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I want to welcome Ganesh air who is the
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CEO of emphasis and IT services company
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and also Jerry wind who is a Wharton
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marketing Professor thank you both for
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joining us uh for this discussion about
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uh how CEOs and other top leaders can
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nurture a digital culture in their
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organization and the first thing I
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wanted to ask you about that is as
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leadership CEOs in particular become
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more digitally transformed themselves
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then the one of the next things that
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they have to look at is how do you move
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this down the organization so what does
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Smart leadership look like as it tries
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to move the uh digital transformation
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down through the organization and and
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KES maybe will start with
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you see the um any
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transformation uh the physical
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transformation is an easier bit because
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you draw up a new chart new reporting
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lines new incentive scheme so that's the
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physical
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transformation The Challenge lies in
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chemical transformation of the company
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how do you rewire the people how how do
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you equip them with new skill sets which
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are required in the new world how do you
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actually walk the talk because for
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example uh when a company which is in
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analog business also aspires to get into
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digital business cannibalization is
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inevitable and as a CEO do you uh go and
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say you do something different and say
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something different so authenticity of
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leadership becomes import important so
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in my company uh the Mantra which we
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have adopted make customer central to
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our
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transformation and revolve around
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customer strategy to be successful so
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one of the things which we have started
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measuring is are we becoming more
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relevant to our customers everybody
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talks about the fact that this customer
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is relevant to me is is that important
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from business
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perspective what is more important is
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are you relevant to the customer because
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that gives you sustainability and
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Longevity and it actually defines
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whether you delivering value so that's
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how we are keeping customer central
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theme to our transformation we are
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focusing more and more on chemical
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transformation and um earlier Jerry and
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I were discussing where is our
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operational headquarter one of the
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things which we are working on is making
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benches as our headquarters so where the
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customer is you just go there and and
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action around those things so those are
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the elements which I would Define as
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Elements which we are working on for
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transformation and you need to be
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ruthless with corporate
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antibodies because in any transformation
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you face corporate antibodies you one
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needs to be just ruthless about it Jerry
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what's your view on uh uh what thises
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smart leadership look like once the
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leadership has transformed themselves to
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think digitally and now they want to
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make their company's culture more
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Innovative well I fully agree with your
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comments I thought I thought were right
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on target uh let me take them a little
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kind of one step further in the
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following sense one the it's absolutely
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critical that the leaders understand the
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digital world and practice it but it's
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not enough that's a necessary but not
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sufficient condition
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I think the sufficient condition is to
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move back to the next step and basically
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saying but what are the implication to
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our mental mods what are the implication
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to our business models uh and basically
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willing to make the tough decision have
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the courage to make the tough decisions
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uh which require basically we have to to
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face the new reality of digital world
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and um uh we finished a study which uh I
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think you're familiar with which was
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basically showed that there four type of
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business models there are basically
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asset Builders there are service
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providers there are technology makers
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and there are network orchestrators
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network orchestrator will be the Uber
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the Airbnb the Visa
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Mastercard uh the market return market
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value on these four business models very
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dramatically so if you look at the
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market value as a multiple of Revenue
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you find out that for manufacturer asset
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Builder 1 to2 for service providers 2 to
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three three technology maker is about
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four if you're a network company it's
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about eight plus to become a network
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company with the enormous benefits there
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like zero marginal cost that you have
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associated with this ability to scale
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infinitely and the like you need a
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different type of mindset you basically
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have to have as a leader you have to
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change basically your mental model you
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have to change the business model move
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more toward the network and you have
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basically to start realizing that it's
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no longer the command and control type
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leadership basically you have to
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basically become much more a co-creator
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and we look at the leadership required
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for Network orchestrator to be
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co-creator of the customers and and
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others you know think about what Apple
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has done with the the ecosystem of of
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Apple there is no way they could have
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had the hundreds of thousands of app
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they out there internally they had to
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basically create it and you have to have
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a culture of a win-win and being willing
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to share with the customer so I will
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take it one step further in term of your
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comment on the customer it's not only
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how important you are the customers but
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change the relationship as opposed to
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just looking me and the customer how can
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we create now a new entity which is how
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do we co-create together what is the
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role of the customer in
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co-creating and if you really move to
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the co-creation and everyone
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organization start getting the culture
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of co-creation and a truly win-win I
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think then you are on the way toward win
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winning in this transformation
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absolutely brilliant point in fact you
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know you I'm glad you mentioned it we
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set up a lab called Next Labs because in
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emphasis the logo is unleash the next so
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we thought next Labs would be a good
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name for our labs and the fundamental
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principle of that lab is
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co-creation if you are creating
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something on your own that is less
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acceptable to us as an investment it is
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more acceptable to us when you are
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co-creating it with the customer we are
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willing to make more investment in that
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area than then you have one bright idea
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and I'm going to try it out so I it's
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such a great point you have made I
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completely
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acknowledge uh which is a good lead in
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from both of you to the next question
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which is how do how does leadership
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starting with the CEO Embrace this idea
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of being more collaborative um this
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egalitarian environment that we're
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talking about where you get immediate
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customer feedback so you know what
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they're thinking really fast you have to
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respond fast um and how do corporate
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cultures change to accommodate
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that
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Ganesh um actually quite a
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thought-provoking
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question it is uh it goes back to uh the
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fact that you have to come to terms with
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the fact that CEO doesn't have Monopoly
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on all the great ideas in fact probably
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he's the worst person to have great
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ideas and um a new person who is serving
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the client youngster who has just joined
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the company may have a great idea so you
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really need to um move from being a
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large boat or a large ship to thousand
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canoes where they are governed and they
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are empowered to make
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choices and that change is not easy I
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mean these concepts are easy to describe
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we are in the midst of trying to do it
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even when you go to someone and says you
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are empowered to make the decision
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suddenly they have been demanding that
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empowerment and the moment you give it
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they are at a loss how to use it they go
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back to the old habit of saying that let
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me check with my boss before I make a
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decision so these Concepts will take
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time to be ingrained in the company one
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needs to be patient it cannot be a um a
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twoin noodle uh kind of an approach it
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is it is something which you have to be
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staying with it
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I need to get comfortable with it
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because in my last 30 years there are
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lots of things which are within my
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muscle memory which are based on command
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and control
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hierarchy uh the ego of being a CEO the
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glamour of being a CEO you have to be
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prepared to take the Shine off
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yourself and and reach out to to people
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who can bring these ideas so those are
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all the cultural changes uh Authority
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changes uh model changes that we are
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making we are also making incentive
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changes we are redefining the incentive
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as if we have multiple CEOs in the
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company so it becomes
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self-governing uh motivated team some of
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the ideas are here um I wouldn't say
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that we have reached um the destination
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or we have arrived we have made progress
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we have still some ways to go Jerry this
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idea about flattening the organization
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that was being talked about here how how
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what's your advice to companies on on
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how they should change their culture to
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uh as he says one thing to say it
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another thing to to live it first of all
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congratulations what you're doing I
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think the absolutely right track I'll
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give you know there's a lot of thing we
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can talk about I'll give you two things
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I'll give you one a change in M Mal and
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one I'll give you something very
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practical that every company should do
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then we can elaborate more the change in
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malal is the concept of control most
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companies believe that they have control
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the reality is that uh let's take for
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example positioning of a brand the
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reality is that the position of a brand
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is determined by the consumers not by
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the company so as long as you as a
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company as a leader believe that I have
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control I decide on the positioning you
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in reality have zero control if you
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change the m m to a collaborative
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co-creating Mal you realize from day one
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that the control is shared between you
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and the customer and therefore you're
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not under this illusion that that you're
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doing something but the market of
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reality is really totally different so I
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think it's absolutely the the change to
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a co-creation mod is absolutely critical
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here now in term of pragmatics in term
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of how do we make it happen I am a great
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believer in
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experimentation and I think if a company
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will adapt the philosophy adaptive
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experimentation they'll be able to
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achieve basically a lot of things
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because the advantage of experimentation
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it's the only way of determining causal
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relationship it is the only way that
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forces you actually to measure you know
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exactly what's happening what is the
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result of whatever you're doing the most
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important thing it encourages you to
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take basically more uh Innovative
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initiative as opposed to just me too or
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a little smic Improvement in what you're
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doing and fundamentally what's happening
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the minute you adopt a philosophy of
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experimentation throughout the company
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you as the CEO send a message to the
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company is okay to fail because everyone
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knows not every experiment will succeed
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the minute you send a message it's okay
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to fail you're overcoming this kind of
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the natural inclin
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to be risk averse the minute you send
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this then you have to link it was what
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you were talking about which is the
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incentive system and the reward system
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so you want to celebrate lessons from
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failure so you're not celebrating only
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the successes but what if we learn from
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something that did not work and if you
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are then adapting basically the Adaptive
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experimentation which says there is no
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fixed strategy basically everything we
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do is experimentation we finish
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experiment one the question is okay what
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have we learned from here we move into
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experiment two Experiment three four
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it's a it's a culture of experimentation
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is the new basically mental model for
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running a business which is ideal for a
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distributed type organization because
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they're not centralizing it the only
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thing centralization you want to do is
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perhaps in terms of creating meta
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analysis of the many many experiments
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providing like Master designs en
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encouraging and if you're moving into
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areas such as cognitive Computing with
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Watson or you're moving into what Google
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is doing with primarily with ual mind in
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term of the AI and you have an AI or
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cognitive Computing Master System out
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there that basically will take all the
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results of the experiments plus all the
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other data out there now you're
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basically a GameChanger but every unit
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in the organization feel empowered
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because they're providing you the key
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ingredient for the decision that you can
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then make based on all of these together
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it's interesting uh what you said about
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uh you have to sort of erase that fear
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of failure it just reminds me of an an
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OG example recall the Japanese uh
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remaking manufacturing during the 80s
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and 90s and one of the things they they
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would say is that when when when a part
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went wrong on the line or something went
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wrong that was to them that was a jewel
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it was like it was a treasure because
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they could look at that and and figure
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out not just what went wrong for that
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but they could figure out ways to do
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lots of other things better so it's a
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interesting parallel uh I wanted to just
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dig into the customer centricity idea a
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little bit because um it makes sense put
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the C customer at the center uh and uh
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and you'll be okay but I'd like to hear
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from each of you what does that look
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like what does customer centricity look
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like in a company how do you nurture it
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how do you how do you encourage it and
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and what does it mean is it you have to
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understand exactly what they're thinking
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tell me tell me what customer centricity
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looks like so um in our
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case when you look back at offsh show
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players
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we were focusing on it
00:14:03
Services which meant you were calling on
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the Chief Information
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officer and procurement side majority of
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the
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time as the world transforms to
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digital the decision around digital will
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get made in the business side of
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things so if you want to be relev I mean
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relevant in the context or customer
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centricity in the digital
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world you need to spend time
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understanding customer's customer and
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not just the
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customer and that's the journey that we
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have been tracking for the last 18
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months as a company how do we understand
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deeper in customers customer now many of
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our customers are both in B2B and b2c
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and you would see digital playing a big
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bigger in
00:14:53
b2c so even making that distinction when
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you think of a customer as one comp
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company logo it's not true they are made
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up of multiple businesses uh their
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competition is different challenges are
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different opportunities are different as
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you get deeper and as you become a
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trusted adviser to business that results
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in centricity we have some cultural
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challenges I let me bring up those
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cultural challenges as well by
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Nature people don't ask questions they
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don't challenge so you have to uh uh
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kind of ensure that people challenge
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people add value they ask questions
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because it's not just doing what they
00:15:39
ask you to do it is also about bringing
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best practices based on your knowledge
00:15:44
and experience and challenging status qu
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so it's not just about serving what they
00:15:49
want but focusing on what they need and
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that distance is truly the distance that
00:15:55
we are trying to cover so our customer
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centricity is being defined by I made
00:16:01
some changes and we are transforming
00:16:03
around 16 customers right now because
00:16:05
I'm not big enough to lead Market
00:16:09
transformation I don't have the
00:16:11
wherewithal to lead Market
00:16:13
transformation so my transformation is
00:16:15
linked to my customers
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transformation and uh hence I take
00:16:20
responsibility for select customers
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every I saw some of the experiment which
00:16:24
people do where they go to retail shop
00:16:26
and the CEO serves there to understand
00:16:28
the customer I'm not in that kind b2c
00:16:30
business but uh I spend time as I
00:16:33
mentioned earlier in trenches to
00:16:35
understand what's going on how can I add
00:16:37
value so those are the uh so the best
00:16:40
way to define customer
00:16:42
centricity uh is understand customer
00:16:46
customer Jerry uh well first I fully
00:16:48
agree basically since you're in the B2B
00:16:51
World basically you have to develop dual
00:16:53
strategy you for every one of your B2B
00:16:56
customers you to develop strategy for
00:16:57
their btc's so help them so basically
00:17:00
you cannot if you're in the B2B game you
00:17:02
cannot just limit yourself to the B2B
00:17:04
space you have to understand the the b2c
00:17:07
aspect but let me give you kind of three
00:17:10
criteria that I will bring for the
00:17:13
customer
00:17:14
centricity one of them uh relate to the
00:17:18
fact that you realize that the customer
00:17:21
is becoming now the active participant
00:17:24
in the system So Co manufacturing think
00:17:28
about build a bearer the customer builds
00:17:30
the product not the factory uh think
00:17:33
about um uh Facebook co-creation all the
00:17:37
Facebook provided a platform all the
00:17:39
content that Facebook has created by
00:17:42
customers um think about uh pricing
00:17:46
priceline.com the customer decides what
00:17:49
is the price think about distribution
00:17:52
why do I have to have my sales people
00:17:53
earlier think about uh diapers.com where
00:17:56
primarily because of the incentive they
00:17:58
provide Ed for every customer to bring
00:18:00
other customers and benefits for both of
00:18:03
them the customers became the
00:18:04
salespeople for the company so stop
00:18:07
thinking about you are doing thing as a
00:18:10
company create a platform to allow your
00:18:13
customers to do things so that's number
00:18:16
one if you're doing this you're really
00:18:18
way way ahead in becoming really
00:18:20
customer Centric second you realize the
00:18:24
fact that if you work especially in the
00:18:25
B2B World also but through also the b2c
00:18:29
if you work together as a co-creation
00:18:31
with a customer you really understand
00:18:34
the needs of the customer it's the
00:18:37
typically when we talk about
00:18:38
understanding customer cons the typical
00:18:41
company will say okay we'll do marketing
00:18:43
research marketing research gives you
00:18:45
almost in most cases wrong information
00:18:47
because first you get tons of people are
00:18:49
not responding to this of a hug non
00:18:51
response bias typically you're running
00:18:53
typically in terms of structured
00:18:56
internet panels which most people are
00:18:58
kind of basically not really responding
00:19:00
and the structured questions tons of
00:19:02
problems with marketing research there
00:19:04
are some good marketing research project
00:19:05
and we've been using them but primarily
00:19:07
you'll get B far more reliable and valid
00:19:09
data if you get it through the
00:19:11
interaction of co-creating with the
00:19:13
customer and three I think you should
00:19:15
change the measures you should start
00:19:17
thinking about not market share but
00:19:19
think about share of wallet what is my
00:19:21
share of the total requirement of this
00:19:23
customer so if you look at infosis they
00:19:26
should look at this basically uh in ter
00:19:29
of what share they have of the total
00:19:31
Computing uh expenses of their clients
00:19:34
as a measure think about lifetime value
00:19:37
of a customer start thinking about
00:19:38
different measures that focus on the
00:19:40
customer because most of the measures
00:19:43
today are not customer Centric in
00:19:45
reality the tragedy is in term of
00:19:46
financial accounting customers are not
00:19:48
even Financial Accounting don't don't
00:19:50
count anything actually because of the
00:19:53
financial accounting the chair on which
00:19:55
you're sitting is worth more than you
00:19:57
because you're not even accounting but
00:19:59
the chair is there is an
00:20:01
asset so change the measures how does it
00:20:04
make you
00:20:05
feel small I feel very small right now
00:20:09
change Financial
00:20:11
Accounting okay the next Revolution
00:20:14
thanks for joining us both of you
00:20:15
apprciate thank you thank you thank you
00:20:29
[Music]
