Open Letter to CEOs: “Don't Rest on Your Laurels" - Why you need to innovate and transform (and how technology will help you)

In 2019, while running a Line of Business with the world’s largest Banking Cooperative (SWIFT), ?I was approached by AWS to come lead their Financial Services transformation practice.

I instantly thought: ‘Why would I go work for an IT company?’ Boy, was I wrong.

After 2+?years engaging with and advising Business Leaders, I wanted to address here some?common misconceptions and important learnings, answering 3 key questions: WHY should you care about innovation and transformation, WHAT technology brings to the business and HOW to design and execute a successful digital transformation. Let's start with why -

Q1: WHY should you care about innovation and transformation?

The average lifespan of an S&P company was 67 years in the 1920s. It's 15 years today. Polaroid, MySpace, Kodak, Xerox, Nokia, Toys R Us, Yahoo, Blackberry??They all failed, arguably because they weren’t able to innovate and adapt to the new norm. And they had plenty of time to see it coming – I am afraid you don’t.

As we enter what Jeremy Rifkin calls the 'Third Industrial Revolution' (Jeremy is an adviser to Angela Merkel and Xi Jinping’s ‘Smart China’, amongst others), slow and friendly change is turning into mass accelerated disruption. In its scale, speed and complexity, the transformation will be unlike anything humankind has experienced before.

Business needs and business problems require new ways of working to meet the rapidly changing customer expectations and challenges. Corporations’ ability to transform, to become agile and innovative, will more than ever dictate which ones will disappear, survive or thrive. “The biggest risk is not taking any risk... In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks.” Mark Zuckerberg.

• Learning #1: Resting on your Laurels will undoubtedly lead you to failure. You need to drive agility, innovation and include technology as a core pillar of your new (agile) strategy. But how can technology become a key asset for more traditional businesses?

Q2: WHAT does technology bring to the business?

In 1995, Jeff Bezos started putting technology, data and customers at the center of his digital retail strategy. And he didn’t stop there: Kindle, Prime, AWS, Amazon GO etc. The Amazon group is now valued at >$1 Trillion, and technology (i.e. AWS) is at the core of everything they do. They are writing one of the biggest success stories of the digital era. Some didn't catch the tech train - in the meantime, household brands like Toys R Us, Sears and others filed for bankruptcy.

In the late 2000’s, UBER, closely followed by LYFT, GRAB ?and others, started challenging the traditional transportation business models, using data, analytics, machine learning to solve traditional problems and create value. While this undoubtedly benefited the end-consumer, it had a disastrous blast on many other established corporations. But the real transformation has yet to start - Super-apps, driverless cars, zero-marginal cost energy and the predicted shift from ownership to access explain the high valuations achieved by these new-comers. Will traditional players survive the next wave?

In 2015, Revolut was founded. 7 years later, the digital bank has onboarded $20M+ customers over 35 countries. They are valued at $33Bn, making the startup about a third bigger than Deutsche Bank and Societe Generale. Monzo, N24, Starling, Volt, Xinja etc. are all experiencing great success. How do they do it? Digital onboarding in minutes, seamless personalized user experience, data-driven decisions, new services launched in weeks, all at a fraction of the cost of traditional banks. Most of their growth is achieved by word-of-mouth. Have you ever recommended your bank to anybody??

AirBNB, NetFlix, Instagram etc. there are many more of these success stories. What do they all have in common? They are all built on the cloud, and they are technology companies above all: Data, Machine Learning, Analytics, Innovation IS their business. These disruptors set the foundations for a future-proof business model, while displaying constant agility and innovation to adapt to a fast-paced environment.

All these success stories, all these disruptors are leveraging the cloud. When traditional banks take years to deploy simple ideas, TNEX was built in 10 months , and acquired 35,000 customers in their first month. But this is not all lost – incumbent players have extremely valuable assets, loyal customers, trusted brands, and a lot of data – if they can make sense of it. There are many examples of traditional players that have successfully redefined their business models. Amongst them, Goldman Sachs is an example I like to cite: Goldman Sachs is becoming a Technology company , with outstanding results: GS is powering the Apple Card, partners with Stripe. Newly-launched Marcus online bank reached $60B+ AUM in 5 years only, the new API-based Transaction Bank already already hit the US$50bn in deposits 18-m after launch, with revenues of US$225m in 2021, up more than 50% from 2020... (GSTB, a fully digital transaction bank built 100% in the cloud ). They brilliantly demonstrate that Banks must behave ‘more like technology companies’ to survive . And whatever vertical you operate in, I believe you should too…

• Learning #2: Technology is the Business, and Cloud is the Technology. Cloud has become the #1 business enabler for both disruptive and traditional players. But few actually know how to fully utilize the power of technology and data.

Cloud Implications on Corporate Strategy, Risk and the Broader Business (credits: McKinsey & Co)

Q3: HOW to Design and Execute a Successful Digital Transformation Strategy (+ Key Milestones and Mechanisms)

This 2020 study by Boston Consulting Group analyzed digital transformation in 825 organizations. It shows that “successful transformations created, on average, 66% more value, improved corporate capabilities by 82%, and met 120% more of their targets on time than those on the other end of the spectrum.” However, it also shows an alarming conclusion: 70% of digital transformations fail, falling short of their objectives, which often produces profound consequences.?While you can’t ensure success, choosing the right strategy and the right partner are essential. ?

The AWS transformation team works with C-Suite and Board members to deliver business value via the use of Technology. During my 2 years leading the team in Singapore, the same questions kept coming back when meeting Leaders: How can our organization achieve a successful digital transformation? How can technology enable my business? How can we become agile and innovative – all this while delivering on its business objectives and managing the risk of Change?

The lack of available guidance, resources and frameworks was highlighted by many “Us being fresh to the cloud, we didn’t know what we didn’t know...all we did was to go to the internet and search for articles that were knowledge based but a lot of them were very theoretical, not practical. We were looking for practical advice, and AWS brings a lot of that to us” Ben Kei, Head of Architecture at one of Asia’s largest securities firms.

Ben and his firm have come a long way since we started our discussions 2 years ago: modernizing the workspace, unlocking new business models, reinventing digital customer interactions, migrating complete regions to AWS…

While this is only my take on this vast topic, the following framework has proven valuable to both customers and internal staff equally - perhaps because it helps articulate learnings from the ground, coupled with actual mechanisms and more theoretical concepts. Largely inspired from Andy Jassy’s digital transformation checklist , it is articulated around 4 pillars: Project, Foundations, Migration and Transformation. Each cover the aspects of People, Processes and Technology. We'll try to keep this simple and pragmatic.

Phase 1: PROJECT.

‘Don’t let paralysis stop you before you start’

The #1 rule is to get started sooner rather than later - start small and avoid the trap of analysis paralysis. Our experience tells us that there are 3 important considerations to help you identify the right Proof of Concept and filter out where to begin:

-?????????Visible Business Impact: The first few PoC(s) should have a clear business impact to attract attention and demonstrate the potential value of technology for the business

-?????????Speed-to-Market: Pick a use case that will demonstrate rapid outcomes. If the project is vast, break it down into phases

-?????????Minimize Complexity: Avoid projects that are too complex, involve compliance burdens or rely on too many decision makers

Once identified, the Minimum Viable Product MVP can be built by AWS Professional Services and/or one of Amazon’s thousands of partners. It only takes days or weeks, and AWS typically covers part or all of the costs – which makes this an absolute winner. We also run ‘Digital Innovation Workshops’ to help business owners dive deep into the initial problem statement, define the ideal business and customer outcomes, design and execution the plan to ensure a successful delivery. Some POC conclusion meetings attended by hundreds of (previously reluctant) stakeholders across the organization, helping generate interest, alignment and support. It is a great first step to get you started on your transformation journey. “[The project] was a huge success. And the thing about that type of success is that it breeds more interest in getting that kind of success. So after starting a proof of concept with AWS, we immediately began to expand until fully migrated on AWS”?Eric Geiger, VP, Federal Home Loan Bank of Chicago

You now have the attention of all and are ready to accelerate towards the next Pillar, where you will continue aligning PEOPLE, PROCESSES and TECHNOLOGY to help setup the right foundations for success. This is critical to ensure the whole organizations moves in the same direction with clear objectives and planning, while managing the risk of change.

Phase 2: FOUNDATIONS

“You cannot build a skyscraper on crippling foundations”

The next step in your journey will be to focus on your PEOPLE.

• ‘Build Senior Leadership conviction’ First, you need to ensure all your top Executives realize the importance of technology and work together in the same direction. AWS runs countless Executive Briefings (EBC), highly interactive sessions where we discuss Amazon’s culture of innovation, demonstrate the art of the possible, share ground breaking industry use cases and help create urgency and awareness. Did you know that in some cases robots are more successful financial advisers or insurance brokers than their human peers? Or that you could build a cross-country e-KYC in a couple weeks for less than $1000? Or double conversion rates by leveraging AIML?

After our latest EBC, the Chief Data Officer called my team: ‘You cannot believe how many CxOs called me after the session, they were in awe, excited like little kids’. Ben Kei once mentioned that executive alignment was the single most important thing the AWS team ever did to help him drive change.

• ‘Train your builders’ But you shouldn’t stop there. You’ll need to include everybody in your project. Many employees can initially turn to skepticism and some of them can push back quite strongly (esp. mid-Management), but the dynamics change completely after you demonstrate your will to invest in them. We have seen some of the initial detractors taking cloud certifications on week-ends and becoming some of the main drivers for change, once they feel included and understand what you are doing – and why. Hence the importance of launching company-wide Training and Enablement programs to upskill your junior to mid-level staff, and uncover your future digital champions.

You’ll also need to work on the business objectives that you want to achieve out of this transformation: Cost savings, digital user interaction, agility, innovation, scale, cross selling, lower churn rates… and draft a plan to get there, and ensure the whole organization follows you:

• ‘Set Top-Down Aggressive Goals’ Set ambitious goals, and a clear path to achieve those. AWS has helped thousands of customers work backwards from their business goals to design their transformation strategy, draft business cases for change, write ROI & TCO analysis, understand the risks/gaps, and work on their execution & remediation plans. Statistics show that 70% of our corporate customers end up executing on the very same strategy we recommended. 2 years after execution, corporations save on average 26% of their IT costs by moving to the cloud, increase business resilience and agility by 28% each and employee productivity by 54-62%. But they don’t think this is the biggest value. “For our market surveillance systems, we are looking at about 40% [savings with AWS], but the real benefits are the business benefits: We can do things that we physically weren’t able to do before, and that is priceless.“ Steve Randish, CIO, FINRA (The Financial Industry Regulatory Authority is the largest independent regulator for all securities firms doing business in the United States, processing up to 155 Billion market events per day).

Phase 3: MIGRATE.

This is getting technical – Let us help

The last step between you and value realization is to align PROCESSES. By building a ‘Landing Zone ’ (jargon alert), you will ensure that your Group companies operate in a standardized, secure, compliant and controllable environment. It also helps preempt (accidental) non-compliant or unauthorized configurations. Cloud Landing Zones are especially important for regulated Enterprises and can be built in a few weeks by your AWS professional Services or selected partners. You will need to align the rest of your internal processes, start thinking agile, align your decision making, your procurement, security and compliance procedures to the new norm. Gregor’s book provides good insights, and Amazon has developed mechanisms to help address this too, such as the Experience Based Accelerator . “Our teams were stuck in a holding pattern; working across teams, together, they did more in three days than in the prior three months in some cases. It unequivocally demonstrated the power of AWS to us." Cameron Etezadi Chief Architect, SAP Concur. The Cloud Adoption Framework also provides some good insights and can be deployed by a consulting partner of AWS’s own professional Services, if further help is required.??

“The cloud is a change in operating model. It isn’t IT procurement. If you don’t change the way your organization works, the cloud is going to look much more like another data center." G. Hohpe

Your Processes are now (becoming) aligned, your People are going through systematic training & enablement, it is now time to take advantage of the Technology, and start executing on your strategy toward value realization. Your CIO, selected partner(s), together with your application and infrastructure teams will be key: Migrate workloads, deploy applications, move to managed, breakout from expensive licensing, break data silos and start realizing some of the above-mentioned benefits.

And even though most seem to agree that business benefits far outweigh the cost savings enabled by the cloud, DOW JONES saves $100M per year after moving 75% of its data centers to AWS.

Phase 4: TRANSFORMATION

“I am a tech company”

Breaking news: you are now operating on the cloud. You are starting to realize significant cost savings. Now you can start to really modernize your landscape and reinvent your business. "With AWS you sprint for 2 weeks and then you accelerate".

You can launch a MVP in days, which will fail quickly or become the future pillar of your business. You can leverage pre-trained AI models, or train your own in minutes… Perhaps even more importantly: with your data all in one place, you can now start realizing the power of Data – building a customer 360 view to double conversion rates and increase cross-selling, transform your contact center into a sales channel, automate Fraud detection or risk calculations, launch an omnichannel customized digital user engagement? Build smart factories, leverage IoT to dramatically increase industrial productivity, enhance financial reporting and transparency? The use cases are endless.

Keep upskilling your people, empowering your digital champions, enabling a culture of innovation…

Congratulations, technology is now ready to empower your business, and you are able to adapt to accelerated change. But don’t rest on your laurels…

... inspire others

Thank you for reading!

?More useful Resources:

https://www.cloudmanagementinsider.com/digital-transformation-checklist-a-note-to-leadership-by-andy-jassy-ceo-aws/

https://aws.amazon.com/blogs/publicsector/cloud-adoption-maturity-model-guidelines-to-develop-effective-strategies-for-your-cloud-adoption-journey/

https://w.amazon.com/bin/view/AWSTransformationGuide2022

https://aws.amazon.com/professional-services/CAF/

https://www.nytimes.com/2021/02/09/style/amazon-web-services.html

https://www.zdnet.com/article/aws-said-it-mitigated-a-2-3-tbps-ddos-attack-the-largest-ever/