N° 07 FEBRUARY 2015 Strategies for the Age of Digital Disruption
DIGITAL TRANSFORMATION REVIEW
N° 07 FEBRUARY 2015 Strategies for the Age of Digital Disruption
Capgemini Consulting’s Editorial Board
Cyril Garcia Fernando Alvarez Tabio Chief Executive Officer Chief Digital Officer
Didier Bonnet Jerome Buvat Senior Vice President Head of Research
[email protected], [email protected], @didiebon @jeromebuvat
[email protected] The Digital Transformation Research Institute
@capgeminiconsul www.capgemini-consulting.com
www.linkedin.com/company/capgemini-consulting Contents
The Age of Digital Disruption: Editorial 8
Digital Disruptions: Making Sense of it All
Fast Thinking: Reinventing Strategy for a Digitally-Disrupted World 12 Rita McGrath, Columbia Business School
A New French Revolution? Building a National Economy for the Digital Age 22 Philippe Lemoine
The Power of Sharing: How Collaborative Business Models are Shaping a New Economy 28 Rachel Botsman
15 Startups to Watch in 2015 36 Brian Solis, Altimeter Group Collaboration Redefi ned: Engaging with The Disruptor
The Silicon Network: How Big Corporates and Digital 44 Startups Can Create a More Innovative World David Cohen, Techstars
Black Swan Startups: Spotting Tomorrow’s Big Digital Disruptors 52 Saul Klein, Index Ventures
Winning Digital Disruptions
Riding the Wave of Digital Disruption: Scripting a New Digital Future, the FT Way 60 Caspar de Bono, Financial Times
Designing Transformational Business Models 68 Serguei Netessine, INSEAD
When Digital Disruptions Strike: How Can Incumbents Respond? by Capgemini Consulting 78 The Age of Digital Disruption – Editorial The Age of Digital Disruption Introduction By Capgemini Consulting’s Editorial Board
hese are uncertain and • Assessing the most effective How can we plan for the challenging times for strategic response to existing emergence of disruptors? traditional organizations disruptions with an analysis T We open the Review with Rita across every industry. The digital by Capgemini Consulting of Gunther McGrath, a professor at economy is turning the traditional incumbents’ winning strategies. Columbia Business School, who rules of the game upside down, as is a globally recognized expert on a scan of business press headlines strategy in uncertain and volatile illustrates. “Since 2000, 52% of Digital Disruptions – environments. “It is important companies in the Fortune 500 Making Sense of It All to understand that most digital have either gone bankrupt, been disruptions don’t happen suddenly. acquired or ceased to existi”. Working with a global panel They take place over time,” she “Uber Valued at $40 Billion in of industry leaders, venture explains. “Most companies often $1.2 Billion Equity Fundingii.” capitalists and academics (see get so caught up in everyday “Is Silicon Valley the Future of Figure 1), we have built a detailed operations that they don’t take a Finance?iii” “How Bitcoin can and picture of the digital disruption step back to think about what the will disrupt the financial systemiv.” phenomenon, probing the key future might hold.” This small sample of recent press questions that organizations need headlines reveals why the leaders answers to: Why are we seeing so many of traditional organizations might • How can we plan for the disruptions? feel a strong sense of disquiet. emergence of disruptors? Philippe Lemoine, who recently Disruption can happen at any • Why are we seeing so many authored a report for the French time, in any sector, and its effect disruptions? government on the digital on traditional organizations can • What shape are these transformation of the country’s be fundamental. Against this disruptions taking? economy, outlines three factors backdrop, this seventh edition of driving disruption: automation, the Digital Transformation Review • Which startups are likely to dematerialization (substitution of is dedicated to three themes: emerge to disrupt sector value physical products and processes chains over the coming years? with digital alternatives) and • Understanding more about the changes to the value chain. nature and context of digital disruption, from assessing where disruptors gain their competitive advantage to the emerging disruptors of the coming years. i Forbes, “Ray Wang: Cloud Is The ‘Foundation For Digital Transformation’”, December 2014 • Examining how collaboration ii Bloomberg, “Uber Valued at $40 Billion in $1.2 Billion Equity Funding”, December 2014 and engagement can help both iii NY Mag, “Is Silicon Valley the Future of Finance?”, June 2014 iv Visual Capitalist, “How Bitcoin can and will disrupt the financial system”, July 2014 incumbents and disruptors.
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Figure 1: Guest Contributors to the Digital Transformation Review N o07
Serguei Netessine, Rita McGrath, Caspar de Singapore New York, USA Bono, Saul Klein, Brian Solis, London, UK London, UK San Francisco, USA
Rachel Botsman, David Cohen Sydney, Australia Philippe Lemoine Boulder, Colorado, USA Paris, France
What shape are these Which startups are likely to many large firms are often disruptions taking? emerge to disrupt sector value ignoring. There are, however, chains over the coming years? some traditional incumbents that Rachel Botsman is a global understand that they do not have thought leader on one of the Brian Solis is a digital analyst, all the answers and are partnering emerging business models of anthropologist, and futurist at with startups across sectors. We the disruptive segment: the Altimeter Group. He studies the spoke to two individuals who are collaborative economy. “The effects of disruptive technology closely associated with startups to collaborative economy drives a on business and society. He understand how incumbents can shift from centralized asset-heavy identifies a select set of startups engage with startups at an early organizations to decentralized that he believes will start hitting stage of their lifecycle. This allows asset-light networks and the headlines in 2015. The eclectic the incumbent and potential future marketplaces,” she explains. “It list spans companies from the disruptor to cooperate rather than typically does this by creating sharing economy, virtual reality, simply compete. business models that enable 3D Printing and more. underutilized assets - from spaces David Cohen is the founder, to skills to “stuff” - to be used more Managing Partner, and CEO of efficiently.” She believes there are Collaboration Redefi ned startup accelerator Techstars. The five key drivers of disruption – – Engaging with Potential Techstars network has so far funded wastage of resources, redundancy, Disruptors 484 companies and it works with complexity, limited access and large corporates to run mutually broken trust. Each of these areas Understanding the nature and valuable mentoring initiatives. creates new opportunities for context of disruption is the first step. “Techstars runs the program and startups and incumbents alike. Crafting a response is the second, is also the investor. The corporates and collaboration and engagement don’t take direct equity in the are important approaches that startup; they don’t take rights to
D IGITAL T RANSFORMATION R EVIEW N° 07 7 The Age of Digital Disruption – Editorial
follow on or acquire the startup or Saul Klein is a Partner with smaller firms are often driving the anything like that,” he explains. Index Ventures, an early-stage technology innovation. Instead, “They simply provide mentors and venture capital firm with €3 he argues, big companies focus on access to their technologies.” By billion under management and a buying from big companies and fail doing so, these corporates secure portfolio of 140 companies across to engage with small companies. new insights into how third- 20 countries in almost all sectors. He says: “Big companies will truly parties can use their APIs and data Saul Klein believes that traditional engage with the startup ecosystem in innovative ways. incumbents need to respond to when they spend between 5% and ‘big-bang’ disruption by really 25% of their tech and innovation engaging with smaller companies, budget with a small company.” not in the least because the
Figure 2: Response Tactics of Successful Incumbents
48%
36% 32% 32%
Judicial Route Mimicking Acquiring Acquiring Digital Competition Competition Talent
N = 84 Note: Figures refer to percentage of companies adopting a particular approach. Multiple responses per company
Source: Capgemini Consulting Analysis
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Winning Digital Disruptions We close this seventh edition of the We hope this edition of the Digital Responding to digital disruption Digital Transformation Review Transformation Review has helped is now a critical weapon that all with Capgemini Consulting’s increase understanding of the organizations need to have in their view on how organizations can disruptive and challenging times strategic armory. The story of the respond when digital disruptions we live in. Digital disruption is a Financial Times’s response to the strike. Our research, involving fact of life and a sweeping force for digital disruption of the media over 100 companies, draws on the business change. Senior executives industry is a salutary example. lessons learned from incumbents therefore need to be confident in Caspar de Bono, Managing that have successfully tackled their abilities to assess and respond Director, B2B at the FT, outlines disruption and outlines the key to exactly this kind of disruption. the organization’s response and strategic responses. Our analysis We hope this Review has helped in how it has turned digital disruption shows that successful companies that regard and please do contact to its advantage, with digital have a relatively even spread across us if you would like to discuss any subscriptions now constituting different tactics (see Figure 2): they of these issues further. nearly two-thirds of the FT’s total have acquired competition, hired paying audience. “Technology digital talent and gone down the helped us establish a direct legal route too. relationship with customers,” he explains. “This was very disruptive and the FT has significantly benefited from this disruption.”
A key response to digital disruption is to constantly innovate business models. Serguei Netessine, professor at INSEAD in Singapore, believes that most companies do not focus enough on their business models and that is a major handicap when they are faced with disruption. His research has revealed that only 5% of For more information, please contact: companies practice business model Didier Bonnet ([email protected], @didiebon) innovation and he proposes an Jerome Buvat ([email protected], @jeromebuvat) alternative framework to improve The Digital Transformation Research Institute ([email protected]) performance.
D IGITAL T RANSFORMATION R EVIEW N° 07 9
Digital Disruptions: Making Sense of it All Fast Thinking: Reinventing Strategy for a Digitally-Disrupted World
Fast Thinking: Reinventing Strategy for a Digitally- Disrupted World Interview with Rita McGrath – Professor at Columbia Business School @rgmcgrath
ita Gunther McGrath, a Professor at Columbia Business School, is a globally recognized expert on strategy in uncertain and volatile Renvironments. She is a popular instructor, a sought-after speaker, and a consultant to various senior leadership teams. She was chosen as one of the top10 global management thinkers in the 2013 Thinkers50 awards, and won the strategy category. In her latest book – “The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast As Your Business” – she outlines a new approach to strategy in an economy defined by transient advantage. Capgemini Consulting interviewed Rita McGrath to understand how companies can steer themselves around digital disruptions.
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Staying Tuned to Digital disagree about their meaning. As Disruptions a result, they are often overlooked. Companies should An example of a leading indicator How can companies identify pay attention to could be data that shows a new technologies or startups that areas where startups product from an unconventional are truly disruptive? competitor gaining popularity are identifying with customers. This could be an It is difficult for companies to early warning sign of disruption. distinguish the truly disruptive and addressing a startups from the hype. This is customer pain point. Companies that only look at lagging because most startups never really indicators tend to systematically achieve critical mass. However, Is there a way in which under-invest in the things that will I think what companies can do is companies can anticipate drive profitability in the future. It pay attention to where startups potential future disruptions? is important to understand that have identified and are addressing most digital disruptions don’t a customer pain point. They should Yes, companies can spot the early happen suddenly. They take place ask themselves: “Where are some warning signs of disruption by over time. So, I always recommend of these digital startups solving a looking at the right data. There that companies really think hard problem for my customers where are three categories of data – I call about leading indicators. But in I’m doing less of a good job? What these lagging, current and leading many companies, the processes are the areas where my business indicators. Lagging indicators are for detecting leading indicators are model is making our customers often highly accurate and precise incredibly weak. Most companies unhappy?” Companies that fail but they only reflect past events often get so caught up in everyday to do this, and have dissatisfied that can’t be changed. Most operations that they don’t take a customers, leave themselves financial information, including step back to think about what the vulnerable to digital disruption. profitability, is a lagging indicator. future might hold. A company’s profits today are A great example of this is the cable a function of what it did for Could you give us an example television industry in America. customers and how it responded of a company or an industry In a digital world, consumers to competition in the past. Current that failed to anticipate digital have grown accustomed to indicators, on the other hand, disruptions? on-demand services. But US are data about where a company cable television companies still stands at the moment. Examples Yes, the print news media business force their customers to pay for of current indicators include is an example of an entire industry expensive packages rather than inventory levels or the pipeline that overlooked digital disruption giving them the option to pay only of opportunities. Finally, leading because it was too focused on for what they want to watch. US indicators provide information routine issues. A person from the cable companies are illustrative on where a company might be industry that I spoke with had of a class of incumbents that has headed. They are often subjective a very interesting observation a lot to worry about from digital and are hard to get a consensus on this. She said: “If you were a disruptions. around because people frequently news company executive in days
D IGITAL T RANSFORMATION R EVIEW N° 07 13 Fast Thinking: Reinventing Strategy for a Digitally-Disrupted World
gone by, you weren’t worried it out. For instance, many large about the news or necessarily the companies end up acquiring a revenue. You were worried about would-be disruptor just to weed things like unionized workers out potential competition. They striking, the price of fuel, and put the disruptor’s technology the distribution and cost of the on ice and continue to do what paper. These were the things on they’re doing. There are some your mind. You weren’t thinking exceptions to this, like Avis. It saw about who was going to buy ads ZipCar as a viable business model if consumers shifted to digital.” I and has continued to support it thought that was very interesting. even after acquiring the company. If you’re worried about issues like union contracts, then your line of sight to what could fundamentally undermine your revenue flows is Denial is a problem very weak. because it results in companies Responding to Digital not classifying a Disruptions: Success Lies in disruption as a Openness to Change threat.
How do large companies What are the main challenges typically react when faced with that companies face in reacting disruptions? to disruptions? The reaction occurs in stages. Technology is seldom the The first stage is denial. For problem. The big issues tend to instance, a company might say: be political. Resources get locked “Oh, that’s just a two-person into divisions, because senior startup, how could it possibly executives want to hold on to hurt us?” This kind of denial is a their resources and not let go. problem. It results in companies You have cases where powerful not classifying a disruption as political players feel threatened by a threat. Then, there’s the stage innovation and try and bury it so where companies get alarmed that it never sees the light of day. and realize that the disruption You also have situations where could indeed have a significant coalitions build up in companies, impact. And the third stage is and groups of executives decide when companies try to deal with to work against a disruptive new the disruption by trying to stamp innovation because none of them
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want it to happen. Unfortunately, In your opinion, why was the right path is ignored when Sony not as successful as companies get into these political Apple in the digital music At Apple, Steve Jobs situations. business, despite having all the was able to bring technology for it? the different warring Sony is a classic example of a parts of the company Companies often company that ceded its entire find it very hard to dominance of a market because together and ensure acknowledge that it tried too hard to preserve that they all worked the status quo. Sony actually towards the same their old business increased its investment in its model does not work Walkman division when it faced vision. the disruption of digital music anymore. players. So, despite having all How has Fuji been so successful the technology for digital music in reinventing its business model, The other reason why companies players – including the hardware, where players like Kodak were are unable to deal with software and the content – unable to do so? disruptions fast enough is due Sony failed to capitalize on The CEO of Fuji brought in to a phenomenon that can be the opportunity. Sony also a different mindset to the called “nostalgia as business faltered in its ability to get all organization. This helped it strategy”. By this I mean that its different teams to collaborate withstand digital disruptions companies often find it very hard and work together on digital much better than others, to acknowledge that their old music players. The teams had like Kodak, which went business model does not work conflicting visions for Sony. The bankrupt. He was prepared to anymore. They find themselves hardware team wanted to charge throw the full weight of the unable to conceive of a new for hardware and give away company behind doing things reality. Take the leaders at RIM software for free. The content differently. He commissioned (now BlackBerry), for example. team, on the other hand, wanted a study of Fuji’s administrative They had never experienced a to charge for content and give overheads and even though serious setback so the thought that away hardware for free. There they were doing much better their business could evaporate was no one who mediated the than their Japanese peers, he was inconceivable to them. They differences between the different said: “It’s not good enough.” He were so confident about their hold teams. At Apple, on the other decided that Fuji needed to do over the business user segment hand, Steve Jobs played the role away with consensus decision- that it didn’t even dawn on them of a centralizing function. He making, be more proactive and that the iPhone or the Android was able to bring the different take tougher decisions. I think devices could become legitimate warring parts of the company this ultimately led to Fuji’s threats. They saw the onslaught together and ensure that they all success. coming but more or less ignored worked towards the same vision. it.
D IGITAL T RANSFORMATION R EVIEW N° 07 15 Fast Thinking: Reinventing Strategy for a Digitally-Disrupted World
Staying Tuned to Digital Disruptions
Pay attention to where Think hard about leading indicators startups are addressing a E.g. data that shows a new product from an customer pain point unconventional competitor gaining popularity with customers.
Most companies often get so caught up in everyday operations that they don’t take a step back to think about what the future might hold. - Professor Rita McGrath
Building Resilient Organizational Structures
Establish a common Give more autonomy Develop the ability to Look for opportunities set of values and to employees, while continually reallocate outside of industry shared beliefs to maintaining a strong resources and boundaries break down central framework reorganize rapidly organizational silos DIGITAL TRANSFORMATION REVIEW
The payment industry is industry. Interestingly, Apple’s often becomes an unexciting witnessing a lot of disruptions payments model is hurting the experience. It is now making it due to startups. If you were banks more than it is hurting possible for business travellers the CEO of MasterCard, how the major card companies, to get Airbnb stays reimbursed would you respond to these even though it is claiming through their corporate disruptions? revenues from financial accounts. If business travellers services businesses for itself. start using Airbnb more As CEO, I would first of all look It remains to be seen how they frequently, I think it could be at business practices that are will compete when and if their very disruptive to the existing making our customers unhappy. business makes serious inroads hotel business. For instance, companies like into payment behaviour. Visa and MasterCard tend to If you were the CEO of a major charge merchants very high Would you consider Airbnb to be hotel chain, how would you interchange fees. I would look a threat to the hotel industry? react to the disruption caused by at this very seriously because Airbnb? I think what they’re doing is I think there are two ways to not sustainable. There is bound look at this. In some ways, we I would think of ways in to be a customer backlash could say that Airbnb has not which we could become more at some point. I would also necessarily been a direct threat competitive in comparison to watch the startups and new to large hotel chains because players like Airbnb. So, I would entrants operating in this it has primarily targeted a evaluate what makes Airbnb space very closely to see how different customer segment. attractive to people besides a MasterCard could reinvent This is a segment that was not lower price. For instance, some itself for the digital world, travelling earlier because it people prefer the authentic rather than defend its existing could not afford hotel stays. experience, having a local host, way of doing business. Mobile So, in that sense, Airbnb may and the personal atmosphere of payment startups like LevelUp have extended the size of the a private accommodation. And have already begun to put overall market without taking then I would try to see if I could pressure on the existing model. away that much business from potentially add those attributes When customers use LevelUp’s the large hotel chains. to my offer. mobile app to make purchases, merchants need to pay only But in the future, Airbnb is For example, some hotels are a fraction of the interchange likely to be much more of a now focusing increasingly on charges that traditional cards direct threat to large hotels. We millennials. Millennial business cost them. LevelUp makes are now starting to see Airbnb travellers tend to differ from this possible by aggregating a break into a market that has their baby boomer counterparts large number of transactions long been the staple of large in how they like to spend through the day before hitting hotels – the business traveller time at a hotel. While baby the interchange system once. segment. Airbnb offers novelty boomers prefer to remain in This could be potentially very to business travellers, for whom their room at the end of a long disruptive for the payments staying constantly in hotels day, millennials like to be in a
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more communal and shared have its own separate website disruption. Being stable at the environment. So, some hotels and management. While Netflix core enables companies to take are starting to reshape their was convinced that customers the right decisions at the right physical plants to create such would prefer streaming to time. To achieve this stability, environments for Millennials. DVDs, customers were actually companies need to reduce the very unhappy with this move uncertainty associated with In your view, how should because it meant that they business model transitions. companies time their shift to new needed to store their content Companies that have been business models? on both websites if they wanted able to survive disruptions It’s really hard to get the timing to continue to access both successfully have crafted right. Companies need to formats. Further, since DVDs social structures that reduce simultaneously disengage from offered more movie choices at this uncertainty. In these an existing business model that point, it also meant that companies, employees tend to while engaging with a new customers would need to look worry less about organizational one, which is very tricky. It has in both places if they wanted to roles and structures than in less to be done very systematically. find what they were looking for. successful companies. Companies should start with In trying to force the transition the early adopters among on customers who were not their customers, shifting them ready for it, Netflix made a Giving more first to a new business model, major strategic mistake. autonomy to and then gradually shift more mainstream customers to it. employees is The sequence is important Being stable at a big part of because not all customers will creating a resilient be ready for a new business the core enables model at the same time. companies to take organization. the right decisions at In order to create stability, Netflix, for example, understood the right time. companies should establish that it needed to transition a common set of values and from DVDs to streaming video, Building Resilient shared beliefs. These help but it did not manage the break down silos across the transition correctly. Many of Organizational Structures organization. Take the US- Netflix’s reconfiguration moves based electricity distributor infuriated customers. For How can companies build an Atmos Energy. It has an HR example, Netflix lost a large organization that is resilient to department whose main goal number of customers when it disruptions? is to implement these common decided to split its streaming During the research for my values. When everyone knows and DVD businesses into two book, I found that stability all the ground rules, you have separate companies. The split is the key to creating an this thread of stability that meant that each service would organization that is resilient to
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runs at the core of how the it operates with a hierarchy to hear what was going on business operates. And then it that is too rigid. That being in the rest of the company. becomes much easier to take said, there is still the need for This brought together people action quickly and adapt to a strong central framework. who had different lines of situations. A good example here is Ford sight on the early warnings of Motor Company. When Alan disruption, and leveraged the Should companies give more Mulally took over as CEO of talent in the top team to help autonomy to employees to enable Ford, the senior team operated resolve problems. At the same a resilient organization? in silos and weren’t brilliant time, it did not take away from at working together. Mulally the autonomy of the executives Yes, giving more autonomy imposed a centralized structure to operate in their own business to employees is a big part of in which senior executives activities. creating a resilient organization. were required to meet on a It is almost impossible for a weekly basis to go through company to move as fast as their business plans and also some markets are evolving if
19 Fast Thinking: Reinventing Strategy for a Digitally-Disrupted World
Can you tell us about the How can large organizations be continuous reconfiguration process disruptors themselves? that you suggest companies should I think large organizations Continuous follow? have enormous potential to reconfiguration Continuous reconfiguration be disruptors themselves. For provides both implies that companies example, Google is potentially should develop the ability to disrupting the healthcare stability as well as continually reallocate resources and automotive segments. dynamism, unlike and reorganize themselves The critical criteria for a a strategy that rapidly. I have found that large organization seeking firms that deliver consistent to be a disruptor is that they is based on the performance over time do have to have appropriate notion of sustained this instead of resorting to business models and financial competitive wrenching restructurings. structures for the markets they Continuous reconfiguration are going after – generally, advantage. provides both stability as well they won’t succeed if they go as dynamism, unlike a strategy into new markets with the that is based on the notion same structures they used for of sustained competitive existing ones. I have said this advantage. It encourages for years – industry boundaries companies to disengage from are fading and every company exhausted opportunities and should be looking for repurpose valuable resources, opportunities outside their rather than vainly defending own industries. existing competitive advantages.
Industry boundaries are fading and every company should be looking for opportunities outside their own industries.
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“I look for instances where there are really interesting and abundant forms of supply and when a company is either tapping into existing demand or creating demand in ways- TTimim thatOO’Reilly’Reill y would change consumer behavior.” “Companies need to look for - Rachel Botsman business model by trying to see if there is a mismatch between what the customer wants and what they deliver.” - Serguei Netessine “Companies can spot the early warning signs of disruption by looking at the right data categories – I call these lagging, current and leading indicators.” - Rita McGrath black swan. If it were that easy, everyone would be able to do it.”
- Saul Klein
21 A New French Revolution? Building a National Economy for the Digital Age
A New French Revolution? Building a National Economy for the Digital Age Interview with Philippe Lemoine – Chairman of the Fing (Next Generation Internet Foundation)
hilippe Lemoine is Chairman of the Fing (Next Generation Internet Foundation), the author of numerous reports and books on information Ptechnology, a former Co-President of French department store Galeries Lafayette Group and CEO of consumer finance group LaSer. He also serves on several boards. In early 2014, he was asked to lead a government-backed initiative into the digital transformation of the French economy. Drawing on nine months of effort, and the input of over 500 people, the resulting report – “The new grammar of success – The digital transformation of the French economy” – was released in November 2014. Capgemini Consulting spoke with Philippe Lemoine to understand the drivers of digital disruption and the new rules of success that France needs to master in order to thrive in the digital age.
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Understanding the Impact Finally, the digital economy has of Digital Disruption given rise to new actors that are What’s new about stepping in as intermediaries While technological this phase – between traditional businesses transformation has been characterized by the and their customers. These new occurring continually over the actors are reinventing established last several decades, what sets word “digital” – is business models, which is resulting the digital age apart and makes that the technology in the reorganization of traditional it so disruptive? value chains. There are two key race is no longer effects of this reorganization – To my mind, we entered a driven by large we see consumers playing new new phase in the evolution of organizations, but roles and data emerging as an technology in 2008 – the year increasingly valuable resource. when Apple began marketing the by people. Companies have found a way to iPhone. What’s new about this create value, using data as an asset. phase – characterized by the word Dematerialization, which refers “digital” – is that the technology to the substitution of physical race is no longer driven by large products and processes with digital organizations, but by people. alternatives, has its own distinct The intensifying People today are equipped with effects. First, it has led to the impact of technology to a huge degree and emergence of new online channels are constantly using new digital of communication and distribution technology in tools. And they have found new that have replaced or transformed the digital age is ways to communicate, invent, physical channels. Second, linked with three consume and share. dematerialization has lowered the marginal cost of production. In a factors: automation, In your opinion, what are the digital economy, the majority of dematerialization sources of the digital disruption production costs – which include and changes in the that we are seeing in almost the cost of designing, prototyping every sector? and testing – accrue when the first value chain. The intensifying impact of technology copy of the product is created. The in the digital age is linked with three cost of reproduction is virtually factors: automation, dematerialization zero. Third, dematerialization and changes to the value chain. has lowered transaction costs by facilitating more open relationships Increasing automation, driven by between internal and external digital technologies, is amplifying stakeholders in an organization. labor productivity and enhancing This has been accompanied by an efficiency in the use of raw materials increase in co-opetition and inter- and energy. sectoral competition.
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There is a lot of talk about in understanding what constitutes according to the notion that they the potential negative impact new employment opportunities in should innovate in line with their of digital on employment, for the digital age. DNA and within the bounds of example. What are the risks of their core business. But, the digital digital disruption, not only for age requires a different approach. companies, but for society in Organizations need to let go general? and innovate freely rather than limiting themselves to mastery It is a fact that digital technologies On the employment within their core business. They have had a major impact on front, the major risk need to understand that the employment. According to the MIT, lies in not making rhythm of digital transformation 47% of jobs in America will either is determined by the customer. disappear or be fundamentally the necessary efforts As a result, everything must be transformed by digital technologies. towards enhancing designed and developed based In Europe, 54% of jobs are training and in on the customer’s needs and estimated to be similarly affected. priorities. I personally think that digital understanding technologies will create as many as what constitutes jobs as those that will disappear due new employment to it. The problem, however, is that The digital age the institutions that are responsible opportunities in the for making the employment market digital age. requires that function are not always effective. organizations follow For example, they are not organized a scheme of letting to put digital at the forefront of What are the biggest permanent professional training, challenges that organizations go and innovating which is extremely important. The face in responding to digital freely, rather than concept of professional training disruption? limiting themselves itself needs to evolve – training There are three main challenges. to attaining mastery needs to be provided throughout First, organizations need to adapt an individual’s career. There is to a whole new “open” culture. within their core also the need for an evolution in They need to increasingly rely business. the structure and nomenclature on external partners rather than of existing jobs, and even in the on internal teams alone. Second, concept of employment, which is organizations need to be able to constantly changing due to the transform existing jobs to suit the diversification of working patterns. needs of the digital age. The third On the employment front, the major challenge is the most important. risk lies in not making the necessary Over the last 20 to 25 years, efforts in enhancing training and organizations have functioned
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How should incumbents react Crafting a New Digital Future to startups that are disrupting for France and Europe their industries? For example, There are many we see a lot of conflict between incumbents in In your view, how do France incumbent taxi service providers highly regulated and Europe compare with the US and new players like Uber. when it comes to leveraging the Should the taxi industry use sectors who opportunities of the digital age? regulations to counter Uber? believe that they There is an interesting indicator I think that the taxi industry is are protected from that illustrates the difference reacting just like any business technological between France, Europe and the that feels endangered. But it is US in how they are adapting dangerous for a profession to disruptions by to technological disruptions. If survive only because of regulation. existing regulations. you take the top 100 companies There are many incumbents in that are less than 30 years old in highly regulated sectors, such France, Europe and the US, you as the banking industry who see a very striking trend. France believe that they are protected has only 1 such company in its from technological disruptions by existing regulations. I believe that’s a very big mistake that they are making. Sometimes, organizations that are protected by regulations lag in innovation. The worst thing that companies in highly regulated sectors can do is to completely ignore the fact that technology is offering new solutions and making consumers more demanding. You cannot break the progress of technology to maintain an old way of working – you must adapt and transform.
D IGITAL T RANSFORMATION R EVIEW N° 07 25 A New French Revolution? Building a National Economy for the Digital Age
top 100, Europe has 9, and the US What should France do to adapt values of Liberty, Equality and has 63. This is a very important to digital transformation? Fraternity, which are at the core statistic when you consider that of the French system. Digital transformation has its own businesses should be creating “grammar of success” – there are new markets or new ways of new rules to be followed. France consuming in the digital age. It will need to master these new helps us understand how well rules and adapt to the competition a society is adapting to digital of the 21st century. For too long innovation. now, France has not been able to unite a realistic view of the future with a bold, utopian one. It is true Digital that France has been traumatized by the bursting of the Internet For too long now, transformation has bubble ten years ago. It is therefore France has not its own “grammar afraid to look naïve again. But we been able to unite a of success” – there must understand that the context is different now and France must realistic view of the are new rules to be adapt. Great entrepreneurs have future with a bold, followed. a capacity to envision utopia. In utopian one. France today, large companies, as Why do you think France and well as public powers, are quite Europe have not produced as far from being able to do that. We many digital leaders as the US? must change that. I would put it down to the lack of real competition. Take the retail How can France emulate new industry for example. In the US, startup ecosystems such as Walmart has implemented huge Finland or Israel? digital transformation efforts in I think that we need to distinguish order to try and compete with, between two things. On the one and even beat, Amazon. In the UK hand, we need to learn from as well, companies like Tesco are them and adapt ourselves. But doing some wonderful things with on the other hand, we also need digital to compete with pure-play to innovate based on our own digital actors. In France, however, values. For example, we should you don’t have many companies focus on building an egalitarian that are truly digital, so there isn’t peer-to-peer Internet architecture the same intensity of competition. – one that creates new rights I think that there is a sort of shift and new digital freedoms. This that has not taken place in France. message has strong links to the
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SURVIVING & WINNING DIGITAL DISRUPTIONS
“Companies that only look at lagging indicators tend to systematically under-invest in the
in the future… I always recommend that companies really think hard about leading indicators.” organizations follow a scheme of - Rita McGrath letting go and innovating freely, - TimTim OO’Reilly’RReilly rather than limiting themselves to attaining mastery within their core business.” transformation is determined by the - Philippe Lemoine customer. As a result, everything must be designed and developed based on the customer’s needs and priorities.” - Philippe Lemoine
transformation was about asking the fundamental question of why the business exists and what purpose it “Executives need to recognize the serves.” - Caspar De Bono speed at which their industries are getting disrupted by new models.” - Rachel Botsman
“Giving more autonomy to employees is a big part of creating a resilient organization.” “It’s important for big companies to - Rita McGrath think about what their core values are and then think about how new emerging technologies could be incorporated to their strategic advantage.” - Saul Klein
D IGITAL T RANSFORMATION R EVIEW N° 07 27 The Power of Sharing: How Collaborative Business Models are Shaping a New Economy
The Power of Sharing: How Collaborative Business Models are Shaping a New Economy Interview with Rachel Botsman – Global Thought Leader @rachelbotsman
achel Botsman is a global thought leader on collaboration and sharing using digital technologies to transform the way we live, work Rand consume. She has inspired a new consumer economy with her influential book “What’s Mine is Yours: How Collaborative Consumption Is Changing The Way We Live”. Rachel was recently named a 2013 Young Global Leader by the World Economic Forum, which recognizes individuals for their commitment to improving the state of the world. In 2014, she was named by Fast Company as one of the ‘Most Creative People in Business.’ Capgemini Consulting spoke with Rachel to understand how companies should adapt their business models for this new collaborative economy.
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Collaborative Business Models are There are multiple definitions Disrupting the Economy of the sharing or collaborative In the digital age, economy; what is your What makes the collaborative consumers no longer definition? economy such a disruptive I define the sharing economy and force? necessarily need to collaborative economy differently. The collaborative economy own assets; they can The sharing economy is an is disruptive for three key instead pay to access economic model based on sharing reasons. First, it drives a shift benefits through underutilized assets – including from centralized asset-heavy skills, spaces and intellectual organizations to decentralized different service property – for monetary or non- asset-light networks and models. monetary benefits. In my view, marketplaces. It typically does the sharing economy is the first this by creating business models wave of the bigger collaborative that enable underutilized assets The third reason relates to the economy. from spaces to skills to ‘stuff’ to be shift in consumer behavior from used more efficiently. Take Airbnb physical ownership of assets to on- and Hilton Hotels. Unlike Hilton demand access. In the digital age, Hotels, Airbnb doesn’t actually consumers no longer necessarily The sharing own accommodation. Instead, need to own assets; they can economy is the it facilitates access to existing instead pay to access benefits spare rooms, holiday houses, through different service models. first wave of the treehouses, castles etc. all around We are seeing this emerging from bigger collaborative the world. On-demand ride- Spotify and Netflix in media, to economy. sharing services such as Lyft and Zipcar and bike share schemes in Uber are similar examples from transportation, to rental services the taxi industry. They don’t own from Solar City to Rent the The collaborative economy is a the cars or employ the drivers, Runway. larger concept based on the shift but facilitate access to an existing from centralized hierarchical inventory and allow assets be When you consider these three institutions to decentralized used more efficiently. factors, they are all disrupting networks and communities. different industries – from travel It includes ‘sharing’ ventures Second, technology is making it to transportation to financial but also new learning models easier for us to trust strangers and services – in a profound way. such as Massive Open Online to interact, exchange and share Courses; decentralized forms in ways that were not possible of production such as 3D before. This is giving rise to Printing and Makerspaces and different forms of peer-to-peer many forms of finance such commerce that bypass traditional as crowdfunding and peer-to- institutions. peer lending. The Collaborative
D IGITAL T RANSFORMATION R EVIEW N° 07 29 The Power of Sharing: How Collaborative Business Models are Shaping a New Economy
Economy transforms how we can they now have close to 900,000 to provide them with access to produce, consume, finance, and rooms. More importantly, they are whatever they need, whenever learn. It may or may not involve at a point from where they can they need it. This “on-demand, asset sharing and includes scale up incredibly fast. Another instant gratification” culture fits other behaviors such as renting, interesting example is BlaBlaCar, in perfectly with models of access lending, bartering, swapping and which is a true ride-sharing as opposed to those of ownership. selling. platform. They now transport The third factor is a backlash more than two million people against consumerism. If you What is the economic weight of every month, which is more than think of the 80s, the 90s and the the collaborative economy? the Eurostar. early 2000s, you had a generation that defined themselves by how Company valuation is probably much they consumed. It was an the most accurate indicator Changing Consumer Behavior is economy built around “I, me that you can rely on right Giving Rise to Collaborative Models and myself”. Today, there is a now to estimate the size of the resurgence of “we” – a revival in collaborative economy. Startups In what ways is changing the belief of community. We are like Lending Club, Uber, and consumer behavior, especially seeing an entire generation that Airbnb have multi-billion dollar among millennials, driving the wants to be a part of brands and valuations. So, the market is big collaborative economy? experiences that are bigger than and it is getting bigger. There are three factors that are the individual self. distinctly shaping the behavior of millennials, and driving the It took Hilton Hotels collaborative economy. First, millennials are growing up with 93 years to build an a different attitude towards inventory of over sharing and interacting with 600,000 rooms; strangers. These attitudes and behaviors are now dispersing into Millennials treat Airbnb got there different areas of their lives. Thus, in just 4 years, and millennials are more inclined mobile phones as they now have close to think about say sharing cars remote controls to in the same way that they think the physical world. to 900,000 rooms. about sharing photos. The second thing is that millennials view To get a better idea of the technology differently. For older potential of the collaborative generations, mobile phones are economy, let us look at individual a tool for digital communication examples. It took Hilton Hotels and content, whereas for 93 years to build an inventory millennials, they are remote of over 600,000 rooms; Airbnb controls to the physical world. got there in just four years, and Millennials look at their phones
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How can companies identify opportunities in the collaborative space? I have developed a framework to help companies identify opportunities in the collaborative economy. To build the framework, I looked at the real problems that collaborative startups were solving and found five key drivers of disruption. TransferWise or CurrencyFair are broken, and people who want becoming popular because they to trust their peers can interact The first driver is waste. Smart allow you to save as much as 95% with them directly. An example entrepreneurs identify an unused on transfer fees. is the massive rise of peer-to-peer asset, create efficiency around it lending, provided by platforms and unlock new forms of value. The third driver is complexity. like Funding Circle and Zopa. Airbnb is a great example. Airbnb Many collaborative startups find recognizes that there is unutilized ways to simplify complex and capacity – from holiday homes frustrating customer experiences. to spare rooms to tree houses to For example, Uber and Lyft have Today, there is a boats – that they can now make simplified an otherwise complex resurgence of “we” liquid. and unreliable experience for customers of taxi services. – a revival in the belief of community. Millennials think The fourth driver is limited We are seeing an access. For example, many luxury about sharing cars products are out of reach for entire generation in the same way that most people. So we see startups that wants to be a they think about developing systems that enable part of brands and shared access to such products. sharing photos. Take the case of BMW-on-Demand experiences which where you are not required to are bigger than the The second driver is redundancy have full ownership of the car, but individual self. – when there are layers of you get shared access to it and are redundant people or processes charged by the minute meaning that can easily be bypassed using you only pay for usage. technology. A good example of this would be peer-to-peer The last driver is broken trust. currency transfer. Companies like This comes into the picture when trust in big institutions is
D IGITAL T RANSFORMATION R EVIEW N° 07 31 Collaborative Business Models: Shaping a New Economy
Collaborative Business Models are Disrupting the Economy
It took Hilton Hotels 93 years BlaBlaCar, a ride sharing platform, now transports more than to build an inventory of over 600,000 rooms 2 million people every month
Airbnb got there in just 4 years, This is more than the number of people transported by and now has close to 900,000 rooms Eurostar every month
Consumers no longer need to necessarily own assets; they can instead access benefits through different service models. - Rachel Botsman
Transforming Consumer Pain Point into Disruption Opportunity
Consumer Pain Point Disruption Opportunity
Waste Airbnb provides access to private accommodation
Redundant Intermediaries TransferWise enables peer-to-peer currency transfer
Complexity Uber gives a simplified, hassle-free experience to riders
Limited Access BMW-on-Demand enables people to ride luxury BMW cars at a much lower cost
Broken Trust Funding Circle facilitates peer-to-peer lending
© Rachel Botsman DIGITAL TRANSFORMATION REVIEW
Can you give us some There are examples in the scope for a lot of value creation. examples of companies that are B2B space too. The idea of an They can reach new audiences adapting their business model unutilized asset being made liquid and create value from existing and joining the collaborative applies strongly to B2B markets. assets in various innovative ways. economy? For example, Getable is a startup that provides a rental marketplace Let us start with the automotive for tools and construction sector. Many of the major equipment, allowing tons of Music majors spent brands are realizing that the unutilized capacity to be opened future of their business is 10 years fighting up. Without a doubt, though there probably not in selling cars, but are currently fewer examples, the Napster, and while in providing mobility services. B2B space will be the goldmine of they were doing so, Thus, Volkswagen has launched the collaborative economy. a car-sharing service called iTunes, Spotify and Volkswagen Quicar. Similarly, Pandora emerged. BMW, Daimler and other major brands have either launched or The B2B space will How do you think incumbents acquired car-sharing services. If respond to disruptive we look at sectors like hospitality, be the goldmine of innovation? Are they doing it Marriott has partnered with the collaborative right? LiquidSpace to give people access economy. to workspace on-demand within I have seen traditional incumbents their hotels. Another interesting Bigger Companies Need to Adapt respond to disruptive innovation angle is to think of idle assets in to the New Rules of the Game in three ways; ostriches, fighters the form of intellectual property. or pioneers. ’Ostriches’ are when For example, GE has partnered How do you convince CXOs to the organization tends to dismiss with Quirky to open up unused launch collaborative business disruption as a short-term trend patents to innovators to start models that can look quite that will go away, and is not building products and solutions. marginal compared with the really a threat. ’Fighters’ are when rest of their business? an incumbent acknowledges that the threat is not going to go away, Executives need to recognize the and decides to fight it with the law speed at which their industries are or regulatory battles. The third GE has partnered getting disrupted by these new and most progressive response is with Quirky to open models. Companies like Airbnb where an incumbent chooses to up unused patents to and Uber are examples of how fast be a ‘pioneer’ and embraces the disruptions are happening. Also, change. innovators to start executives are starting to realize building products that besides value destruction, where these companies could take and solutions. away their margins, there is also
D IGITAL T RANSFORMATION R EVIEW N° 07 33 The Power of Sharing: How Collaborative Business Models are Shaping a New Economy
If you were the CEO of a big Peeking into the Crystal Ball How do you identify disruptive hotel chain, how would you try startups? to counter the threat of Airbnb? Going forward, what are It involves an assessment of the sectors that are most I think that Airbnb will transform multiple factors. One way is to likely to be disrupted by the the entire ecosystem of travel. see the value of the unutilized collaborative economy? From the perspective of a hotel, asset that the startup is trying to the biggest threat of Airbnb is the Financial services without a doubt, unlock or make liquid. Another hyper-personalization that it can because if you think of the five way is to look at the magnitude offer. You know, when I check drivers that we discussed earlier, and importance of the problem into a hotel, I do not remember they are strongly applicable to that it is trying to solve. I also look the person at the reception. financial services. Healthcare is at opportunities where supply But I do remember my Airbnb another – there may be very little and demand are broken and hosts. Thus, hotels need to see activity in this sector at present, ‘providers’ and customers both how they actually compete with but we will see a lot of it over the want to interact in new ways. the level of customization and next couple of years. The utilities personalization that is embedded sector also has a lot of potential. In short, I look for instances where into the brand of Airbnb. I would For example, there is an interesting there are really interesting and also pay close attention to One platform called Vandebron based abundant forms of supply and Fine Stay who I think will crack in the Netherlands that connects when a company is either tapping the super luxury end of the market. renewable energy providers into existing demand or creating They are providing the services of directly with customers. For demand in ways that would a five star hotel in multi-million example, one wind turbine change consumer behavior. dollar homes. can power about two hundred households – think of a scenario Beyond the collaborative where customers and providers economy, we are seeing many can find one another and form new technologies emerging. Executives are contracts in less than five What are the key technologies starting to realize minutes. It is a peer-to-peer that are going to transform our marketplace and a classic case of economies over the next few that besides value disintermediation. years? destruction, where Technologies related to identity, These are highly regulated these companies such as cross-platform identity industries, but this is where I think and reputation systems are going could take away there will be shifts in the business to emerge in a big way. Related model, and established brands their margins, there technologies such as geo location, will start to do interesting things is also scope for a lot payments and data privacy that could be difficult for startups are also going to get a boost. of value creation. to achieve. Biometrics and nanotechnology are two other spaces that I think are really interesting.
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15 Companies to Watch in 2015: A Personal View from the Valley
15 Companies to Watch in 2015: A Personal View from the Valley Brian Solis – Altimeter Group @briansolis
his is a perspective that originates in Silicon Valley, but is certainly not limited to it. Innovation can happen anywhere, by anyone, at any time. TAs a digital analyst, it’s my job to track disruptive technology and its impact on business and consumer markets. As a digital anthropologist, I also study how new technology affects consumer behavior and expectations. In this list of 15 companies to watch this year, there is a wide range of companies that are disrupting existing markets or creating new ones. But this elite group is hardly complete. It’s merely a conversation starter and a call for you and your business to start to think and act like a startup so that you become the disruptor in your space rather than the disrupted.
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ever developed. At the center of and also make new friends, all the user experience is a heads up while making the trip a bit more display (HUD) that provides an interesting. I expect this service to intuitive Google Glass-like view take off around the world in 2015 inside the helmet. Add to that a while also spawning potential With a valuation of $41 billion rear-facing 180-degree camera, competitors in each country. at the time of this writing, it’s bluetooth connectivity, embedded www.blablacar.com not the newest startup on the list. battery and speakers among many However, this company is going other features, and the AR-1 (or maybe has gone by the time starts to take shape. More so, you read this) public. In a story it’s what hasn’t been debuted or that ran on CNN at the end of 2014, invented yet that truly holds the Founder Jeremy Johnson is Uber was listed as the “Alibaba promise for the future of riding introducing an incredible new of 2015.” The company is using and transportation in general. paradigm for education, but with current investments to expand Imagine embedded sensors that a twist. He believes that Africa as a markets around the world. At talk to “smart” cars on the road continent and economic power, is the same time, there isn’t enough to prevent drivers from swiping, grossly underestimated. He’s willing money in Uber’s bank account clipping or intercepting riders. to back up his belief with his time, nor enough influence to simply Essentially, the helmet becomes money and resources. Andela is a walk into new markets without a platform for innovation on unique program that unites qualified political resistance. But make no the bike, surrounding cars and African students (regardless of age mistake, if and when Uber IPOs, also in traffic engineering. or income) with invaluable access the transportation industry will www.skullysystems.com get Uberized and every other to leading developers who teach market where startups refer to them to code. More so, Andela pays themselves as “the Uber of…” students to learn so that they do not will be further encouraged to acquire debt as many students do disrupt their respective markets. in the United States, for instance. www.uber.com I love the vibe of this little And, once students graduate, French company. While Uber and they become part of a workforce AirBnB are the most well known that serves a thriving roster of representatives of the so-called companies hiring in-demand sharing economy, BlaBlaCar is developers for important projects. solving the underserved market www.andela.co As a motorcycle rider, I’m instantly for people looking to carpool to drawn to this company. In 2015, long-distance locations. Whereas Skully is going to introduce a someone might take the train, Innovation can smart helmet that merges the real bus or fly, there are always happen anywhere, and augmented world for drivers. others willing to drive. With The company’s AR-1 is by far the BlaBlaCar, drivers and passengers by anyone, at any most advanced motorcycle helmet can connect to offset expenses time.
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“Magic Leap is mustering an arsenal of techniques…to produce a synthesized light field that The world of virtual reality will falls upon the retina in the same finally become a reality in 2015. way as light reflected from real On the subject of 3D printing, The Facebook-owned startup will objects in your environment,” he imagine owning hardware that ship public beta this year and it shared. Like Oculus, it will cater could clone artifacts simply will transform the way consumers to gamers as well as “readers, by rendering a 3D model on experience the digital world. You learners, scientists, and artists.” the fly. Fuel3D is the developer should also be prepared to take www.magicleap.com of SCANIFY, an affordable motion sickness medication if handled 3D-scanner that could you’re easily upset. But once you do just that. The technology immerse yourself in these new was originally designed for the worlds, coming back to reality will medical imaging market. But be a bit difficult. While initially Makerbot is the darling of now, with SCANIFY, consumers, aimed at the gaming world, the consumer-facing 3D printing. businesses, and also industry potential for virtual engagement We can all appreciate that 3D professionals will have the ability spans exploration, entertainment printing is going to completely to 3D-scan objects for a variety and education across existing and transform every industry and also of applications. Partnered with not-yet-imagined applications. supporting supply chains. But, at Makerbot or other 3D printers, the www.oculus.com the same time, Makerbot is going possibilities are mind-boggling. to teach consumers, slowly at first www.fuel-3d.com but faster over time, how to think differently about products and parts. It’s not unheard of to think Silicon Valley is always in search about 3D printing something you of its unicorns: those companies might need rather than buying it. Everyone seems to be talking destined to join the billion-dollar Or, you might order up a recipe about Instacart. In December club. One of the companies stoking from a particular manufacturer 2014, the company raised a the imagination is Magic Leap, to print upgrades or replacement whopping 100 million at a a company based in Florida that parts. This capability will only valuation of $2 billion to allow recently claimed notable science become more advanced. In mid- consumers to order groceries fiction author and game designer to-late 2015, MakerBot will create from their phone or desktop and Neal Stephenson as its Chief new composite filaments and have them delivered to their Futurist. Stephensen revealed in supporting tech for its printers door in less than an hour. If you a post that he was lured to Magic to enable consumers to print lived through Web 1.0 and the Leap after seeing a demonstration prototypes with bronze, maple dotbomb bust like I did, you might of the company’s technology. wood, and iron-like materials. automatically recall Webvan. But www.makerbot.com
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the difference here is that Instacart commission a new genre of living photos or handles. Since the app employs a new generation digital art to bring these frames is localized, those users within 1.5 of the on-demand freelance alive beyond static imagery. miles of the message can read it. workforce. Watch this space www.electricobjects.com www.yikyakapp.com though. Even if Instacart isn’t the clear winner, Google’s Shopping Express and AmazonFresh will collectively build-out an on- demand market for groceries. Messaging is the new social media. As of October 2014, Slack was At the same time, they’ll further And anonymous posting rooted in the fastest-growing workplace condition consumers to expect geo-location community forums software ever. It’s a pretty and get whatever they want, is the new messaging according astounding feat considering when and how they want it. to Yik Yak. Consumers - mostly that the company launched www.instacart.com from the college and high school demographics - are flocking to it in 2014 and, just nine months in droves. Yik Yak is an app that later, announced $120 million in allows anyone to post anything funding with a valuation of $1.12 without a username. In fact, billion. It’s been called a fancy chat you don’t even need a password room. Instead, it brings unbundled Everyone remembers the digital to log in. The timeline of Yik conversations strewn across picture frames that adorned Yak looks like Twitter, operates multiple apps back to one place. desks and walls everywhere. Just like Whisper or Secret, and It is also a powerful repository of kidding. For some reason, the feels a lot like Reddit. The most all company engagement tied to digital frame market never really interesting thing though is that a powerful search platform. The materialized to push old school all engagement is done without pitch for Slack is that it makes you paper pictures and posters out more productive by reducing the of the mainstream. But, Electric amount of time you spend on other Objects is taking a new approach productivity-related tasks. P.S. to make digital art relevant in Slack is brought to you by Stewart an analog world. The idea is to Butterfield, co-founder of the now rethink what art could be and Yahoo-owned Flickr photo service. how it lives digitally, whether it’s on a wall or on a desk. The In 2015, you will also see company secured $1.7 million Facebook at Work rollout slowly in funding in 2014 and then at first and then at scale as raised an additional $800,000 time and the app age a bit. It is on Kickstarter later in the year. designed to help groups of users The company is introducing a collaborate, share documents and digital frame that is controllable manage projects in the workplace. via a mobile or desktop app. It My partner at Altimeter Group – is also working with artists to Charlene Li – asked why Facebook
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should or would venture down for a generous sum, not because this path. Her answer was this, the company’s assets are usable, “Easy, they can.” She pointed out but because the team is talented that Facebook has been using enough to apply to another more this tool internally for the last profitable effort. Brands are always looking for four years, and think it’s robust ways to capitalize on the latest enough to launch for the general Enter ExitRound. Founded by trends. PopUp shops continue public. “We have a long history Jacob Mullins and Greg Dean, to cause a stir among connected of successfully connecting people ExitRound is a private, anonymous consumers. We Are Pop Up is and connecting businesses,” marketplace for buyers and sellers basically the AirBnB of temporary said Elisabeth Diana, corporate of technology companies. It helps retail space, connecting landlords communications director at buyers find technology companies and temporary tenants with Facebook. “It’s a worthwhile test that fit squarely within their commercial grade space. The result to explore.” As Charlene notes, target. ExitRound also eliminates is a creative, short-term use of space enterprises could potentially have inbound chaos by automating to engage customers, generate a hard time keeping employees prospecting. Essentially, buyers buzz and also test new ideas. on Chatter, Yammer, or other only speak to companies that www.wearepopup.com internal social networks when fit their strategic interests. This the Facebook interface is already also optimizes potential exits for so familiar and functional. startups. In the end, these types Indoor Mapping www.slack.com of deals come down to human relationships and people. The You caught me. There’s no startup by software, if you will, applies a this name. But, the space as a whole sophisticated human algorithm is one to watch this year. Google is, that creates unmatched efficiency of course, a big investor in essentially and desirable outcomes. While It’s not a secret that Silicon Valley making a version of Google Maps for this is traditionally done through and any worthy tech epicenter the inside of spaces used by the public highly connected personal around the world is burgeoning such as airports, malls, buildings, etc. networks, there appeared to be an with new cash aimed at funding Apple is too. There have been several opportunity to add marketplace new startups. We all know, recent acquisitions in fact, with dynamics and algorithmic however, that most of the new major brands vying for a top spot. sophistication to gain a high level startups, even those that are the Last September, Baidu invested $10 of scale in connecting buyers and most promising, are likely to million in Finnish mapping startup sellers who may be a perfect match, fail. All hope is not lost. There Indoor Atlas. The applications are but otherwise may not have met. are several possible exits beyond great. From retail to real estate to www.exitround.com demise. Aquirehires are most general consumer navigation, indoor prevalent of course. This is where mapping is worthy of tracking this Company “A” buys Company “B” year and next.
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WHERE WILL DISRUPTION HIT NEXT?
“All sectors that have been disrupted will be disrupted again because of mobile and social.”
- Saul Klein “In the long-term, crypto-currencies and crypto-equities could potentially - TimTim OO’Reilly’RReilly
- David Cohen
“In the near term, I think any sector that is based on a brokerage model will be vulnerable to disruption.”
- David Cohen
“Financial Services without a doubt.”
- Rachel Botsman “Healthcare is another sector up for disruption – there may be very little activity in this sector at present, but we will see a lot of it over the next couple of years.” - Rachel Botsman
enormous amount of potential for disruption.” - Saul Klein
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Collaboration Redefi ned: Engaging with the Disruptor The Silicon Network: How Big Corporate and Digital Startups can create a more innovative world
The Silicon Network: How Big Corporates and Digital Startups Can Create a More Innovative World Interview with David Cohen – Founder, Managing Partner, and CEO - Techstars @davidcohen avid Cohen is the founder, Managing Partner, and CEO of mentorship- driven startup accelerator Techstars. Techstars provides startups Dwith seed funding, intensive mentorship, and a network of mentors and alumni. Previously, David was a founder of several software and web technology companies. He is an active startup advocate and technology advisor. He also serves as a member of the Entrepreneurial Advisory Board at the Silicon Flatirons Center for Law, Technology, and Entrepreneurship at the University of Colorado. Capgemini Consulting spoke with David Cohen to understand his views on disruptive startups and ways in which large organizations can engage with startups to cope with digital disruptions.
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Nurturing Innovation: A and corporate partners. The network emphasis on who the founders are, Glimpse into Techstars is a huge competitive advantage and what their skills are. We really because it allows entrepreneurs to try to understand the source of their Can you give us an overview of avoid the mistakes that others have passion, and how they imagine the how Techstars works? made and also gives them access to world differently. That gives us a introductions or business connections sense of how disruptive the startup Techstars provides startups with into practically anywhere in the world. can be. seed funding and mentorship. But I think that most entrepreneurs Every year we run 14 programs undervalue the importance of a We then look at the market that with 10 startups each. Our mentor powerful network, especially early in the startup is trying to address. pool is made up of 1,200 mentors their career. We look at whether that market is who are among the most notable changing, growing or shrinking. entrepreneurs in places like New Next, we look for some form of York, Boston or London. Each progress because we believe that company that is accepted into a Our mentor pool entrepreneurs actually do things, Techstars program gets to engage is made up of rather than just talk about doing with 10 mentors on an average. things. Finally, we look at the 1,200 mentors idea. We deliberately put that So far we have funded 484 who are among last, because we know that the companies, 56 of which have idea often changes significantly. been acquired through M&A the most notable transactions. About $1.1 billion entrepreneurs in in venture capital has flowed places like New York, into these companies, and their combined market capitalization is Boston or London. over $3 billion. I think that most We also run programs in What are the criteria that partnership with large corporates. Techstars uses to select startups entrepreneurs For instance, we have partners for its accelerator program? undervalue the like Disney, Barclays, Sprint, We receive about 1,000 applications importance of a Kaplan, and others for whom we for each of our 14 programs – so run accelerator programs. that’s nearly 14,000 companies powerful network, applying to us every year. Of these, especially early in What is the secret to we pick only about 1%. Since these their career. Techstars’ success? are early stage startups, there’s I would have to say it’s the typically not a lot of revenue to network around Techstars. The look at. So we use other criteria. Techstars network has over 3,000 First, we look at the team running entrepreneurs, mentors, investors, the startup. We put a lot of
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flow of services or limiting the How should large companies availability of inventory. In the respond to disruptions? taxi industry, for example, brokers First, we look at the Large companies can either were charging 50% to 60% of the team running the continue to focus on what they fare, while the driver received just are doing and hope that they startup. We put a lot 40%. Both Airbnb and Uber saw a won’t get disrupted or they can future where such imbalances are of emphasis on who be proactive and participate in the corrected and where resources are the founders are, and disruption. By helping a startup used more efficiently. what their skills are. be successful, for instance, they will be in a position to make that Uber, for instance, saw a future first offer to acquire it, invest with fewer cars, where fewer in it or partner with it. If they Understanding Digital people would have to own a do not engage with the startup Disruptions: An Accelerator’s second car, and where the world community, they might be the last would be more efficient with Perspective ones to know of a disruption. By its roads and transportation. I then, it can also be too late. Why are we seeing so many think that’s the ingredient for true disruption – being able to disruptions in recent years? Should you really engage with vividly imagine the future with a a disruptive startup that is I think the fundamental reason is 10-20 year horizon, in a way that planning to reduce your margins that the Internet has become really impacts a large number of people. by 90%? accessible in the last 20 years. We Both Airbnb and Uber were able are seeing more disruptions as to do that. Yes. I think it’s counterintuitive, the Internet matures, as Internet but I think that’s exactly right. So, speeds get faster, and as the if that’s what they’re planning, knowhow to develop systems on they’re either going to be the Internet gets cheaper, faster, successful or they’re going to fail. and better. In fact, the speed of By investing in them or acquiring innovation is just vastly different Both Airbnb and them, you can have a relationship today than it was 20 years ago, Uber saw a future that’s symbiotic and beneficial because of the maturity of the where imbalances to both parties. Being around Internet. the disruption at the early stages are corrected and – and spotting it before others What makes startups like Airbnb where resources do – gives you a competitive and Uber truly disruptive? are used more advantage and you can help the I think Airbnb and Uber are quite efficiently. startup grow at the same time. similar. They are both operating in what I call “imbalanced marketplaces”. These are markets where there is some sort of a broker that is controlling the
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There is another strategy, which might be able to engage with vertical that is of interest to is defensive acquisition: you them through a revenue share the partner. Techstars runs the acquire the startup and you kill agreement or as investors. That program and is also the investor. it! This is not the best strategy but way we would get to be part of The corporates don’t take direct certainly an option if you want to the disruption rather than have to equity in the startup; they don’t gain some time. A better option is compete with it. take rights to follow on or acquire to grow the startup and create a the startup or anything like that. barrier to the next person coming They simply provide mentors and along and just doing the same Learning from Startups access to their technologies. So thing. it’s a pure “give first” approach Very often, we see large that they follow. I think that the If you were leading a major hotel companies struggling to work corporates we work with have chain, how would you respond with startups. In your view, what really figured out that it’s not to the Airbnb disruption? are the reasons for this? about what you can get. It’s about being around the activity and I would want to engage with them We’ve seen many corporate seeing the innovation, assisting very early on. Hotels have a large venture funds and incubators it, and building relationships distribution network through their come and go. The reason is they with the entrepreneurs who really relationships with travel listing don’t have a long-term view. matter. sites. I would say to Airbnb: “We They’re not purely focused on have a relationship with Expedia helping the startups. It’s all about, Could you give us a concrete and the other travel listing sites. “How can we fund a company that example of how a large company Why don’t we help get you on helps us be successful?” That’s not has benefited from the Techstars there?” By helping Airbnb with what startups care about. Startups program? our distribution network, we care about their vision of the world and how they’re going to Nike is a good example. When achieve it. Nike launched its NikeFuel APIs, we picked 10 startups run by very We’ve seen many How can large companies talented entrepreneurs that would corporate venture participate in accelerator be the first 10 companies in the programs such as Techstars? world to ever experience those funds and incubators At Techstars, we partner with APIs. Nike executives were able come and go. The corporates to run vertically to literally watch how the startups reason is they don’t focused programs. For example, used their APIs. The feedback that we partner with Kaplan on they got from the entrepreneurs have a long-term education technology, with was very valuable and I think view. They’re not Barclays on financial technology, the APIs meaningfully improved purely focused on with Disney on entertainment because of that experience. Nike technology, and so on. We filter also struck business deals with helping the startups. the startups that we accept into several of the startups directly, our programs based on the and I think in one case even
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acquired an interest in one of Looking Ahead: Future vertical search engines for that. them. I remember the media Sources of Digital Disruption So, we’ve invested in vertical headlines “Nike gets startups.” search firms like Mocavo and Priceless for them. What are the themes that your Next Big Sound. deal flow focuses on? What are the key lessons that In your view, what are the Our areas of focus include large companies can take from startups to watch in 2015? “imbalanced marketplaces”. We startups? believe that the day of the broker I think PivotDesk is a really I think a key lesson for large who takes a 50% cut is just gone; it’s interesting company to watch. corporates is that they need to not going to work. So, we’re looking PivotDesk’s model is working think and operate differently if they at “imbalanced marketplaces” or really well where it connects want to innovate. Unlike startups, unfair markets and at companies businesses that are looking to rent large corporates have too many like Uber, Airbnb and PivotDesk that office space with companies that processes that really slow things are trying to correct the imbalance have space to spare. Businesses down. To be innovative, they need by taking spare resources and get to pay for office space on a to move away from their normal allocating them more efficiently. month-by-month basis rather processes for budgeting, go-to- than having to commit to long- market, or marketing. They need We focus a lot on human term leases. PivotDesk has to have a new way of doing things. computer interaction. In a 20- recently expanded to overseas But a lot of large corporations look year horizon, the way we interact markets as well. at entrepreneurship and say, “It’s with computers will be completely hard for us to go back to those different. We look for startups that DigitalOcean is an interesting days.” One way for them to create are finding new ways to interact startup in the infrastructure space. an innovation culture within the with data and information. One It’s a New York-based firm that organization is to engage with example of a company in that provides a simple and easy-to-use the entrepreneur community and space is Oblong, which we’ve web hosting service. Then there learn from startups. invested in. If you remember the are companies like SendGrid. movie “Minority Report”, this SendGrid is now delivering about was literally those people. They’re 2% of the world’s legitimate inventing new ways to interact e-mail and growing really fast. with computers. It sounds really easy to deliver We look for startups e-mail, but it’s not. It turns out that are finding new We’re also really interested in that 10% to 20% of legitimate vertical search engines. We corporate e-mail isn’t received ways to interact still believe that it’s too hard to by the recipient. And it’s really with data and find some things in the online hard to scale your infrastructure information. world. Google is not the answer to support so much outbound to everything. It’s easier to find e-mail. SendGrid does that as a a flight because you have great service.
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Fostering Innovation: How Techstars Works
Invests in startups and provides Nurtures a large network of 14,000 applications a year, mentorship through 1200 mentors, most are only about 1% get picked 14 programs with notable entrepreneurs 10 startups each, every year
Accelerating Innovation: How Techstars Helps Large Enterprises Innovate
Techstars provides investment, staff and processes to Enterprises provide mentors and run ‘accelerator’ programs in access to their technologies Nike and Barclays benefited partnership with corporates from learning and partnering with startups through Techstars
Looking Forward: Potential Disruptors of the Future
Imbalanced marketplaces Startups like Oblong are Vertical search engines, are ripe for working in the exciting such as Mocavo and disruption - companies like domain of Human-Computer Next Big Sound, allow Uber, Airbnb and Interaction focused search in a domain PivotDesk correct such imbalances Startups working on crypto-equities and crypto-currencies The Silicon Network: How Big Corporate and Digital Startups can create a more innovative world
In the near term, I think any sector everywhere else. We believe that that is based on a brokerage model you can build Internet software In the near term, will be vulnerable to disruption. companies just as well in Dublin, Real-estate is an example of such Tokyo or Tel-Aviv, and we want I think any sector a sector. Here in the US, you pay to be part of such up-and-coming that is based on a a 6% brokerage fee even if it startup communities around the brokerage model takes just two days to sell a house world. after it’s listed online. The market will be vulnerable to needs to be more flexible, and disruption. technology can help with that. So, I think you’ll see startups that come What are the sectors that will be in with transactional systems that disrupted the most over the next address the inefficiencies in the few years based on what you brokerage model. We are working can see? with one such startup that charges a brokerage fee commensurate In the long-term, crypto- with the effort involved in a sale. currencies and crypto-equities could potentially disrupt the We see more and more tech hubs financial world. We recently across the world in countries funded a crypto-equities startup such as Finland and Israel. Is that allows you to invest in a Techstars planning to be present company without ever using in tech hubs outside the UK or traditional money. I think that the US? this has the potential to disrupt the global economy and banking Yes, absolutely! People ask me systems. It’s still a use-case all the time, “David, are you currently. But to me, it’s a potential anti-Silicon Valley?” I say, “No, Internet-scale disruption that not at all!” It’s not that we’re could change the way we transact. anti-Silicon Valley. We’re pro
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Black swan startups: Spotting tomorrow’s big digital disruptors
Black Swan Startups: Spotting Tomorrow’s Big Digital Disruptors Interview with Saul Klein – Partner with Index Ventures @cape
aul Klein is a Partner with Index Ventures, one of the largest venture capital firms specializing in technology investments. Saul has 20 years Sof experience in building tech companies in both the US and Europe. He is the co-founder of Kano and Seedcamp; he also co-founded and was the original CEO of Lovefilm International, which was acquired by Amazon; and part of the original executive team at Skype, which was acquired by eBay. Capgemini Consulting spoke to Saul Klein to examine the disruptive impacts of startups and their implications for traditional incumbents.
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The Rise of Big Bang customer experience within that You recently argued that it Disruptions sector. The market and leadership takes less and less time to team are relatively easy to ascertain, create $10 billion in value Could you give us an overview but the product or customer today. Does it mean that we of Index Ventures? experience are more difficult. In are now seeing more big bang sector after sector, we are looking disruptions? Index Ventures is an early-stage for businesses that are delivering a Yes, absolutely, we will see more venture capital firm, founded in 1996 product that serves a real need. But and more big bang disruptions. Let’s with €3 billion under management the mode of delivering that need be clear on one point – the Internet across various funds. We have a should change the dynamics of the changes everything. There are three portfolio of 140 companies across industry in a way that it becomes billion people connected to the 20 countries and 39 cities, in almost hard for incumbents to compete. all sectors where technology is a Internet with smart phones, which disruptive force. The combined is going to increase to nearly six revenues of these companies amount billion in the next five years. Until to around €6.5 billion, with an 10 years ago, the Internet was only average growth rate of circa 117%, used by 300 million people, mainly and employing 25,000 people. Over Spotting disruption in the U.S. and Western Europe. just the last 12 months, we have With the growing addressable is like finding a market, the opportunities are 10x, had 10 companies that have gone black swan. If it were public or exited at more than a billion 20x, or 50x bigger on the consumer dollars. They include King, Criteo, Just that easy, everyone side than 10 years ago. On the Eat, Arista, Climate Corporation and enterprise side, it used to take six to would be able to do twelve months to land a $1 million Supercell. Many of our companies it. reach the 100 million mark in revenue annual contract. Today, you can get in less than five years. Some of them to 10,000 customers with virtually are generating billions in revenue in no sales force. Also, until a few less than three years. years back, the customer base of cloud computing and SaaS was the How do you assess the Fortune 500. Today, it’s the Fortune disruptive potential of startups? 5 Million. Businesses are witnessing customer growth and revenue Well, there is never one specific growth at extraordinary speeds. thing. Spotting disruption is like finding a black swan. If it were that The emergence of a new easy, everyone would be able to do entrepreneurial culture is certainly it. However, the things that we look accentuating this new wave of out for are: market opportunity, disruptions. We recently conducted strong leadership, and a product research and found that, on Facebook, that fundamentally changes the there are 55 million people interested
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in entrepreneurship. This is a huge capacity for risk taking. All these You also need a C-suite that really number and not far from the amount of factors together put the incumbent understands technology. What people who are interested in celebrities in a tough spot. Incumbents have companies need is a board or like Beyoncé or Ronaldo. People huge assets in terms of their balance a C-suite that really challenges starting their own businesses has sheets, distribution channels and and critiques the company’s IT/ become a mainstream phenomenon. human capital. However, unless they technology investments. This is a Becoming an entrepreneur is also are prepared to be aggressive and board that would point to the results much more accessible: the tools of take risks, it is very hard to compete. achieved by startups and question production are now incredibly low- why their company cannot emulate cost; the distribution platforms – app them. For example, they might point stores and social media – are often to Adyen – a payments technology free; and the ability to access capital Very few incumbents firm – that can process billions of through platforms like crowdfunding transactions in 130 countries at is widely and globally available. have boards or much lower cost. Or Instagram, CXO suites that are which built a global network of 400 million people with 30 developers. Big Companies Reacting equipped with the to Digital Disruptions right digital skills. How do you think big companies should react to Why do you think big disruption from smaller, newer companies are not well Do you believe that big players? equipped to combat disruption businesses are not tech-savvy from startups? It’s important for big companies to enough? think about what their core values I think there are a number of It is not that big companies do are and then think about how different levels. Firstly, startups not take tech seriously. Most big emerging technologies – robotics, have a cost base – OpEx and CapEx companies spend over a billion virtual reality, AI, etc – could be – that is radically different from dollars a year on IT. Whether they incorporated to their strategic the incumbent. Incumbents have spend it wisely or not is a completely advantage. One of the reasons that high legacy cost in everything different matter. Big companies big companies have been in business from infrastructure to IT. Trying to do not get enough exposure to the for a long time is because they have a compete with someone who has a truly innovative technology and set of values that has been successful lightweight or a cloud-based cost business models that start-ups are over time. Companies like GE or base is difficult. Secondly, very involved with. This is because big Marks & Spencer – which have been few incumbents have boards or companies focus on buying from big in business for over a hundred years C-suites that are equipped with the companies, and not really engaging – have been successful because they right digital skills compared to the with small companies. But before are consistent with their values. strong digital skills that startups you know it, these small companies Companies succeed best when they have. Finally, incumbents have are actually pretty big, driving most are true to who they are, not when profit pools that they are perpetually of the technology changes. they try and be something that they trying to protect, restricting their are not.
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Is acquiring the disruptor a in the ecosystem and gain visibility. good approach to fight back? However, it means nothing until there is commercial engagement I think it absolutely needs to be a part that happens through procurements We will see more of the toolkit. However, companies and purchase orders. have not been great at doing that. and more big bang When you look at innovation, 80 disruptions. to 90% of risky innovation fails, Europe as a Startup Hub but it is the 10 to 20% that succeed that create 40% of your profit pool. Is Europe catching up with the In the venture business, 62% of the US on the startup front? capital that you invest returns 1x or It is clear that billion-dollar companies below. So, let’s apply that thinking now come from anywhere in the to M&A. The wrong way to think world and not just from Silicon about M&A is that every acquisition Valley. However, it is much easier to I make is going to succeed. The right be an enterprise company in the Bay way to think of M&A is that some Area because big companies in the will succeed and some will fail. I Bay Area are earlier adopters of new will significantly overpay on some technology. companies and I will massively underpay on others. If Google bought YouTube today, it would be $50 to 100 billion. They bought it at 1.6, and everyone thought they were insane. The right way to We see many big companies think of M&A is investing in accelerators and some will succeed acquiring incubators. Do and some will fail. you believe this is the right approach to engage with the I will significantly startup ecosystem? overpay on some Big companies will truly engage companies and I will with the startup ecosystem when massively underpay they spend between 5% and 25% of their tech and innovation on others. budget with a small company. Accelerators are nothing but Corporate Social Responsibility. They help big companies participate
55 Spotting the Digital Disruptors of Tomorrow
Nurturing the Innovators: An Overview of Index Ventures
€ 100 €
Portfolio of 140 Combined revenues of Many companies reach companies across €6.5 billion,, average 100 million in revenues in less than 20 countries and growth rate of 117%, 39 cities five years 25,000 employees
How Should Big Companies React to Disruptions?
Digitally equip your C-suite Embrace technology, but stick to your core values Acquire Startups, but be Prepared for Failures
creates The Apply the same 10 to 20% that succeeds of your mindset to acquisitions 80 to 90% of profit pool risky innovation fails DIGITAL TRANSFORMATION REVIEW
What can Europe learn Looking Ahead from countries like Israel regarding startups and the tech Which are the key startups to ecosystem? watch for in 2015? There are a lot of successful tech On the enterprise side you have ecosystems now in Europe. London companies like Hortonworks in is probably the biggest, but you Big Data, Pure Storage in the have great ecosystems building storage sector or Dropbox in cloud in Berlin, Stockholm, Dublin and computing, Adyen in financial Paris. However, Israel is unique as services, and LookOut in mobile it is almost akin to a Silicon Valley security. Then you have some really to the rest of the world. You have a interesting consumer businesses, like The financial diverse technology ecosystem and BlaBlaCar, Etsy and SoundCloud. services sector strong infrastructure. Within the The list is endless. In every sector has an enormous space of an hour’s drive, you can see and geography there are 5 or 10 the cutting-edge, including ad:tech, companies that are poised to break amount of potential cleantech, cybersecurity, cloud out and go mainstream. for disruption. computing, storage, networking, semiconductors, e-commerce, and In terms of sectors, which ones consumer mobile. The density of the are going to suffer most from Israeli ecosystem is unique when disruption in the next year? you compare it with other markets All sectors that have been and locations beyond Silicon Valley. disrupted will be disrupted again To create an ecosystem, you need to because of mobile and social. look at the specific attributes of the Media & entertainment, retail geographical location. You want and travel have been disrupted to see small businesses, venture once, and they are going to get capital, universities, governments, repeatedly disrupted again. The and big companies. These are the financial services sector also has five dimensions of an ecosystem you an enormous amount of potential need for fruitful cross-pollination. for disruption. No one will be Europe always had great micro- exempt! centers of innovation, but they were never effectively connected. This is starting to change.
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Winning Digital Disruptions Riding the Wave of Digital Disruption: Scripting a New Digital Future, the FT Way
Riding the Wave of Digital Disruption: Scripting a New Digital Future, the FT Way Interview with Caspar de Bono – Managing Director, B2B at the Financial Times
he Financial Times (FT) is one of the world’s leading business news organizations, providing news, comment, data and analysis for the global business community. TIn 2014, the FT’s total circulation reached an all-time high with 700,000 subscriptions and sales across print and online. Significantly, digital subscriptions increased 23% year-on-year and now constitute nearly two-thirds of the FT’s total paying audience. Further, the FT has seen sustained mobile growth - mobile now accounts for almost 50% of the FT’s total traffic and 20% of new digital subscriptions. In an industry that has been swept by digital disruptions in the last decade, the FT stands out as one of the few incumbents that have successfully managed these disruptions. Capgemini Consulting spoke with Caspar de Bono, Managing Director, B2B at the FT, to discuss the impact of digital on the news media industry and the response of the organization to that tidal wave of change.
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Did you anticipate the strength and the speed of the In 2000, the US disruptions you were facing? We introduced a newspaper industry We knew that the prices we were metered model in was generating getting for the same audience online 2007 where we were a fraction of the prices in print. $60 billion in print People were hoping that it was just a began to use demand advertising. Ten years matter of time before online audiences to help us price. later, print advertising would be so massive that everything revenues dropped to would resolve itself. But I think Experimenting with Digital where we differed from many of our to Build a New Content $20 billion. competitors was in our realism. We Universe realized early on that this hope was Responding in a News too optimistic to be credible, and that As part of your response, you Industry Hit Hard by Digital we needed to get busy changing our launched a range of initiatives source of revenue. The benefit of being and experiments. Can you tell What disruptions have you a specialist provider of information is us more about your response? faced since the 1990s? that we know from our readers that what we produce is valuable. We put In 2001, we made the decision that we We used to be almost entirely that to the test by asking people to pay were going to ask readers to subscribe funded by our advertisers, so 80% for accessing our journalism digitally. and pay for access to our journalism. of our revenues in the late 1990s We started doing that in 2001, and We tried a binary solution, where came from print advertising. we’ve been experimenting and scaling some content was always free and As both reader and advertiser what works ever since. some content was always paid for. We demand shifted to digital, the found that while that worked initially, whole economics of advertising it plateaued, so we ended up with changed as well. The oversupply about 90,000 subscribers and then it of advertising inventory online We realized early on didn’t grow much beyond that point. meant that advertising rates fell substantially. This has had a that we needed to very significant impact on the get busy changing newspaper industry’s revenues. To our source of put that into perspective, take the United States as an example. In revenue. 2000, the US newspaper industry was generating $60 billion in print advertising. Ten years later, print advertising revenues dropped to $20 billion and the same newspapers were only generating $1.3 billion in online advertising.
D IGITAL T RANSFORMATION R EVIEW N° 07 61 : Riding the Wave of Digital Disruption
FT Stands Apart in a News Industry Hit Hard by Digital
The US newspaper industry lost $40 billion in print advertising revenues in 10 50% years since 2000 In 2014, FT Digital subscribers Mobile accounts accounted for for 50% of the Online advertising revenues subscriptions and sales reached an all time high of the FT’s FT’s total stood at just $1.3 billion two-thirds total paying audience in 2010 of 700,000 traffic
Continually Experimenting with Digital to Build a New Content Universe
2001 – Began 2007 – Introduced a 2007 – Established charging readers for metered charging model, direct contractual access to publications using consumer demand relationships to price content with content aggregators
Organizational Resource Investments in Upgrading Skill Changes Allocation Technology Levels
Built direct sales, More than doubled Focused on data Regularly organizes marketing, and prp int prices in the analytics to enable “Digital Learning customer support last ten years to make targeted Week” capabilities, which did print profitable in its advertising that to familiarize employees not exist before own right guarantees with digital technologies “attention time” Acquired a sos ftware company, which later became FT Labs DIGITAL TRANSFORMATION REVIEW
That’s why we introduced a metered package. The aggregators sell the So, in 2007, we went to all seven model in 2007 where we began to content and the software solution to aggregators we had at the time and use demand to help us price. We were banks, governments, corporations, said - “we are going to terminate our saying “let’s not have the FT decide universities, and any kind of collection licenses with you for the rights to retail what content is worth paying for and of readers where the purchase is done the FT. But what we are prepared to what should be free, let demand decide centrally and the access is managed do is continue to have key content that.” So, we let customers register to centrally. The pricing of the content is available on your platform if the access a limited number of free articles very commoditized since institutional end customer has bought a license of their choosing. We realized that if a customers have a lot of buying power from us.” This was probably the most customer had never come across the FT – given they buy about 20,000 sources profound change that technology before, they would want to read a little from an aggregator for one price. We enabled for us. It helped us establish and to decide whether our content was felt that even though we were getting a direct contractual relationship with relevant to them and worth paying a high margin from this model, the customers. This was very disruptive for. Once they had exhausted their amount of profits that we earned was and the FT has benefited significantly free articles, we invited customers to actually a fraction of what we could from this disruption. Technology has purchase a subscription. earn if we went directly to customers. given us a lot more insight into the Not having a direct relationship customer. We now know who our This had a profound impact on with customers also meant that we readers are. We have a dialogue with subscriptions. It meant that our didn’t have access to direct customer them about how we provide value. We acquisition costs were now much feedback. We didn’t know where we have very objective evidence of how lower because rather than trying to were adding value, where there were customers are using the FT and how acquire subscribers anonymously, missed opportunities, and where we we’re delivering value. Our customers we were now marketing to registered needed to improve. have benefited as well because it has users. It was a much more nuanced given them more transparency. They marketing approach and one of the now know that they only pay for the fundamental reasons why we were FT once and can then access it through able to re-kick start our subscriptions Technology helped any of now nearly 50 third-party growth. us establish a solutions. They also have evidence of direct relationship their utilization, which they can use to Can you give us an example of with customers. decide whether their money is being how you benefited from digital well spent and whether they should disruptions? This was very spend more or not. Previously, we relied on intermediaries disruptive and the As a consequence of this change in our – wholesalers and retailers – to reach FT has significantly licensing model, we now have more customers. In fact, most publishers still benefited from this than 4,000 institutional customers, allow third-party news aggregators more than 300,000 readers who to buy intellectual property rights disruption. benefit from our licenses, and we have wholesale and then retail the content increased profit by a factor of nearly and the software solution as one five. We also have a 90% renewal rate.
D IGITAL T RANSFORMATION R EVIEW N° 07 63 Riding the Wave of Digital Disruption: Scripting a New Digital Future, the FT Way
Building the Organization, a world where you anticipate that come out of iTunes and launch our Capabilities and Skills for a advertising is going to be challenged, own HTML5 app. The app was built Digital World you want to make sure that print is quickly and cost effectively by a highly profitable on its own. Equally, you specialized independent software want to be able to put as much of your house. We ended up acquiring that Can you outline some of the surplus into digital and not use it to business, which then became FT Labs. organizational changes that subsidize a loss-making print activity. you implemented as part of So, we increased the prices for our your digital response? print product quite significantly, in In order to have a direct relationship fact by more than double in the last 10 We have invested with consumers, we had to build years. And we are very pleased with out our direct sales, marketing, and the fact that we’ve managed to get our heavily in the support capabilities, which we didn’t print business to a profitable point and collection of data have before. In particular, we brought adapt to the digital world at the same and have built up our customer service in-house. We time. agreed that if we wanted to build a quite a significant direct relationship with customers, we capability in data needed to service them directly and we analytics. couldn’t outsource that relationship. We made the We were driven by the desire to get decision that we How about data analytics? feedback from our customers because that feedback is crucial to help us wanted the print We have invested heavily in the adapt and learn. business to be collection of data and have built up profitable in its own quite a significant capability in data How did you evolve your analytics. We have worked very hard resource allocation between right and before at improving the targeting that we’re print and digital? advertising. able to offer our advertisers. It’s one We still have many customers who see of the reasons that we’ve been able the print version as valuable and who What level of investment have to be bold in reframing how we’re are willing to pay for it. Our transition you made in technology? going to sell advertising. We made a statement a few months ago that strategy has been sympathetic to We are investing a lot in technology. we’re now going to sell what in effect that. This is why, for example, we For instance, when we made the are “attention minutes”, in addition redesigned the newspaper recently. shift to a direct licensing model, to inventory. As you know, most But we also made the decision that we launched a mobile app for our advertisers sell impressions, and they we wanted the print business to be customers. Initially we developed an might sell the consequence of those profitable in its own right and before iOS app, but when Apple changed its impressions, such as clicks or even advertising. In the days when 80% of commercial terms, which effectively purchase. We’ll still do this, but now your revenue came from advertising, meant that Apple would own the advertisers will also be able to buy a it was fine for your circulation to customer relationship, we decided to be subsidized by advertising. But in guarantee that an advertisement will
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be seen by a particular target group are aggregating, repurposing or for a specified period of time. So, you republishing content that’s been are buying minutes or hours of time in originated by others. Origination is our front of that audience and it’s verified USP. that it’s really a person there, it’s not a machine.
In terms of your people, what Digital Learning training initiatives have you Week is intended to launched and can you tell us stop people feeling more about Digital Learning Week? that just because Digital Learning Week is a fantastic they started their festival: an exhibition of different career in print media aspects of what it means to be digital. This could mean helping our people they don’t have a lot understand how to use social media of potential and a lot better or how to market effectively to offer with digital in digital media. Overall, though, it’s really about familiarization. It is media. intended to stop people feeling that I think the other competition is time. just because they started their career Our audiences are very time-poor; in print media they don’t have a lot there is a huge amount of competition of potential and a lot to offer with for their attention. Therefore, we can’t digital media. That’s very important think of our competitors as just direct culturally. Digital should not be seen substitutes for what we do, but also as a specialist activity done by a few substitutes for a reader’s time. We technical experts. therefore have to be very clear about how we improve the productivity of Do you face emerging our readers. How do we help them competitors in the digital space, discover interesting and compelling such as LinkedIn, which is now content effectively? How do we make investing in producing original the best use of their time? editorial content? Any organization that is investing in original content that is of interest to our target audience – leaders in government or business who are making multi-million-dollar decisions – is a competitor. But a lot of organizations
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What are the next phases That’s a fairly profound change. of transformation for the It needs a lot more evidence to be Financial Times? collected. It requires a much more We ensure that we We are moving much more to being trusting and direct relationship with continually review a service organization. We are the customer and it’s going to rely a lot our business model. looking at whether we can work with on data. our customers to measure what a beneficial outcome for them is in using Learning the Lessons having information sourced and validated in an independent way our journalism. For example, we have of Digital business education clients who we’re so they can make decisions on working with to build on early insights it. We came up with a strategy to What are the key lessons we’re getting that students who have deliver that in a world where the that you learned from this read the FT are more compelling in job whole economics of distribution transformation and what could interviews. These students are able to and funding had changed. be the key takeaways for link theory to practice, to relate what companies across sectors? they heard in the classroom to what’s How do you decide to evolve happening in the market, and are able I think it’s about asking the your business model? to apply what they have learnt. How fundamental question of why the We have regular discussions on do we improve that? Can we measure business exists and what purpose different forums on the changes that? it serves. Then, you must be brave and adaptations that we need and confident about adopting to make. That’s not only done at a strategy to deliver that. Both board level. We have a product We are moving competitors and customers told council that involves multiple much more to us outright that our ambition to stakeholders across the business. charge for our journalism wasn’t We also look at changes in being a service going to work. But we went back customer feedback and sentiment. organization. to the fundamental reason that we We take all of these measures to exist: that the market sees value in ensure that we continually review our business model.
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Designing Transformational Business Models
Designing Transformational Business Models Interview with Serguei Netessine – Chaired Professor of Global Technology and Innovation at INSEAD @snetesin erguei Netessine is The Timken Chaired Professor of Global Technology and Innovation at INSEAD and the Research Director of the INSEAD- SWharton alliance. Before joining INSEAD in 2010, Professor Netessine was a faculty member at the Wharton School, University of Pennsylvania. He has co-authored dozens of publications in prominent management journals. His latest book - “The Risk-Driven Business Model: Four Questions that will Define Your Company” (www.defineyourcompany.com) - co-authored with Professor Karan Girotra of INSEAD, provides a toolkit to help organizations design innovative business models. Capgemini Consulting spoke with Professor Netessine to understand how companies should adapt their business models to survive digital disruptions.
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Business Model Innovation pioneered by energy efficiency is the Key to Surviving services companies, which are Disruption It is becoming driving up the adoption. These increasingly more energy efficiency services Why is business model evident to many companies replace old bulbs with innovation so important today? energy-efficient ones free of organizations charge. Commercial consumers The shortcomings of traditional that traditional don’t have to pay anything for the innovation approaches that focus new bulbs. Instead, they need to on new technologies and new innovation measure how much money they products alone are becoming approaches that save on electricity by using the increasingly evident to many focus on new new bulbs. At the end of the year, organizations. For example, the savings are split between the pharmaceutical companies spend technologies and consumer and the energy services as much as 30% of their revenues new products alone, company. This new business model on R&D, trying to develop new often do not work. is in large part responsible for the products or technologies. But increasing adoption of energy- the return from this enormous expenditure has been very elusive Would you argue that and it is a common problem across groundbreaking technology industries. For every successful rarely achieves mass adoption new product that a company without an innovative business creates, there are typically 10 model? that fail. For example, Apple has many new product successes Yes, I believe that is true. The to its credit, but it has also seen challenge with new technologies some major failures, such as the is that they usually have very Newton project. This was a series different cost and revenue of handheld computers that Apple parameters from an old technology. produced in the 1990s that lost it This makes their adoption using an close to $1.5 billion. old business model very difficult. Take the case of energy-efficient We also see more and more light bulbs. They help consumers companies – such as Airbnb, save on electricity and are more Uber or Alibaba – that do not environmentally friendly, but really invent any products or they are also more expensive technologies. Yet, they have huge than normal bulbs. This is why market capitalizations as a result of the adoption of energy-efficient their innovative business models. bulbs has been very slow in some I think this is the main driver of countries. However, we are now business model innovation. seeing new business models,
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efficient bulbs. managed. Dell is an interesting You identified two types of example of a company that used risks - information risk and the risk-driven approach to stay The Risk-Driven Approach to incentive-alignment risk. ahead of the competition. Dell’s Could you tell us about the Business Model Innovation innovation, which disrupted differences between them? the computer industry, was to If I go back to the example of Dell, What are the different ways produce computers on demand. most computer manufacturers were in which organizations can In doing so, Dell eliminated producing computers without innovate their business models? the fundamental risk that other really knowing exactly which computer manufacturers were Companies can redesign their configuration the customer wanted. facing – the risk of uncertain business models by changing They were producing based on demand. Dell’s competitors were their cost or revenue structure. forecasts. This is what we call often forced to liquidate excess For instance, a company could information risk – a situation where stock or lower prices significantly go from charging per song (like companies make decisions without because of lower than expected iTunes) to charging per month enough information. (like Spotify). This changes the demand. In contrast, Dell revenue structure. Companies can completely eliminated the risk of also change their cost structure mismatch between demand and by, for example, outsourcing supply by producing only what Information risk is manufacturing to a low-cost customers wanted when they a situation where country. But I think most wanted it. companies make companies realize that these kinds of innovation are quite common It is important to note that Dell’s decisions without and are relatively easy to copy. cost structure was higher as a enough information. result of this approach. In order to deliver on demand, it had Companies can to manufacture close to where Incentive-alignment risk arises its customers were. This meant when incentives are not aligned on also redesign their producing in the United States a value chain. This happens very business models by rather than in low-cost countries often with new technologies. For changing the way like China. Further, since it example, Netafim, an irrigation retailed its products for about company based in Israel, develops in which risk is the same price as its competitors, advanced irrigation equipment managed. Dell’s revenue structure was about that increases crop yields by the same as that of its competitors. 400-500% with very little water. There is another approach to Despite this, Dell managed to Despite the dramatic improvement business model innovation dominate the industry for many in crop yield, Netafim found that companies should explore: years by building its business it very difficult to sell their redesigning their business models model around managing risk equipment. The technology was by changing the way risk is more effectively. expensive and farmers lacked
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the educational background to Are there startups that have fully understand the benefits. So, adopted a risk-driven business in this case, the incentives were model? The fundamental fundamentally misaligned. Farmers Yes, San Francisco-based startup issue with most were not convinced of the value of Timbuk2, a consumer products investing in the equipment, despite companies is company, has adopted a risk- its seemingly obvious benefits. driven business model. Timbuk2 that they never To fix this problem, Netafim produces quality, custom-made re-evaluate their decided to sell services instead of bags to order. They manufacture products. They offered to install business models. the bags locally in San Francisco, their products free of charge for which is one of the most expensive farmers. At the end of the year, they Successful Companies cities in the world. Nevertheless, would measure crop yield. If it had they are highly successful because Constantly Reinvent their increased by the promised 400%, they produce on demand. As a Business Models they would take a share of the result, they completely eliminate difference in revenues. This helped information risk. In your opinion, why are some align incentives in the value chain. companies more successful than Farmers were now willing to use the Uber is another example of a others in surviving disruption? equipment since they did not need company that has adopted a to pay anything upfront, which The fundamental issue with risk-driven business model. minimized any downside risk. By most companies is that they Taxi service providers are eliminating incentive-alignment never re-evaluate their business exposed to the risk of mismatch risk, companies can create business models. Blockbuster, for instance, between demand and supply. models where everybody benefits. pioneered the revenue-sharing They need to purchase cars, hire business model in the video rentals taxi drivers, and pay wages to industry. Before Blockbuster drivers. However, the demand for introduced the new model, studios taxis may exceed or fall short of charged retailers very high rates supply, which results in losses. By for tapes. Under the new model, offering higher rates to drivers Blockbuster paid studios lower Incentive-alignment when demand outstrips supply, rates upfront but shared revenues risk arises when Uber incentivizes more drivers to with them instead. The new model incentives are not offer their services. As a result, helped Blockbuster increase whenever demand increases, it its market share from 25% to aligned in a value is matched by a corresponding 38% in just two years. However, chain. increase in supply. By aligning Blockbuster never really revisited incentives in this manner, Uber its business model again. And has been able to mitigate one of when they did revisit it, it was too the taxi industry’s fundamental late. They were already far behind problems. their competitors.
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In hindsight, there is a lot that What are some of the lessons distributors and wholesalers to they could have done. For we can draw from Amazon’s selling its fulfillment capabilities instance, they could have thought success? to others. of new ways to structure their Amazon is one of those amazing Apart from the innovations relationship with customers. companies that constantly and on the fulfillment side, Instead of charging exorbitant relentlessly analyzes its business what are some of the other penalties in late fees, they could model and tries to disrupt it before ways in which Amazon has have graduated to a subscription being disrupted by others. When experimented with its business model like Netflix. And, of course, Jeff Bezos started Amazon as an model? Blockbuster should have thought online retailer of books, he realized earlier about delivering DVDs that it was impractical for a cash- In 2005, Amazon made a major by mail and offering video on strapped startup to carry millions change to its revenue stream demand. of books in inventory. So, he when it launched Amazon Prime. invented a business model that he Experience had shown that a lot of called “Sell All, Carry Few”. In this customers chose not to buy online model, Amazon operated like a because they were deterred by high Amazon is one virtual retailer and outsourced most shipping costs. So, with Amazon of those amazing of its fulfillment to distributors Prime, Amazon began offering and wholesalers. Within a few customers a shipping subscription. companies that years, however, Bezos realized This meant that customers did not constantly and that most of its distributors were have to worry about paying for relentlessly tries to not good at fulfilling individual individual shipments. Amazon book orders. This was negatively also experimented with its product analyze its business affecting customer satisfaction and mix. In the late 1990s, Amazon model and tries to damaging Amazon’s reputation. started expanding beyond books disrupt it before So, he completely turned Amazon’s into categories such as music, model around and started investing videos and games that required being disrupted by heavily in warehouses in order to similar logistics capabilities as others. stock all inventory internally. books. It has continued to expand its product portfolio constantly, In 2001, Amazon started offering even with unrelated product its website development, order categories, as a way to hedge risks. fulfillment, and customer service Its expansion into computing capabilities to other companies services such as cloud computing like Toys “R” Us, Borders, and and electronic data systems is an Target. In 2006, it went further and example of this. began to offer these capabilities to small retailers as well. So, Amazon came full circle from completely outsourcing fulfillment to
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Have you been observing similar success stories in business model tried to understand customer innovation in more traditional pain points, and adopted a new industries? time. As a result, customers had strategy in response. They did I think the larger the company, to make various provisions to it very openly, with the CEO the less frequent the innovation. manage the resulting uncertainty, speaking publicly about the new But, we certainly see some such as holding more inventory strategy. It is very rare to see this interesting innovations in or making their production kind of an organized process. traditional companies. Maersk capabilities more flexible, which Shipping Line is one example led to additional costs. that comes to my mind. Maersk is an industry leader in shipping Maersk decided to fix this problem. and one of the oldest and largest They began to guarantee the shipping companies globally. arrival time for their containers Companies need to I really like their recent major and offered to pay a penalty to innovation, which is called “Daily customers in case a shipment did look for symptoms Maersk”. Maersk performed a very not arrive on time. They added of inefficiencies in extensive analysis of customer many more ships on their routes their business model pain points to understand what to make sure that there were daily bothered their customers the departures and customers did not by trying to see if most. They realized that the have to worry and plan ahead. In there is a mismatch biggest challenge that customers exchange for helping customers between what the faced was the uncertainty in better manage uncertainty, container arrival times. In fact, Maersk charged a premium for customer wants and there was a 55% chance that this service. I really like how they what they deliver. containers did not arrive on questioned their business model,
D IGITAL T RANSFORMATION R EVIEW N° 07 73 Designing Transformational Business Models
Business Model Innovation is the Key to Surviving Disruption
Pharma companies spend 30% { ~30% of revenues on R&D, but without much return
Companies like Airbnb, Uber or Alibaba do not invent any Returns from traditional product innovation can be elusive new products - yet are successful due to their innovative business models
A Framework for Innovating Business Models
What - Companies look at When - Companies look at Who - Companies change Why - Companies change the kinds of decisions they the timing of decisions the decision-maker the incentives that exist in a want to make e.g. Dell decided to sell e.g. Google allocates value chain e.g. Zappos decided a product first, and 20% of any employee’s e.g. In the US healthcare to focus on a single produce it later time to do whatever they sector, doctors recommend product line think is best many procedures as their incentives are tied to them
P O W E R E D b y S E R V I C E™
Unlike technological or product innovations, business model innovation cannot be relegated to the R&D department. It needs to be driven by the top management.
- Professor Serguei Netessine
DIGITAL TRANSFORMATION REVIEW
Building a Culture of Sustained Could you tell us about the they think is best. Google realizes Business Model Reinvention framework you have developed that employees are best positioned in order to help companies to identify the most important How can companies anticipate innovate their business model? projects to work on. The “Who” if their business model is strategy has produced nearly 50% We have developed four different becoming obsolete? of all innovations at Google. approaches for companies to deal Companies need to look for with information and incentive- The “Why” approach changes the symptoms of inefficiencies in their alignment risks and we denote them incentives that exist in a value chain. business model by trying to see if by four words: “What”, “When”, For example, the fundamental there is a mismatch between what “Who”, and “Why”. problem in the US healthcare sector the customer wants and what they is that doctors are compensated per deliver. There are many troubling In a “What” approach, companies procedure. This results in doctors symptoms that indicate that the need to look at the kinds of decisions prescribing too many procedures business model is not working well. they want to make and how they and leads to higher healthcare These could be large fluctuations in can increase or reduce risks using costs for companies. This is an financial performance, underutilized those decisions. For instance, they incentive problem. To change employees or excessive inventory. could decide to focus on a narrower these incentives, many companies To start with, companies need to set of decisions. A good example have started integrating doctors conduct a business model audit in would be companies like Zappos within their organizations and order to identify information or and diapers.com that only sell a paying them a fixed salary. This incentive-alignment risks in their single product category (both were has reduced the cost of healthcare current business model. acquired by Amazon.com). for companies and increased the quality of care. The “When” approach changes the timing of decisions. A good Companies need to apply these example here would be Dell. Instead approaches and identify ideas for of first producing a product and Companies need to business model innovation. As a then selling it, Dell began selling next step, they need to experiment develop scaled-down a product first and producing it with these ideas. Experimentation is versions of their later, in response to actual customer very important because it is difficult orders. new business models to accurately predict the success of an innovation. Companies need to and test them with a The “Who” approach changes who develop scaled-down versions of subset of customers. makes the decisions. For instance, their new business models and test Google allocates 20% of any them with a subset of customers. employee’s time to do whatever
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audit the business model, identify sectors in Europe. Companies very inefficiencies and generate ideas, often lack basic understanding Unlike technological companies should set up a small about what the business model is or product team tasked with testing these ideas and why they should look at it. So, and implementing them on a small I think the process of creating a innovations, scale. It is important that this team culture of constant business model business model is not affected by resistance from innovation should begin with innovation cannot within the organization. It should education. Next, organizations therefore operate independently, in should make a habit of making be relegated to the a startup-like environment. Once an business model audits a regular R&D department. idea is tested and found to generate exercise. Innovation should not positive results, companies can happen only when a company is in What kind of an organizational then start rolling out the innovation financial trouble but on a frequent structure should companies across the organization. basis, driven by the CEO. build for business model innovation? How can companies create Unlike technological or product a culture that encourages innovations, business model constant business model innovation cannot be relegated innovation? to the R&D department. Business We recently conducted research model innovation needs to be in Singapore which showed that driven by the top management. only about 5% of manufacturing Business model audits should organizations in Singapore practice have the support of CEOs and business model innovation. This potentially board members and number is consistent with some should involve top managers from all functional roles. Once they
76 D IGITAL T RANSFORMATION R EVIEW N° 07 WHAT ARE THE CHALLENGES IN RESPONDING TO DIGITAL DISRUPTIONS?
“Over the last 20 to 25 years, organizations have functioned according to the notion that they should innovate in line with their- TTim iimDNA OO’Reilly’RR eiandilly within the bounds of their core business. But, the digital age requires a . - Philippe Lemoine
companies is that they never re-evaluate their business models.”
- Serguei Netessine
“Technology is seldom the problem.
- Rita McGrath to acknowledge that their old business model does not work anymore.” - Rita McGrath
“Unlike startups, large corporates have too many processes that really slow things down.”
- David Cohen
77 When Digital Disruption Strikes: How Can Incumbents Respond?
When Digital Disruption Strikes How Can Incumbents Respond? By Didier Bonnet, Jerome Buvat and Subrahmanyam KVJ, Capgemini Consulting @didiebon, @jeromebuvat and @SuB8u
Volatility and Corporate averages2. These are challenging While there are several reasons Darwinism times for companies as the speed, for companies vanishing from the volume and complexity of change radar or going bankrupt, technology Since 2000, 52% of companies in intensify. disruptions are playing a big part the Fortune 500 have either gone in amplifying this development. bankrupt, been acquired or ceased One critical manifestation of to exist1. US corporations in the Since 2000, 52% of this heightened volatility is the S&P 500 in 1958 remained in the companies in the emergence of technology-driven index for an average of 61 years. Fortune 500 have startups across multiple sectors. By 1980, the average tenure of an Venture funding to startups is at S&P 500 firm was 25 years, and by either gone bankrupt, historic highs. In just one startup 2011 that average shortened to 18 been acquired or hotspot, Silicon Valley, venture years based on seven-year rolling ceased to exist. capital investment in the first Figure 1: Venture Capital Investments in Silicon Valley, 1995-Q3 2014 ($ Billions) 33.40
Till Q3 2014
Dotcom bust Financial 17.79 downturn 16.96
12.67 12.17 12.42 11.55 11.53 11.15 9.77 9.39 8.00 8.13 8.29 7.26 6.73 5.88 4.63 3.37 1.81
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Source: NVCA, “National Venture Capital Association Yearbook”, 2014
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three-quarters of 2014 was around traditional incumbents respond to enabled business model. The next $17 billion, a figure that is only digital disruption, we conducted stage, Spread, typically takes place surpassed by the peak of the dotcom research spanning 100+ companies two or three years post the arrival of era in 2000 (see Figure 1). (see research methodology at the a disruptive technology/company. end of the article). In this stage, the main disruptor Digital innovation is shaking the core starts growing in popularity, and of every industry and incumbents Three Quarters of Incumbents there are multiple me-too services are struggling to respond. The Responded Late to Digital that mimic the disruptor. The final emergence of startups such as Uber Disruptions stage – Mainstream Adoption – is – which disrupt entire sectors with when the disruption reaches large- There are three broad and linear their agile, innovative business scale acceptance and is over four stages to disruptiona. The first stage, models – is worrying traditional years from its arrival. Onset, is typically within the first incumbents. In recent research by year of the arrival of disruption. That GE, two-thirds of respondents agreed is marked by the entry of a disruptive that businesses have to encourage a Adapted from Steven Sinofsky, Board Partner, startup that either brings forth a new Andreessen Horowitz; http://recode.net/2014/ creative behaviors and must disrupt technology, or a new technology- 01/06/the-four-stages-of-disruption-2/. their internal processes in order to do so3. What does a successful strategy for responding to disruption Figure 2: Response of Incumbents to Digital Disruptions by Stage look like? How fast have companies responded to digital disruptions? 74% To understand more about how
In the Silicon Valley, 38% venture capital investment in the first 36% three-quarters of 2014 26% was only surpassed by the peak of the dotcom era in 2000.
Onset Spread Mainstream Adoption
N=100
Source: Capgemini Consulting Analysis
A response is an action taken specifically to ward off the disruption/disruptive startup, such as the acquisition of the disruptor or the development of a new business model.
D IGITAL T RANSFORMATION R EVIEW N° 07 79 When Digital Disruption Strikes: How Can Incumbents Respond?
Our research found that nearly 74% Why Incumbents Struggle Complacency about Existing of companies responded to digital to Respond to Digital Business Models disruptions only after the second Disruptions One of the biggest challenges year of their occurrence. Worryingly, in responding to disruption is over 38% of incumbents respondedb In most organizations, decision cycles complacency. When disruption to the emergence of a disruptive lag technology cycles. However, that is strikes, companies find it difficult to company after the fourth year. This not the only reason why incumbents keep pace with the fast-moving and is the period when the disruption struggle to respond to digital changing world as they cling on to starts to move more mainstream (see disruptions. We found five root causes the old successful business model. Figure 2). Our research also showed behind incumbents’ slow responses. One key reason for organizations that the vast majority of companies becoming complacent is management that went bankrupt responded only inertia – failure to sense the need to when the digital disruption had change. INSEAD’s Professor Serguei already firmly taken root. In most Netessine believes that organizations do not ask enough hard questions of organizations, their business models. As he explains: decision cycles lag “I like to compare it to financial Nearly 74% technology cycles. auditing, which every organization does every year, many times. Often, of companies a public company will do it once a responded to digital Slow Decision Cycle quarter. But then you ask the same disruptions only Old-school approaches to designing company how often [it examines] its after the second year change – such as annual strategy own business models, they’ll tell you, meetings – are too cumbersome for a ‘Well, I don’t know. Twenty years of their occurrence. non-linear, fast-paced digital world. ago? Thirty years ago?’”6. Technology cycles are becoming shorter than corporate decision cycles4 as technology progression accelerates. Organizations are One key reason b A response is an action taken specifically to finding it increasingly hard to ward off the disruption/disruptive startup, for organizations such as the acquisition of the disruptor or match the pace of rapid technology the development of a new business model. changes. Thirty-seven percent of becoming respondents in a global survey of complacent is industry executives reported being management inertia worried that their organizations would not be able to keep pace with – failure to sense the technology changes and as a result, need to change. lose their competitive edge5.
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There are many examples of such until then were only possible on a Fear of Cannibalizing complacency. Consider the case PC. BlackBerry’s core users began Existing Business of RIM/BlackBerry. For years, to migrate in droves. RIM believed The threat of cannibalizing existing BlackBerry was the product leader its dominance of the enterprise business can prevent incumbents in enabling secure push mail on market was impregnable, but trends from going to market with mobile phones, earning a committed such as Bring Your Own Device and innovative offerings. Take the case following with corporate users. the growth of smartphones caused of Kodak. Kodak, an innovator in However, while RIM continued to massive challenges. It saw its photography, invented the world’s focus on its lead product, Apple was market share of the smartphone OS first digital camera in 1975. Despite reinventing what a mobile phone market reduce from a high of 20% its solid lead in the film business, could be. Apple’s iPhone married in Q1 2009 to as low as 0.8% in Q3 it failed. Kodak had most of the email functionality to tools that up of 20147. patents for the digital photography
Figure 3: Major Causes Behind Incumbents’ Slow Responses
Fear of Complacency Cannibalization
Slow Reaction to Digital Disruption
Slow Decision Lower Margins Cycle in the Transition
Resources Unaligned to Opportunities
Source: Capgemini Consulting Analysis
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technology, but did not A company that has embraced subscriptions. The total circulation, commercialize them aggressively cannibalization as a very across print and online, for the paper as it feared cannibalization of successful business strategy is at the end of Q3 2014 was 690,000, its film business. Instead, other Apple. The company has launched the highest in its 126-year history. firms licensed Kodak’s technology a variety of products (iPod, iPhone, One key reason for this, according and commercialized it. This iPad) that have cannibalized one to its manager of marketing and restricted Kodak from leading another. Apple’s CEO Tim Cook audience development, is that the the digital camera race8. As Rita explains, “Our core philosophy is FT thinks of itself as “a premium McGrath, professor at Columbia to never fear cannibalization. If we brand with high quality content”, Business School says, “Kodak don’t do it, someone else will10.” and not as a newspaper11. continued to focus and invest in film-based technologies in the Lower Margins in the 1980s and 1990s, while Fuji was Transition systematically extracting itself In industries where digital business 48% of successful from film-based photography and has lower margin than traditional companies relied shifting massive resources, both business, taking the digital path is financial and human, to the new on hiring specialist often perceived as a significant bet and unproven digital technology. on the company’s future revenues. digital talent in the By 2003, Fujifilm had 5,000 digital Incumbents hesitate to take the wake of a disruption. processing labs in chains stores plunge. The newspaper industry, for through the U.S. At that time, example, has largely depended on Key Resources Unaligned to Kodak had less than 1009.” advertising revenue to subsidize low Opportunities subscription revenues. To transition In most organizations, people to digital, where advertising rates are treated as resources tied to are a fraction of what they are Kodak had most of divisions, products, services and on print, has a significant impact business units. Managers are the patents for the on profitability. This can blind typically reluctant to let go of management to the potential digital photography resources assigned to them for opportunities of digital for new technology, but did fear of any potential diminishing business models and sources of of their authority. Similarly, not commercialize revenue. organizations tend to try and them aggressively retro-fit new opportunities into One company that has successfully as it feared existing organizational structures. tackled this challenge is the These political challenges pose cannibalization of Financial Times. Today, over two- significant hurdles when it comes thirds of the FT’s audience is online. its film business. to digital disruptions that, more Mobile readership drives 50% of often than not, cut across the entire total traffic and 20% of digital organization.
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Successful Responses to to join its Digital Advisory Board12. Digital Disruptions These executives were specialists in areas such as innovation 32% of successful We studied the strategies management, customer experience companies launched adopted by organizations that management, user interface design 13 have successfully withstood and intelligent systems . In our services that digital disruptions (see research research, we found that 48% of mimicked those methodology at the end of the successful companies relied on of a disruptive article)c. We found four dominant hiring specialist digital talent responses to disruptions adopted in the wake of a disruption (see competitor. by these organizations: acquiring Figure 4). digital talent, mimicking the Acquisitions Help Incumbents competition, acquiring the Mimicking Enables Incumbents Compete and Scale-Up to Have a Ready Offering disruptor/ competitor and taking a A common response to disruption judicial approach. Most successful We found that 32% of successful is to acquire one of the leading companies adopt a combination of companies launched services that disruptors. Our research found that these responses to ensure a robust mimicked those of a disruptive 36% of successful companies relied and well-rounded approach. In competitor (see Figure 4). In some on acquiring companies as a tactic this section, we examine each of cases, the incumbent can throw to access disruptive technology/ these winning responses in detail. significant resources at creating innovation (see Figure 4). Once it competing solutions. For instance, has completed an acquisition, the Acquiring Digital Talent Brings even though Apple’s iPod, iPhone and incumbent might either choose to in Fresh Thinking iPad are known to be path-breaking absorb the disruptor in its operations Often, incumbents resort to and breakthrough innovations, or continue with business-as-usual. acquiring select digital talent they were not the first of their so they can start to build more kinds. A number of digital music coherent responses in-house. players existed before the iPod was 14 Travel agent Thomas Cook was launched . Similarly, a number of one of the early companies to be tablet PCs were launched in the 1990s Over the years disrupted by the advent of online and early 2000s, but it was the entry Walmart has booking sites. The company, as part of the Apple iPad in 2010 that sent the 15 acquired multiple of its multi-pronged approach to tablet market soaring . Apple’s focus this digital disruption, hired a series on creating products that dramatically startups in of executives with backgrounds in improve on competing offerings innovative fields and digital technology as digital ‘gurus’ from disruptors in its industry has subsequently folded enabled it to continually stay ahead of competition. the teams into their c Successful companies are those that have maintained and/or improved their market operations. position
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An example of the former category have increased scale, expanded Aereo, for example, was a is Walmart. The company, their rosters of top-selling artists disruptor that offered live-streams through its Walmart Labs arm, has and increased their holdings of broadcast TV over the Internet. over the years acquired multiple of recording and publishing Since traditional broadcasters and startups in innovative fields and copyrights. distributors were cut-off from any subsequently folded the teams monetization opportunities in into their operations. Luvocracy A Judicial Approach Slows this model, they sued Aereo in the is an example. The startup was Down Disruptors US courts. The case went all the an online community of half way to the Supreme Court, which Digital technologies, because they a million members that allows ruled that Aereo was ultimately in are so new, are often not covered consumers to discover and buy violation of existing regulation. in existing regulatory legislation products recommended by other The company subsequently went and base their competitive model people. Walmart subsequently into bankruptcy and shut down18. on a disruptive approach that was closed the service and absorbed its not anticipated by policy-makers. key technologies into existing and Similarly, Uber, the taxi-services Incumbents can thereby respond proposed Walmart platforms16. app, has seen significant pushback by suing disruptive startups, citing from local taxi services in many unfair advantage under the regulatory In other instances, the acquirer cities across the world. In Spain, framework that governs their industry. allows the innovator to continue for instance, a local court ruled Other legal concerns that incumbents to do business without much that Uber was illegal and Uber had typically raise against startups include interference. For instance, car to suspend its operations in the the evasion of taxes, and the exposure sharing is disruptive to car rental country. Similarly, the company of consumers to new risks due to firms such as Avis and Hertz. has also been sued or legally disruptive platforms. Our research Realizing this, Avis paid over questioned in several US states found that over 32% of successful $500 million to buy Zipcar, a including California, Colorado, companies have resorted to using the rent-by-the-hour startup17. The Portland and Oregon19. However, legal route to slowing down disruption company continues to operate the startup has only been going (see Figure 4). independently and leverages from strength to strength. It Avis’ global network. recently raised a billion dollars in venture capital and is valued at Another key driver for acquisitions over $40 billion20. is consolidation, which gives the 32% of successful incumbent more scale to fight back. The music industry, which companies have suffered significant disruption resorted to using from digital music, is a good the legal route example. The six major labels that existed pre-digital have now to slowing down become three, with the healthier disruption. labels acquiring their struggling brethren. By doing so, these labels
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Ultimately, if Ultimately, if the disruptive Establishing the Right Mix of the disruptive technology has real customer Responses value, the legal route has the technology has real Drawing lessons from incumbents effect of delaying the disruptor that have successfully tackled customer value, the development but it rarely stops disruption – retained their market the technology development over legal route has the position or have improved it – can time. effect of delaying help organizations establish the right mix of responses (see Figure the disruptor Our research found that the number 4). development but of companies taking the judicial route has increased significantly. Successful companies have a it rarely stops While 8% of incumbents used relatively even spread across the technology this approach over the 2000-2010 different tactics. They have acquired period, in the 2010-2013 period, it development over competition, hired digital talent has risen to 27%. time. and gone down the legal route too. Overall, the best approach
Figure 4: Response Tactics of Successful Incumbents
48%
36% 32% 32%
Judicial Route Mimicking Acquiring Acquiring Digital Competition Competition Talent
N = 84 Note: Figures refer to percentage of companies adopting a particular approach. Multiple responses per company Source: Capgemini Consulting Analysis
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is a balanced one that uses a collaborative economy, highlights strength today might be a burden mix of tactics (see Figure 5 for a how these startups disrupt existing tomorrow22.” It is vital for a company comparison). markets by solving real customer to keep questioning the status quo. problems, “Many collaborative Blockbuster’s innovative idea of startups find ways to simplify Making the Most of sharing revenues with the studios, complex and frustrating customer instead of paying the studio for each Digital Disruption experiences. product, revolutionized the video and DVD rental market. Blockbuster’s As technology cycles keep getting market share skyrocketed. However, shorter, disruptions will become they failed to look ahead and more prevalent. And as the world As the world anticipate the impact of streaming and increasingly becomes software- increasingly eventually went bankrupt. Netflix, driven, competitors will emerge becomes software- on the other hand, thrived because from adjacent industries rather it adapted and actively cannibalized than just the ‘home’ industry of the driven, competitors its DVD business. Organizations will incumbent. Does this spell the end will emerge from constantly have to question the status of the centuries-old corporation? adjacent industries quo and pose ‘what-if’ questions of Not necessarily. Incumbents need their core operating model. to position digital innovation rather than just the at the heart of their business. To ‘home’ industry of achieve this, they can take a series of practical steps. the incumbent.
Proactively Identify Customer For example, Uber and Lyft have Pain Points simplified an otherwise complex and unreliable experience for Incumbents need to One of the biggest entry points customers of taxi services21.” constantly revisit that disruptive startups take While some incumbents react to is to identify customer pain their business model the emergence of the pain point points. Resolving these customer by denying its importance, the to ensure it is not pain points then becomes the market has been created. outdated. unique selling proposition of the disruptor. Startups such as Question the Status Quo and Airbnb, Uber and Lending Club, Constantly Audit Your Business which are based on a peer-to-peer Model economy, have been successful because they have identified As INSEAD’s Serguei Netessine gaps in what customers want and explains, “Business models and the what incumbents provide. Rachel advantages that flow from them Botsman, leading expert on the are transient. What is a competitive
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Many incumbents typically stick subsequently tied into what are Responding to to the same strategy playbook that in reality independent fiefdoms. has served them for years. However, Responding to digital disruptions digital disruptions the pace of technological change requires that organizations move requires that has made this approach dangerous. to a resource allocation that is organizations Incumbents need to constantly revisit centrally governed and organized their business model to ensure it is around opportunities, not existing move to a resource not outdated. structures. As Columbia Professor allocation that Rita McGrath says, “In companies is centrally Reorganize Resource Allocation [that have been able to survive around Opportunities disruptions], employees tend to governed and worry less about organizational organized around Most organizations are typically roles and structures.23” organized by business units opportunities, not or market units. Resources are existing structures.
Figure 5: Pros and Cons of Response Types Response to Digital Disruption Pros Cons Acquiring Disruptor/ • Enables a certain level of ‘control’ • Does not rule out the possibility of Competition over spread of disruption other “me-too” services that operate like the acquired disruptor • Gives the incumbent a head-start over its competition • Requires large investments that may be hard to justify to investors Acquiring Digital Talent • Brings in fresh thinking into the • Hard to hire certain digital skills, e.g. company analytics • A more robust approach that • Requires a dedicated strategy to prepares the incumbent for future attract and retain digital talent disruptions Mimicking Competition • Ensures incumbent has offerings • Risk of comparison with disruptors matching the disruptor and falling short of customers expectations • Helps reduce customer churn in the short-term • Challenges of replicating a true disruptor within existing legacy operations Judicial Approach • Allows incumbents to gain time to • Likely to antagonize existing/ prepare a more coherent response prospective customers
Source: Capgemini Consulting Analysis
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Move to an Open incubators and partnering with do not care for organizational Innovation Model startup accelerators. As David history or tradition. In fact, they Cohen, founder of leading startup sweep aside existing approaches Large companies need to learn to accelerator Techstars says, “Being and models, creating a new world spot the early warning signs of around the disruption at the early order. Digital disruptions are in disruption to avoid being surprised stages – and spotting it before many ways a very democratic force by their impact at a later stage. others do – gives you a competitive and they can just as well originate This requires a shift to an open advantage and you can help the within a two-person startup as they innovation model that allows startup grow at the same time24.” can in a $100 billion organization. them to stay tuned to sources of While that prospect might make disruptive innovation. An open Digital disruptions are a fact of many incumbents feel vulnerable innovation model entails engaging economic life in the twenty-first and uncomfortable, the secret is to closely with the startup ecosystem century. New digital technologies see it as an opportunity. by setting up innovation labs and
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Checklist: Are you in a Position to Successfully Negotiate Digital Disruption?
How do you spot disruptions? We actively look out for new technologies that can impact our industry We gain insights into customer behavior by actively monitoring sentiment on social media sites, understanding emerging behavior of millennials and tracking new startups globally We have a good view of our customer’s pain points We have a set of leading indicators (patent filings, consumer behavior etc) that we track to foresee disruptions
How do you rate your organization’s agility in responding to disruptions? Our leadership team has a digital vision that encompasses all organizational units We can quickly pull together pilots based on new technologies and get them off the ground We are ready to buy a disruptor if it makes strategic sense We have a high-level roadmap for digital transformation, which is flexible based on changing market scenarios We revisit our business model regularly
What is your approach to scouting for opportunities outside of your business? We have a ‘labs’ setup where we encourage investments in emerging technologies and trends We invest our time and effort in hiring and nurturing digital skills We have partnered with/ funded startups at various stages We encourage our partners/ customers to contribute to our product development process
Research Methodology
We conducted a comprehensive study of 100 leading companies in North America and Europe to understand how they negotiate digital disruption. For our study, we selected 10 leading players across 10 industry groups that have been digitally disrupted. The industry groups included Public Transport, Healthcare, Hospitality, Education, Publishing, News and Media, Photography, Music, Banking and Travel. All of these industries were carefully selected on the basis of disruption witnessed at various stages. The incumbents that we studied have been leading players in these industries for over two decades.
In our research, 84 companies had been successful in withstanding digital disruptions – success implies that they have maintained and/ or improved their market position – while 16 had been unsuccessful – these are companies that went bankrupt. Our focus was to understand the various strategies used by successful incumbents to respond to digital disruptions.
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1. Constellation Research, “Research Summary: Sneak Peeks From Constellation’s Futurist Framework And 2014 Outlook On Digital Disruption”, February 2014
2. Innosight, “Creative Destruction Whips through Corporate America”, 2012
3. GE Ideas Lab, “Global Innovation Barometer”, 2014
4. Greg Satell, “Business Models and the Singularity”, May 2012
5. Economist Intelligence Unit, “Agent of change – The future of technology disruption in business”, 2012
6. INSEAD Knowledge, “Four Questions to Revolutionise Your Business Model”, July 2014
7. Source: IDC and Gartner, accessed through Statista.com
8. Innovate or die: Wisdom from Apple, Google and Toyota, TIME, Jan 2013
9. From IEDP Review of - Rita Gunther McGrath, “End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business”, April 2014
10. All Things Digital, “Apple CEO: Don’t Fear Cannibalization, Embrace It”, January 2013
11. Forbes, “Digital Transformation in Action at the Financial Times”, November 2014
12. Travel Weekly, “Thomas Cook appoints digital ‘gurus’ to add tech experience”, May 2014
13. Breakingtravelnews.com, “Thomas Cook appoints three digital experts to enhance tech experience”, May 2014
14. Fastcodesign.com, “Apple’s Inspiration for the iPod? Bang & Olufsen, Not Braun”, November 2013
15. Techradar.com, “Meet the tablets that had to die before the iPad could succeed”, 2014
16. Marketwatch, “Wal-Mart buys another tech startup, Luvocracy — only to shut it down”, July 2014
17. Wall Street Journal, “Avis to Buy Car-Sharing Service Zipcar”, January 2013
18. TechCrunch, “Aereo Files For Chapter 11 Bankruptcy”, November 2014
19. BBC, “Uber under pressure as more bans and lawsuits loom”, December 2014
20. Wall Street Journal, “Uber Gets an Uber-Valuation”, June 2014
21. Capgemini Consulting Interview
22. HBR, “Amazon Constantly Audits its Business Model”, November 2013
23. Capgemini Consulting Interview
24. Capgemini Consulting Interview
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About Capgemini Consulting
Capgemini Consulting is the global strategy and transformation consulting organization of the Capgemini Group, specializing in advising and supporting enterprises in significant transformation, from innovative strategy to execution and with an unstinting focus on results. With the new digital economy creating significant disruptions and opportunities, our global team of over 3,600 talented individuals work with leading companies and governments to master Digital Transformation, drawing on our understanding of the digital economy and our leadership in business transformation and organizational change.
Find out more at: www.capgemini-consulting.com
About Capgemini
With more than 130,000 people in over 40 countries, Capgemini is one of the world's foremost providers of consulting, technology and outsourcing services. The Group reported 2013 global revenues of EUR 10.1 billion. Together with its clients, Capgemini creates and delivers business and technology solutions that fit their needs and drive the results they want. A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative Business ExperienceTM, and draws on Rightshore®, its worldwide delivery model.
Learn more about us at: www.capgemini.com Digital Transformation Review Guest Contributors
Rita McGrath, Professor at Philippe Lemoine, Chairman of Serguei Netessine, Chaired Columbia Business School the Fing (Next Generation Internet Professor of Global Technology Foundation) and Innovation at INSEAD
Rachel Botsman, Brian Solis, Principal Analyst David Cohen, Founder, Global Thought Leader Altimeter Group Managing Partner, and CEO - Techstars
Saul Klein, Partner with Caspar de Bono, Managing Director, Index Ventures B2B at the Financial Times