Our Digital Transformation Journey

A few weeks ago, I was honored to speak at the Economist Business Innovation Summit, on the topic of digital transformation – what we have done at Firmenich, what we focused on, and what we learned on the way.?I thought it may be instructive to share some of these points.

The start of our digital transformation journey involved some soul searching about what we needed and what was “out there.”?Initially, it was a question of looking outside our own industry and what companies seeking to innovate were doing.?We were able to look at disruptors and ask the questions internally: how should we be using digital strategies to provide our customers with a better product, to disrupt, to be more competitive??Second, our own industry intelligence told us that large tech companies were already looking at our market and seeing how innovation could disrupt it.

As we started a digital transformation, for us the challenge was less a technical one, and more a governance and strategy one: ensuring digital transformation reflected our fundamental business values.?

So, we started from that simple premise: adopting modern technologies must be done with an eye to complementing and enhancing our business values of creativity, traceability of ingredients, customer orientation (the ability to flex to meet customer expectations) and innovation (for competitive edge).

Digitalization has changed our habits along our entire value chain. Conscious consumers demand personalized products and transparency. Customers move at new speeds and require fluid services. Sales & Marketing teams analyze digitally enabled consumer insights and e-commerce results. Operations & Enablers ensure predictive automation optimizes production. Creation is improved through AI and machine learning. R&D uses digital technologies to drive further discovery. Suppliers provide fluid services to ensure transparency. Finally, our workforce guarantees capability-driven teams, motivated by purpose.

We learned on the way, that while there are many buzzwords out there, the challenge is not to chase every new technology, but at the same time, be willing to learn and relearn new ways of looking at things and be open.?The way we looked at it: we had to go back to our fundamental business values.

What we wanted to avoid as we looked at modern technologies was seeking the advice of lots of management consultancies or even tech firms themselves – instead we built our own ecosystem of professors, business leaders in adjacent businesses, and software developers.

For example, we worked with Ecole polytechnique fédérale de Lausanne (EPFL), Europe's most cosmopolitan technical university (more than 120 nationalities), with a focus on three missions: Education, Research, and Innovation, to create d-lab, a digital lab located in the Innovation Park.?This brings together Firmenich experts and key members of the Campus’s dynamic ecosystem to harness Artificial Intelligence (AI) to disrupt innovation across fragrance and taste creation. d-lab enhances Firmenich creation capabilities through the convergence of human creativity and digital technology, and the partnership provides Firmenich access to research groups and student communities, and easy contact with EPFL Innovation Park Companies and start-ups.?

Digital transformation is an ongoing and quite detailed process, but if I had to summarise three key areas we focused on, I would say: ?

1. Industry 4.0: Two years ago, we began our Lab 4.0 journey – to accelerate our operations from factory to fragrance labs and increase capacity and facilitate production. Today, our compounding and application laboratories are operating as mini-factories. They are implementing automation, robotics, digital tools and lean management, and we are monitoring service rate, punctuality rate, automation ratio, lead and cycle time.?Three of our facilities now use an exclusive, proprietary robotic solution for sample production, which has increased their production capabilities to 800 EDTs/day, with one EDT sample delivered every 28 seconds. In January 2020, we inaugurated our flagship Perfumery Center at our Geneva headquarters. This high-tech facility boasts a fully automated sampling lab and storage warehouse which has increased productivity by 25%. It also utilises autonomous robots to deliver samples.
2. ?Big Data: For over 50 years, we have been collecting data – scientific research, consumer insights, production and sales. Ten years ago, we became systematic and methodical in our approach, which enabled us to launch the industry’s first mobile creation tool, Geranium. Today, working through our Information Services and d-lab teams, we have an ecosystem of more than twelve digital applications – all enabling a revolution across intelligence, creation, development, production and sustainability.
3. ?Artificial Intelligence A key milestone in Firmenich’s digital transformation across its value chain, AI-augmented creation enables uniquely tailored perfumery and taste solutions with unprecedented speed-to-market. In 2020, Firmenich launched the industry’s first AI-augmented laundry care fragrances and created the first ever flavor by AI, a delicious lightly grilled beef taste for use in plant-based meat alternatives. You may wonder why this specific taste: There has been a significant consumer shift in recent years, which is now accelerated under Covid, towards healthier Flexitarian lifestyles and eating less meat. People are replacing meat with plant-based proteins. Plant based-meat alternatives like “burgers” are a huge growth area. Our customers (food companies) are looking to innovate their plant-proteins & meat analog portfolio with both new flavors and familiar, beloved meat tastes like grilled beef.

As we “digitally transformed”, we did not want to forget the human element. How does an organisation ensure that its employees buy in the new technologies, and are using them as required??How important are training and talent to ensure a digital transformation strategy is successful? Does this mean the role of the CIO/CTO has to change as companies undertake digital transformation?

With the introduction of AI into our creative process, there might have been a feeling, as there has been in society as a whole, that machines would replace humans.?However, we worked hard to include our creators in the adoption process through training.?They found that AI complements rather than replicates. AI is a tool in a flavorist’s or perfumer’s toolkit. You trust it the same way you would use or trust any tool – it’s all about the hands of the creator – whether a carpenter, chef or flavorist. AI is a tool which enhances the art or the work of the flavorist – making their job easier and ultimately creating a finer, better end-product.?AI doesn’t replicate or replace the skills and experience of a Flavorist or Perfumer; it enhances and supports it like any specialty tool does for a craftsperson. To give an example, in Flavors, AI works by scanning our raw materials data base, searching for the most successful taste or perfume combinations, optimizing raw material usage and accounts for regulatory requirements like all kosher or organic certified, dietary or allergen restrictions, etc., creating a starting flavor that allow our Flavorists to focus on creation – to perfect & improve the AI-Created starting flavor through their unique expertise.

To conclude, I would say that digital transformations are not just digital – we as a business also had to “marry” the human element into our transformation.?We changed our recruitment focus, and started recruiting people who were more at home in the digital world.?This motivated others to upskill their capabilities, to embrace digital tools more fully and to ensure they had a more blended talent set.?Some people you did not expect to embrace digital were in fact very keen to do so – and the inverse also.?For example, many of our more senior and older creatives really embraced digital.?I think it was because they are intrinsic innovators who seek to use all tools at their disposal to meet client needs.?So our early adopters really helped as evangelists, endorsing the use of digital tools.?But the biggest thing we learned on the way??The worst enemy of sensible strategic decisions in a digital transformation is the belief that we already know everything, and are in control of everything. A digital transformation requires everyone involved in it to unlearn and relearn regularly, with humility …..and fast.