Digital Disruption Series at Scheller College of Business at Georgia Tech, FULL PANEL
Good. Evening and welcome to. The inaugural. Presentation. Of, digital. Disruption. Speaker. Series, we. Are delighted that you're here with us tonight. My, name is Maryam, Alavi, I'm the Dean of Scheller, College of, Business at Georgia Tech and. Just. To give you a framework for our discussions. Tonight. It. Used to be said that change. Is the only constant. But. Being. In the field in terms of research, and education being. In the field of digital strategies. I'm. Beginning. To think that. Even. Change, is changing, now and. The. Primary, evidence of that is really the scope the scale and the speed of. Digital. Disruptions. And, diffusion. Of digital, technologies. Just. To give you an example. It. Took the, internet, for. Years, to reach 40. 50. Million, users, four, years to reach 50, million users. The, internet. You. Might have heard of the. Digital. Game, pokemon. Gold. It. Took Pokemon. Go. Just. A few hours to. Reach 50. Million users. So. To. Help you develop some insights, and navigate. Digital. Disruptions. And innovations. Scheller. College of. Business and, Accenture. Partnered. And teamed. Up together, to. Introduce this speaker towel speaker, series on this important, topic. Scheller. College is, a very innovative and, a top-ranked. Business College at. The. Intersection. Of business and technology. Accenture. Is a world leader in, working. With organizations. Of all sizes across. Different, industries, to. Help them leverage, technology. To. Help them grow and compete, in the digital, era I. Cannot. Think of any, two other organizations. That are better equipped, to. Come together, for. Launching, this wonderful. Speaker series this is an important, topic and it's a very timely topic. To. Give you an example. The. Panelists, tonight among ourselves we, have about a hundred, years of experience. And expertise, in the digital, arena, so. We, have, been in this area for a long time so. What is digital disruption. We. Are really talking about. Exploring. Exploring. The ways in which organizations. And managers. Can. Embrace digital technologies. To. Successfully. Compete. To. Create value. And, to. Create the. Workforce, of the future, so. I know, you're here to listen to our speaker, to our panel, wonderful, panel discussions, so, let me just take a few minutes to introduce and call our, panels speakers. Off to the stage, so. Let me start with David, Godsman. David, please come up. David. Is the, chief, digital. Officer at. The coca-cola company. In this role he. Is responsible, for developing the, digital, transformation, strategy.
For The coca-cola company. And come up with innovations. In. Their products, and bring. Efficiency, to their operations, David thank you so much for being thank you for having me. The. Next panelist, is our very own. Sabe. Mitra sorry please come up he's. The senior. Associate. Dean for programs. And in, this role he is responsible, for, innovations. And delivery of top-notch. Undergraduate. MBA. And, non-degree. Executive, development program, he's, also a professor of information, technology. Management thank. You for being here. Last. But, not least is. Michael. Sutcliffe. Michael please come up Mike. Is the good CEO of, Accenture. Digital he. Works with clients to develop effective to, help them to develop strategies and to compete effectively in, the. In, the area of digital disruptions. Under. Mike's leadership. The. Revenue, from, digital. Services. At Accenture, has grown to 13, and a half billion, dollars I, also. Want, to thank Mike for partnering. With Scheller College and, being the champion, of the, speaker sellers at Accenture, so, thank you all for being here and let's get started. I. Will. Start by asking a number of questions I. Sometimes ask the same question, from everybody, sometimes, I ask different questions from, different people based on their background, and, the. Context, that they are familiar with and we, are gonna stop and, allow 15 to 20 minutes for questions. From the audience, so my first question, goes to. Goes. To Mike and sabe, so. The question is in the digital, transformations. Incumbent. Companies, seem. To be at a disadvantage when. It comes to responding, to some of the, digital. Innovators. Such, as the Amazon's ubers, etcetera, so. Why. Do you think some companies, are more, successful. Incumbent. Companies are more successful in, responding. To some. Of these early. And. Digital. Entrants, into their space. Sorry. You want to start you, go ahead okay well, I guess you know what, I would start with is I think, its culture I think it's the management teams appetite, and interest in learning their. Willingness to be open to ideas from the ecosystem and, a, recognition that what's, worked in the past might not work in the future so if they're if, they're open to learning they're. They're, willing to consider that the. Business, around them is gonna change that their customers expectations are gonna change that the quality, of their product is going to change then. They start seeking, input from others and learning, from others and if they can do that they can be successful the. Companies that feel, safe secure and stable, sometimes.
Just Don't have that appetite and it takes a little, bit longer and usually they wait for a little bit of a shock to tell them that it's time to move sabi, do you want to add to that sure. Perhaps. This is a little long, answer, but I think you're right that a, lot of times you know especially the examples, you gave over and, against. The taxicab industry and, Amazon. Versus, retailers, the. Incumbents, seem to be at a disadvantage in. Those, examples and I think they're really fundamentally, you know two reasons, for that one is it's. Really about not. About strategy. About execution, and execution. Is hard for large companies so, if you know if you if you take a really. Iconic example. Such as Kodak I would, say that Kodak probably, knew that digital, was coming and if they didn't know then, Accenture, would have been there and told them that digital was coming. And. And, if and if you look at you know what they did they hired George Fisher, who was CEO of Motorola, prior. To his joining Kodak. In 1993. They, set. Up a digital imaging, division, they, actually had pretty good success initially, with digital they were the first to come up with a digital. Camera way, back in 1975. And then they came up with very, viable products, and were perhaps. Number one or number two in the digital space but, they still couldn't succeed so I would say that you know their strategy, was they, realized that digital, was coming they were doing all the things but they couldn't execute, and there, are a couple of reasons I think that large companies cannot execute, on the, digital transformation very, effectively, one is it, often requires different business models so, if you think about Kodak. For example, they were a consumables, company you know they sold film, and paper and they, had to move away from to. A world where there are no consumables, in the digital space. The. Incentives, were, also not aligned if you think about you, know incumbent. Company very comfortable, as Mike you mentioned in, their own space. Very. High margins, on digital, or. I'm sorry on film and on paper the. The. Joke was at that time that there was nothing legal. That had the kind of margins, that film, and paper had and so, they wanted to hold on to that for. A little longer than was optimal, for them for those of you with gray, hair in the room or with, no hair like me you. Remember, this photo CD I don't know if you remember that was their attempt to still. Capture on film because, you know I'm making great margins on film but let's hold it longer a little bit longer I'll give it to you on a CD, and then you can email it and do all those other things that you want, to do there. Their current resource basis like their manufacturing, facilities, you, know for. Incumbents, are not relevant, anymore so for blockbuster, there. There you know in a video-on-demand world, their stores don't have much value or, for, Kodak their manufacturing. Base of for manufacturing. Film really, doesn't have that much value anymore, and so, it's hard for them to make that transition and you know and finally, I would also say that digital. Transformation, is kind of a balancing, act if you will and, it's very hard for 900 pound gorillas, to do, a balancing, act so if you think, about. Transforming. Digital. Transformation. Do. You do, you do it through acquisition. Or do it do. You do it through, internal. R&D well. The answer is that it's neither it's a balancing, act between the two if you take Google you. Know most many of their current, products, are through acquisitions, Android. Or the targeted. Advertising, but, they also spend about 16, 17 or 20 percent I don't exactly, remember of their, revenue on internal. R&D because. It's necessary, to build, the absorptive, capability, so that you can take, those acquisitions and, bring it in-house and if. You think about the. Timing of the transition, you know do you do it quickly or do it do it do it slowly well Kodak, obviously, did it slowly but if you think about net, Netflix. A few years back I don't know if you remember the Qwikster. Debacle. That they had they, were trying to move too quickly, so, in, that case it's also a balancing, act in terms, of how fast do you transition so, that you bring your customers, with you and because.
Of That because you, know it's very hard to do that balancing. Act for large, incumbents. I think, they're often, at a disadvantage compared, to a large. Effort, to incumbent. Digital. Player okay. Thank, you David. Could. You in your role as the chief digital officer at. Coca-cola give us a few, examples of, some of the projects, and initiatives that, you have launched in the digital, arena, yeah. I mean I thought, the opening, comments were wonderful. I think I just want to add a couple and then I'll jump, right into that I would say I, think. That large companies sometimes. Operate. With a sense of arrogance, you. Know they don't respect, the. Companies. To the extent they should and they don't recognize the exponential, curve that can happen in an industry I think in the Kodak example, they missed the. Macro-level trend, of memory right. And what was happening with a memory chip which ultimately enabled the, photos and they don't move with purpose either you. Know when you state that you're going to enter into a period of digital transformation too often that, is a branding, campaign of activity, that will happen throughout, a year that someone is forged enough to own versus a journey that you're going to embark on over a three to five year period if not ten year period, of time so. I think those are some interesting things we you, know we looked at it at the highest level in the company we've looked at it across. Experience. Transformation and, that's how we create value for consumers and our customers, we. Looked at it across business. Opportunity. And how we change our own systems, and evolve those using digital as a capability to advance and accelerate our business model we, look at new business models, and. Some, of the the, areas where we have an opportunity not only to disrupt ourselves but to create new services new models for consumers. And lastly, was consider. It. Takes a lot of courage for companies to realize they don't know what they don't know and for them to embrace the community and learn so, we've just actually finished up a fairly, in-depth, exercise. Where we went and we looked at fifteen different capabilities across, our, entire. Ecosystem. So both the company side the business units that we operate and also. The the bottling franchise, partners that we have so. We we will get everything. From how, we market into it how our marketing in a digital world, and that's online, marketing, that's use of digitally. Enabled technology. In the physical world we. Looked at e-commerce, as. One of the greatest disruptions. That are going to face our business, most. You know that that have been. Have. Enjoyed, any any consumer package good for that matter product, know. That the the, world is changing very quickly and we won't be going to the same shelf in the grocery store for for. The remainder so ecommerce, is a big big, opportunity, and we've been spending a lot of time in supply chain understand, barriers to entry understanding. What's happening in the bio harvesting, field and what that means to raw, material, procurement, to create beverages, and how, digital is actually influencing that to change the business model and so it's it's a bra it's a it's a broad set of areas. That we're focused on but we're very deliberate, about it and to your point sabi which I thought was excellent this. Is not something you achieve in a year you set horizons, you know one horizon maybe 12 months out the next one maybe 24, months out and so forth and so you. Picked the projects, that that can yield obviously, the the fastest. Return, but. You can't lose sight of the long-term picture I mean you have to have a perspective on where you're trying to go as a company and what that five-year view may look like and. As consumers of beverages, or any other product, we. Live in a world where there's more value than what's inside the bottle that's, what we expect from the brands that we interact with and so that's a major transformational. Thought for us to think beyond the beverage itself and to, create content, and other forms, of value for, for consumers, and customers David, you you worked at a big bank before coming, there did you. See, in consumer products in retail and and. A big you know multinational. Big, brand companies their.
Management Processes, are all set up right they're really, good at managing marketing. At finance and HR procurement. Supply chain etc. How. Did they manage innovation and how, much, does that impact their ability to go through the, change curve that digital throws out yeah I think they attempted to manage innovation like they did the, other processes, originally, right so things, like a marketing, factory where you're looking at creative, concepts before they go to market and or gates and milestones, and things of that nature is not not really the waiting normal normal. Incumbents, are actually, it's the way normal incumbents operate it's not the way that disruptive, companies are operating I, think, what you've seen especially in financial services which is going through an amazing FinTech. Revolution. And, I also won through in the travel industry is. They're starting to try to push it out to the edge a little bit more find, partners right where you can develop lab environments. And other ways to kind of scale accelerate, learning without being. Encumbered. By the the, legacy systems and other things that typically bring people down and then you have to bring a system to allow it to come back right. So there's something about setting free allowing for divergence, to happen in mass experimentation. And then figuring out a way to cultivate that and bring it back into system with purpose I think, going back to your original question of why does some company struggle or not I think, that last point about having an innovation, architecture, a process, that's built into the business model that is, different. Than, the business model in, creating, predictable, results, is really a new, skill that most companies are just learning today it. Really has to do with managing, risk learning, how to manage risk and the other thing about innovation. Nowadays, is that, it's not a, punctuated. One-time, thing you do and then you say oh I have a new product so I'm good for the next 5-10 years it's. A continuous. Process of, enhancement. And change, and, transformation, so, I think that's. Another reason, perhaps. Some of the established, firms have, a hard time dealing with that it's like going. Off balance, and learning, to remain, off balance, for indefinitely. So. Those are a lot of complex, issues you know one really important point is coming, back to your financial services example, if, Google, serves me a wrong ad big. Deal no, problem, but, if. JPMorgan, Chase or Bank of America they, don't process my transaction, correctly, that is a big deal because they're moving trillions, of dollars so you've got to be agile, but, you also have to have the processes, in place in many, of these incumbent, organizations, to do it reliably. And efficiently and, that's, one difference that you have to keep in mind at, the point risk. Management, David, my question, what have you done at, coca-cola. That, you can share with us in terms of transformations. And innovations, digital, innovations, well we've done that we've done a number of things right we started to reimagine, our marketing model so we had a historical, model where we, would create big television commercials, that we probably are all very familiar with and then we would take that asset and try to morph it into other forms, we've, flipped that model on its head we now develop television, for the internet first and then we bring it back to broadcast, television so, we use the mobile device is a great mechanism, to do that something we did in the last year that, enables, and challenges us frankly get to the core core, concept, in a six-second. Opportunity. Versus a 30-second or what may have been 60, second things.
So I think, been fairly interesting we've started, using machine learning on how. We, how. We approach our audiences, so. We know we have seven we have seven audiences, 15, drinking moments a day there, are 74, emotional. And functional, reasons why you select, a beverage and then you ultimately pick a beverage and and we have that level of data around consumers, because, we, have people consuming know, people. Consuming, personalization. Yes and. Then you have volume right we have two billion drinks. Consumed a day and so, you start to apply that model and, it was a great example of what, we historically would have done is individuals, would look at that data set write, a creative brief and then ultimately hand that off to an agency or to someone internally to do it a machine can do it a matter of milliseconds. With complete, objectivity, not. Subjectivity, right so there's no interpretation, of the data the data is what the data is and so that is that has radically changed the way we think about our marketing model how we go to market and there'll be future, iterations of that and. Then we've really started to embrace, the. Changes, in the physical environment that are coming because of digital so. You're noticing more and more when you walk into a store any store or to a gas station or, you're. Being presented more with digital signage than you are physical signage posters, are starting, to be replaced by screens that have the same image we. Spend a lot of time looking at how we can leverage, that at a personalized, level for, for consumers, as they come through those retail environments, there's a lot of interesting, and exciting and kind of creepy. Voodoo, booty. Targeting. Type stuff going on it's all with good purpose, and desire to. Obviously, help the consumer, in their in their journey to to. Find, what they're looking for so, okay. So my, next question has to do with the IT infrastructure. Of the corporations, of course IT. Infrastructure. Plays, a key role in, digital. Transformation. And it used to be that many years ago I remember in the early days when I was doing my research on digital. Strategy, I would go to functional. Area executives. And I would say this is important, it can impact your business model and their, eyes with gloss over and say go talk to my CIO that's, not what I do that's the back office stuff, but. Things have changed tremendously, the, back-office, technology. Is moving. Forefront. So my question, and this is really directed initially to sabe and then to David is. How. Could corporations. Position. Their IT infrastructure. To really enhance and support the, digital transformation, sabe. Quick, answer and then I want to move to David yeah so. You, know we're at, Scheller College we've been pretty, lucky in working with one of the largest banks in the country and as. They go through a transformation, in their IT infrastructure, and basically, what they're what they're trying to deal with is because of the disruptions, that you just talked about in the financial, services industry they, need to be much more agile to be to. Be able to compete with the FinTech. Emerging. FinTech players that are coming on to market but, they also have to do it they. Have to be agile but they have to do it reliably, they have to comply with all the rules and regulations, because. They're a big bank and they. Have to do it cost efficiently, also, because you know they don't have huge, margins, either. So. Some. Of the things that they're doing in terms of their IT infrastructure, I think there are there are three or four key things one is.
Simplification. Which is they've. Gone through acquisitions. And like many other incumbent, companies they, have a very very complex, infrastructure, if you have complex infrastructure. It's not reliable, it's, also very hard to be agile, in that environment, because, you can't make quick, changes and so, having consistent, platforms, having consistent, infrastructure. Simplified. Systems, that's one of the bedrocks. Of what they're trying to do, the, way they are trying to transform. Their IT infrastructure, the second is you. Know around leveraging, the cloud better, and, I. Think, they're struggling through that a little bit because like. Many companies because, if you look at it today perhaps, you do have the scale internally, to. Have the same sort of cost advantages. As the public, cloud but that's probably not going to be so, in the future where, the public cloud cost might go down significantly so, you got to be prepared and after all if you can get something as a software. As a service, you know it's so much more cost efficient, much, so much less headache but, how do you really do it in a way that, just things that you got to keep internally, especially, for this large bank they gotta keep it internally, by, regulation, and other reasons but they also want to leverage the public. Cloud so how do you marry, those two together and, then, the. Third thing that they're struggling, with is more. Of a match. Between a centralized. And a decentralized. Model, for IT where you know centralization. Has lots of benefits. More. Cost-efficient. It's more. Perhaps. Standardized, there's, better security, all, of those benefits but, then, it you lose the agility you lose the ability to be closer to the user so how do you get that balance right between having. Decentralized. Groups. But. Also having centralized, IT. Providing. The scale that's necessary, so those are I think the three key things that they're struggling with in there, in transforming, their IT. Infrastructure. You're, taking me back to a world I thought. I had escaped. And. I don't need to know what the final financial, institution. Is I know they all struggle. How. Would you like to add to that in terms of the technology. Infrastructure, in a corporation, so look I think, part of the reimagining. Of the technology, stack is getting, it grounded, in the use of data and, effective, uses of data so the ability to ingest data standardized, data the ability to then manipulate, the data and effectively make decisions, off of it not. Everyone built their technology. Infrastructure, with, that level of focus, and with, data being the the, future currency, of the world I think that's incredibly important, I think you're absolutely right about sabe. About cloud and, the flexibility that enables you to have and the scalability the infinite scalability the, last thing I would just say is we. Need to we. Being large. Corporations. Are, guilty, of this need to move away from high. Levels of customization, so. High levels of customization, of platforms, where we think we need something because we think we need it put.
You On a path to being very. Challenged. When you want to unwind, I need, flexibility, and optionality in today's. World and your, ability to be able to plug in and plug out is incredibly important so as the architectures, are being designed, a lot of time spent on thinking through that so. That you don't know. Who's talking yeah that you don't you don't put yourself in a scenario where you have to unwind from systems or in many cases I, think. It's the demise of some opportunity. For companies where they can't unwind. And. I know the I know the coal file or boilers. That we have pulled in the financial, services industry behind, us that it's impossible to get out of so that is a particularly, important, issue in terms of flexibility, and undoing, things because, if, you want to change your processes, to. Respond to your clients, or customers better, or to be more efficient, and if those processes, are encoded, in your systems, your, technology and your IT systems, that, becomes almost impossible to, undo so. I would. Just add that you know the three. Things that we talked about in terms of simplifying. And and. Also, leveraging, the cloud as well as having more agile. Decentralized. IT, organization. It's, probably, not just limited, to financial services is you know it's pretty common across large companies, in many other industries. As well so. My question, to you Mike is sort of related to technology was a little different, given, your experience working, with so many companies in different industries, what. Type of digital, technologies. Your big, clients, are, going after and how do they go about acquiring it what are they interested, in and how do they go about acquiring it, well, I mean when when, the first wave of digital. Hit and people were trying to define what digital was really about they were thinking about engaging. The customer you, talked about marketing you know moving from mass marketing, to personalized marketing using. The ubiquity, of the screens the devices, to connect with people and listen, to them and understand. Their preferences, and then try and provide a more personalized. Response to those preferences that was pretty much wave one of digital and so, that was about advertising technology, and marketing technology, which had little or nothing to do with. The CIO organization. Which was all about systems of record systems of control in transaction. Processing, systems so so originally, there was a bifurcation between the, CIO organization. And then what, was going with customer, engagement, and Inter over. Time we, started to see e-commerce, become, a big wave of interest for clients because, they started to talk, about the movement, away from the physical purchase to something. That might be happening in an online market, and then. We started to see them moving past, ecommerce, into, areas, like, artificial. Intelligence, applied analytics, and. We and we started to see that the data and the data science, were as important, as the technology, and actually. Enabling, those interactions with their customers and providing better personalized. Responses, and then. We saw a whole new set of things coming out like blockchain, technologies, which enabled. Trust. Networks, to occur that that weren't, able to be stitched together inside, the walls of a single company now, we could start to see members, of an ecosystem collaborate. Together to take fragments, of data and establish. A. Different. Way to interact with those customers and to serve them and so, people got very excited not not about the Bitcoin currency so, much as the blockchain under, underneath it and then the smart contracts, that. Those enable, and. And now we're starting to see an interest in the concept of extending. Your experience, so you. Know augmented. Reality virtual. Reality, mixed reality what's. Gonna happen as we start to expend you expand.
Your Human capacity. To, absorb information, and put yourself into different cognitive situations. And so. You, know the nice thing about digital is it's not one technology so it's a wave, of them that come wave after wave and, the, question is are you understanding. What each new wave enables, and are, you thinking about how to apply it to the business model the customers, the products and services, right now one, of the most interesting, things that we're seeing is the collision, and I think collision is the right word there between. Operational. Technology, that's used to manage manufacturing. Production supply chain etc, with, information, technology and, that collision, is a very interesting one because it, takes a bunch of really old technology 20. 30 year-old SCADA systems, right, and tries to bring them in you know into the real world which. Is really. Creating. A massive security issue for a lot of clients those, things are not designed to be secure in the way that we want to use them today so, you. Know lots, of different types of Technology to become familiar with and and the most important, point, is that none. Of the technology, by itself is important, the really important. Question is what are you going to do with it. Okay. So my next question now I'm gonna direct, it to David and Mike again, given your. Background. And experience, with. Different corporations. Traditionally. In the u.s. a lot of, digital. Innovations, and digital disruptors. Have. Innovations. Occurred in the US the. US companies, were leading, the way if you will but. Then lately if you look at companies like they do and. Alibaba. And C trip and WeChat, in China. They're. Just amazing in terms of how they are innovating, and how they are moving so fast do. You think US, is losing, its competitive. Edge when it comes to digital, innovations. What's. Your opinion on that what. Do we need to do no. No, I actually, don't although. I have an. Enormous amount of respect for many of the companies are starting to merge emerge. Out of Asia and, India for that matter I. Think. If you look at the large scale tech companies, the, Amazon's apples, alphabets. Microsoft.
Facebook, You. Look at the top 10 tech companies, there they were all originating. Created in the United States if, you look at the advancement, of a lot of these platforms. They're, mirroring, and mimicking, many of the models that were created in the US right, so by do by nature, being 76 percent of the search volume in China, I believe now and. You. Can see remnants of where that model came from and. Frankly they're not they're not shy, about it I think if you look at the, advancement, in commerce. You. Had things like Amazon Prime day three. Or four years ago you now have eleven eleven singles day and some of the biggest commerce, events in the world which by the way make them at. An exponential, rate grow, which. Makes them obviously be, well deserved of the headline in the scale I. Think the you, know what, I can see it and and on all these companies right there's this kind of like this coming. Together this, convergence, is gonna happen somewhere over the, Middle East probably. Where you. Know the, the companies, from from, from the West are moving east and the companies from the Eastern moving west and the companies from the South are moving vertically up its. Me really interesting to see who who can maintain the, consistency of the brand and the experience, and the consumer value proposition, on a global basis versus. Being able to do it really well in, a localized. Fashion where, they're taking advantage of some of those trends. Disagree. With may be controversial, I largely, agree with with the point that the US remains an incredibly, competitive place, if you want to be an innovator around technology. Because. We have a massive, amount of capital available with. A community, that knows how to invest so, they're they're comfortable, being angel investors or Series A or series B they understand the risk profiles, and there's a lot of capital, flowing into. Innovation. And the ecosystem, is there to support it the educational. System to generate. People. Who can do the work as well as. Companies. Who are used to working with those startups, to test and pilot, and do proof of concepts and prototypes so, if you had to choose a place to try something, this. Is a great place to try it in the US now having said that not. All the best ideas came, from the US right a lot of the companies in Silicon Valley originated. In Israel or London or or, Frankfurt or somewhere else and the problem, was the. Regulatory environment there, stopped them right it, didn't give them the freedom, because. You know data privacy or regulatory. Or, you know capital, restrictions, or whatever said. If, you want to do this you're gonna have to go try it somewhere. In North, America now North America has got this massive, market. You know behind China it's probably the most attractive, market, to try and do this and the, problem with the Chinese market is you can only do it if you're Chinese, right, so that you can't if you're Google you can't go there but. They, can certainly come here and so what. We're seeing with, the large competitors. In. China is they. Never did lack, the. Ability to innovate they've always been able to innovate but, they had a different, taury environment, and what we've seen over the last ten years is, the. Regulators, in China are letting them experiment, and therefore. They're, developing, really competitive capabilities.
Now, They're starting to export those from China into other markets note. They're not really coming here they're going to Eastern Europe or Africa or other places, but. They will come here eventually, as we, will go there so I think we will meet somewhere in the middle the. Most interesting. Part is I think the. European. Union has just completely shot themselves on the foot there won't be another innovative company coming out of there for, about a decade so, you, know don't don't try and innovate if you can quote them. You. Know it's just I mean they just have put too many regulatory constraints on the ability to innovate, as. A start-up right and, so the people who've got those ideas in Europe have. To choose are they gonna go try and do it in China are they gonna come try and do it in here or that maybe they'll go to India yeah they're certainly not gonna try it in one of the European countries you know one really quick point University. Systems play a really really, important part in innovation. And I would say that twenty years back if you looked at the university. System in the u.s. it was really unparalleled I, mean you know there's there's no other country in the world that has the, scale and scope of universities, that exist here but. In the last five years I'm seeing a little bit of a transition in terms of scientific, papers that are submitted to journals, I used to edit a pretty, prominent journal and. Ten. Years back I would say a hundred percent of the articles in that journal, were all from folks. Who were in. The US universities, now. The, I seem much more or, many, more it's still dominated, by US universities, but, much more from. Europe. Being one but, also China India, Singapore, Hong, Kong etc. As well. Sorry. I want to ask you we, talked about incumbent. Corporations, we talked about the fast digital movers. Everyone. Says companies like, Amazon. Facebook, Google, Ober these are the winners in the, digital. Economies do. They have anything, to worry about or. They are just so, far ahead. They can just what, do they have to worry about, anything. That that's. An interesting question we just came back from our Silicon Valley trip as you know with with MBA, students, you. Know I think a couple of things one, is, the. Lot. Of the tech companies rely on this notion of network effects, which is they. Pay, a lot of emphasis on. Usage. Traffic. On. Those, eyeballs. Rather, than on revenue. Profit, the traditional, metrics with. The idea that you know as you grow larger you get sort of to scale and no one else can compete and and that's actually you know if you look at Facebook and Google that's probably true but. But, I think. There is a danger, in that thinking, because. If you rely on web, well on those kinds of metrics on network, effect metrics, without. Switching costs. Those. Are meaningless. In other words when you try to monetize, if. Consumers. Can really quickly switch, to another platform, so uber, spending, a lot of money to get drivers, and and riders. To. Be on their platform, if there's, alternative, platform available that, can provide, the same benefits and, there's really no viable, switching, costs to prevent me from switching, all that investment sort of goes you. Know is not of much value so, that's one thing that they have to be careful of the other thing I feel, is, they. Have very high margins, and very high valuations, right now and if, you have those high margins, and high valuations, it leads to a little bit of inefficiency. And, complacency. So you build these you know fancy campuses. You. Have, your. You're, not as efficient, you're not as hungry as you as you, can be if you have those high margins, and that's, something that they have to be careful about your ring you know downturns, and your even there don't have those high valuations, can they really maintain those. The. Infrastructure, that they're setting up and then, the the last thing is. Incumbents. I think, if you look at Amazon and, you look at Walmart, Amazon has, probably, 44%, of online. And. And, Walmart, has a much smaller share but. You, know if you Amazon, has 75. Or, 70, or, 80, fulfillment. Centers around the country. Look. At Walmart they have maybe 4,500. Stores. So. They have so, many more locations. To be closer to the customer if, they can get their act together on the digital space they. Have about 480, billion dollars in revenue compared to Amazon which has 130. Billion so they have bigger, scale better, supplier. Relationships. More, economies. Of scale if they can get their act together they. Can be a very viable competitor. Against. The digital players now. Of course they haven't been able to do that in a Walmart is still in, terms of digital revenue is pretty small but I think there's a risk there as well. You. Can add another risk one, of the things that you'll learn in the program here, I still, remember this discussion, we had in class years ago about what.
Stakeholders Matter, you, know and right, now there's a massive, discussion. Going on about, whether or not Society is going to continue to give them the license to operate mm-hmm. The way they've been operating today, right and Trust, is, a, major, major, factor if, you lose the trust of the, people or the government, and they, revoke your license, to operate or, significantly. Change it that, can damage your business model whether you want it to or not right and, you know so we're. In London right now a bit of a pinch right because they're they're about to lose their license then that's, because the regulators just don't trust the fact that they, caught them using some software they shouldn't have been using to try and avoid the regulation, and the regulators have said okay fine if you don't want to play by the rules we'll just pull your license to play at all yeah yep I think it's very valid point there was a article yesterday or today in the Wall Street Journal, which was, basically discussing whether, it's time to break up the Facebook's, and Google's of the world because, Google has 89%, share of search and Facebook. Has some 95% share of you know of, 95. Percent of the people use some sort of Google app whatsapp, or Facebook. Etc. And so, is it time to break them up and that sort of scrutiny will come as they become larger I also, think the very asset, that they built their business on is a risk right. The the, asset of data that they built their business on accumulated, on every, virtually, every individual, in the world has, to be protected and. As. You saw with the likes. Of the kind of the ending chapter of Yahoo as an example right with the mass compromising, the email accounts, that wasn't disclosed, you. Saw the impact of that ad ultimately, on the transaction. Value of it I I I, do think, some, day we will face some form of data apocalyptic. Event where one of these companies, will, be and they haven't to date but, will, will, face some some serious pressure. And potential, vulnerabilities, that will Tamila lead to a backlash and. People will now start to take back ownership of their data as their currency and and you, know for the last five years we've all been kind of it's like the 70s, again right we've been all out on the wild web and live in our lives with no real recourse and the, reality, is everything, has been permanent, and is out there as you can see from the photo that's in the pamphlet that someone found for me five years ago, it's. Out there and sometimes it's not pretty and. When. You can dig up stuff like that it's if there is there's a lot of risk associated. Things. Never go away on there. One. Of the issues around this security. Breaches which is really interesting, is right now people tend to be tolerant. Of that not. Even they don't have any alternative. All you get is a letter, that comes in oh by the way your data was, compromised. And oh, you. Can get a couple credit. Reports, so. There are not really severe consequences. To that but eventually when, something terrible happens they're going to be consequences so I agree, with you on that so, I think again. This is a question for David and Mike to begin, with. This. Year 2000. About 50%, of. Fortune. 500 companies have been replaced on that list so things are really in a state. Of flux and, you. Started to talk a little bit about that, but what.
Should The leadership. What, should can, could. Leadership. Do in organizations. To get them to the agile to get them to innovate to get them to move faster to come up with the balancing, act what, is what is a leader to do what are some of the attributes some, of the things they can possibly do to make. Things you. Know to guard against this, being. Left behind or being disrupted. How, can one become the disrupter, rather than disrupted. Right, yeah. I think you got different situations, right you've got you, know companies, with long established market, shares global. Portfolios, of products. That are you. Know stable and and, you know and working well and, even in that situation I think you. Know you've got a new CEO in place you recognize that that's not that's not really gonna be what the world looks like five years from now so even. With the you know the best advantages, of a blue. Chip brand name like coca-cola you. Know the CEO I, think. Day one in the company said you, know I'm telling you all the, future won't look like the past right and I think that is step one is is the leadership team, having. A culture inside the company that recognizes. That, the world will change whether you wanted to or not. And and the. Very first thing that we would recommend to, CEOs, is to, make sure that they really understand. Where, values being created for their customer, and whether, that's going to be persistent, and if not what they're gonna have to do to capture new sources of value in the future and so we think if you start with that and if you start with really understanding where the value is coming from and what its gonna look like in the future then. Everything else has to be up for grabs right you've got to be willing to say the, operating models the markets, the products, all of the things that we used to do might. Have to change based on that value and you. Know we we, take an example, of you know Amazon coming, and disrupting, the retail industry, now. Walmart's, responding, right Walmart has recognized, that they, they actually have an advantage on the physical desert. But. Only if, they act if we look at what. You know the transaction, going on now with CVS and Aetna right, you know why is CVS, buying it because. They know that Amazon's, coming into the pharmaceuticals, market and they want the ability to react, and so. The. Willingness, to look at value proposition, from the end customers, viewpoint and make, everything, else up for grabs I think has got to be the, mindset, that the leadership team starts with and I think that's what's going on now yeah, no no I agree. 100% I think I think. There's some characteristics, right I do, you think we all have to operate with a sense of humility even. Though we're massive, you. Know in our case one of the most recognizable. Recognizable. Iconic, brands in the world we don't know what we don't know and we know that others are moving quickly into the space I, think a healthy sense of paranoia is a good thing so. I think all leaders should carry a little bit of a you know looking, over the shoulder type mentality.
Because. There are proof points that you can find and generally every subject, where, that's happening, I think, they need to test the immune system, so. I am a you know I joined I joined coca-cola a year ago I was a complete outsider I've, never been in CPG, before I didn't know a single person in the company I came from the banking industry which obviously is going through lots of transformation. And. To. Bring in individuals. To also heart start to shape and change the thought process, and the way to do that's incredibly, important and you could do that I. Don't, want to but. I am here and I'm it's a year in so no, but it's really important to test in and, I could also say you could you change over a lot of the leadership. Individuals. Right if you can't change fast, enough you got to be courageous. Enough to make, bigger changes there but I do think it's straining, yourself a little bit to see if you have that characteristic there and the last thing I think we've talked about a couple times tonight, introduce. A sense of risk tolerance. Responsible. Risk tolerance, so. There, are very few people in the company who are like I'm gonna bet I'm gonna bet it all on my job today right, because that's not the way large companies, work but. Showing we're fast, fail. Mentality. Is, actually, not is. Rewarded, not. Necessarily. Scolded. I think isn't in is is interesting and and there many companies today have introduced things in their innovation, processes where they do failure, rewards people. Get bonuses for for, knowing that they killed a project, that was never gonna be commercially, viable at a scale that would mattered but. They're rewarded for and they celebrate it in a, way and I think that's some of the some of the cultural dynamics you start off by start talking about culture earlier I think those are some of the things you have to do to really test the, the. The. Courage. Of the organization, especially. As a top-down leadership structure. The, only thing I would add is being comfortable, at the intersection, of business and technology which, is where the Scheller College operates. Commercial. There we go. Let, me now put it to the audience and we. Have mics. That are going to be taken. Around so. I'd. Be very quick and answer you, know. Hindsight. Is always 20/20. Right and we can always say what they could have done so, if you if you look really quickly they had a lot of acquisitions, they had given in multiple, different businesses, and they actually shed, those businesses, at one point because. They. Wanted to focus on their core film, business now, on hindsight, if they had kept those businesses, maybe those businesses, would have had much more value than their core film, business so that was one of course, I think they were too slow in the transition, they could have been much more faster in the transition and with good reason they, were slow because they had a very profitable film. Business which, they don't you know they didn't want the business, to go away fast, so they wanted to slow that down and in hindsight that was probably, not. A good thing to do. Next. Hi. My name is Annie Khan so I used to work at Accenture, now I run our FinTech so my question is so. To kind of transform. Companies. You, need a, lot of capability, not only in the perspective, but in the talent and a lot of the new talent that's required takes, an extremely, long time data, analytics, machine. Learning how, do you develop that in a company that has a lot of legacy employees, do you replace them do, you you. Know spend a lot of money on training them, what's.
The Strategy here yeah. I would just say it's a I'm gonna I'm gonna give you a plug. As well that's in the sense right to your comment on universities, earlier I think you know you you look you look at universities, as a feeder system a lot, of a lot of the studies obviously, focus on those areas and you have to be willing to take somebody who actually frankly, hasn't, been and been in the, hasn't been tainted by the kind, of the large, business, environment, right and and, relish, that opportunity, to have some different, thinking you, definitely can up skill but. You, either have the capability, or don't right it's hard to change kind of the cognitive processing, of an, individual, who just isn't going, to be graded at data, science, or analytics, at some point and. Then I think you have to look for partners right. You have no choice but to look for partners and where you can augment those you, know it's interesting we spend a lot of time talking about artificial, intelligence machine, learning you. Know you can also look to government's, you know we spend a lot of time with the government, and Singapore there they will attempt to build based. Off the way that they're investing, their attempt to build probably. The largest concentration. Of artificial intelligence data scientists, have to fuel that industry, so. There's opportunities, to look at that but I think it's a combination right, you can't you, can't try to move everybody in the direction that you already have unfortunately, in the organization, because they do not have the ability or it takes too long you have to find ways to inject, in augment. If. I may add to that, developing. The workforce of future, it's, a critical, issue for all corporations. Unfortunately. I mean there's no way that universities. Can graduate. As many students, as is. Needed for. Economy. And many organizations in, the u.s., so. It's really important, that the, company, the organization's, come up with a strategy for, human resource development to really address some of these issues one. Of the companies that has done a good job at that is AT&T. AT&T. Embarked, on this human. Resource development a number of years ago and they did it on in multiple, ways it's, not a single way of doing that of course, they want to recruit great. Graduates, from great Institute's, like Georgia Tech but. In addition to that they. Started, partnering, with universities. Including, Georgia Tech to. Develop, online. Kind. Of programs. For them curriculum. And program, for them that, make they make it available in the organization. But it's just not enough to say here's the online thing in your spare time go, ahead and, you. Know rescale. And develop, data, science, capabilities. Or already intelligence. They. Really sit down and create opportunities. For their employees, it's. A program what kind of jobs you want to get into the future this is the progression you can have and they. Incentivize they. Provide incentive, for their workforce to. Upskill, themselves, and they give them promotion, they give them opportunities. So. It's truly, has to be a very, significant. Aspect of. Strategy. Of a lot of big corporations. Unfortunately. Many of them are not paying a whole lot of attention to that unfortunately. It's not going to happen overnight people, need time to develop the new skills and you cannot fire. Your, entire workforce. And. Hire, all. These bright, students. That are going to be graduating, and have another the right set of skills beside, their set of skills gets, outdated in a matter of a couple years anyway, so, that's a fundamental issue, that corporations. Have to rethink and, I think, a couple of things that you'll remember from your Accenture days then is you know we have something called learning boards right where, we let our employees who. Feel like they're experts, at something create, their own videos, like a YouTube video and post. It and then people consume, it and they upvote it and downvote it and say you know this one's really good this one's not that great, and. There, are thousands, of them so if you want to learn a particular technology, or you want to learn about a particular topic in an industry there's, probably a learning board out there that somebody who thinks that they're an expert already has.
Has, Made on their behalf for you right and you can you can take it if you think about what, the Khan Academy is done for, you. Know for, education, it's provided, a model and right now if you had the name you know what's the place where the most people go to learn things, YouTube. Right. How many YouTube videos are out there on really. Interesting topics that people can learn from so I think this concept of bite-sized. Learning, of pieces, of learning can work for lots of different things now. Something, like you know learning to be a data scientist probably creates a more structured set of interactions, but. As you said you, know governments, and incubators, and are doing really interesting work there, the other thing that we see in, terms of identifying talent is hackathons, we, run hackathons, with the express intent of figuring out who were gonna hire. Because. You know they come and they do an awesome job at the hackathon you're like probably. Have the skills we're looking for you. Know I also think that existing, employees, bring. A lot to the table if. You look at data analytics. The. Real gap is not in the production of analytics, but in the consumption, of analytics, that is using analytics, to make actual business decisions, and for that you need that that, understanding, of the business which is what. Fresh. Graduate. However well we trained them will, really not have when, they enter the workforce. Hi. My name is Sarah cross I work for you 8y advisors on their management technology, consulting, team my. Question revolves around how would you reconcile, two different, trains, of thought as far as software selections, for different companies who are wanting to move forward you. Talked. About not. Getting into a situation where. Your two customized, and backing, yourself into, not. Being able to get out of a certain software getting, behind on a trend maybe. You have high switching costs for your own company, my. Team on the other hand is seeing a lot of this situation where our clients. Are are wanting, to select. New software, to move forward, and. Create. More efficiency for their business and there's. This situation, where. Instead. Of, software. Companies saying. This is what you get from us they're more now saying what would you like to see and, you're seeing that kind of trend and customization. And the clients quite, frankly like that because it's protecting. Their, their. Value proposition by. Supporting, their unique workflows, how. Would you reconcile, those two. Yeah. My observation, was so it wasn't it, was probably dude general the statement, right I think there are there are certain platforms, certain software capabilities, that you, do have to leverage at the core and I think that's incredibly important, and and. We get asked that question a lot frankly, from a lot of the vendors that we work with you know what would you like to see in the in the in the capability. But. That's not unique to us right. I think what's brilliant about how the software model is evolving is people are taking the opportunity ask all their clients what are the features functions, elements. Of a potential. Solution that, would help make it better but. Then that's being applied to everyone, as a common benefit right what, I was referring to is you you take a piece. Of software I won't name one so if I get in trouble but you take a piece of software and you go you go really deep on this, has to be the ultimate coca-cola, version, of that software instance, that's, where I think you can't get out of it but we do spend a lot of time and I think you're right in acknowledging, that we spend a lot of time with software. Providers, and vendors talking. About how does the platform, how should it evolve where, are we thinking of going with our models that may may be a little bit of feature and functionality out, of it so it's almost like we're kind of helping to shape the product over time and. I think that's more where the world's leaning that was my point about customization, I think that's more of influenced. Software. Development, versus, you. Know proprietary. Customization. Models I don't. Know if you guys well. You, know one, of the things that we see in terms of how people are architecting, their IT, within.
The Company is they, are picking some platforms, and they'll say you know this the these are going to be the building. Blocks of my architecture, and they're, separating. The, platforms. From the user interface and. Then the user interface, becomes what you customize right and so that. Approach. Seems, to be one that gives a lot of. Flexibility. While not getting, into the quicksand. Of going you know into deep deep changes. To the underlying transaction. Processing, capabilities, or control systems in the, platforms, that you've chosen for the architecture, so, there's a balance there there always will be. The. Big big, big question which, is usually. Not answered, well within the company is, what really matters, right, which ones do you really, need to customize and, which ones just make you feel good and you. Know focusing on the ones that really matter. Really. Requires some discipline, that most companies find hard to execute. What. Are the question. Kevin. Right in the middle so. I'm actually, Accenture, alum as well and I now work at Aetna so it's funny to hear you say that my. Question kind of goes back to the when you guys were discussing. The. Low-hanging fruit. Versus, kind of the long long-term. Goals, that you have and. You. Know I struggle. This internally, I do a lot of type, of work where, we have to pick projects, and just curious how you guys pick your projects, is it ro a bit ROI based is it value prop base is that we need to pay to play kind of just. Curious when you're going from the digital disruption perspective. How you kind of scope and then kind, of pick your roadmap, yeah. I think we've tried do we've. Tried to have a balance of kind of highly. Innovative project. Work that maybe short term the long term in terms of benefit stuff. We have clear line of sight on that we can invest in and then just the core business and we've kind of tried to apply a funding, model and an evaluation approach, to that, ROI. Applied, to everything is very difficult, to enable. And foster innovation right, cuz you don't know what you don't know when you're in a business where you're removed two and three times from a consumer, it's also challenging, to get to a moment, where you can with. Absolute, clarity Tatro ROI to that so I think we use a balanced model we used to break it up kind of 70-20-10. Type of thing I think we're adjusting that slightly but you. Have to have a healthy balance yeah, you have to know where you're going to explore, where. You think there's meaningful, value that you're going to challenge and then ultimately where you develop a core leadership position, that you need to extract value from it those are usually where you can see a very clear ROI the rest of it you've got a you've, got to apply multiple lens and. As I said before you know in our world I do think, ROI. Can be in value creation beyond, just a core product, that, someone has purchased that. Is where we're seeing greater upside, and potential loyalty deeper, penetration from, household all those types of things. Versus. You know something that we would have tied back to the purchase of a beverage. Directly, so I, think. Also that a lot of the metrics which are there to measure especially. Technology. IT. Are. Very, back-end, focused, so it's it's around cost, it's, around ROI it's. Around, on-time. Delivery, it. Doesn't, really get to the value of IT and agility, innovation. And there's, a whole you know that's that's a whole other area of coming, up with the right metrics, to measure, technology. And they. Change, metrics are different from project, to project it's, not the same, Drix okay. Well this, was a wonderful discussion. Thank you very much thank you to our panel.