Digital & Analytic Business Transformation

By: Andrew J. Walter

“The culture of a company is the behavior of its leaders. Leaders get the behavior they exhibit and tolerate. You change the culture of a company by changing the behaviors of its leaders. You measure the change in culture by measuring the change in the personal behavior of its leaders and the performance of the business.”          

– Dick Brown, CEO EDS

Working now across numerous startups, technology, and Fortune 500 companies, a common dilemma is being contemplated across all levels of the organization (from Board of Directors down): Should and How do we change our company and culture to truly become a digital and analytic competitor? 

Now you’ll notice I’ve used the word “dilemma,” early 16th century (denoting a form of argument involving a choice between equally unfavorable alternatives): via Latin from Greek dilēmma, from di- ‘twice’ + lēmma ‘premise.’ This is intentional as this decision often takes the established company down one of two equally unfavorable paths in their attempt to become a digital business.

1)    First, there are those in the camp of “Do nothing,” don’t become an analytic and digital competitor, hope that those that do won’t beat you too bad, and continue to believe your company can “play not to lose” too much market share, consumers, and or profitability. These companies live a slow and painful death of a thousand cuts (layoffs, acquisitions and/or divestitures to structure their way out of it, and a strategy of the month syndrome). Now they don’t specifically articulate this as their strategy, but their lack of action declares it. 

2)    Alternatively, there are those in the camp of “Talk a good game,” do everything, outspend others on rotating talent, expensive solutions, and hype-speak, but fail to truly become an analytic and digital competitor. They mistakenly believe that by pontificating on this topic that their company is becoming a “new generation” company. However, the employees know better… nothing really changes in how they operate or how leaders behave. They continue to see the winners do this better and they long to be “like” them (insert the name of the digital & disruptive leader in your industry, category, or market).

Unfortunately, for many companies, this remains a dilemma and, even worse, they simply fluctuate between the two equally unfavorable alternatives. Failure in the path they take emboldens the opposing leaders to head in the other direction (often with new rotating talent) in a continued downward spiral of business results, employee retention/morale, and trust (from consumers, shareholders, and partners). Often the fear of digital transformation is driven from success in the past and fear of cannibalizing that success.

So, what is needed to take advantage of the exponential pace of technology capability in the areas of digital and analytic transformation? It truly comes down to business leaders and their ability to personally make the journey - to focus the transformation against business outcomes and then their ability to change the culture of the entire company to do the same. You can have the best digital talent, data scientists/analysts, solutions, and partners. It will not be sufficient if the leadership of the company does not lead and make this journey.

“The people who are crazy enough to think they can change the world are the ones who do.”       —Apple’s “Think Different” commercial, 1997

Leading the Digital & Analytic Business Transformation

Whether you’re talking about digitizing your business model (e.g., direct to consumer), bringing analytics into key business processes, or even digitizing your packaging, it will only be successful with the strong leadership from the top. I’ve seen incredible leaders take this on and succeed. I’ve also seen incredible leaders sit on their hands and hope it somehow happens without them investing their time, leadership capital, and personal behavior change. In the latter case, regardless of investment… and I’ve seen hundreds of millions invested… it has failed. 

Culture eats Strategy for breakfast. – Peter Drucker 

As I’ve reflected on these transformations, three attributes define the strong leaders.

1)    Passionate Sense of Ownership for the Business Model – leading a digital or analytic business transformation requires an intrinsic understanding of the current business model and passionate ownership of the future model. Too often, leaders don’t really understand their business model (product, financial, innovation role, supply chain, consumers, go-to-market), and as such, fear changes to that model (they stay risk averse, especially if they see it still sufficient to play not to lose).

- John Pepper, CEO P&G, What Really Matters on changing the business model…

“Doing this can be challenging! It is difficult to maintain energy for change when you’ve been successful. Success, particularly sustained success, brings with it the inclination to preserve, to follow existing models — often to a fault. And yet the need and opportunities for improvement in how we operate are all around us. Consumers change, technology develops, competitors progress, business models alter, business becomes more global.”

“We need to be alert and responsive to changing situations, anchored to only one commitment — doing the right thing to provide superior consumer value. We cannot be complacent or assume that yesterday’s formula for success will work today.”

Changing the business model (going direct to consumer / subscription, joint ventures / strategic partner approach [See Case Study below], digitizing consumer engagement, digitizing the package, leading on trends, introducing future break-through innovation that will cannibalize the current business) requires risk taking and leadership from the most senior leaders of the organization. I’ve seen over and over where the small company takes the lead in this disruption. It is very rarely the case that the market leader did not see the opportunity… they just lacked the leadership to make the move.

As a leader, are you:

-       Taking the lead on these transformations, balancing the present with the future? I’ve seen a recent CEO of a major Consumer Health Care company take this on and even setup an external advisory board (like a private equity startup approach) to guide them / bring the outside in. They are doing what only the leader can do.

-       Engaged in all aspects of the business model, informed by the external and inspiring the internal? The best leaders surround themselves with top experts in each element of the business model. This is not to abdicate decisions, but to bring the best thinking together to inform the final call… which they make decisively.

2)    Decision Making, when data is growing exponentially and 90% of the world’s data is unstructured and unable to be analyzed in a traditional way, will be re-defined / augmented by the incredible explosion in Analytic capability. The leaders that can take advantage of this capability (versus paralyzed by it) and understand it as a build on their years of experience will continue to lead the market, operate with a high sense of urgency, and instill trust to drive a culture / approach that cascades across the company.

“The key to good decision making is not knowledge. It is understanding. We are swimming in the former. We are desperately lacking in the latter.” 

“We live in a world that assumes that the quality of a decision is directly related to the time and effort that went into making it...We believe that we are always better off gathering as much information as possible and spending as much time as possible in deliberation. We really only trust conscious decision making. But there are moments, particularly in times of stress, when haste does not make waste, when our snap judgments and first impressions can offer a much better means of making sense of the world.” 

- Malcolm Gladwell, Blink: The Power of Thinking Without Thinking

  The lacking “understanding” that Gladwell calls out is where “augmenting” analytic capability can make a significant impact for leaders. Strong leaders can iterate with analysts/data scientists on new approaches, algorithms, and solutions. They leverage data democratization as a driver of decision making speed and not a culture-destroying hammer. They take the lead to transform business and issue reviews away from PowerPoint influencing exercises to truly leveraging analytic insights.

 As a leader, are you:

-       Leveraging the latest analytic capabilities and talent to put yourself in a position to drive decisive decision making… including those requiring going understanding? 

-       Driving a positive impact/behaviors with data democratization, augmenting analytics with business experience, and decision making… or does the organization see you as a barrier… what stories are they telling about you right now?

3)    Stay Close to Competitors & Trends, but Drive your focus on your Consumers. Create a “streaming mindset” to thinking about insights, consumers, competitors, and trends. Break away from the annual strategic planning mindset… live every day close to your consumers and put your energy towards the long-term “obvious.”

“I very frequently get the question: ‘what’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘what’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two – because you can build a business strategy around the things that are stable in time….in our retail business, we know that customers want low prices and I know that’s going to be true 10 years from now. They want fast delivery, they want vast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff I love Amazon, I just wish the prices were a little higher [or] I love Amazon, I just wish you’d deliver a little more slowly.’ Impossible [to imagine that future]. And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long-term, you can afford to put a lot of energy into it.

 …And so big ideas in business are often very obvious, but it’s very hard to maintain a firm grasp of the obvious at all times.”

- Jeff Bezos, CEO Amazon

Be clear on how the Digital or Analytic Transformation is going to impact and be a win for your consumers in your business. Too often I’ll hear leaders proclaiming digitization or analytics (“we’re moving everything to the cloud,” “AI will cure cancer”) with no clear understanding or path to get there. The lack of leadership in many digitization efforts drives massive misses in both short and long term impact to the business.

As a leader, are you:

-       Truly understanding your consumer and ensuring the digitization & analytic transformations will make a long-term & obvious win for them? Create a regular “insights streaming mindset” within your culture and in your behavior. 

-       Driving the consumer mindset as part of your culture at all levels? Your behaviors? What do you tolerate in others?

Lead your Digital and Analytic Transformation!

- AJW

Joint Ventures / Strategic Partner Approach – Case Study

In leading the analytic transformation of Procter & Gamble in 2010, it was clear that a key part of this journey would be reshaping the business operations, transforming the strategic partnership model, staying in touch with what our competitors were doing in this domain, and understanding the trends and rapid technology development from hundreds of startups. All of this while changing the underlying IT technology, managing numerous business leaders, and driving a significant impact on all facets of the P&G business.

Like any Digital or Analytic Transformation, there were key elements of our journey that made all the difference…here’s some of them to give you more insights!

Leadership Journey / Changing the Culture

Starting from a position of strength with a CEO and CIO that “got” analytics and were demonstrating the right behaviors and expectations of other leaders, I focused on bringing other key business leaders along and getting my own team driving this forward.

-       Initial attention was the right business leaders that would iterate with us and start running their business leveraging analytics. Don’t try to win with every leader, get the early adopters with line business accountability, help them win and look good!

-       For my leadership team, we eliminated all offices and sat together at a “collaboration” table. This drove fast decision making, full transparency, and the sense of urgency not typically seen in big companies.

Business Model

   We executed the analytic transformation under the leadership of our shared services organization, but realized quickly that our shared services partnership model was running out of steam after nearly 7 years in place. The number of potential players was also growing exponentially. We needed a way to understand who was out there, what competitors were doing in this space, and more.

-       Early in a trip to meet with Israeli startup companies, we identified Signals Analytics and their capability to bring enormous amounts of unstructured data together (press releases, patents, competitive intelligence sources, publications, and more) and identify key trends, players, and insights. We immediately put it in place for our Analytic Journey… tracking all external activity in this space and leveraging it to shape our business models and efforts.

-       A new Business Value Driven Partnership Model was developed to balance the present (speed, cost savings, speed to value) with the future (creating long term win-win strategic partnerships). The model created a shared risk and win-win scaling approach.

Decision Making

As we identified potential partners or capabilities we wanted to pursue, we needed a rapid decision making process to move at the speed of a much smaller company.

-       We established an External Commercialization Advisory Board that included the GBS President/CIO, Purchases Leader, and Finance Leader for the business unit. We leveraged the analytics and made calls with immediate focus then to execution. 

-       We did not get stuck with the current Business Model and quickly explored break-through models across the portfolio: Value Sharing Deals with Partners, equity stakes in start-up companies, and Industry shaping consortiums via the International Institute of Analytics.

Importantly, every employee and leader in our organization saw the decisive decision making… the culture cascaded down from the leaders behaviors, not a Powerpoint presentation.

Competitors & Trends

The Signals Analytics capability in place allowed us to keep a continuous Landscape Assessment, Patents understanding, New Company Launches, and specific domain deep dives (i.e., Supply Chain, Retail, and Academia).

-       We monitored every new product launch, competitive patent activity, academia research, and more unstructured data sources to quickly connect with potential partners. Over the next 3 years of the transformation, we created over $25 Million in value for P&G through our partnership model. Most of these win-win partnerships are still in place today!

-       Extremely helpful on the technology side, we guided development of products in visualization, Big Data, machine learning / advanced analytics, and more. We were able to turn our industry leadership position into a “networked R&D” capability and investment not seen before.

Just a flavor of the journey and transformation, the major partners continue to accelerate their efforts in the industry and release similar value for other major companies. We were crazy enough to think we could change a $70 Billion enterprise and did!

   AJW

Full Disclosure, I saw so much value in the partnership model, I’ve decided to work with many of the key partners in this transformation, including Signals Analytics, Verix, and Fractal Analytics. I also saw CEO’s that approached the strategic partnership model in the same manner… I’ve sought them out as well! You can see all the details in my LinkedIn Profile: linkedin.com/in/andy-walter