On March 20, 2018 at the IBM THINK Global conference, directly after Chairman Ginni Rometty’s keynote, we had a discussion with four thought leading CEOs about transformation in our digital world. The panel, which I moderated, consisted of:
- Jo Ann Jenkins, CEO, AARP, the world's largest nonprofit, nonpartisan membership organization dedicated to social change and helping people 50 and over to improve the quality of their lives. Jo Ann is also author of the best selling book, “Disrupt Aging”
- Bruce Van Saun, CEO, Citizens Financial Group, where the Citizens 2014 IPO was the largest banking IPO in history, and the IPO share price has since more than doubled.
- Judy Marks, President, Otis Elevator Company, founded in 1853 with 68,000 colleagues. Otis is the world leader in elevators and escalators, moving 2 billion people across the world every day.
- Mike Beller, CEO, Thesys Technologies, a capital markets technology leader, recognized for winning the bid to build the Securities and Exchange Commission-mandated Consolidated Audit Trail (CAT), which will become the largest financial database in the world.
The discussion was teed up by subject matter expert, Ismail Amla, Managing Partner, IBM Global Services, N.A., “What is being called by many, Industry 4.0, will usher in exponential growth and a transformation of business and society. According to McKinsey Global Institute, a large majority of jobs will be automated and more than 300 million people worldwide will have to learn new skill sets for jobs. There will be a need for continuous learning and retraining of workforces. Artificial Intelligence (AI) will be implemented in 70% of organizations by the end of 2018 and 93% of organizations will be on cloud by 2020 for IT agility and other reasons. However, Boston Consulting Group has said the chance of failure has increased from one in twenty to one in three, so the stakes are really, really high. In summary, this idea of man and machine is here-- and it’s here now, and it’s at scale.
Robert Reiss: What is your definition for transformation?
Judy Marks: Leading change through the combination of culture and technology.
Mike Beller: Bettering markets through technology.
Bruce Van Saun: An effort to maximize a company’s potential.
Jo Ann Jenkins: Taking the strategic risks to make necessary changes that meet our customers where they are today, and more importantly, where they’re going.
Reiss: How is digital changing your industry?
Beller: People talk about "big data", which, to my mind, is really just any amount of data too big for you to comprehend or process by yourself. Computers help us make big data into small data, and humans can use and comprehend small data.
The way people talk about Artificial Intelligence (AI) sometimes sounds magical but it’s actually a very old concept, that goes back to the foundation of computing many decades ago. In recent years, the amount of data we have available to us has increased by a factor of many thousands, and a specific discipline with AI, called machine learning, has begun to produce results which have a real impact on our lives. Machine learning is about reducing the enormous amounts of data and recognizing patterns and scope, and providing that digested result to humans, so humans can comprehend and make a decision. This is key because we don’t want to ignore a whole bunch of data just because it’s too large an amount for us to wrap our heads around.
Where we’ve seen success largely in the application of machine learning technology is leaving the grunt work to the machine learning algorithm and leaving the creativity and the vision to the humans. So, for the capital markets, AI does not replace vision, it helps us make the best decisions possible, which brings us back to our mission at Thesys -- making better markets through the application of technology.
Jenkins: Digital will have tremendous impact, particularly the autonomous car, because isolation is one of the biggest areas that affecting deterioration of the brain and other organs. If in fact you are isolated or lonely, it is the equivalent of smoking fifteen cigarettes a day, and people who are lonely live eight years less than those who aren’t. Another application is what we call Fifty Plus Banking. What has been so fascinating in this digital space is that what our members tell us they want is the same exact thing as people who are under the age of fifty tell us they want in terms of ease of use, connectivity, having family members being connected to or having access to bank accounts and making financial decisions. Banking can now detect when someone starts to pay the bill twice or three times in a month or when they start to take out large sums of money. That is often the first area where you see the brain deterioration or the loss of memory and dementia occurring. So it’s important for us to be digitally connected.
In Japan, they now have a service equivalent to the US Postal Service where a family member can, for a small fee, the mail carrier will check on that loved one when they are delivering mail to the house and send out an electronic transmission to that individual to say I saw Robert today. He looked fine. Looked healthy. Was very communicative. So technology, particularly voice transmitted technology, is going to be key to allowing people to live independently as long as they’d like to.
Marks: I don’t think you can be a leader today and not figure out how to disrupt yourself. You will be disrupted and disintermediated. The question is are you going to lead your company through disruption in your industry or are you going to let someone else do it? Digital is really influencing everything we do, especially when you think about smart cities. We are not responsible for moving people horizontally through cities. There are sensors that can tell you exactly how populations are moving. But once you get in a building, we do understand the traffic flow patterns. We understand who is where, who needs to go where, how you can do that with control, and most importantly how you can move people efficiently, effectively and safely in buildings.
If you think about integrated access control, if your iPhone can check you into a hotel and open your hotel room lock, it can also provide access control as you enter a building. It knows where you want to go and on your way up, if you’re the first person on that floor, it can connect with intelligent lighting and adjust the HVAC. So when I talk about us being the spine of a building, it’s all about understanding the movement of people. It’s really important – especially for the incumbents, when you’re dealing with a legacy business and a wonderful heritage of great employees, many whom have generations of history with your company – to figure out how to empower your colleagues to help your company lead toward the future.
Van Saun: The industry is moving very rapidly to digital experiences and for the first time last year, overall digital transactions far exceeded both what happens in the branch and what happens through the call centers so that adoption curve has really picked up pace. And I think what customers want is they want to have their experiences be seamless, whatever channel they use, whether it’s in the branches or doing things online or doing things over the phone. So that has been a real effort is to try to make sure those things are integrated.
For us, I think when we think about what do customers want digitally, it’s really two big umbrellas that we’re building under. One is simplicity. So they want a simple experience. It’s easy to use. The other thing is personalization. They want to know my bank gets me. It doesn’t waste my time. It makes offers to me. It understands where I am on life’s journey. And so we use data really to solve personalization.
Amla: The view is that for the S&P 500, 50% of those companies will disappear in the next ten years. There will be a churn. Research done by the IBM Business Institute, where we have decades of research going on, with the latest round with 12,500 C-Suite executives from across the world, suggests the disruptors and the disruption are largely coming from industry, from within the industry. So the disrupted have woken up, learned, and are now going to become the disruptors. And they have all the assets. They have all the data. Right now, 80% of data is sitting within organizations who don’t have access to it. Once these enterprises unleash their data, they will become the dominant organization in disrupting. AI is not a magic pill, a piece of software that you “switch on” and implement; it’s the curating of data, understanding that data, so you can become the disruptor.
Reiss: What insights can you share on how to lead through transformation?
Van Saun: I think you can compare it to gardening in many ways. If you want to plant a nice garden, you start out with a picture, the vision of what the end state is. And then you have to put the things in place and build it over time so it turns out that way and then as you’re going, you’ve got to be doing all the weeding and the watering and the nurturing to help things along to get to that end state. With a company, it’s very similar. It starts with, what is the vision? What is the potential of the organization considering the environment it’s operating in, considering its strengths, considering where there are gaps that have to be addressed? Paint that picture and then get the organization. Fill the place with good leaders who can help you move along that continuum and help the company reach its potential.
Beller: I have three children, all Millennials, and I find myself taking advice from them. Millennials expect more from a job; they expect their life's work to make a difference in the world. So as a leader, I believe that my employees appreciate the fact that we’re about making the markets better -- and, to us, that actually isn't just a bunch of words. It’s how we make our decisions. How we deliver for clients, institutions, regulators, and how we impact the economy. That sense of purpose helps us through challenging times, and also helps us celebrate key milestones. It also plays a factor in the type of employees we want to have on board. That’s why my core leadership belief is never compromise on culture.
Marks: I’ve been a technology zealot as an engineer my whole life and I fully believe in the incredible strength of technology. But to be a leader, you’re not just leading a company – you’re leading people. You have to share a common vision. You have to empower them. We have over one thousand branches across the world and if you think decisions can be made at a headquarters with any true invoking of real-time leadership, they can’t. You have to empower your teams. You have to trust. You have to engage. So communicate. You can’t do it enough. Once your colleagues have bought in, it is amazing to watch the culture shift and it’s amazing to watch the power of your people and how that exponentially moves across your business. Technology is wonderful, but it’s not of value if you can’t deploy it and you can’t use the strength of our incumbency, especially in industrial, which is our people.
Jenkins: I’ve found that organizational culture trumps strategy every day. You change an organization’s culture by having an engaged staff so that they’re co-creating a vision of what the future looks like with them. I often tell people that my number one job as the CEO of AARP is to empower staff to do their best work and to remove the barriers so that they can create what the future looks like.
… In summary, when I wrote The Transformative CEO (McGraw-Hill 2012) I defined a Transformative CEO as someone who, “creates new value that reinvigorates a company, reinvents an industry or reboots society.” As I think about the insights from these top leaders I think the key is to become the disruptor by understanding where digital is taking us and thinking through how to create new value.
To listen to interview with top CEOs, go to www.theceoforumgroup.com
