Digital Transformation at Scale

Michael Krigsman: Welcome to Episode #205 of CXOTalk. I’m Michael Krigsman. CXOTalk brings together the most interesting, innovative leaders in the world These are people who are genuinely shaping the future. And, I’m again, Michael Krigsman. I am an industry analyst and the host of CXOTalk. Today, we’re talking with a very interesting gentleman, an old friend, who is named Didier Bonnet, who is a senior executive at Capgemini, one of the largest consulting firms in the world. Didier is an author, he is a researcher, and we’re going to be talking about digital transformation inside large companies. Didier Bonnet, how are you?

Didier Bonnet: Very well, thank you. Glad to be with you.

Michael Krigsman: Well, it’s so good to see you again! The last time we spoke was about two months ago, and you were here in Boston?

Didier Bonnet: ...over dinner!

Michael Krigsman: Over dinner! And so, I’m so thrilled that you’re here on CXOTalk.

Didier Bonnet: Oh, thank you! Thank you very much for inviting me. Delighted!

Michael Krigsman: So, Didier, please tell us about Capgemini, and tell us about your role at Capgemini.

Didier Bonnet: Ok. So very briefly, I belong to the strategy and transformation arm of Capgemini, which is called Capgemini Consulting. It’s about 3,500 consultants focused entirely on digital transformation. And of course, we’re part of the bigger Capgemini group, which is about 13 billion dollars, 180 thousand people worldwide really delivering the technology that we’re trying to shape as consultants. Within that time, I run the digital transformation practice globally, and also responsible as the exec sponsor for our research partnership with MIT.

Michael Krigsman: So, you spend a lot of time talking with large organizations, and you wrote a book. And you know, why don’t you tell us briefly about the book that you wrote as well, because I think that will feed into our conversation.

Didier Bonnet: Ok. So I think the whole, without going too far back in history, I mean one of the things that surprised me - this is going back to around 2009, when I started really looking at this phenomenon - most of the stuff that was written in the press, or that you could see in research, was around industries that were really either tech industry, or Apple, or Google, or the music industry, the publishing industry. So all the industry that I like, or companies that I like. Altogether, these industries represent about 6% of the world economy. And, I sort of said, “you know, if this phenomenon actually transfers to many more industries (which I believed at the time), then we have 94% of the world economy which is not looked at.” And this 94% is composed of fairly large companies in very traditional industries like pharmaceutical, like manufacturing, like banking, insurance, retail … So I really wanted to focus on really looking at what happened: How do they shape this transformation in large companies? Because, as you well know, large companies have been in existence for hundreds of years, sometimes with loads of legacy systems and organization. And therefore, the transformation is a really complex endeavor. So we’re really focused on that.

And I found a wonderful partner with MIT that was willing to get along with the journey with us. And really, for years, try to put some frameworks and understanding and data around what’s happening in digital transformation in large firms. In those days, very few people were talking about digital transformation, but we really were focused on really shaping: “What does it actually mean? What areas of the firm does it actually cover? Where do you actually start? What kind of capabilities do you need?” And really the book is about conveying those frameworks, particularly how you go about them - evolving and changing your organization for digital technology.

And, the purpose was really to say, “You know, if we think what’s happening right now with those technologies is completely magical and superb, we ain’t seen nothing yet. What’s coming ─ and you know that very well what’s coming down the pipe ─ with robotics, with artificial intelligence, is going to make the software technology even more amazing. And, therefore, the opportunity for business is even bigger.

But, the only firms that will be able to leverage that are the firms that are able to transform themselves and have gone through a few cycles to really integrate those technologies for business benefits. So there’s really the story of how we … So after four years, we published that book and since then, we’ve continued drilling down into the topic in a more precise segment of the digital transformation journey.

Michael Krigsman: I remember when you were doing that research before you published the book, and at that time, digital transformation was a relatively new concept, and you were right on the cutting edge. Today, if we fast-forward four years, digital transformation has become kind of this almost meaningless buzzword. Every marketing department, every business marketing department, it seems, have adopted the phrase, and it means whatever they want. And so, from your standpoint, having been researching this, and really one of the pioneers in this, what does “digital transformation” actually mean? If we strip away the jargon and the hype, what is digital transformation?

Didier Bonnet: Yes, so I think you’re right. This...Today, everybody who’s either selling a product or doing something with technology is either using the term “digital transformation,” and unfortunately I couldn’t come up with anything different. So, I will stick with that for now. But to me, it’s kept its original meaning. It’s really how do you fundamentally transform the business operation and the customer experience, or the business model of a corporation through the use of digital technology? And the emphasis is really not so much on the beauty and the power of the technology, but more of its effects on organization for the benefit of the customer or productivity or efficiency or whatever. So, I still really, in my head, every time I talk to a client or I start to figure out a problem around that, really try to think in terms of, you know, connecting with my customers, which are themselves changing and getting more digital about…

As you know, today, the operational side is really taking great prominence with the Internet of Everything, but also automation, and artificial intelligence; and also thinking about business models. Because, we’re in a world where equally the word “disruption” is being bantered around all over the place ─ everybody’s getting “disrupted” and it’s all about disruption. And really try to get behind that and say, “Ok, who is getting disrupted and at what speed?” and “How do you defend, as a large corporation, against potential disruptives?”

Underlying all this, you see there’s a big layer of digital platforms, which is the next evolution of the IT platforms, that is happening. And also, a massive endeavor of analytics. You know, today we talk about that Big Data and analytics. But, if you look at these large corporations, just getting to the point where you can condense the data that you need, and then getting to the point where you can take that data and make different decisions is a massive endeavor for these ─ I’m talking about, you know  ─ multibillion dollar global organizations that are thought to go through these processes.

So to me, the point of these exercises is really to say, “How can I really transform my organization through the use of digital technology?” With the main goal being, “Can I actually move the needle on my bottom line or my top line?” Because, that’s what business is all about.

I forgot to mention one thing, which is that I think I’d like to emphasize (which is equally important is, in note of this) I still have the fundamental belief that despite the fact that these transformations are really technology-based, and very complex technology, there is still a massive human element behind that. So, organizations are made of people, and I think we have to understand that as part of a transformation, if you don’t get your people on board, upgrade their skills, and really engage them in this transformation, usually it’s not a good sign for succeeding in this kind of transformation. So that’s kind of our, if you know what, it’s a pretty broad topic. Not everybody’s trying to do floor-to-ceiling-type of transformation. You can start with your customer experience. You can start with operations. But fundamentally, these technologies are really going to touch every single point of the organization and to some extent, that’s one of the messages I said in the book. Hence the need for a good strategy and a good vision, because you could spend a ton of money to try to, you know, change everything in your organization. But, you can’t truly change every part of your organization with technology. So one of the exercises is, “How do I focus my investments to make sure that there is a payoff?” and also “Whether the organization can actually deliver on the vision, and on the strategy?”

Michael Krigsman: One of the pieces that I think is so interesting, is the fact that we’re always talking about putting the customer in the center. And why is that so important for digital transformation?

Didiet Bonnet: So I think that’s a good point. I think to be honest in fact, up until a few years ago, if you start[ed] a conversation about digital transformation with most executives, you’d end up talking about digital marketing, social media, and this kind of discussion. Primarily because the major focus, I don’t know, it’s probably not 100%, but it certainly is a large percentage, maybe 80% of the activity was focused on the front-end. And, to be honest, there’s nothing wrong with that. I mean, customers are what the firm’s all about, so it’s quite right to start with the customers. But I think it’s probably missing a big point in terms of the other potential parts of the front end that you need to align. And by that I mean that, for instance, if you take an application where you’re changing the way that you connect with your customer, you probably… a big part of the work is going to be around the customer experience, but a big part is going to be about, “How do I deliver on that promise from an operational perspective?” And if you think about e-commerce or short-run delivery, or the last mile for if you’re in the retail industry, these are all operational issues that you have to solve at the back of the customer experience. 

So the reason mainly that people, in my view, start with customer experience is a good reason, which is: How do we really improve the customer experience from, this kind of silo delivery that we have? And also because digital has just multiplied the touchpoints so much, that we have, you know: kiosks; loyalty cards; social channel ─ I mean, you name it. We have a multitude of touchpoints with the client; it’s becoming more and more complex to connect in a seamless way with your customers. And hence, all the projects and endeavors that we see over the last few years around multichannel integration, because it’s an incredibly difficult exercise to do. And I think it’s quite right to start with the client.

Probably also, as you go in front of your board and ask for investment, it’s probably easier if you say it’s about [the] customer than it is to say it’s about something else in the organization. So there’s probably that as well. But I think the focus on the customer for me, is every transformation that I see being successful has always been fairly customer-centric, and really taking an outside view of the organization. Because you know….Most industries today are facing a set of clients that are fundamentally changing themselves, and we talk a lot about Millennials. But, I think it’s not just age groups that are changing, so it’s not just demographics that drives that. It’s actually behavior. So, we’re seeing...And if you look at the research, you will find that demographics is only a good indicator, but you find a very traditional and conservative 30 year old, and a very digital-savvy 55 year old. So, you cannot be a perfect guide.

So that is really important, because the way these people want to interact with the firm, want to engage in … with the firms are fundamentally different. And the more traditional corporations have really got to understand that and recalibrate how you want to do banking. I’ve been banking with the same bank for 15 years. I love them and I’ve never talked to a single employee in all these 15 years, and I’m happy with that. So those are the kind of things that are really changing the way that we connect with our customers.

Michael Krigsman: We have an interesting comment from Arsalan Khan on Twitter. And he’s pointing out something that I was going to ask you about, which is: “Is it fair to say that digital transformation is the business process re-engineering of our time? Or is there something different here?”

Didier Bonnet: Yeah, so it’s a very good question. I really like that question, because I actually believe so. I think you actually have to look at it as a portfolio. So digital re-engineering, re-engineering has bad press. I don’t know why, but it has bad press. But, I think yes. A part of digital transformation is about re-engineering. So in other words, if you’re touching… if you think about a two-way matrix where on the one hand, you’re not really covering the entirety of your value chain, so you’re looking at maybe a single department like maintenance, or something like that; and on the other hand, it doesn’t really have an impact on your business model. Then, you’re truly in the world of re-engineering with digital tools. And you know what? There’s nothing wrong with that. Actually, I love projects and programs. And I love to see clients who have got a good dose of this kind of re-engineering aspect to it, because that is a route to a faster payback, and it’s also the route to raise investment capacity that you can then invest in the things that are truly transformative. So, in other words, the things that are much more complex to deliver from the value chain perspective ─ and I mentioned multichannel integration, for instance. That covers something you want to work right across the silos and the organization.

Or the things that are changing your business model. And if you think about, you know, what GE has done with the, you know, the industrial internet and Predix. I think that’s a good example of a digital transformation that’s fundamentally changed the nature of your business: how you go to market; the kind of skillset that you have to hire; and so on and so forth. So, I think you have to think about it like a portfolio of activity where some of it will be more re-engineering, some of it will be tweaking your business model without changing too much. So, think about the insurance companies selling insurance by the hour, or mobile phone. You know, that’s a fundamentally new offering, but it’s not really changing your fundamental business model. Then you have the really complex, I would say, cross-value chain type of transformations. So, if you think about banks, and telecom back-office system, it’s a mind-boggling endeavor to actually start, you know, modernizing and automating this current system. And then in the GE example I’ve just taken, where it’s complex from a value-chain perspective, and complex from a business model perspective. And these are kind of the moon-shots and the big bets that people are taking, and I think GE is going to …You know, if you think about when … how long they’ve taken to actually do that. You know four years is actually a very short time. And it’s an example of an impressive case.

But, I love the question, because people tend to think always about disruption: “We have to change everything!” No! I think you have to think every type of these… within a big digital transformation, you have different types of programs, and each of them have got a different risk profile, and a different investment profile, and a different timeline. And actually, it’s good to manage it as a portfolio so you can add your bets, and your risk, and your investments.

Michael Krigsman: It’s very interesting to hear you describe it as a portfolio of activities with their own investment, their own timeline. To what extent are companies making the big bet change, that you were talking about at the extreme? I mean, if you read the press, it seems like every other company is, you know, completely rethinking their whole business! But …

Didier Bonnet: ...Yes, and…

Michael Krigsman: … But I was going to say it’s not quite …

Didier Bonnet: So I see different types of companies. I think they are companies… You’re absolutely right where we have big discussions around, you know: What if we get disrupted over the next three years? We need to change our business model completely. You know, it’s going to be a radical change for our capabilities, and so on and so forth. And then when you look at the digital transformation roadmap, it’s mainly optimization. It’s mainly optimizing the existing. So, there’s a gap between the strategy thinking, and the actual delivery. So I think that’s one case.

I do think that this is why I really emphasize this notion of managing as a portfolio, because you need to have both your eyes on protecting what you’ve got today. So, you’re getting attacked in your backyard on a daily basis by all sorts of competitors, being the traditional ones, but also ones you’ve never heard of, or people that are not even in your industry. So you have to protect that backyard. And at the same time, you have to keep an eye on, “What is the future state of my organization if I want to be successful and doing well?” So you have to have kind of two heads all the time, and to some extent design your programs that way. Hence, my point about portfolio, because the way you tackle those initiatives are very different.

 For instance, let me give you an example. If you think this technology might have an impact on your organization but you’re not sure ─ things like AI or robotics, or really anything today; 3-D printing; and it’s quite okay to have what I call “edge” innovation. You have a sandbox or an innovation department that actually talks about this technology; try all the math; see if there’s some sort of application… But this is a long-term process because it takes a while to nurture those technologies and bring them to the business side. But it’s also the reasonably limited risk for an organization to do that.

If you’re in a case where your business model is entirely dependent on an acquisition of skills. So, for instance, if you’re a bank, and you have very little data analytics capability today, then your route may be more in acquisition, because the speed to market becomes essential for your strategy. So, the acquisition becomes a nice way or a quick way. It’s not cheap, but a quick way to get access to these skills.

Equally, I mentioned earlier on the very complex transformation that some industries are contemplating today. You can do it in house, but you can also greenfield. So, in other words, a few companies are actually doing that as we speak, which is basically: If I know it’s going to take ten or fifteen years to change my call systems and my call processes within a firm, then is it not quicker to start with a greenfield operation, where I can build a stack which is completely different of new technologies and new processes targeting a certain segment of the plan and then slowly migrate my existing base to that.

So I think that’s, again, the notion of every piece of the portfolio that I’ve described earlier has got different ways to go to market whether you have time or not, whether you have money or not. And it includes things like innovation processes that you could put in place, whether it’s a fund or a sandbox, or an innovation center in California or whatever, or whether it’s acquisition, or even greenfield. So that’s kind of the panoply, I would say, of tools that you could use to actually deliver on that.

But the point you made is very valid. You have to do that, because you have to keep an eye on what you can optimize today, which is worth doing from a technology and a re-engineering aspect. But, also the part that you’re going to start touching your business model, and therefore, creating some real danger in your competitive position. And this has to be tackled too, through acquiring capabilities and understanding where the market is going to end up, and really taking a position early on.

The trick that’s the most difficult in all of this ─ and I see most CEOs I talk to really struggle ─ is everybody talks about disruption, but nobody’s putting a timeline on it. And so, for a businessman, if it’s all going to collapse or go off ship in two years, or in twenty years, it has massive different implications as you can imagine. And I think part of the strategy ─ part of digital transformation ─ I think really needs to crack, in a pretty deep and fundamental way is: How long are we talking about? And because, if you’re …

I’ll give you an example where this has become an impediment actually. I see a lot of financial service institutions, for instance, that I mean they are being disrupted left, right, and center by all these startups and businesses. You listen to them, you feel like the business is going to collapse tomorrow morning. And then a month later they publish their results and they’re up 20% in profits, up 10% in sales or whatever. And therefore, and this is good. But, the problem is that there is no way to generate the need and the excitement to actually transform, because there’s no pressure from the top. If you’re in trouble, it’s easy because it’s what I call a type of crisis-induced type of transformation. They’re easier because you have a natural enemy, which is your business is degrading very fast. So if you think about the post office business, for instance, it is clear that the latter business is going down like a stone, and it’s not going to come back anytime soon. So you have to think about a fundamental shift in your business.

If you’re in the bank, or in pharmaceutical, or some of these industries, and your results are great, and you’re still growing and making good money, then it’s harder for maybe not the CEO, but at least to convince a sufficient population of your exec. to actually have the empathy and the willingness to really change the organization. So, I think this notion of pressure is pretty important.

Michael Krigsman: So you’ve been talking about the business and really, the human element of transformation. But, you mentioned earlier, when we were talking about the components, “What is digital transformation?”, you mentioned earlier about platforms and data. And so we know the technology has some role to play here, and what is the role of tech?

Didier Bonnet: [Laughter] It’s huge, it’s huge, because it’s … So first of all, I think the notion that, and it’s a notion I’ve been fighting against for a long time, that we have technology on one side of the organization and the business on the other is such an old-fashioned concept. I mean, I think we’ve got to get rid of that as soon as we can. Unfortunately, that’s how we designed organizations ninety years ago. And you know that for a very long time, the IT department or the technology department had the virtual monopoly of technology introduction in the firm, and we know that is gone! This world is finished.

But it goes further than that. I think the education of executives in organizations needs to change. By education, I don’t mean your university degree, but what you yourself learn personally. It is virtually impossible for, in a company, to have executives today that have absolutely zero tech-savvy competencies. You know, it’s impossible. You know, in the US, I must at least have a collection of fifteen business cards of people whose job it is to be CTO marketing, and I always said, “What the hell is that?” And, they usually tell me, “Well, you know, there is so much technology just around the marketing function, or just around the automation of marketing tasks, that you need to actually start sifting through all of these technologies to truly understand what that can do to your business.”

So my point is, technology, with a big T, has a role to play at any point of this transformation. It’s not going to go away, and I think it’s more the opposite. I think we’re seeing more of a fusion between IT and the business side, where IT people have got to be much more educated around the business challenges, and the business strategies that the company is trying - to become businesspeople. And equally, the businesspeople ─ the business side ─ has got to become much more attuned to what technology can do for them. It doesn’t mean that each are going to replace each other; that’s not what I mean. But I think there needs to be a lot more communication, a lot more cross-functional collaboration between these two teams. And therefore, the levelling, even the language to be able to communicate is important. And of course, the best companies I’ve seen in the research world, the companies where the businesspeople were totally okay to have a technology conversation, and then the IT guys were totally okay to have a conversation about channel strategy. And that’s where you want to end up - as people that are really…

Because [this] is not the world where (with maybe a few exceptions in the world of systems and records) a world where we were having technology developing in a dark corner ─ all this kind of stuff, and making sure all the lights are switched on is over. If you want to succeed in digital technology today, or in digital transformation, these two worlds have absolutely got to fuse. And I must have done 55 or 60 projects, which were usually titled, “How do we align IT with the business strategy?” And I think this is, again, over. It’s not about alignment; it’s really about fusion. And the way that you deliver these projects has got to be with cross-functional, multiskilled team that includes IT, creatives, marketing people, supply chain people, and so on. So we really have to … to some extent, we’re breaking down some of the natural barriers we’ve built in the organization over the years. And this is, in a very large organization, very hard to do.

So back to your question. Technology with a big T is, to me, 100% component part of digital transformation. And, the IT groups within that called the CTO groups within that, absolutely have got to play their part. You cannot do business transformation properly without the complete collaboration of these communities. And I know a few companies have tried, and I’ve seen very, very few succeeding without actually involving the technology side of the business.

Michael Krigsman: I want to remind everybody that you are listening to CXOTalk. I’m Michael Krigsman, an industry analyst and the host of CXOTalk, and our guest today is Didier Bonnet, who is a senior executive with Capgemini consulting, and truly one of the pioneers writing and researching digital transformation. So, Didier, you were just talking about the need for businesspeople to understand tech, and technologists to understand the business. But when you have this kind of environment, what actually is the appropriate role for IT? In the best organizations that you’ve seen, what’s the role of IT?

Didier Bonnet: Right. So, the organizations that I’ve seen that were really successful at digital transformation are I think, first of all, I will go back to a leitmotif of our research and the book, which is that it’s leadership plays a massive role. So, you just have to look at the leaders. And some of the leaders that I see were CIOs, or CTOs driving or helping to drive these transformations, are people that are absolutely understood what this transformation is about ─ understood the way that you deliver. The way that you experiment in a digital environment is very different, and absolutely part of not only delivery of the system, but the conceptualization of the business problem, and the business solution. So, you do have to have a different mindset.

I’ve also seen the opposite. I’ve seen people that have stayed in their traditional model of IT delivery. And I personally don’t think there’s a great future for these type of leaders, because I think the world has moved on. But equally, I think we’ve gone a little bit too far sometimes in the price where I see a lot of us talk about “bimodal IT”, and “dual speed IT”, as the panacea of everything. I’m always a bit careful, because I think I’ve seen, you know, a CIO actually running bimodal-type IT within the IT department very effectively. So, it’s not a matter of taking out some responsibility for IT and putting it somewhere else, whether it’s in marketing or somewhere else. It’s more about can we actually have these dual demands of, on one hand, having some systems which are absolutely fundamental to the corporation being run with 100% safety, 100% reliability ─ if you think about the back office of the bank, for example, a transaction processing system. And that is not going to change; you’re still going to have to have this level of utmost security and delivery. But on the other hand, you have a more, I would say, untraditional type of IT, where you’re doing a lot of piloting, a lot of proof of concept, a lot of data capture. So, you can actually trial many more experiments, and then if they work, scale them. If they don’t work, throw them out; then move on.

And, the type of competence of people that you put in these two boxes are very different. The type of IT delivery process, delivery methods, that you use are very different than at once … I promised myself that I would not mention the word “Agile” but I’ve just done it. So, [laughter]... So you know what I mean… So all this is very different. However, it doesn’t mean that they have to be separated from the technology function. I’ve seen cases where it worked extremely well, when it stayed within the IT department because the technology leaders have the perspective - the view and the vision to say, “I get what you’re trying to do. I understand, and I will reshape my IT department very, very differently.”

Equally, we’ve seen examples where, you know the IT [garbled] in this traditional mode of everything you say ends up with two or three months of requirements gathering with the business, and that doesn’t work. So, people have recreated IT functions or digital IT functions, separate from the traditional IT. So, you don’t have to do it; it just depends on the kind of leadership and competence and capabilities you have within the IT function. And that’s why you’ve also seen cropping up digital divisions, or digital development units, all over the place. It’s really to try to capture that kind of new developments that these are absolutely essential to the world of digital.

But, there’s [garbled] there is no silver bullet that says it should be in IT, or we should throw away IT and start anew. You need both and you need a little bit of … you need a lot of leadership from both sides ─ the business and technology ─ to really figure out what is the best solution for your particular organization. Because, for instance, the form of your particular organization can be very cultural. So if you’re a highly decentralized organization, and you’re building a very centric and centralized type of IT, digital IT solution, it’s very hard to make it work. So, you have to really figure out how the organization is constructed ─ what’s the culture of the organization, how people work, how it’s structured ─ in order to do effectively these kind of IT developments and digital developments.

Michael Krigsman: We have an interesting question from Shelly Lucas on Twitter. And you know, we always talk about the best practices with high-performing organizations, and Shelly’s asking, is there something that you have seen, in relation to digital transformation out in the field, that just shocked you?

Didier Bonnet: Yes, there’s many. Many. I’ve seen a few shocking things. I’ll tell you the main one, and it was a surprise to me. I’ve always had an eye on the human aspects of this change, for obvious reasons. Because I’ve studied organizations for a long time, I know that an organization is just a collection of people, [in] the end. And if you don’t get the people aligned and engaged, then nothing will happen. So, I spent quite  a bit of time trying to understand how is it we are currently facing one of the biggest skill change, or skill improvement, or skill update in our corporation?

Some of the biggest that I’ve seen in my career is that we are all to make an effort within an organization to really challenge ourselves ─ to reskill ourselves ─ whether you’re in marketing or in technology, or anywhere. And yet, I’ve rarely seen the HR departments in large organizations being in the game or at least in the driving seat. That was a big shock to me. But, there were a few exceptions where HR were really taking on the baton. Usually the people that were caring were the operations people ─ the COO, or the CIO, or you have the people who really understood that, “Oh my God, we’ve got to get the people with us. We’ve got to up-skill the whole marketing department to be able to handle the digital capability, or we don’t have any … You know, we talk about analytics but we don’t have any data scientists to speak of. So where do we get them?” That kind of stuff.

So, this skill change is very important. Mainly it was driven by the business, and I think my plea to corporations is we have to really, rather than counting the number of holidays, there’s a bigger problem. There’s a problem that needs to be tackled, which is “How do we mass-skill?” And we’re talking about scale ─ sometimes hundreds of thousands of people. How do we mass-skill the population? Because otherwise, you will end up, which is already happening in some firms, with a kind of two-speed community. It’s not two-speed IT anymore; it’s a two-speed community of people who get it, and people who don’t. There are plenty of things that, when I say HR, I’m not pointing the finger at the department or anything.

Largely, the people who care about the development of the people within an organization, and being able to design programs, but really re-skill the organization. And, of course, it’s about hiring and training. But, it’s also about incubating. It’s about conquering. It’s about doing reverse-mentoring program. Whatever tools you can use, there’s a whole panoply of them that you need [such as] building your own transformation university, which many companies are doing right now. So it’s using this tool to really scale or mass your population, because if you… One of the findings we had from the research was when you ask the corporation, “What is the biggest impediment to you accelerating your transformation, your digital transformation?” In 80% of the case or 77% of the case, the answer was “capabilities and skills ─ people”.

So, we’ve got to tackle that problem, because it’s not going to go away. And we don’t have the luxury of waiting until all the people who are not skilled retire and then we hire new ones. So really, my plea to the community in HR, is to rebuild … We used to call them in the old days “organizational development, [or] management development people” ─ people who really get the business side of up-skilling an organization. And I think these people need to come out, or be hired to really support the transformation, because the business is already overloaded with digital initiatives and transformation. And we really need support from every function in the firm. So that was a big surprise for me during the research.

The other one was the number of people who say they’re not talking now… CEOs mainly, who would say, “Yes, digital transformation is important, but I will wait until my competitors move,” or “I will wait until something else happens, and be a fast follower.” And, you know, the number of people … or delegating, or saying, “[I] put one guy on the job to look at digital transformation,” and you find out the person is Level -5 [Level minus 5] in the organization. So, you know from the start that this is not going to work. This lack of awareness, and I think it’s getting better over the years, but this lack of awareness of what we’re talking about here, which is not another fad ─ you know another technology fad that’s going to go away in two years ─ but something that’s really going to profoundly change the shape and operation of your organization. So those would be the two main ones.

Michael Krigsman: We have just a few minutes left. Now, where does all of this go? Where is the future of digital transformation? And maybe, you can give us a glimpse into some of the research topics that you’re focused on next, because I know you’re beginning your research and your writing cycle, authoring cycle. So, where are we going?

Didier Bonnet: So, yes. So this is a question I get all the time. They say, “Didier, you keep talking about ‘digital transformation’, but surely, now everything is digital so we should stop talking about digital transformation,” and I wish it were true. Unfortunately, it isn’t. I think we on balance … I think very, very few corporations have really, truly transformed to the point where they are totally at ease with integrating all these technologies. And second, the flow of technology is just not going to stop whether we like it or not. And I have a lot of clients saying, “I wish that this technology could just stop for two or three years so we can integrate all this, and we’ll see the next way.” But, that ain’t gonna happen.

So, we’re going to see more advanced technology coming on board. The cycle time between research, prototyping in the labs, and going into the business front is reducing. I mean, think about 3-D printing. We’re getting composite material 3-D printed nowadays, and it’s already being trialed out in the business world. So, really reducing cycle time. So, I think this agility ─ it’s a bit like running a marathon, you know. You need to do a lot of digital transformation because it helps you to stay the course in the flow of all this technology.

So where is it going? I think for the firms that are really, I would say, at the forefront ─  the firms that we call “digital master” in the book ─  I think what you’re starting to see is fundamental change in the way that these corporations actually work. And they’re around not just the digital mindset, but the way that, for instance, the organization is flattening. And I’m not a believer in the completely flat organization with no boss or anything. I don’t buy that. But you do see the organizations flattening. You do see a lot more decision power coming closer ─ where the large decisions are being made or the important decisions are being made because you can at the same time delegate power but at the same time control the data. So, that is happening. And therefore, the decision base ─ database decision making ─ is becoming more of a way of operating for these kind of firms. And you’ll see also a lot of automation happening, which has got positive implications for productivity and efficiency, but also some pretty negative implications for staff and employment, which we’re going to have to tackle.

So I think there’s a layer of fundamental organizational change that is happening to corporations, which is starting to change the shape of these 19 year old organizations that were designed basically on the military model, where information was cascading top-down. There were middle managers and all this kind of stuff. So I think we’re seeing a crumbling of that. It’s just it’s very hard to figure out what’s the end-game. So, we tried to put some fresh [thinking] around that with the MIT [garbled…], try to get at least some directions as to where the organization is going, but it’s very, very hard to figure out where is the end-game. It’s fundamentally going to change the way that we structure functions within the firm, I believe.

And then the second part of where the future is going is I think we’ve got to… I’m a firm believer in that we need to recreate and reinvent corporate innovation. You know, one of the things that large firms are always scared by? Startups. It’s always startups that are going to eat your lunch and you get [you. You know ], somebody tomorrow, [a] 200,000-people insurance organization is going to be killed by two guys and a dog in San Francisco. Maybe. But I think the corporation can fight back. There’s one lever that a corporation can use is scale. Because if you talk to a startup, that’s what they want. They want scale. They want geographical spread. They want distribution channels. So, it’s how … We need to really fundamentally reinvent that corporations actually do innovation. And it’s quite a complex endeavor, because it’s again, it touches not just the creativity.

The problem with innovation is not ideas. Everybody’s focusing on ideas, but that’s a piece of the problem. You can get ideas from everywhere. The problem is how do I get my idea to a business application through, you know, my organization: through prototyping; through testing; through experimentation; and then being able to scale? So today, I think quite a few corporations have got the idea of, or have got the concept of, “I get the point where I can see, and conceptualize a solution that provides a hard proof of concept.” A load of companies are doing that. But I still see clients that have got the proof of concept running for 2, 3 years because they can’t scale it. There is no process within the organization to scale it, no capabilities to do so.

So, I really believe that the two frontiers that we are looking at right now. One is the notion of how is the shape of the organization going to change once our organizations are very transparent, very data-driven, and so on and so forth; and therefore, what is it that we need and don’t need in this new world to actually operate this organization? And secondly, how do we actually use our scale to really completely reinvent the way that corporations actually do innovation? Let’s talk about, you know, talking to three startups, and open innovation. Digital innovation is not about talking to a startup or taking your board to Silicon Valley to meet with Google and Apple. That helps, on the cultural side, but you really need to fundamentally change some of the processes, systems and culture within the organization to really drive these changes. In particular being able to scale, because the scaling is where the business case lies, not in the prototype. Sorry.

Michael Krigsman: [Laughter]

Didier Bonnet: Those are two topics, by the way, that we are starting to research for the MIT right now.

Michael Krigsman: Wow. Well you have given us an incredible amount of advice, and this time has gone by so quickly, so I would like to thank Didier Bonnet, who is the Senior Vice President and Global Practice Leader for Capgemini Consulting, for taking the time and speaking with us today. Didier, thank you!

Didier Bonnet: Thank you!

Michael Krigsman: You have been watching Episode #205 of CXOTalk. Next week, there is no show, because of Thanksgiving here in the US, but we’ll be back the following week, and I hope you’ll join us. Thank so much, everybody, and have a great day.