Across industries, advances in everything from analytics and artificial intelligence to mobility and social media are changing virtually every aspect of doing business. Welcome to the era of “Transform or be transformed.”
This new reality—like most large-scale changes—represents both an opportunity and a threat for business leaders, agreed CEOs gathered for Chief Executive’s recent CEO2CEO Summit.
Recognizing this imperative, business leaders participating in the summit shared their experiences deploying digital strategies to engage more effectively with consumers, streamline internal processes, improve productivity and explore new value propositions. Here are 5 key themes that emerged.
1. Staying current requires constant vigilance. The rapid growth of relative newcomers like Amazon, Uber and Netflix epitomizes the threat of disruption faced by legacy businesses that fail to foresee and adapt to game-changing technology. The consequences of neglecting to adapt to even incremental advances can be just as dire over time, marching a healthy business steadily toward obsolescence.
Recognizing the need for constant vigilance is key. Even companies that once innovated their way to success become vulnerable to the next big thing once they reach a certain size. 1-800-Flowers—which revolutionized the floral business by embracing telephone sales and, later, e-commerce—guards against being overtaken by aggressively pursuing new technologies as soon as they emerge, reported Jim McCann, founder and executive chairman.
The company was an early partner with IBM Watson, which led to the creation of a digital concierge. “Gwyn” is a virtual assistant that helps web customers with their gifting needs and will, thanks to machine learning, learn its craft much the way a floral shop employee learns about floral service over time. 1-800-Flowers also is partnering with Uber to speed delivery service, has a chatbot on Amazon Messenger and a partnership with Amazon’s virtual assistant, Alexa, that allows customers to place an order with a voice command.
“The diversified conglomerate model is dying in the public market. You have to choose areas of [focus] so that you can scale appropriately within them.”
2. Digital advances have raised customer expectations across all industries. Customers in both the B2C and B2B segments increasingly expect instant gratification—and stockholders are no different, noted Dow Chemical CEO Andrew Liveris, who is leading a reorganization aimed in large part at making the company more agile. When the dust settles, Dow will be divided into three entities: one devoted to materials sciences in the packaging, infrastructure solutions and transportation areas; a second concentrating on agricultural science; and a third focused on specialty petrochemicals.
“The diversified conglomerate model is dying in the public market,” Liveris said, explaining the thinking behind the reorganization. “You have to choose areas of [focus] so that you can scale appropriately within them.”
The restructuring will allow Dow to continue its journey toward speeding innovation through technology. Already, noted Liveris, investments in bioinformatics and robotics have increased the number of experiments Dow conducts on behalf of its business customers from 20,000 a year a decade ago to 2 million a year.
Recently, for example, Under Armour approached Dow looking to make its line of athletic shoes bouncier, water-resistant, temperature-resistant and less likely to degrade over time. “Normally, developing a polymer that would support that would take two to three years,” said Liveris. “We did it using chemical engineers, biomatics, robotics and materials science in three weeks.”
Speed is just as critical in the B2C market, where customers expect to be able not only to find whatever their hearts desire at their fingertips, but to receive it within days—or, in the case of pizza, within minutes. Domino’s, which built a national chain around the promise of speedy delivery, upped the ante on that model in 2015 with a pizza ordering app that not only guarantees easy and fast access to a pie, but lets you track it on your smartphone every step of the way. Today, digital orders account for 35% of the company’s sales and deliver a higher repeat customer rate, higher spending and higher satisfaction.
3. Artificial intelligence (AI) will increasingly inform decision making. The unbiased decision making that comes from data being plugged into algorithms can inform rather than replace strategic decision making, asserted David Kenny, general manager of IBM’s Watson Group. “It enables you to see patterns and identify solutions.” For example, Kenny described Watson’s effort to use genomics to help doctors treat a leukemia patient who was failing despite six years of aggressive treatment. “After analyzing her DNA and treatment data, Watson proposed she could actually have two strains at the same time,” he said. “The medical team addressed the second strain and now that patient is perfectly healthy.”