When asked about his biggest achievements as FLSmidth’s CDO, Mikko Tepponen talks about the following:
“We saved up to USD150 million annually for a customer by providing them with digital and optimization solutions.” Tepponen also says the data collected from FLSmidth’s sites and equipment is “the basis of many of our digital services and solutions, creating a lot of positive momentum in our digital transformation.”
The two statements clearly show that successful digital transformation consists of three factors — digital maturity, tech investments and strong leadership. Mikko Tepponen shares why he’s excited to be FLSmidth’s CDO and walks us through the company’s digitalization and sustainability efforts.
What is the link between digitalization and sustainability in an organization?
Digitalization is an enabler for sustainability from several perspectives. First, you must be able to measure sustainability goals. For example, a company with ambitious targets for the reduction of CO2 emissions. Digital tools are important in industrial settings in terms of collecting data and understanding emission levels.
In industrial settings, the cycle time for replacing equipment or building new capacity in the market is very long. Some of the equipment used is at least 30 years old. In order to work with zero emissions and carbon neutrality, you need to have the technology ready within the next couple of years.
But at the same time, you can already do so much today from an optimization perspective with digital tools. For example, we take a traditional cement plant and optimize it, finding energy savings of 5% to 10%. These will directly benefit the environment, forming a good business case for customers. At FLSmidth, our future rests on two pillars — sustainability and digitalization. They’re very much intertwined and you can’t have one without the other.
Tell us more about FLSmidth’s MissionZero ambition and its milestones so far.
MissionZero is our central ambition in the cement and mining industries. In the cement industry, it goes back to the following questions: “How can we substitute some of the fuels needed in cement manufacturing?”, “What raw material is it produced from?”, “How do we move away from using limestone and clinker into clay?”
Mining is quite a water-intensive and energy-consuming process. How can we use less water and lower the energy footprint within the mining industry? As a technology provider, we’re committed to having all the technology ready and available by 2030, so the two industries can become carbon neutral and emission-free.
What are the greatest challenges and advantages of being a CDO in a company with a 135-year legacy?
We’re very much an engineering company and we’ve built a lot of the technologies that are behind current cement and mining processes. In an engineering culture, people are willing to try and push for new technologies and get excited about innovative projects. That is one benefit of working in a company like ours.
In terms of challenges, I could say it’s the same thing. Every engineer likes to invent and has individual ways of working. This presents an obstacle when driving uniform technology from a process perspective.
The related systems in the back end are not always easy when you have a mindset that everything can be tweaked to be a little different. As a CDO, you want to build a system of uniformity that can be automated and developed further.
What does this legacy mean to FLSmidth’s digital agenda?
Because we’ve been around for a long time, we have great and long customer relationships. A lot of digital innovation happens together with our customers. We also have a large installed base that spans several decades. How do you link into that installed base with technology that is decades old?
As some of it existed before the Internet, it can be upgraded throughout the years. The heritage brings great opportunities because there is plenty of installed base and equipment that can be connected. This can bring a lot of value as we’re a company with a global heritage. We can work anywhere in the world at any time but must keep in mind the history and old systems that are in place.
Find innovative ways to build a strong digital agenda through expert panel discussions and case presentations at Denmark’s Digital Advantage event.
How exactly is customer co-creation utilized in FLSmidth’s digital transformation journey?
We have a standing rule when developing new digital technology. I think it holds true with a lot of our R&D efforts in traditional and digital spaces. We don’t develop anything unless there is a customer involved in that development. It is crucial, even for a technology company like us.
We call ourselves the best in generating physical equipment and the digital services related to them. Of course, you want to have that end-user input all the time when you’re developing new services. It reduces the time to market, helping us get the right answers quicker.
If you’re successful, you get the first references immediately. If you have the data to back it up, it’s even better. For example, this solution increases productivity by 2% or improves availability by 5%. This allows us to solve challenges and scale solutions out to the market quicker.
There is also a lot happening with our most important customers. They’re tackling the same digital transformation challenges as us. They’re thinking about how to operate their plants more effectively. As some mine sites are located in super remote places, our customers are moving towards autonomous operations. What role can we play in helping them with that technology?
What are the biggest challenges when it comes to integrating digital tools across all business functions?
Many industrial companies such as OEMs and manufacturers of industrial goods have grown through a series of acquisitions, resulting in a mixed landscape of solutions and systems. At the same time, there is the integration of different cultures, processes and ways of working. It becomes a challenge if there is no clear focus on harmonizing your processes.
At FLSmidth, we had a holding company structure that consisted of product companies and small entities. We’re making progress in standardizing global processes and that has helped us in delivering digital tools. There is still much work to be done as our enterprise architecture is quite diverse. For example, we just announced a major acquisition – which is subject to regulatory approvals – of thyssenkrupp’s Mining business, an entity with more than 3,000 employees and many locations around the world. An enterprise architecture and system landscape need to be as lean as possible to manage the additional complexity of acquisition of this magnitude.
How has the CDO role evolved in the past year in terms of leadership and driving tech investments?
At FLSmidth, the CDO is expected to be a catalyst for change as well as a technology leader. Digital organizations are used to working in agile ways and CDOs are tasked with introducing a modern and emphatical leadership style. The CDO role is a balancing act of trying to constantly push their organization a little bit more than they’re willing to. When you get a little bit of pushback, then you know you’re at the right level of trying to drive change. CDOs need to make sure that their organization is ready by taking on new ways of working. It’s an exciting time to be a CDO because I think it’s more vital than ever.
*The answers have been edited for length and clarity.
As we enter the new world of work, all eyes are on CIOs and their teams to drive digitalization initiatives and successfully integrate them into existing systems. IT is breaking out of their silos and now has a much-deserved seat at the C-level table. No business decision can be made without the input of the IT division as we move into more technologically advanced ways of working.
We tap into the expertise of Petra Ålund, Head of Technology at SEB, on effective IT technologies and data strategies, IT talent shortage solutions and the characteristics of tomorrow’s IT organization.
What IT technologies have made the biggest impact on SEB’s business processes?
Intelligence has come a long way in the last five years. With increasing volumes of transactions and trades, manual work is not enough to maintain optimal pace and quality. AI and ML are vital in several aspects of our business operations. This includes securing the best uptime for our data centers and keeping a high-security level to data-driven advice internally as well as for our customers. Here are two important examples:
AIOPs: AI operations use predictive infrastructure anomaly detection to detect deviations early, preventing downtime and service outage.
Anti-Money Laundering & Financial Crime Prevention: AI is applied to large sets of data. Its smartness can detect anomalies which allows us to report them earlier. This will help us prevent, examine and report anomalies and suspicious activities more efficiently.
We are only starting to reap the benefits of smart technologies and we can already see positive impacts. The cloud journey is very prominent and a top priority in most industries. Cloud is the way forward to be scalable, flexible and locationally independent. We have partnered with Google Cloud to collaborate on innovative products and services to provide our customers with a better user experience.
As a third example, integration of Application Programming Interface (API) into systems, services, customers, other companies, and data sources will have a big impact on business processes. Leveraging both internal and open APIs on the market will allow the highest availability of components to easily build new solutions for customers.
What is your idea of an effective data strategy for optimal data utilization and protection?
Being data-driven is more than having a data warehouse and producing reports and dashboards. Data transformation is about having your data in order, but more importantly, it is about people upskilling and implementing whole new ways of working in all parts of the bank. It is a big cultural change, and it should not be underestimated.
What are your solutions to solve the IT talent shortage?
Attract new talent
Since the competition for talent is fierce, especially for talent with more scarce competencies, talent management is an area SEB is really investing in. Our global talent acquisition team is using cutting-edge tools to be able to work in more data-driven ways to find the right candidates faster and to enhance their end-to-end experience.
Branding is super important to attract talent. At SEB we are fortunate to be one of the top-ranked Nordic financial employers among finance and IT students. We have close collaborations with universities and regularly participate in events, job fairs, career days, workshops and research fields both directly and through our owners.
Train and retain our talent
We work with experts, international universities, and schools to offer learning in all fields to inspire, develop and support our employees’ ambitions. Our initiatives include internal events, hackathons and fully digital business universities. In addition, we offer mentor programs, volunteer programs, job-shadowing and internal gigs where employees can work in different parts of the bank for short periods of time.
What does the next-generation IT organization look like?
Business is IT and IT is business. We will see a continuation of this trend as there is still high demand for digitalization and new technologies. IT is the foundation and delivery mechanism of most financial and banking products and services. Technologies are part of all external and internal deliveries in back-office, operations and customer-facing functions.
IT departments are growing in the presence of new marketplaces and ecosystems. They are the infrastructure that enables the digitalization of processes and services for both employees and customers.
At SEB we have a virtual agile organization with 16 domains consisting of 65 tribes and 285 teams. These are cross-functional execution vehicles that increase adaptability to change as an organization. This structure allows us to learn, pivot and deliver at high speed, and to thrive in a competitive market.
I believe that DevSecOps (Dev: IT development, Sec: Security, Ops: IT operations) and IT automation will continue to accelerate in 2022. DevSecOps combine people, processes and automation to unite culture, work methods and tools to create the best prerequisites for fast and stable delivery.
How has the CIO role evolved in the last 18 months?
CIOs are becoming visionaries of the future as they provide insights into the changing business landscape and how to adapt to new technologies. This has been the set-up at SEB for quite a while where the CIOs are in the front seat of driving strategy.
This is in line with organizational development and learning as well as increased digital pressure from competitors, customers, and employees. All parts of the bank, with their different skill sets, are collaborating and are equally important in our agile set-up, where we drive both transformation and innovation of new products for our customers.
*The answers have been edited for length and clarity.
With remote work expected to become a mainstay in the foreseeable future, IT and business leaders are looking at new ways to ensure that their employees are equipped with the necessary critical insights needed to make business decisions.
One of the key approaches is to develop a data-driven culture: the utilization of emerging technologies to drive business value, pushing an organization to be insight-driven as opposed to gut-feeling and operating in the dark.
Marco Hoppenbrouwer, Chief Data Officer for Global Functions & Finance at Shell, understands the value of data to drive value for businesses in today’s modern landscape. In this interview, Hoppenbrouwer shares his insights on how the chief data officer (CDO) role has evolved and why a data-driven culture is a necessity for corporations.
The Power of Digital and Data and The CDO’s Role
To compete in an age of rapid acceleration, companies need to be data-driven, but the transition from a feeling- to a fact-based organization is not an easy path. With only 24% of companies truly fostering data-driven cultures, it is up to the CDO to push the initiative of cultivating data technology in a business.
However, before CDOs can achieve that, Hoppenbrouwer points out why the components of Digital and Data are important for a business and what the focus needs to be for CDOs to streamline the transition towards a fact-based organization.
How has the role of the chief data officer (CDO) evolved in today’s data-driven culture?
Let me first set the scene as to why digital and data are so important for any business and one cannot do without the other:
The energy transition and digitalization are two mega-trends that affect the world in the coming decades. Both are expected to have a profound impact on the way everyone lives their lives.
Digital technologies can play a key role in the transition to a lower-carbon future. Furthermore, we see a rapid increase in digital products, services, and processes coupled with increasing expectations for a seamless digital experience from both our customers and employees.
Digital is not new, but what’s different is the availability of technology, data, and capabilities that are growing at an exponential rate. Digital is also one of the few processes that require quality data as input to be successful.
I’ve seen projects fail because a Proof of Concept was successful as it was run on manipulated datasets but this was not the reality in the field when the solution was to be deployed.
Maximizing the benefits of digital technology is heavily dependent on the readiness of an organization and its workforce, meaning:
It is key to upskill the workforce with new tech skills
The entire organization needs to be data-savvy
This also means that if the organization cannot keep up, it will rapidly be taken over by a competitor that leverages digital technologies and can deliver a more compelling value proposition faster and at a lower price point. A good example of digital disruption is SpaceX which disrupted the entire launch industry.
As to how this answers your question, the role of the CDO has changed from an information & compliance management role into a strategic value generator role. With digitalization and the emergence of the CDO, data is now at the forefront and is seen as a key-value driver that drives business outcomes.
What role should the CDO play in streamlining the transition to a fact-based organization?
There are three key areas the CDO should focus on:
Accelerate digitalization and drive business value from data, meaning:
CDO knows how data enables the business strategy and what value it can drive
CDO knows what data is needed, who owns it, where it’s mastered, whether it can be trusted, and how it can be accessed
CDO formalizes roles & responsibilities for Data Management
Increasing organization’s data literacy so that:
employees understand the importance and their role in data management, including data quality beyond their line of business. For example: if the quality of data you create is not good enough for downstream usage by another line of business, you create a problem in the value chain.
employees have the technical skills to drive value from data through citizen developer tools such as the Microsoft Power Platform. This can be achieved through developing role-based learning paths, setting up a community of practices for sharing key data-related best practices, and running DIY boot camps or Hackathons.
The CDO should strive for data-based decision-making by ensuring that the required analytics & insights are timely available in the decision-making process
Eyeing The Potential and Opportunities of Data-Driven Culture
The field of data analytics has consistently grown, in terms of acceptance and importance, and will play a critical role as a decision-making resource for executives in modern companies.
Gartner predicts that by 2024, at least 30% of organizations will invest in data and analytics platforms, increasing their business impact for trusted insights and encouraging new efficiencies. As such, CDOs must take the initiative in fostering data technology as an organizational asset for digital transformation.
But, what are the challenges and how should CDOs approach this transition?
Hoppenbrouwer delves into the main points of how the CDOs should facilitate the data strategy for an organization, and the perspective needed to overcome the challenges of digitalization in a post-pandemic market.
With data having the potential to transform functions into a high business impact model, what initiatives should the CDO take to help this transition?
Ensure that there is a data strategy for each line of business. This helps pave a clear roadmap for the usage of data, the business value it enables, and the capabilities required to deliver this value.
Secondly, businesses will need to get the data into good shape, meaning:
Identify data ownership and resolve where ownership is unclear
Identify the data that matters, which means not all data, only the critical data
Make data issues transparent, such as data quality & remediation or master data management & replication
Embedding of data quality management in daily operations for data that matters
Drive fit for purpose improvements
Lastly, there needs to be a focus on upskilling the employees on data skills.
Are there challenges for the adoption of data technology skills and culture? How has the pandemic affected these challenges?
There are many challenges and plans that have been impacted, but I prefer to look at the opportunities.
I am heading our European Data & Analytics community and normally we hold local and focused events on specific data topics. These can be lunch & learn or deep dives on how to start on the AI journey, sharing best practices from a recent analytics project, etc.
Due to the pandemic, we organized virtual sessions. These events offer the opportunity for staff to virtually meet other colleagues outside their daily routines and join with D&A communities in larger events across the organization, such as data literacy programs or DIY boot camps.
At the same time, the pandemic has accelerated the business’ digitalization plans, putting much more emphasis on data enablement. As a result, it has increased the need for Data, Data Strategy, Data Governance, Data Quality, Data Skills, and Data Capabilities in the organization.
People At The Core of Data and Digitalization
The explosion of available data has given corporations the potential to fuel a new era of fact-based innovation and new ideas through solid evidence. All this culminates in improving operations, clear strategies, and better ways to satisfy customers.
Yet for many organizations, a strong data-driven culture still remains elusive with data rarely being the foundation for decision-making.
What makes it hard for corporations to be data-driven?
The answer lies beyond data technology. It is about kickstarting the culture at the very top through leadership that sets expectations and decisions anchored in data. The lack of data awareness is something that Hoppenbrouwer believes is one of the major pitfalls for those in leadership roles.
Not all employees are sufficiently aware of the importance of data for the organization. People have learned to store certain data, but they are not really sure why this is important and what other departments do with it.
As a result, data provided by one department to another is often incomplete or contains errors on more than one. Supplementing or correcting this leads to additional work and additional costs. It’s key for employees to understand the data value chain and the role they play in it.
What pitfalls should the CDO be aware of when pursuing a data-driven culture?
Culture is made up of people, and changing a culture means you need to get a change going with the people. People don’t change naturally unless there is a reason to do so.
Everybody wants to deliver their digitalization strategy due to the value it enables and this is a key catalyst to improve data culture.
However, data is a foundational enabler, and data responsibilities were considered an add-on to the day job without recognition for good performance in data-related activity.
Leadership needs to change here and needs to step up, from the top, all the way to the supervisors on the shop floor.
What can the leadership do to make these changes? Some examples include:
Publicly speaking about the role and importance of data
Clearly articulate how data enables the business strategy and the value it unlocks
Data roles & responsibilities need to be formalized AND effort recognized
Visibly recognizing the good work done in the organization to get the data right
Sharing of success stories and lessons learned
Encouraging staff to become more data literate, through sponsoring data literacy events, citizen data science boot camps, and inclusion in personal development plans
Ultimately, the CDO plays a key role here in supporting the leadership to drive change through the organization.
Johann Hofmann, Founder von ValueFactoring® bei MR Maschinenfabrik Reinhausen GmbH zählt mit über 30 Jahren Berufserfahrung als Experte im Bereich Industrie 4.0 und Digitalisierung. Schon zu Beginn seiner Karriere hat er für sein Unternehmen den digitalen Weg bereitet und ein Assistenzsystem für die digitale Hochleistungsfertigung entwickelt, für das er mit dem Industrie 4.0 Award ausgezeichnet wurde.
Der charismatische Maschineningenieur hilft heute EntscheidungsträgerInnen dabei, Sicherheit und Know-how rund um Digitalisierung und Industrie 4.0 zu erhalten. In diesem Interview zeigt er uns auf, wie der Stand im Smart Manufacturing heute in Deutschland ist und wo es noch Verbesserungsbedarf gibt.
New Normal in der Industrie 4.0
Wie hat der aktuelle Normalzustand, das „New Normal“, die Aussichten für Industrie 4.0 verändert? Sind die Hersteller auf dem richtigen Weg in Bezug auf die nötige Digitalisierung?
Es geht um Hersteller von vernetzungsfähigen Produkten. Die Werkzeugmaschine oder der Werkzeugschrank ist zum Beispiel ein vernetzungsfähiges Produkt. Diese Produkte sind auch als Assets im Sinne von Industrie 4.0 bekannt. Und ebendiese Assets müssen zu Industrie 4.0 Komponenten werden, damit das Ganze funktioniert.
Dazu braucht jedes Asset eine Verwaltungsschale. Die Verwaltungsschale ist im Prinzip Teil des Digital Twins (Digitaler Zwilling). Damit wird die Vernetzung vereinfacht, so dass wir von diesem „Gefrickel“ wegkommen, das beim Vernetzen von Dingen oftmals entsteht.
Beim Drucker hat das ja wunderbar funktioniert. Wenn wir heute unter Windows 10 einen neuen Drucker installieren, steckt man den ein und der installiert sich von selbst. So etwas stelle ich mir auch bei Werkzeugmaschinen vor. Doch dazu müssen die Hersteller von diesen vernetzungsfähigen Produkten eine Industrie 4.0 Komponente ausliefern, also nicht nur das Produkt selbst, sondern auch den digitalen Zwilling, wie die Verwaltungsschale. Dann sind sie auf dem richtigen Weg.
Veränderungen durch das New Normal
Hat das New Normal, dieser neue Normalzustand, in den letzten Monaten viel verändert oder war das von Anfang an Thematik?
Worüber ich eben gesprochen habe, ist nicht die Wirklichkeit, sondern eine Wunschvorstellung. Das muss sich erst Schritt für Schritt über alle Asset-Hersteller ergeben. Die Hersteller von vernetzungsfähigen Produkten halten sich aktuell zurück, weil es noch keine Software gibt, die damit umgehen kann. Gleichzeitig halten sich die Software-Hersteller zurück, weil es noch keine vernetzungsfähigen Produkte gibt, die eine Verwaltungsschale mitbringen.
Da muss die Industrie 4.0 Plattform noch richtig Druck auf die gesamten Hersteller ausüben und ein Regelwerk kreieren, damit das in Gang kommt. Dieser „Normalzustand“ ist also noch nicht da, ist aber ein „gewünschter“ Normalzustand irgendwann in der Zukunft.
Wie fortgeschritten ist dieser Plan denn schon? Kannst du uns eine Einschätzung geben?
Das ist branchenabhängig. Unterschiedliche Branchen sind also unterschiedlich weit. Und ich habe das Gefühl, dass die Branche, in der ich unterwegs bin, die diskrete Fertigung, am weitesten hinterher hinkt. Aber das ist nur eine persönliche Einschätzung (lacht).
Wünschen Sie sich weitere aufschlussreiche Diskussionen? Treffen Sie Johann Hofmann und andere BranchenexpertInnen auf unserer nächsten Veranstaltung IndustryForum Smart Manufacturing.
Zukunftsausblick: Augmented Reality, Wearables und Cloud
Gibt es andere aufstrebende Technologien, die Hersteller im Auge behalten sollten? Welche Herausforderung gibt es bei der Einführung solcher Technologien?
Da fallen mir auf einen Schlag drei Technologien ein. Zum einen wären das die Datenbrillen, also Augmented Reality über Datenbrillen. Diese Technologie kränkelt aber ein bisschen. Wir hatten vor Jahren schon mal einen Versuchsballon zum Umrüsten von Maschinen über eine digitale Brille gestartet, bei der man den Arbeitsraum dann digital sieht. Das lief jedoch noch nicht ganz reibungslos, deshalb wurde das Projekt erstmal auf Eis gelegt. Trotzdem habe ich dahingehend eine große Erwartungshaltung. Mit jeder neuen Version einer Datenbrille wird es sicherlich besser und umfangreicher.
Überholt werden könnte diese Technologie von Wearables, also am Körper tragbare Computer, wie beispielsweise eine Smart Watch oder Datenhandschuhe. Hier wird sicherlich eine Zeit kommen, bei der der Meister durch eine Fertigungshalle läuft, dabei auf seiner digitalen Uhr Informationen von einer Werkzeugmaschine bekommt, die gerade irgendein Problem hat. Das wird bestimmt Standard in der Zukunft werden.
Die dritte Technologie ist die Cloud. Vor Jahren war ich ein größerer Fan der Cloud. Das hat jetzt ein bisschen abgeflacht, weil all unsere Kunden in der Fertigungsbranche Angst vor der Cloud haben. Doch das Thema sollte unbedingt weiterverfolgt werden. Es gibt Branchen, die sind komplett in der Cloud, zum Beispiel Amazon. Aber genau in unserer Branche hinkt man da ein bisschen hinterher, wir müssen aber am Ball bleiben.
Die Wichtigkeit von Digital Twins im Smart Manufacturing
Der Digital Twin ist bei den Herstellern immer beliebter geworden um mit Start-Ups wie Tesla Schritt zu halten. Wie sollten ältere, alteingesessene Fabriken die Einführung eines Digital Twins angehen?
Aus der Sicht des Anwenders ist die Frage einfach zu beantworten. Wenn eine Fabrik etwa eine neue Maschine, einen Werkzeugschrank oder ein anderes Produkt bestellt, sollte sie vom Hersteller einen Digital Twin fordern. Es soll also nicht nur die Maschine, sondern auch der digitale Zwilling geliefert werden.
Und das kann ich vom Hersteller verlangen, da ich als Käufer auch eine gewisse Macht habe. Wenn ich diese Macht nutze, dann werden alle Hersteller mit der Zeit ganz sachte dazu gezwungen, den digitalen Zwilling zu liefern. Und daran scheitert es ja momentan. Dazu fällt mir ein Beispiel ein:
Vor ca. 15 Jahren, als ich die Werkzeugdatenbanken aufgebaut habe, hatten wir kein Bild bzw. eine Grafik dazu. Wir mussten nebenbei Studenten beschäftigen, die uns die Grafiken für die Werkzeuge gezeichnet haben. Damals habe ich unseren Einkäufer also darum gebeten, bei jedem Kauf in den SAP Datensatz reinzuschreiben, dass das Werkzeug UND eine Grafik geliefert werden müssen. Wenn eines davon nicht geliefert werden sollte, zahlen wir auch nicht.
Natürlich war das damals in der Werkzeugbranche erst einmal ein Riesenaufschrei, ist heute aber Standard. Wer heute ein Werkzeug kauft, bekommt selbstredend eine Grafik dazu. Jeder der also Produkte kauft, kann beim Hersteller Druck aufbauen. Jetzt jedoch müssen wir nicht nach der Grafik verlangen, sondern nach dem Digital Twin. Wenn das jeder fordert, kann man sich den Zugzwang ausmalen, der plötzlich bei den Herstellern herrschen würde.
Das fehlt also noch. Aber ist es auch umsetzbar und realistisch?
(Lacht) Wir müssen das halt erst einmal probieren. Es gibt ja viele Hersteller, die bereits einen Digitalen Twin liefern, aber teilweise noch nicht vollständig. Die Industrie ist da auf jeden Fall auf einem guten Weg, aber eben noch nicht am Ziel. Um dieses Ziel jedoch schneller zu erreichen, können Einkäufer diesen Druck bei den Herstellern aufbauen.
Die fünf Naturgesetze der Digitalisierung
Was sind die größten Herausforderungen für Fabriken bei der Anwendung von Digital Twins als Teil ihrer bestehenden Prozesse? Was können Hersteller tun, um diese Herausforderungen zu meistern?
Ich beschäftige mich mittlerweile seit 33 Jahren mit der Digitalisierung. Dabei haben sich immer die gleichen Herausforderungen herauskristallisiert. Wenn ein Projekt gekränkelt hat oder gescheitert ist, war das immer eine von fünf Herausforderungen, die nicht vernünftig angepackt worden ist. Diese fünf Herausforderungen nenne ich die „fünf Naturgesetze der Digitalisierung“. Diese muss man abarbeiten, damit solche Projekte auch gelingen können.
Das erste Naturgesetz ist: Menschen mitnehmen. Klingt erst einmal ganz banal, aber wenn die MitarbeiterInnen nicht wollen, wird das Projekt immer scheitern. Man muss Menschen also von dem Projekt begeistern. Da gibt es eine Metapher, die man vor allem auf Konferenzen häufig hört: Wenn du ein Schiff bauen willst, erzähl den Leuten nicht, was sie alles für den Bau benötigen. Erzähle ihnen nur von der Schönheit des Meeres. Dann wirst du auch das beste Boot bekommen, das du dir vorstellen kannst.
Das zweite Naturgesetz ist: Wenn man einen schlechten analogen Prozess digitalisiert, dann bekommt man einen noch schlechteren digitalen Prozess. Analoge Prozesse müssen also schon vorher schlank und einfach gemacht werden. Dazu eignen sich LEAN-Methoden hervorragend. Also LEAN einführen und leben, das ist das zweite Naturgesetz der Digitalisierung und somit auch eine Herausforderung.
Das dritte Naturgesetz sind Stammdaten. Viele Projekte scheitern an unvollständigen Stammdaten. Diese müssen vollständig und fehlerfrei sein. Wenn du beispielsweise mit einem Navigationssystem durch Deutschland fährst, dann sind die Landkarten die Stammdaten. Wenn ich nun in ein neues Industriegebiet fahre, und mein Navi diese neue Landkarte noch nicht kennt, dann fehlen mir hier die Stammdaten.
Das vierte Naturgesetz ist: Die Konnektivität im Brown-Field herstellen. Wir leben und arbeiten ja alle in einem Brown-Field. Green-Field wäre eine nagelneue Fabrik mit nagelneuen Maschinen und Werkzeugen. Doch das hat keiner. Wir alle haben einen historisch gewachsenen Maschinenpark. Wir haben also einen maschinellen Zoo an unterschiedlichen Maschinen, die 24 Stunden am Tag und 365 Tage im Jahr stabil vernetzt sein müssen. Wenn ich diese Konnektivität nicht erreichen kann, kann ich alles andere auch nicht schaffen.
Das fünfte Naturgesetz ist: Offene Ökosysteme. In unserer Branche soll man nicht nach einer eierlegenden Wollmilchsau suchen, denn die ist Illusion. Die Lösung sieht so aus: Die digitale Fabrik besteht aus verschiedenen, eigenständigen Öko-Systemen, in deren Zentrum ein planendes META – System sitzt, Stand heute ist das das ERP System. Unterhalb dieser META Ebene befinden sich die jeweiligen ÖKO Systeme mit ihren domänenspezifischen Abläufen und Prozessen. Wie z.B. eine Feinsteuerung, ein Warehouse System, ein CAQ System, ein PLM System, ein Shopfloor System, etc. Die Interoperabilität dieser Systeme ist dabei ein entscheidendes Kriterium für deren Auswahl. Die richtige Orchestrierung der einzelnen Ökosysteme bringt den echten Mehrwert der Digitalisierung.
Das sind die fünf Herausforderungen, die man erst einmal meistern muss, bevor man überhaupt mit der KI den nächsten großen Sprung machen kann. Ohne das bringt auch ein Digital Twin nichts. Wenn es dafür keine Basis gibt, dann ist der Digital Twin auf verlorenem Posten.
Nachhaltigkeit in der Industrie 4.0
Aufgrund von Megatrends, wie dem Klimawandel, ist die Nachhaltigkeit für die Infrastruktur von größter Bedeutung. Welche wichtigen Änderungen nehmen Hersteller vor, um mit den Nachhaltigkeits-Vorschriften Schritt zu halten?
(Lacht) Jetzt hast du ein Riesenthema aufgemacht. Was heißt denn Nachhaltigkeit überhaupt? „Die natürliche Regenerationsfähigkeit der beteiligten Systeme gewährleisten“. Am Beispiel der Forstwirtschaft heißt das etwa, nicht mehr Holz zu fällen als nachwachsen kann. Schneide ich einen Baum ab, muss ich einen Baum anpflanzen, der auch irgendwann abgeholzt werden kann. Das ist Nachhaltigkeit.
Aber was bedeutet das für uns in der Produktion? In den Produktionshallen würde das bedeuten, dass nicht mehr Rohstoffe verbraucht werden als Rohstoffe nachwachsen können, wie beispielsweise seltene Erden, Erdöl oder Eisenerz. Das geht aber nicht. Diese Aussage („geht nicht“) verwende ich äußerst selten. In diesem Fall hat das allerdings Millionen an Jahren gebraucht, um überhaupt zu entstehen. Die ganze Nachhaltigkeits-Thematik ist in der Fertigungsbranche also eher scheinheilig, weil es sowieso nicht geht.
Wir beuten die Erde aus, bis sie kollabiert. Punkt. Das ist das Problem, das wir alle auf diesem Planeten haben. Was sollen die Hersteller jetzt also machen, um einigermaßen etwas richtig zu machen?
Sie könnten in energieeffiziente Anlagen investieren, damit auch der CO2-Ausstoß reduziert wird. Auch könnten Reisezeiten minimiert werden. Durch die Coronavirus-Pandemie habe ich so viel Reisezeit eingespart, das kann man auch nach Corona noch beibehalten. Zudem sollte Home-Office – soweit möglich – auch nach der Pandemie ermöglicht werden. So wird jeden Tag der Weg ins Büro gespart, und damit auch Sprit.
Ein Beispiel: Manche fertigen ein goldenes Lenkrad mit Lenkradheizung, während andere einen Tesla bauen. Nicht das goldene Lenkrad sollte optimiert werden, sondern es sollte an den richtigen Stellen weiterentwickelt werden. Aber ob das Elektroauto für den Klimawandel wirklich so gut ist, ist eine völlig andere Diskussion.
Eine weitere Methode, die bei der Nachhaltigkeit helfen könnte, wäre die Just-in-Time-Produktion. In meinem Studium im Jahr 1989 wurde das sehr stark thematisiert. Hier heißt es: Das beste Lager ist kein Lager. Der beste Transport ist kein Transport. Es könnte also direkt in die Montage produziert werden, statt erst einmal ins Lager und von dort aus wieder weiter transportiert zu werden. Das ist zwar eine uralte Methode, aber die könnte durchaus nachhaltig sein.
Ist das eine realistische Methode? Setzen dies Hersteller vielleicht sogar schon um?
Die Automobilindustrie setzt das großartig um. Sitzhersteller zum Beispiel fahren ihre Sitze in kein Lager, sondern direkt an die Montagelinie im Autowerk und vor dort werden sie Just-In-Time montiert. So gut, wie das die Autoindustrie hinbekommt, bekommt das keine andere Branche hin. Da gibt es für unsere Branche noch viel Optimierungs-Potenzial.
Richtig auf die Zukunft vorbereiten
Inwiefern können Zukunftsszenarien EntscheidungsträgerInnen helfen, ihre Pläne zu verfeinern und Strategien zu entwickeln, um sich auf die Zukunft vorzubereiten?
Zukunftsszenarien helfen EntscheiderInnen immer nur dann, wenn sie die Zukunft auch richtig vorhergesagt haben. Sonst kann es sein, dass Pläne entstehen, die das Ganze nicht verfeinert, sondern ruiniert haben. Wenn ich von einem komplett falschen Szenario ausgehe, dann treffe ich ja die komplett falschen Entscheidungen.
Dazu fällt mir immer der Komiker Karl Valentin ein. Er hat folgendes gesagt: „Prognosen sind schwierig, besonders wenn sie die Zukunft betreffen“ (lacht).
Aber bei Zukunftsfragen kann ich trotzdem eine Hilfestellung geben, wie beispielsweise die fünf Naturgesetze der Digitalisierung. Diese haben sich über Jahrzehnte als Basis für richtige Entscheidungen bewährt und haben auch noch in der Zukunft Gültigkeit. Wenn man sich daran orientiert, kann man eigentlich keinen großen Fehler machen. Wenn Sie diesen QR-Code entschlüsseln, dann finden Sie dazu eine wertvolle Hilfestellung, in der meine Erkenntnisse aus 33 Jahren Digitalisierung komprimiert dargestellt werden:
Major industries of the world experienced a massive shift due to the pandemic with many corporations navigating through the disruptive scenarios hoping to achieve growth and recovery in a post-pandemic landscape.
For Hartung Wilstermann, Executive Vice President Battery Systems of Webasto Group, the journey towards achieving growth is to understand one simple truth: change and adapt.
In this interview, Wilstermann discusses and explores a wide range of topics such as the future workplace, the megatrends that the automotive industry needs to know, and how all of it comes back to the need for change and adaptation.
Want more insights on the automotive industry from Hartung Wilstermann? Join him and many other industry leaders in Management Events’ IndustryForum Automotive event in Germany.
Understanding The Post-Pandemic Landscape and Challenges
It’s safe to say that everything changed due to the pandemic and with the economies opening back through rampant vaccination, corporations are preparing future scenarios to keep up with business growth in 2021 and beyond.
However, Wilstermann believes that the focus should not be on creating scenarios or predicting the outcomes of the future. Rather, what is important is for organizations to understand that reacting and being flexible to situations that arise should be the priority.
What is your outlook on the European automotive industry in the latter half of 2021?
My personal opinion here is, let’s not try to find the right scenario for the future. Instead, understand that whatever you have planned, will come differently.
Of course, you can have plans and scenarios, either internally or through different companies that are analyzing and predicting what will happen in the industry. However, if you look at the past year, they have all been wrong.
Nobody foresaw Corona(virus), and nobody was prepared for the crisis.
It is not that important to predict or analyze what will come. It is more important to be able to react to whatever will come. So for me, the answer is, whatever happens, we need to be prepared to react and be flexible to the situation.
Be flexible, have your scenarios but expect it will come differently.
What about post-pandemic challenges for the European automakers? Will it be different?
Again, it’s not new and there will always be new changes and challenges. Our whole life is nothing but changes and currently, there are several big changes in society that corporations need to keep an eye on; namely, autonomous driving, connected vehicles, and e-mobility.
These are well-known megatrends that we need to focus on, that is clear.
But for the European automakers, the challenges are the same as it was in the past. They need to adapt to new realities, be it to jump into services, invest in e-mobility, or autonomous mobility.
This is my key point here. Corporations must react faster to the changes because the changes are occurring faster and faster.
Interconnected Industry Megatrends, Climate Influences, and The Speed of Change
2021 kickstarted a global effort to bring COVID-19 under control through massive vaccination and a reenergized global agenda towards climate change. There is no question that 2021 will be a year of transition, but how has it affected the megatrends amongst major industries and the automotive industry in particular?
Wilstermann highlights that many facets of the automotive industry’s megatrends have shifted towards sustainability and e-mobility, in addition to digital transformation, and how change is at the core of all these megatrends.
What are the key megatrends or changes that will drive growth for the European automotive industry?
The big ones are the well-known ones. You have digitalization, which can be a megatrend and a source for change.
And then you have e-mobility, which for me, is something which I have believed in 15 years ago and is now coming through. And the e-mobility trend will not just be batteries, it will be a global trend, for all the mobility that we have on earth. Like aviation, automotive, and marine mobility.
Another megatrend is the speedup of changes. The speed of change is a megatrend itself because it influences all of our challenges and pushes organizations to adapt. The world has become closer and globalization has shown how connected we are on a global scale.
And when one industry goes down, it influences the rest of the industry as well. A virus can influence the production of chips and the supply chain, which shows how fully integrated and highly connected our industries are.
Yes, organizations are reacting to this, by getting more local. But we need to get faster. To react and still be calm when we experience changes.
And of course, we also need to adapt to climate change. It is something which we can see, and is happening now. Climate change will influence the way we need to think, the way we need to act, so, I would also call it a megatrend.
It might not be one which we like to have, but it is happening. It is a megatrend we need to understand and realize it is there. It will influence our way of thinking, of acting, and therefore the industry.
The New Balance of Future Workplace and The Roles of Leadership
The pandemic has disrupted the structure of the workplace as more and more corporations have adapted to the idea of mobile work offices. However, finding the balance for the future workplace is a question that many leaders within the automotive industry are struggling to answer.
For Wilstermann, the focus should not be on finding a single solution or a sweeping generalization on what the “next-normal” workplace will be for an organization.
But rather, to adapt and change as necessary, create a new balance that works for the culture of the company and at the same time, having those in the leadership roles lead the way for these changes.
What will the “next-normal” workplace look like and how can organizations achieve it?
The “next-normal” is something we cannot predict. But, we can create it.
We can create it by understanding what are the needs of the workplace, and what are the changes.
For example, before COVID-19, most companies were reluctant to have mobile offices. Now, we’ve all understood that mobile offices are possible because we were forced to do it.
Will we stay completely with mobile offices? Of course not.
There needs to be some kind of balance where we will integrate this new change into the new workspace. Yes, there are a lot of different solutions depending on the department, but the new reality will be a very diverse one.
Each area, each department, each team, needs to find its balance and adapt it to the changes that will come up. So this, for me, will be a new reality. It is much more flexible and more reactive to the needs of the customers, the employees, the industry, and the megatrends.
What role should those in leadership roles play to help transition into a diverse workplace?
For me, the most important part of leadership is to lead people, and sometimes also results. This also means that you need to create an environment where people can do their jobs.
And being in that leadership role means setting an environment that allows people to adapt individually and react quickly to changes.
Leading, or being in a leadership role, does not mean setting a goal and waiting until somebody reaches those goals. It means creating an environment that allows people to adapt, fast and individualized, to their needs while still being part of the team.
This is what I would call, real leadership. It is setting the environment for people so that they can find their solutions. Not setting solutions, or defining what the “next-normal” will be, how it looks, or how it will work.
Adaptation Is Key In Organizational Structures And Embracing Change
Corporations are constantly in search of the perfect organizational structure that will help align their vision and drive growth, especially in today’s volatile market.
With major industries within Europe pushing towards Sustainable Development Goals (SDGs), corporations are scrambling to find and develop the necessary elements needed to overcome the disruptive changes coming due to sustainable initiatives.
But as Wilstermann points out, there is no “perfect” solution or structure, and that companies must react and evolve constantly to the changes that occur within the industry.
How should organizations structure themselves to overcome disruptive changes such as Sustainable Development Goals (SDGs)?
I would say it is very important to first understand the history of the company, the mindset, and the culture of the company.
There is no one organizational setup that is the best as there are many elements that you need to take into account, such as the culture, product, and even the size of the company.
The only consistent element that I see the same for every organization is the need for change and adaptation to the megatrends, the society, your customers, and the competition.
The best setup is to have a continuous improvement and change of the organization and not assume that the organization you have now will be the same for the next ten years.
If you’re open to changes, you will be able to find the perfect organization for this point in time, in this situation, the environment you are in, and for your industry. And tomorrow, it will be a different one.
But, if you’re open to adapt, you will find another setup.
Of course, it all depends on different factors such as region, product, history. Adapting to all of these factors and elements will lead to a temporarily optimized organizational structure.
What advice would you give to organizations on overcoming changes from disruption?
Let me share a personal experience from when I was in the Philippines for one year.
Coming from Germany where everything was structured. Safety was, for me, having insurance, enough money, and all these things which were related to planning and stability.
Then going to the Philippines, and seeing how different it was. I came back with a different understanding of what feeling safe meant.
It was not having money, insurance, a car, plans, and so on.
I came back with the understanding that feeling safe means having the confidence of being able to deal with every upcoming change.
Do not try to avoid changes and replace them with plans, which will never come true. Rather, it is necessary to adapt to the future, deal with all the changes that come from disruption, and keep pace with the speed of the changes.
After a disruptive year, supply chain & procurement companies are still reeling from the impacts of the pandemic. They continue to face obstacles in transportation and logistics, rising prices of raw materials, and shifts in customer demand.
Supply chain leaders have realized that digitalization and sustainability efforts need to be prioritized to provide flexibility to respond to unforeseen challenges. Jori Fabricius, Senior Vice President of Global Supply Chain Management at Kemira, shares his insights on the post-pandemic supply chain landscape and its effects on tech adoption, leadership and more.
The pandemic has accelerated digital transformation efforts in supply chain and procurement. What tech adoptions have been the most effective in mitigating the disruptions presented by the outbreak?
There are many aspects to this, but what immediately comes to mind are control tower tools, visibility enabling tools and processes that support fact-based alignment across functions. The idea is to bring transparency to deviations as soon as possible and enable fast mitigations.
Real-time execution controls (day to day): These were implemented at Kemira two to three years ago. The controls are nature operative and used in placing replenishment purchase orders and securing material availability. They are connected to visibility tools and alerts in real-time, providing personal dashboards that show performance and risk incidents to operators as they are happening. The addition of AI allows operators to supervise product quality and connect the dosing of chemicals.
Planning tools (weekly or monthly, mid-term): These are extremely valuable as they provide optimized plans to mitigate potential or current constraints, and to enable fast cross-functional problem-solving. In Kemira, we started the implementation of upgrading the planning environment globally, which has been successfully taken into use for supply planning.
Visibility tools (long-term): This is related to general aspects of performance — a good example is visualizing Kemira’s distribution networks with enriched built-in KPIs. This allows us to visually capture recent changes such as distribution cost performance, distribution distances, shipments sizes and transportation emission calculation.
All these tools are necessary to drive performance and to enable faster, better decisions and implementations. This saves time, improves service and creates new business opportunities. Another thing to note is that these tools are highly dependent on cleansed, credible master data and one common enterprise resource planning (ERP) platform.
In your opinion, how has digital transformation affected leadership roles in supply chain and procurement?
Over my 30-year career, I think there has been a continuous change in the supply chain in terms of technology and science. In fact, the term ”supply chain management” did not exist before 1982 even though the concept has been around long before that.
When digital transformation cracked the nut of “the distance dilemma”, the world became a smaller place and brought different cultures together. With more companies centralizing teams from their physical locations, supply chain leaders need to be culturally sensitive and emotionally intelligent to build engagement across diversified teams.
Supply chain leaders also need to understand other functions better. They can no longer work in isolation. To be efficient, they need to gain knowledge on multiple industries and professions, and learn a number of skills. Going back to the tools I mentioned earlier, they are useless without analytical skills. Leaders must be adept at using IT tools because these are business-critical capabilities.
Sustainability is a core part of Kemira’s business strategy and operations. Why is there an urgency for organizations to embrace sustainability and what are its long-term benefits?
At Kemira, we can proudly say that our value system supports sustainable world thinking. One of our values is ”We care for people and the environment.” Having this value makes for a strong foundation for future sustainable initiatives.
Other than values, we need to understand the different players around us such as our customers, investors, regulators, resource market and employees. In the last five years, investors have been putting more effort into implementing sustainability programs. No company today can say that sustainability does not have a role in their business strategy.
In terms of recruitment, I think the fight for talent will only grow bigger as we go along. This is because the younger generation will choose companies that reflect their own values, and sustainability is a topic that comes up very often during Kemira’s job interviews.
What do I think are the long-term benefits? I would say it is very difficult to work in this world if you are not a good citizen. Regulators, Customers and Investors for sure are moving in a sustainable direction which not only supports good citizenship but is also a ticket to a profitable business.
What are the biggest obstacles when it comes to maintaining sustainability in all levels of the supply chain?
It is fair to note that the obstacles are partly related to behavior and an individual’s value systems. It is difficult to change as culture and values always beat a good strategy.
Because of that, I would say change management is the most difficult part as transforming current value systems may not happen quickly. Another hurdle is missing infrastructure – replacing an entire supply chain is a major change and does not happen overnight. For example, shifting from oil-based materials to bio-based ones. There is bound to be some resistance as current infrastructures have been in place for decades. Hence, leaders must implement change management carefully, taking into account regulations and investors’ needs.
“It is easier to steer a boat that is moving and floating,” rather than one that is sinking.
What can business leaders do to future-proof their supply chain and procurement functions in order to tackle unprecedented challenges?
Organizations must be ready for a heavier fight for resources and competencies in the future. There will be market upsides and downsides, especially with leaner pipelines. Additionally, they must always develop new digital capabilities that drive business value and build engagement.
Business leaders must also look for the best talent to join their companies but recognize that it will be a challenge. Engaged and flexible employees are role models and potential future leaders. They are usually the best people to secure an organization’s resilience and continuity.
What are emerging supply chain trends in 2021 and 2022?
I believe there are two main trends supply chain leaders should look out for:
The new order after COVID-19: After 1.5 years of living in isolation and running operations, leaders need to reflect on the lessons learned from the pandemic. It has been no doubt a tough time for organizations. However, it is time to truly understand the phenomenon itself and to build a sustainable working model.
Digitalization remains strong: There will be more choices for digital applications in operative work, like pricing tools. Procurement and sourcing platforms will also accelerate B2B integration and collaboration, and support building communities.
*The answers have been edited for length and clarity.
In recent years, Insurers have sought to digitalize their processes and improve their customer experience, making it more seamless and tailored to the needs of today’s digital consumers. Many large incumbents have partnered with insurtechs and invested in technology platforms to digitalize their selling or claims management process, establish virtual payment options, or improve their websites’ usability with chatbots.
While digitalizing parts of the customer journey was a great initial step, it did not address the industry’s core problem. That is, adopting a truly digital-first mindset, rather than offering unchanged products with an online quote and bind journey and putting band-aid solutions on outdated business models.
Silos Across Business Lines and Distribution Channels
Purchasing insurance products is a cumbersome process, and most customers utilize both offline and online channels to research their options and gather the necessary information before they are confident of making a purchase.
For this reason, digitalizing processes in insurance companies should not be seen as a replacement for the existing agency model. On the contrary: digital technology should help insurers to automate standard processes and enable the agent as they advise the client to add an extra layer of personalized services. From a productivity perspective, digital technology can free up the human workforce to focus on more value-added tasks and extend the capability of selling insurance at the point of sale or through non-traditional partners, let it be for valuables, travel, mortgage insurance, or SME risk covers.
As Manisha Bhargava, Head of Global Sales at Innoveo explains, “Consumers are merely covering their risk to insulate themselves, their families and their lifestyle from potentially disruptive events that may impact them financially. They are not seeking to buy “insurance”. Innovative Insurers should put their customer first as they build products, with the changing customer lifestyle at the center of their offerings.”
To achieve that, insurance companies have a lot of customer data on their hands. The trouble is that it is siloed across multiple legacy systems. For example, when it comes to the integration of online and offline distribution channels, a 2019 McKinsey survey concluded that in the vast majority of cases, insurance customers who switch between digital and non-digital channels still cannot continue their journeys online. In other words, even though many insurers have some type of lead routing from their landing page to their offline sales and service channels, due to the lack of channel integration, this usually remains a one-way street, leaving customers with a broken digital journey. Those who have compared product offerings online and then called an agent to seek in-person advice, no longer have the possibility to get back to the digital buying journey that they started in the first place.
Source: McKinsey & Company: Moving to a user-first, omnichannel approach, January 7, 2021.
Strong Demand for Digital-native Insurance Products
As E&Y points out, the penetration rate of both life and non-life insurance segments already had a declining tendency years before COVID-19, especially in the USA. The number of policies sold has fallen, as products that were once attractive to consumers no longer meet their needs.
Traditionally, large insurance carriers operate with separate business lines, based on the type of risk that they cover. This operational logic does not reflect our current lifestyle, where we make decisions in a digital space and expect to have instant access to information. As consumers are getting used to seamless online journeys like ordering products on Amazon or signing up for Netflix based on their individual preferences, it is logical that they would expect the same, sophisticated experience when looking for insurance coverage online.
Despite the increasing demand for digital-native products, the percentage of insurers who offer more complex insurance products for purchase online remains low, according to another recent McKinsey research for the European market. McKinsey also finds that approximately 66 percent of insurtechs specialize in select parts of the value chain, such as data collection, while less than 10 percent aim to disrupt the full business model. If we add the fact that most of the industry still relies on face-to-face interactions, we can see that there is a huge opportunity for digital disruptors and those who are willing to embrace new technology.
The Relevance of No-Code for Insurers
To maximize customer lifetime value and increase conversion rates, it is key to reduce the complexity of the buying journey for customers and agents alike, and this is where no-code platforms come into play. If an agent or broker wants to scale his business, it is no longer sustainable that three different customer calls’ data would land in three different CRM systems. To connect the dots across those data silos, insurance companies need software that could sit on top of all their legacy systems.
“Because of hard-coded legacy systems that incumbents depend on for specific product lines, their adaptability is painful and expensive. A no-code platform like Innoveo Skye® has a pivotal role in making this digital transformation smooth and incredibly fast”, Manisha Bhargava argues. “When you adopt a broader, turn-key solution like Innoveo’s no-code platform, an insurance product becomes nothing but a data model. And the moment you abstract the process this way, you will be able to make systematic improvements and break silos across the whole value chain.”
Overall, no-code platforms present an untapped opportunity for the insurance industry. With Innoveo Skye®, insurers can have all their business lines, agents, brokers, and customers in one platform, creating an omnichannel experience. The platform also lets them configure private and public channels and define which functionality is available to each one of them, which provides the flexibility to combine and package various products for their customers.
If insurance companies truly want to get closer to their customers and cater to their needs, then it is crucial to increase the frequency of touch with their end customers and understand that they are looking for an effective, secure, and easy way to cover their risk. They want products that offer holistic coverage, and they expect insurance providers to be proactive in risk prevention, by using the data available in their possession.
In the words of Manisha, “True digitalization in insurance means to deliver on the 5Es (excite, educate, enable, execute and empower the buyer) through the buying journey without the need for any physical interaction.”
Written by Barbara Péterfi, Content Marketing Manager, and Manisha Bhargava, Head of Global Sales at Innoveo.
The chief marketing officer (CMO) role has always evolved with the market landscape. Egmont Philips, Marketing Director of DAS, believes that the time for change has come and executives now need to evolve their roles as CMO.
What does that have to do with cooking?
In this interview, Egmont shares with us his perspective on how CMO roles have transformed to meet current markets, the challenges they face in strategizing transformation, and why you need to think like a cook.
Evolving The CMO Into a Digital-Driven Role
CMO has always encompassed numerous roles, from bottom-of-the-funnel lead generation and sales support to brand development. This has always set the role for failure as they lack the strategic, longer-term strategy of other C-level roles.
However, digitization has disrupted the traditional CMO position and has forced many executives to rethink what the term “CMO” means in today’s landscape. The effects of the pandemic are a catalyst for this development.
Has the role of the CMO changed dramatically since the pandemic? And is the change here to stay or for the short-term?
The role has changed. As a marketeer, you always need to anticipate, adapt, and change the organization. But some market developments went faster than planned.
On one hand, digitization has a steeper development curve, which is good news for marketers. On the other hand, as platformication increases, this will lead to a faster shift of power based on customer ownership and causes many traditional players to rethink their business models.
With over 4 billion active users, the CMO needs to be able to bridge the gap between marketing and technology to successfully forge meaningful connections with its customers. Given the diverse platforms available and channels such as Clubhouse, catching the attention with the right content in the right context will require a shift from the traditional behaviors of marketers.
Of course, there are challenges when making that transition, and 2021 looks to be as challenging for the CMO as was the pandemic for businesses last year.
Achieving Sustainable Growth Through Data and Transformation Strategy
What are the major challenges you foresee in 2021 and how should the CMO overcome them?
Growth via new business models: Digitization, platformication, the energy transition, and the need for a more inclusive world are trends that create new opportunities. It will also disrupt current business models. The speed of change is much faster than before and to succeed, the key will lie in the talents you hire and the business ecosystem you build to signal changes and develop new propositions.
Resilience: For many industries, market dynamics have changed due to the pandemic.
The way to overcome this is to develop scenarios. Use scenarios where you exaggerate variables. Think of ways to deal with extremes. This will fuel your creativity and it helps in decision-making for the short term.
While growth and resilience stand as the key priorities that Egmont highlights, there is also a growing awareness to develop sound customer experiences in both B2B and B2C markets.
The need to be an experience-driven organization is becoming important as more and more consumers (59% in a post-COVID-19 survey) are prioritizing customer experience in a post-pandemic world.
Egmont delves into the reasoning as to why CMO is needed in this transformation and the approach that they should adopt.
Why is becoming an experience-driven organization increasingly important? And what is the CMO’s role in this transformation?
Many products have become commodities. The only way to differentiate is by building bespoke experiences, experiences that are built around a strong company purpose. The CMO is the chief experience design officer and is at the forefront of setting design criteria and building multidisciplinary teams around customer journey optimization themes.
How should the CMO strategize their marketing plans to improve and strengthen customer experience?
The struggle is often how to determine the ROI of investment in customer experience optimization and figure out how to allocate a budget. The recipe for strategizing CX is to use journey maps to pinpoint which part gets what KPIs and what investment is needed in capacity and budget.
This allows for a simple overview that will help convince boards to invest.
As for the tools needed to help the CMO improve CX and strengthen the customer journey, there are a few emerging technologies that Egmont believes will be key for organizations to invest in.
What are the key tech tools that the CMO needs to focus on investing, especially in today’s “new normal” market?
RPA and digital assistants are most effective when used to automate processes that are of low value to the customer as well as to your company. Such as changing your address, categorizing and directing incoming emails to the right person, etc.
Data analytics are the real thing, no doubt that the CMO needs to invest in market intelligence, customer intelligence, and algorithms that help to personalize the customer experience and create higher conversion rates.
Reinventing the CMO role
Given the drastic change that industries around the world have experienced due to Covid-19, it is not shocking to think that the marketer’s role has changed alongside it.
For Egmont, the title of the CMO has to be re-imagined, and he offers his advice on how marketers should approach the shift in marketing roles.
There have been talks in the industry about changing and re-inventing the CMO title in today’s “new normal” markets. In your opinion, what should it be changed to and why?
I am spreading the gospel of changing the CMO into Chief Customer Officer. Marketers do not only translate market developments and change customer behaviors into propositions. They have also become the orchestrators of customer journeys.
What is your advice for the CMO on how to prepare for the shift in marketing roles?
Maybe the most fundamental way to prepare is to change your self-image.
I see myself as an experimental cook. I build various propositions for several customers and personalize them by combining a basic set of ingredients in completely different dishes. Restaurants and food are like fashion. It changes every season. When it comes to experimentation with the ingredients, you need to be a bit of a chemist.
I use this analogy when approaching market research, data analysis, creating propositions, and managing the team in the marketing kitchen.
Change management is inevitable in the era of digital transformation — at individual and enterprise levels. Over the past year, organizations across the globe experienced some form of change management out of necessity.
Shona Elliot, best-selling author and executive management & leadership consultant, shared her insights on organizational change management in a recent Transformation Thursday session on Clubhouse hosted by Management Events.
“COVID has completely moved the needle in terms of what change looks like beyond the proper change management processes of the past,” she says.
All eyes are on CIOs to not only spearhead the adoption of new technologies, but to also become leaders in change management. Easier said than done, right?
The modern CIO may find it difficult to focus their energies on the right areas with so many elements in flux — rapid digitalization, customer expectations, technology advancements, cyber security and shifting go-to-market strategies, among others.
Therefore, it is essential that CIOs craft change management strategies that can withstand the volatility of current times, as well as help their organizations enable effective transformations in 2021.
CIO: The New Change Agent
“Change management is the art of making organizations work well – and continue to work well.” – Michael K. Levine, author of People Over Process: Leadership for Agility.
CIOs wear many hats; the newest one being an agent of change. Digital advancements have propelled CIOs to the forefront of organizational change. As a key change agent, CIOs now have the responsibility to promote cultural shifts for successful transformation.
As more IT organizations adopt agile and design thinking methods to align with overall business goals, CIOs must be able to manage the impact of this change successfully. According to Accenture, the efficacy of technical business transformations relies on strong change management leadership to guide teams through this process.
Why is Change Management So Hard?
70%. This is the percentage of change management initiatives that fail to meet their goal. Change management is hard to get right, and CIOs are forced to face the added challenge of a global pandemic and a remote workforce.
The main reasons why change management efforts fail at enterprise level are:
Often, C-levels prioritize technical capabilities over business capabilities when taking on new spending methodology projects. Majority of resources are utilized on data, tools and insights when it should be focused on the business process adaptations that stem from change management principles.
Organizations must discard the “There’s an app for that!” philosophy where they become too reliant on packaged software applications to drive internal processes. This philosophy leads to the increasing difficulty of educating and convincing employees to use new technological systems, something CIOs should address urgently.
What is Change Fatigue?
As humans, our brains are hardwired to resist change.
According to Elliot, “I’ve heard senior leaders many times in their career say they are just going to be resisting change or a stakeholder group is just going to resist it.”, and nothing can be done except to move forward to something new. In addition, 92 % of participants in a Deloitte survey stated that resistance to change is an expected reaction from employees as well.
The rapid pace of continuous change at organizations may take a toll on employees, also known as ”change fatigue”. This is on top of the stress caused by the pandemic and health concerns, economic issues and job uncertainty. If not addressed immediately, change fatigue can be a serious inhibitor of digital transformation.
CIOs must keep this in mind when planning change management strategies. Change fatigue can result in C-level peers and employees becoming frustrated and resentful — which can get in the way of achieving company goals.
What Makes a Good Change Manager?
Forward-thinking change managers must redefine the concept of change management for their organizations. This is supported by Elliot, who recalls leaders with a traditional mindset having an awakening around the importance of their employees and building a people-centric culture.
“It is looking at all of the decisions through the lens of ‘how does this impact our employees and teams?’ and ‘how do we talk to them about it?’”
This shift in mindset will help with creating a simple and effective change management project plan, that should include:
Furthermore, a change management project plan should be supported by these strategies:
Assess change readiness of employees to determine overall stress and morale level as well as openness to change,
Understand how the organization and working culture has been impacted by external events,
Acknowledge the importance of aligning people, technology and processes,
Translate overarching goals and objectives into specific transformational strategies,
Ensure all internal stakeholders and executives are aligned and informed.
With the rise of remote workforces, change management strategies are likely to succeed when CIOs take the time to utilize digital communication tools to connect with teams within the organization and listen to their concerns.
Besides that, IT leaders can propel their teams to digital transformation with five pillars of change management success:
They can tailor existing change management models to their organization’s needs, such as Lewin’s Change Management model, McKinsey 7-S model and Kotter’s theory.
Why is Change Management Important for CIOs to Understand?
Valuable time and resources go into adopting new technologies and processes. Without change management, that time and money go to waste.
According to Elliot, senior leadership needs to understand all the components to change and craft an approach to help spearhead successful change initiatives. CIOs should also note that change management plans are not a one-person job.
“I look at it as a co-creation model, to be able to include stakeholders that are going to be responsible for delivering the change and include them in the conversation as early as possible.”
Furthermore, IT leaders who involve employees in designing change management processes are more likely to succeed. Results from a Gartner survey reveal employee engagement and retention rate increased by 38% and 46% respectively with the integration of open source change management.
A good change manager keeps their employees in mind and closely collaborates with stakeholders when building an impactful change management strategy.
Once seen as an isolated and ongoing project, change management is now reactive and necessary. CIOs must make their mark in the change management landscape and inspire their organization to be excited about change, instead of fearing it.
Pandora took the business world by storm this year as the renowned international jewelry retailer successfully drove digital transformation and innovation in the midst of COVID-19 and launched the much-talked-about Digital Hub.
To find out more about the Digital Hub and Pandora’s agile aspirations, Management Events interviewed Pandora’s CIO, Peter Cabello Holmberg, winner of CIO of the Year 2020, who shared the objectives of the ‘Hub’ and its importance in Pandora’s continued digital strategy.
The Digital Hub, also known as the Hub, opened its doors in Copenhagen in July 2020. But what exactly is the Digital Hub?
The Digital Hub is actually a place. It’s a physical location; a full floor in a building next to our global office, where we have room for some 200 headcounts. We initially called it ‘Global Office 2’, but as we wanted to create some hype around digital and our digital strategies, we decided on ‘Digital Hub’.
Also, we were running out of space in our global office, and we had pockets of digital talents – the IT, marketing, and e-commerce teams – sitting in different places globally. That wasn’t optimal so we wanted to consolidate our digital talents in Copenhagen.
We believe that having our digital talents in the same location would help our delivery speed, and our intention was to have a new layout of office space that could facilitate agile ways of working, where people can move around and sit in teams to exchange knowledge on a daily basis.
In the early phases, we discussed building it in New York or Amsterdam, but we decided to build it next to our global office in Copenhagen because there was a need for proximity with the rest of the senior executives there. We were super lucky that we could get the office space next to our global office.
How did the idea of the Hub come about?
We’ve been working with our thoughts and aspirations on digitizing across our value teams for a couple of years. And what we realized was that we had to orchestrate ourselves differently to deliver faster on our digital aspirations.
We’ve been relying on waterfall approaches, business cases, and other methods that were very slow for us to get things started and signed off, so we needed a different operating model and a different engine room.
It was that realization – for us to deliver on our digital aspirations, have more transactions on our online channels, and improve digital marketing, omnichannel, and in-store technology – that we felt the need to bring the technology, e-commerce, and marketing teams together and implement new, agile ways of working.
Projects like the Digital Hub are huge investments, and getting the stakeholders’ buy-in is always a challenge. How was the project presented for the executive buy-in?
I went to the CEO and the executive leadership teams a year and a half or 2 years ago and said that we needed to do an IT transformation. I said that I would save money for the company, build new career duties, and introduce agile working. And I got a sign-off on that.
The CEO bought into it because we – on top of the savings – also presented strong business cases for digitalization and data-driven consumer growth that were very attractive with significant incremental revenue.
AGILE WORKING AND CHANGE MANAGEMENT
After getting the sign off on introducing agile ways of working, how did you start its implementation?
We did a number of introduction sessions before we did anything else. We talked about what agile is, its meaning and principles, and the choice of methodology, and introduced the terminology. We also did a few proofs of concepts, small projects that we would normally put into an agile release train (ART), and applied agile ways of working, like scrum meetings.
Other than that, we had meticulous discussions about Spotify and SAFe, and supporting tools for agile ways of working. We initially made a decision to go with both models, which was a mess for us. Now we’re back to the principle of one model.
We made some decisions along the way that were just wrong. So when we went live, we went in knowing that we had to learn if the decisions and changes worked and asked everyone to give feedback so that we could adjust on areas that didn’t work.
Major organizational transformations can be difficult to execute smoothly. How did Pandora handle the change management?
This was a massive change management exercise, but we knew we had to shift our ways of working completely.
So we gave people a flavor of how this change would look. We started to talk about what an ART should be like and introduced new and different roles to both the business and organizations. We pieced it step by step, presenting increasingly more elements of agile working.
There was change management happening both bottom-up and top-down, but at some point, we came together and communicated to everyone involved that ‘This is how it’s going to look, and here are the members of the Arts’.
We communicated the incoming change to all parts of the organization with 50 to 70 lightning talks about agile working held for all the employees to participate. More than 1,200 people from the entire business signed up to learn about it.
Even when we went live with our first ART, we continued having lightning talks because more and more people wanted to know about it.”
We try to stay as open and transparent along the way so that everybody knows what was happening. It was a lot of communication on where we were, what was happening next, and what to expect.
HIRING AND TALENT MANAGEMENT
With all the transformation initiatives, what were the responses from the teams and employees?
The interesting thing is, as we implemented the agile ways of working, our churn rate of people in IT, marketing, and e-commerce leaving Pandora has gone down. Even though we did this massive transformation, the turnover rate has decreased.
From what I’ve seen and heard, people are actually quite excited to try agile working. They want to see how it works. Some have already tried it and are super happy with it. And those who have always worked in traditional waterfall approaches are keen to learn about agile ways of working because everyone’s talking about it.
With about 200 employees working on a collective digital strategy, how does the Hub ensure that decisions and responsibilities are delegated to the right people and teams?
We have a number of ARTs now, and the biggest and most mature one is our consumer ART.
Whatever the team does in this agile release train is tied to our business strategy, so there’s a link from the strategy to how we work with agile portfolio, lead portfolio management, and so on. So we can track from strategy to ARTs to APEX to features to use cases.
Since we have defined the ART with all the members and different roles, there’s full transparency on who’s responsible for what. Everyone knows what their role is in the whole process.
Furthermore, the tool that we use holds the overall description of the business strategy, and breaks down into the related ARTs and components, so that we’re constantly updated on the business timeline and deliveries. Hence, I would know exactly what’s going to be delivered and when. It’s pretty amazing.
It’s not news that Pandora has been actively hiring digital talents for the Hub. What talents are being seeked, and what hiring strategies are being used?
We’re hiring very different types of profiles into the Digital Hub from all over the world – Columbia, Argentina, the US, and Singapore. We want people who are creative, who have an opinion, who want to push things forward and make a difference. And because we also want to set them free with the business, we want them to be self-operating.
What we did with hiring was create hype around the Digital Hub. We had the CEO talk about the Hub when he was interviewed, and we sent out press releases and reached out to different media. We also talked to universities about what we were doing and trying to achieve and spread the word that we wanted to build a digital powerhouse in Pandora and be number 1 in our industry.
So we set the ambition level quite high, which is part of attracting talents while doing features and events and mobilizing all types of channels to spread the word.
What challenges did the Digital Hub encounter in terms of recruiting talents and managing the current workforce?
One of our bigger problems was that, when we got a ‘go’ for the Hub, it was the time when COVID-19 hit. So we had to hire these positions using Teams and Zoom since we couldn’t meet the candidates face-to-face.
We also had to go about the hiring processes in a different way because everybody was on lockdown globally, and we couldn’t fly them in and bring them to the Digital Hub. From Day One, they had to start from their home office. We sent PCs and laptops to them, and onboard them from their home and whichever country they were in.
Now that the Hub is completed, what initiatives is Pandora taking to ensure a functional communicative and collaborative culture?
The Hub initially was driven by the CDO, CIO, and our SVP for data analytics. Now that we have consolidated these functions under a CDTO then the Hub is anchored with the CDTO. We’re trying to create a community so that the Hub is seen as one team with one common purpose.
Now, the Digital Hub has its own dynamics, and there are social events, fireside chats, and town halls where people across different organizations can participate. We put these people together in one location, and what this has actually done is broken down the silos that we were experiencing previously.
We’ve been sitting on different floors, in different buildings, in different countries. Now that we have brought the teams together, they talk to each other every day – they literally sit next to each other – so it has broken down the silos between different functions. We’re much more aligned compared to before, and that is a huge improvement for us.
DATA AND DIGITALIZATION
In terms of technology and innovation, what challenges did you face with the Hub?
We didn’t have many challenges with our technologies and choice of technologies when we started the transformation.
We already had a roadmap on what to do with data. We had our online platform, our salesforce, e-commerce, and cloud. Our biggest challenges are with integrations, master data, and a scattered point of sales landscape. But overall, we are in fairly good shape.
What stage is the digital transformation of Pandora at the current moment? What other processes are underway to boost the brand’s digital experience?
What we have now is a pretty solid digital strategy that has been shaping up over the last 8 months or so.
We’re going all in on our user data for tips on marketing and personalization. We’re also considering communities for people who are interested in our type of jewelry, and planning to introduce a global loyalty program that will hopefully further drive brand loyalty.
The consumer ART is working with data, and working with the marketing team on digital marketing and personalization. In regards to data-driven consumer growth, we also set the teams free to use data to drive sales. By combining the different data sources that we have, such as our transactions and customer browsing data, the ART teams are free to make decisions on their own to allow faster decision-making.
What are the biggest differences between the company’s past and present data utilization?
It’s two different worlds before the Hub and after the Hub is live. The incremental revenue that is delivered from our data-driven consumer efforts is just outstanding.
We’ve built the integration between different sources in our stack, applied new technologies, and hired Ph.D.-titled profiles to work with data so that we can learn more about our consumers.
We didn’t have that data focus a year and a half ago. I think we had one person in Pandora working with data, but now we have 60+ people working only on advanced data analytics and the use of data.
SUCCESS AND THE FUTURE
What do you consider to be the key achievements of the Hub?
What’s interesting is that the agile way of working that we implemented has really proven its value when the pandemic hit.
Our stock prices have gone up some 100% during 2020 when COVID-19 hit, and that’s quite amazing. It’s actually all down to our technology readiness and the shifts from physical stores to taking advantage of our online channels and digital initiatives.
We were able to step back and look at our priorities and completely change our focus, and now the rest of the business – HR, finance, and other parts of our commercial organization – want to embrace agile working because they see its value. This is just the start and we want to do even more.
Additionally, we see that we can move much faster now. Because the teams are dedicated to the agile release trains (ARTs), they’ve become very efficient and knowledgeable about their role, purpose, and responsibilities. So we’re able to come up with solutions to business strategies at a faster rate.
There are always expected ROIs for major projects. What is the anticipated ROI in 2021 due to the Hub?
When we first started, my focus, and marketing’s focus, was on revenue-generating and return on investment. It was clear when we went to our CEO that what we proposed was very attractive and that data-driven consumer growth, meaning advanced data analytics alone, would pay for our Digital Hub. And we still have many other initiatives that we’re driving.
In some cases, in terms of ROI, we’re talking about a factor of 10 of the investment. Also, our stock prices have gone up significantly because we took advantage of our online channels and digital initiatives. I think that alone shows the impact of getting digital right.
What are the upcoming plans and strategies for the Digital Hub and Pandora?
We are in the middle of finalizing our digital strategy for the next 3 to 5 years. We never had a digital strategy before, but now we have it, and it sets the direction for our technology investments across our value chain – where we want to invest our bodies and resources.
Also, we’re focusing on how we can take agile working and our technology operating model to the next level. Yes, we started out with Agile but we’ve only been live for a year or so. Now, how do we bring this further? What do we need to invest in? What kind of profiles, like what agile coaches or release train engineers, do we need to bring on board to further mature our agile ways of working?
What commercial goals does Pandora seek to achieve in 2021? What role does the Hub play in achieving these goals?
Our key focus right now, and into the next 3 to 5 years, will be on revenue-generating initiatives. We want to drive even more revenue through our online channels.
Aside from that, we’re also focusing on creating an even more seamless customer journey across our different channels. We want to engage with our consumers in a more meaningful way – be more precise in what and when we communicate so that we become more relevant.
Of course, we do all of these to drive revenue, and the Digital Hub is instrumental for us to proceed with the plans.
