JW Marriott Ditches Commercials And Experiments With Branded Content [VIDEO]

Michael Brenner

Is advertising dying?

Gabe Leydon, CEO of one of the world’s largest gaming companies Machine Zone, seems to believe so. You can read his critiques and watch his full interview at Re:Code/Media conference earlier this year here. And Leydon isn’t alone.

David Beebe, a former media and marketing exec at Disney-ABC Television Group, who currently serves as the head of creative and content marketing at the global hotel brand Marriott International, recently announced that Marriott’s own content studio will be producing and distributing more of its own branded content.

Move over commercials, story-driven content is here

Consumers have grown weary of commercials that interrupt their viewing experience. They download and are even willing to pay for ad blockers to avoid seeing ads they do not want or need.

And Beebe reiterates what many content marketers have been saying for years, “You can’t just make a commercial anymore. You have to create something of value.” To get the attention of today’s consumers, your content needs to be relevant, useful and adds value to your intended audience.

Rather than investing in commercials, Beebe’s team focuses on creating story-driven branded content such as short films and documentary-style TV programs, which consumers can watch on various distribution channels, including Marriott’s website, in-room entertainment, YouTube, and partner channels.

The latest content series Beebe’s team is working on, titled “Open Invitation,” follows Bill Rancic, winner of the first season of “The Apprentice,” as he travels around the world with his wife, Giuliana Rancic, who you may be familiar with as a former anchor and host at E! network.

The show unsurprisingly will showcase some of Marriott properties and the luxurious experiences Rancic and his wife will enjoy on their adventure visiting JW Marriott, a luxury hotel chain among 30 other Marriott’s global brands.

But unlike a typical hotel commercial that may focus solely on promoting the property and its amenities, the branded content series goes beyond the hotel and explore the city, culture, people and food, very much like a TV travel show – the things that both beginner and seasoned travelers would be interested to learn about when planning for their own trip.

“We want to inspire people to travel the world, or to maybe remind them to go back to cities they’ve visited before and discover something new,” Beebe explained.

The first episode of “Open Invitation” follows Rancic to Venice, Italy, exploring local cuisines and immersing himself in both tourist as well as hidden attractions recommended by locals, such as visiting a glassmaking factory. Viewers will not only learn more about what the city can offer, but also the stories behind the places and people Rancic meets on his trip.

Published at the end of last month, the first episode has already garnered over 3k views on YouTube. It’d be interesting to follow the rest of the branded content series and see how well it performs. If you’re interested, you can watch the full episode below.

How to create the content your audience will love

Not every brand has the budget and resources to produce the kind of content Marriott does, and if your company doesn’t, you should just give up on content marketing altogether, right? Absolutely not.

An effective content marketing program is a combination of hard work, commitment, time, and a solid content marketing strategy, execution, and measurement plan.

Your content marketing strategy should identify the objectives you want to accomplish with your content marketing efforts, your audience and existing content gaps, the content types you will produce, a publishing schedule and promotion plan, as well as a measurement strategy to track and communicate your results. Here’s a quick guide that goes through each component of an effective content marketing plan in detail.

Ultimately, what will help you reach and convert your target audience is producing and providing content that they want and need. Before you create any content then, put yourself in the customer’s shoes and think about what information they look for when making a purchase decision. What pain points or challenges are they facing? What are their triggers, motivators, and goals? What are they interested in reading and learning about?

By providing valuable and relevant content that helps your customers make smarter, better purchasing decisions, you become a trusted advisor and partner to them, which in turn builds trust and credibility with your target audience. So when it’s time to make a purchase, your customers will have more confidence in your brand and will choose to do business with you over your competitors.

Are you interested in engaging and converting new customers for your business? Contact me here and let’s talk about how we can help. Or follow me on LinkedInTwitter, or Facebook and if you like what you see, subscribe here for regular updates.

Photo Source: Adweek

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About Michael Brenner

Michael Brenner is a globally-recognized keynote speaker, author of  The Content Formula and the CEO of Marketing Insider GroupHe has worked in leadership positions in sales and marketing for global brands like SAP and Nielsen, as well as for thriving startups. Today, Michael shares his passion on leadership and marketing strategies that deliver customer value and business impact. He is recognized by the Huffington Post as a Top Business Keynote Speaker and   a top  CMO influencer by Forbes.

Exploring The Future Of Insurance

Uwe Hofstaetter

The insurance industry is evolving quickly. New technology and innovative solutions are providing consumers with much more than a basic policy that sits in a drawer and is sought after only when they need to file a claim. Today’s insurance industry is far-reaching, providing a wide variety of services to consumers. Insurance has become a life service.

Insurance is transforming as innovation continues

Insurance is evolving from a service that provides help when a problem occurs to a tool that helps prevent the problem in the first place. Insurance is helping people live healthier lives, enjoy safer homes, avoid vehicle accidents, and much more.

Predicting risks helps reduce loss

Information allows insurance companies to assess situations with real-time data and lessen the potential damage from natural disasters. For example, over the previous few years, devastating hurricanes have hit the United States and other areas of the world. However, the amount of destruction and the number of lives lost has decreased due to better use of data. According to Bob Cummings, head of the insurance industry business unit at SAP, data and technology behind the scenes are helping make this possible. In the “S.M.A.C. Talk Technology” podcast, he explains, “This is just because we’ve been able to protect much more, and much of that protection actually is thanks to technology, thanks to data, thanks to sensor technologies which allow us to have early warning systems.”

Zillow Research indicates that in Florida alone, $400 billion in real estate value is at risk from climate change by the year 2100. Analyzing and assessing data could help reduce this loss significantly. Today’s innovative technology is leading the way.

Companies can innovate and still reduce privacy risks

A key concern with innovation in the insurance industry is privacy. A survey from On Device Research for Mobile Ecosystems Forum found that 70 percent of Americans, and 62 percent of people globally, are worried about privacy and the Internet of Things.

There’s no doubt that the insurance industry has an unnerving amount of access to a person’s private information. Consider, for example, a watch that monitors a person’s pulse, or a device that constantly gathers information about their level of physical fitness. These devices can help health insurers provide more cost-effective policies to healthy patients and guide to others to obtain health care before life-threatening conditions arise. Yet there is a privacy concern here. Can data stream in and still be protected?

“I would say even most importantly, wrap it in-iron clad security so that this data really stays within its business context and its business model and is not available to other areas. This is probably our fastest growing area,” says Bob Cummings in the podcast. In many ways, the technology that’s now transforming this data into usable information is becoming some of most sophisticated from a security perspective. That’s good news for both consumers and insurance companies: It reduces risks, enhances access to usable data, and ensures privacy.

Harnessing data has never been easier

Just a few decades ago, insurance companies could not access data to accurately predict risk with consumers. Today, that data is available in many forms. Consumers wear smartwatches that stream data. Mobile connectivity through smartphone apps has exploded. New technology is synthesizing patient data to make it usable in real time.

Consumers benefit first and foremost when insurers have data from such technological advances and connection points. Weather data can help predict storms. Smart home technology can save lives by monitoring carbon monoxide levels.

While IoT, machine learning, and predictive analytics technologies help consumers, they also help mitigate risks to insurance companies. Insurers can provide better service to consumers and work to improve systems and offer health guidance to minimize claims. With privacy solutions built in, consumers can feel confident that sharing their personal information will benefit them in both the short and long term. In this way, technology empowers insurance companies, brokers, agents, and industry leaders to provide a life service.

Where will the insurance industry go from here?

It is an exciting time to be in the insurance industry. New resources and tools are becoming available as companies explore innovative ways to meet the needs of their customers. To explore the innovation and changes occurring and how your company can adapt to them, take a few minutes to listen to the full podcast from SAP’s Bob Cummings at S.M.A.C. Talk Technology.

Hear the full podcast episode here. Learn how to bring new technologies and services together to power digital transformation by downloading The Future Services Sector: Connected Services for Continuous Delivery.

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Why Online Retailers Enhance Their Offline Experiences

Matt Wilkinson

For centuries, retail was a single-channel experience. Our predecessors purchased their goods from a single brick and mortar store, and that served their needs.

As technology evolved, so did our needs. We needed more channels to access more goods at our convenience. This caused retail to become a multichannel experience. Right now, we are watching that multichannel model give way to the omnichannel experience.

As retailers integrate their channels, they are allowing their physical shopfronts to shut down at an alarming rate. In Australia alone, major brick and mortar outlets are closing while online sales are soaring.

But why should retailers abandon brick and mortar? If handled correctly, a physical storefront can enhance the online shopping experience. Below are three reasons why retailers should bring their offline experience into the age of Brick and Mortar 2.0.

Engagement

Human contact appeals to us on a basic level. Despite online retailers adopting conversational AI, this appeal can only be authentically provided through a brick-and-mortar outlet. Along with appealing to us on a basic level, brick-and-mortar staff can start conversations with customers. This can steer them towards online services and sign-ups. It can also keep them in the store long after they could have clicked another tab.

As well as engaging with other humans, physical stores allow us to engage with the products we’re interested in. After all, statistics show 85% of shoppers prefer to make purchases in person. This is thanks to the security of seeing merchandise up close before making a decision.

If online retailers cannot provide this sense of security through a physical storefront, they must provide a dependable return policy.

Organic discovery

As online shopping enters Industry 4.0, advanced business analytics ensure that shoppers are presented only with heavily filtered results. This can obstruct organic discovery, which enables customers to discover delightful new products they may not have found online.

With a shop-front in your customer’s own neighborhood, you can ensure your brand won’t be buried under filters and search rankings. Otherwise, you must optimize your SEO and search filtering with a smart content management system.

Data collection

Just as technology has enabled real-time customer profiling for online retailers, so too has it improved offline customer profiling. In fact, many leading retailers recognize that they can capture unique data in their brick-and-mortar stores. American homeware retailer Crate & Barrel found that in-store engagement alone increased their email signups by over 15%.

In addition, advances in facial recognition and machine learning can enable brands to track customer emotions in store. By combining customer emotions with the power of Predictive Analytics, the possibilities are endless.

While retailers must pay attention to their digital experience, it is important to augment their brand through offline spaces. After all, it is difficult to retain retail customers in an omnichannel world.

For more on this topic, see Unified Commerce Ends The Online Vs. Brick-And-Mortar War.

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About Matt Wilkinson

Matt Wilkinson is the General Manager, Consumer Industries for SAP ANZ. Having operational roles in consumer industries organisations combined with 20+ years of professional services in both delivery and sales roles with cloud and on premise solutions, provide him with a unique insight to help organisations achieve effective digital transformation.

The Blockchain Solution

By Gil Perez, Tom Raftery, Hans Thalbauer, Dan Wellers, and Fawn Fitter

In 2013, several UK supermarket chains discovered that products they were selling as beef were actually made at least partly—and in some cases, entirely—from horsemeat. The resulting uproar led to a series of product recalls, prompted stricter food testing, and spurred the European food industry to take a closer look at how unlabeled or mislabeled ingredients were finding their way into the food chain.

By 2020, a scandal like this will be eminently preventable.

The separation between bovine and equine will become immutable with Internet of Things (IoT) sensors, which will track the provenance and identity of every animal from stall to store, adding the data to a blockchain that anyone can check but no one can alter.

Food processing companies will be able to use that blockchain to confirm and label the contents of their products accordingly—down to the specific farms and animals represented in every individual package. That level of detail may be too much information for shoppers, but they will at least be able to trust that their meatballs come from the appropriate species.

The Spine of Digitalization

Keeping food safer and more traceable is just the beginning, however. Improvements in the supply chain, which have been incremental for decades despite billions of dollars of technology investments, are about to go exponential. Emerging technologies are converging to transform the supply chain from tactical to strategic, from an easily replicable commodity to a new source of competitive differentiation.

You may already be thinking about how to take advantage of blockchain technology, which makes data and transactions immutable, transparent, and verifiable (see “What Is Blockchain and How Does It Work?”). That will be a powerful tool to boost supply chain speed and efficiency—always a worthy goal, but hardly a disruptive one.

However, if you think of blockchain as the spine of digitalization and technologies such as AI, the IoT, 3D printing, autonomous vehicles, and drones as the limbs, you have a powerful supply chain body that can leapfrog ahead of its competition.

What Is Blockchain and How Does It Work?

Here’s why blockchain technology is critical to transforming the supply chain.

Blockchain is essentially a sequential, distributed ledger of transactions that is constantly updated on a global network of computers. The ownership and history of a transaction is embedded in the blockchain at the transaction’s earliest stages and verified at every subsequent stage.

A blockchain network uses vast amounts of computing power to encrypt the ledger as it’s being written. This makes it possible for every computer in the network to verify the transactions safely and transparently. The more organizations that participate in the ledger, the more complex and secure the encryption becomes, making it increasingly tamperproof.

Why does blockchain matter for the supply chain?

  • It enables the safe exchange of value without a central verifying partner, which makes transactions faster and less expensive.
  • It dramatically simplifies recordkeeping by establishing a single, authoritative view of the truth across all parties.
  • It builds a secure, immutable history and chain of custody as different parties handle the items being shipped, and it updates the relevant documentation.
  • By doing these things, blockchain allows companies to create smart contracts based on programmable business logic, which can execute themselves autonomously and thereby save time and money by reducing friction and intermediaries.

Hints of the Future

In the mid-1990s, when the World Wide Web was in its infancy, we had no idea that the internet would become so large and pervasive, nor that we’d find a way to carry it all in our pockets on small slabs of glass.

But we could tell that it had vast potential.

Today, with the combination of emerging technologies that promise to turbocharge digital transformation, we’re just beginning to see how we might turn the supply chain into a source of competitive advantage (see “What’s the Magic Combination?”).

What’s the Magic Combination?

Those who focus on blockchain in isolation will miss out on a much bigger supply chain opportunity.

Many experts believe emerging technologies will work with blockchain to digitalize the supply chain and create new business models:

  • Blockchain will provide the foundation of automated trust for all parties in the supply chain.
  • The IoT will link objects—from tiny devices to large machines—and generate data about status, locations, and transactions that will be recorded on the blockchain.
  • 3D printing will extend the supply chain to the customer’s doorstep with hyperlocal manufacturing of parts and products with IoT sensors built into the items and/or their packaging. Every manufactured object will be smart, connected, and able to communicate so that it can be tracked and traced as needed.
  • Big Data management tools will process all the information streaming in around the clock from IoT sensors.
  • AI and machine learning will analyze this enormous amount of data to reveal patterns and enable true predictability in every area of the supply chain.

Combining these technologies with powerful analytics tools to predict trends will make lack of visibility into the supply chain a thing of the past. Organizations will be able to examine a single machine across its entire lifecycle and identify areas where they can improve performance and increase return on investment. They’ll be able to follow and monitor every component of a product, from design through delivery and service. They’ll be able to trigger and track automated actions between and among partners and customers to provide customized transactions in real time based on real data.

After decades of talk about markets of one, companies will finally have the power to create them—at scale and profitably.

Amazon, for example, is becoming as much a logistics company as a retailer. Its ordering and delivery systems are so streamlined that its customers can launch and complete a same-day transaction with a push of a single IP-enabled button or a word to its ever-attentive AI device, Alexa. And this level of experimentation and innovation is bubbling up across industries.

Consider manufacturing, where the IoT is transforming automation inside already highly automated factories. Machine-to-machine communication is enabling robots to set up, provision, and unload equipment quickly and accurately with minimal human intervention. Meanwhile, sensors across the factory floor are already capable of gathering such information as how often each machine needs maintenance or how much raw material to order given current production trends.

Once they harvest enough data, businesses will be able to feed it through machine learning algorithms to identify trends that forecast future outcomes. At that point, the supply chain will start to become both automated and predictive. We’ll begin to see business models that include proactively scheduling maintenance, replacing parts just before they’re likely to break, and automatically ordering materials and initiating customer shipments.

Italian train operator Trenitalia, for example, has put IoT sensors on its locomotives and passenger cars and is using analytics and in-memory computing to gauge the health of its trains in real time, according to an article in Computer Weekly. “It is now possible to affordably collect huge amounts of data from hundreds of sensors in a single train, analyse that data in real time and detect problems before they actually happen,” Trenitalia’s CIO Danilo Gismondi told Computer Weekly.

Blockchain allows all the critical steps of the supply chain to go electronic and become irrefutably verifiable by all the critical parties within minutes: the seller and buyer, banks, logistics carriers, and import and export officials.

The project, which is scheduled to be completed in 2018, will change Trenitalia’s business model, allowing it to schedule more trips and make each one more profitable. The railway company will be able to better plan parts inventories and determine which lines are consistently performing poorly and need upgrades. The new system will save €100 million a year, according to ARC Advisory Group.

New business models continue to evolve as 3D printers become more sophisticated and affordable, making it possible to move the end of the supply chain closer to the customer. Companies can design parts and products in materials ranging from carbon fiber to chocolate and then print those items in their warehouse, at a conveniently located third-party vendor, or even on the client’s premises.

In addition to minimizing their shipping expenses and reducing fulfillment time, companies will be able to offer more personalized or customized items affordably in small quantities. For example, clothing retailer Ministry of Supply recently installed a 3D printer at its Boston store that enables it to make an article of clothing to a customer’s specifications in under 90 minutes, according to an article in Forbes.

This kind of highly distributed manufacturing has potential across many industries. It could even create a market for secure manufacturing for highly regulated sectors, allowing a manufacturer to transmit encrypted templates to printers in tightly protected locations, for example.

Meanwhile, organizations are investigating ways of using blockchain technology to authenticate, track and trace, automate, and otherwise manage transactions and interactions, both internally and within their vendor and customer networks. The ability to collect data, record it on the blockchain for immediate verification, and make that trustworthy data available for any application delivers indisputable value in any business context. The supply chain will be no exception.

Blockchain Is the Change Driver

The supply chain is configured as we know it today because it’s impossible to create a contract that accounts for every possible contingency. Consider cross-border financial transfers, which are so complex and must meet so many regulations that they require a tremendous number of intermediaries to plug the gaps: lawyers, accountants, customer service reps, warehouse operators, bankers, and more. By reducing that complexity, blockchain technology makes intermediaries less necessary—a transformation that is revolutionary even when measured only in cost savings.

“If you’re selling 100 items a minute, 24 hours a day, reducing the cost of the supply chain by just $1 per item saves you more than $52.5 million a year,” notes Dirk Lonser, SAP go-to-market leader at DXC Technology, an IT services company. “By replacing manual processes and multiple peer-to-peer connections through fax or e-mail with a single medium where everyone can exchange verified information instantaneously, blockchain will boost profit margins exponentially without raising prices or even increasing individual productivity.”

But the potential for blockchain extends far beyond cost cutting and streamlining, says Irfan Khan, CEO of supply chain management consulting and systems integration firm Bristlecone, a Mahindra Group company. It will give companies ways to differentiate.

“Blockchain will let enterprises more accurately trace faulty parts or products from end users back to factories for recalls,” Khan says. “It will streamline supplier onboarding, contracting, and management by creating an integrated platform that the company’s entire network can access in real time. It will give vendors secure, transparent visibility into inventory 24×7. And at a time when counterfeiting is a real concern in multiple industries, it will make it easy for both retailers and customers to check product authenticity.”

Blockchain allows all the critical steps of the supply chain to go electronic and become irrefutably verifiable by all the critical parties within minutes: the seller and buyer, banks, logistics carriers, and import and export officials. Although the key parts of the process remain the same as in today’s analog supply chain, performing them electronically with blockchain technology shortens each stage from hours or days to seconds while eliminating reams of wasteful paperwork. With goods moving that quickly, companies have ample room for designing new business models around manufacturing, service, and delivery.

Challenges on the Path to Adoption

For all this to work, however, the data on the blockchain must be correct from the beginning. The pills, produce, or parts on the delivery truck need to be the same as the items listed on the manifest at the loading dock. Every use case assumes that the data is accurate—and that will only happen when everything that’s manufactured is smart, connected, and able to self-verify automatically with the help of machine learning tuned to detect errors and potential fraud.

Companies are already seeing the possibilities of applying this bundle of emerging technologies to the supply chain. IDC projects that by 2021, at least 25% of Forbes Global 2000 (G2000) companies will use blockchain services as a foundation for digital trust at scale; 30% of top global manufacturers and retailers will do so by 2020. IDC also predicts that by 2020, up to 10% of pilot and production blockchain-distributed ledgers will incorporate data from IoT sensors.

Despite IDC’s optimism, though, the biggest barrier to adoption is the early stage level of enterprise use cases, particularly around blockchain. Currently, the sole significant enterprise blockchain production system is the virtual currency Bitcoin, which has unfortunately been tainted by its associations with speculation, dubious financial transactions, and the so-called dark web.

The technology is still in a sufficiently early stage that there’s significant uncertainty about its ability to handle the massive amounts of data a global enterprise supply chain generates daily. Never mind that it’s completely unregulated, with no global standard. There’s also a critical global shortage of experts who can explain emerging technologies like blockchain, the IoT, and machine learning to nontechnology industries and educate organizations in how the technologies can improve their supply chain processes. Finally, there is concern about how blockchain’s complex algorithms gobble computing power—and electricity (see “Blockchain Blackouts”).

Blockchain Blackouts

Blockchain is a power glutton. Can technology mediate the issue?

A major concern today is the enormous carbon footprint of the networks creating and solving the algorithmic problems that keep blockchains secure. Although virtual currency enthusiasts claim the problem is overstated, Michael Reed, head of blockchain technology for Intel, has been widely quoted as saying that the energy demands of blockchains are a significant drain on the world’s electricity resources.

Indeed, Wired magazine has estimated that by July 2019, the Bitcoin network alone will require more energy than the entire United States currently uses and that by February 2020 it will use as much electricity as the entire world does today.

Still, computing power is becoming more energy efficient by the day and sticking with paperwork will become too slow, so experts—Intel’s Reed among them—consider this a solvable problem.

“We don’t know yet what the market will adopt. In a decade, it might be status quo or best practice, or it could be the next Betamax, a great technology for which there was no demand,” Lonser says. “Even highly regulated industries that need greater transparency in the entire supply chain are moving fairly slowly.”

Blockchain will require acceptance by a critical mass of companies, governments, and other organizations before it displaces paper documentation. It’s a chicken-and-egg issue: multiple companies need to adopt these technologies at the same time so they can build a blockchain to exchange information, yet getting multiple companies to do anything simultaneously is a challenge. Some early initiatives are already underway, though:

  • A London-based startup called Everledger is using blockchain and IoT technology to track the provenance, ownership, and lifecycles of valuable assets. The company began by tracking diamonds from mine to jewelry using roughly 200 different characteristics, with a goal of stopping both the demand for and the supply of “conflict diamonds”—diamonds mined in war zones and sold to finance insurgencies. It has since expanded to cover wine, artwork, and other high-value items to prevent fraud and verify authenticity.
  • In September 2017, SAP announced the creation of its SAP Leonardo Blockchain Co-Innovation program, a group of 27 enterprise customers interested in co-innovating around blockchain and creating business buy-in. The diverse group of participants includes management and technology services companies Capgemini and Deloitte, cosmetics company Natura Cosméticos S.A., and Moog Inc., a manufacturer of precision motion control systems.
  • Two of Europe’s largest shipping ports—Rotterdam and Antwerp—are working on blockchain projects to streamline interaction with port customers. The Antwerp terminal authority says eliminating paperwork could cut the costs of container transport by as much as 50%.
  • The Chinese online shopping behemoth Alibaba is experimenting with blockchain to verify the authenticity of food products and catch counterfeits before they endanger people’s health and lives.
  • Technology and transportation executives have teamed up to create the Blockchain in Transport Alliance (BiTA), a forum for developing blockchain standards and education for the freight industry.

It’s likely that the first blockchain-based enterprise supply chain use case will emerge in the next year among companies that see it as an opportunity to bolster their legal compliance and improve business processes. Once that happens, expect others to follow.

Customers Will Expect Change

It’s only a matter of time before the supply chain becomes a competitive driver. The question for today’s enterprises is how to prepare for the shift. Customers are going to expect constant, granular visibility into their transactions and faster, more customized service every step of the way. Organizations will need to be ready to meet those expectations.

If organizations have manual business processes that could never be automated before, now is the time to see if it’s possible. Organizations that have made initial investments in emerging technologies are looking at how their pilot projects are paying off and where they might extend to the supply chain. They are starting to think creatively about how to combine technologies to offer a product, service, or business model not possible before.

A manufacturer will load a self-driving truck with a 3D printer capable of creating a customer’s ordered item en route to delivering it. A vendor will capture the market for a socially responsible product by allowing its customers to track the product’s production and verify that none of its subcontractors use slave labor. And a supermarket chain will win over customers by persuading them that their choice of supermarket is also a choice between being certain of what’s in their food and simply hoping that what’s on the label matches what’s inside.

At that point, a smart supply chain won’t just be a competitive edge. It will become a competitive necessity. D!


About the Authors

Gil Perez is Senior Vice President, Internet of Things and Digital Supply Chain, at SAP.

Tom Raftery is Global Vice President, Futurist, and Internet of Things Evangelist, at SAP.

Hans Thalbauer is Senior Vice President, Internet of Things and Digital Supply Chain, at SAP.

Dan Wellers is Global Lead, Digital Futures, at SAP.

Fawn Fitter is a freelance writer specializing in business and technology.

Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.

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CEO Priorities And Challenges In The Digital World

Dr. Chakib Bouhdary

Digital transformation is here, and it is moving fast. Companies are starting to realize the enormous power of digital technologies like artificial intelligence (AI), Internet of things (IoT) and blockchain. These technologies will drive massive opportunities—and threats—for every company, and they will impact all aspects of business, including the business model. In fact, business velocity has never been this fast, yet it will never be this slow again.

To move quickly, companies need to be clear on what they want to achieve through digital transformation and understand the possible roadblocks. Based on my meetings with customer executives across regions and industries, I have learned that CEOs often have the same three priorities and face the same three challenges:

1. Customer experience – No longer defined by omnichannel and personalized marketing.

Not surprisingly, 92 percent of digital leaders focus on customer experience. However, this is no longer just about omnichannel and personalized marketing – it is about the total customer experience. Businesses are realizing that they need to reimagine their value proposition and orchestrate changes across the value chain – from the first point of interaction to manufacturing, to shipment, to service – and be able to deliver the total customer experience. In some cases, it will even be necessary to change the core product or service itself.

2. Step change in productivity – Transform productivity and cost structure through digital technologies.

Businesses have been using technology to achieve growth for decades, but by combining emerging technologies, they can now achieve a significant productivity boost and reduce costs. For this to happen, companies must first identify the scenarios that will drive significant change in productivity, prioritize them based on value, and then determine the right technologies and solutions. Both Mckinsey and Boston Consulting Group expect a 15 to 30 percent improvement in productivity through digital advancements – blowing the doors off business-as-usual and its incremental productivity growth of 1 to 2 percent.

3. Employee engagement – Fostering a culture of innovation should be at the core of any business.

Companies are looking to create an environment that encourages creativity and innovation. Leaders are attracting the needed talent and building the right skill sets. Additionally, they aim for ways to attract a diverse workforce, improve collaborations, and empower employees – because engaged employees are crucial in order to achieve the best results. This Gallup study reveals that approximately 85 percent of employees worldwide are performing below their potential due to engagement issues.

As CEOs work towards achieving these three desired outcomes, they face some critical challenges that they must address. I define the top three challenges as follows: run vs. innovate, corporate cholesterol, and digital transformation roadmap.

1. Run vs. innovate – To be successful you must prioritize the future.

The foremost challenge that CEOs are facing is how they can keep running current profitable businesses while investing in future innovations. Quite often these two conflict as most executives mistakenly prioritize the first and spend much less time on the latter. This must change. CEOs and their management teams need to spend more time thinking about what digital is for them, discuss new ideas, and reimagine the future. According to Gartner, approximately 50 percent of boards are pushing their CEOs to make progress on digital. Although this is a promising sign, digital must become a priority on every CEOs agenda.

2. Corporate cholesterol – Do not let company culture get in the way of change.

The older the company is, the more stuck it likely is with policies, procedures, layers of management, and risk averseness. When a company’s own processes get in the way of change, that is what I call “corporate cholesterol.” CEOs need to change the culture, encourage cross-team collaborations, and bring in more diverse thinking to reduce the cholesterol levels. In fact, both Mckinsey and Capgemini conclude that culture is the number-one obstacle to digital effectiveness.

3. Digital transformation roadmap – Digital transformation is a journey without a destination.

Many CEOs struggle with their digital roadmap. Questions like: Where do I start? Can a CDO or another executive run this innovation for me? What is my three- to five-year roadmap? often come up during the conversations. Most companies think that there is a set roadmap, or a silver bullet, for digital transformation, but that is not the case. Digital transformation is a journey without a destination, and each company must start small, acquire the necessary skills and knowledge, and continue to innovate.

It is time to face the digital reality and make it a priority. According to KPMG, 70 percent to 80 percent of CEOs believe that the next three years are more critical for their company than the last fifty. And there is good reason to worry, as 75 percent of S&P 500 companies from 2012 will be replaced by 2027 at the current disruption rate.

Download this short executive document. 

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Dr. Chakib Bouhdary

About Dr. Chakib Bouhdary

Dr. Chakib Bouhdary is the Digital Transformation Officer at SAP. Chakib spearheads thought leadership for the SAP digital strategy and advises on the SAP business model, having led its transformation in 2010. He also engages with strategic customers and prospects on digital strategy and chairs Executive Digital Exchange (EDX), which is a global community of digital innovation leaders. Follow Chakib on LinkedIn and Twitter