SVIC - Mathieu Guerville
Leading digital transformation
Prepared for Vodafone Egypt
February 9, 2021
This session is a mix of content from an array of workshops, keynotes, and academic materials developed over the past few years. Feel free to challenge, question, re-use, and distribute. Contact information at the end of the page.
Follow along
http://mguerville.tilda.ws/ldt_vodafone
Mathieu Guerville
Founder & CEO @ fnma.work
Walking the walk
>10 years of corporate innovation (consultant + public & private sector)
> 5 years of startups (solo founder, 500 Startups alumni)
Talking the talk
> 5 years public speaking, 50+ clients, 3 continents
> 2 years of academia, adjunct prof at top 20 global MBA program
Betting the farm
> 75 angel investments + 8 VC investments
> 10 Mentor + advisor roles (alchemist accelerator, ie ventures, etc.)
>10 years of corporate innovation (consultant + public & private sector)
> 5 years of startups (solo founder, 500 Startups alumni)
Talking the talk
> 5 years public speaking, 50+ clients, 3 continents
> 2 years of academia, adjunct prof at top 20 global MBA program
Betting the farm
> 75 angel investments + 8 VC investments
> 10 Mentor + advisor roles (alchemist accelerator, ie ventures, etc.)
Agenda
Leading Digital Transformation
Why
Why
Why bother with digital transformation?
- It's everywhere
- It's everyone's job
- It's confusing
What
What
What are the components of digital transformation?
- It's innovation for growth
- It's innovation for survival
- It's innovation for innovation's sake
How
How
How to successfully implement digital transformation?
- Strategy: understand common macro decision drivers and industry-standard planning frameworks
- Execution: understand the impact of your march towards innovation on orchestrating people and processes
- Resources: understand best practices (or lack thereof) for allocating finite resources towards fuzzy goals
Q&A
Q&A
Questions & Answers
- Closing comments
- Additional Resource
Why?
Why bother with digital transformation?
Chapter: Why?
It's everywhere
No industry, country, or demographic group is spared by digital transformation, and many technologies are reaching maturity at once at a scale never seen before. The life expectancy of even the largest companies has been halved by the disruption of the last 10 years.
Software is eating the world.
More and more major businesses and industries are being run on software and delivered as online services — from movies to agriculture to national defense. Many of the winners are Silicon Valley-style entrepreneurial technology companies that are invading and overturning established industry structures.
(...)
Software is also eating much of the value chain of industries that are widely viewed as primarily existing in the physical world. In today's cars, software runs the engines, controls safety features, entertains passengers, guides drivers to destinations and connects each car to mobile, satellite and GPS networks. The days when a car aficionado could repair his or her own car are long past, due primarily to the high software content.
(...)
Software is also eating much of the value chain of industries that are widely viewed as primarily existing in the physical world. In today's cars, software runs the engines, controls safety features, entertains passengers, guides drivers to destinations and connects each car to mobile, satellite and GPS networks. The days when a car aficionado could repair his or her own car are long past, due primarily to the high software content.
You've embraced it as a consumer, start seeing it as an executive
Move the image slider to contrast between the two view of the graph
How it works
A new technology reaches a critical point
it becomes within reach of most companies (talent, tech, funding, understanding)
It goes everywhere
As companies rush to embrace the trend, the new technology is forced into every product and service imaginable
The market validates the good ideas, and kills the bad ones
Over time, technology implementations that doesn't deliver enough value are retired
Some use cases will make sense, others won't
Some business models will make money, others won't
Some industries will be transformed by the technology, others won't
To forecast mature stage adoption of a new technology isn't just picking winners, but also losers; it's not just spotting the early movers, but also the fast followers
Understanding the product lifecycle, the gartner hype cycle, and the valley of death concepts is particularly useful to thrink through new technologies
Some business models will make money, others won't
Some industries will be transformed by the technology, others won't
To forecast mature stage adoption of a new technology isn't just picking winners, but also losers; it's not just spotting the early movers, but also the fast followers
Understanding the product lifecycle, the gartner hype cycle, and the valley of death concepts is particularly useful to thrink through new technologies
A cryptocurrency wallet
combining the cryptocurrency trend with the legacy cash it aims to replace
Bluetooth water bottle speaker
Cramming bluetooth into a water bottle (either as a speaker or with an app to encourage users to drink more) seems like overkill
Electric carving knife
When electric motors became incredibly cheap and could be made in various small sizes, appliance manufacturers created electric versions of can opener, knives, etc. Most of which went out of fashion very quickly, but coffee grinders, rice cookers, etc. did create new market segments in cookware
Understanding the typical journey of a product, a business, or a trend:
Chapter: Why?
It's everyone's Job
Technology is no longer the job of the IT department, it's an enabler of all stacks of the value chain, a compliance chaperone, a substitute for some tangible goods and services, and more importantly it needs orchestrating among all of the firm's stakeholders
Innovation is everybody's job not just because they have to merely adopt it, but because for it to really work, they have to drive it and be a part of it
The transition from closed innovation to open innovation has moved from a competitive advantage to an absolute necessity, and with it the requirements for entirely new processes, mindsets, and strategies, all centered around the necessity of collaboration
Move the image slider to contrast between the two view of the graph
This translates into all industries, products, and services, from the most complex to the simplest, and the most forward-looking to those seemingly stuck in the past.
The star of our next story, the bread Toaster
Like nearly every product, no matter how simple, the toaster can go through a transformation, let's look at this illustrative example
Features
The Humble Toaster
(mass marketed since 1950's)
(mass marketed since 1950's)
Toast-a-matic 2000
(in stores now!)
(in stores now!)
Toastr.io v3
(release date: 2025)
(release date: 2025)
Toasts bread
Adjustable toasting level
Programmable timer
Bluetooth enabled
Voice-enabled
Anti-bacterial nano coating
You cannot run the company that makes Toastr.io v3 the same way you'd run the one making the humble toaster.
Even without looking at all facets of innovation and just focusing on digitization of key process, it is obvious that coordination is key, as overlap between responsibilities translates into overlap of new systems and dependencies of data, workflows, and governance for across all functions. No one function can really jump too far ahead or fall too far behind.
Innovation is a team sport, not a solo act
Innovation is a team sport, not a solo act
However... most companies still resort to doing the following:
In reality, the best innovation teams aren't teams
Research suggests innovation needs to be embedded, not isolated, in the org chart. Spread your innovators throughout the organization
Decentralized
While some reporting to a central entity allows for a less short-term oriented view, necessary for innovation, it removes the innovators from the execution space.
Title-agnostic, merit-based
Seniority and job titles are no guarantee a person is suited for innovation roles, instead diversity of the team members and action-oriented bias of each member are the best predictors of success
Curious, outsiders on the inside
Knowing your organization and your market isn't a handicap in itself, but knowing nothing outside of it is a death sentence.
Chapter: Why?
It's confusing
Which technologies are trends and which are fads, when to invest in tech that halves in prices every year, which innovations are compatible with your processes or your data, and what trade-offs of security and privacy are worth the quick wins
We want to |
... can you help us?
... can you help us?
Actually who cares what the name is... but let's understand levels of transformation
Digitization
Use a digital tool to replace a legacy system, or upgrade a product/service to be more digital-friendly
(Use a web form for supplier questionnaires instead of requesting a .docx or .xlsx file, provide a webpage for a user instruction manual)
(Use a web form for supplier questionnaires instead of requesting a .docx or .xlsx file, provide a webpage for a user instruction manual)
Digital re-imagining
Bundle, unbundle or re-arrange aspects of a product or process to improve performance
(Build a collaborative workflow between your team and suppliers, with some automation to speed onboarding and reduce invoicing issues. Provide a web video for user instruction manual and a chatbot for faster support)
(Build a collaborative workflow between your team and suppliers, with some automation to speed onboarding and reduce invoicing issues. Provide a web video for user instruction manual and a chatbot for faster support)
Digital Transformation
Transform a business function or a product/service line as if built natively digital from Day One
(Build an internal marketplace for your suppliers and procurement team to fluidly and dynamically exchange with reduced waste thanks to demand forecasting, intelligent ordering, and integration with third party compliance, logistics and payment tools that are always involved in the buying process. Provide a support community where clients can answer each others questions and share best practices about your product, moderated and augmented by your team)
(Build an internal marketplace for your suppliers and procurement team to fluidly and dynamically exchange with reduced waste thanks to demand forecasting, intelligent ordering, and integration with third party compliance, logistics and payment tools that are always involved in the buying process. Provide a support community where clients can answer each others questions and share best practices about your product, moderated and augmented by your team)
When it comes to innovation advice, nobody talks about the incremental wins, every innovation guru tells you to invent the iPhone of your industry (without telling you what it may even be)
Many types of value creation
Vitamins
Hard sale against the status quo
Increase revenue, supports decision making, reduces risk
Pain killers
Easy sale against a burning issue
Reduces costs, stop ongoing problem, opens a locked door
Candy
Easy sale during good times only
Often disguised as vitamins to get approval from the buyer's manager
Perspective
What is candy for some is painkiller for others, etc.
Meet the usual experts
If you look for help, you'll likely end up with the metaphorical following options:
Medicine from Doctors
Boring, but effective
Narrow in scope and plenty of side effects but if your company is sick you actually DO need it
Narrow in scope and plenty of side effects but if your company is sick you actually DO need it
Vitamins from Nutritionists
Does it actually make a difference?
Is this just a fad, or will there eventually be real research that proves it's worthwhile.
Is this just a fad, or will there eventually be real research that proves it's worthwhile.
Candy from clowns
Fun, but mostly useless
If you get a famous clown you can still get a bit of morale uplift at least.
If you get a famous clown you can still get a bit of morale uplift at least.
What
What are the facets of digital transformation?
Chapter: What?
It's innovation for growth
Digital Transformation is primarily an accelerator, it doesn't always fundamentally alter the business model of a company or its relationships with customers, patners, and suppliers, but it enables a higher pace.
Growth is KING!
Public and private markets have put a premium on growth over profitability and capital has rushed to technology as a bet towards it ability to quickly pivot from top line to bottom line (e.g. Amazon)
2x
8
1/3
A third of startup funding events include participation from a corporation
(National Venture Capital Association, 2020)
(National Venture Capital Association, 2020)
Even public markets have started shifting away from profitability and started rewarding revenue growth (and in some cases growth of non-revenue items, like users, content, etc.) above all else.
The expectation that growth and size builds a moat that can later be converted to profitability (Amazon did it) is rampant, even when the underlying logic doesn't seem to make sense; and the reality that legacy companies stalling in their growth but flush with cash and cheap leverage are always a potential way to an exit that could value the top line growth ever higher
The expectation that growth and size builds a moat that can later be converted to profitability (Amazon did it) is rampant, even when the underlying logic doesn't seem to make sense; and the reality that legacy companies stalling in their growth but flush with cash and cheap leverage are always a potential way to an exit that could value the top line growth ever higher
Unprofitable company stocks performance in 2020
Over the same timeframe, the S&P 500 is up about 8%
Typical growth goals of a Digital Transformation initiative
New Revenue Lines
Creating new products or product extensions in a digital portfolio of offerings
(e.g. Smart oven with digital subscription of AI enabled recipe, news app with premium paid podcast)
(e.g. Smart oven with digital subscription of AI enabled recipe, news app with premium paid podcast)
New audiences
Reaching customers previously out of reach or out of targeted segments
(e.g. K-POP reaching western audiences via social media. Software companies of 20 employees being "global")
(e.g. K-POP reaching western audiences via social media. Software companies of 20 employees being "global")
New Pricing Power
Creating more (and higher) price points with digital extensions and features to existing product lines
(e.g. Smart TV with built-in Netflix, etc., metered insurance pricing)
(e.g. Smart TV with built-in Netflix, etc., metered insurance pricing)
Chapter: What?
It's innovation for survival
Companies who fail to lead with digital transformation risk being disrupted by faster adopters of technology or by "digital natives" who enter their market with businesses built on the shoulders of technology from the start and therefore designed to higher standards of operating performance
Being late to Digital Transformation, mishandling it, or worse, ignoring it has not been kind to even the most resilient and otherwise well run companies
Beyond the view of the top 12 (above), examples abound of companies who overtook competitor's market cap (if not market share yet). Netflix over the entertainment industry, Tesla over auto OEMs, Facebook over the news industry, Amazon over retailers, etc.
Typical survival goals of a Digital Transformation initiative
Channel migration
Once your typical channels become inconvenient, customers may prioritize the buying and delivery experience over the product differentiation
(e.g. Amazon's ease of use vs bespoke online stores with bad user experience, poor shipping and return policies)
(e.g. Amazon's ease of use vs bespoke online stores with bad user experience, poor shipping and return policies)
Productivity gap-reduction
Once inefficiencies of legacy systems become an order of magnitude worse than new technologies, even the most change-averse clients move away
(e.g. emails and collaboration tools being disrupted by slack and google G-suite)
(e.g. emails and collaboration tools being disrupted by slack and google G-suite)
Customer experience modernization
While customers may have tolerated antiquated processes for a while, a newcomer has changed the landscape and you risk losing
(e.g. iTunes selling individual songs or Spotify selling subscription vs. the music industry whole-albums CDs)
(e.g. iTunes selling individual songs or Spotify selling subscription vs. the music industry whole-albums CDs)
Chapter: What?
It's innovation for innovation sake
Fundamental research and curiosity were once the domain of a few R&D-centric organizations and government labs; but in today's markets, experimentation and innovation for the sake of it are able to yield real benefits in nearly all industries
Typical issues of poorly planned Digital Transformation initiatives (a.k.a Innovation for Innovation sake)
Re-painting
A coat of innovation paint doesn't change the foundation of your crumbling building.
(e.g. changing the names of your conference rooms to cool names, or reclassifying basic product improvements as innovation)
(e.g. changing the names of your conference rooms to cool names, or reclassifying basic product improvements as innovation)
Cargo culting
Embracing the rituals and the dances of innovation without understanding them and tailoring them is usually a waste of time and counter-productive
(e.g. scrum and print meetings that just mean one more daily meeting, cramming non innovative ideas into innovation frameworks and templates)
(e.g. scrum and print meetings that just mean one more daily meeting, cramming non innovative ideas into innovation frameworks and templates)
Distracting
It distracts legitimate resources from worthwhile projects (innovation-related or otherwise) and gives innovation a black eye.
(e.g. a hotel chain wasting time with blockchain tracking of room bookings may then dislike the technology as a whole and miss out on better use of it)
(e.g. a hotel chain wasting time with blockchain tracking of room bookings may then dislike the technology as a whole and miss out on better use of it)
But it's entirely possible to do it right, or even just luck into good results!
Typical innovation byproducts of Digital Transformation
Talent
Occasionally, innovative projects are a "carrot to attract the right talent to work on your other, less interesting projects.
(e.g. Google's 20% time culture created a few great products, but more importantly it attracted, retained, and engaged thousands of employees that may otherwise have gone to scratch their innovative itch rather than work on web indexing and ads)
(e.g. Google's 20% time culture created a few great products, but more importantly it attracted, retained, and engaged thousands of employees that may otherwise have gone to scratch their innovative itch rather than work on web indexing and ads)
Market Intelligence
As one explores and observes any particular market for a long time, the ability to see patterns and assimilate useful knowledge that can be repurposed elsewhere increases dramatically
(e.g. Large companies starting Corporate Venture Capital groups to immerse themselves in the relevant startup ecosystems typically outperform their peers)
(e.g. Large companies starting Corporate Venture Capital groups to immerse themselves in the relevant startup ecosystems typically outperform their peers)
Unexpected ideas
Serendipity, curiosity, and creativity go hand in hand, so unsurprisingly pursuing innovation without particular goals or pre-conceived objectives can yield unexpected new ideas and inspirations
(e.g. Even in "failure" employees pick up new skills and new relationships outside of their normal day to day scope and eventually bring a fresh perspective to their jobs)
(e.g. Even in "failure" employees pick up new skills and new relationships outside of their normal day to day scope and eventually bring a fresh perspective to their jobs)
How
How to successfully implement digital transformation
Chapter: How?
Strategy
The plan!
What strategic tools do we have for digital transformation
In parrallel to the rise of the OI model, a number of frameworks and tools have surfaced to democratize the innovation process
Lean Canvas
Structured approach to mapping business plan components and distilling a business model and its differentiated value proposition
Design Thinking
Empathy and iteration driven approach to problem identification and prototype creation
Agile Methodology
A flexible approach to break down large projects into small goals and structured cadences of deliverables and alignment sessions between team members
The 3D model of innovation portfolio
Our framework to allocate limited resources to limitless ideas and account for varying degrees of organizational innovation maturity.
The 3D model of innovation portfolio dictates that innovation should be approached like a portfolio, and that each investment in the portfolio must be cohesive with the rest of the portfolio and with the portfolio objectives
Approaches of innovation
These are the activities and the structures you organize innovation resources around. Are you committing full time resources, or just part time? Are the siloed or embedded in the business, how much independence do they have? Are they time-bound to a week per year or more pervasive? Are the participants from the top or the bottom part of your org chart.
Areas of innovation
Are you innovation the visible consumer-facing side of your business or the internal back office, the distributor-facing side? Are you changing the product or service itself or the business model around it, or its production process?
Magnitude of innovation
Are you making small improvements or making radical changes that may open new markets, transform the product into a brand new category?
A smart portfolio creates synergies, is aligned with the current innovation maturity level of the organization, and relies on external partners to create leverage.
What does a coherent innovation strategy look like
Everyday we work hard to make life of our clients better and happier
Incoherent
Initiatives that may counter each other or otherwise yield no synergies whatsoever.
e.g. licensing a lot of IP from universities (good long term idea) but having mostly short term marketing-related KPIs for innovation
e.g. licensing a lot of IP from universities (good long term idea) but having mostly short term marketing-related KPIs for innovation
Sub-optimal
Hyper narrow but well executed, more akin to innovation tactic (micro level) than innovation strategy (macro level)
Coherent
A well laid out plan where projects are sequenced intelligently and build on each other.
e.g. automating warehouses (internal) and therefore innovating the delivery of product (external) to create a unique advantage.
e.g. automating warehouses (internal) and therefore innovating the delivery of product (external) to create a unique advantage.
Chapter: How?
Execution
The action!
The world needs dreamers and the world needs doers. But above all what the world needs most are dreamers that do.
–Sarah Ban Breathnach
Author
Safe to Fail vs Fail-safe
Growth mindset vs Fixed mindset
All-Start team vs team of All Stars
Focus must come with execution, new tangents and ideas spur new initiatives but once in execution phase, a project must move largely in a straight line
The key to successful innovation execution is to recognize that it follows a non linear journey.
It's ok to err, change course, and even revert some decisions in the early days of a project, but the farther along the process a project reaches, the more linear its execution must become.
Once the design, validation, and prototyping phases are completed, execution should be fast and iterative without straying from the main path identified in the research phase.
It's ok to err, change course, and even revert some decisions in the early days of a project, but the farther along the process a project reaches, the more linear its execution must become.
Once the design, validation, and prototyping phases are completed, execution should be fast and iterative without straying from the main path identified in the research phase.
3 key success factors
Execution is hard, here's what helps
Get some help
External help is best. Someone who doesn't care about your office politics, industry traditions, who's done it before but isn't stuck in some dogma from one prior success, and can be extremely candid in their feedback
Start today, or yesterday if you can
Most of the learning comes from action, not research, not brainstorming. Have an action bias and a willingness to course-correct, often.
Set visible goals
In agile spirit, aim towards a goal you can see and reach, and then another, and another. Stay true to the goals for set periods, even if the road gets bumpy, then alter the next goals according to the learnings of the first milestone
There's a Jony Ive quote along the lines of "when you build something, you get the actual thing, but even more valuable is how you've grown and changed from building that thing."
Chapter: How?
Resources
The tools!
Useful Resources
Continuing education, experimentation, and an eye on the outside are key for innovators; here are a few tools.
Crunchbase, Pitchbook, Oddup, Angel List
Startup databases
A good place to pull data on industry trends (funding etc.) and identify startups relevant to your industry and the investors who back them
ReadWrite, TechCrunch, twitter
Tech news
To follow events and stay up to date, curation (via twitter or RSS) is necessary to drown out the noise and the topics that are irrelevant to your industry and business
SaaStr, TechCrunch Disrupt, Web Summit, Launch Festival, SXSW, CES
Conference and trade shows
Where an industry comes together to showcase new products or discuss new trends
Mary Meeker's internet trends, Prof G, Ben Thompson's Stratechery, Paul Graham's essay, a16z, Fred Wilson
The Analysts
They come in blog, podcast, youtube channel, or annual powerpoint flavors, but the great analytical minds of tech rarely fails to identify patterns most of us are oblivious to
Hacker News, Trends by the Hustle, Angel.co
The communities
Where the news is discussed by the people with boots on the ground, and where rumors and early warnings show up
Coworking spaces, accelerators and incubators, Eventbrite, lunchclub.ai, etc.
The Spaces
Where serendipity and networking happens, and the hands on innovators meet to look for partners, co founders, and help in general
Chapter: Q&A
Questions
It's all about next steps
Go home and congratulate each other on attending a meeting, or take the next steps towards actual change
Book a keynote, workshop, or event
For comments and any question, please contact me:
Open Innovation 101
Use of the term 'open innovation' in reference to the increasing embrace of external cooperation in a complex world has been promoted in particular by Henry Chesbrough, adjunct professor and faculty director of the Center for Open Innovation of the Haas School of Business at the University of California.
Design Thinking
from the IDEO team, CEO Tim Kelley
Widely considered a piece of silicon valley canon, the essay published in 2011 predicts the tidal change of the 2010's with great accuracy and articulates the scope of impact of digital transformation in a way few have since.
Business Model Canvas
from the "Lean Startup" by Eric Reis
Business Model Canvas
Agile methodology