Philip Morris International is going through a digital transformation and wants to become a digital leader. The large tobacco company, with over $76 billion in revenue, believes the industry cannot continue with its current business model. Instead, the company has embraced technology to drive efficiency and change how it develops and markets new products.

We speak with Michael Voegele, the company's Chief Digital & Information Officer to explore the technology and business dimensions of this significant business transformation. In this role, he serves as both Chief Digital Officer and Chief Information Officer.

Here are key topics we discussed:

Michael Voegele became Chief Digital & Information Officer in March 2021. Mr. Voegele joined Philip Morris International in 2019 as Chief Technology Officer. Before joining PMI, he worked for Adidas from 2011 to 2018. There, he first served as Vice President, Group Functions, and Head of Enterprise Architecture and went on to become Senior Vice President, IT Sales. Since 2015, Mr. Voegele served as Global Chief Information Officer and was appointed to the core leadership team in January 2017.

Transcript

Michael Voegele: How can I listen to the consumer? How can I fix problems the consumers have and might not even know? And how can I create products and services around this so that I can make a change?

Michael Krigsman: Today, we are talking about digital transformation at the huge company Philip Morris International. We're speaking with Michael Voegele, Chief Digital and Information Officer of Philip Morris International.

Michael Voegele: PMI (Philip Morris International) is one of the world's leading international tobacco companies. We have a workforce of over 70,000 people. We are operating in more than 180 markets across the world.

We also have a bold ambition. Our ambition is really we want cigarettes to be replaced by science-based, smoke-free products as soon as possible to the benefit of people who smoke, those who care about them and, of course, also for public health.

To give you a bit of an order of magnitude of what this change means, in the last years we have invested roughly $8 billion in the development and scientific substantiation in the manufacturing capabilities but also commercialization capabilities for our smoke-free products, which are a less harmful alternative to cigarettes.

About the CIO and Chief Digital Officer roles

Michael Krigsman: Michael, you are both chief information officer and chief digital officer. I'm very interested to explore those roles with you. Why don't you start with the chief information officer? I think that's a title that's a little bit more common than the CDO role.

Michael Voegele: As a CIO, I think I have three distinct things that I really want to drive and change for PMI and for the IT organization as well. There are three pillars.

The first one is about how we deal with the legacy that we have built over the last 10, 15, 20 years. These are assets. These are systems that work well and have served well in the context of the old way of how we have been doing business and the old products that we have been selling.

Now, they're a little bit in the way of changing and transforming the organization. So, there's a core aspect of looking into how we innovate, how we simplify, how we reduce that footprint of legacy applications.

The second pillar is, how do we bring state-of-the-art technology into the organization? How do we utilize the advancements and those fast advancements of technology in our organization?

We talk about APIs. We talk about different ways of integrating. We talk about cloud computing, AI, ML as just some examples that are not new but that have been very difficult to bring into an organization because of the legacy I've been talking about. We have to look at those two things.

Then at the end, it's also what I'm really talking a lot to my teams about. "Look, we are not transforming for the sake of technology. We are transforming for the sake of creating products and better experiences for our customers and consumers," so we also have to change the way how we lead, how we behave, how we think, how we make decisions, and how we organize ourselves around those structures and processes.

These are three distinct things that I think are very important in my role as a CIO. Those are, I would say, my strategic pillars in that role.

The CDO role, I think, has also changed over the last couple of years. If you look at the CDO role, for me, the foundation lies in a key topic. I don't know where I picked this slogan up or whether I came to it myself.

If you invest heavily into technology—which a lot of companies do in their digital transformation—but you don't change and adapt your organization to structure the people, the processes, the way how you organize yourself, what you get is just a more expensive old organization.

There is a people-centric part that looks across the entire organization, all the functions, and all the markets and affiliates, and we have to address adjusting both sides equally and in sync to yield the benefits of technology investments to the better of our customers and consumers.

Michael Krigsman: What I find most interesting is it seems that by having these two roles, you're ensuring that internal technology (namely IT in your CIO role) is fully aligned to the business strategy and where the business is wanting to go. Then ultimately, tied to the consumer experience as well.

Michael Voegele: When you create an IT strategy in the organization, you have already lost because what you focus about is investment in the technology and not so much into value and impact for the entire organization. For me, there's one company strategy and there is consumer centricity, there is financial shareholders and stakeholders, so there are a lot of things that we have to weave into those business strategies. Today, technology has to be an integral part of it.

I think, when we look at those two distinct roles, that is where I can make the biggest impact by combining a view on the business, by understanding our business and our processes (including the nuances that we might see from one market to the other) and have the right answer how technology can help us to overcome issues, to solve business problems, or even to accelerate the strategy execution.

Michael Krigsman: What you're describing, in a way, is kind of the ideal that people talk about for the CIO role, but why was it necessary or why did you add on the CDO part?

Michael Voegele: I think the CDO part gives me (on the one side) a formal role in the organization. Now, this might be sounding minor, but there is somebody who is accountable and in charge, defining with the senior management team in how we drive our strategy forward, and has the ability to link and synchronize it with the technology investments into the organization.

Now, Michael, if I give you an example – very classic but very simple example – the way IT investments and budgets have been distributed across the business in the past was very easy because we said, "Okay, what happened a year ago? Let's take the part and just slice it into pieces and give each function a piece of it."

Now, this is not the optimal solution if you want to optimize the outcome because then you have to look at the total demand. You have to look at what is the priority, and what supports (in the best possible way) the strategy execution. That's where you allocate people, money, and resources to drive the strategy execution.

That might mean that one function gets a little bit less money than last year, but we have a balance in the strategy embedded into the strategic execution plan, embedded allocation of money and resources. I think that's a pretty simple example, but you have to take this view from a company perspective and not from a function and leader point of view to make those changes in the organization.

Culture change and change agents

Michael Krigsman: We do have a very interesting question from Arsalan Khan on Twitter. Arsalan says, "If you're moving towards smokeless products, how have you handled resistance to the status quo culture? In other words, should the CDO/CIO be responsible for culture change for the entire organization?"

If I can generalize it, I think this is really that culture change question. What is the role of the CIO, and what is the role of the chief digital officer, in culture change?

Michael Voegele: Number one, I don't think that (in an organization) just by title, you are accountable for a certain piece, you are the only one that has to take care, and all the rest can lean back and say, "Okay, maybe Michael will fix the culture issue," or "Michael will change the entire structure." I don't think that's the reality. I think what is the reality is with how we have changed our executive team, bringing external experiences in, outside perspectives into the organization.

When we look today, we don't really focus as a senior executive team just on our teams and our function and our work, but that we take a horizontal view on what's best for PMI to achieve our ambitious targets. You will see that this is more about groups of people that are aligned and jointly drive the decision-making around changes.

Our chief HR officer, of course, is an important ally in this for me because we talk about, on the first hand, how we create confidence across the 70,000 people in PMI that the target that we have set ourselves can be achieved. On the other side, how we bring the people the competence to be part of that journey because we have significantly changed from an indirect business to a direct business, from a simple one product line to a multicategory, from basically a simple product to electronics.

If you just think about this order of magnitude, you can understand what new skills – not just on the technology side but also on the business side – are required. Therefore, we as an executive team at PMI are clearly focusing on exactly those two things: how we provide confidence (we can achieve what we have set) and how we give the people confidence.

Sorry. The other way around. How do we create the confidence, and then help (through heavy investment into training, learning, and people initiatives) to also create the competence across the entire organization to move to this new way of doing our business, but also into the new way of our product portfolio and the different set of products we're offering today?

Michael Krigsman: Do you consider yourself to be a change agent? How important a part of your role is driving organizational change?

Michael Voegele: If you look at the senior executive suite in all companies, I would almost say the most important role is the change agent role. Today, I don't think we can go back to a time where we had a product, we were successful, we created these boundaries for the competition to enter, and we are sitting there and celebrating success. Today, all those influences—social influences, technology change influences, consumer behavior influences, competition that we have never been thinking about—entering into our field of business, all those forces require us to constantly adapt, change plans, to be still relevant in five to ten years from now.

I think a key role for everybody in the senior executive team is to focus not so much on your KPIs. I think they are important. Everybody needs OKRs or OGSMs to have clarity around target and measure how you do but, at the end of the day, bringing in this human aspect and saying transformation is done by people, by human beings and not human doings that just hunt for the targets. Therefore, our effort needs to be on the people. That is what I call mostly change management work that we do every day.

Michael Krigsman: As I've spoken with the best CIOs and with virtually all CDOs, it does seem that that change dimension, driving change, is a really fundamental part of the role.

Michael Voegele: I mean if you look around you, we have to acknowledge the last three, four, five years. Everybody has been talking about one thing. It's the digital transformation.

What is transformation? It's changing, so it's about changing a lot of things.

Actually, even more important, it's about letting go of things that have made us successful in the past and acknowledging that you can't just lean back and say it's done. It is a constant change and we have to let go constantly of things that were successful in the past to make room for new skills, new relationships, partnerships, new ways of working, but also new business opportunities. I think that is an important aspect.

I remember still the days (ten years ago) where I was at that point in time with my former employer where people said, "Okay, what's the North Star? When are we done?"

I still recall. I said, "Okay, let's define what done means," and then we figure out this will change every three months, so you can't define something done in today's world. It's too much change, and acceleration of that change means you have to create this comfort with feeling uncomfortable. [Laughter]

Michael Krigsman: Discomfort or, rather, comfort with ambiguity.

Michael Voegele: Yeah. I think one of my former colleagues – a great person and mentor for me, Glenn Bennett – he was saying, "I have to start feeling comfortable with feeling uncomfortable." What he meant is really, "I think we will never go back to times where we have constant environments, but we will always have changing environments and we need always to adjust.

What are key skills that innovative CIOs must possess?

Michael Krigsman: We have an interesting question on Twitter from Anna Wilgan who asks, "What are the most important or the key skills for an innovative, future-focused chief information officer?" More broadly, she goes on to ask, "What is the relationship for the CIO or how important are these change, organizational transformation skills for a chief information officer?"

Michael Voegele: Yeah, look. I don't think everybody shares my point of view, but I think it has served me well in my career. I think there's a combination. You need to understand the business. If you don't understand the business, the industry you're operating in as a chief technology or chief information officer, you will run into problems.

Second, you need to reflect on how technology can support that industry, that business, those challenges that you have. You need to basically be able to abstract to see the things, not just the ones that are there but the things that are coming, to be a little bit proactive and start combining them with regard to the relevance to the business and the industry you're operating in.

I think these are two elements that we have to think more and more about. It's not just about technology skills. it's not just being connected to startups. And it's not just talking about great things that happen in supercomputing and the convergence of it.

That's all really great stuff, but I think the work that we do, a lot of the things are more focused on the horizon, one, rather than on the horizon three. I think that is relevant because that's where you create impact, that's where you can achieve results, and that is where we also need to focus our work on.

Michael Krigsman: We have a question on LinkedIn from Christopher J. Blackwell who asks, "How would you explain the value of digital transformation to the board?"

Michael Voegele: Look. The question is, would I actually explain the value of digital transformation? [Laughter] I think that's the first question we should ask ourselves. I would never go into the room with my board colleagues and start explaining the value of digital transformation.

I think that is exactly the point we also discussed before, if you are not talking about the business, the industry, the challenges we are having across the various functions, if you are not the one that also has the ability to bring those things across the functions together. That's a great advantage of IT. You see everything. You know all the initiatives. You know what's happening in all the functions and areas of the business. Your role also is to bring those things together and make sure that they are in synchronization.

I would never go into a meeting and say, "I need $500 million to make a great digital transformation." I would go in and say, "How do we invest our resources and our money on driving our business strategy forward?"

If technology can help us to accelerate or to even achieve better results, that's fantastic, but that's not what technology is about. It's not about explaining digital transformation. It's not about explaining technology spend.

I think this is where I had a wonderful conversation with Nigel Vaz from Publicis Sapient who just wrote a book a few months back. He says, "We have to go back to renaming digital transformation to digital business transformation because we're not talking about technology change. We're talking about how we change our businesses and the way we work with the help of technology."

Michael Krigsman: I will say thank you for that answer because far too often digital transformation has become this kind of black box buzzword that doesn't have a lot of meaning. You're forcing a kind of mental rigor and discipline on the term to open it up and say, "Okay. What are we actually trying to do here?"

Michael Voegele: You can go back to Forbes magazine, PricewaterhouseCoopers, all the big consulting companies. They have done these great surveys in the past where they ask, "Are you in a digital transformation?" and 99% of the companies said, "Yes, we are."

Then they ask, "Okay. Have you been successful?" Then 84% said, "No, we failed."

Now, what does it mean? If the digital business transformation failed, it means your company is potentially going to be out of business in the next couple of years because it's not about bringing technology into the organization. It's about fundamentally changing the way an organization is structured, how an organization thinks and behaves, and puts the consumer into the center of the decision-making. That is, I think, clearly something where we need to differentiate the two things.

We also have to differentiate that digitalizing something is just about putting something from a paper into zeros and ones but it doesn't change the way we work. A digital business transformation is about changing the way we are structured, how we work, and how we decide with the help of the technology. I think we have to be very clear in making those minor but distinct differences in the way we talk about digital transformation.

Digital transformation and customer-centricity

Michael Krigsman: Can you relate this back to PMI and to your work at PMI in terms of how you think about transformation and the connection back to customers and to the changes going on in society around you?

Michael Voegele: The more internal classic things of looking at this, so how do we simplify our legacy world? How do we standardize around the processes and maybe adjust or change the way we have been doing things for many, many years?

Then you talk about digitizing certain aspects of the business, but then also moving into automation, utilizing AI and ML to help us to do things more automated or even a better way in version and quality. Those things we can do in finance, you can do those things in P&C. You can do those things in the supply chain, in the manufacturing area.

When we talk about, for instance, a very simple example in our manufacturing environments, the manufacturing of our products is very sensitive to climate change within the manufacturing environment. How do we use AI and ML to optimize the quality of our products by providing the right conditions via the HVAC in those factories? Very simple examples how technology can help us to produce better products in a way that we have never been able to do it before because we have been monitoring more manually and adjusting the air conditions and the air humidity.

On the other side, with our smoke-free products, have now a little bit more freedom in the context of how we can create awareness about the category and the benefits of the category. Now we are moving, like many companies, more and more into a direct engagement with our consumers to show them the scientific substantiation behind it that our 500 scientists have created in our Neuchatel research facility.

We can show them how it impacts their personal health. We can actually go into a one-to-one engagement personalized engagement with our consumers, to help them to do what is really difficult because it's actually a behavioral change in switching away and stopping to smoke. We can help them much better in a one-to-one way with the digital capabilities that we have today to go through that change with them.

Michael Krigsman: How do you can convert or how do you think about threats in the environment and convert those into opportunities?

Michael Voegele: Threats can come (in our industry) from legislation. Threats can come from competition. Threats can come through ourselves in the sense of we are not delivering the product quality or the benefits of the product that are promoting. There are multiple ways of looking at this.

I think, when you look into this, what is extremely important is what the organization has learned pretty quickly; You have to look at your consumer journey. You have to understand those touchpoints and those distinct, decisive moments in that consumer journey.

You have to not just then use this from a marketing perspective, but you have to close the feedback loop back into your science, back into your product development teams so that you have that closed feedback cycle that you get from the consumer but then influences the way you design, improve, or create new products. I think that is a very important way because when you have that, you can create an advantage, a head start against the competition you are having.

Second, you can create conditions that, from a regulatory perspective, are extremely important. I want to give you an example.

I think we all are aware of the aftermath of the prices that happened in the U.S. when we talk about JUUL and how the market developed there. We have this firm belief that the use of access prevention is extremely important. None that is not a legal adult smoker should have access to our products.

Second, we also have a firm belief that this is not about growing the market, but it is for a distinct consumer segment which are legal adult smokers. We would never sell a product of ours in the smoke-free category to somebody who is not a smoker.

I think, when you look at those two things, how do you do this at a global scale with currently almost 20 million users? You have to rely on technology. You have to rely on age verification at purchase or at point of delivery.

You have to also think beyond that and say, "Even after that, how do I prevent kids to pick up the device when it's lying around somewhere? How do we create technology solutions that only unlock the device when we an age-verified person is picking it up?"

We start to think really a long way ahead of bringing technology in to solve imminent problems of the category and want to be the ones that set the standard and set the real industry standard when it comes to also be compliant and only addressing the people that can benefit from the new product category.

Michael Krigsman: You made a point that I think is very interesting. You said that it's important to close the loop from the feedback you receive from consumers back into product development. It seems, for many companies that are talking about customer experience, this is precisely where the gap lies. Customer experience is a relatively superficial concept, really a marketing concept, but you're talking about customer experience in a much more deep and profound way.

Michael Voegele: Many of the listeners have applied this. We talk about NPS scores, customer NPS, employee NPS. These are nice indicators, whether you're delivering something to the consumer, but it doesn't help you to really understand how you can improve.

When you look at us, the category that we are creating, and the ambition that we have, it is really about you can only create impact not just by creating nice experiences or services. You can only create impact when you fully convert a smoker to the smoke-free category. This conversion aspect is important and, as it is behavioral change, it's pretty difficult.

We have to close that loop and understand how we can help to do that behavioral change by the best way of the product experience but also by the service experience. Otherwise, we will not create the impact that we have set ourselves out for to create by 2025.

How to build a digital business?

Michael Krigsman: We have another question, a really interesting question, from Twitter, from Lisbeth Shaw who says, "How do you move a large legacy business (like your smoking business at PMI) to create or add a digital business?"

Michael Voegele: I joined PMI in the beginning of 2019, and that was a point in time where the organization already had gone through a massive journey. But I think I mentioned a little bit the investments and the numbers in the beginning about our smoke-free category.

I think, when you look into the organization and you look at what are those 70,000 people doing, you can say the vast majority of those people have been completely taken out of the existing business, have been reallocated towards the consumer direct awareness of the category and making sure that our products deliver against the promises that we have made, and focused really on developing those categories. If you think about it, it's almost like putting the old on auto-pilot while you move your crew in the plane over to fly a different plane.

This is the key to the success is the seriousness, the dedication from the entire board (with the support of the non-executive board) to actually say, "This has to happen. If this has to happen, we shift our full attention towards that category and towards the new way of doing business and put the stuff that we have done in the past on auto-pilot."

Michael Krigsman: This is – correct me if I'm wrong – the real substance of the digital transformation, what you just described.

Michael Voegele: I think maybe it's not the real substance of digital transformation. I think it's the real substance of becoming consumer-centric because you can say, "I'm consumer-centric," but you're still spending your marketing money and all the other things and nice things you have been doing in the past on the old things.

If you want to be consumer-centric, you have to say, "Okay, what's the problem of the consumer? How can I listen to the consumer? How can I fix problems the consumer has and might not even know? How can I create products and services around this so that I can make a change?" That is about consumer centricity.

It's really about the reallocation of resources (people and money) towards that piece of the business. I think that is a fundamental piece. You can't really go in and say plan B or plan C or give it a try with half the money.

I think there's dedication, there's a belief this will work and we will make it happen. I think it's a fundamental piece of that change.

Michael Krigsman: I think most people working in business want to do the right thing. They want to satisfy their consumers. Yet, customer experience is so hard. Where do companies tend to fall down and why is what you just described so elusive, so difficult?

Michael Voegele: The key piece is you have to let go of things that make you or your organization successful in the past. Now, how do you do this? It's actually understanding, okay, just because it was successful in the past doesn't mean it's going to be successful in the future.

Therefore, at a certain point in time, you need to make those bold decisions and say, "Okay. This time it's different. This time, we're doing it different. This time, we're allocating the resources and the money different. This time, we're actually betting ourselves on a new category or on a new product line."

I think, in times of ambiguity, there is not the one answer. I think it shows also that, more and more, while we talk about data and AI and fact-based decision-making, intuition of senior leaders of the organization are also still important in guiding the organization towards the future and potentially towards a completely different future of the past where those things that have been successful are not going to help anymore into the future.

Using data to become customer-centric?

Michael Krigsman: We have a very interesting question from Arsalan Khan again. Arsalan asks great questions. He said, "Do you provide data sandboxes for your employees to play with data and see what is possible? What kind of data do you collect to help create the next generation of innovative products? Just in general, how do you rely on data to feed this transformation and feed becoming and being customer-centric?"

Michael Voegele: No, we are not providing data sandboxes. I sometimes think a sandbox is something for kids to play in. We're not in the playing business; we're in the real world and a real business.

There are a lot of issues in doing that. You have to anonymize the data. You have different data protection regulations. You have to potentially even think about who has access to which part of the data because of segregation of duty environment.

Just providing data for people to play with, I don't think it makes a lot of sense because what is the problem you are trying to solve? The problem is not, I want to play with data. The problem is a business challenge or a business problem or the acceleration of a strategic project.

Now, this is real-life stuff and that's where you need to figure out, do I have the data? Do I have the data in the right quality? If I don't have the data, where do I get the data? But it's really serious and has to start with a business problem, with a business challenge, and not with people playing around with anonymized, meaningless data (at the end of the day) because do you do with it afterward?

Now, the other question is really about collecting data, right? I think, with IT systems, we have always been collecting data and mostly internal transactional data that we could use to analyze our performance. Most of that was backward-looking.

Now in today's world, you can really think about it. I think we talk about edge devices. We talk about the IoT element. We are talking about how this influences my supply chain. We talk about consumer engagement and how we learn about the specific needs and personalize this engagement with the specific consumer.

We are doing, I would say, almost the same thing that every company is doing that is in the business of CPG or FMCG that has a relationship, a direct relationship with consumers. But the same applies, of course, also in the indirect channel when we talk about our customers and partners in the distribution network where we can analyze and digitalize a lot of the business and, by that, gain more and more insight into data that we can use to make better decisions or even to automate certain aspects of the process.

Michael Krigsman: We have a lot of listeners on CXOTalk who are chief information officers. What advice do you have for CIOs who want to become closer? I think, historically, we would say closer to the business, but let's say closer to the customer because that was a real emphasis that you made earlier.

Michael Voegele: This is very hard to answer in a generic way because of the fundamental thing I also said before: Understand your business. Understand your industry. Understand your customers and consumers.

That is really something that is specific to every company and is different to every company. That's why I truly believe there's no real blueprint of how you run a successful transformation or digital business transformation.

I think, when I come back to what I said earlier, Michael, it is really about the nuance of saying, "If I focus myself on technology only, if I focus myself only on finding startups and finding the latest technology, I will not make a significant impact to the organization. I will just create a more expensive, old organization."

Shift away from looking at the technology to look at the business and look at the people (internally and externally) and how we can help them to create competence and confidence in those change journeys. That we have business conversations about what are those strategic challenges or problems that we are facing today or seeing coming, and only then start to talk about, "Okay, which technology can help me to overcome this?"

Now, this sounds very traditional and, of course, we are also (in PMI, and I am doing this a lot) challenging the status quo. What if we do things completely differently and use this and this technology? Wouldn't that be an advantage?

I think you also have to have the boldness to go in and challenge those practices because, as I said before, it is mostly about letting things go that have been successful in the past. This is not an easy conversation because specifically, those people that have created the success don't really see (at the moment in time where you start this conversation) that we are still successful but potentially not anymore two or three years from now.

I think that is the right balance in supporting, in looking at humans and business aspects rather than technology aspects, but also have the foresight to see that certain competition moves and/or technology changes can help to fundamentally change the things we have been doing.

Advice for Chief Information Officers

Michael Krigsman: What about for CIOs who come from a strong technology background for whom this kind of business thinking is not where they were trained?

Michael Voegele: Get yourself good buddies in your company and start learning. I think that's the only advice I can give.

Now, I've done my technical studies. I have spent the first ten years of my career as a software engineer with SAP, so I can say I am an engineer. But I very quickly found out that most of the problems (and potentially even back then in my SAP days) customers had with SAP solutions were not actually a technology issue. Were issues of the process, were issues of the understanding of what the system can and cannot do, so you have to go out of this view of a box and saying technology will fix everything.

I think this is not only advice I give to peers as CIOs, but it's a conversation that I have a lot with my IT teams where I say, "Stay curious, and if you have created expertise in the technology field, that's perfect. That's super because it will help you a lot but start understanding the business and the processes that we're working against because the combination of this will make it a multiplier, more impactful and powerful, and it will not help the company only but also your own career."

Michael Krigsman: I think, finally, to finish up, you just mentioned the IT team. What's the composition of the digital team, so your CDO hat? What does that team look like?

Michael Voegele: On that side of the team, we are not really talking about a team that is in a structure and you have five direct reports and they're organized. This team is really about senior people across the organization coming together on a project-based way of working and saying, "Okay. How do we create competence? How do we create competence across the business in the context that the people understand what digital, what technology, what data is all about? How can we help people that talk about agility and agile ways of working that this is a fundamentally different way of being organized and empowering people?"

For example, as a team, we came up and said, "Okay. Let's train all of our process owners on product ownership through safe training. What does it mean to be a product owner and how is it different to be a process owner? What are the advantages?"

Now, the interesting part is a lot of people came back and said, "Oh, I didn't know this is a much more disciplined and a much more rigorous process than all the things we have done in the past. I thought this is about not knowing and just going and doing stuff."

I think you can see that bringing this into the organization together with my peers and colleagues from other functions is, I think, the powerful element of doing that because what we want to avoid is that the rest of organizations sits there and says, "Hey. Here's the CDO. He will transform the organization, so let's focus ourselves on the things we have been doing so far."

It has to be inclusive, it has to be embedded, and it has to be cross-functional. The best way of doing this, for us, was organizing this in a project-based way of working.

Is the digital transformation journey ever complete?

Michael Krigsman: Arsalan Khan, who has one last question, let's give him the final word. He wants to know, "Does digital transformation ever end?"

Michael Voegele: No. You can remove the digital and potentially, five years from now, we will put another word in front of it, but I don't think business transformation will ever change. If you are not acknowledging that there is no end to change, I think you have already lost.

I don't know who said it, whether it was Amazon or Microsoft. "I want people to come into the office every day as it would be their first day."

I think what was meant by this was really about curiosity, fostering curiosity every day, again challenging what we have been doing, and figuring out new ways of doing stuff. That is, for me, transformation. This is about creating change and leading the organization through the change to sustain the success of the past also in the future.

Michael Krigsman: Okay. Michael Voegele, Chief Information and Digital Officer of Philip Morris International, thank you so much for being with us today and taking time.

Michael Voegele: Michael, thank you so much. It was a pleasure.

Michael Krigsman: Everybody, thank you for watching. Before you go, please subscribe to our YouTube channel. Hit the subscribe button at the top of our website so we can send you our great newsletter. We have amazing shows coming up. Check out CXOTalk.com, and we will see you again next time. Have a great day. Bye-bye.

Michael Voegele: How can I listen to the consumer? How can I fix problems the consumers have and might not even know? And how can I create products and services around this so that I can make a change?

Michael Krigsman: Today, we are talking about digital transformation at the huge company Philip Morris International. We're speaking with Michael Voegele, Chief Digital and Information Officer of Philip Morris International.

Michael Voegele: PMI (Philip Morris International) is one of the world's leading international tobacco companies. We have a workforce of over 70,000 people. We are operating in more than 180 markets across the world.

We also have a bold ambition. Our ambition is really we want cigarettes to be replaced by science-based, smoke-free products as soon as possible to the benefit of people who smoke, those who care about them and, of course, also for public health.

To give you a bit of an order of magnitude of what this change means, in the last years we have invested roughly $8 billion in the development and scientific substantiation in the manufacturing capabilities but also commercialization capabilities for our smoke-free products, which are a less harmful alternative to cigarettes.

About the CIO and Chief Digital Officer roles

Michael Krigsman: Michael, you are both chief information officer and chief digital officer. I'm very interested to explore those roles with you. Why don't you start with the chief information officer? I think that's a title that's a little bit more common than the CDO role.

Michael Voegele: As a CIO, I think I have three distinct things that I really want to drive and change for PMI and for the IT organization as well. There are three pillars.

The first one is about how we deal with the legacy that we have built over the last 10, 15, 20 years. These are assets. These are systems that work well and have served well in the context of the old way of how we have been doing business and the old products that we have been selling.

Now, they're a little bit in the way of changing and transforming the organization. So, there's a core aspect of looking into how we innovate, how we simplify, how we reduce that footprint of legacy applications.

The second pillar is, how do we bring state-of-the-art technology into the organization? How do we utilize the advancements and those fast advancements of technology in our organization?

We talk about APIs. We talk about different ways of integrating. We talk about cloud computing, AI, ML as just some examples that are not new but that have been very difficult to bring into an organization because of the legacy I've been talking about. We have to look at those two things.

Then at the end, it's also what I'm really talking a lot to my teams about. "Look, we are not transforming for the sake of technology. We are transforming for the sake of creating products and better experiences for our customers and consumers," so we also have to change the way how we lead, how we behave, how we think, how we make decisions, and how we organize ourselves around those structures and processes.

These are three distinct things that I think are very important in my role as a CIO. Those are, I would say, my strategic pillars in that role.

The CDO role, I think, has also changed over the last couple of years. If you look at the CDO role, for me, the foundation lies in a key topic. I don't know where I picked this slogan up or whether I came to it myself.

If you invest heavily into technology—which a lot of companies do in their digital transformation—but you don't change and adapt your organization to structure the people, the processes, the way how you organize yourself, what you get is just a more expensive old organization.

There is a people-centric part that looks across the entire organization, all the functions, and all the markets and affiliates, and we have to address adjusting both sides equally and in sync to yield the benefits of technology investments to the better of our customers and consumers.

Michael Krigsman: What I find most interesting is it seems that by having these two roles, you're ensuring that internal technology (namely IT in your CIO role) is fully aligned to the business strategy and where the business is wanting to go. Then ultimately, tied to the consumer experience as well.

Michael Voegele: When you create an IT strategy in the organization, you have already lost because what you focus about is investment in the technology and not so much into value and impact for the entire organization. For me, there's one company strategy and there is consumer centricity, there is financial shareholders and stakeholders, so there are a lot of things that we have to weave into those business strategies. Today, technology has to be an integral part of it.

I think, when we look at those two distinct roles, that is where I can make the biggest impact by combining a view on the business, by understanding our business and our processes (including the nuances that we might see from one market to the other) and have the right answer how technology can help us to overcome issues, to solve business problems, or even to accelerate the strategy execution.

Michael Krigsman: What you're describing, in a way, is kind of the ideal that people talk about for the CIO role, but why was it necessary or why did you add on the CDO part?

Michael Voegele: I think the CDO part gives me (on the one side) a formal role in the organization. Now, this might be sounding minor, but there is somebody who is accountable and in charge, defining with the senior management team in how we drive our strategy forward, and has the ability to link and synchronize it with the technology investments into the organization.

Now, Michael, if I give you an example – very classic but very simple example – the way IT investments and budgets have been distributed across the business in the past was very easy because we said, "Okay, what happened a year ago? Let's take the part and just slice it into pieces and give each function a piece of it."

Now, this is not the optimal solution if you want to optimize the outcome because then you have to look at the total demand. You have to look at what is the priority, and what supports (in the best possible way) the strategy execution. That's where you allocate people, money, and resources to drive the strategy execution.

That might mean that one function gets a little bit less money than last year, but we have a balance in the strategy embedded into the strategic execution plan, embedded allocation of money and resources. I think that's a pretty simple example, but you have to take this view from a company perspective and not from a function and leader point of view to make those changes in the organization.

Culture change and change agents

Michael Krigsman: We do have a very interesting question from Arsalan Khan on Twitter. Arsalan says, "If you're moving towards smokeless products, how have you handled resistance to the status quo culture? In other words, should the CDO/CIO be responsible for culture change for the entire organization?"

If I can generalize it, I think this is really that culture change question. What is the role of the CIO, and what is the role of the chief digital officer, in culture change?

Michael Voegele: Number one, I don't think that (in an organization) just by title, you are accountable for a certain piece, you are the only one that has to take care, and all the rest can lean back and say, "Okay, maybe Michael will fix the culture issue," or "Michael will change the entire structure." I don't think that's the reality. I think what is the reality is with how we have changed our executive team, bringing external experiences in, outside perspectives into the organization.

When we look today, we don't really focus as a senior executive team just on our teams and our function and our work, but that we take a horizontal view on what's best for PMI to achieve our ambitious targets. You will see that this is more about groups of people that are aligned and jointly drive the decision-making around changes.

Our chief HR officer, of course, is an important ally in this for me because we talk about, on the first hand, how we create confidence across the 70,000 people in PMI that the target that we have set ourselves can be achieved. On the other side, how we bring the people the competence to be part of that journey because we have significantly changed from an indirect business to a direct business, from a simple one product line to a multicategory, from basically a simple product to electronics.

If you just think about this order of magnitude, you can understand what new skills – not just on the technology side but also on the business side – are required. Therefore, we as an executive team at PMI are clearly focusing on exactly those two things: how we provide confidence (we can achieve what we have set) and how we give the people confidence.

Sorry. The other way around. How do we create the confidence, and then help (through heavy investment into training, learning, and people initiatives) to also create the competence across the entire organization to move to this new way of doing our business, but also into the new way of our product portfolio and the different set of products we're offering today?

Michael Krigsman: Do you consider yourself to be a change agent? How important a part of your role is driving organizational change?

Michael Voegele: If you look at the senior executive suite in all companies, I would almost say the most important role is the change agent role. Today, I don't think we can go back to a time where we had a product, we were successful, we created these boundaries for the competition to enter, and we are sitting there and celebrating success. Today, all those influences—social influences, technology change influences, consumer behavior influences, competition that we have never been thinking about—entering into our field of business, all those forces require us to constantly adapt, change plans, to be still relevant in five to ten years from now.

I think a key role for everybody in the senior executive team is to focus not so much on your KPIs. I think they are important. Everybody needs OKRs or OGSMs to have clarity around target and measure how you do but, at the end of the day, bringing in this human aspect and saying transformation is done by people, by human beings and not human doings that just hunt for the targets. Therefore, our effort needs to be on the people. That is what I call mostly change management work that we do every day.

Michael Krigsman: As I've spoken with the best CIOs and with virtually all CDOs, it does seem that that change dimension, driving change, is a really fundamental part of the role.

Michael Voegele: I mean if you look around you, we have to acknowledge the last three, four, five years. Everybody has been talking about one thing. It's the digital transformation.

What is transformation? It's changing, so it's about changing a lot of things.

Actually, even more important, it's about letting go of things that have made us successful in the past and acknowledging that you can't just lean back and say it's done. It is a constant change and we have to let go constantly of things that were successful in the past to make room for new skills, new relationships, partnerships, new ways of working, but also new business opportunities. I think that is an important aspect.

I remember still the days (ten years ago) where I was at that point in time with my former employer where people said, "Okay, what's the North Star? When are we done?"

I still recall. I said, "Okay, let's define what done means," and then we figure out this will change every three months, so you can't define something done in today's world. It's too much change, and acceleration of that change means you have to create this comfort with feeling uncomfortable. [Laughter]

Michael Krigsman: Discomfort or, rather, comfort with ambiguity.

Michael Voegele: Yeah. I think one of my former colleagues – a great person and mentor for me, Glenn Bennett – he was saying, "I have to start feeling comfortable with feeling uncomfortable." What he meant is really, "I think we will never go back to times where we have constant environments, but we will always have changing environments and we need always to adjust.

What are key skills that innovative CIOs must possess?

Michael Krigsman: We have an interesting question on Twitter from Anna Wilgan who asks, "What are the most important or the key skills for an innovative, future-focused chief information officer?" More broadly, she goes on to ask, "What is the relationship for the CIO or how important are these change, organizational transformation skills for a chief information officer?"

Michael Voegele: Yeah, look. I don't think everybody shares my point of view, but I think it has served me well in my career. I think there's a combination. You need to understand the business. If you don't understand the business, the industry you're operating in as a chief technology or chief information officer, you will run into problems.

Second, you need to reflect on how technology can support that industry, that business, those challenges that you have. You need to basically be able to abstract to see the things, not just the ones that are there but the things that are coming, to be a little bit proactive and start combining them with regard to the relevance to the business and the industry you're operating in.

I think these are two elements that we have to think more and more about. It's not just about technology skills. it's not just being connected to startups. And it's not just talking about great things that happen in supercomputing and the convergence of it.

That's all really great stuff, but I think the work that we do, a lot of the things are more focused on the horizon, one, rather than on the horizon three. I think that is relevant because that's where you create impact, that's where you can achieve results, and that is where we also need to focus our work on.

Michael Krigsman: We have a question on LinkedIn from Christopher J. Blackwell who asks, "How would you explain the value of digital transformation to the board?"

Michael Voegele: Look. The question is, would I actually explain the value of digital transformation? [Laughter] I think that's the first question we should ask ourselves. I would never go into the room with my board colleagues and start explaining the value of digital transformation.

I think that is exactly the point we also discussed before, if you are not talking about the business, the industry, the challenges we are having across the various functions, if you are not the one that also has the ability to bring those things across the functions together. That's a great advantage of IT. You see everything. You know all the initiatives. You know what's happening in all the functions and areas of the business. Your role also is to bring those things together and make sure that they are in synchronization.

I would never go into a meeting and say, "I need $500 million to make a great digital transformation." I would go in and say, "How do we invest our resources and our money on driving our business strategy forward?"

If technology can help us to accelerate or to even achieve better results, that's fantastic, but that's not what technology is about. It's not about explaining digital transformation. It's not about explaining technology spend.

I think this is where I had a wonderful conversation with Nigel Vaz from Publicis Sapient who just wrote a book a few months back. He says, "We have to go back to renaming digital transformation to digital business transformation because we're not talking about technology change. We're talking about how we change our businesses and the way we work with the help of technology."

Michael Krigsman: I will say thank you for that answer because far too often digital transformation has become this kind of black box buzzword that doesn't have a lot of meaning. You're forcing a kind of mental rigor and discipline on the term to open it up and say, "Okay. What are we actually trying to do here?"

Michael Voegele: You can go back to Forbes magazine, PricewaterhouseCoopers, all the big consulting companies. They have done these great surveys in the past where they ask, "Are you in a digital transformation?" and 99% of the companies said, "Yes, we are."

Then they ask, "Okay. Have you been successful?" Then 84% said, "No, we failed."

Now, what does it mean? If the digital business transformation failed, it means your company is potentially going to be out of business in the next couple of years because it's not about bringing technology into the organization. It's about fundamentally changing the way an organization is structured, how an organization thinks and behaves, and puts the consumer into the center of the decision-making. That is, I think, clearly something where we need to differentiate the two things.

We also have to differentiate that digitalizing something is just about putting something from a paper into zeros and ones but it doesn't change the way we work. A digital business transformation is about changing the way we are structured, how we work, and how we decide with the help of the technology. I think we have to be very clear in making those minor but distinct differences in the way we talk about digital transformation.

Digital transformation and customer-centricity

Michael Krigsman: Can you relate this back to PMI and to your work at PMI in terms of how you think about transformation and the connection back to customers and to the changes going on in society around you?

Michael Voegele: The more internal classic things of looking at this, so how do we simplify our legacy world? How do we standardize around the processes and maybe adjust or change the way we have been doing things for many, many years?

Then you talk about digitizing certain aspects of the business, but then also moving into automation, utilizing AI and ML to help us to do things more automated or even a better way in version and quality. Those things we can do in finance, you can do those things in P&C. You can do those things in the supply chain, in the manufacturing area.

When we talk about, for instance, a very simple example in our manufacturing environments, the manufacturing of our products is very sensitive to climate change within the manufacturing environment. How do we use AI and ML to optimize the quality of our products by providing the right conditions via the HVAC in those factories? Very simple examples how technology can help us to produce better products in a way that we have never been able to do it before because we have been monitoring more manually and adjusting the air conditions and the air humidity.

On the other side, with our smoke-free products, have now a little bit more freedom in the context of how we can create awareness about the category and the benefits of the category. Now we are moving, like many companies, more and more into a direct engagement with our consumers to show them the scientific substantiation behind it that our 500 scientists have created in our Neuchatel research facility.

We can show them how it impacts their personal health. We can actually go into a one-to-one engagement personalized engagement with our consumers, to help them to do what is really difficult because it's actually a behavioral change in switching away and stopping to smoke. We can help them much better in a one-to-one way with the digital capabilities that we have today to go through that change with them.

Michael Krigsman: How do you can convert or how do you think about threats in the environment and convert those into opportunities?

Michael Voegele: Threats can come (in our industry) from legislation. Threats can come from competition. Threats can come through ourselves in the sense of we are not delivering the product quality or the benefits of the product that are promoting. There are multiple ways of looking at this.

I think, when you look into this, what is extremely important is what the organization has learned pretty quickly; You have to look at your consumer journey. You have to understand those touchpoints and those distinct, decisive moments in that consumer journey.

You have to not just then use this from a marketing perspective, but you have to close the feedback loop back into your science, back into your product development teams so that you have that closed feedback cycle that you get from the consumer but then influences the way you design, improve, or create new products. I think that is a very important way because when you have that, you can create an advantage, a head start against the competition you are having.

Second, you can create conditions that, from a regulatory perspective, are extremely important. I want to give you an example.

I think we all are aware of the aftermath of the prices that happened in the U.S. when we talk about JUUL and how the market developed there. We have this firm belief that the use of access prevention is extremely important. None that is not a legal adult smoker should have access to our products.

Second, we also have a firm belief that this is not about growing the market, but it is for a distinct consumer segment which are legal adult smokers. We would never sell a product of ours in the smoke-free category to somebody who is not a smoker.

I think, when you look at those two things, how do you do this at a global scale with currently almost 20 million users? You have to rely on technology. You have to rely on age verification at purchase or at point of delivery.

You have to also think beyond that and say, "Even after that, how do I prevent kids to pick up the device when it's lying around somewhere? How do we create technology solutions that only unlock the device when we an age-verified person is picking it up?"

We start to think really a long way ahead of bringing technology in to solve imminent problems of the category and want to be the ones that set the standard and set the real industry standard when it comes to also be compliant and only addressing the people that can benefit from the new product category.

Michael Krigsman: You made a point that I think is very interesting. You said that it's important to close the loop from the feedback you receive from consumers back into product development. It seems, for many companies that are talking about customer experience, this is precisely where the gap lies. Customer experience is a relatively superficial concept, really a marketing concept, but you're talking about customer experience in a much more deep and profound way.

Michael Voegele: Many of the listeners have applied this. We talk about NPS scores, customer NPS, employee NPS. These are nice indicators, whether you're delivering something to the consumer, but it doesn't help you to really understand how you can improve.

When you look at us, the category that we are creating, and the ambition that we have, it is really about you can only create impact not just by creating nice experiences or services. You can only create impact when you fully convert a smoker to the smoke-free category. This conversion aspect is important and, as it is behavioral change, it's pretty difficult.

We have to close that loop and understand how we can help to do that behavioral change by the best way of the product experience but also by the service experience. Otherwise, we will not create the impact that we have set ourselves out for to create by 2025.

How to build a digital business?

Michael Krigsman: We have another question, a really interesting question, from Twitter, from Lisbeth Shaw who says, "How do you move a large legacy business (like your smoking business at PMI) to create or add a digital business?"

Michael Voegele: I joined PMI in the beginning of 2019, and that was a point in time where the organization already had gone through a massive journey. But I think I mentioned a little bit the investments and the numbers in the beginning about our smoke-free category.

I think, when you look into the organization and you look at what are those 70,000 people doing, you can say the vast majority of those people have been completely taken out of the existing business, have been reallocated towards the consumer direct awareness of the category and making sure that our products deliver against the promises that we have made, and focused really on developing those categories. If you think about it, it's almost like putting the old on auto-pilot while you move your crew in the plane over to fly a different plane.

This is the key to the success is the seriousness, the dedication from the entire board (with the support of the non-executive board) to actually say, "This has to happen. If this has to happen, we shift our full attention towards that category and towards the new way of doing business and put the stuff that we have done in the past on auto-pilot."

Michael Krigsman: This is – correct me if I'm wrong – the real substance of the digital transformation, what you just described.

Michael Voegele: I think maybe it's not the real substance of digital transformation. I think it's the real substance of becoming consumer-centric because you can say, "I'm consumer-centric," but you're still spending your marketing money and all the other things and nice things you have been doing in the past on the old things.

If you want to be consumer-centric, you have to say, "Okay, what's the problem of the consumer? How can I listen to the consumer? How can I fix problems the consumer has and might not even know? How can I create products and services around this so that I can make a change?" That is about consumer centricity.

It's really about the reallocation of resources (people and money) towards that piece of the business. I think that is a fundamental piece. You can't really go in and say plan B or plan C or give it a try with half the money.

I think there's dedication, there's a belief this will work and we will make it happen. I think it's a fundamental piece of that change.

Michael Krigsman: I think most people working in business want to do the right thing. They want to satisfy their consumers. Yet, customer experience is so hard. Where do companies tend to fall down and why is what you just described so elusive, so difficult?

Michael Voegele: The key piece is you have to let go of things that make you or your organization successful in the past. Now, how do you do this? It's actually understanding, okay, just because it was successful in the past doesn't mean it's going to be successful in the future.

Therefore, at a certain point in time, you need to make those bold decisions and say, "Okay. This time it's different. This time, we're doing it different. This time, we're allocating the resources and the money different. This time, we're actually betting ourselves on a new category or on a new product line."

I think, in times of ambiguity, there is not the one answer. I think it shows also that, more and more, while we talk about data and AI and fact-based decision-making, intuition of senior leaders of the organization are also still important in guiding the organization towards the future and potentially towards a completely different future of the past where those things that have been successful are not going to help anymore into the future.

Using data to become customer-centric?

Michael Krigsman: We have a very interesting question from Arsalan Khan again. Arsalan asks great questions. He said, "Do you provide data sandboxes for your employees to play with data and see what is possible? What kind of data do you collect to help create the next generation of innovative products? Just in general, how do you rely on data to feed this transformation and feed becoming and being customer-centric?"

Michael Voegele: No, we are not providing data sandboxes. I sometimes think a sandbox is something for kids to play in. We're not in the playing business; we're in the real world and a real business.

There are a lot of issues in doing that. You have to anonymize the data. You have different data protection regulations. You have to potentially even think about who has access to which part of the data because of segregation of duty environment.

Just providing data for people to play with, I don't think it makes a lot of sense because what is the problem you are trying to solve? The problem is not, I want to play with data. The problem is a business challenge or a business problem or the acceleration of a strategic project.

Now, this is real-life stuff and that's where you need to figure out, do I have the data? Do I have the data in the right quality? If I don't have the data, where do I get the data? But it's really serious and has to start with a business problem, with a business challenge, and not with people playing around with anonymized, meaningless data (at the end of the day) because do you do with it afterward?

Now, the other question is really about collecting data, right? I think, with IT systems, we have always been collecting data and mostly internal transactional data that we could use to analyze our performance. Most of that was backward-looking.

Now in today's world, you can really think about it. I think we talk about edge devices. We talk about the IoT element. We are talking about how this influences my supply chain. We talk about consumer engagement and how we learn about the specific needs and personalize this engagement with the specific consumer.

We are doing, I would say, almost the same thing that every company is doing that is in the business of CPG or FMCG that has a relationship, a direct relationship with consumers. But the same applies, of course, also in the indirect channel when we talk about our customers and partners in the distribution network where we can analyze and digitalize a lot of the business and, by that, gain more and more insight into data that we can use to make better decisions or even to automate certain aspects of the process.

Michael Krigsman: We have a lot of listeners on CXOTalk who are chief information officers. What advice do you have for CIOs who want to become closer? I think, historically, we would say closer to the business, but let's say closer to the customer because that was a real emphasis that you made earlier.

Michael Voegele: This is very hard to answer in a generic way because of the fundamental thing I also said before: Understand your business. Understand your industry. Understand your customers and consumers.

That is really something that is specific to every company and is different to every company. That's why I truly believe there's no real blueprint of how you run a successful transformation or digital business transformation.

I think, when I come back to what I said earlier, Michael, it is really about the nuance of saying, "If I focus myself on technology only, if I focus myself only on finding startups and finding the latest technology, I will not make a significant impact to the organization. I will just create a more expensive, old organization."

Shift away from looking at the technology to look at the business and look at the people (internally and externally) and how we can help them to create competence and confidence in those change journeys. That we have business conversations about what are those strategic challenges or problems that we are facing today or seeing coming, and only then start to talk about, "Okay, which technology can help me to overcome this?"

Now, this sounds very traditional and, of course, we are also (in PMI, and I am doing this a lot) challenging the status quo. What if we do things completely differently and use this and this technology? Wouldn't that be an advantage?

I think you also have to have the boldness to go in and challenge those practices because, as I said before, it is mostly about letting things go that have been successful in the past. This is not an easy conversation because specifically, those people that have created the success don't really see (at the moment in time where you start this conversation) that we are still successful but potentially not anymore two or three years from now.

I think that is the right balance in supporting, in looking at humans and business aspects rather than technology aspects, but also have the foresight to see that certain competition moves and/or technology changes can help to fundamentally change the things we have been doing.

Advice for Chief Information Officers

Michael Krigsman: What about for CIOs who come from a strong technology background for whom this kind of business thinking is not where they were trained?

Michael Voegele: Get yourself good buddies in your company and start learning. I think that's the only advice I can give.

Now, I've done my technical studies. I have spent the first ten years of my career as a software engineer with SAP, so I can say I am an engineer. But I very quickly found out that most of the problems (and potentially even back then in my SAP days) customers had with SAP solutions were not actually a technology issue. Were issues of the process, were issues of the understanding of what the system can and cannot do, so you have to go out of this view of a box and saying technology will fix everything.

I think this is not only advice I give to peers as CIOs, but it's a conversation that I have a lot with my IT teams where I say, "Stay curious, and if you have created expertise in the technology field, that's perfect. That's super because it will help you a lot but start understanding the business and the processes that we're working against because the combination of this will make it a multiplier, more impactful and powerful, and it will not help the company only but also your own career."

Michael Krigsman: I think, finally, to finish up, you just mentioned the IT team. What's the composition of the digital team, so your CDO hat? What does that team look like?

Michael Voegele: On that side of the team, we are not really talking about a team that is in a structure and you have five direct reports and they're organized. This team is really about senior people across the organization coming together on a project-based way of working and saying, "Okay. How do we create competence? How do we create competence across the business in the context that the people understand what digital, what technology, what data is all about? How can we help people that talk about agility and agile ways of working that this is a fundamentally different way of being organized and empowering people?"

For example, as a team, we came up and said, "Okay. Let's train all of our process owners on product ownership through safe training. What does it mean to be a product owner and how is it different to be a process owner? What are the advantages?"

Now, the interesting part is a lot of people came back and said, "Oh, I didn't know this is a much more disciplined and a much more rigorous process than all the things we have done in the past. I thought this is about not knowing and just going and doing stuff."

I think you can see that bringing this into the organization together with my peers and colleagues from other functions is, I think, the powerful element of doing that because what we want to avoid is that the rest of organizations sits there and says, "Hey. Here's the CDO. He will transform the organization, so let's focus ourselves on the things we have been doing so far."

It has to be inclusive, it has to be embedded, and it has to be cross-functional. The best way of doing this, for us, was organizing this in a project-based way of working.

Is the digital transformation journey ever complete?

Michael Krigsman: Arsalan Khan, who has one last question, let's give him the final word. He wants to know, "Does digital transformation ever end?"

Michael Voegele: No. You can remove the digital and potentially, five years from now, we will put another word in front of it, but I don't think business transformation will ever change. If you are not acknowledging that there is no end to change, I think you have already lost.

I don't know who said it, whether it was Amazon or Microsoft. "I want people to come into the office every day as it would be their first day."

I think what was meant by this was really about curiosity, fostering curiosity every day, again challenging what we have been doing, and figuring out new ways of doing stuff. That is, for me, transformation. This is about creating change and leading the organization through the change to sustain the success of the past also in the future.

Michael Krigsman: Okay. Michael Voegele, Chief Information and Digital Officer of Philip Morris International, thank you so much for being with us today and taking time.

Michael Voegele: Michael, thank you so much. It was a pleasure.

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