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Capgemini Consulting - Digital Transformation


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The rise of new digital technologies …

The rise of new digital technologies
is one of the most exhilarating challenges facing
companies today. No sector or organization
is immune from the digital phenomenon,
which dictates its own pace and presence in
the management agenda. The question is no
longer when companies need to make digital
a strategic priority – this tipping point is past
– but how to embrace it and turn it to competitive

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  • 1. N° 01 JULY 2011 The challenges of the digital revolution • L’Oreal’s choices by Marc Menesguen • Transform to the Power of Digital: DigitalTransformation as a Driver of Corporate Performance by Capgemini Consulting • No sector is immune by Andrew McAfee, MIT • The boom of Chinese e-commerce by Brian Xin, StarryMedia • A transformed society is emerging by philosopher Bernard Stiegler
  • 2. summaryeDitorial vision guest writerDigital and Transformation: No sector is immune from digital Digital as Bearer of AnotherAre they now indivisible? transformation SocietyBy Capgemini Consulting’s Interview with Andrew McAfee, By Bernard Stiegler, philosopher,Editorial Board principal research scientist at the President of Ars Industrialis, page 4 Center for Digital Business, MIT Director of the Pompidou Center Sloan School of Management Institute for Research and page 30 Innovation page 43strategyBeauty and digital: A magicalmatch Capgemini Consulting’sInterview with Marc Menesguen, Editorial Board:Managing Director of Strategic telesCope Pierre-Yves Cros, CEOMarketing for L’Oréal Tom Blacksell, UK Regional Head Chinese entrepreneurs take full Didier Bonnet, Global Head of page 6 Practices advantage of the e-commerce Patrick Ferraris, Global Leader, boom Technology Transformation Interview with Brian Xin, founder Xavier Hochet, France Regional Head of StarryMedia, a Chinese start-up Ton de Jong, Netherlands Regional Head for social marketing and digital Eric Roudil, North South EuropeClose-up research Regional Head page 36 Michael Schulte, Germany Regional HeadTransform to the Power of Digital: Ken Toombs, USA Regional HeadDigital Transformation as a Driverof Corporate Performance Coordination Editor: Claire ThiebautBy Didier Bonnet, Global Head ofPractices, Capgemini Consulting Design and Production:and Patrick Ferraris, Global Leader, Les Ateliers CorporateTechnology Transformation, Key figures Printing:SolutioncomCapgemini Consulting page 14 pages 35 and 42 Cover illustration: Fernando Togni Digital transformation review n°01 - 03
  • 3. eDitorial Digital and Transformation: Are they now indivisible? By Capgemini Consulting’s Editorial BoardW elcome to the first issue of Capgemini Consulting’s Digital TransformationReview. The rise of new digital technologies the opportunities offered by these new tech- nologies and their related applications. While transformation is not just digital, transforma-is one of the most exhilarating challenges fa- tion cannot do without digital.cing companies today. No sector or organiza-tion is immune from the digital phenomenon, Second, digital is shaping the competitivewhich dictates its own pace and presence in battleground in all sectors. The data shows athe management agenda. The question is no growing performance gap between the best di-longer when companies need to make digital gital learners and the others. The more a sec-a strategic priority – this tipping point is past tor relies on technology, the greater the gap– but how to embrace it and turn it to compe- between the most effective companies and thetitive advantage. rest. And yet, the digital phenomenon doesn’t stop at the borders of «traditional» sectors. Di-Given this urgency, should we now view the gital technology allows a more targeted busi-rise of digital as the alpha and omega of trans- ness approach, more scientific decision-ma-formation strategies, the focal point for every king and a new type of customer relationship.aspect of corporate change? Our hypothesis is Companies in every business sector need tothat transformation strategy is its own master, master digital tools.but we have reached a stage where transfor-mation cannot be done in isolation from digi- We do think it is important to stress that thistal. There are two reasons for this. emphasis on a technology-driven digital re- volution in no way diminishes the importanceFirst, digital has a fundamental impact on how of human initiative and responsibility. Indeed,change takes place. Moving forward, every the truth is quite the opposite. It is more im-strategy that is devised must take account of portant than ever to acquire the right skills Digital transformation review n°01 - 04
  • 4. eDitorialand place them strategically to support trans- Media, a Chinese start-up connecting marke-formation programs. ting and social media, offers particular insight into the speed of change in China today.In this publication we are determined to em-brace just this sort of complexity and coun- Finally, philosopher Bernard Stiegler providester-intuition, through a viewpoint that cros- the necessary distance for understanding theses geographical boundaries and domain social impact of the digital revolution, whichboundaries, with contributions from faculty he compares in the scale of human history toexperts, practitioners, start-up pioneers and the invention of writing.philosophers:Marc Menesguen, Managing Director of Stra- We hope you enjoy the thoughts and strongtegic Marketing for L’Oréal, explains how the convictions of all our revolution has impacted the organiza-tion and strategy of this global beauty pro-ducts leader.Prof. Andrew McAfee of MIT paints a pictureof how these digital technologies are disrup-ting work processes and corporate strategy.Along the way he describes profound changesin American consumer habits and their im-pact on traditional marketing approaches.The article by Brian Xin, founder of Starry- Digital transformation review n°01 - 05
  • 5. strategyBeauty and digital: A magical match an impact on how our consu-Marc Menesguen, Managing Director of mers relate to information andStrategic Marketing for L’Oréal, explains advertising, and thus to our brands. According to a study byhow the digital revolution has impacted the Forrester group, 7% of sales around the world today takethe organization and strategy of the place online, and almost 40%global beauty products leader. of off-line sales are influenced by internet research. So almost half of purchases in the world are already somehow digitally H as the rise of the digital phenomenon changed your customers’ habits? influenced. This trend in any given country depends on its digital maturity. Digital transformation is one In the United States, where the of the major drivers of change phenomenon first developed, in today’s world. I believe we the internet plays a very signi- are witnessing the start of a true ficant role today in purchasing revolution, given how the major decisions and in how we sup- players are powering forward – port our consumers. This is a Google, Apple, Microsoft, Face- little less the case in Europe, book... – and the speed at which although things are advancing digital tools are proliferating. more quickly. And in the newer There are expected to be 20 markets digital technology has billion connected devices (tele- a considerable impact. In China, phones, tablets, game consoles, internet penetration is already etc.) by 2015. almost 30%. These changes are of fundamental importance to This revolution naturally has L’Oréal. Digital transformation review n°01 - 06
  • 6. strategyHow does the company view you see emerging with digital The final opportunity involvesthis revolution? transformation? innovation. Research & Innova- tion is at the heart of the L’OréalDigital transformation re- First of all, digital transforma- model, and digital transforma-presents an extraordinary tion is a chance to strengthen tion helps our researchers’ work.opportunity to strengthen our our brands’ images by impro- For example, in the United Sta-current business model and be- ving the efficiency of our com- tes we have a social networkcome even better at being the munication and advertising. of 250 women who test ourworld’s number-one beauty cosmetic or facial care products,group. In fact, beauty and di- and give their feedback online.gital are something of a magi- “ The digital world We examine their reactionscal match, because beauty is an and take them into account multiplies the waysemotion and the digital world when designing new products. our brands can createmultiplies the ways our brands We have truly reached the stagecan create an emotional-filled an emotional-filled of co-innovation!relationship with their custo- relationship withmers. their customers. ” How is L’Oréal reacting to take advantage of theseAlso, using our products isn’t opportunities?always self-evident, and digi- Second, the internet is an ama-tal tools allow us to help our zing tool for supporting custo- Our Chairman and CEO, Jean-consumers understand and use mers throughout a product’s cy- Paul Agon, named 2010 thethem better, and to offer them cle of use, and for strengthening «Digital Year» for L’Oréal. Suc-personalized, one-to-one ser- brand loyalty. The third advan- ceeding in the digital revolutionvice so we can increase the tage is one of sales. The inter- is a major strategic challengequality and perceived value of net makes it possible for brands for the company at the globalusing our products. to project themselves right into level, along with winning one people’s homes, and generate billion new consumers over theCould you tell us more spe- purchases and repeat purchases coming decade. The year 2010cifically what opportunities through online sales. was therefore one of intense Digital transformation review n°01 - 07
  • 7. strategyBeauty and digital: A magical matcheffort, particularly for a crisisexit phase, with strategic po-licies impacting our 23 brandsand all our countries.This mobilization was expressedin a number of ways. First, wemade sure we had the necessaryexpertise in-house. We formed ateam of 300 people specializedin digital technologies, withthe goal of providing digitalexpertise at every strategic pointin the company, and we havea global digital manager to pilotthis cross-functional networkwho reports to me directly.I would point out here thatdigital transformation doesn’tonly concern marketing; rather,we have digital managers in Marc Menesguen Managing Directorresearch, manufacturing, com- of Strategic Marketingmunication and in the sales for L’Oréalfunctions.We also launched a programto train 15,000 individuals indigital fluency in two years,including the company’s mana-gers. Digital transformation review n°01 - 08
  • 8. strategyHave you defined measurable developing m-commerce, sales strategy. Whereas in the massobjectives for your digital via mobile phones. And within media model, typically centeredstrategy? Europe, the United Kingdom is on television, everyone received coming off the starting block the same message, with digitalWe plan to double investment first. media we can design muchin digital media in 2011, from more targeted marketing.5% to almost 10%. L’Oréal is the Marketing is key to L’Oréal’sthird largest advertiser in the business model. Has the tra-world, so you can imagine the ditional marketing mix beenscope of this goal. More gene- transformed by the emergence “ The real goalrally, I would note that we work of digital tools? is to raise ourusing a test & learn approach: digital IQ as aThe real goal is to raise our di- Of course. The difference way to structurallygital IQ as a way to structurally between the traditional modelreinforce our business model. and the new one that is emer- reinforce our ging, is a difference between business model. ”We have chosen specific units positioning and movement.within the group to play a pio- Today it’s not enough to thinkneering role. Their job is to about brand positioning. Digitalprepare the ground and assem- transformation allows brands I think this trend will becomeble the skills needed, and then to interact directly with their even more marked in the futuretransmit them to the other units. customers. This communica- with the rise of mobile devices,In e-business, for example, the tion requires an agility from which will become an increasin-luxury products divisions in the brands as well as an ability gly important interface betweenthe United States and Korea to remain in motion and adapt brands and consumers. Withare leading the charge, so they continuously. It’s a challenge, geolocation, for example, wehave gained a head start with but also an extraordinary op- can target messages more pre-6% and 12% of their sales on- portunity. In the new marketing cisely and adjust to customersline, respectively. Japan, on the that is developing, the consu- whether they are out shoppingother hand, is responsible for mer is even more central to our or at home. Digital transformation review n°01 - 09
  • 9. strategyBeauty and digital: A magical matchDoes digital transformation priorities and guidelines. They greater proximity and interacti-increase the complexity of deploy integrated marketing vity, but in the end customersmanaging your brands? campaigns to ensure that the want the same thing: They want brand receives the same expres-L’Oréal is historically a compa- sion no matter what the pointny of innovation and conquest, of contact. “ We plan toso our teams are excited by this double investmentnew challenge. That said, like As for monitoring economic effi- in digital mediaany major change, digital trans- ciency, it has been strengthened in 2011, from 5%formation brings with it ques- with the creation of the Stra-tions and risks, two of which tegic Marketing division that I to almost 10%. ”come to mind. run. This organization is meant to support the markets in iden-The first is the risk of a frag- tifying best practices, and those to be surprised, seduced, drawnmented image and loss of brand that are less effective. We work in by a great story. Digitalequity, in the sense that multiple on aligning key performance transformation lets ad writerspoints of contact with a brand indicators for digital campaigns tell even more fabulous storiescan lead to divergences between worldwide, which allows us to to reinforce our brands.the global and the local. There is measure the effectiveness of ouralso a risk of insufficient return digital initiatives and organize Do social networks accentuateon investment, of our economic reporting of experiences and the risks of a negativeresources being spread thin. sharing of best practices. reputation?We are prepared to respond to Has the way you advertise The internet has held risks for re-these risks with a matrix struc- changed? putations even before the emer-ture for our 23 global brands gence of social networks. Thisand the large regions that pilot Whether on- or off-line, let’s risk is real, whether we like it orbusiness in the different coun- not forget that the main success not, and we are very attentivetries. Each brand develops its factor for a campaign is its crea- to it. We are part of the conver-own digital strategy with clear tivity. Digital channels allow sation, interacting ourselves Digital transformation review n°01 - 10
  • 10. strategyon the internet around every- This is a significant aid in choo- gering 72% of them came fromthing that is said. This has been sing and buying cosmetics. emerging markets, which showspart of our company strategy how digital transformation lar-for several years already. In Human Resources, last year gely coincides with the geo- we developed “Reveal”, a re- graphic shift that is underway.How is your digital strategy cruiting website that takes We recruited 120 people inexpressed in other functions? the form of a business game 20 countries with this game. ( Research & Innovation, our I could give you similar detailsstrategy has always been based for Manufacturing, Corporateon proximity to our consu- Communications, and all themers around the world, with “ The difference group’s functions. The digitalmore than 3,400 researchers between the revolution truly impacts everyworking at 18 research centers traditional model area of the 12 countries. Digital techno- and the new onelogy allows us to achieve even that is emerging, Is the impact of the samegreater proximity, practically scope for every division? is a differenceentering consumers’ homes and, between positioningthanks to imaging technology, The impact is strong everywhe-we can get «inside their skin.» and movement. ” re, but is expressed differently depending on the business.Sales functions, for their part, Each division and each brandneed to integrate e-distribution The applicant enters L’Oréal develops its own digital stra-techniques. For example, we as a virtual trainee, takes tegy based on its specific cha-are testing on-line promotions. part in the activities he or she racteristics.We’re also taking part in a very is interested in – product inno-interesting experiment launched vation, marketing, production – The Luxury division sees digitalby Carrefour Planet, an interac- and receives a grade. Last year tools as an opportunity to createtive makeup counter where wo- 61,000 people participated from an image with incredible globalmen can apply virtual makeup. 160 different countries. A stag- consistency, but also as a way Digital transformation review n°01 - 11
  • 11. strategyBeauty and digital: A magical matchto improve personalized service example, Redken, in the Uni- in this area, the Luxury Pro-and a path to increasing busi- ted States, designed a strategy ducts division, generates 6% ofness through e-business tools. for animating its network on its sales in the United States on-To date, this division has made Facebook, with highly targeted line. Where direct contact withthe greatest strides in imple- distribution of samples and ex- our customers through e-com-menting online sales. cellent return on investment. merce offers the greatest value, is in terms of marketing, andFor the Consumer Products di- In the Active Cosmetics division, assessing the effectiveness ofvision, the primary challenge is Vichy has developed a comple- our strategies. This higher awa-to optimize advertising impact. tely novel website for online skin reness also benefits our off-line diagnosis (, business, and thus our distribu- only made possible by the in- tor partners. The brands with “ Digital transfor- ternet. the best online performance are also those that sell best in sto- mation lets ad Finally, the Body Shop, which res, such as Kiehl’s. writers tell even is both a global brand and a more fabulous network of stores, has expanded What are the main successes stories to reinforce its online service and sales pos- of your digital strategy? our brands. ” sibilities with the internet. Lancôme had a number of di- Does this direct channel gital successes in 2010, both inDigital tools help generate more between the brand and consu- support of product launches andrelevant, targeted messages with mers bring your relationships through a very impactful colla-more content. with your distributors into boration with Michelle Phan, a question? video blogger in the United Sta-In the Professional Products tes. She is a huge fan of Lan-division, we have an extraor- No, not really. For one thing, côme, and became the brand’sdinary chance to enhance our e-commerce is still a fairly mar- online beauty advisor. Everyrelationships with our global ginal phenomenon. Our division month she posts a video withnetwork of hair stylists. For that has advanced the farthest advice that is seen by more than Digital transformation review n°01 - 12
  • 12. strategya million viewers. They are so Apple has listed us among their It’s a challenge for all of us. Wesuccessful that five of the ten best apps! can legitimately characterizetop make-up videos on YouTube this as a cultural revolution.are hers! What lessons do you draw But the pioneering spirit is a va- from your failures? lue that has been shared by allLancôme has a similar ap- L’Oréal employees for decades.proach in China, with a social We haven’t experienced any Don’t forget that Lancôme wasnetwork called Rose Beauty. real failures, as every expe- the first luxury cosmetic brandWith 500,000 fans and more rience contributes to our digital to launch a website, in 1999!than two million posts per year, learning. However, we have no- One year later, we were againthe website is an excellent lever ticed some dispersion and frag- the first luxury brand to launchfor Lancôme, which I remind mentation effects in past years, an e-commerce website in theyou is the top luxury brand in with local initiatives that may United States! Today, digitalChina. have been very interesting, but transformation is an exciting were not entirely in sync with challenge that involves all ofIn the Consumer Products divi- the brand values. This led us our 66,000 employees aroundsion we launched Instant Beau- to strengthen the brands’ stra- the world.ty, a mobile phone application tegic priorities and develop in-that lets customers scan a pro- tegrated campaigns. The mainduct’s bar code in the store and lesson from these experiencesget complete information about is the need for consistency ofthe product and how to use it. off-line and online strategies:For Maybelline, we are also cur- Our strength lies in a compre-rently testing iAD, a new gene- hensive vision, and mistakesration of advertising for iPhone. mainly come from a lack ofIn particular, it allows very pre- consistency.cise targeting, and raises vi-sibility in the Apple universe, What are the reactions to thiswhich aligns with the brand’s transformation within the“hip” character. Especially since company? Digital transformation review n°01 - 13
  • 13. Close-upTransform to the Power of Digital:Digital Transformation as a Driverof Corporate PerformanceBy Didier Bonnet, Global Head of Practices, Capgemini Consulting andPatrick Ferraris, Global Leader, Technology Transformation, CapgeminiConsultingDigital tools and technologies have invaded the businessenvironment, triggering significant changes in the way wework, communicate, and sell. Industries and governments alikeare undergoing a digital transformation either crisis-induced,as part of a core strategy, or as part of a more controlledbusiness transition. Under all circumstances, leaders needto be well prepared to anticipate the current and future impactof this enduring trend and steer their corporations accordinglyat the right speed.T he journey toward digi- tal transformation entailsharnessing its benefits - such journey depending on its starting point and the digital maturity of its industry and products or ser- An Enduring TrEnd AffEc- Ting EvEry indusTry… buT AT A diffErEnT PAcEas productivity improvement, vices. It is imperative for busi-cost reduction, and innovation nesses to remember that digital Over the past decades, digital- while navigating through the transformation is not just about technologies have progressivelycomplexity and ambiguity brou- technology. Instead, like any been embraced by organizationsght about by the changes in the other business transformation, a driven by advancement in tech-digital economy. roadmap across people, proces- nology, changing consumer be-We believe that every organiza- ses, and technology will enable havior, increasing globalizationtion is likely to tread a different organizations to successfully of the workforce, and a desirepath in its digital transformation navigate this transformation. to be more productive and inno- Digital transformation review n°01 - 14
  • 14. Close-upvative (see Figure 1). This digi- Although the use of digital to- for the Internet it was less thantal wave has not only fuelled a ols in the enterprise is not a new 7 years, and for tablets it can benumber of fundamental changes phenomenon, what has changed expected to be around 4 the way organizations pro- in recent years is the accelera- This breakneck pace of techno-duce, sell, and serve, but also tion of both the capabilities of logical change has triggered newchanged the way employees these tools as well as the pace consumer behaviors and usagework, communicate, and colla- of adoption by customers, em- patterns which are having a pro-borate. It has therefore created ployees, and organizations alike. found impact on organizations.a leadership and transformation For instance, while mobile te- Simply stated, digital transfor-challenge for most industry par- lephony took around 13 years mation is the increasing adoptionticipants. to reach critical mass-market1, of digital tools and technologiesFigure 1: Digital Transformation of Enterprises Communication VoIP Smartphone UCC Telepresence Online Knowledge Collaboration Base IP-PBX E-mail IM Cellphone Video Conferencing LAN Voice Voicemail V based Mail Multi Channel Conferencing Optical Enterprise Pagers P Customer Interface Knowledge Social Snail Mail PBX Base Network In-Person Team Store Meetings Magnetic Fixed Line Phone Knowledge Online Physical Base Tele Fax Knowledge Base Netmeeting Channel Channel Livemeeting Door to White-boarding Door Sessions Key: Social Roadshows Typewriters Networking 1950 -1970 Physical Files PC Digital Early Cheque Laptop Days Credit Predominantly Cloud Tele Card Manual Cash computing 70’s & 80’s b -banking Manufacturing Tape Digital B Branchless Drives Progression Infrastructure B Banking CD Electronic Funds Semi Automatic ATM Transfer Manufacturing The 90’s Smart Digital E-Commerce Computer Aided Manufacturing Manufacturing Acceleration Storage as a 2000 - Present Tablet Digital m-Commerce service Transformation Commerce / Financial Source: Capgemini Consulting Analysis 1 Years necessary for an invention to be used by a quarter of the US population. 2 Capgemini Analysis; The European environment Agency, State and outlook 2010: “Accelerating technological change: racing into the unknown”, Nov 2010; Forrester Research eReader Forecast, 2010 To 2015 (US), July 2010. Digital transformation review n°01 - 15
  • 15. Close-upTransform to the Power of Digital:Digital Transformation as a Driver of Corporate Performanceby an organization to funda- Faced with this transformation HArnEssing THE bEnEfiTs ofmentally alter both its internal challenge and the need to stay digiTizATionand external processes and func- relevant in one’s industry, lea-tions. All industry segments and ders have to embrace the impli- Digital transformation shouldgovernments have been touched cations of this enduring trend not be an end in itself. Like allby this new digital reality, which on their organizations in order other forms of business trans-has significantly altered mana- to steer their strategy and drive formation it should be guidedgement practices in areas from better operational performance. by clear managerial goals andhospitals to hypermarkets and Unfortunately, recent history is realizable business services to the future replete with examples of orga- Once a clear roadmap has beenof public services. As a result, nizations which have not been defined, digital transformationit has become a high priority able to keep pace with this new can help organizations addresson the leadership agenda, with digital reality. The recent ban- their most significant prioritiesnearly 90%3 of business leaders kruptcy of movie rental com- and achieve both internal andin the US and UK expecting an pany, Blockbuster, owing largely external benefits, in areas suchincreasing strategic contribution to its inability to rapidly hone a as innovation, customer expe-of IT and digital technologies new business model5, is one such rience, efficiency, or producti-on their overall business in the example. vity (see Figure 2).coming decade. With the Inter- Every industry is going throughnet, Hi-Tech, and Media sectors a digital transformation, some It’s About Productivityonly accounting for approxima- crisis-induced, some as part of Improving productivity is a keytely 10% of US GDP, we believe their core strategy, and some as driver for sustainable growth. Inthat the real transformation will part of a more controlled transi- recent years, productivity growthbe seen in the remaining 90% of tion process. Under all circums- in developed economies has been‘traditional’ industries’4, where tances, leaders have to steer their steadily falling and is signifi-customer and employee behavior corporations at the right speed, cantly lower when compared tois fast evolving. We can expect a taking into account the current emerging markets. For instance,largely similar trend in other de- and future competitive situation during the periods 1995-2005veloped countries as well. in their respective industry. and 2005-2008, Total Factor 3 Gartner: “Gartner CEO and Senior Business Executive Survey, 2010: Anticipating the Post-Recession Landscape”, March 2010. 4 Interview with Andrew McAfee, Author of Enterprise 2.0: New Collaborative Tools for Your Organization’s Toughest Challenges. 5 Blockbuster failed to effectively adapt its storefront model to online technology. Digital transformation review n°01 - 16
  • 16. Close-upProductivity6 in the US and EU- thereby exerting additional pres- improve productivity by auto-15 nations grew at the lowest sure on productivity. In order to mating tasks, enabling betterrates when compared to deve- stay competitive, companies in decision-making, and freeingloping markets in India, China, developed nations need to find employees up to create value inCEE, and Africa7. On top of this, new sources of productivity if other areas. In the United States,we can add socio-economic they want to remain relevant on IT was responsible for two-thirdstrends such as the shrinking and the global stage. of total factor growth in produc-aging workforce. In Germany, There is clear evidence that im- tivity between 1995 and 2002Italy, and France, the working plementation of digital techno- and virtually all of the growthage population8 is expected to logies has been a key driver of in labor productivity10. Similarly,fall by 15%, 8%, and 6% respec- corporate productivity. Digiti- EU firms that adopt e-businesstively between 2010 and 20309, zation has helped organizations practices (such as online salesFigure 2: Key Benefits of Digital Transformation Internal Opportunities Drive organizational Reduce selling, delivery, and employee and service costs productivity by Accelerate time to leveraging digital tools External market External Opportunities Create new digital Opportunities Multichannel and integrated customer experiences products such as across mobile, social and Cost and Time Productivity consumer devices, online platforms Saving Improvement eBooks, and smart meters New New Customer Products / Experience Services Use tracking or Operational analytical tools to Extend service analyze customer offerings to behavior patterns Customer New technology enabled and generate Insights Customer Product Platforms platforms such as insights online and mobile Source: Capgemini Consulting Analysis 6 Total Factor Productivity Growth measures the Growth of GDP over the combined contributions of total hours, workforce skills, machinery and structures and IT capital. 7 The Conference Board Total Economy Database, Summary Statistics 1995-2011, Jan 2011. 8 Working-age population = 15-64. 9 Stanford Center on Longevity: “ Population age shifts will reshape global work force”, April 2010. 10 ITIF: “Digital Prosperity: Understanding the Economic Benefits of the Information Technology Revolution”, March 2007. Digital transformation review n°01 - 17
  • 17. Close-upTransform to the Power of Digital:Digital Transformation as a Driver of Corporate Performanceand purchasing) are twice as li- mer acquisition cost on online novation and the main drivingkely to report enhanced produc- channels is 50% less than that force behind product and ser-tivity and expanded employment on offline channels13. Similarly, vice innovation across sectors.when compared with firms that when compared to call-center An EU-commissioned surveydo not use Internet technologies technical support, approximate has found that product andto innovate11. cost per contact is nearly 92% service innovation in most ofHowever, research12 points out cheaper for a virtual agent and the largest industries in Europethat while investment in digital 99.2% for web self-service14. is either directly related to, orcapital has a strong correlation The cost benefits of digitization enabled by, ICT16. Leading thewith high productivity, techno- span a whole range of indus- pack are the energy supply andlogy alone is not the most im- tries and functions. The use of telecommunications servicesportant driver of productivity. RFID tags in the supply chain sectors where 89% and 86%17Instead, it is a combination of a environment can help reduce of companies attribute productdigitally savvy corporate culture, inventory handling and logis- and service innovations to ICT.a distinct set of organizational tics costs. Remote health carepractices, and digital tools that enables monitoring of a pa-results in significantly higherproductivity. tient’s symptoms in real-time at relatively low cost. Smart me- “ In the US, in 2010, adoption ters can save utilities millions of e-business practicesIt’s About Saving Costs and of dollars by enabling them helped save companiesTime-To-Market to read meters remotely and $528 billion throughDigitization not only helps or- controlling demand. In the US,ganizations reduce operatio-nal, communication, travel, in 2010, adoption of e-business practices helped save companies efficiency gains ”marketing, selling, and pro- $528 billion through efficiency Digital tools also provide anduct development costs, but gains15. excellent platform to engagealso significantly accelerates stakeholders in co-innovation,problem resolution and time- It’s About Driving Innovation brand creation, and problemto-market. For instance, custo- Digitization is an enabler of in- resolution. Philips successfully 11 Information Technology and Innovation Foundation: “The Internet Economy 25 Years After .com”, March 2010. 12 MIT Sloan, Center for eBusiness : “The digital organization: seven practices of highly productive firms”, May 2003. 13 Forrester Research: “2009 Cost Of eBusiness Operations And Customer Acquisition”, May 2009. 14 Forrester: “It’s Time To Give Virtual Agents Another Look”, March 2010. 15 Information Technology and Innovation Foundation: “The Internet Economy 25 Years After .com”, March 2010. 16 Information and Communication Technology. 17 European Commission: “ICT and e-Business for an Innovative and Sustainable Economy”, 2010. Digital transformation review n°01 - 18
  • 18. Close-upcreated a private online com- customers over multiple touch- improve retention, up-sell, andmunity, Sensorium, in 2007 to points, providing a seamless cross-sell, and anticipate theco-create better products with and integrated multi-channel success of new product launches.customers and deliver on-de- experience. Defining and for- National Instruments, a leader inmand insights to multiple pro- mulating a multi-channel stra- virtual instrumentation, has suc-duct teams. In the last three tegy also enables companies to cessfully adopted a web-analy-years, the community has hel- maintain a 360 degree view of tics solution for lead generationped Philips in identifying post- the customer and balance sales, and customer engagement. Bypurchase concerns, creating ef- customer care, and retention tracking on-site visitor behavior,fective product positioning, and across channels. Moreover, by NI has achieved a 3% increase inunderstanding technical speci- aligning organizational struc- the number of visits that reachfications for a new product18. tures and incentives, organiza- the point-of-sale21. tions can drive maximum value As outlined above, the businessIt’s About Transforming across all channels. In the UK, imperatives and benefits of di-the Customer Experience 76% of marketers have expe- gital transformation are com-Digital channels and platforms rienced improved brand expo- pelling and have to be addressedare helping organizations ex- sure, 68% better customer servi- at all levels in the organization.tend their reach to a wider and ce, and 62% increased revenue, However, the path toward digitalmore engaged ecosystem of cus- by adopting a multi-channel transformation is not without itstomers and partners. The high strategy19. challenges.adoption rate of mobile devices Today, more than 70%20 of alland Web 2.0 tools - such as so- digital information is consu- A TrAnsformATion wiTHcial media, collaboration appli- mer-generated and comes from iTs own cHAllEngEscations, smart phones and tablet outside the organization. Aidedcomputers - is changing the way by sophisticated analytical to- In order to identify the key bar-people share information, learn, ols, companies can leverage this riers in the successful imple-communicate, and interact. For ocean of information to extract mentation of digital transforma-each transaction, organizations better customer insights, maxi- tion programs, we conducted acan interact and engage with mize customer lifetime value, series of interviews with a num- 18 Forrester Research: “Case Study: Philips Achieves Consumer Proximity Using Private Online Communities”, January 2011. 19 DBG Report: “Multichannel Marketing Today”, September 2010. 20 2010 Digital Universe Study: “A Digital Universe Decade – Are You Ready?”, April 2010. 21 Forrester Research: “Case Study: National Instruments Replatforms Web Analytics”, November 2010. Digital transformation review n°01 - 19
  • 19. Close-upTransform to the Power of Digital:Digital Transformation as a Driver of Corporate Performanceber of global corporations from ocean of data. Between 2009 pour an overwhelming amountacross different industries. Our and 2020, the amount of digi- of data into the digital ocean.analysis suggests that organiza- tal information created and re- The more information organi-tions across the globe are facing plicated in the world is expec- zations receive, the harder ita common set of challenges as ted to grow 44 times to reach gets to decipher what is crediblethey tackle these new digital an unprecedented 35 trillion and useful. Moreover, it beco-realities. These challenges can gigabytes22. In fact, according mes even more difficult to per-be broadly classified into four to estimates, more digital infor- form tasks and take decisions.categories (see Figure 3). mation was produced in 2009 Employees are unable to cope alone than all information since with the rising volume of infor-Manning the Information the beginning of time23. As inte- mation and this adversely im-Floodgates ractions become more frequent pacts on their morale and pro-The digital explosion has floo- and information-rich, custo- ductivity. A majority (62%24 onded organizations with an mers, partners, and employees average) of workers across the globe believe that the quality of their work is hampered becauseFigure 3: Key Challenges in the Path to Digital Transformation they cannot process and make sense of all the information at  Information flooding from multiple sources  The all-powerful customer their disposal fast enough.  Managing changing customer  Analyzing information for actionable intelligence sensitivities Though organizations realize  Developing the right social  Managing and securing large volumes of data media, Web 2.0, and mobile capabilities the importance of analytics, Change in many of them do not have the Information Overflow Customer Behavior skills - particularly advanced Key predictive analytical capabili- Challenges  Avoiding organizational and  Crafting a clear digital ties - to undertake it. Lack of technical silos Silo Based Organization/ roadmap at the top  Adopting a holistic approach Approach Culture Gap management level senior executive support, a silo  Workforce transformation  Change Management approach, an inexperienced workforce, and insufficient in- vestment are some of the big-Source: Capgemini Consulting Analysis gest roadblocks. 22 2010 Digital Universe Study: “A Digital Universe Decade – Are You Ready?”, April 2010. 23 MIT Sloan Management Review, 2011 MIT Sloan CIO Symposium. 24 LexisNexis Press Release:” New Survey Reveals Extent, Impact of Information Overload on Workers; From Boston to Beijing, Professionals Feel Overwhelmed, Demoralized”, October 2010. Digital transformation review n°01 - 20
  • 20. Close-upKeeping Pace with Customer pany had to scrap the launch. of clarity around customer andExpectation In certain industries, such as social-media ownership, ina-The increasing proliferation of music, changes in consumer be- bility to tailor business modelsdigital platforms has funda- havior have completely disrup- catering to changing consumermentally altered the way cus- ted traditional models and ren- behavior, and failure to take antomers interact with brands, dered many players obsolete. “outside-in view” of their busi-research and buy products, and ness.influence the decision makingof other customers. Customersare increasingly becoming wary “ More digital information was Adapting the Organization and Cultureand distrusting of traditional produced in 2009 alone Alligning the existing corporatemarketing vehicles and ins- than all information culture with new digital realitiestead are turning to online so- since the beginning is one of the main inhibitors incial networks, blogs, wikis, and the digital transition of compa-community forums to formu-late their brand perceptions and of time ” nies. One of the clearest indica- tors is that a clear governancemake purchase decisions. To- Despite being faced with this process for the transformation isday, consumers trust consumers very visible customer expecta- often lacking. In our interviewsmore than they trust brands. tion challenge, many companies with CXOs, it has become clearWhile 50%25 of consumers do have been slow in developing that one of the major issues isnot believe in the advertising the right skills and capabilities the lack of accountability in di-promises of brands, 73%26 trust to manage this new customer gital transformation programs.the recommendations of friends sophistication. For instance, Further, enterprises’ traditionaland family. 56% of Fortune 50 companies decision-making systems areCompanies can no longer afford still do not have social-media too vertical and too intrinsical-to ignore the voice and preferen- icons on their home pages while ly slow to keep pace with rapidces of the customer. Customer 60% hide their twitter streams27. technology-driven transforma-backlash against GAP’s recently This failure of organizations to tion. Consequently, corporationslaunched new logo was so in- rapidly adapt themselves can be have started to experiment withtense on the web that the com- attributed to factors such as lack various organizational formats 25 “The future of advertising agencies: learnings from Forrester”, Feb 2010. 26 Forrester Research: “Three Ways To Find, Create, And Energize Advocates”, Sep 2010. 27 Adage: “Most Fortune 50 Brands Still Hiding Their Social Media”, April 2011. Digital transformation review n°01 - 21
  • 21. Close-upTransform to the Power of Digital:Digital Transformation as a Driver of Corporate Performance- such as cross-functional tas- program, there can be inherent have responded to the impactkforces and identifying digital reluctance and resistance to of digitization through multi-leaders at board-level - in order change from within, especially ple, separate and uncoordinatedto adapt their culture to digital from middle management. Di- initiatives, even when the im-challenges. gitization results in the demo- pact is felt by the same brands,Far too many enterprises are cratization and free-flow of customers or employees. Func-investing in digital tools and information. Managers perceive tional silos frustrate interactiontechnologies without trying to this as a threat to leadership be- and create information silos,drive changes in the operating cause they have less control of making it harder to connect themodel, working practices, and information flows. For instance, right people in the right ways toculture. Companies often focus the US Department of Defence create and maximize value.too much on the technical and (DoD) had to face a lot of inter-customer-facing aspects of di- nal resistance during the formu- “ It is the obstacle togital transformation, forgetting lation of its social media policy is not technologythat true value can only be le- as the traditional military hie- thatveraged if we align people and rarchy and the network securityprocesses. As Raffi Amit, Pro- group were used to doing things digital transformation,fessor at Wharton, pointed out:“It is not technology that is the the old way28. It is important for corporations to have confidence it is people ”obstacle to digital transforma- in their employees by involvingtion, it is people”. An aging HR them closely in this journey and Similarly, a completely techno-infrastructure, non-alignment giving them ownership of pro- logy-centric approach often failsbetween business and HR lea- cesses. to challenge the fundamentalsders on the most critical busi- of a company’s business model.ness drivers, and ineffective Overcoming Silos This is because this approachrollout of change management Our discussions with organiza- aims to automate existing pro-programs to train employees on tions have surfaced a common cesses rather than attemptingnew digital ways of working are pitfall - adopting a silo-based a step-change in performance.some of the key barriers. approach, be it technical or or- In addition, technology-ledAs with any transformation ganizational. Many enterprises transformations often alienate 28 ReadWriteWeb: “U.S. Department of Defense Goes Social...Yes, Really!”, March 2010; Scout Comms: “The Department of Defense gained a social media beachhead in 2010”, Feb 2011. Digital transformation review n°01 - 22
  • 22. Close-upIT from the business functions, traditional business models. Or- Strategic Leadershipresulting in significant resis- ganizations need to tread a ca- and Boundary Definitiontance to change. Digital trans- reful path toward digital trans- Digital transformation is aboutformation is first and foremost formation, crafting a winning leadership. It has become thean enterprise-wide business strategy and a clear roadmap ultimate challenge in changetransformation and technology across people, processes, and management because it affectsshould be seen as a second-or- technology (see Figure 4). not only industry structures andder priority. strategic positioning, but also allTo overcome the silo mentality, Figure 4: Navigating Digital Transformation: A Frameworkcorporate leaders should take aholistic approach, cutting across Digital Strategy & tranSformationall aspects of their value chain • Value chain positioning • Value proposition / Business modelsand management functions. As • Digital transformation strategy • Innovationwell as the many challenges Digital cuStomeroutlined here, this is as much people 2.0 experience analyticSabout a fundamental change in • Integrated talent • Digital Marketing • Customermindset. management • Multi-channel analytics • Connected management • AdvancednAvigATing your own workforce/ • Customer Experience segmentation collaboration Optimization • PerformancedigiTAl TrAnsformATion • Change management management/ Digital operationS • External partner training metricsOrchestrating your Digital • Target operating model • BenchmarkingTransformation • Process digitization • WorkforceDigitization can extend the • Digital business analyticsreach of organizations, impro- platformsve management decisions, and technology Strategy & tranSformationspeed the development of new • Technology roadmap • Technology • Technologyproducts and services. At the to digital governance and innovationsame time, overly rapid adop- • Information organization management strategytion of technologies can disrupt Source: Capgemini Consulting Analysis Digital transformation review n°01 -23
  • 23. Close-upTransform to the Power of Digital:Digital Transformation as a Driver of Corporate Performancelevels of an organization (every achieve. Similarly, the Human methods can quickly be put intotask, activity, process) as well as Resources department must also “proof-of-concept” pilots and,the extended supply chain. Lea- be involved, given the impor- when successful, rolled out toders must constantly challenge tance of the people dimension the entire organization.their organizations to ensure in digital transformation. Digitalthat this technology-enabled transformation requires a mix An Outside-In View ofchange can unlock productivity of skills which are often scat- Customers – Re-inventinggains and significant competiti- tered across the enterprise and Marketingve advantage. At the same time, its external partners. To succeedthey should understand where in this quest, leadership should “ Many enterprisesand how the fundamentals of not hesitate to redefine the tra-their current operations could ditional boundaries between its have responded tobe unsettled by agile new en- different entities, making them the impact of digitizationtrants or new business models. permeable and porous. We see,A significant issue facing the for example, the marketing or through multiple, separate,top-management is that most commercial departments acqui- and uncoordinatedcompanies have traditional de-cision-making systems that are ring technical skills to address rapid technological changes. initiatives ”not well adapted for the digital Conversely, IT organizations areworld: they are too vertical, too strengthening their marketing Marketing is undergoing theslow to deal with the cross-func- and sales expertise in order to most fundamental change intional, technological and rapid better serve their companies. its history. The increasing em-nature of this transformation. Strategy formulation needs to powerment and sophisticationFor instance, when focusing on gradually move away from the of consumers - together withcustomer issues, you need the linear, annual process it once the proliferation of new chan-active participation of the Mar- was. Once strategic directions nels, digital technologies, andketing, Sales and IT organiza- are understood, senior executi- tools - is forcing marketers totions. However, historically, ali- ves need to steer their organi- rethink the way they operategnment between these different zations into virtual laboratories and the way they engage cus-functions has been difficult to where new applications and tomers. The result is an oppor- Digital transformation review n°01 - 24
  • 24. Close-uptunity to dramatically improve think «outside-in» about their damental lever of transforma-the efficiency and effectiveness customers and markets. Instead tion. Leaders should focus onof investments in marketing, of thinking about finding cus- a clear people vision and try toadvertising, and channel mana- tomers for their products and bring about inherent changes ingement. solutions, marketers need to the way people work and colla-Traditional marketing focuses think about finding products borate. There are a number ofon increasing reach and fre- and solutions for their custo- key challenges along the way:quency by pushing information mers. They need to understand professionalizing and web-ena-and offers through a variety of what activities customers per- bling end-to-end people pro-loosely aligned channels. Howe- form as they evaluate, buy, and cesses throughout the organiza-ver, the future of marketing in a use their products and services. tion, fostering collaboration anddigital world is to develop and They need to think deeply about information exchanges betweensustain unique, personalized re- when and where they hand-off communities of knowledgelationships with customers by products, services, and infor- workers to maximize producti-collaborating and partnering mation to their customers. They vity and speed-to-market, andwith them through their own need to ask which activities they adapting traditional organiza-trusted networks. For instance, can perform better than custo- tion models to the new demandsin 2010, Coca Cola cut adver- mers. Conversely, they need to of the digital world.tizing spending on television ask what activities customers Digitally powered tools andby 6.6 % globally, and instead can perform better than the en- processes must be developed toinvested more on social media terprise. encompass the entire employeecampaigns via platforms such lifecycle. They should comple-as Facebook, Twitter, and You- People at the Heart of tely transform the way peopleTube29. The social media stra- Transformation join, learn, perform, earn, growtegy of the company is aimed at As in all forms of transforma- and leave the company. Leadinglong-term sustainable engage- tion, people need to be mobi- global organizations are alsoment, developing advocacy, and lized and engaged. Too often embracing Enterprise 2.030 to-encouraging brand loyalty. we see the technical nature of ols to foster a connected work-The new digital customer expe- digitization resulting in compa- force where new forms of col-rience requires that companies nies underestimating this fun- laboration generate significant 29 Socialmediatoday: “Coca-Cola Cuts Ad Spend by 6.6% and Invests More in Social Media”, March 2011. 30 Harvard Business School Professor Andrew McAfee coined the term «Enterprise 2.0» in 2006 to describe how Web 2.0 technologies could be used on organizations intranet and extranets. Digital transformation review n°01 -25
  • 25. Close-upTransform to the Power of Digital:Digital Transformation as a Driver of Corporate Performancebusiness benefits. For instance, is closely linked to the business “Organizational Capital”33 andPfizer uses a range of collabora- strategy and customer priorities. obtain the highest gains fromtion tools such as Pfizerpedia (an For example, the physical distri- their digital transformation.integrated platform including bution network and fulfilment Data-Driven Decision Makingpeople, projects, events, blogs, processes should be optimally for a Smarter Organizationand discussion group to promo- designed to support new digi- In recent years, digitization haste knowledge sharing) and Pfa- tally-enabled multi-channel go- brought a wealth of both inter-cebook (platform for employees to-market strategies from both nal and external data sourcesto interact) to connect its people a cost and customer experience - such as supply-chain metrics,worldwide in a way that fos- perspective. customer online data, and so-ters innovation and speeds the IBM was able to save $6 billion cial-media commentaries - intopharmaceutical development by re-engineering its supply organizations. Today, the notionprocess . Of course, technology 31 chain processes, which inclu- that hard data and good analy-does not foster collaboration on ded process-automation throu- sis beats experience and intui-its own, so it is essential that gh web-based applications and tion is generally well accepted.organizations properly imple- consolidation of functions. In However, as the technology forment these tools with work pat- addition, the company esta- capturing and analyzing infor-terns and knowledge flows truly blished an e-procurement system mation becomes widely availa-understood. which helped reduce the average ble, at ever-lower price points, contract cycle time from 6 to 12 most organizations are stillDigitizing Your Operations months to less than 30 days32. learning how to leverage themfor Maximum Efficiency Digital Operating Models should to the fullest.As companies transform their be designed around four key In order to maximize the bene-business models in the face of dimensions: governance and fits of analytics, organizationsnew digital realities, transfor- performance management prin- should look beyond descriptiveming their operations becomes ciples, organization and mana- models, which provide simplea pre-requisite to successful gement practices, process model, operational statistics, such asexecution. Organizations need and system architecture. Only by sales-per-store or average pro-a clear roadmap in the form of integrating all these dimensions fit-per-employee, and focusa Digital Operating Model that can an organization create real instead on predictive models 31 Various Websites.32 Information Technology and Innovation Foundation: “The Internet Economy 25 Years After .com”, March 2010. 33 Because effective work organization can be costly to develop and implement but yields a stream of cash flows over time, it can be thought of as an asset. This asset is called “Organizational Capital”- Erik Brynjolfsson, “Intangible Assets: Computers and Organizational Capital”, October 2002. Digital transformation review n°01 - 26
  • 26. Close-upto generate deeper insights. For damental changes required in security, legislation, and infor-instance, Seven Eleven Japan culture, people, processes, and mation-management should beuses a sophisticated analytics technology. Further, adopting a key leadership prerogative. Insystem to manage the limited an enterprise-wide centralized addition, the historical quest toshelf-space at its stores. Point- approach to analytics, rather align IT with business strategyof-sale and customer demogra- than a department-level focus, and with key functions such asphic data is analyzed on a real- makes more sense for an orga- marketing and sales has beentime basis to gather statistics nization as it ensures that there difficult to achieve in practice.such as hourly sales trend for is a critical-mass of analytical What is needed in the digitalindividual items, stockout ran- expertise, data from different world is a true fusion of skillsking by individual items, and departments can be correlated, and functions to achieve ac-hourly sales trends by customer and security and governance is countability and speed of exe-profile, to better match supply centralized36. cution. This often requires newwith demand34. types of skills as well as flexibleData-driven decision making Adapting IT Governance organizational model.should be made an integral part and Processes for Effectiveof organizational culture and Transitioncompanies should use it as a The most effective companieslever to compete on analytics.Recent evidence points out, that have taken years to optimize their IT governance, and must “ Digital transformation is first and foremost anorganizations which adopt data- now re-examine it in the light enterprise-wide businessdriven decision-making achieve of the particular rhythms anda 5% to 6%35 higher producti-vity than those that do not. This characteristics of digital trans- formation, where technology transformation ”significant boost in productivi- decisions, investments and ini-ty can clearly separate winners tiatives are spread out throu- Since technology is a key ena-from losers in most industries. ghout the whole organization. bler of digital transformationThe transition to analytics Formulating an enterprise-wide the role of a CIO becomes in-should be driven by top ma- IT policy and governance which creasingly important in today’snagement because of the fun- addresses key issues such as enterprise. CIOs must focus on 34 Graduate School of Business, Stanford University: “Operational Analytics”, September 2007. 35 New York Times: “When There’s No Such Thing as Too Much Information”, April 23, 2011. 36 Babson Executive Education: “Competing on Analytics”, Thomas H .Davenport, Don Cohen, and Al Jacobson, May 2005. Digital transformation review n°01 -27
  • 27. Close-upTransform to the Power of Digital:Digital Transformation as a Driver of Corporate Performanceequipping the workforce and the Every organization is likely to pany, Journal Register38, spea-IT organization with new skills tread a different path in its di- rheaded its turn-around fromand tools required in a digital gital transformation journey bankruptcy in less than a yearcontext. Interfacing these new depending on its starting point by championing the firm’s digi-tools such as social networks and the digital maturity of its tal transformation strategy, “Di-and connected devices to the industry and products or servi- gital First”. The company, whichlegacy systems in order to drive ces. In addition, with constant filed for bankruptcy in 2009,value needs to be a top priority technological innovation and recorded a $40 million profit atfor organizations. competitive activity, crafting a the end of 2010 by adopting aFinally, the increasing com- transformation journey is not series of digital initiatives39.plexity of managing large vo- an event but a continuous pro- It is also important for mana-lumes of digital information, cess. Our analysis suggests a few gement to educate the board onfrom both within and outside, is best-practice pointers on how to the need for, and benefits of, thisexerting significant pressure on successfully craft and execute a transformation in order to achievethe IT organization. Companies digital transformation. complete buy-in on digital initia-which handle this stress better tives from all stakeholders.are more likely to gain an edge Lead and Educateover the competition. Organi- As with most successful bu- Evaluate and Set Prioritieszations therefore need to start siness transformations, senior Organizations need to carefullyconsidering virtual solutions team commitment is essential. review their current digital ini-such as cloud computing. In ad- Leaders should create awareness tiatives and conduct a “digitaldition, they should deploy tools and alignment in their top team fitness” test on their operationsfor prioritized storage as well as around the possibilities created so as to craft a coherent transfor-security and privacy protection by the digital economy. The CEO mation map toward their digitalin hybrid (both physical and should take charge and become future. Companies should alsovirtual) environments37. the principal advocate of the undertake a benchmarking exer- transformation program, with cise in order to identify best prac-A diffErEnT TyPE of a strong backing from top lea- tices both within and outside theirTrAnsformATion dership. For instance, the CEO own sectors. Priorities need to be of US-based print media com- set based on the areas - customer 37 Journal Register Company Owns and operates 18 daily newspapers and more than 150 non-daily publications and affiliated websites. 38 Company Websites; CEO John Paton’s Digital First Blog. 39 ScreenDigest: “Netflix dominates physical rental even as it moves toward digital”, May 2011. Digital transformation review n°01 - 28
  • 28. Close-upvalue, revenues, cost position, etc In 2010, Netflix had the largest must translate that vision into- where digitization is likely to single-company share of the phy- a set of measures and targets tohave the most positive impact. sical disc rental market as it grew drive the desired results from their from under 26% in 2009 to nearly digital transformation. People inCommunicate and Mobilize on 35% in 201040. all functions need to understanda Large Scale “what good looks like” in termsCommunication and mobiliza- Invest in Skills and of customer metrics, cost posi-tion are essential first steps to Competency Development tion, and productivity. Leadersget the entire organization en- The right digital competences will need to decide the timeframe andgaged around the transforma- not be widely available across the the level of ambitions based ontion as well as to manage the organization, so it is important to the particular responsiveness, thetraditional resistance to change. have a well-articulated talent and competitive situation, and theEnterprise 2.0 tools - such as people plan to start injecting the culture of their media, wikis, and discus- right skills in the right places atsion forums - can help mobilize the right time. Further, it is impe- The road toward successful di-and align the workforce on digi- rative to develop a mix of digital gital transformation is indeed atal objectives by building awa- competences across all functions, long one. However, every indus-reness, creating transparency, such as marketing, HR, sales, and try will be impacted at some pointand establishing open channels IT. Equally, investing in people so those that do not take advan-of communication. development and connecting the tage of “the power of digital” willA careful operational balance also workforce to improve sharing be at a competitive disadvantageneeds to be set between mana- and exchange will be key to le- in the short- to medium-term.ging the digital and the physical veraging the people side of the Industry leaders have a uniqueside-by-side. For instance, even as transformation. opportunity to start steering theirNetflix moves toward streaming organization from the physical todigital media services, it still do- Set the Ambition and Iterate the digital in an orchestrated wayminates the physical rental market Once the company is mobilized in order to improve their corpo-and has not lost focus in this area. around a clear vision, leaders rate performance. Contact the authors: 40 ScreenDigest: “Netflix dominates physical rental even as it moves toward digital”, May 2011. Digital transformation review n°01 -29
  • 29. visionI can’t think of any industry sector or companywhich is immune from digital transformationAndrew McAfee is a principal research scientist atthe Center for Digital Business in the MIT Sloan School ofManagement, and a fellow at Harvard’s Berkman Centerfor Internet and Society. Andrew McAfee professor at MIT Digital transformation review n°01 - 30
  • 30. vision gories of usage. The first inclu- built in. Their digital environ- des tools that allow companies ments are very open; they offer to become more scientific in every participant the chance to their decision-making, to rely adapt it at will. But the ama- less on gut feelings and be more zing thing is that the arrival of data-driven. Many companies these technologies hasn’t led actually commit to projects, ini- to chaos or disorganization. In tiatives or investments without fact, we can see extremely in- carrying out in-depth studies to novative structures and modelsH ow would you define di- gital transformation? validate them. Or these studies are done with the single goal of confirming the initial objective. taking shape. Corporations tend to use self-organization techno- logies either in the interactionsIt is characterized by the ever Now companies have a fantas- of their employees and partnersgrowing penetration of digital tic tool kit to test the relevance or in the relationships with theirtechnologies into every facet of of their hypotheses with near- life. By digital techno- scientific validity.logies, I not only mean classic “ The emergence ofenterprise applications but also The second category, which Ithe corporate usage of techno- call Self-organization, includes social media andlogies such as mobile, analytics, everything that helps people interactive websitesweb 2.0, localization, … (employees or consumers) come has served to lessen together, increases their ability the importance ofBeyond the technologies them- to communicate and to work traditional experts orselves, the real interesting phe- together without specifying in brands in favor ofnomenon is how corporations advance how they should do our own networks. ”and public institutions are using so. We include social media andthese technologies to deeply related web 2.0 tools in this ca-transform every facet of their tegory. It’s important to note Finally, the third category,whichbusiness. that 2.0 technologies don’t have I call orchestration, is in someI would distinguish three cate- a lot of workflow or hierarchy ways the opposite of the second. Digital transformation review n°01 - 31
  • 31. visionI can’t think of any industry sector or companywhich is immune from digital transformation It includes technology usages- and interactive websites has that allow companies to specify served to lessen the importance and monitor their operating mo- of traditional experts or brands dels on a global scale. This isn’t in favor of our own networks. new and typically emerged with Now I no longer rely on a gui- the ERP systems that came out de written by a food critic to in the late1990s, but we are now choose a restaurant. Instead, reaching out a level of maturity I check out consumer opinions where corporations are able to on Tripadvisor and those of execute their operating models my «friends» on Facebook or and processes on a global scale, Foursquare. Trust from consu- exactly as they were designed mers is more critical than ever and planned. and it has shifted from experts and brands to people whose opinions are more valued. “ Technology used to be frustrating In some sectors this upheaval and isolating, it has requires an urgent response. We become interesting, noticed in the United States that intuitive and social. ” the major financial institutions – banks and insurance compa- nies – were not very well-per- How has the digital revolution ceived by younger consumers. transformed consumer habits This population doesn’t like a in the United States? sales approach based on a sales- person or a brand which comes The way consumers make deci- to you and proposes a solution. sions, especially younger consu- Young people don’t trust this mers, has profoundly changed. kind of expertise anymore, es- The emergence of social media pecially when they see how Digital transformation review n°01 - 32
  • 32. visionbadly designed these compa- industry has changed far more and we are reaching out a levelnies’ websites are for maintai- than oil transport. It all depends of complexity in the manage-ning their relationship in a sa- on the products, the market ment and performance of globaltisfactory manner. and how things are organized. operating models and proces- I can’t think of any company ses which has never been rea-Our traditional Marketing mo- or sector which is immune ched before. On the other hand,del is broken, and not just for from digital transformation. we are just at the beginning ofyoung consumers. More and And the bad news is that the self-organization. Let’s take formore consumers in older age speed of change will only in- instance the innovation process:groups are now changing their crease as technology adoption Many corporations are lookingconsumer habits. The consu- and usage further blossom! at ways to open up their inno-merization of technology is a Economist Joseph Schumpeter’s vation processes which usedprofound phenomenon. Tech- «creative destruction» is taking to be run from the guys in thenology used to be frustrating place before our eyes. labs, into an open ecosystem ofand isolating, it has become employees and partners whereinteresting, intuitive and social. even consumers play a criticalThe gap between digital natives “ What is at stake role!and immigrants is rapidly clo- is the transformationsing… Companies need to be of the 90% of Do you think we’ll faceright there with their consu- all the ‘traditional’ a disruption of traditionalmers. business models? industries andHow are companies respon- companies. ” We’ve definitely seen new busi-ding to this technology revo- ness models appear on the scene,lution? Are they all affected Now, if we come back to our ini- often very innovative, for exam-the same way? tial three responses from corpo- ple in media or travel distribu- rations and institutions, I think tion. But we shouldn’t overstateNaturally, this phenomenon we can find different levels of things. The Media, HiTech anddisrupts some sectors more than maturity. Orchestration has the internet sectors account forothers. For example, the music been around for a while already less than 10% of the GDP in the Digital transformation review n°01 - 33
  • 33. visionI can’t think of any industry sector or companywhich is immune from digital transformationUnited States! What is at stake What are the main barriers times they’re unwilling to en-is the transformation of the re- to change? ter into a field they know littlemaining 90% of all the ‘tradi- about. Sometimes they justtional’ industries and compa- There are several. The cost of don’t think it’s their job to takenies. The US economy is still making these investments can the initiative. In other words,primarily founded on traditio- be one. But the most impor- a little intellectual revolutionnal businesses which are less tant without a doubt is com- is needed to draw benefit fromlikely to transform their busi- panies’ resistance to change these new technologies. This isness model than to adapt it. I and may be managerial inertia. not only true of the older indus-don’t share the opinion some tries. Unwillingness to changehave expressed, that companies “ You should never also affects businesses in newerwill be completely restructu- fields. underestimatered by these developments, oreven that what we recognize the fondness of people Is it relevant to talk abouttoday as companies will di- and organizations digital winners and losers?sappear altogether. Traditional for the status quo. ”structures still have their value, Yes, the data shows a growinghierarchy and organization are You should never underestimate performance gap between theuseful. Even newer companies the fondness of people and or- best digital leaders and thethat have perfectly integrated ganizations for the status quo. others. We have found a strongnew information technologies Many executives recognize that correlation between the tech-rely on experienced managers, using new technologies will in- nology adoption of an industryrely on full-time employees crease their ability to analyze and and its level of competition: theand organize career planning. effect change within the com- higher the technology intensityIn fact, they are very similar to pany, and change how people of an industry, the larger thetraditional companies. Silicon work, but many still don’t really gap between the best perfor-Valley companies, for example, understand what this means for mers of this industry and thestill face the familiar challenge themselves or their company, others. So yes, mastering digitalof continuously seeking out the and don’t see where the inno- transformation definitely makesbest talent. vations will come from. Some- a difference for corporations. Digital transformation review n°01 - 34
  • 34. Key figuresDigital usage Half of the More 700 million than 90% Facebook users access the website with their mobile devices of Chinese consumers between the age of 18 and 54 purchase products online2 billioninternet users in the world (at 80%end-2010), among which: of American450 millionare Chinese consumers rely on their social networks when searching for products to buy240 million are 61% ofAmerican Consumer behavior internet users5.3 billionmobile users (at end-2010) Multichannel consumers go online every day compared with 54% of TV viewers, 36% of radio listeners and 32% of spend 30% newspapers readers more than mono-channel consumers Digital transformation review n°01 - 35
  • 35. telesCopeChinese entrepreneurs are taking fulladvantage of the e-commerce boomBrian Xin, age 40, belongs to the generation that graduatedfrom top universities in China and went abroad to start theirprofessional lives, before coming back and creating their ownbusinesses. For him, it was Tsinghua university and then SiliconValley, before his return to China where he eventually becameChief Technological Officer of MSN. By 2009, he decided it wasthe right time for him to found StarryMedia and focus on socialmarketing and digital research. H ow would you define digital transformation? through the digital chain and keep searching for even easier and quicker access to an ex- Digital transformation is a broad panding volume of content and concept, but I would define it as goods. follows: getting online, getting On my way here in the subway, I social, getting mobile. had time to finish several tasks, It started much earlier in the read my tweets, check your pro- US, but China is following very file on Facebook, and send a quickly, especially in the social presentation on my iPad. Digital arena. Businesses and indivi- transformation is about access duals all are communicating anywhere, anytime. Digital transformation review n°01 - 36
  • 36. telesCopeCan you describe to us the to support this revolution. Now $1 billion, acquiring 50 millionrevolution going on in China? the online world is not only users within a year. the place to discuss and makeThe figures for internet in China friends, but the place to do mar- However, the main differenceare quite impressive. By June keting and look for revenue. with the US is that China’s di-2010, there were 420 million gital market is not consolida-internet users including 364 ted yet. For one Facebook, youmillion broadband users, and have five or six Chinese players: “ Digital2.79 million websites1. Many Renren, Kaixin, Sina… Last yearare incredibly successful. Bai- transformation is China numbered 1,000 Groupondu, the Chinese equivalent of a broad concept, copycats. Now the top three orGoogle, created in 2000, listed but I would define four are taking over most of theon Nasdaq in 2005, is worth it as follows: market share. In our case that is$44 billion today. Nine out of getting online, a very good opportunity as weten Chinese internet users use getting social, provide a transversal social me-Baidu for their searches. Ali- getting mobile. ” dia research platform.baba Group completed its $1.7billion initial public offering on How are the Chinese expe-the Hong Kong Stock Exchange The first hint came from mas- riencing this transformation?in November 2007, the biggest sive investments by ventureInternet IPO at that time since capitalists. Some think there Well, don’t ask my parents toGoogle’s 2004 offering on the is a bubble forming, but make become digital actors, althoughNasdaq. no mistake: a long term trend they do browse news online. is emerging. ETC, a Russian in- They will never place an order,We must remember that e-com- vestment company that funded because they don’t trust the on-merce only started booming in Facebook, Groupon and Twitter, line transaction. In fact, mostChina two years ago. Before, is now supporting Chinese di- people their age don’t even havethere was no trust in online gital companies. Lashou, built a payment card.transactions. Payment and lo- on the Groupon model, saw its While people below the age ofgistics were initially not ready value soar from $1 million to 50 have grown used to the inter- 1 Source : Chine Internet Network Information Center Digital transformation review n°01 - 37
  • 37. telesCopeChinese entrepreneurs are taking full advantageof the e-commerce boomnet, populations younger than example, I buy everything on agent also became a money30 are the main users. Most are the internet, both products and collector.from the eastern and coastal services, and I use price compa-regions in Tier 1 cities such as rison sites to make my decisions. How is this transition toShanghai, Beijing, Guangzhou. The younger generation, also an internet digital economySome Tier 2 and 3 cities such uses the internet for purchases. viewed by “traditional”as Hangzhou, Nanjing are also They are also highly reactive companies in China?highly digitalized. China counts to push mobile promotion. Themore than 420 million Netizens, e-commerce site Alibaba regis- Traditional companies are sit-with 30% growth each year. In- tered transactions for a value of ting up and taking notice. Theyterestingly, 61% of online ac- some 200 billion renminbi (€21 see the strong rise of the e-eco-cess is through mobile devices billion) in 2010. nomy, but they don’t know how(phone, iPad, etc.). to take advantage of the oppor- tunities offered by new digitalEach segment of the population “ The main difference tools. They are cautious and stillhas its preference. MSN is used with the US is that skeptical about the results theydaily by 20 million white collar China’s digital can achieve. So they’re stickingworkers to chat and do business. market is not to traditional media for theirRenren attracts 140 millions consolidated yet. ” advertising. I think they needteenagers and recent college advice and time to convincegraduates. themselves of the effectiveness We developed a model which of the new digital media.How is digital is quite specific to China. Astransformation influencing e-commerce initially faced trust Even so, competition increasedChinese consumers? issues, and part of the older po- in the past three years. The focus pulation was reluctant or una- is on getting the largest marketThere are different profiles, de- ble to pay for orders online, share, rather than on the profitpending on age and on perso- China ensured home delivery to be made. This is obviously thenal experience and proximity with at-the-door payment for best situation for digital tools. In my case, for online orders. Your delivery We could estimate that in China, Digital transformation review n°01 - 38
  • 38. telesCopearound 10% of advertising bud- strategy to cope with this trans- The social media constitutesgets are devoted to the new me- formation. pools of consumers that expressdia, or probably 15% to 20% for needs, making it possible to tar-digital transformation pioneers What companies also see now is get offers leading to immediatethat do lots of e-commerce, and that the growth of e-commerce purchase.5% for the others. But things goes hand-in-hand with the ex-are changing fast. For example, pansion of social networks. The You lived in the UnitedProcter & Gamble just asked its Chinese like to give their opi- States for ten years. Whatadvertising agencies to focus nions and hear those of other similarities or differences doon these new consumer trends. people, and the new websites are you see between the ChineseMany companies still need to perfect for this. They contribute and American approaches?address the question of their to a rise in consumer power. From a professional point of view, the approaches are quite similar. However, there are big differences in behavior. The Chinese like to ask other people for their opinion. You might say they were predisposed to use social networks, which explains the success of these websites in China. But Western companies have a hard time understanding the specifics of Chinese culture. Their offer is often not adapted Brian Xin, to the expectations of Chinese founder of StarryMedia consumers, which limits them in benefiting from this exci- ting and booming market in China. Digital transformation review n°01 -39
  • 39. telesCopeStarryMedia, a new approach to social mediamarketing and digital research Brian Xin has an engineering de- platform with ‘social connect’ links gree from Tsinghua University, to all major social networks and known as the Chinese MIT. He wor- communities in China. Segmen- ked in Silicon Valley in the US for tation and analysis of consumer ten years before returning to China groups will lead to very precise un- in 2006. derstanding of the expectations of Chinese consumers, and give client In 2009 he founded StarryMedia, a companies – from multinationals to start-up that aims to use the huge SMEs – high-added-value informa- success of social networking in China tion. The participants in this social to carry out extremely targeted mar- marketing community receive bene- fits (coupons, exclusive promotions, etc.) from the companies that com- “ THE goAl is To build mission the research and promo- tions, to help generate loyalty and THE bEsT consumEr dATAbAsE stickiness. Reward-based research Among THE cHinEsE PoPulATion, also brings an alternative payment To suPPorT HigHly EfficiEnT solution to partnership communi- kEy inTErnET figurEs in cHinA1 mArkETing for businEss. ” ties. Such a consumer engagement platform helps businesses move 420 million inTErnET usErs beyond research in the consumer in JunE 2010 keting and research. It includes Xin- community to carry out effective 50% of THE PoPulATion gDian consumer engagement portal marketing. On the consumer side, onlinE in 2013 with twitter style user experience StarryMedia delivers personalized 277 million inTErnET usErs and StarrySurvey digital research and targeted benefits, such as pro- on mobilE PHonEs DIY platform. The goal is to build motions, coupons, paid surveys,THE cHinEsE sPEnd 70% of THEir frEE TimE on THE inTErnET the best consumer database among etc., to consumers and builds a1 Source : Chine Internet Network Informa- the Chinese population, to support strong daily relationship betweention Center, ESSEC / Capgemini Consulting highly efficient marketing for bu- brands and consumers. It can lead siness. The consumer engagement to a next generation Groupon type Digital transformation review n°01 - 40
  • 40. telesCopeof services for each consumer, which curacy many users via the Kaixin users for feedback and a deepermeans more personalized, targeted, network, and provides Kaixin user/taste experience survey. At therelevant, and enjoyable interaction and its users with a good method end of the campaign, StarryMediaand offerings. for monetization. It’s a win-win helps YesMyWine spread the word situation for both Starry- Me- in social media, get high qualityStarryMedia has already formed dia and Kaixin. StarrySurvey customers, and also maintain cus-close relationships with major in- will also work on several deep inte- tomer satisfaction for long term re-ternet players. The company plans gration cases with Kaixin to offer develop in the Chinese and Asian an alternative payment solution inmarkets first. other apps, especially games, to StarryMedia will target three client Kaixin users. categories at this stage:Client references:1. StarrySurvey on 2. StarryMedia with - Large companies that understand this type of marketing approachStarrySurvey is the digital research and are willing to try it out, such asplatforms of StarryMedia. It created YesMyWine is the No.1 B2C wine retail chains or shopping centers.the extension app on e-commerce company in China.(considered to be China’s Facebook StarryMedia and YesMyWine are - The financial sector: banks thatfocusing on high-end white collar carrying out a joint market cam- need to promote their productspeople). The StarrySurvey app on paign targeting social media popu- and cards with their customers.Kaixin allows StarryMedia client lations. StarryMedia publishes thecompanies to potentially reach 120 online survey to recruit potential - Major brands, particularly luxurymillion Kaixin users. Kaixin, one of participants through social network brands that want to expand intothe largest social network platforms, channels. With the survey answers, China.opened up its APIs for 3rd party StarryMedia helps YesMyWineapps in late 2010. The StarrySurvey screen participants by preferredapp is the first digital research and criteria and generate target usersmarketing oriented app on Kaixin. (Lead generation). YesMyWine de-This cooperation helps StarryMedia livers free wine sample bottles tolocate with a high degree of ac- the users. StarryMedia follows the Digital transformation review n°01 - 41
  • 41. Key figuresBusinessperspective 100 billion Tipping points searches month on Google each announced in May 2011 that 3 billion it is now selling more electro- nic books through Kindle videos watched each day on YouTube than printed books$680 billionexpected global e-commercerevenues in 2011 (+19% yearon year) .77% of 3 millionFortune tweetsGlobal 100 each daycompanies have Twitteraccounts in 2011, compared 125 pictureswith 65% in 2010 added on Flickr every second Digital transformation review n°01 - 42
  • 42. guest writer Digital as Bearer of Another Society By Bernard StieglerI n 1919 Valéry began “The Crisis of the Mind” (“La crise de l’esprit”) with the following words:We later civilizations… we too now know that we are It can only be through the capacity to confront this question that humanity will remain human, or will no longer be human.mortal.1We, the earthlings of the twenty-first century, know *that we are capable of self-destruction. In his analysis Western knowledge is said to be rational in the sensein 1919 of what he called a crisis of spirit, Valéry em- that it is founded on demonstrative, deductive, cumulati-phasized above all the fundamental ambiguity of this ve and non-contradictory reasoning, the model of whichspirit (of reason, science, knowledge, and even of the is geometry, and it is said to be logical in the sense that itmoral elevation that made possible so many ruins and respects the laws of logos, that is, of thought insofar as itdeaths, and so much devastation, in Western Europe, is capable of reaching a universalizable truth.beyond anything that could have been imagined in anyprevious historical epoch): The broad contours of Western knowledge, and the dis-So many horrors could not have been possible without ciplinary divisions to which it gave rise and that weso many virtues. Doubtless, much science was needed today know as the natural, the human and the socialto kill so many, to waste so much property, annihilate sciences, emerged from what was produced at the endso many cities in so short a time; but moral qualities of the fifth century BCE in Athens, when Socrates, andin like number were also needed. Knowledge and Duty, then those who were called philosophers (the friends ofthen, are suspect.2 wisdom), began to fight against the way that writing was being used by the Sophists. According to SocratesThis constitutes that which, in what follows, I am going and Plato, the Sophists, abusing the power of writing,to call the question of the pharmakon—that is, of what, prevented the Athenians from thinking—and in particu-as cure for the ills of humanity (for example, as technics lar Athenian youth.and as science), can also become the very thing thatpoisons it and even threatens it with self-destruction. The foundation of Western knowledge—insofar as thisThis question, one that occupied certain twentieth-cen- took place, through Socrates, Plato and Aristotle, withtury intellectuals around the world, is no longer only an the establishment of the rational conditions of logicalacademic issue of concern to scholarly philosophers: it thought—rests on the critique and the rejection of whatobsesses all of us. It is the fundamental question of the philosophy presented as false knowledge, as a delusiontwenty-first century. or a trap, the illusory aspect of which derives, according 1 Paul Valéry, “The Crisis of the Mind,” The Outlook for Intelligence (Princeton: Princeton University Press, 1962), p. 23. 2 Valéry, “The Crisis of the Mind,” p. 24, translation modified. Digital transformation review n°01 - 43
  • 43. guest writerDigital as Bearer of Another Societyto Socrates and Plato, from the practice of alphabeticalwriting, the usage of which had become massively wi-despread in the Athenian society of the fifth century.Now, this historical fact is eminently paradoxical. Andthis is so because writing, as many authors have esta-blished—from Hegel3 to Vernant4, and passing throughHusserl and Derrida5—is also the condition of possibilityof the forms of knowledge that we call rational. This isso for the original model of rational knowledge, geo-metry, but also for all the extensions into fields suchas history, geography and, certainly, philosophy itself.And it was doubtless the writing of Plato’s Dialogues6that made possible the rational and cumulative processthat began with philosophy, and through which Plato“immortalized” the figure of his master, Socrates.But more than anything—and it is primarily on this pointthat Vernant insists—alphabetical writing is the condi-tion of the establishment of public law, and therefore ofa public thing, a res publica, which does not mean thefounding of scientific knowledge—even if, like the latter,it is subjected to the question of the criterion of truth Bernard Stiegler, philosopher,(the courtroom is the institution that aims to establish President of Ars Industrialis,juridical truth through the application of legal rules): Director of the Pompidou Center Institute for Researchit founds a new way of life, the conditions of being- and Innovationtogether as citizens, something that also constitutes acharacteristic trait of Western society.Public law, that is, law that is made public through wri- 3 Georg Wilhelm Friedrich Hegel, The Encyclopedia Logic: Part 1 of the Encyclopedia of Philosophical Sciences (Indianapolis: Hackett, 1991). 4 Jean-Pierre Vernant, Myth and Thought Among the Greeks (New York: Zone Books, 2006). 5 Edmund Husserl, “The Origin of Geometry,” and Jacques Derrida, “An Introduction to The Origin of Geometry,” both in Derrida, Edmund Husserl’s Origin of Geometry: An Introduction (Lincoln & London: University of Nebraska Press, 1989). 6 Cf., Léon Robin, Platon (Paris: Alcan, 1935). Digital transformation review n°01 - 44
  • 44. guest writerting, founds the Western way of life insofar as it consti- geometrically if we apprehend and reconstitute in our-tutes a form of political power that is perpetually ex- selves and for ourselves the demonstrative character ofposed to critique. This question of critique, that Marcel the demonstration, and not simply the result that oneDetienne7 has shown presupposes the written publica- calls the theorem—that one can, nevertheless, make usetion of that which is to be critiqued , is here absolutely 8 of empirically.fundamental: it is critique that constitutes the dynamicprinciple which means that societies of public law are In the Phaedrus9, Socrates, in conversation with theincessantly evolving. young Athenian who lends his name to the dialogue, explains to him that writing—which the Sophists useIn the city of Athens, however, at the end of the fifth and abuse in order to manipulate the minds of the noblecentury (if at least we are to believe Socrates and Plato), and ambitious youth in exchange for money—is both athe Sophists implemented a practice of writing that no remedy and a poison: a pharmakon.longer aimed to increase the individual and collectivecritical capacity of that social group known as the polis, This pharmakon is the remedy for a living memory thatbut, on the contrary, short-circuited this critical activity, is continuously being lost, for a memory that is limi-and enabled the Sophists to manipulate thinking—that ted, a remedy that makes up for this flaw in psychicis, to prevent thinking. Because to think is always to and cerebral memory by adding a memory that is ar-think for oneself, whereas Sophistic writing consisted tificial, mnemotechnical (of which alphabetical writingin spreading received ideas, commonplaces (topoi) that is an advanced stage, but of which there exist archaicwere all the more dangerous in that they granted the forms dating back to Prehistory). It thus makes possibleillusion of thinking to those of whom they took hold, culture in general, that is, the transmission of individualat the very moment that they in fact prevented them experience from generation to generation, and thus asfrom thinking. This engenders what can then be called collective experience: as the accumulation of knowled-stupidity. ge, knowledge that, with alphabetical writing, becomes deductive and demonstrative in the proper sense, and * transmissible as such, that is, literally, to the letter.Those who think only think if they think for themsel-ves, say the philosophers. We all know that we only Writing, however, is also what enables individual mnesicunderstand the concepts of geometry and only think activity to be short-circuited: instead of memorizing Marcel Detienne, Les Savoirs de l’écriture en Grèce ancienne (Lille: Presses universitaires de Lille, 1988). 7 Cf., Jack Goody, The Domestication of the Savage Mind (Cambridge: Cambridge University Press, 1979). 8 9 Plato, Phaedrus, in Edith Hamilton & Huntington Cairns (eds.), The Collected Dialogues of Plato (Princeton: Princeton University Press, 1961), pp. 475–525. Digital transformation review n°01 - 45
  • 45. guest writerDigital as Bearer of Another Societyand in this sense learning—to count, for example—I can of systemic perverse effects, leading to the depletion orsimply pick up a calculator, or again, instead of learning the exhaustion not only of the interior milieu, but of theand memorizing a telephone number, I can just store exterior milieu itself, that is, the environment, the humanit on my phone. This technical exteriorization of my world in its totality. And hence the conclusions reachedmemory can lead to its weakening, to its atrophy, and by Paul Valéry ninety-two years ago have now becomeeventually to the destruction of this psychic memory those of everybody—resulting in a very disturbing apo-that is the foundation of the capacity to think for one- calyptic climate. Things have moved in this directionself—that is, of the capacity to think full stop. because economic as well as political powers are in need of new forms of knowledge, forms that may beThis is why Socrates and Plato can claim that, even if required by the development of industrial technologies,writing founds the possibility of knowledge as the poli- but that for the moment remain completely lacking.tical way of life, as rational public debate, it remains athreat to all of this just as much as it has made it possi- The human situation must be understood in its totality,ble. It is as such that it constitutes a pharmakon, that is, and as the dynamic system that constitutes this totality,a poison as much as a cure. from the perspective of a general pharmacology, itself based on a general organology. Drawing upon a solid * basis in scientific evidence, the palaeo-anthropologistWhat Socrates and Plato say about writing can be ge- André Leroi-Gourhan showed that it was through theneralized to everything technical—and in the first place exteriorization of their memories that human beingsto medicines and drugs themselves, the abuse of which were able to accumulate individual experiences trans-leads to a weakening of the capacities belonging to the missible from generation to generation, thereby forminginterior milieu that forms an organism10, which may that collective memory we call culture: this memory isthereby become dependent, and which may at that point technics.develop pathologies that we refer to as “side effects”,requiring other drugs that in their turn provoke further During the course of the prehistory and protohistoryside effects, and so on. of technics, mnemotechnical forms appeared, and were continually changed and improved, the most importantThis vicious circle can now be seen everywhere, in every of these being, of course, alphabetical writing: this formsphere, with all of technics having in the end these kinds has today spread across the planet. Digital is an evo- 10 Claude Bernard, Introduction à l’Etude de la Médecine expérimentale (Paris & New York: Librairie J. B. Baillière, 1865). Digital transformation review n°01 - 46
  • 46. guest writer lution and extension—into electronic and multimedia pability11 and the loss of autonomy, that is, the loss of spheres—of this form of writing. knowledge. Mnemotechnics, technics in general, and technologies From writing, as analysed by Plato, up until what is ta- are always two-sided. king place today in the digital field, and having passed through the stage of the machine-tool—which Adam Their beneficial side intensifies what the philosopher Smith (and then Marx) showed “corrupts” the mind of Gilbert Simondon called processes of individuation, that the worker, sending it into a “torpor”12, workers being, is, processes of transformation through which beings thereby, transformed into the proletariat insofar as they realize potentials, increases and augmentations of what are deprived of their knowledge, this knowledge having Spinoza called their “potential to act”—for example, been exteriorized in the machine, and the workers dis- augmenting their memory, and thereby increasing their covering that in this sense they have been dis-indivi- capacity for calculation, for discernment, for critique, for duated13—processes of dis-individuation are therefore reason, and so on. This augmentation, which can also continually operating at the same time as processes of mean improvements of the individual’s physical perfor- individuation. mance, is individual as well as collective, and is even the very foundation of the collective: the distribution All this proceeds from the pharmakon that, always and through society of technical augmentations constitutes irreducibly, both individuates (produces individuation, a division of labour configuring social organizations, increases of the potential to act) and dis-individuates such as, for example, businesses or institutions. (produces dis-individuation, deprivations of the poten- tial to act). In this regard, we, men and women of the At the same time that they constitute the basis of the twenty-first century, find ourselves in a very particular individuation and transformation processes of psychic situation, of which I shall here draw attention, essenti- and social individuals, however, these processes of the ally, to two aspects. technicization of human relations (to which technical developments of every kind always lead) always also * contain the possibility of short-circuiting relational mo- 1. des and individual capabilities, and they may, therefore, We live in the epoch of industrial technology, and ever create phenomena of dis-individuation, that is, of inca- since the Industrial Revolution technological evolution11 Capability and incapability are major themes of the approach developed by Amartya Sen, beginning with Amartya K. Sen, “Equality of What,” in Sterling M. McMurrin (ed.), The Tanner Lectures on Human Value (Salt Lake City: University of Utah Press, 1980), pp. 195–220. Among many other works, see also: Sen, Commodities and Capabilities (Oxford: Elsevier Science Publishers, 1985); and Sen, Development As Freedom (Oxford: Oxford University Press, 1999). 12 Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Random House, 1937), pp. 734–5. 13 This is Simondon’s analysis of what occurs with the machine-tool in the nineteenth century, in Du mode d’existence des objet techniques (Paris: Aubier, 1989). Digital transformation review n°01 - 47
  • 47. guest writerDigital as Bearer of Another Societyhas accelerated and deterritorialized: it slowly but su- systems mostly lasted for more than a century, and inrely emancipates territories, and therefore national po- the Palaeolithic era they could last for several hundredlitical structures. thousand years. As for ourselves, however, we live in an industrial world where the technical system never stopsEver since the nineteenth century, since this accelera- evolving.tion in the transformation of the relation to time, sincethe advent of technology, it has become no longer a The duration of the first industrial technical system, amatter of (empirical) technics but rather of (scientific) system we refer to as thermodynamic because it wasindustrial technology, the evolution of which is now constituted around the steam engine, was seventy years.programmed and organized by the economic world. Then came chemistry, electricity and the Lenoir engine,Whereas, on the territorial plane, and therefore in space followed by the electronic system, so that the technicalin the sense that the technical and now technological system of today now seems to be caught in a perpetualsystem tends to globalize itself ever more rapidly, phe- process of re-elaborating itself, and to have been strip-nomena of “disadjustment” have been produced. ped of all stability.Disadjustment is a term employed by Bertrand Gille inorder to describe the way in which, from one age to To the extent that a form of technics is pharmacological,another, the evolution of a technical system, which is a it always has effects that may eventually be positive,dynamic system, leads to a rupture of the system, during but that in the first place are negative, and Gille thuswhich the technical system begins to evolve very rapidly argues that the only way of constituting a viable socio-and decouples itself from the social systems that were technical system—that is, of combining and integratingformed around it during the stage preceding the rupture. the dynamics of the technological system with those ofSocial tensions then arise, at times provoking revolu- the social systems, but also with those of psychic sys-tions and all manner of troubles, disrupting society at tems, biological systems and geographical systems (withthe very moment it is reinventing itself: this is in certain the constraints of such systems, as, for example, theirrespects a moment of great “creative destruction”—and seismic potentials)—is to organize the readjustment.Bertrand Gille himself cites Joseph Schumpeter14. This organization of readjustment is the modernizationDisadjustment is a regular occurrence whenever there of society founded on the idea of progress, which inis a change of technical system. For a very long time, France was implemented by the Napoleonic state, andin any case up until the nineteenth century, technical which throughout almost the whole world was imple- 14 Joseph Schumpeter, Capitalism, Socialism and Democracy (New York: Harper, 1975). Digital transformation review n°01 - 48
  • 48. guest writermented in various ways by the state, in particular by the 1970s absolutely crucial for large-scale commercial en-Prussian state—it is thus a process of becoming at the terprises—short-circuits social systems.heart of which states have played a fundamental role. This short-circuit is even more extreme, since it hasThe process of disadjustment is inevitable, and it must been accompanied by a process of financialization, re-always be assimilated and overcome by a process of sulting in financialized capitalism—which is no longeradoption through which society must rethink itself, and an investment-based capitalism, becoming instead awhere the choice of technical orientations (which are speculative form of capitalism—that relates in a directalways a socio-technical combination) must be elabora- way to consumers via marketing subjected to the pres-ted according to the objectives of this readjustment. sure of shareholders, who have themselves become more and more speculative. * 2. Now, what is thus short-circuited is not only the so-All this is tied to the history of capitalism: the history cial function of social systems: it is the entrepreneurialof industrial society is also that of capitalist society. function. And all this leads to an accumulation of pro-Between the nineteenth and twentieth centuries, capita- blems that are not only social but environmental andlism passes from productivism to consumerism, that is, psychic, and which, combined with the weakening offrom obtaining gains in productivity through the pro- social bonds, constitute a massive process of dis-indivi-letarianization of the producer and the rationalization duation, now painfully felt by populations, and percei-of modes of production through mechanization, to a ved by them to be intolerable—a situation that is trans-society in which the central figure becomes the consu- lated into a regression both social and psychic.mer, of whom it is a matter of transforming behaviouralmodes: of making behaviour plastic, and permeable to *technical evolution. It is in this highly “pharmacological” context that, after twenty years of digital reticular techno-It is no longer simply social systems that are transfor- logy, there emerges a new electronic form of wri-med by the organization of readjustment on the scale ting that absolutely affects all individual and col-of the state: it is psychic individuals who are here di- lective activities through a constant connectivityrectly solicited, and this solicitation—through marketing that winds up producing everything under the sun.which, as strategic marketing, has become since the Digital is a pharmakon, and all the evidence suggests it Digital transformation review n°01 - 49
  • 49. guest writerDigital as Bearer of Another Societyis the bearer of another society. It is the bearer of a social sharpened flint characterizes the first hominid);organization no longer founded on Fordist consumerism,but instead on the economy of contribution15. • collective individuals, which form social organizations (social systems that have as a goal to make compatibleIn order to implement the potentials for psychic and and efficient the connections between physiologicalcollective individuation brought about by digital, and organology and technological organology).in order to struggle against its potentially dis-individua-ting effects, it is necessary to adopt the pharmacological It is through the implementation of this dual approachapproach founded on general organology. (pharmacological and organological) that reticular society, network society, will be able to confront theGeneral organology is a method of making scientific collapse of the consumerist model and implement andisciplines work together in relation to three spheres of economy of contribution that is also an economy ofindividuation: the reconstitution of knowledge, that is, of the strug- gle against the processes of proletarianization that the• psychosomatic individuals (a psychic individual pharmakon tends to spread to “all levels of society.” always has a body, and its “psychism” is inseparable from the organs of its body, the brain, heart, kidneys, Alan Greenspan thus confessed to the House of Repre- etc., the neuro-vegetative system, perceptual organs, sentatives that he had lost the possibility of apprehen- and so on); ding a financial technology that in fact short-circuited his ability to make decisions, just as the advent of nu-• technical individuals (a technical system links together clear systems guided and performed by central compu- artificial organs each one of which is dependent on ters, and linked to radar systems and missile launchers the others—a technical object never functions on its via Arpanet (forerunner of the internet), had “proleta- own, just as, for example, a brain cannot function wi- rianized” the politician, who was thus deprived of the thout the heart, since it needs to be irrigated by blood, possibility of knowing and deciding—this being the very whereas a smartphone needs to be fed either by an reason that, according to Paul Virilio16, Richard Nixon electrical network or by a photovoltaic battery—these and Leonid Brezhnev were forced to enter negotiations artificial organs equipping psychosomatic organs: a with a view to limiting nuclear armaments… pair of glasses equips a pair of eyes, a bicycle equips the moving body, writing equips memory, and the Translated by Daniel Ross 15 The economy of contribution is the principal object of the work of the Ars Industrialis association. 16 Paul Virilio, Speed and Politics: An Essay on Dromology (New York: Semiotext(e), 1986). Digital transformation review n°01 - 50
  • 50. About Capgemini ConsultingCapgemini Consulting is the Global Strategy and TransformationConsulting brand of the Capgemini Group, specializing in advisingand supporting organizations in transforming their business, fromthe development of innovative strategy through to execution,with a consistent focus on sustainable results. CapgeminiConsulting proposes to leading companies and governments afresh approach which uses innovative methods, technology andthe talents of over 3,600 consultants worldwide.For more information: About CapgeminiCapgemini, one of the world’s foremost providers of consulting,technology and outsourcing services, enables its clients to transformand perform through technologies. Capgemini provides its clientswith insights and capabilities that boost their freedom to achievesuperior results through a unique way of working, the CollaborativeBusiness Experience™. The Group relies on its global delivery modelcalled Rightshore®, which aims to get the right balance of the besttalent from multiple locations, working as one team to create anddeliver the optimum solution for clients. Present in 40 countries,Capgemini reported 2010 global revenues of EUR 8.7 billion andemploys around 110,000 people worldwide.