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A HIGHER GOALFujitsu’s Yumiko Kajiwara on why purpose and people are key to empowering business

THE VALUE OF SECURITYCan cybersecurity protect the business and deliver ROI?

SPECIAL EDITION 2020 | I-CIO.COM

DELIVERING DIGITAL AGENDASThree leading CIOs share theirbusiness transformation challenges and success stories

RESILIENT BY DESIGNBusiness model guru Alex Osterwalder on

building future-proof organizations

Global Intelligence for Digital Leaders

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FEATURE NAME IN HERE

4 In pursuit of purpose Fujitsu Vice President Yumiko Kajiwara explains why a new clarity of purpose is

essential for all businesses

7 Briefi ngThe world's top business thinkers • Andreas

Ekström on restoring trust in the internet • Why workforce transformation goes hand

in hand with digital transformation

10 Building resilient companiesBusiness model guru Alex Osterwalder

argues that organizations need to create ‘innovation engines’ in order to thrive

Digital agendasHow three leading CIOs — from

Costa Coff ee, Wärtsilä and Lufthansa Technik Philippines — are

ensuring their organizations can meet the demands of the 21st century

22 Co-creating for impact How a strategic design approach from

Fujitsu is helping thousands of companies fulfi ll their digital transformation goals

25 Technology focusExamining the commercial benefi ts of cybersecurity, with three leading chief information security offi cers

28 Transformation at TotalHow Dominique Pardo, head of Global IT Services at Total, is leveraging advanced

tech to take the energy giant into a new era

31 Future statesCreating a national digital identity

in Estonia, and building a sustainable city in Finland

34 EndpointColombia Business School’s Rita McGrath

and Ryan McManus on creating digitally enabled strategic ecosystems

CONTENTSDesigning digital successWelcome to this special edition ofI–Global Intelligence for Digital Leaders, the exclusive publication for technology and business decision-makers produced by Fujitsu.

The magazine brings together a rich selection of interviews, case studies and analyses that showcase how digital tech is instrumental in ensuring both the success and — critically in these volatile times — the robustness of enterprises and public-service organizations.

A core theme runs through this issue: strategic design. Our cover story features an interview with Alex Osterwalder, the leading authority on business model design and a co-creator of the Lean Startup movement. He outlines how large companies can insulate themselves from digital disruption by developing cultures that generate market-grabbing innovations time and time again.

Digital leaders — from Wärtsilä in Finland, the UK’s Costa Coffee, Lufthansa Technik Philippines and France’s Total — detail their companies’ very different digital transformation journeys, while our panel of cybersecurity experts vigorously makes the case that security not only protects the organization but adds real business value.

Elsewhere, articles on Fujitsu’s Human Centric Experience Design approach and the rise of digital ecosystems highlight how co-creation is now the preferred style of engagement for many customers and their technology partners.

We hope you fi nd all the insight and discussion useful. And you can always fi nd more — Big Thinker videos, hot-topic analysis, CxO profi les and best-practice guidance — at www.I-CIO.com, and by following us at @GlobalCIO.

Editor’s letter

3 WELCOME

I-CIO.COM

Kenny MacIverEditorI–Global Intelligencefor Digital Leaders

I–Global Intelligence for Digital Leaders is produced on behalf of Fujitsu by SevenC3 (www.seven.co.uk), 3-7 Herbal Hill, London EC1R 5EJ, UK Email: [email protected] Neither Fujitsu nor SevenC3 accepts responsibility for contributor views expressed.For SevenC3 Kenny MacIver, Editor; James Lawrence, Associate Editor; Scott McKenzie, Design Director; Tivina Elliot-James, Visual Editor; Christina Ryder, Sub-Editor; Nathalie Gregory, Account Director.For Fujitsu Hiroshi Nishikawa (Director), Naoko Wada, Manami Komatsu and Ramola Mehendale at the Strategy Planning Division, Global Marketing Unit.Andrew Richardson, Russell Norman and Claire Connley at the Marketing Communications Division, Global Marketing Unit. Copyright © 2020 SevenC3. All rights reserved.

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4 EXECUTIVE Q&A

From the Covid-19 pandemic and economic meltdown to climate change and digital disruption, we are living through volatile times that raise questions about the wider

role of business. Fujitsu’s Yumiko Kajiwara argues that companies must now demonstrate a clarity of purpose that aligns their activities with society’s priorities.

IN PURSUIT OF PURPOSE

Faced with high levels of uncertainty and major societal challenges, how well are businesses responding?

I’m actually seeing new types of economic activities, the kinds motivated by creating sustainability for future generations rather than merely focusing on the interests of shareholders. For example, more companies are engaging in projects that align with the United Nations Sustainable Development Goals, and the investment to support such endeavors is also growing.

There is also increasing awareness of a shift — perhaps most evident in the US — from shareholder capitalism to stakeholder capitalism. Apart from shareholders, other important stakeholders include communities, supply chains and employees, as well as customers — the immediate beneficiaries of products and services from vendors. At last year’s meeting of Business Roundtable, the US association of top CEOs, 181 executives committed their companies to this shift. Also, the 2020 World Economic Forum Annual Meeting in Davos held a similarly themed session.

In Japan, the government’s Council for Science, Technology and Innovation proposed Society 5.0, a human-centric

vision of society in which economic growth goes hand in hand with solutions to social challenges. The Japan Federation of Economic Organizations, too, supported the vision, defining it as the “Imagination Society” that focuses on creativity and social co-creation.

It’s worth noting that traditional Japanese businesses have always been comparatively sensitive to societal concerns, as expressed in sampo yoshi, or the benefits that flow from any transaction — to the seller and the buyer, but also to society. It also embraces the management philosophy that “business is a public institution of society,” one that is integral to the “goodness cycle.”

Is that why Fujitsu has chosen to reaffirm its purpose this year?

Fujitsu is currently transforming from an ICT company to a Digital Transformation (DX) company. We are trying to become a partner that not only provides technology and services but also engages in digital transformation with customers and other stakeholders. To be a trusted partner, one needs a clearly defined purpose.

It is, to quote: “To make the world more sustainable by building trust in society through innovation.” The aim is to inform

Q

QYumiko Kajiwara

is Fujitsu Limited’s head of diversity

and inclusion, head of sustainability

promotion, and vice president responsible for ‘The FUJITSU Way’

and collaboration with government.

Since joining Fujitsu, she has also held senior roles with the IP, legal and

HR divisions.

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all our stakeholders of what Fujitsu stands for and how we can benefit society. It’s our raison d’être: our management philosophy and mission statement all rolled into one, and something around which all management policy, business strategy and services will align.

Notably, ‘trust’ has been part of Fujitsu’s DNA since its founding. Our presidents over the years have repeatedly touched upon it. Trust is imperative in the digital age, and even more so as AI becomes ubiquitous. Of course, as technology matures, it can have both positive and negative impacts. That means it’s up to companies to understand all aspects of the technologies they develop and take responsibility for how they are used.

How do you ensure that this is implemented across a global workforce of 130,000?

It’s important for employees to reflect on their actions to ensure they align with our goals. Every worker has to internalize our purpose so they can spontaneously communicate it to others.

In his classic book, Management, Peter Drucker related the story of the three stonecutters who were approached and asked what they were doing. The first answered: “I’m earning a living by cutting stone.” The second didn’t even look up,

but said: “I’m doing the best job of cutting stone of anyone in my profession.” The third, however, had the look of a visionary as he replied: “I’m building a cathedral.”

The allegory shows that people doing the same job can have vastly different views. Probably, the most motivated stonecutter would be the one who is aware of the purpose of building something that benefits the entire community.

Given the growing awareness of the challenges facing mankind, does Fujitsu’s purpose resonate with employees and customers?

I think so, especially among millennials and Generation Z. There are many in these generations who are more interested in contributing to society than just making money. Unlike people who’ve lived through periods of relatively high prosperity, the defining moment for younger generations in Japan, for example, might have been the Great East Japan Earthquake, especially if relatives or friends were impacted by it. That’s why they ask themselves what they should do in these uncertain times. They are also likely to react to the coronavirus pandemic. When a generation with such sensibilities becomes the bedrock of society, companies that don’t adhere to their way of thinking will be shunned.

Q

A core aspect of the Fujitsu corporate philosophy is promoting diversity. What is your role in that?

For several years, I have worked to implement diversity and inclusion policies throughout the company. When brainstorming with our global team about an appropriate internal vision message for diversity and inclusion, we chose: “Be completely you.” This means that a person should be able to realize their full potential in a corporate setting.

It draws on the notion of “psychological safety.” If someone doesn’t feel safe in the workplace, they can’t be 100% effective. For that reason, we must provide a workplace where an individual can work in their own way, no matter their sexual orientation or gender identity. Diversity and inclusion mean respecting every colleague’s individuality while maximizing abilities and talents. If we can’t do that, it’s going to be harder for us to discover or create new business value.

Are there diversity and inclusion challenges that are unique to Fujitsu’s home country of Japan?

The idea of everyone working toward the same goal, almost exclusively speaking the same language and drawing on the same cultural references was very successful during the high economic growth period in Japan when productivity was the first priority. However, in this age of uncertainty when the traditional ways of thinking don’t always provide the answers, new perspectives and ideas are called for. Innovation requires different views and sensibilities. Then again, homogeneity in the workforce is not necessarily all bad. It’s useful sometimes to have everyone on the same page in case existing business values created by technology and related services need to be maintained and enhanced. So rather than choosing between uniformity and homogeneity, we should understand the merits of each and stay balanced.

From a more global perspective, though, Fujitsu has a wealth of relevant expertise and technologies, including its quantum-inspired Digital Annealer, Explainable AI, 5G and blockchain. And true to our purpose, we aim to leverage them all to help solve the problems afflicting society, which in the end will benefit our customers and stakeholders.

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7 BRIEFING

Briefing Opinions, analysis, trends and indicators on the future of digital technology

W Chan Kim and Renée MauborgneBoth professors of strategy and

international management at Insead business school, Fontainebleau, Kim and Mauborgne are experts in how companies can navigate uncharted waters. In 2017 they wrote their long-awaited follow-up to Blue Ocean Strategy, which has sold four million copies since its publication in 2004. Blue Ocean Shift: Beyond Competing provides a practical, step-by-step strategy development guide for any organization seeking to leave a mature, crowded market and find its own space.Follow at: @BlueOceanStrtgy

Amy Edmondson A Harvard Business School professor of leadership and

management, Edmondson is an expert on the human interactions that prompt businesses to make positive contributions to society. Her 2018 book, The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation and Growth, has been lauded as an invaluable guide for any enterprise that wants to flatten communication channels throughout its organization in order to improve transparency and drive innovation.Follow at: @AmyCEdmondson

Roger MartinEmeritus professor of strategic management at the University of

Toronto’s Rotman School of Management, Martin has focused much of his research on the problem-solving power of integrative thinking. This is the ability, which he has observed in numerous blue-chip CEOs, to consider two conflicting approaches and synthesize something that’s superior to either. It’s the central theme of Creating Great Choices, the 2017 book he co-wrote with fellow Rotman professor Jennifer Riel. Malcolm Gladwell called this “the rarest of business books that teaches decision-makers how to think, not what to think.”Follow at: @RogerLMartin

Yves Pigneur (pictured) and Alex Osterwalder Osterwalder (see ‘Big Thinker’, page 10)

co-founded the Strategyzer consultancy with Pigneur, honorary professor of management and information systems at the University of Lausanne, to introduce the world to the Business Model Canvas. This trademarked chart showing a set of nine interdependent “building blocks” — including key partners, value propositions and customer segments — has been used by more than five million organizations as a template to define, reaffirm and reset their business models. The tool was popularized by their 2010 bestseller Business Model Generation. Promising to build on that management classic for the digital age, their latest book, The Invincible Company, explains how organizations can reinvent themselves and remain resilient under even the most extreme disruptive pressure. Follow at: @AlexOsterwalder and @ypigneur

Rita McGrath Professor of strategy and innovation at Columbia Business

School, New York, McGrath is a globally recognized expert on business transformation. She wrote the 2013 bestseller The End of Competitive Advantage and 2019’s Seeing Around Corners, which explains how to detect — and take advantage of — disruptive inflection points before they occur.Follow at: @rgmcgrath

Meet the world’s most influential management gurusEvery two years, the global Thinkers50 awards rank the crème de la crème of business thought-leaders on the quality of their insights into leadership, strategy, innovation and the impact of digital. Here we profile the current top five.

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View the full ranking at thinkers50.com

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98 BRIEFING

igital transformation is high on the agenda of almost every organization, but new research by the Economist Intelligence Unit suggests that

successful outcomes are linked to an equally profound shift in working environments.

The survey of 200 senior executives from North America, Europe, Oceania and Japan, sponsored by tech partners Fujitsu and Citrix, makes it clear that organizations that remodel, re-equip and reskill their workforces are more likely to succeed at digital transformation. As Andrew Davis, head of strategy and growth for future workplace at Fujitsu, observes: the findings confirm “workforce and technology transformation share common objectives.”

cross the arc of history, the introduction of a revolutionary technology — such as the steam engine or the telephone — has

typically been followed by a long period of uncertainty and disruption, when societal, government and business forces work out the true value that new technology brings and the direction it should take.

According to Andreas Ekström, the digital revolution fueled by the internet is no exception — it’s just the chaotic period is a little faster. “There’s always been about 100 years of chaos when something revolutionary happens,” says the journalist, author and keynote speaker. “We think about 1995 as the starting year for the digital revolution because that’s when people really started to have internet in their own homes.” By his calculation, that puts us about halfway through a 40- to 50-year period of revolutionary uncertainty.

For Ekström, that upheaval currently manifests itself in three major ways: the geographical fragmentation of the internet (he points to China, Russia and even the EU as actors here), the dilution of trust in the information presented on the web, and the attempts by certain governments and business to abolish net neutrality.

As such, he argues, humankind is at an inflection point where it needs to shape the direction of the digital world it wants. The alternative, he says, will be the end of the free, open, borderless internet as we know it.

“The 2020s are going to be an incredibly exciting time to be alive,” he says. “But there are so many things that we have to figure out. Somehow, we need to define a truly global internet again. We need to look at freedom of speech, at freedom of commerce, at the civility of how we talk to each other online.

“So we need to do everything we can, at every level of all things digital, to create a

global internet again.” If we don’t, he says, business and governments will progressively take control of the channels and scope of the internet, which will break it down from “an ocean to a set of puddles” of online activity, each governed by separate rules.

What’s more, he argues, restoring trust in the online world requires a clearer characterization of what information is expertise-backed fact and what is simply opinion — as well as a new transparency from the big internet companies.

“There’s going to be a battle about what is true that’s going to apply to every field,” says Ekström. “If we’re going to build a digital world right — indeed, if we’re going to build all of society right — we need to trust true expertise.”

SEE & READ MORE tinyurl.com/andreas-ekstroem

LISTEN & READ MORE Download the full survey and listen to the related webinar here: tinyurl.com/WorkforceTransformation

Work in progress: Aligning workforce and business transformation

of senior executives say the objectives for both their digital and workforce transformations are intertwined.

say the same goals underpin both workforce and technology transformation initiatives.

Dual transformations

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Award-winning speaker, technology commentator and author Andreas Ekström highlights the threats to the integrity of the global internet and why it’s imperative to restore trust in the online world.

Rethinking the digital universe

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Employee resistance to change 38Lack of understanding of ‘ideal workforce’ 35Employment law/regulation 34Lack of a clear business case 30

What senior executives say are the most common barriers to workforce transformation:

The C-suite executives who are driving workforce transformation:

of executives cite investment in technology as a key strategy for

The challenges to transformation

Who’s leading the changes?

Key to success

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29 25 19 9 8 6CEO CIO/CTO HR chief CFO CDO COO

successful workforce transformation. Meanwhile 77% also believe investment in a workforce’s digital skills and increased salaries are vital.

ANDREAS EKSTRÖM ON…… BEING ACTIVISTS FOR DIGITAL“We look at all these things that we have to address, and maybe governments are going to take the lead or businesses are going to do it. But what I would want first of all [is] a Greta Thunberg for digital. That is the highest level of integrity I’ve seen in a person in I don’t know how long. I’d like to see that with digital. I’d like to hear people saying, ‘Stop, we’ve got to make sure that we get this right.’”

… HOLDING THE INTERNET GIANTS TO ACCOUNT“I’m going to ask one thing of them. Talk to us about the decisions you’re making [on internet content] and explain why. Because, congratulations Google, congratulations

Facebook, you were so incredibly good at what you did about organizing us and organizing the world’s information that you accidentally made yourselves editors of the world. Now please step forward and tell us what principles apply as you edit the world for us. Because without that discussion, we can’t get anywhere [on internet integrity].”

… OUR DIGITAL LEGACY “Ideally, we should be building digital environments (companies and societies) that will allow us to look in the mirror when we are retiring and say, ‘I did good for my company but I also did good for the global internet, and so for the democracy of the world.’”


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that process of business model regeneration just once. Companies, he argues, need to have the structures in place and the management mindsets formed that enable this model regeneration to be a repeatable and continuous process. That way, he says, companies can become not just inured to market challenges but invincible.

There is a growing number of companies already exploiting these new innovation structures. Osterwalder cites not just the tech-led giants of Amazon, Apple, Tesla, Microsoft and Airbnb, but less obvious ones such as Dollar Shave Club and Xerox.

“The reality is that business models are expiring faster than ever before,” he wrote in an open letter to business leaders. “The likelihood of a CEO managing a single business model through his or her tenure no longer exists. You have to invent the future, which requires systematically and continuously inventing business models. You not only have to be world class at executing and improving your current business model, but also world class at searching and inventing new business models for the future.”

The foundation for that is the development of an innovative culture. And in most mid-sized and large businesses today, that is either absent or, at best, a token effort — what Columbia Business School professor Rita McGrath calls “innovation theater.”

Osterwalder also likes to quote McGrath on what she learns when she requests access to the schedules of the CEOs with whom she consults, to see how much of their time is dedicated to innovation. “That’s a good indicator of whether a company is taking innovation seriously,” says Osterwalder. “Unless a CEO is devoting 20% to 40% of his or her time to innovation, they are not taking it seriously enough.

“The bandwidth of the leadership team to focus on innovation makes all the difference,” he says. “Money is rarely the problem; it’s really the senior leadership’s ability or willingness to commit. What’s primarily lacking in innovation today is an understanding of how it really works and the authority to make it happen.”

In an era of digital disruption, large companies are looking to reinvent their business models. But that is not enough to sustain success, says business model guru Alex Osterwalder. They must build innovation engines that can maintain a continuous flow of new value creation.

n the boardrooms of market-leading companies around the world, management teams are hotly debating an existential challenge: how to strengthen their organizations’ business models — or devise new ones — so that they can exploit

the opportunities presented by new, often digitally driven, market dynamics while withstanding the attack of nimbler entrants to their industries. And getting those models right will determine whether the incumbents of today’s boardrooms are able to sustain their companies’ leadership.

Alex Osterwalder, co-founder of consultancy Strategyzer, along with his colleague Yves Pigneur, professor of management information systems at the University of Lausanne, are widely regarded as the world’s leading thinkers on business model generation. Their book of the same name, published in 2010, has been the handbook of hundreds of thousands of executives. Indeed, the business model canvas it lays out — a framework of interdependent building blocks such as Key Partners, Value Propositions and Customer Segments — is said to be used by more than five million people as a template to define, reaffirm and reset their organizations’ business models.

But Osterwalder is in no doubt that in the decade since their bestseller appeared, the landscape has shifted. In the rapidly changing dynamics of today’s commercial world, it is not enough to go through

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“ COMPANIES NEED TO BE TRULY AMBIDEXTROUS: WORLD CLASS AT EXPLOITING BUSINESS PORTFOLIOS AND INNOVATION.”

The Invincible Company

The third major publication by

Alex Osterwalder and Yves Pigneur, published in April 2020, enhances

the methodologies of their 2010 management

classic, Business Model Generation,

for the digitally disrupted age. It covers the creation of

perpetual innovation portfolios, business model mechanics,

new growth engines, and more.

Business Model

Generation3.0

BIG THINKER

Osterwalder explains some of the dynamics he sees when consulting on companies’ innovation strategies.

Attempts to innovate will always come under attack from those running product lines that use budgets which could be diverted towards innovation projects. That’s because they naturally deliver greater and more immediate revenue than the embryonic products. “Unless there is the authority driving innovation projects, budget won’t be allocated and retained for them. Neither will these internal ‘venturers’ be allowed to go after established customers with their future products.

“Established corporations have all the assets required for world-class innovation — money, brand, customers, infrastructure, scale — but they often don’t give their internal venturers, their innovation teams, sufficient access to those assets.”

He suggests that power pyramid needs to be inverted. “For innovation to work, you need to start with small teams, of course. But in big companies, the larger the budget and the team, the greater the

perceived prestige of the executive. So there is a paradox when small teams that endeavor to innovate are perceived as having no prestige, when the reverse should be the case.”

BECOMING AMBIDEXTROUSBusinesses need a separation of power so that they can protect innovation, as projects can easily be killed off at their different stages of development

— for example, when ideas are first validated by management or when they are due to be scaled up.

In many cases, though, such a cultural change is difficult. Executives say they want their organization — or at least parts of it — to behave like a start-up, to be agile and move fast. But they are not structurally and culturally equipped to do so, says Osterwalder.

“So a company needs to become what business school academics describe as an ambidextrous organization: establishing a space to be world class at exploiting business opportunities, at managing their proven, existing business model portfolio; but also world class at innovating to create a pipeline of new ideas, some of which will become substantial growth engines. The trouble is that each of those needs a different culture, KPIs, skills and people.”

Being ambidextrous doesn’t necessarily lead to internal conflict. “So often leadership teams say things like ‘everybody in our company needs to be an innovator.’ But it’s a partnership. The existing business generates the cash for the future to be explored but the established business needs to accept that they aren’t the guys who will invent the future. So they also need to take the innovator seriously. That’s a hard thing to build under one roof, but establishing conditions for both to thrive is what great leadership teams do,” he says.

Osterwalder, who works with many of the world’s top management teams, including those at Mastercard, Fujitsu, SAP, 3M and Gore, cites several multinationals that are moving towards innovation-led business models in the vein of Amazon with pioneering innovation cultures, where they are investing in 40 to 80 innovation teams per year.

Such teams explore ideas for two to three months to build evidence for a potential product, talking to customers about the business value that the innovation might create, he says. And in about 30% to 40% of cases, that is followed up with investment.“The others may have technically failed, but they’ve failed cheaply and quickly,” says Osterwalder. “And

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“ BUSINESS MODELS TODAY ARE LIKE YOGURT. THEIR SHELF LIFE IS SHORT AND GETTING SHORTER.”

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it’s important that the senior executives in those companies, who understand that it’s extremely hard to get from idea to real business, then tell these innovation groups that they haven’t failed but should appreciate that it’s an exploration journey that is part of the business model.”

CREATING AN INNOVATION ENGINEThere is a big difference between finding the ‘next big thing ’ — the successful follow-on to a company’s earlier innovations — and creating an innovation business model and culture that provide a sustainable series of landmark innovations.

“When companies feel secure in the belief that they have found the next big thing, they’re the opposite of invincible. Today, Amazon is a great example of an ‘invincible company.’ Just look at the attitude of CEO Jeff Bezos, who says outright that Amazon is destined to ‘go bankrupt and fail.’ If you aren’t committed to continuously innovate while you’re successful, then the end is inevitable and on the horizon.

“Most companies think that once they are successful they can relax. It’s the contrary. That’s just when you can’t afford to be complacent. As soon as you do that, you run the risk of being disrupted. In the case of Amazon, which I’d regard as being at the top of its game, it’s now showing itself as a serial innovator.”

Amazon, of course, has the revenue stream and investment capital to do so. “It’s the right moment to invest in innovation. So it’s not about the next big thing; it’s about creating that innovation engine. It is about continuous exploration. That is why we really need to create those ambidextrous organizations, because it isn’t about finding this or that next business model; it’s about finding it again and again and again.”

PERISHABLE BUSINESS MODELSBut those don’t all have to be blockbuster business models capable of dominating an industry for decades, as in previous industrial eras.

“That’s the big change. It’s why many of the CEOs from the previous couple of decades, who relied on business models that had a long shelf life, aren’t well equipped for the future,” says Osterwalder. “In fact, business models today are like yogurt: they have a fast-approaching expiry date. So if their shelf life is short and getting shorter, a company just has to accept that it needs to continuously reinvent itself.”

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Find out more at: www.fujitsu.com/vision

Human Centric Innovation

Driving a Trusted Future

FujitsuTechnology and Service Vision2020

The Fujitsu Technology and Service Vision sets out our future vision for societyand our approach to making this a reality.This is where you can find our thinking on how you can use technologyto create business and social innovation.

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One of the toughest items on every CIO’s ‘to-do’ list is ensuring their organization has the necessary digital

capability to meet the growing demands of the 21st century. Here’s how three businesses from

around the world are leading the way…

THE D IG ITAL

TRANSFORMATION AGENDA

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Following its acquisition by Coca-Cola, Costa Coffee has been rapidly building a new IT function capable of scaling up its retail operations globally. CIO Phil Scully outlines the unique prospect.

Brewing a fresh digital blend

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resource, it has taken with it a bedrock of customer-facing platforms that were developed and deployed in the build-up to its spin-off.

Since Scully took over as CIO three years ago, Costa Coffee has taken huge strides in digital transformation. The majority of that progress has focused on enhancing customer and in-store capabilities, he highlights. “We’ve built a strong click-and-collect offering, a new web platform, a new loyalty platform and mobile app, and supported a unified customer view with a complete renovation of integration and middleware,” he outlines.

He cites just one example of how these capabilities are already unlocking customer value. “We connected our loyalty scheme to our Costa Express machines so customers can now use that across both stores and the machines. But it also gives us good visibility into sales transactions, movement between machines and stores and more.”

THE COCA-COLA CHALLENGEAs Costa Coffee takes hold of its own IT destiny, the pressure will be on to build an advanced digital capability that will drive Coca-Cola’s and Costa Coffee’s ambitions in the coffee sector, where Costa Coffee already commands a base of almost 4,000 retail outlets in 32 countries (including close to 2,500 in the UK and 500 in China).

And cloud IT will be a critical element. “We will move completely from a physical data center into the cloud — a big step that will unlock opportunities such as fully upgrading our ERP,” says Scully. “My remit is to enable the business to be as big and as multi-channel as it wants to be — and that will include more stores and machines, new countries and territories.”

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P hil Scully has the kind of opportunity that most CIOs can only dream of. The CIO of UK-headquartered Costa Coffee, the world’s second-largest coffee retail chain, has the chance to create an IT organization

— and its technology estate — afresh, swapping legacy IT for new platforms, applications and a ramped-up talent base.

For that, he can thank Coca-Cola. The beverage giant’s £3.9 billion ($4.9bn) acquisition of Costa Coffee from British hospitality group Whitbread (completed in January 2019), is part of Coca-Cola’s strategy to build a global coffee brand that will rival the ubiquitous Starbucks. And to do so it has not only set up Costa Coffee as a distinct entity but is investing in a new foundation of digital platforms to fuel its ambition.

“It’s as close to a greenfield IT opportunity as you’ll ever get,” says Scully, “a rare opportunity that I’m hugely privileged to be able to take.”

Rather than integrate with Coca-Cola’s IT, Costa Coffee will connect to it. “As a separate business we’ll have our own systems, which means we’re in the process of standing up our own enterprise systems, support, security and everything else.”

MAKING THE TRANSITIONBefore it gets there, though, Costa Coffee needs to work through a short-term transition — with some inevitable frustrations for an organization keen to move quickly. To ensure a degree of continuity, for the remainder of this year the company will continue to draw on the systems it shares with its former parent, Whitbread, under a series of technology service agreements (TSAs) for HR, ERP, supply chain and other core systems. But alongside that legacy

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Noting Coca-Cola’s heritage in vending machines, Scully says automation and coffee machines are a key element of that. Costa Coffee already has 11,000 machines in operation globally, with immediate plans to add another 1,200. And those are already a rich source of customer data. “Our Costa Express machines are all connected and feed into a data lake. That’s unlocking insight and giving us a huge opportunity to apply next-generation technologies [such as AI and IoT].”

Costa Coffee’s clean sheet is also enabling it to set a new approach for the IT organization. “We aren’t even halfway through the journey of defi ning our culture and our ways of working,” he says, pointing to how he’s had to defi ne and build a security function from scratch.

That sense of new beginnings is changing the culture of the whole business — not just IT. “I think of us now as a really big start-up. There’s now the edge, energy, enthusiasm and ambition that you’d fi nd in a start-up. Indeed, we have to have that mentality if we want to achieve the ambitions we have.”

“MY REMIT IS TO ENABLE THE BUSINESS TO BE AS BIG AND AS MULTI-CHANNEL AS IT WANTS TO BE”

This manifests itself in several areas. “We now have a fl at organization that allows decisions to move at pace right across the business,” he says. There’s also a ‘fail-fast’ attitude: “With so many different things going on, we’re not afraid to try things and then wind them back if they don’t work out.”

FUTURE BLENDSo how will the Costa Coffee IT operation look in a few years’ time? Scully sees it as an engine for value for both the customer and the business.

“From a customer perspective, Costa Coffee’s products will be much more accessible — wherever you are, wherever you want them. That’s hugely exciting for everybody here as our digital technology will make buying coffee a far faster, more frictionless customer experience with easier payment services, reduced queuing times and our ability to recognize loyal customers.”

At a business level, “Costa Coffee’s data will be democratized and business more automated, with capabilities in the places where our people need them. That will free up time in our operations to focus on our customers and our coffee rather than on things like manual stock counts and checks,” he says.

Strategically, it will also see the IT group enabling a truly global coffee retailer. “Coca-Cola is a hugely ambitious company; you don’t spend $5 billion on a business to let it stand still. We have fabulous support not just from the CEO for Costa Coffee but also all the way up through the Coca-Cola organization; they understand the importance of technology in taking a business globally and are hugely supportive of our mission and the need for technology to be part of it.”

And that means constantly adapting. “Every retailer, every consumer goods business today is driven by customer choice and speed of service, brand loyalty and an absolute need for convenience. There is a lot of technology underneath that customer service, whether that’s a mobile app, artifi cial intelligence, personalization or facial recognition.

“And we’re always going to be transforming to take advantage of technologies that will get us the right mix of quality and convenience for our customer.”

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Finland’s Wärtsilä is driving a sustainability revolution in the marine and energy sectors. Its CIO, Jukka Kumpulainen, highlights the journey from engine-maker to a smart technology company with digitally empowered solutions.

Evolving for a smart, sustainable future

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J ukka Kumpulainen, the CIO of Wärtsilä, jokes that he works for the biggest company you’ve never heard of. But, as he highlights, the Finnish power plant and shipping systems specialist aims to be recognized as leading

a smart technologies revolution in the energy and marine industries that will have a major, positive impact on environmental sustainability.

With annual revenues of around €5 billion ($5.43bn) and 19,000 employees globally, Wärtsilä in recent years has looked to apply digital innovation to improve the efficiency and sustainability of marine transportation and power generation. The emphasis on smart, data-led technologies is relatively new, but the company is no stranger to business model transformation.

Formed in 1834, Wärtsilä has its origins as an operator of sawmills and ironworks; by the mid-20th century it had switched to making diesel and gas engines before it extended its reach into ship propulsion, power and automation systems.

Now with its business transformation to smart technologies underway, its stated ambition is to create a brighter outlook for both the company and the planet by pursuing a Smart Marine Ecosystem and a “100% renewable energy future.”

Kumpulainen says that evolution in the company’s business model is crucial. “We need to be able to move into new areas. So a major transformation is needed,” he says. Hence the shift of emphasis from industrial engineering to data-driven technologies that sense, manage and enhance the performance and efficiency of marine and energy hardware.

Fast-changing global markets are another driver for this transition. With new competitors emerging around the world, Wärtsilä feels the need to disrupt its existing business model before it is itself disrupted. Environmental factors are also playing a big part in that thinking — rather than being known for its engines, for example, the organization would prefer to be famous for applying its deep expertise to

The power of data: “Enabling sustainable societies with smart tech is a purpose everyone can buy into”


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“I believe the future will involve very different kinds of energy sources: there will be solar and other renewables, while gasoline and gas will continue to play a role — and hybrids of those,” says Kumpulainen. “Alongside, energy-storage systems will be crucial. So, there’s a lot of information that we need to combine in order to optimize energy use.”

His team’s role is not only to build and run the technology that underpins Wärtsilä’s advanced analytics; it’s also to ensure the company has the right environment for agility and innovation — for which it looks to a trusted partner. In November 2019, Wärtsilä signed a global digital workplace and managed infrastructure services agreement with Fujitsu. As well as delivering an innovative, fl exible working environment, the implementation will support Wärtsilä’s digital transformation, drawing on Fujitsu’s expertise in multi-cloud and hybrid IT.

Kumpulainen says he looks for partners that have innovation in their DNA and who feed that into their customers’ business. But he believes in bringing together a broad ecosystem of talent: internal teams, smart start-ups and trusted, big-name vendors.

GAME-CHANGING TECHWhen it comes to the implementation of emerging technology, Kumpulainen sees machine learning, artifi cial intelligence and blockchain all playing a big role at Wärtsilä. He says many of the new business models the fi rm is looking to create will be about using and analyzing data to make predictions and create scenarios.

Yet technology does not exist in an isolated box. Kumpulainen says business and digital transformation are intertwined. He says the companies that develop a competitive edge in the future will be those that place an emphasis on the importance of driving change in both areas simultaneously.

“Technological development is enabling everything,” says Kumpulainen. “It’s about supporting new revenue models to create new businesses and other opportunities but it is also about how we utilize technology to change and improve our own business processes and makethem more effi cient.”

He says a key challenge associated with this continuous reinvention is one of culture: Wärtsilä must ensure its employees remain motivated and engaged as the company shifts its emphasis.

“The cultural part is about building a basis for change,” he says. “You have to think about how to transfer 19,000 employees to a new way of working — and it’s defi nitely a journey. I believe that in terms of technological change — either transforming the core or creating new business models — you won’t be successful in the long term if you don’t build the right culture.”

making a difference to the future of the planet, says Kumpulainen. “When you’re part of a company that is on a journey to make the whole world a better place, enabling sustainable societies with smart technology, that’s a purpose that everyone can buy into,” says Kumpulainen. He details how that looks in practice in two key areas of Wärtsilä’s operations.

DATA-DRIVEN SHIPPINGThe marine business now sees its remit as providing innovative products and integrated solutions — all digitally enabled and data-led — that are safe, sustainable and economically sound. By aggregating and analyzing data from customers’ operational activities it seeks to minimize waste and boost effi ciency. This enables its teams to help customers make better decisions about the optimal movement of their ships around the world.

“Take the example of a cargo ship that’s carrying bananas. We might suggest the vessel takes a slightly longer route to avoid warmer sea areas. That approach can be more cost-effi cient as the client can save energy by not having to make extensive use of cooling systems for the fruit,” he says.

Wärtsilä’s energy business, meanwhile, is driving the company’s push towards a 100% renewable energy future by creating optimal power systems. These include power plants based on fl exible engines (capable of running with multiple fuel types), hybrid solar power plants and energy-storage solutions.

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Aircraft maintenance company Lufthansa Technik Philippines is accelerating its digital transformation by blending private and public cloud services. Dr Roberto Asuncion, vice president for information technology, charts the course.

T he center of gravity for the global aviation industry is moving east. Figures from the International Air Transport Association (IATA) show the rate of growth in demand for air travel in Asia Pacific has been

massively outstripping that in Europe and North America. That pattern is set to continue, with China due to overtake the US as the world’s number one source of passengers within five years.

This growth is creating huge potential for companies which provide airlines with maintenance, repair and overhaul (MRO) services, such as Lufthansa Technik Philippines, Inc. (LTP), a joint venture between Germany’s Lufthansa Technik AG and the Philippines’ MacroAsia Corporation. Founded in 2000 and with its main hub in the Philippines’ capital, Manila, LTP is well-positioned to ride the rising demand curve in the region.

However, as Dr Roberto Asuncion, LTP’s VP of IT observes, the winners in that highly competitive field will be companies that aggressively exploit advanced technologies and services to dramatically optimize the efficiency of their operations, keep costs in check and automate processes.

DIGITAL BUSINESS AGENDAThat prospect has sent LTP on a digital transformation journey that encompasses the application of hybrid cloud and an array of digital innovations — from robotic process automation to AI and predictive analytics.

But the primary goal is hyper-efficiency. MRO is largely driven by aircraft turnaround times, highlights Asuncion. “Each day a plane is on the ground, the airline is not making money on it. So we want to do the repair or maintenance in the quickest

time possible — always, of course, in line with set production and regulatory standards,” he says. “Today, aviation MRO is still a labor-intensive activity and a very highly regulated one, which can make digital transformation very challenging. What we are pushing for now — supported by our parent company in Germany — is to use all these available technologies to improve efficiency,” he says.

LTP started on that digital transformation journey in mid-2017, largely on the initiative of the IT organization. But the driving force behind that has been shifting to the business, Asuncion says.

“Digital transformation is not really an IT project. It has to come from the business and that really requires an internal mindset change. In the past, when you attached ‘digital’ to any initiative, business would always see it as IT’s job to deliver on it and any related issues as something IT needs to solve. So the challenge on the digital transformation journey is to shape the mindset of everybody, to ready them to accept different technologies, to embrace new ways of doing things, new ways of thinking. Not just senior management but right across the 3,200-employee organization. What we really want is to drive a new digital culture.”

LTP’s digital transformation journey is being driven by the need to stay ahead of the competition. “There is fierce MRO industry competition in Asia and significant disruption driven by new technology,” says Asuncion. Indeed, some airlines even see advances in technology as the means by which they can take the MRO function in-house. “So our choice of technology — and technology partners — to drive the business is very important. We want to be the

Setting a hybrid IT flight path to transformation

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LTP is looking to blend its new private cloud with a set of public cloud applications it plans to use for less sensitive applications. “We want to move things slowly to the cloud. As we are in a highly regulated industry, we want to do it in a way that will secure the approval of the various regulatory agencies. It also means aligning ourselves with the head offi ce strategy of Lufthansa Technik.”

Asuncion says that the IT organization has also become more cost-effective as a result of the move to managed services. “Aside from infrastructure and systems management, we no longer have to invest a lot in training our people to maintain those areas because we already have the assistance of our partners. This makes it possible for me to move people to other, more exciting lines of work dealing with technologies involving analytics, artifi cial intelligence and the internet of things.”

The new digital culture is showing the value to the business too. “It’s always essential to ask yourself, ‘Why is this valuable to the business?’ when you’re getting into any new technology change,” says Asuncion. “It’s really important we ask ourselves, ‘Why?’ and then the how, the what and the when come [easily]. For me it’s really closely tied to the business vision.”

And that vision is not without ambition. “LTP wants to become the MRO of fi rst choice in Asia,” says Asuncion. “So we are really focused on how we will be able to provide the appropriate technologies to support the vision.”

industry leader, capable of exploiting new business-advancing technology better than any other organization — not just in Asia but in the world.”

New approaches on how the IT organization delivers its services are constantly helping to fuel those ambitions.

In 2018, LTP rethought its traditional model for running all its own technology infrastructure and development in-house, instead choosing to work with hosting and managed-services companies to create a hybrid IT model that blends private and public cloud services with existing systems. The goal was not just greater effi ciency and reliability but also to free up resources in the IT group to concentrate on exploiting the array of emerging new technologies. “The thinking was that we needed to be more strategic,” says Asuncion. “We were concerned we wouldn’t keep pace with the potential for new technologies if we were so busy doing our own daily operational IT.”

The new approach involved partnering with digital transformation company Fujitsu for infrastructure and platform services. From an on-premise private cloud, Fujitsu now manages a platform that hosts LTP’s main e-MRO system from specialist software company TRAX and core SAP applications, providing those as a hosted service. Fujitsu also provides off-site disaster recovery for its TRAX system through an Oracle Public Cloud for DR platform in the US.

SKY-HIGH BENEFITSThe advantages of the move extend beyond raising the LTP IT group’s ability to focus on strategic IT: it has also boosted system reliability.

And reliability is inseparable from the number one priority in aircraft MRO: safety. “For our main MRO system even an hour’s downtime is very serious because our mechanics and planners can lose sight of the whole picture of operations and production and then it becomes a safety issue. We want to make sure that the planes that we maintain and repair are given back to the airlines in a very safe condition, and reliability of IT is key to that,” he says.

The move to the platform- and infrastructure-as-a-service models is showing other gains. “We’ve been able to increase our service levels internally to 99.96% for the main MRO system,” says Asuncion.

“THE CHALLENGE IS TO SHAPE THE MINDSET OF EVERYBODY… WHAT WE WANT IS TO DRIVE A NEW DIGITAL CULTURE”

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JOACHIM BOX Global head of Fujitsu’s Co-creation Program

Decision-makers everywhere want to accelerate the transformation of their organizations, whether to deliver compelling new value to stakeholders, disrupt markets or reinforce resilience. We look at a unique approach with its origins in Japan — FUJITSU Human Centric Experience Design — which combines co-creation with design expertise to help executives turn their digitally inspired strategic aims into reality.

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of business decision-makers and those who ‘own this problem’ together with our best technologists and domain experts, for an intensive series of short and focused work sessions. Essentially, people who know the issues but who are coming at them from diverse backgrounds, experiences and points of view in a highly creative space — either physical or, more recently, virtual — helped by powerful digital tools that inspire teams to co-create at real pace. Together we work towards a clear purpose of achieving a business impact as quickly as possible, often harnessing the latest technologies but always taking a human-centered view to the application of those.”

The FUJITSU HXD approach did not emerge out of nowhere. It was created in 2011 by Fujitsu design experts in Japan and has been continuously refined ever since. Thousands of customer engagements across the globe, such as with Japanese architecture, engineering and construction company Takenaka Corp, have attested to its potency. Most recently, Takenaka has leveraged it as part of its collaboration with Mercedes-Benz Japan to design EQ House, a futuristic structure that explores the inter-relationship between people, smart homes and connected cars.

NEW STYLE OF COLLABORATIONWhat might seem unfamiliar to many customers used to PowerPoint pitches of ‘solutions’ is that FUJITSU HXD is essentially not a selling set-up. For Box, that talks to the maturing of the relationships between vendors, their partners and customers.

“Over the past few years, there has been an evolution in how — and where — we engage with our customers and partners,” he says. Co-creation sessions could take place at one of Fujitsu’s purpose-built Digital Transformation Centers around the globe; they might be through an ‘on-the-road’ co-creation service at the customer’s offices, or at an inspiring off-site location.

Or, indeed, as adopted more recently, they might be a virtual grouping, where participants immerse themselves as an avatar in the collaborative experience. This can be even more effective than the physical setting, says Box. “Participants adopt avatars designed to look very simple and similar to intentionally democratize the ideas process and encourage the widest possible engagement; to flatten

23 DESIGNING THE FUTURE

limate change, the rise of AI, diversity and inclusion challenges, the coronavirus crisis — executives across all

industries are looking intensely at how to ensure their organizations thrive in societies experiencing waves of profound change and unexpected disruptive events.

In many cases, the opportunities to drive success presented by fast-maturing transformative technologies such as AI, big data, IoT and blockchain are overwhelming when not connected to a clear purpose. They may fuel streams of bright ideas from across the organization but often with no structured way — or creative thinking space — to turn those into reality. Indeed, according to consultancy McKinsey, 70% of all digital transformation initiatives either stall or fail to reach their goals.

What’s clear is that some approaches to delivering digital transformation are more effective than others. One that is producing standout results — and is much lauded by participants — has been pioneered by global tech company Fujitsu.

The FUJITSU Human Centric Experience Design (FUJITSU HXD) approach centers on purpose-driven, immersive co-creation sessions — journeys with customers and partners that combine the synaptic energy of design thinking techniques with a focus on delivering solutions to real-world problems in the context of digital.

UNDERPINNINGS OF SUCCESSAs global head of the Fujitsu Co-creation Program, Joachim Box describes FUJITSU HXD as a strategic design approach as ambitious in its goals as it is innovative in its execution. “It was specifically developed to enable senior leaders to harness the power of digital to deliver benefits to people in business and society,” he says. “We create a unique space and experience where all parties are committed to making an impact, in a spirit of mutual collaboration, trust and intimacy.”

FUJITSU HXD is built on three pillars, he explains. “We take a customer’s business-critical issue — something really important to them, now. We bring their line

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HELPING KONGSBERG TO MEET A REGULATORY CHALLENGEDriven by the International Maritime Organization’s 2020 moratorium on the use of high-sulfur fuel oil in shipping, maritime services company Kongsberg was under pressure to deploy a fuel and route optimization solution that would help it make a shift to less polluting fuels.

Using the unique FUJITSU Human Centric Experience Design (FUJITSU HXD) methodology, a Kongsberg and Fujitsu co-creation team defined the project, scoped the objectives and worked out how to deliver them — over the course of just two days.

The parameters: the solution would have to be best-in-class to meet Kongsberg’s sustainability goals, and suitably user-friendly to appeal to crew members and employees. And all this without requiring elaborate ship re-engineering or major expenditure by ship-owners and operators.

Day one of the FUJITSU HXD process was devoted to solving the fuel and route optimization challenge; day two, the need for an on-board ‘data center’ and satellite connectivity to power a decision dashboard for ships’ captains and fleet owners.

Less than six months later, the solution was implemented — an AI-powered fuel and route optimization web service that helps ship-owners meet the low-sulfur regulations and reduces greenhouse gas emissions. The AI engine constantly learns from the navigational strategies of captains and ship performance and combines those with meteorological and hydrographic data to recommend energy-efficient routes.

“Kongsberg was attracted by the fast-track nature of the FUJITSU HXD approach,” says Joachim Box, the global head of Fujitsu’s Co-creation Program. “It grasped that bringing its stakeholders together with Fujitsu experts would focus thinking and speed decisions.”

TRANSFORMING THE WEB CUSTOMER EXPERIENCE AT CFL As every retailer knows, great customer experiences drive customer satisfaction, more sales and repeat business.

So when Luxembourg’s national rail service, CFL, recognized that the age of its customer-facing websites was impacting customer experience (CX) — for both rail passengers and freight customers — it embarked on a broad program to redesign its web presence.

From the project’s early stages, CFL’s chosen partners of Fujitsu and CX specialist Nvision engaged with the train operator using a co-creation approach based on design thinking principles.

Over a series of highly creative sessions, the partners defined the most compelling structure and content mix for the sites, setting a common graphical mood and identifying essential user features.

The result was a visually compelling, user-friendly and feature-rich new Voyageurs consumer site, where the purchase of tickets is streamlined and information on timetables, fares and so on is available through an intuitive portal.

In parallel, the new freight website was designed to enable transport and logistics professionals to create quotes online, to build customized solutions and to easily connect with advisors. For CFL, that translates into enhanced operational efficiency and competitiveness.

The outcome, says Christian Kettmann, CFL’s CIO, is an “increase in customer satisfaction and retention. The improved freight portal positions CFL ideally in the competitive logistics market; and travelers are enjoying a significant reduction in ticket-purchase times.”

As the project partners acknowledged, much of that success can be traced back to the use of the co-creation approach.

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hierarchies and reduce issues such as gender bias. The virtual environment enhances the ability to make sure everyone’s voice is heard and everyone is hands-on in the design of the solution. In all cases, though, we’ve tried to create a neutral environment which is as much about the people in it as the logo on their badge, and certainly not about demo-ing technology.”

To generate both energy and intimacy, such sessions are held in small teams where participants are carefully selected to bring the diversity of expertise, perspectives and seniority required to drive transformational outcomes. The emphasis is on ensuring a range of relevant voices — both senior and not so senior. On the customer side, that might mean people who can view a problem from the perspective of those it impacts — be that customers, citizens or internal users. From Fujitsu, it might involve a sector-specific CTO, a solutions architect and an expert in a technology of particular relevance to the challenge. Increasingly, participants are seeing the benefit of including experts from partner organizations and academia to bring additional insights.

“We use well-crafted tools and techniques to bring the best out of each individual and to be able to work at real pace. The unique environments feature digital collaboration tools, including 800 unique inspiration cards that Fujitsu has designed to accelerate the ideation process,” says Box.

The focus is always on purposeful outcomes — as teams who have been through the sessions will testify. Aside from rail operator CFL and shipping company Kongsberg (see right), examples include the UK Environment Agency (where co-creation spurred a multi- channel flood-warning system), the New South Wales Office of Environment and Heritage (which found a way of monitoring wild plants under threat of extinction) and charity Autistica (which resulted in a platform to help autistic people deal with sensory issues).

So why is FUJITSU HXD encouraging so many senior decision-makers to come to the table? “It’s a smart investment of time because they are working with experts on initiatives that are aligned with the big decisions they have on their horizon,” says Box.

• Find out more here: fujitsu.com/cocreating-program

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XX DIGITAL TRANSFORMATION

HOW CAN CISOs DEMONSTRATE THE BUSINESS IMPACT OF THEIR STRATEGIES?BRIAN HINTZE: On the surface our impact as security heads is often perceived as negative. Security is a cost of doing business, so the function is not generally seen as an enabler. By implementing certain controls, I may actually be making it a bit harder for the business to accomplish its goals. It’s certainly hard to demonstrate the positive impact in some cases.

On the other hand, at least every week I’ll receive a request for proposal from a potential customer, or a security questionnaire from an existing customer, wanting to understand how we’re protecting their data and our network connections to them. If we can’t meet their requirements, we may lose that business.

BECKY PINKARD: Identifying, highlighting and mitigating risks aligned with the business’s objectives is the best way to show our impact. The next question is: are quantitative or qualitative metrics better? The answer is that it depends on the business, the tools you have and your ability to produce the information required.

Once seen as a barrier to innovation, chief information security officers (CISOs) are increasingly showing how they can help their organizations to achieve strategic goals. Here, our panel of leaders explain how they are focusing not only on ensuring security but also proving its commercial value.

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TECHNOLOGY FOCUS

BRIAN HINTZE Director of cybersecurity, Fujitsu Network Communications

BECKY PINKARD CISO, Aldermore Bank

PAUL WATTS CISO (UK & Ireland), Domino’s Pizza Group

MEET OUR PANEL THE BUSINESS VALUE OF SECURITY

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DIGITAL TRANSFORMATION 27

“THE MOST EFFECTIVE CISOs WORK WITH THE BUSINESS TO IDENTIFY SOLUTIONS”

You don’t want to end up with a beautiful set of quantifiable metrics that take hours to update each month, for example.

PAUL WATTS: The short answer is: don’t talk about impact purely in the context of risk reduction and compliance.

A CISO can’t run an effective strategy without demonstrating its relationship to business outcomes, be they tactical or strategic. To appreciate security as a business-enabling capability, boards need to recognize the benefits of a security strategy from several angles.

Taking finance as the most obvious, a strategy of cost control and revenue growth would translate to a security strategy that delivers cost reductions (or at least good cost control) while controlling risks effectively.

A positive impact from the perspective of consumers would be the ability to show them how the business continues to protect their interests while innovating and minimizing friction in the customer journey — which is particularly important in ecommerce and retail. For that, you’d use customer satisfaction, retention and revenue generation as the measures.

The same can be said in the case of your internal ‘customers.’ You need to show them how processes can be further protected, balanced against friction and complexity, through continuous improvement and effective collaboration with the business.

This is becoming more critical in order for CISOs to demonstrate the benefits of their function.

IS CALCULATING THE ROI OF SECURITY REALISTIC? DO BOARDS EXPECT THAT?HINTZE: Although I’ve never actually had to calculate an ROI for a security project here, there are certainly some models for doing so. But it’s challenging, because ultimately it comes down to an educated guess — what’s the percentage risk that you are going to have a security breach? Being able to defend such numbers in front of a business leader is always tough.

PINKARD: You hear a lot about ROSI (return on security investment) but seldom see it expressed quantitatively. The closest I’ve seen is taking the average industry reported cost per breach, for example, applying that against the cost of a new anti-phishing solution and, after deployment, describing trend lines against inbound volumes.

WATTS: There is a shift towards that expectation of calculating ROI. Measuring an empirical ROI for a holistic security program is still rather challenging, but a good place to start for now is the ability to demonstrate that it is helping the business to achieve its goals.

CAN CISOs DEMONSTRATE THAT THEIR SECURITY PROGRAMS ARE ENABLERS RATHER THAN BARRIERS?HINTZE: I definitely think so. Many a time we’ve had to connect to a customer who

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HOW DO YOU PRESENT SECURITY OBJECTIVES TO THE REST OF THE BUSINESS?BRIAN HINTZE: Reputational protection plays a role in that. We will look at projects where we store certain types of customer data or have access to it and think about the risk if we were to lose control of it. As an IT services provider, we’re expected to be able to deliver our services in a highly secure manner. If we’re storing personally identifi able information and an attacker steals it from us, the reputational damage would be extreme.

That kind of breach would certainly leave questions in potential customers’ minds about whether or not they want us to provide their cybersecurity services. If we fall short, we’re going to lose their business.

BECKY PINKARD: As security becomes ever more integrated and mandatory for successfully running a business, leaders are looking to map expectations and desired outcomes in a way that makes sense to the board and the shareholders. This means moving away from the FUD (fear, uncertainty and doubt) messaging that security has grown up on, and maturing into the language of business.

PAUL WATTS: I think there’s a trend away from focusing on risk and control alone towards aligning with business performance indicators. That said, there’s still a place for more traditional

KPIs regarding security operations and risk management — just not necessarily aimed at the board.

DO CISOs NEED TO TRANSLATE THEIR DATA AND ADAPT THEIR LANGUAGE TO BE UNDERSTOOD BY BUSINESS LEADERS?HINTZE: I do think we need to tailor our language to the audience, but it can be a struggle — and I know other CISOs struggle with this a bit too. We compile monthly reports around enterprise security intelligence metrics. Our experts do look at them but even they can have a diffi cult time understanding what the data is saying.

PINKARD: As security continues to mature from a very tactical, response-driven engagement type to one that is more proactive and strategic, CISOs are also working on maturing their delivery style. The challenge is doing this at the same pace as the ever-evolving threat landscape, using language that makes sense to the business while leading their (generally) resource-lean teams. Short answer: it’s a work in progress.

WATTS: CISOs recognize that telling their board that they stopped 100 phishing incidents is great, but answering the “so what?” question in terms of the impact on the business is a much better story to tell.

Download this free Forrester Research report on aligning cybersecurity capabilities with business outcomes: tinyurl.com/security-value

BUILDING A CONSENSUSThe role of key metrics in highlighting the benefi ts of security to other business leaders

is an IT service provider and do this in a way that meets its requirements. If we can’t provide a secure solution, we won’t be able to meet the customer’s needs and we’ll therefore have problems, be they contractual or reputational.

There’s almost always a solution, but it may take us two or three months to provide it. That’s when it looks as if we’re a barrier. We need to talk to the people involved in projects and be part of the planning, instead of coming in at the end after a contract has been signed and we’ve been backed into a corner.

It’s also important that we can talk to business leaders not only about current projects but also about where the organization is going. What are they trying to accomplish in the future? If I understand what they want to do — where they think the business will be in six, 12, 18 months — I can prepare. That way, when that project comes on board and they sign the agreement with a customer, I’m ready to go. I can make it really quick for us to be able to work with the customer, which in itself can give the business an advantage.

PINKARD: It’s certainly possible to show security is not just a barrier. And you need people in your team who believe it is an enabler and who can speak in a language that the business understands.

WATTS: The best way to prove it is by driving cultural change over the longer term. At the Domino’s Pizza Group I have worked closely with our CIO and leaders in the broader business to promote the ideology of ‘shift left.’ That has entailed moving security to the earliest stage of a project and shedding the ‘accredit and regulate’ persona that the function once had — or the notion of the security team as ‘the fun police,’ as it was once described to me.

The most effective CISOs are those who work with the business to identify potential solutions, with pros and cons, enabling it to make informed decisions rather than inhibiting innovation and business development. When word spreads, it’s amazing how quickly it breaks down traditional barriers to engagement. My life is much easier when someone starts a conversation with me by saying “I’m thinking about doing…” instead of “I’ve gone and purchased…”

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Dominique Pardo, head of Global IT Services at Total, highlights the pivotal role that digital teams are playing in the energy giant’s metamorphosis.

any corporations today like to talk about ‘business transformation,’ when in reality a large number are doing little more than making tactical adjustments around the edges of their business models. However,

if you’re an energy player at the level of Total, the world’s sixth-largest oil and gas company, superficial change is simply not an option.

The French giant, whose sales hit $200 billion in 2019, fully recognizes the business and environmental imperatives that require a dramatic shift away from its traditional carbon-intensive fuel sources towards cleaner, more sustainable energy. And underpinning that fundamental metamorphosis is a far-reaching digital transformation program.

“The group’s purpose is to provide the cleanest, most affordable energy possible to the largest number of people on the planet,” states Dominique Pardo, president of Total Global IT Services, the company’s 5,000-strong tech subsidiary. “Digital

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technology is a lever for [business] transformation and we are investing to transform our group.” This involves supporting a growing focus on developing renewable and low-carbon energy sources, he explains — with each new area of operations the equivalent of absorbing a new business into the existing organization.

“For us, our ‘energy transition’ has already begun,” says Pardo. That spans the production of low-carbon electricity from gas, the construction of solar power plants and wind farms, the capture, storage and recovery of CO2, and the creation of natural carbon sinks such as forests or wetlands. “These are major transformations, since we are creating/acquiring new businesses and gradually integrating them,” he says.

DRIVING THE CHANGENone of this could succeed without the digital transformation that is happening in parallel, Pardo stresses. “We have made a lot of progress in our digital activities,” he says. “And we are providing all the IT building blocks that are necessary to do this [transformation].” IT may have been an essential component in business for the past half century, but now as a lever for business transformation “it is becoming increasingly essential.”

Pardo cites several major initiatives that are helping to drive the pace of business change. “We have set up a research center that leverages digital technology. We have a program called Refinery 4.0. And we are creating a ‘digital factory’ as a means to accelerate the spread of digital capabilities within Total’s multiple businesses,” he says.

The challenge with digital is not necessarily a technological one, he emphasizes. Instead, it lies in how well the business units can adopt and absorb digital innovation — which is where the digital factory can help. And ultimately, it is

a transformation in the way that digital is applied that will enable improvements in business performance, he explains.

A critical path to making that digital journey successful, says Pardo, is finding the right balance between legacy systems and the ability to offer game-changing new technologies to the business. “Each generation has seen programs and IT applications that have come into the organization and need to be managed by IT,” he says. “But the leverage comes from the capacity to manage our existing IT while offering users new services — the ability to use technologies such as cloud, the ability to use data platforms, for example, the ability to use DevOps platforms or artificial intelligence.”

However, anyone who has ever attempted to lead a major transformation program within a large multinational like Total, with its 100,000 employees operating in 130 countries, will know that such projects can be fraught with the many kinds of challenges that result from corporate inertia and bureaucratic red tape.

Pardo believes that overcoming such issues is less about the technology per se and more about having the right mindset — and that is particularly important for his IT team and how it interacts with the rest of the business. “People say large organizations are dinosaurs when compared to the likes of a dynamic start-up. They say, ‘Shifting them can’t be done,’” he says. But he clearly doesn’t share that opinion. “Of course, large groups have rules: there are HR rules, financial rules, legal rules and a whole framework and structure to respect. But within these rules, there is room for maneuver.”

He gives some examples of simple approaches he has deployed to push the transformation agenda. Activities such as hackathons, offsite brainstorms, collaborations with academia and start-ups on building alternative models and roadmaps are open to everyone, he says: “There are heaps of things like this that can lead to change and will leave your people saying, ‘We can do this.’”

UPSKILLING IT For all this to happen, today’s IT teams need to be at one with the business, urges Pardo. They need to engage in the wider business ecosystem, demonstrating collaborative skills and a sensitivity to the technology needs of their colleagues.

Therefore, deep technical skills alone are not sufficient — particularly in an organization like Total, where business transformation and new ways of working are so high on the strategic agenda.

“Of course, IT employees need to acquire the skills related to these new technologies: cloud,

“IT TEAMS MUST ACQUIRE ‘SOFT SKILLS’: THE ABILITY TO COLLABORATE, THE ABILITY TO OPERATE IN A MATRIX THAT IS ALWAYS CHANGING”

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As president of Global IT Services

at Total, Dominique Pardo leads a

team of 5,000 IT professionals located around

the world — from Houston and

Singapore to the energy company’s

HQ in Paris. A mathematician

by training, he obtained a master’s degree in artificial intelligence during the technology’s

formative years in the early 1980s. He is passionate

about the positive impact of digital

innovation across all areas of business and

society, with his current

interests including voice-activation, workplace IT and,

of course, AI.

About Dominique

Pardo

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infrastructure-as-code, DevOps, agile… and all with a single objective to accelerate the digital development capabilities at the core of the company. But this is not enough,” he says, and points to the fact that people across the multinational organization increasingly have advanced technology skills too, dubbing them “user-collaborators.”

“In about 10 years’ time, everyone will be able to use digital tools,” he believes, and refers to how technological revolutions in history have eventually led to new skills being adopted by a wider user base. “When printing was invented, there were only a few people who could actually read and knew how to use a book. It’s the same thing now. Digital, artificial intelligence, and so on are coming into the hands of [non-IT] people.”

As a growing number of colleagues rapidly acquire those skills, so IT teams must operate increasingly closely with the rest of the business to deliver genuine value, he argues. “Our employees must work in an ecosystem as a group and acquire collaborative skills. They must be able to better understand the needs of the business, and also their expectations — as responding to expectations and responding to needs are not exactly the same thing.

“Therefore, they must acquire ‘soft skills’: the ability to collaborate, the ability to understand others, the ability to interact in a matrix that is always changing, depending on the position someone has in the company and depending on its ecosystem.”

And this is one of the most challenging — albeit most crucial — elements of the job, he argues. “These soft skills are essential. IT is used to acquiring technical skills and has been doing so since time immemorial. The pace of technology runs very, very fast. Nevertheless, this is inherent in the IT profession and it’s not that hard to acquire those skills – but it is much more difficult to acquire the soft skills.”

The opportunities presented by artificial intelligence (AI) to the Total group are nothing short of “immense,” according to its head of Global IT Services, Dominique Pardo.

And among IT leaders, he is perhaps uniquely positioned to judge that — having graduated with a master’s degree in the subject back in 1983 when the technology was in its infancy and its potential poorly recognized.

In his view, integrating AI with the company’s deep technical capabilities feels very much like a natural progression rather than a major step-change. “We’re not starting this from scratch,” Pardo says. “Total is an engineering company with many scientists and mathematicians — and we have been applying mathematical models for a very long time.”

But now with AI technology maturing and the computing power there to drive it, Total is finding value-generating use cases right across its varied activities, such as in command and control, predictive maintenance and remote control — particularly in conjunction with its major transformation program.

“Already ongoing, we have a program that uses neural networks to accelerate the evaluation of seismic images during oil and gas exploration [where] we are trying to predict the presence — or

not — of reservoirs,” Pardo says. “Historically, this has taken a long time and is expensive, so accelerating it represents a very important play, ultimately, for our decision-making on investments today and in the future.”

AI is also being deployed to improve efficiencies in Total’s refineries. “Our Refinery 4.0 program involves the application of digital technologies in all kinds of industrial processes connected to refining, such as remote control and, for example, the optimization of refinery shutdowns.”

Total has also launched a ‘digital factory,’ where AI and its multiple applications figure strongly. “We have identified a number of use cases whose deployments will be accelerated through its work,” he says.

And what does he hope AI can achieve in the long term? “I don’t know if I can dream for the Total group,” he says, “but I see a lot of areas in renewable energies; electricity will be much more important for us. For example, every house will have to optimize and regulate the energy it consumes. Behind this, there will be AI programs — essentially large mathematical optimization programs — that will be able to interact and regulate the consumption and propagation of energy.”

Watch & read more: tinyurl.com/Dominique-Pardo

THE RICH OPPORTUNITIES OF AI IN THE ENERGY SECTOR From detecting oil reservoirs to optimizing home electricity consumption, artificial intelligence is giving rise to a flood of value propositions.

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he birthplace of industry-redefi ning apps such as Skype and TransferWise. A country where 7% of GDP is generated by a technology base of 3,700

fi rms and where 4% of the workforce is employed in start-ups — four of which were declared ‘unicorns’ (valued at more than $1 billion) in 2018.

Estonia may be nine times smaller than California and have a fi fth of the population of Singapore, but the Baltic state continues to outshine many more renowned tech hotspots, earning the accolades of, “The most advanced digital society in the world” (Wired) and “The world’s most tech-savvy government” (The Atlantic).

One leading fi gure behind that rise, Marten Kaevats, has been the national

digital advisor on the information society and innovation to the Government Offi ce of Estonia for the past fi ve years. An urban architect turned system architect, he now paints his role as “an in-house visionary looking at the whole landscape of technology.” That gives Kaevats a helicopter view of the primary drivers behind Estonia’s relentless pursuit of opportunities to advance the country through digital, the barriers it encounters and, ultimately, its vision for the digital societies of the future.

CATALYST OF INDEPENDENCEThe spark for digital Estonia was lit on August 20, 1991 when it declared independence from the Soviet Union. The new government then found itself in the unusual position of having to construct a new nation — including a civil service

Since gaining independence in the 1990s, Estonia has led the world in national digitalization programs. Marten Kaevats, one of the leaders behind this transformation, discusses the key technologies that continue

to drive the Baltic nation’s goal to be the world’s foremost e-state.

HOW ESTONIA NURTURES A NATIONAL DIGITAL IDENTITY

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SUSTAINABILITY IN A DIGITAL CITY

and bureaucracy — from scratch. Digital systems were seen as the only conceivable route to achieving that, particularly in a country with a strong educational heritage in mathematics and computer science. Its capital, Tallinn, for example, had been home to the Soviet Union’s fi rst Institute for Cybernetics since 1960.

Kaevats believes that the age of many Estonian politicians has also been impactful. “We have a culture of young politicians. The fi rst prime minister in 1991 was 33,” he explains. “Whereas in many other countries, you have older guys who have actually never used a computer and do not understand the implications of these types of technologies. It’s diffi cult to change anything if people don’t get that.”

LEADING THE WAYThis commitment to digital, once driven by necessity, has become the norm in Estonia. “We haven’t used any paper documents in the public sector for 10 years,” says Kaevats. “We can do everything online except [a few aspects of] getting married or buying and selling real estate.”

To demonstrate how widespread and fundamental digitalization is across Estonia, he points to how government operates. “From 2000, the government

became the fi rst in the world to hold meetings [supported by] digital tech,” he says.

“What that has allowed us to do is reduce the length of meetings. Previously, government meetings lasted on average fi ve hours, during which around 50 to 60 matters of state were decided. Last year, the average was 15 minutes. The shortest was in August, when we had a 22-second government meeting during which 50 decisions were made.

“This is achieved because there is a digital system in the background that allows everyone to see the latest document and uses the principle that if there are no objections, items can pass rapidly.”

Services run by the government operate with similar pace and effi ciency. “I’ve probably spent less than 15 minutes declaring taxes over my whole life,” estimates Kaevats. “In Estonia, the average is three minutes per year. This time, I did [my tax return] in 18 seconds.

MINDSET CHANGESThe effects of such widespread digitization are enormous. According to Kaevats, in 2018 alone the X-Road system that links public and many private databases throughout the country saved about 2,400 person years. Furthermore, he says: “When you have digitalized everything, then the mindset starts to change as well.” He contrasts this with the situation in California: “You have the Googles and Facebooks doing cutting edge everything, but to deal with some government departments, you still need to have a paper utility bill to prove who you are, which is absurd.

“The biggest challenge for other countries is to change the mindset to all-digital. We achieved the elimination of paper in government, for example, in more or less 15 years. It’s a big change that starts with bureaucratic apparatus but also involves society.”

Digital makes a sustainable future for cities feasible, argues Pekka Timonen, mayor of the Finnish city of Lahti, set to be the EU Green Capital in 2021. Here, he shares his views on…

32

“WE HAVEN’T USED PAPER DOCUMENTS IN THE PUBLIC SECTOR FOR 10 YEARS. WE CAN DO [ALMOST] EVERYTHING ONLINE”

TACKLING CLIMATE CHANGEThe biggest challenge facing cities in the 21st century is climate change. Whatever we do, we have to do it in a sustainable way. We have to make sure that we

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Achieving this level of digitalization is only possible because of trust, argues Kaevats. “This is an everyday practice. In technical terms, you can build information systems that basically promote trust and give citizens the opportunity to trust their government more.

“The fi rst stage is to build general awareness so people know what can be done with their data. The second is actual control and management of the data systems. That’s why building centralized information systems is not a good idea because in today’s world it’s not a question of if, but when, this information will be compromised. If you spread it around, if something small happens it can be more easily managed.”

TOWARDS AN ETHICAL FUTUREAn issue currently facing governments around the world is how to handle the application of fast-advancing artifi cial intelligence (AI) technologies. Kaevats helped to initiate the Estonian AI Strategy, which was adopted in early 2019, and he believes that it offers a third way for managing this disruptive technology.

“What we see globally are two core data governance structures,” says Kaevats. “We see the Chinese doing a centralized information system. We see the US, on

the other hand, with basically corporate control systems like Facebooks and Googles. Looking at those systems from a European point of view, they are not okay.

“We are trying to provide an alternative model — an ecosystem that preserves human rights in the digital space.”

Estonia is working closely with the Institute of Electrical and Electronics Engineers Standards Association, which is compiling a set of AI ethics standards for creating services. “We are trying to be

the fi rst country to put AI ethics into a legal context, meaning that all AI systems must be ethical,” says Kaevats. “This will provide concrete guidance. We want to show that human-centric governance is actually possible, including human rights in the digital space. You can build an ecosystem where every citizen is the owner of their data and in control of it. And we want to show that this model can work in all different domains: economy, society, government, democracy.”

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develop wiser ways of using our resources. We have to address all environmental questions, for example, around energy effi ciency and public transportation in cities because urban areas will decide whether we will succeed in developing a more sustainable future. In Lahti, for instance, we are almost 100% free from fossil fuels.

CREATING SUSTAINABLE CITIES We need services that use resources differently. We need data to make sustainable cities and communities possible. It’s very hard to imagine a sustainable major city that is not highly digitalized — they go hand in hand. Digital makes a sustainable future feasible.

Our next step in Lahti is to turn our organization upside down so that we build it around the possibilities and tools of the digital world rather than simply using digital services to improve our organization. An example of this is CitiCAP,

a personal carbon trading scheme for citizens that operates via an app. Asthis rolls out [over 2018-2020], we will be the fi rst city in the world to introduce this kind of program. CitiCAP monitors your behavior and rewards you for making changes [in your use of carbon], including fi nancial benefi ts such as free travel.

Developing the app has involved input from Lahti’s citizens as well as EU support and insight from a range of start-ups. Working together, we’ve created something that’s never been created before: a digital solution to change behavior, a digital solution to create benefi ts, and a digital solution to fi ght climate change.

SOLVING PROBLEMS TOGETHER It helps that today’s and tomorrow’s cities are highly collaborative. We are learning to do things together. There was a world where everything was in a box: you had your business, there was a city

organization, there was a university, there was day care. But that was the city of the old 20th century.

We realized we couldn’t do this alone: we needed a partner with the knowledge and resources to help us solve these challenges and develop both our own organization and the services we provide to citizens. You need strong partners to do this, which prompted our collaboration with [digital transformation company] Fujitsu.

COLLABORATION AS INSPIRATIONI’m interested in being part of a broad group that is pushing change and is committed to creating a better city. That’s what inspires me.

When I became mayor in 2018, my inspiration was — and it still is — to be part of a team which is turning Lahti from an old industrial city with economic problems and no real direction into a forward-looking, innovative and green city.

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longstanding assumption on business strategy has been that firms exist to coordinate resources that can’t be bought and sold on open markets.

But the advent of digital technologies has changed the nature of important resources to be controlled.

In the past, physical assets and internal processes created barriers to entry. Today, data and technology capabilities are part of the new competitive ‘secret sauce’ while traditional resources can easily be bought and sold in market ecosystems, with APIs and advanced data capabilities enabling tightly integrated working relationships between organizations.

Ecosystems allow organizations to focus activities on their specialization, engaging best-of-breed service providers rather than creating less than optimal internal capabilities. They also allow organizations to scale faster than they could on their own via access to the new markets and capabilities made available by all of the participating organizations.

NEW PLUMBING For players embedded in the old models, the transition to ecosystems can be challenging. Digital and data-driven ecosystem relationships are complex and require new architectures, governance models and contracts. Very few organizations have the technical and commercial scale to operationalize broad ecosystem partnerships, especially across multiple organizations.

Acquiring start-ups can infuse those capabilities into a more established firm but there may be considerable tension in integrating them. Across the ecosystem, there is also a lot of

basic plumbing involved. Privacy protection and cybersecurity capabilities must be ensured, normally across multiple architectures and in line with international regulatory frameworks.

Customer, data and revenue ownership must be transparent so customers don’t have to manage multiple relationships and the ecosystem needs to ensure all members are capturing sufficient value to incentivize their ongoing participation.

MITIGATING RISKSAt least one partner should be large enough and possess sufficient technical and commercial capabilities to help orchestrate the challenging aspects of assembling an ecosystem. Ideally, they should avoid exposing themselves to the kind of competition-plus-cooperation that has sometimes proved challenging.

For instance, Japanese technology giant Fujitsu is anticipating the emergence of an ecosystem for quantum computing, which promises to revolutionize the speed at which computers can work through vastly complex problems. It has partnered with quantum software company 1QBit, the University of Toronto, Waseda University and others to make available emerging quantum-inspired technology (the Fujitsu Digital Annealer).

In addition, since 2015, Fujitsu has run its Accelerator program to combine innovative start-up technologies with its products and solution services. The program has already generated more than 70 projects. GETTING STARTEDBefore participating in an ecosystem, be clear about your strategy. In many cases, this can be based on the delivery of superior customer outcomes through

the digital instrumentation of tasks and processes. Each task or process can be considered a node in the ecosystem.

Ecosystems also require a mechanism for assuring participants live up to their agreements and avoid opportunistic behavior. This suggests prioritizing trust in the design of the ecosystem. With relationships spread across multiple parties, the sharing of data and an understanding of the multiple customer touchpoints is critical. Here, working with a leading player with advanced data, platform and operational capabilities provides a significant advantage.

Having designed your ecosystem strategy, then follow a ‘discovery-driven’ approach. This has been used for many years to manage high-uncertainty growth and innovation programs.

Leaders must evaluate a broad portfolio of potential participants for each node in the ecosystem. Look for evidence of willingness to partner, expert capabilities related to the node, commercial viability, security and privacy architectures, brand and reputation, and availability of a team to lead its role in the ecosystem.

Next, run some small-scale experiments without making a long-term commitment. As you learn, you will be able to refine the approach. Eventually, you should have enough confidence to select your ecosystem partners for operational integration and deployment.

Ecosystem participation is no longer an option for most organizations. It represents one of the most powerful digitally instrumented business models, and you should consider this in your longer-term strategy.

Download a longer version of this analysis: tinyurl.com/VisionInsights

The rise of digitally instrumented collaboration is leading to a new way of thinking about strategy.

ECOSYSTEM DIMENSIONS

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Rita McGrath is a faculty member at Columbia Business School and a globally recognized expert on strategy. Her most recent book is Seeing Around Corners.

Ryan McManus is CEO of Techtonic.io and a lecturer at Columbia Business School.

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“BUSINESS MODELS ARE EXPIRING FASTER THAN EVER. YOU HAVE TO INVENT THE FUTURE

BY SYSTEMATICALLY AND CONTINUOUSLY RE-INVENTING

YOUR ORGANIZATION.” Alex Osterwalder

Business model guru and author of ‘The Invincible Company’

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