INTERVIEW OF THE MONTH
INTERVIEW WITH MR. VENKAT IYER
Venkat Iyer has 30 + years of experience working in US and India and in various businesses like Renewable Sources of energy (Solar & Wind), Office Equipment (Canon USA, Canon India & Xerox), Pharma manufacturing & healthcare (Pfizer & Wockhardt), Automotive (TVS Motor), IT services (IBM@Tata Steel) and Broadcast Media(Star TV).
Till recently he was the Global CIO of Wockhardt Ltd. He is also an independent director in StockHolding Document Management Services and Pahal Financial services. He is also an advisor to couple of technology startups.
Enterprises are at different stages of their digital journey. What kind of competitive advantage can enterprises get with early adoption of new and emerging technologies?
Digital journey for any organization today is imperative. It is not only a competitive advantage but your survival depends on that.
People are moving away from newspapers, movies are not seen in movie theatres alone, you don’t need multi-million dollars and top actors to make a movie anymore, more people watch homemade films on YouTube, people buy insurance on mobile, lot of kids in US are not looking to get driving license. In all these verticals, traditional way of doing business is dead or dying.
There is still a lot of confusion between “Are you digitizing your current business processes or are you creating a new roadmap on how your business needs to be, in this digital world”.
You take a typical vegetable seller in Santa Cruz, Mumbai who goes to a wholesale market in Dadar, Mumbai at say 5 AM, picks up the goods, and takes the western suburban train and start selling at 8 AM from a small shop on the street corner. Couple of years back, people would go to him, bargain, pay cash and buy. Today he goes to each apartment complex, takes the order and home-delivers to each one and possibly collects the money via PayTM. A variation of this would be for him to get the order via Whatsapp and then he fulfils the order.
In places like Bangalore, I see a new format where refrigerated vegetable kiosks are available in the apartment complex 24×7, connected through Wi-Fi with your mobile app, you get to see what you want, open the door, pick up the vegetable and pay through mobile wallet. The back-end knows what all have been sold and currently they keep replenishing twice a day.
In a new startup called Farmizen for instance, you lease space of land online, the farmer grows organic vegetable of your choice and you pick it or they deliver it to you.
In the above examples, when a street vendor starts using a POS device or collects money via PayTM, these would fall under the category of digitizing your current business process, while in the refrigerated kiosk, the business process itself has changed and you have a new digital business.
Hence the question really is – are you reinventing your entire business which must grow in this new digital world? Your customer’s buying behaviour is changing. If you don’t see it, someone else will and you will cease to exist very quickly. A similar example would be the newspaper industry in the western world. More and more news is now available online via social media like Twitter, and in fact, people have now started to depend less on even the digital news (forget about paper-based news).
A growing number of executives though, are facing up to digital reality. They know that digital technology can significantly improve the performance of their current business. They know that first-movers have an advantage. And they are keenly aware that digital can give birth to entirely new business models that shake up sectors, leaving companies that fail to adapt, struggling to survive.
Journey, on the other hand, is an evolving series of events that will take you places you could never imagine, maturing you like the greatest sages of our time. Think Columbus, setting off looking for a new route to the East and instead coming upon a whole new series of lands- The Western Hemisphere. Think Edison, setting off to create a non-oil based light and in turn creating one of the greatest manufacturing enterprises in the world – General Electric. And who can forget Jobs, venturing out to make a more user-friendly computer and ultimately changing how people and technology interact- Apple. These were not pointed in time events, but a ‘journey’ that matured each step of the way.
“Companies don’t become digital by buying or creating a new technology; they build on-going capabilities and knowledge over time”.
Digital journey is the company’s ability to recognize the value of new information, assimilate it and apply it to commercial ends.
Technology initiatives have always until recently, been the responsibility of the chief information officer. In the context of Indian enterprises, do you see the change happening where CEO’s and COO’s are getting increasingly involved in suggesting or driving these initiatives?
Technology initiatives for old world problems continue to remain with the CIOs. While in the digital world the business model itself is changing and that vision has to come from CEOs or CMOs and i am still not sure if they even see it. That space is slowly being taken over by young start-ups. Flipkart is an online distribution company. How many CEOs of FMCG, white goods saw it as a threat to their business? They saw it as another channel for selling their wares and in that process, they lost control of their own brick and mortar distribution channels. So now the online channel is deciding the price of the consumer durable and white goods by driving a hard bargain. 40% of all microwaves, 25% of all LED TVs and 35% of all smartphones are sold online (majorly between Amazon and Flipkart). If you look at the hotel industry, the exclusivity that some of them enjoyed has suddenly become one of the many being offered online in Booking.com. Companies are almost becoming like a contract manufacturer under a brand called Amazon or Flipkart or Booking.com.
Hence CEOs/CMOs/CDOs who drive the digital business will have to take a lead and define the requirement very clearly, but the execution will be left to the CIO/CTO.
Given your vast experiences, what’s your view on how the CTO/CDO can be more empowered to drive the change within enterprises?
Digital journey is identifying new sources of revenue and new sources of value. There are some industries which are very conducive to migrate to a digital business-like Banking, insurance etc.
I don’t think the CTOs Job description even defines him/her to look for a new business model. But it does for a CDO.
Is a CDO thinking like a CEO and coming with a new business/revenue model which is digital in nature, which may or may not cannibalise the existing brick and mortar business of that organization? In that case the CDO has to be empowered to change the existing organization or build a new organization to deliver the digital business.
When adopting emerging technologies, several enterprises typically evaluate ROI from a headcount reduction perspective. What other factors are key to consider during such an evaluation? How does one justify the returns from investments in emerging technologies?
In digital, like any business, business model is critical, technology is secondary. Digital business will run on technology. Like in the old world, you needed thousands of people, hundreds of stores etc., now you need to invest on strong scalable reliable platforms which is lot cheaper than physical assets. ROI need not even be looked at; it is just a cost of running business.
As part of digital business when you look at the manufacturing side where you invest in IOTs, sensors, automation etc. for improving quality & productivity, there you will need less manual labour and more data analysts etc. for reducing inventory, aligning supply to demand.
The first step in the process is to do an audit of the challenges facing your company.
What are some of the good practices that enterprises can adopt to drive cultural change for technology adoption, given that this is an indispensable factor for driving returns?
Digital business is a new model of doing business. It is not an extension of old business. People who cannot visualize the new model have no place in the digital journey. This new business needs various technologies like data analytics, Artificial intelligence, Bots, Machine learning, manufacturing 4.0, cloud, IOTs and sensors and people who can appreciate the use of these technologies and effectively use it to further their business rather than depending on their gut feel. The users need not know how to build the technology (as they are easily available and can be integrated across the platforms) but how to effectively get the best out of it.
The CEO/CMO/CDO has to drive it top down. Technology is inherent part of the business. The way one runs the business will go through a complete change, as automation will handle most of the non-value added work. Inter departmental silos go away and along with that human interdepartmental brokers go away. People who only knew micromanaging will find it difficult to kill time.
Interesting times ahead.