SVIC - Mathieu Guerville
Leading digital transformation
Prepared for ESCP
April 19, 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.
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http://mguerville.tilda.ws/escp
Mathieu Guerville
Founder & CEO @ Canary.One
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
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
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
What
What are the facets of digital transformation?
- It's innovation for growthDigital 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.
- It's innovation for survivalCompanies 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
- It's innovation for innovation's sakeFundamental 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
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 LinesCreating 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)
New audiencesReaching 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")
New Pricing PowerCreating 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)
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 migrationOnce 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)
Productivity gap-reductionOnce 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)
Customer experience modernizationWhile 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)
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-paintingA 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)
Cargo cultingEmbracing 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)
DistractingIt 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)
But it's entirely possible to do it right, or even just luck into good results!
Typical innovation byproducts of Digital Transformation
TalentOccasionally, 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)
Market IntelligenceAs 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)
Unexpected ideasSerendipity, 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)
How
How to successfully implement digital transformation
- StrategyThe plan!
Read more - ExecutionThe action!
Read more - ResourcesThe tools!
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 CanvasStructured approach to mapping business plan components and distilling a business model and its differentiated value proposition
- Design ThinkingEmpathy and iteration driven approach to problem identification and prototype creation
- Agile MethodologyA 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 portfolioOur 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
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.
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?
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
- IncoherentInitiatives 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 - Sub-optimalHyper narrow but well executed, more akin to innovation tactic (micro level) than innovation strategy (macro level)
- CoherentA 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.
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 helpExternal 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 canMost of the learning comes from action, not research, not brainstorming. Have an action bias and a willingness to course-correct, often.
Set visible goalsIn 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
- Learn hands-onGame-based workshops around "Intrapreneurship", affiliated with University of Wisconsin Milwaukee Lubar School of Business
Book a keynote, workshop, or event
For comments and any question, please contact me:
+1 773 413 0783
mathieu@m-guerville.com
mathieu@m-guerville.com
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
