Transcript for:
Driving Digital Strategy Insights

um right um good evening everybody and good morning uh Professor Sunil Gupta uh I welcome you to the HBS uh India book club this is our fourth reading of the book driving digital strategy a guide to reimagining your business by Sunil Gupta so my name is Sanjay prakash and I'm going to be your so-called moderator so you'll have to suffer me for an hour uh let me just quickly describe the format of the one hour today so I will Begin by introducing Sunil then there'll be some opening remarks by Sunil about his book and his thoughts on that uh we'll then straight away open it open it up for questions and comments uh we will use the chat box as far as possible uh to post your question and you can also raise your hand and I will use a process to try and call you out I already have some questions so we can kick start that as soon as Sunil finishes there are no slides or polls today Sunil prefers a free flow or discussion and interaction we will go on for one hour uh it is being recorded as you can sort of See it'll only be put on the website for alums it won't be in the public domain we've had very good registration let's see how many people finally show up and lastly I'll just request you to put on your video so you know um Sunil can actually put uh face to a name so that's that and let me start without further Ado in introducing a brief introduction on Professor Sunil Gupta so Sunil Gupta is the Edward W Carter professor of Business Administration and co-chair of the executive program on driving digital strategy of HBS he was the chair of the GMP from 2013 to 2019. from August 2019 to February 2020 he served as a senior advisor to the CEO of Cleveland Clinic one of the leading healthcare providers in the world to help him design the digital strategy of the clinic sunil's current research examines how digital technology impacts a firm's strategy the primary goal of his research is to understand how entrepreneurs can leverage digital technology to disrupting existing Industries and how incumbents should transform their business in this new environment and that's the subject of the book which was published in August of 2018. so Sunil has published three books and I believe some more are coming and over 220 articles book chapters cases and notes on these topics is researchers well recognized and his articles have won several National and international Awards um for the last seven years he has been invited by the Royal Swedish Academy of Sciences to nominate a scholar for the Nobel prize in economics we won't talk about Ben Bernanke tonight and then Sunil serves on the on the board of U.S foods and Tama group in Saudi Arabia and as an advisor to a few startup firms as a business Expert Sunil has frequently appeared on several National and international television programs and also quoted in leading U.S newspapers so Sunil holds a bachelor's degree in mechanical engineering from IIT Delhi and an MBA from I am Ahmedabad and a PhD from Columbia University so that's a brief introduction of Sunil srila now hand over the floor to you for maybe 10-12 minutes and you can talk about the Genesis of your book thoughts Etc and then we'll go into questions and comments thanks great thank you Sanjay after that introduction it's all downhill so but thank you for your kind introduction uh so I think my interest in this particular area of digital technology started in the late 90s with the emergence of Amazon and I think all of us were kind of intrigued by what Amazon was doing with e-commerce and I remember running an executive program in the late 90s and 100 people signed up for that which was kind of surprising yes and uh interestingly a lot of people from Wall Street signed up for that program because they had trouble valuing those companies the traditional Financial metrics didn't quite work for them and they were honored to understand what's this new business model and how this will evolve so that was my first introduction to this whole area and of course executive program forced me to sort of learn and dig deeper into that area uh and in fact I ended up writing a research paper and in terms of how you should think about valuing these businesses uh based on customer lifetime value because you can value One customer you can value the entire customer base you can project the future customer growth and you can value those firms and in fact that particular research approach is now used by Wall Street a pretty standard approach that the Wall Street guys use for subscription-based models like Netflix so that was my first introduction to this uh and then of course you would see all kinds of disruptions you saw the bust of.com in the 2000 2001. There's A disruption of Kodak and blackberry there's an introduction of iPhone and I think that's where I started digging a lot more deeper into this area uh and I sort of looked at three sets of companies the first group of companies I looked at are the startups and the VCS that were funding them so I made my pilgrimage to Silicon Valley many many times to sort of say why are the VCS funding these companies where do these startup see the white spaces and why they are so confident that they can disrupt large companies the second group of companies I looked at are what I call the digital Giants the the Googles the Amazons the apples of the world who grew up with the digital DNA but now there are large uh companies themselves but in spite of being large they still keep innovating so what is the secret magic if you will for those large uh digital native companies and the third group are the established Legacy companies that most people work at and of course nobody wants to be disrupted so the question was how do you turn a large ship uh when you can see that the winds are sailing in a different direction and I think over time I collected some insights from I must have taught over the last 14 15 years to about 150 companies around the world and you gain some insights after talking to those people doing your own research uh and when I was running GMP I used to teach that stuff in in my classes and a lot of people came to me and said well where do I get this information I said well it's all in my head because there's not one place that this information exists so that was the Genesis of the book and the broad idea of the book uh focused on especially large established companies trying to turn around is to say as a large company you're not a startup so you can't do what a startup does you don't have a clean slate so you need to do two things at the same time you need to strengthen the core of what you do but also build for the future at the same time and that's much harder it's almost like changing the engine of a plane while you're flying now how do you do that and basically what the book talks about is there are four major components that you need to look at all at the same time which is your fundamental business strategy and business model is that changing the way you create value and capture value uh the second is how do you run your operations uh that also may actually benefit from technology the fourth is the customer whether it's Omni Channel whether it's improving customer experience because now you have the data uh far more richer data than you ever had and the fourth is the organization structure itself may have to change how do you drive innovation in an old 100 year old company uh and a lot of companies have accelerators and hackathons sometimes they work sometimes they don't and how do you reskill the talent if you will so I think again it touches every aspect and the reason I created that framework is because when I talk to lots of companies during my journey almost every company was doing these digital experiments because their new technology is there and uh and the whole process turned out to be a thousand flowers blowing and everybody felt that something is happening but there is really no movement because it didn't add up to any coherent strategy and a big shift in the organization so that notion of grassroot innovation or grassroot excitement is good to create the excitement but not good to move the ship and that was the basic idea that look it has to yes you need to create some excitement at the grassroot level but you also need a top level View Vision and strategy as to how this will actually change the direction and path of the company so I think that was the basic Genesis of the book uh and then we go into some of the elements and given what we do at Harvard Business School we always feel that we learn by the case method uh it's like you tell a story a bedtime story to your kids and at the end of the story there is a moral of the story so that was the basic idea behind the sliding style of the book take a particular case study and use that case study to illustrate some point which hopefully are generalizable across different businesses so now of course as I said the technology keeps evolving new things keep happening and of course uh uh you keep learning in the process so this area is always very exciting for me so I'll just leave it at that and uh happy to have a discussion and debate about and also learn from all of you guys who are at the Forefront of this stuff as well sure thank you thanks very much um so as I mentioned before kindly raise your hands if you want to ask question in person or you can just post it on the chat box like I said I have a few questions so let me shoot off the first one which is uh quite obvious is that given that this book was written several years ago you know obviously a few questions emerge how much disruption has taken place in the assumptions and theory that you had advocated earlier and if you could also overlay this with kovid as to what changes does the digital transformation Journey need to undergo to be effective so let me answer the second question of yours first which is I mean as we all know kovid has been a great it's like a big natural experiment in some ways that changed the habits of lots of people uh and many of us who were hesitant about some aspects of Technology have suddenly had to embrace so for example at HBS we were always very comfortable teaching in a physical classroom with a Blackboard and we suddenly had to Pivot to teaching online and that has been a big learning for us but now we realize the online teaching opens up new doors the way we couldn't imagine so now we can try to create Blended programs with hybrid mechanisms that you might imagine thousand people I mean 150 amp in the physical classroom but maybe thousands of their colleagues sitting somewhere else who can listen in and also benefit so when you go back to your company you have your teams working on this with the same language Etc so I think we can we learn that Telehealth another example of big change in terms of how we can read the remote Villages of India and provide access to healthcare uh work from home has certainly changed the way we operate and that has a huge implication of the organizational structure the office space so I think online Commerce has gone up my parents never used to do online grocery before because it was not in the DNA but Cove would completely changed and they're not going back so I think a lot of those things have changed and if anything go with his accelerated the digital adoption for most of us uh something will go back but I think most things will probably have a different equilibrium than the ball now to your first question of what has changed in the Assumption and theories I think by and large the basics I usually you see the same framework applying almost everywhere some of the contexts have changed so for example in the last four years you see a huge shift in the payment landscape uh Amit is here so he can tell us more about Google pay and all the payment system that has happened uh the UPI in India has completely changed the whole payment landscape Central Bank digital currency is now being experimented in 50 different countries uh cryptocurrency and NFP there's a lot of conversation about that as well as metabors so lots of new technologies coming up that will also change different aspects of the businesses that of course were not there four years ago and I'm actually studying them to say okay how that will change the world and you see new business models uh uh that are like after pay Etc also emerge in the process so I think there are changes in certain industries much more than others Healthcare is another industry because of covid and Telehealth I think healthcare transformation has accelerated because when I work with Cleveland Clinic uh the biggest challenge for the hospitals was to convince their own Physicians about Telehealth much more than the patients because Physicians never thought that you can provide the same level of Health Care and because we are prisoners through our own assumptions if you will the way we have operated but covet slightly again changed their behavior and assumptions and now you they see a much more faster adoption of those those kind of approaches so I think you see those kind of things happening uh so to your question about assumption I think many of the things remain the same one thing I will say that I realized that I didn't realize the power of it four years ago is in the book I say well most companies end up doing efficiency cost efficiency Etc and that's not enough which is still true but what I see from talking to companies in the last four years is the first step of reducing costs improving operational excellence is actually a great way to get a buy-in inside the company because you can see immediate Roi you can see this is how I will actually do certain things in some cases it has actually a huge impact so Dunkin Donut is a good uh Domino's Pizza is a great example of improving operational efficiency to have remarkable success so that first step of operational excellence and and improving cost and and productivity which I actually downplayed in the book it turns out to be a a very good powerful first step lovely um let me turn to a hand raised by Mr Google Amit Singh thank you welcome to our book club uh Sunil early on in the book you talk about data and you talk about you know how important data is and a company's customers are then you say but the balance sheet or any other financial statements don't value data as an asset now my question is and also based on your background teaching Wall Street execs what what do you propose is a credible way to value a company's data and customer base so I think the customer base is easier than data uh so Wall Street now regularly uses customer base analysis to do the valuation especially for SAS based companies and subscription-based companies so now they do not put in the balance sheet but that's a way for them to project that's a key metric they look at if I'm a subscription-based company like Netflix or adobe or most cloud-based companies are based on that then you can see the annualized recording Revenue you can see customer acquisition customer retention rate so customer metrics get into the valuation model it doesn't get in the balance sheet but that's certainly indirectly they are part of the valuation data is much harder because accountants mindset change is a much harder task and there is a rules and regulations in the accounting board that is harder to change and it all goes into this big bucket called Goodwill when you buy a company it goes into that Goodwill same thing for brand value right and there's a lot of Papers written about intangibles and how to Value the intangibles for the last 15 years but those things are still not officially in the balance sheet because accountant just refused to say say unless we can prove it and everybody agrees on the same number this is not gonna because your valuation or data may be different from my evaluation of their data and the only way to find out that is when you sell a company another company and how much they actually willing to pay for it so I think that data part is hard I mean interestingly there is a recent paper that I saw where they try to and you would know because there's a lot of regulations potentially coming up about use of third-party data uh because of privacy issues so This research paper tried to sort of say if we don't have access to third-party data and advertisers use only first party data what will happen to advertising Effectiveness and cost of a customer acquisition and this paper shows the customer acquisition cost will go up by 37 on average and this was study was done across 100 000 advertisers so it's a fairly generalizable study that's an indirect cost of the losing the data of certain kind right but whether we'll go in the balance sheet I'm not holding my breath for that thank you for very well-rounded perspective thank you okay I'll take a question from the chat box when this is posted by Sundar emrajani and it says we have moved from 2G to 3G to 4G and now 5G how will it impact the evolution of the digital story what's the next big disruption so I think what the 5G is doing is the speed and access uh is much much greater so it will have an impact on autonomous vehicles for example because you need real-time feedback of what's going on the gaming industry is rapidly evolving because of that because you can have multiplayer games with hundreds of players because you need the bandwidth metaverse which is becoming a reality exactly for that reason because you need the speed you can't have latency when we run an online hybrid class and we have a case discussion with lots of people on the screen we can't afford the latency in that it's not like I wait for 30 seconds before I hear your comment so I think where the speed is essential that's where 5G will become very very important and then we already see some application happening in in that area thank you all right thank you let me take one of the other questions um so you know in your book um the many examples that you posted in your book they're mostly success stories it makes great reading could you elaborate on some that have not succeeded and any one in particular where they let the boats on fire as you call it and the company was doomed and what lessons can we learn from that I'm not sure about boats on fire but there are several examples of uh I'll give you two one is GE that I actually mentioned in that book which I thought would be a success story that didn't turn out to be and you all know about that the other uh that I've worked with the company uh at T and as you know Randall Stevens spent 85 billion dollars to acquire Time Warner which now they are they're selling so it's like you acquired after and within three years they're sort of reversing their strategy and that hasn't worked Verizon by the way tried the same thing and there that hasn't worked either so there are those examples where they try to build an ecosystem because everybody wants to become a platform that's the new wave um but in those cases it didn't work and I think in most all these cases the reason why it didn't work is this CEO had division so Jeff immel had the vision Randall Stevenson had the vision about what they wanted to do but if you talk to the next level people they couldn't see how the dots are connected so when I talked to the I gave a talk to at D where there were thousand Executives in attendance and 5000 online uh and I talked to the business unit heads of atnt who were going to implement the strategy that the CEO has envisioned and I asked them how this will actually come to fruition and nobody could articulate that and that's a bad sign you require you spend 485 billion dollars to acquire a business and you have no clear sense of how this will get integrated so I think a lot of that happens because the CEO wants to show to Wall Street that we are going in a growth path but there is no follow-up or there are no capabilities in the case of GE they wanted to build the predix platform which was a good idea but the internal team and I talked to the GE Bill Drew was a chief of the GE digital and I went to San Ramon and talked to build Rue and a lot of the people and you could see the capability were not there they did not have the capability of the Amazon and the Google to do what they were actually expecting to do so if you don't have the right people on board the vision alone won't do so I think again the path was right in many of those cases but the engine behind it to actually make it happen wasn't that so just a follow-up question on that because I had that question later too is that so you know in my view that a lot of this gets derailed because uh the boards or the Senior Management Etc are not fully bought into it so somebody has a great idea but the people who let's call them old school and some I'll get a wrap on my Knuckles saying that but to be that as it may um they are these sort of laguards in this space because of all the technological changes that are taking place how can companies actually help them go over the wall so I think in some ways there are laggers in in some ways they get influenced by this new shiny object so I had one senior executive come to me and say how do I use blockchain and I say why do you want to use blockchain and I would always start with what is the business problem you're trying to solve or what is a new opportunity you want to capture if you I mean it's ultimately a business problem not a technology problem and yes you need to be aware of Technology what you can possibly do that you couldn't do before but it has to be linked with the core of your business or your vision of where the business is going I think a lot of times that's a disconnect because you get excited by a technology I am now hearing from lots of companies how do we do metaverse uh because that's a new buzzword that everybody is talking about never mind nobody can articulate what exactly are is your vision for the business forget about metaverse and how is metabus fits into that story so I think a lot of time it's a very common human tendency to get excited about the new shiny object and whether it's board or whether it's a management if you don't have a good understanding of technology and its capabilities and see how that might actually help the business it just becomes uh an experiment that doesn't go anywhere thanks we'll take a question from Jyoti you got your hand raised uh hi professor you mentioned blockchain and you mentioned metaverse and you said you're actually studying it if you exclude the gaming in the entertainment industry where everybody's buying land at the metaverse where do you actually see early adoption happening in what kind of industry and what kind of applications are you seeing so I think right now metaverse is really a a slightly different version of VR because the real meta verse is where you can take your avatar and your digital image or wherever to any different place and same take the same digital option Etc so a lot of the fashion brands are experimenting right now because they're saying this is a way to for consumers ultimately if you buy an expensive fashion item your self-expressed it's basically a form of self-expression and the question is if you do you can do the same self-expression in the in the virtual world there was one study that showed that gen Z consumers feel majority of them feel that their identity in the virtual world is more real than in the real world I don't know what that says about our society but that if they really feel what who they truly are is in the virtual world then they want to excel Express that's the theory at least and we'll see how that pans out so that's one industry I think that a lot of effort being done in Gucci and Ralph Lauren and and you name it all the fashion brands the other area where I think there's a lot of excitement is the fitness industry so imagine if uh if I'm like I'll understand the value of Fitness but I'm not I'm lazy I don't do it I put on my VR glasses and I see a tiger running behind me get guess what I'm gonna run faster and that's what a lot of people are thinking about that you don't need to go to the gym there are boxing uh uh VR games there are other games where you can actually get this done right and this started even before metaverse with Peloton and others Nike who started all these Fitness instructors uh at home through the videos and this is the next level so I think those two the third that people are beginning to explore a little bit is education you can actually have a feel of real in classroom experience in the mirrors but all these are very early it's hard I mean there are reports by Mackenzie which says metabus will be a four trillion economy I mean I don't know how they came up with the number of four trillion who knows but I think all those numbers right now are highly speculative but gaming is actually becoming big and I can see advertising actually shifting to the gaming platforms Roblox is making a huge amount of money in that area right yeah so it's just like he is doing that but I even read I even read that JP Morgan has got a lounge in the metaverse that's what I read somewhere everybody is doing that see also so I think everybody is dipping their toes because there's a fear of missing out and the words that I hear from senior Executives is this is like the mobile Revolution or the social Revolution that happened previously early on when the social Revolution happened where people were chatting on Twitter or Facebook most most of us say well why would I want to be on Twitter and say I had a bagel this morning who cares and now that changed in many ways to how you engage with the consumers they don't want to be left out and they say dipping my toes and doing some experiment if I spend 100 000 or 300 000 or half a million dollars at least I'll learn something I think to some extent that's right but I'm actually writing a case with the with the company on that and the more I talk to them the more I realize they have no clue what they're doing they just want to call themselves because they go to the cons festival and say we have been in metaverse this is the typical thing the CMOS want to speak and the executives want to say but how it will change your business if it is successful it's not quite clear thanks thank you you got your hand raised High Prof quick question you mentioned failures in this area you know I work in Vodafone very much like atnt for us getting here is like changing the you know we call it an oil tanker in bitsy even though you can't turn very fast so what do you think is critical is you first need to change the beginning of the organization the culture of the organization before we can succeed or uh you know are you all the CEO can just wrap it down the way I mean you know with beliefs and strong uh push you can push it down and change the organization to be far more digital thank you out of your CEO alone can change I think a great example of and I just finished a case study with the MasterCard uh and I know Ajay banga very well he was my classmate in iron and when he became the CEO in 2010 they did in survey internally of the employees as to what is most important for MasterCard in the future on 27 items Innovation was dead last and he was shocked because in an industry which is moving fast and technology is the key ingredient for Success none of the people thought Innovation was important because as you as you recall MasterCard came as a Consortium of banks right so it was a very much a bank Consortium and Banks were their customers they were making good money they had no reason to change so his first step was to change the culture and people of the people of the organization and he had a vision which he explained that world Beyond cash as he said because 85 percent of the transactions are done not on credit cards but on cash and checks so there's a lot we are fighting visa and mass American Express but there's a bigger pie out there on cash and checks but in order to execute that vision and build a particular strategy First Step was people and culture so I would say people and culture has to be an important first step uh after you have a certain roadmap as to what you want to do okay here is a question from Ajit changyani and he says assuming India is indeed a leader in I.T and since the benefits of digital transformation of Health Care Services physical and mental have already been proven can India take a serious worldwide lead in this field question mark what U.S regulatory impediments to this exist wow that's a very broad question I did uh so I think India certainly has the capability and I am a product of India and I think we have some of the best talent in the world uh if you look at the CEOs of the top tech companies they are all Indians so I think we have a tremendous talent and capability uh I think it's just the question of and of course the government is also opening up now if you look in the payment industry I think that's a good example of government opening up I talked to Nanda nilkenny about the aadhar system that was built which was a remarkable success UPI is another example that other countries are looking at so I think India has the capability sometimes so we are victim of our own success or the government regulations that come in the way uh I don't know exactly how India can LeapFrog but it can a mobile technology is certainly where India is ahead uh of the world so I again I don't know the answer to I need to think a little bit deeper about it because I think it's a much broader question as to how do you change uh the entire country and Nation uh in in this direction so maybe your colleagues can pitch in because I'm at a loss as to exactly I haven't thought about that uh at a very deep level okay we need the Kapoor you raised your hand can you ask your question just go off mute yeah so uh uh my question is more around saying okay let's let's uh pretty much put aside the entire idea of new technologies but go down to some of the basics for what is the real driver and what is the value add as you've already said that okay what is driving you to think digital on various aspects and it's a bit of a loaded question because I myself am already investing in a currently I'm setting up a B2B platform uh but I want your point of view in terms of how much of digital transformation sits in a Enterprise Zone versus a multi-enterprise zone so just to quote again McKenzie kind of predicts that the network systems of Integrated Network ecosystems would be 60 trillion Revenue throughput in the next few years and how do you see if it from your point of view that okay how much of digital this only me versus a collaborative in a larger network of mine so again I don't know exactly what the percentage would be but what is certainly happening because we are in an interconnected world there are more and more ecosystems and platforms being built and the competition is less between products but competition is more between platforms and ecosystems because very hard to do everything yourself so if John Deere wants to go from becoming Beyond becoming a product company because product competition catches up very quickly and the differentiation goes away and wants to become a farm management company it has to partner with telecom companies it has to partner with lots of other companies you can't do it all and I think building the ecosystem sometimes is challenging because you have to give up control you have to think about how you divide the pie but at the same time you want to keep what is core to you to yourself and not share with the other guys because otherwise what's your competitive brand it's I think it becomes a very delicate balance as to what's your core and what you want to keep yourself and where you want to partner and where you want to actually share the common good and grow the part I think that the book is still being written on exactly what the mechanism should be on that part uh but certainly in many many cases there is a partnership model that is working and in fact I mean again if I may go back to the MasterCard example MasterCard is also saying the model of their story is collaborate and lean in rather than complete so when Apple was getting into Apple pay and the concern was Apple pay will actually have a disrupter for master Garden Visa went to Tim Cook and said well we do certain things very well which you don't and you do certain things very well that we don't why don't we collaborate same thing with Central Bank digital currency the question people are raising is if the Central Bank offers the digital currency that goes into my digital wallet that I can pay the merchant why do I need Banks and what I would need MasterCard and they're basically again leaning in and saying look Central Bank can issue digital currency but they still don't know lots of the transaction processing and all the infrastructure that we know about so we will go to the central banks and say hey if you want to do that that's fine we don't see you as a competitor Let's help you in terms of what we know that you need in order to make this a reality so I think their notion is we can't change the direction of the current where the water is Flowing but what we can do is we can ride the wave with them and that's the change in the business model that they think they're argument to be so I think that's more and more the case you you cannot be stuck to your old model and protect your business if the world is changing around you and that's a judgment call is thumbs up how much wealth is changing and therefore what is your core and how much you want to collaborate so just just to add to it uh so I'm sure that you're aware of the ghx model and how it has evolved over the years uh but if you look at it uh so maybe I'll try to get you more focused on Zenger if I was to have a ghx model in various other sectors and we talk about digital highways rather than three complementing scenarios as what you're saying that someone brings in banking versus someone else bringing in the product or some other other aspect of that ecosystem so one is to have heterogeneous ecosystems but one is to have homogeneous ecosystems with digital highways as a collaborative piece and I still find it uh very hard to understand that if you know in a multi-enterprise and many to many non-linear networks that are the way the trade or other other services emerge the only way that I can think of the future in low latency High stimulus interconnected environments would be collaborations it could be done more amongst competitors the like to like collaborations where yes you retain your competitive advantage in a newer newly defined format but rather than think that I'll actually build a highway from City a to City B for myself alone yeah and that I mean the collaboration among competitors is fraught with challenges also right I mean uh you saw that in the entertainment industry with Hulu and Disney and all the Comcast and others and ultimately they can't work together Goldman Sachs try to do the same thing in some of the brokerage Network and that didn't work so I think the competitive part of you always comes up and that collaboration between competitors becomes hard usually what happens is a large player collaborates with smaller players uh because they are competitors but they are not are the same level if you will and that model works but JP Morgan and Goldman Sachs working together that's going to be hard but we can have a deeper conversation I need to understand your story a little bit more actually nobody investing a lot of time on this because I do think that the conflict of interest or the concentration of power Concepts actually too many dimensions to it for this forum uh and I am already uh investing on a design where we actually come up with you can say a variant of some of these to say that the independence of the service provider should be more looked at as if I was a telecom provider so like I don't ask someone that which Telecom provider you use I have a privacy Assurance around that so as long as data is not my model independent platforms would be the way of digital transformation rather than Enterprise driven digital transformation otherwise the second tier companies will never come forth with some of these models right right right right yeah no again let's have a separate conversation I'm sure I'll connect with you on the side yeah I'm just going to just um ask you a little bit on the ecosystem how should companies Safeguard the ecosystems and the welfare of its members is there any quick tips you can give us I think that's a very tough question and I sort of I don't think the any general rule that I've seen emerge uh because certainly when you build an ecosystem you have to give up some control you have to collaborate with people you don't of course that they're not your part of your organization you don't control them 100 percent so how you create that partnership is not written by lawyers and the contracts are not written by lawyers completely because it's not a legal contract it's more of a collaborative story that benefits everybody there is also a tussle between who is actually governing what is the governance model of that ecosystem who actually has the rights to invest who has the right student to say no Etc so there are lots of open components uh and they have they're good benefits because increases the size of the pie but also challenges in terms of whether it will sustain or not a lot of ecosystems Fall Apart uh and as we were just discussing I think this is an area that I need to do more research on because I've not seen very clear sense of what is the right structure of an ecosystem how do you build it how do you sustain it how do you govern it I think that remains still an open question great um Amit you got your hand raised can you ask your question thank you two questions and I'll keep it quick chapter four uh Professor talks about Innovation and then you explain how your product is being used by users and they have a pain and then they self innovate and improve your product and you suggest companies should then glue with the users for next features my question is are there any companies that inspired you in this user-led Innovation and question number two if you have time is just open any thoughts you have on this new government governments are coming up with digital currencies I think everyone would love to hear if you have any thoughts on that so I think again I work with Adobe for quite some time and uh I got to know shantanu very well when they moved from selling the package software to Cloud now that everybody is doing that they changed the product Innovation System completely because earlier it used to be you designed the product for launch 18 months down the road and that was designed by engineers but now once you're on the cloud they actually see what people are using where they're getting stuck they don't even have to ask the users so that iterative process becomes very agile so this is a different way of getting consumer feedback and seeing from the usage Behavior exactly what's happening they never had that visibility now I don't know whether that's exactly in line with what you had in mind under the user feedback but that actually changed the way Engineers work and surprisingly many of their old Engineers could not work in this model because they were used to the 18-monthood cycle to design the product so this agile model was very very different for many some people are just as some did it is almost like making a movie versus making a game that you can iterately change or making a software so that is a I mean I think a lot of software company moving to the cloud has actually opened up the ways the companies innovate a lot of the DTC companies have done the same thing so whether it's a glossier whether it's all those direct to Consumer companies that emerged in the last 10 years have actually innovated rapidly on the product Innovation what lipstick to sell and what beauty products to sell or what food products to sell based on the rapid feedback from the consumer you said so I think think of this as another way to get customer inside uh rather than doing a typical survey if you will you actually get inside by the usage behavior and where they're in stock now to your second part of Central Bank traditional currency I think the only country which is probably ahead of the game is China on Central Bank digital currency but China is very unique I mean privacy is is a is not a guarantee it's an optional thing if I may say so uh but in most democratic places like India and us I think we will be I don't think I want my government to know what I bought yesterday so for Central Bank digital currency to manage that process they have to know everything about me so privacy will be a big issue as to who actually has access to that information security will become a huge issue also so I think it's a good idea to remove friction in the economy it's a good idea especially for the unbanked people but there are lots of ifs and buts in the process to for this to become reality but I mean I mean you might have some insight because uh with Google pay and everything else I'm sure you're all in the middle of it we are tracking what in India the RBI is doing and earlier this week they came up with more detailed guidelines on how they envisioned I read those guidelines uh there wasn't that much concrete I could hold on to so I think they just need some more time to evolve and you know come up with yes I think governments are very much interested in it because the cash has its costs the security issues for governments uh when with NASCAR I did uh some uh a case study about uh Financial inclusion in South Africa where the Sasa distributes the Social Security checks and there is these big armored trucks go to Soweto to distribute cash to the poor people and that's costly and of course there is all kinds of theft that can go in corruption goes on the whole notion or at least the theory is with digital currency all that leakage will will get stopped now whether that will happen or not whether other kinds of issues will come up with the hacking and cyber security issues ETC we don't know um but that remains to be seen so I think the story is still being written on that okay do you have a question from Hindu shaker and his question is do you see consolidation of certain digital companies who have similar strategy or goals if so would it be a strategy to improve their evaluations or market share foreign consolidation so many of these fintech companies for example they also realize it's very easy to start and launch a business so it's very hard to scale so certainly many of these smaller companies that starting they're getting uh merged with large companies and large companies are getting bigger uh smarter also in this process whether it is consolidation across large companies I don't know I think that's a probably a case by Case by industry by industry uh so for example in automobile will Tesla acquire GM I don't know I think that's a that's a probably uh uh very much depends on the situation of different companies so I don't see big consolidation happening similarly entertainment uh you have Netflix and you have Amazon getting into videos and you also have now apple and others at Disney's will they consolidate I doubt so I think it depends on the industry and depends on the size of the company uh but it might in some in some cases okay then though it does thank you so much all right great okay I have another question which is from your chapter five and this is on operational excellence and you talk about demand driven digital Supply chains warehousing Logistics and fulfillment and it's quite apparent that with kovid some of those assumptions or the way we used to work just in time inventory it's become just in case um so can you talk a little bit more about that because this is an area I feel there's a lot of disruption that's taken place in the last two or three years thanks to kovitz so certainly I mean we all know Supply chains have been disrupted due to co-ed but I think they are all coming back uh I don't think that changes the fact that you can still use technology to improve the operational excellence in the supply chain you can still track the products you can still remove the friction in the supply chain you can still make the routing process faster you can still make the factories much more uh smart factories Etc so I think covet in my mind was certainly at this a bump in the road and certainly a bigger bump that most of people expected but will that change the fundamental aspects of how operations and Supply chains should be optimized I don't think so I think that will still go on it certainly a company had to take a detour because right now they were not talking about optimization they were talking about do we have the product do we actually have them because the supply was much shorter than demand that's why we have all this inflation going on so so the fundamentals don't change I think they've just been delayed okay great I have a question here from Radha Krishna and his question is number one do cxos need to be trained on Technologies AI ml models algorithms Etc to drive digital transformation effectively and the second question is what's the ideal profile of a CDO in an incumbent organization right uh so exactly so let me take the second question first because this is a in my board that's the exactly the question we were talking about as to do we need a CDO and what should be the profile of the CDO uh and I think uh in fact at Harvard Business School we're having the same question so our Dean three can't ask me the same question should we have a CDU and what should be the broad because we have a CIO right so by and large what I've seen is in many companies every company has a CIO or a CTO you have different sort of labels that you attach to it typically a CIO is managing the existing operations of business creating the data Lake making sure everything works properly whether operations are working efficiently Etc a CDO might be needed if you are launching new businesses technology-based businesses opening up new channels of growth and opening up new businesses for growth so in uh one of the companies that I'm bored uh the Saudi Arabian company we are having the same discussion which is think of digital transformation from an internal organization perspective was it this is a transformation from an external perspective for where you're looking for growth and new revenue streams so I think CDO if that's the goal of the company that you might need two different functions CIO for internal operational excellence and digital transformation of the internal processes Etc and a CDO for business development think of this as a business development based on technology there you need a person who is conversant with technology who knows technology but also knows the business and also know is a change agent because you need to change the way the company operates and bring the people along so I think that requires a little bit of a much more General management perspective not just the technology perspective at least that's the sense that I'm getting talking to lots of people uh and also looking at some of the board work that we are doing I'm now forgetting the first question that you had sorry all right let me try and take that back [Music] um one second right do cxos need to be trained on Technologies AI ml models to drive digital transformation effectively so I think again depends on what you mean by training I think we all need to know on now to understand what what is possible and what is not possible so my analogy would be that I need to play tennis once or at least enough so that when I see Roger Federer hitting a running forehand shot I understand how difficult it is or what are the pros and cons of that so I think you need to go on the trenches once to understand what is possible and what are the limitations of Technology you don't need to be expert on that I don't need to be Roger Federer to appreciate Roger Federer play but I need to play tennis at least somewhat to understand how easy or difficult certain shots are I think that's would be my suggestion you don't need to be expert you can't keep up with all the changes that are going on but you have enough of information because as a cxo you need to know not only technology you need to know the business as well right so you need to be a general manager in that sense so but you need enough knowledge I mean it's almost like if you're a cxo you need to know how to read a balance sheet you can't become a cxo without knowing some of the basis of Finance even if you're not a CFO same thing I would say thank you so I think it's a question from ritesh palaksha and his question is incubating digital Technologies or Transformations is easy is it but scaling them or end to end implementation is taking time or takes time or is it a journey how to address return on investment value creation any other metric to address the above challenge a great question I think you're right incubation is easy I would look at again uh two companies that I found things have done very well uh MasterCard example that I gave that has done very well of innovating and scaling the other is IBM under Lou gerstner when they pivoted from the hardware to the software to Services business and how they actually incubated the new services and scale them up and the basic model is and in the book I talk about a speedboat versus large ships that you don't want to create speed boards that take on their own course and their own change the direction of the ship but you don't want an innovation inside the ship also because the bureaucracies and the white blood cells will kill that Innovation and nothing will happen so the trick is to keep the Innovation unit separately for a while but then slowly move them into the core and we build that Innovation unit or build that incubation Innovation or any new activity you have to have a clear sense is what line of business it will get into and how will actually help the line of business and that's what MasterCard has done now they created an innovation lab for two years in the early tenure of Ajay banga they were separate the goal of the Innovation lab was simply to change the culture of the organization not to come up with new ideas and new products but to change the culture as they call it to show the art of the possible and once they change the culture then they're slowly brought in because the goal was it's not just a bunch of smart tech savvy people who will do the Innovation is the entire organization has to do the innovation and how do we Inspire the entire organization and show them that what is possible that was so slowly that shifted inside the core of the business and now you actually see innovation in the core products not just on this ex periphery if you will so I think going back to one of the earlier questions where do you start I always I think it's pretty strongly believe it's the people and the culture have to change your DNA organization has to change before you can actually create that different election just on this Talent are you seeing the digital Talent keeping Pace with the requirements of digital disruption or change in the companies you're working with I think it's slowly happening and and large companies are becoming much smarter than when I wrote the book for example I mean four years is a long time for this and companies realize uh the hiring process has changed uh in many companies now for example whenever we visited uh the automobile companies in Germany uh BMW and others German car companies historically have been fantastic in mechanical engineering but now car is a software on wheels so now they suddenly realize we're not very good in software technology we are very good in mechanical engineering so they're hiring the software Engineers by the drove because if you have to compete with Tesla they can keep upgrading a car overnight because of new software whereas BMW is still the same old car so how do we change that model unless I have the right Talent so I think that's happening much more in most companies we are 729 but I want to ask you one last question which is that do you think we can thank covet for digital adoption disruption and acceleration and do you see any clawbacks along the way I won't say thank is the right word I would use for covet but uh there's a lot of negatives that we suffered or the holy Humanity suffered from covet but certainly covert has activated adoption as we earlier discussed for lots of areas some things will go back I think there's a big debate about work from home how much it will sustain and how much it won't many companies have won the employees back in the uh and physically because there's a lot of informal conversations that are lost uh in in the zoom environment I think the balance will be somewhere in between some companies are leaning more for in-person work versus others so there certainly will be some clawback but I don't think we're going back to exactly where we were two and a half years ago so it'll be a new equilibrium and every company will design it differently to some extent so um we're right on time I just want to take the opportunity to thank you very much we had a interesting conversation I hope we've given you enough thought for another book uh that you might write uh I also want to take the opportunity to thank kushboo and Amit my co partner um in all I Endeavor we're trying to do with this book club and we hope to have you again with your new book as and when it comes out in the future so thank you everyone thanks very much thank you very much it was it was fun fun to do this appreciate it thank you thank you in which direction I graduated in 79 many years ago around the 82. okay okay I did it myself right there [Laughter] all right thank you professor bye-bye thank you