'What do you mean we need to be a software company?' asked Lukas Braunschweiler, CEO of Sonova, one of the world's leading manufacturers of high-tech hearing devices. I had just finished giving a talk to their senior leadership team at the gorgeous lakeside town of Stäfa, near Zurich. 'We already have lots of software engineers. Are you saying that we need more?' It was a fair question, and one I had spent much of the prior week thinking about, in a few unusual places. How many software engineers do you need to transform a company?
Actually, a few unusual places was an understatement. A thick stack of ticket stubs in my passport evidenced my week's seemingly impossible tour of duty: Brussels, Rwanda, Bangkok, Manila, Hong Kong, London, Paris, Istanbul and finally Zurich: all in seven days. Along the way, I had some different conversations with leaders, from a variety of cultures, about AI, data, and what digital transformation might mean in a global context.
Here are a few fragments of conversations I found fascinating:
- Speaking with the leadership team at Coca-Cola in West Africa, I learned how their Nigerian division was using sensors, data and machine learning to discover patterns about what a successful drink outlet looked like, and then to provide location specific suggestions for sales agents on their tablets on how to improve performance. For example, the algorithm might recommend moving the position of some bottles, checking the temperature of a cooler or using some provided discussion points to introduce a new product.
- A senior leader from Safaricom, which is Kenya’s leading mobile provider, told me that are now more mobile phones in her country than toilets or water faucets. She explained that getting a driver’s license used to involve walking many miles to a regional center, but now could be done entirely online, and with the payment via their payment platform, M-Pesa. M-Pesa, with over 26 million subscribers (80% of the adult population), has become a kind of national digital platform. Safaricom is now pushing further into new services, like M-Kopa, which seeks to provide access to lighting and power to over 500,000 homes, with payments also made via M-Pesa.
- At the other end of the spectrum, later that week in Paris, I had coffee with Mohamed Marfouk who is the COO of the LVMH Group, the world's largest luxury brands conglomerate. We also discussed data but from the perspective of how brands might embrace digital platforms to reinvent luxury experiences. Mohamed revealed that one of my favorite brands, Berluti, might soon allow its customers to follow in real time as their shoes were handmade and personalized for them - just like how someone buying a Tesla can track their order through the factory. In the new world of digital luxury, there is no more waiting time, just an immersive experience of purchasing something.
So as I discovered, whether you are selling soft drinks or luxury handbags, or are operating in an emerging market or a mature economy - leaders face the same set of issues. What makes 'being digital' difficult is not deploying the latest enterprise technology, but rather orchestrating people, assets, and brands to reinvent the overall experience.
And in a way, that is also how I tried to answer Lukas' excellent question, as I finished my talk.
'You don't need more software engineers,' I explained. 'There is a difference between making software, and designing your company to run like software.'
We are all software companies now, because the most valuable thing we can create, protect, and leverage is data.
Amazon will be a formidable owner of Wholefoods, not just because it can run warehouses at scale, but because it is a company that can transform massive amounts of data into smarter decisions at speed. Walmart can buy all the e-commerce business it likes, but until it sees itself as primarily a data-driven, software business, it will struggle to challenge Amazon.
Here is my view: 'being digital' is ultimately about applying the same agile, data-driven and iterative approach that engineers use to design software, to doing more interesting things for your customers.