industry from biotech, healthcare and pharma through to all forms of social media and entertainment and the emerging internet of things will be a new tipping point

-PA Consulting

Data and Digital have now become the twin imperatives most impacting companies. Research is suggesting that the winners in 2025 will be those who best master them both.

We have all been acutely aware of how Digital generally is transforming the way companies do business and how customers prefer to interact and purchase. Now, Data has come to the fore and whether it’s Machine Learning or AI or real time predictive analytics, companies are facing major competitive pressures to gain new insight into