SUMMER 2017
digital:mastered INSIGHT AND NEWS FROM THE UP GROUP
LESSONS FROM SILICON VALLEY WHERE WORLDS COLLIDE TRANSFORMING A 300-YEAR-OLD BUSINESS DIGITAL MASTERS AWARDS 2017 STOCKHOLM ROUNDTABLE INSIGHTS
Organising for
Innovation
Organising for Innovation
2-6
Where worlds collide
8-9
Digital Masters Awards 2017
10-13
Digital Masters Awards - Green Cube Winners
14-17
Transforming a 300-Year-Old Business
20-22
The Up Group in Stockholm
22-23
Roundtables 24-25
With thanks to our Digital Masters partners
Welcome Hello and welcome to our first edition of Digital:Mastered, featuring our latest insight, and a round-up of what we’ve been up to in the first half of 2017. Our day-to-day work sees us advising companies at a variety of stages on organisational and talent strategies to fuel their future success. Whether fast-growth startups, or corporates grappling with transformation, our clients often have lots that they can learn from one another’s experiences.
clare.johnston@theupgroup.com
Our recent Digital Masters Board Dinner (page 8) provided a great opportunity for 300 CEOs, Board members and investors from a whole range of UK-based organisations to share this kind of diverse thinking for mutual benefit, whilst our article Organising for Innovation (page 2) explores what the digital giants of Silicon Valley can teach European companies about creating a culture of constant innovation. We also caught up with digital entrepreneur, Serge Taborin, about his new role as Head of Innovation at Aviva, and how he is bringing a start-up mentality to a 300-year-old business (page 20). Meanwhile, our fourth annual Digital Masters Awards took place in May, and brought together over 1,000 of Europe’s top digital executives and investors to celebrate those leaders driving growth and transformation across the region. Find out who won the coveted Green Cubes on page 14. We’ve also been busy hosting a whole range of Digital Masters Roundtables (page 24), as well as a dinner in Stockholm, where we’ve just opened our newest office; We welcome Rupert Lion, our Director on the ground in Sweden.
agnes.greaves@theupgroup.com
As ever, please do get in touch if there’s anything we can help with. Best,
Clare Johnston CEO & Founder The Up Group
Agnes Greaves
Managing Director The Up Group
digital:mastered • 01
Organising for Innovation
Learning lessons from Silicon Valley Introduction Traditional companies, hunting for digital transformation1 best practices, tend to look to other traditional companies for inspiration. But they rarely find it. Rather, they find a mixed bag of innovation models. They find corporate VCs, in-house accelerators, ecosystem engagement programmes, innovation labs, digital hubs, and tech garages. They find roles with ‘digital’ or ‘innovation’ in the titles, targeting a mix of KPIs within a variety of organisational structures. And, by and large, they find companies that are struggling to make the leap. There is no shortage of advice available, based on selected examples of transformational success, but this tends to be of limited general applicability. The data set is very small, and the few companies that have made the transition tend to be in industries with uniquely conducive features such as catalogue retailing, classified ads, or gambling.
digital:mastered • 02
Rather than trying to discern common success factors from isolated examples in the traditional industries, in this paper we explore whether there are universal lessons to be drawn from a segment where transformational best practices are settled and well understood, namely global digital pureplays – which we term, for convenience, ‘Silicon Valley companies’. We will focus in particular on Google, Facebook, Microsoft, Netflix and Amazon2.
Innovating at scale It is important to understand that the challenges facing Silicon Valley companies are no different to those facing any business. Indeed, they confront constant existential crises, and the landscape is littered with the corpses of once-unassailable tech giants. Today’s Snapchat can easily become tomorrow’s Yahoo. As a result, Silicon Valley companies have turned innovating at scale into an art form. Netflix effectively jettisoned its profitable DVD rental business and pivoted towards streaming when they
Feed the winners, starve the losers
Organisational themes were already a large, successful public company3. Five years ago, Facebook’s revenues from mobile ads were zero; in Q3 2016, they generated $5.7 billion. Through a series of audacious moves, Google developed Android into the world’s most ubiquitous operating system. And in the process of becoming the world’s largest retailer, Amazon also delivered the world’s leading cloud platform (AWS), online marketplace (Marketplace), and e-reader (Kindle). There are numerous similar examples; in Silicon Valley, transformation and reinvention is ubiquitous. Of course, many of the barriers to innovation that traditional businesses encounter simply do not apply to pureplays. They are born digital, and disruption is in their blood. Yet based on our experience of working across the global economy, we believe that several approaches prevalent in Silicon Valley are relevant to the challenges facing traditional corporates today.
Diffuse decision-making Whereas for traditional companies digital transformation is typically seen as a project with an owner, for Silicon Valley companies, innovation is everyone’s responsibility. Product initiatives and roadmaps emerge from small teams working autonomously. Facebook’s most famous maxim, ‘move fast and break things’ neatly encapsulates this approach. It is underpinned by a hypercommunicative style – Valley messaging apps and inboxes crowded – and high levels of transparency. The concept of decisions following the ‘HiPPO’ (highest paid person’s opinion) is anathema to Valley companies4. Data is the only voice that counts. The inevitable inefficiency, through duplication, misfit and error, that decentralisation implies is dwarfed by the overall gains in agility and innovation 5. The key is to build in sufficient structure, processes and capabilities, particularly around internal communications and data analytics, to enable the business to capitalise on successful initiatives, and disregard the rest – what Google calls ‘feeding the winners and starving the losers’6. digital:mastered • 03
It should not be thought, though, that these practices are only possible in digital-first companies. In fact, the archetypal agile enterprise, whose practices foreshadowed those now common in the Valley, is a 114-year-old company with 90,000 employees, producing 60,000 products: 3M. One third of 3M’s $30 billion annual revenues come from products that were invented less than five years ago. How does it do it? A striking feature of the way 3M is organised is a semi-structured approach to decision-making. Business units are run with lots of freedom and loose planning so that they can pursue unexpected opportunities7. Yet there’s also plenty of structure, including sophisticated financial controls and information systems. Each division is expected to hit specific quarterly profit, growth and innovation targets. And the constant flow of hit products is triggered by the rule that 25% of sales must come from products less than four years old. This sets the rhythm of innovation for the entire corporation.
Willingness to let people go is a point of pride for Netflix. Its managers use what the company describes as the ‘Keeper Test’: they constantly evaluate which of their reports they would fight to keep at Netflix. Those who fail the test should be let go to free up space for a star candidate. Of course, all things being equal, it is easier for companies like Netflix and Facebook to attract star candidates than a traditional company. It is also more straightforward to let people go in California than in, say, the UK. But the lesson for traditional companies is less to do with the specifics of the hiring bar or performance evaluation methodology, than the extent to which Valley companies adhere to whatever policies are in place. For Silicon Valley companies, a false positive is far more damaging than a false negative; they would rather miss out on a stellar candidate than hire one (or keep one) who isn’t.
Unfair pay structures
It is unrealistic to think that all traditional companies, with long-established hierarchies and decision-making processes, can shift to a radically decentralised model – far less to a situation described by William Coyne, 3M’s former SVP R&D, as ‘managing chaos8.’ But even small steps can pay dividends; and there are a number of tools and approaches that can make this change manageable9.
It is widely understood in the Valley that talent, particularly engineering talent, follows a power law – that is, most people are below average, and a handful people are way above average.
Rigid hiring bar
Not only do Silicon Valley companies believe this, but their pay structures reflect it. It is not unusual in the Valley for two engineers at the same nominal level to be paid vastly different amounts of money depending on their calibre. Laszlo Bock, former SVP People Organisations at Google, called it ‘paying unfairly’. He uses this phrase ironically: not only is it self-evidently fair to pay people what they’re actually worth, it is unfair not to.
Lightweight central control is only possible if employees are capable of making the right decisions. And maintaining a ruthless hiring bar is axiomatic across the Valley. This manifests itself in various ways, from very lengthy interview processes, to fiendish coding exams. All are designed to avoid what Steve Jobs called the ‘Bozo Explosion10’: where A players hire A players, B players hire C players, C players hire D players, and so forth. Netflix exemplifies this principle. Its approach to quality control is encapsulated in its celebrated ‘Netflix Culture’ PowerPoint deck11. Its author, Patty McCord12, believes that if you hire the right people, almost all of them will do the right thing. ‘Most companies spend endless time and money writing and enforcing HR policies to deal with problems the other(s)… might cause. Instead, we tried really hard to not hire those people, and we let them go if it turned out we’d made a hiring mistake.13’ digital:mastered • 04
Bill Gates expressed it as follows: “A great lathe operator commands several times the wage of an average lathe operator, but a great writer of software code is worth 10,000 times the price of an average software writer.”
There are many other ways that Valley companies find to recognise their stars, from equity grants to spot bonuses. Recently, there has been a trend towards experiential, rather than financial rewards. But one way or the other, Valley companies are not squeamish about singling people out. For all the benefits of traditional pay scales and predictable promotion / reward timetables, the Silicon Valley experience teaches us that companies should hesitate before under-rewarding stars in the name of fairness.
In Silicon Valley, transformation and reinvention are ubiquitous
A distinctive approach to L&D In Silicon Valley, stars emerge fast. Companies load responsibilities onto youngsters and expect them to step up. The Valley is not just full of young founders: it is also replete with twenty-something VPs and CxOs. That rate of progression requires rapid enhancement of skill levels. This means that, for Valley companies, Learning and Development is a critical area to get right. And as a result, these companies are often at the forefront of thinking in this area. One L&D principle that has become sacrosanct in the Valley is the importance of internal training and knowledge-sharing. Pioneered by Intel under Andy Grove, who held that training is one of the highest leverage activities a manager can perform, staff at Silicon Valley companies are encouraged, from the day they join, to dedicate themselves to upskilling their colleagues. At Google, 85% of internal courses are delivered by staff. Another emerging feature is a culture of ongoing, direct feedback. The most recent manifestation of this is a methodology known as Radical Candour14, whereby people are encouraged to be unflinchingly honest with each other, but out of a clear sense of personal caring.
A mark of how seriously L&D is taken in is the rise of the Chief Learning Officer and its variants. Whilst this role emerged at a traditional business (General Electric), and can now be found in companies across the economy, it has become disproportionately prevalent in Silicon Valley15. This relentless focus on upskilling is one of the reasons why these companies have become so good at harnessing the energy and iconoclasm of a young workforce to drive innovation and reinvention.
Twin career paths Another aspect of the Valley star system that is underappreciated, and of clear relevance to traditional corporates, is the emergence of twin career paths. It is a truism that great salesmen do not necessarily make great sales leaders, but that principle is often honoured more in the breach than the observance amongst traditional businesses, where promotion tends to imply greater management responsibility.
digital:mastered • 05
Forgotten Leaders
This focus on tailoring career paths to get the best out of people, rather than squeezing them into pre-defined hierarchies, is another example of how Silicon Valley companies cherish talent and empower individuals to make a difference. This is a common thread underpinning, and explaining, a great deal of how those companies organise themselves.
Conclusion
Not in Silicon Valley. Some of the most legendary figures in the tech industry have never had any reports. Companies understand the extraordinary value that an individual contributor can bring, and are good at avoiding killing the golden goose through adding unwanted management tasks. More importantly, individual contributors - who Forbes magazine recently described as ‘forgotten leaders’ – are valued and celebrated in the Valley. Probably the most famous example is Google’s Jeff Dean, who designed and implemented large portions of the company’s advertising, crawling, indexing and query serving systems. Not only is he a Senior Google Fellow – the highest individual contributor rank, equivalent to an SVP – he has become a local hero, attracting a whole genre of jokes playing on his superhuman coding skills16.
1.
The wholesale reorientation of business activities, processes, competencies and models to address the challenges and opportunities associated with digital technology.
2.
Though Amazon and Microsoft are based in Seattle and Redmond respectively.
3.
At the time, the move was described as a ‘trainwreck’, and its share price plummeted by 80% in 6 months; today Netflix shares are trading near all-time highs.
4.
As CEO of Netscape, Jim Barksdale reportedly said: “If we have data, let’s look at the data. If all we have are opinions, let’s go with mine.”
5.
This can have odd results. At one point, there were four different ways to send a text message on Android: Google Talk, Google+ Messenger, Messaging (Android’s SMS app) and Google Voice.
digital:mastered • 06
6.
7.
8.
9.
The importance of HR in driving innovation is illustrated vividly by an emerging trend in Silcon Valley of appointing Chief People Officers with exclusively, or predominantly, business backgrounds. Eileen Naughton (Google), Lori Goler (Facebook), Kathleen Hogan (Microsoft) and Beth Galetti (Amazon) are notable examples. Silicon Valley companies understand that building enduring business value is about far more than building great products, or getting the strategic calls right. Rather, it requires relentless dedication to creating the conditions to innovate at scale. This dedication has given rise, as we have seen, to a broad set of principles and practices that have become widely adopted by some of the most successful and admired tech companies in the world. And, as we have noted, many of these are transferable to other business environments. This suggests that traditional companies should at least take seriously the idea that they may have something to learn from Silicon Valley when it comes to organising for innovation.
See more generally ‘Competing on the Edge: Strategy as Structured Chaos’ by Shona Brown, which expands on these concepts. The book is probably the most useful analytical framework for analysing how Silicon Valley companies organise themselves for reinvention. Thinsulate, for example, was turned down five times by senior management before it was finally produced; it is now one of 3M’s most successful products. Quoted in ‘The Balancing Act of Innovation’ by Silberzahn & Van Dyck. The full quote: ‘Innovation at 3M is anything but orderly. It is sensible, in that all our efforts are directed at reaching our goals, but the organisation ... and the process … and sometimes the people can be chaotic. We are managing chaos, and this is the right way to manage, if you want innovation’. The OKR system, pioneered by Intel, is one notable example. See http://www.businessinsider.com/ googles-ranking-system-okr-2014-1
10.
According to ex-Apple Fellow Guy Kawasaki.
11.
See http://www.slideshare.net/reed2001/ culture-1798664. Described by Facebook COO Sheryl Sandberg as ‘the most important document ever to come out of the Valley’, the presentation has been read over 15 million times.
12.
Then Chief Talent Officer of Netflix
13.
See https://hbr.org/2014/01/how-netflix-reinvented-hr
14.
Radical Candor: Be a Kickass Boss Without Losing Your Humanity, by Kim Scott
15.
See eLearning Mind report, 2015
16.
See www.quora.com/Jeff-Dean/What-are-all-the-JeffDean-facts/answer/Christopher-Lin. One example: Jeff Dean’s PIN is the last 4 digits of pi.
What’s the right path to accelerate your growth journey? EY’s Fast Growth Platform takes emerging tech companies to the next level Follow us: @EY_TMT Visit: betterworkingworld.ey.com
The better the question. The better the answer. The better the world works.
Where worlds collide Our recent Digital Masters Board Dinner at the Rosewood Hotel, London, brought together 300 investors, CEOs and NEDs from listed businesses, private equity-backed and venture capital-backed businesses, who are all leveraging technology to drive growth and transformation. At the event, we caught up with several attendees to hear how companies at different points along the growth curve can share experiences for mutual benefit. Large corporates are increasingly looking to replicate the innovation of scale-up digital businesses in order to stay relevant. These businesses move quickly, take risks, and are highly-focused. Collaborating with entrepreneurs and startups can help larger companies to think outside the box. Antonio Capo, Operating Partner at TPG Capital explains: “Entrepreneurs are good at change, at creating. Corporations are often a little stifled in their creativity.” James Bilefield, NED of Stagecoach, highlighted that it is not just ‘traditional’ corporates that take this approach: even Google, one of the world’s most innovative companies, digital:mastered • 08
BOARD DINNER LONDON
Corporates can learn how to innovative, how to be creative, and more importantly how to be agile and nimble, because frankly in today’s world, none of us are moving fast enough Tanya Cordrey, NED, Schibsted Media
acquires c. 20 companies each year to help it stay ahead of the game. Innovation is hard as a big company; Partnerships, collaborations, and M&A can expedite this process. This combination of corporate scale and startup thinking can be a heady mix for innovation. Majestic Wine’s takeover of Naked Wines in 2015 is a good case in point. “Majestic bought Naked Wines, a very innovative, entrepreneurial disrupter in the wine industry” says Greg Hodder, NED of Majestic. “They put the Naked Wines CEO and founder (Rowan Gormley) in charge of the group and the results have been very strong. You are able to see how a business is able to get its mojo back.” Since the acquisition, Majestic has rolled out nextor-named-day delivery, a ‘no quibbles’ returns policy, and has a renewed focus on in-store customer service.
While the benefits of collaboration are obvious, finding partners with the right cultural fit is not always plain sailing. Networking events certainly play a very useful role here as they allow companies to meet and talk in an informal setting. Hodder explains, “Events like this are great networking opportunities. You can talk to people in an open way and see how digital and small business ideas can be applied to bigger businesses.” On the flip side, there are also vital lessons for scale-ups to take from highgrowth digital businesses: embedding processes, insight into how to work in public markets, compensation structures, and how to generate long term brand value. The challenge for scale-ups is retaining their culture and “pioneering spirit” as they mature. It is important not to throw the baby out with the bathwater, but to
embed the right processes (remuneration, onboarding, development plans, team structures etc.) without bogging the company down in bureaucracy and inertia. As venture capitalist Keith Wallington puts it, “What is important is for them to adopt just enough structure and just enough process mentality” to succeed. Interviews from the Dinner bit.ly/board-dinner
When you put together the pureplay businesses with the traditional companies, great things can happen James Bilefield, NED, Stagecoach digital:mastered • 09
A night to remember Now in its fourth year, the Digital Masters Awards stands alone as the gold standard for leadership within digitally-driven businesses. The event, held at the Roundhouse in Camden, gathered over 1,000 C-level executives, entrepreneurs and investors to celebrate the world-class executives leading European companies to global success. The ceremony was hosted by broadcaster Rory Cellan-Jones, and featured entertainment from Groove Armada. This year’s winners were judged by a panel of 32 of the region’s leading tech investors and advisors, and chaired by Daniel Waterhouse of Balderton Capital. Watch highlights of the 2017 Digital Masters Awards bit.ly/DMA2017-Highlights With thanks to our Digital Masters Awards partners
digital:mastered • 10
By shining a light on the unsung heroes of the digital revolution, the Digital Masters Awards reminds us of how important our work is, and how much we can achieve if we aim high enough Daniel Waterhouse, Partner, Balderton Capital and Chair of the 2017 Judging Panel
digital:mastered • 11
The level of energy and the passion that people have here... you meet old friends and you meet new people - it’s just been fantastic CEO & Co-founder, Supercell
digital:mastered • 12
The Up Group, as always, is perfect at getting the most relevant players in the industry together CEO & Co-founder, Busuu
It’s just a fantastic networking event CMO, On The Beach
A great opportunity for us to meet with lots of companies in the space, both startups and large corporates CFO, Criteo
digital:mastered • 13
And the Green Cubes are awarded to... CEO of the Year
Excellence in Transformational Leadership
Ilkka Paananen
Nina Bhatia
CEO & Co-founder Supercell
MD, Connected Home (Hive) Centrica
In June last year, Tencent acquired Softbank’s stake in Supercell for $8.6bn, valuing it at over $10bn – an extraordinary vote of confidence in the business, and testament to Ilkka’s exceptional leadership.
Nina leads the team responsible for developing Centrica’s technology-led home management products and services which have transformed the company into a byword for innovation. She oversaw the launch of the Hive Active Heating smart thermostat, as well as the acquisition of AlertMe, which now underpins its Internet of Things capabilities. In 2016, the company acquired FlowGem, a leak detection company, and launched BoilerIQ, which gained 20,000 customers by the end of the year.
Since founding Supercell in 2010, Ilkka has grown the Finnish studio to become the world’s largest mobile game publisher by revenue, and retained this crown in the face of fierce competition from the likes of King and hit games such as Pokémon Go – all achieved with a staff of just 280.
Nina not only persuaded Centrica to create the Connected Homes business, she secured £500m of investment for future innovation. Her work has transformed Centrica’s employer brand and culture, enabling it to attract the best talent. digital:mastered • 14
Excellence in General Management
Excellence in Finance
Excellence in Transformational Marketing
Sam Halse
Elliot Jordan
Sarah Manley
COO Adyen
CFO Farfetch
CMO Burberry
Adyen’s amazing growth story continues, with the volume of transactions processed on the platform doubling for the third year in a row, to $90 billion in 2016. The company has also gained significant traction in the retail market, unveiling successful in-store and omnichannel payment solutions for global brands.
Over the last 18 months, Farfetch has emerged as one of the world’s leading online fashion retailers, achieving over $800m in annual sales, up 70% year-on-year. Elliot and his Finance team have been critical in creating the conditions for profitable growth.
Sarah has overseen Burberry’s global transformation into a digital marketing leader, with over 60% of the Marketing budget now dedicated to digital channels. Burberry has built a strong presence on social media with more than 38 million followers across 19 global platforms, allowing it personalised interactions with its audiences; it is now the third most followed luxury brand on Facebook and Twitter.
Sam has played a key role in driving this growth, notably on the retail side. In the past year, the POS solution expanded to over 2,700 stores across the US and Europe, and Sam’s team has focused on ensuring a consistently excellent customer experience.
The company secured $110 million of Series-F venture funding, bringing on new investors Temasek, IDG Capital Partners and Eurazeo. This valued the business at over $1 billion, and brought the total raised to over $300m. It also made significant investments into digital marketing, technology, and analytics, as well as expanding its physical footprint and infrastructure.
During Fashion Week, Burberry made its entire line immediately shoppable online, harnessing fast sales while the items are still fresh in the consumer’s mind. It also launched a chatbot to help customers explore the collection, adding a gamified maze element to enhance the experience.
digital:mastered • 15
Excellence in Product
Excellence in Technology
Excellence in Marketing
Gustav Söderström
Shane Legg
Angela Watts
CPO Spotify
Chief Scientist DeepMind
VP Global Communications Spotify
With responsibility for 1,500 people across product, design, data, technology, and engineering, Gustav has played a pivotal role in driving Spotify’s extraordinary growth.
DeepMind astonished the world in March 2016 when its AlphaGo program defeated eighteentime Go world champion Lee Sedol – a feat of AI widely believed to be unachievable for at least a decade, and prompting Sedol to remark: “Today, I am speechless”.
When Angela joined Spotify seven years ago, the challenge confronting her was to change the way people think about consuming music, from ownership to access. Today, with streaming fast becoming the default mode of music consumption, her task is to convince consumers to use Spotify in the face of aggressive competition from Google, Apple, Amazon, and others.
Over the past year, Spotify has launched breakout new features, as well as seeing continued success with older ones. Over 5 billion tracks have now been streamed via its Discover Weekly product, inspiring the launch of Release Radar, generating personalised weekly playlists of new music from relevant artists. On the backend, Spotify has migrated its infrastructure to Google Cloud Platform, having formerly operated its own data centres.
digital:mastered • 16
Under Shane’s leadership, DeepMind’s team of researchers, described by the FT as ‘the most formidable community of machine intelligence academics anywhere in the world’ has produced a string of breakthroughs, including programming a computer to win Atari games without any instructions or prior knowledge.
Spotify’s extraordinary numbers are testament to the success of Angela and her team in addressing both of those challenges: 50 million paying subscribers, and 100 million registered users, active in over 60 different markets.
Excellence in Transformational use of Data
Excellence in People & Talent
Excellence in Commercial Management
Marco Bressan
Sian Keane
Michael Rouse
Chief Data Scientist BBVA
VP Talent & People Farfetch
CCO Klarna
Marco leads BBVA’s Data & Analytics practice globally, comprising over 350 people across Analytics, Insight and Data Science. His team works across 35 countries, 11 of which are core markets, with a central data hub to deliver algorithms and self-serve tools to support over 20 business units.
Since joining Farfetch four years ago, Sian has presided over extraordinary organisational growth, from 100 people in four offices to 1,500 across 12 countries
Under Michael’s leadership, Klarna achieved a 45% increase in transaction volumes in 2016, driven by the acquisition of 18,000 new merchants (including companies such as Nike and Adidas) and expanding channel distribution to include direct selling. A record nine million consumers tried Klarna’s product for the first time last year.
Marco has been at the forefront of developing innovative new products for BBVA. One example is the ingesting of new data sources to facilitate a dramatic increase in credit provisioning to SMBs in Spain. He has also increased the sophistication of BBVA’s modelling capabilities, in order to better understand its propensity models, customer journey, customer lifetime value, and churn.
Over the last year, Sian has been instrumental in launching Farfetch’s share option scheme, enabling all employees to participate in the company’s success. She has also launched a new career ladder for Farfetch, identifying 80 job families, outlining roles and responsibilities, and demonstrating the steps to the next level with consistent language across all career paths. As a result, the company’s NPS around career opportunities has increased dramatically.
Over the past 12 months, Michael has restructured the Commercial function, introducing new leadership into every market and establishing global sales, account management, and capability teams. He also led the acquisition of two companies in Germany.
See all the 2017 Digital Masters Awards runners up bit.ly/DMA17-winners digital:mastered • 17
We believe in believers At Silicon Valley Bank, we work with the brightest minds across the UK technology market. We’ll help you build your business at every stage. Find out how we could help E: ukenquiries@svb.com T: +44 (0) 20 7367 7800 svb.com/uk Silicon Valley Bank is authorised and regulated by the California Department of Business Oversight and the United States Federal Reserve Bank; authorised by the Prudential Regulation Authority with number 577295; and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request.
Dealmakers in Technology
Transforming a 300-year-old Business The ability to execute a successful digital transformation is becoming an ever more existential threat for large corporates. There are several examples of companies who are doing this well, and one of those is Aviva. With that in mind, The Up Group’s Sarah Noyce sat down with the insurance giant’s Global Innovation Director, Serge Taborin, to discuss transformation and corporate innovation.
digital:mastered • 20
SN: What does digital innovation mean for you at Aviva? ST: Typically, corporates haven’t been good at disruptive innovation – this is the reason disruption happens. There is no universally correct way to do things, and so we have to work out our own way to innovate. Culture, market position, and customers all impact how a company will innovate. Those companies that have been most successful so far have not picked simply one stream through which to innovate, but executed on a number of different streams: venture arms, incubators, internal product launches. This multistream approach is the one we take at Aviva; as there is no one universally correct approach, there is no one stream that will win out over the others. SN: And how does innovation and transformation work specifically within the insurance industry? ST: Insurance is different to most other industries, in that it has not been disrupted – yet. We are still hugely behind what the customer might expect from a modern digital business, and there is an enormous amount of work to be done. This will take place through incremental innovation to improve the customer experience, coupled with more serious leaps forward. SN: What are you doing specifically at Aviva to achieve this? ST: Our strategy revolves around three core pillars: build, partner, invest. For example, we have set up our own investment vehicle, Aviva Ventures, and we have opened our own digital garage.
This hosts a number of our most critical digital initiatives, as well as working on existing features and product development. Our Chief Digital Officer, Andrew Brem has put in place a culture that mixes innovation with real, tangible improvements in the present. On the partnerships front, we take a two-pronged approach, either directly investing in startups or just incubating them and working with them operationally. In addition to working with startups, we also have partnerships with accelerators – Founders Factory in London and Plug and Play in Silicon Valley. I led these initiatives, and in doing so it was vital to consider exactly what we wanted to get out of these partnerships. So far, we are very happy with the two accelerators we have partnered with. SN: What was it that made you move from a startup back to a more corporate environment? ST: In reality it was a couple of things. When you’re at a startup, you can move quickly, whilst at a corporate you have resources, an existing brand and all sorts of other things – so to some extent, it was a case of the grass always being greener on the other side. Having been in a startup, I was fascinated by the opportunity to try to recreate that same approach, leveraging all the advantages and resources offered by a corporate. This culture shift can often be a difficult one for a corporate, but Aviva is really committed to this transformation.
We are still hugely behind what the customer might expect from a modern digital business, and there is an enormous amount of work to be done. SN: What was it that attracted you to this opportunity in particular? ST: Insurance as an industry has a few fairly unique elements to it that have made it difficult for startups to crack, such as the regulatory environment and the assets required to start. The strength of the current incumbents gives them a real opportunity to innovate. Moreover, this leads to a fantastic opportunity for collaboration across the value chain, as corporates can access the best talent and startups can access a suite of corporate assets. SN: What are the biggest challenges that companies face when going through a digital transformation? ST: My role at Aviva is actually innovation, rather than transformation. Whilst often used interchangeably, the two are in fact very different things – one is turning a tanker around, whilst the other is building a new boat entirely. The challenges are similar though. In a 300 year-old company with 30,000 people, getting people to get to grips with digital is difficult, and you have to work hard to convince them to take the first leap of faith required to generate future profits. digital:mastered • 21
Transforming a 300-Year-Old Business SN: What does the future hold for disruption in the insurance industry?
SN: When building teams, what qualities do you most prize in a potential hire?
ST: Insurance will still exist as it does today – that is to say, people will still insure the same things, such as cars, but there will be new challenges. With the oncoming rise of autonomous vehicles, new and difficult questions will arise for both insurers and regulators – who is to blame when an accident occurs? The owner? The software? The manufacturer? In addition to this, we are living in a world in which more and more data is becoming available, from more and more different sources. This represents a threat to our own proprietary data sets, whilst the surge in articial intelligence potentially creates new ways of underwriting.
ST: The balance is a very tough one to strike. When we first started, we looked to attract a lot of entrepreneurs who have created and grown products themselves. When we were doing this, the digital garage was a huge asset, as it showed we were really serious about our commitment to transformation. However, we found that the ability to do this in a startup was different to the ability to do so in a corporate environment, and the assets that we could offer were not being leveraged properly. We now operate in a more bilingual environment, with both entrepreneurs and those who can understand and navigate the corporate environment working together. This mix of talent has been absolutely crucial to our successes.
SN: So those are the challenges – what opportunities do you see coming about in the industry? ST: Digital represents a huge opportunity to right the historic wrongs in our industry. Insurance is typically unloved and poorly understood amongst consumers. We now have a real chance to mend this relationship with customers and turn it into something far more positive, meaningful, and transparent. In terms of the business itself, we have an opportunity to expand into new areas with customers - taking more preventative measures, for example. As things stand, insurance exists for when things go wrong, but what if we could use artificial intelligence to predict a boiler breaking a month before it does, and advise the customer accordingly. Those sorts of services could be hugely valuable. digital:mastered • 22
SN: What would you be doing if not this? ST: Having worked in this space, at the intersection of the startup and corporate worlds, I think I’d be hesitant to move back into another role in a purely startup environment. Where I am at the moment is such a fascinating space, as these two worlds move closer together.
BOARD DINNER STOCKHOLM
A splendid evening. Provided me with plenty of ideas and valuable connections SVP & Senior Investment Manager, Bonnier Growth Media
Excellent crowd, location and great seeing you so committed to Stockholm Partner, Creandum
A very interesting and inspiring evening CEO, Blocket.se
The Up Group in Stockholm Selected companies in attendance
Our Digital Masters Dinner returned to Stockholm for the third time, bringing together 80 of the country’s most influential C-level executives from VC- and PE- backed companies, NED’s - investors and board members. The evening was held at the beautiful Michelin-starred restaurant, Bobergs Matsal, providing rooftop views of the city. At the event, we announced the opening of our Stockholm office at No18 Stureplan from 5th June, with Rupert Lion joining us there as a Director. We look forward to hosting many more events in the city soon.
rupert.lion@theupgroup.com
digital:mastered • 23
Roundtables Over the past few months, we have continued to bring together leaders from across the digital ecosystem for provocative discussions around key topics and sectors. Highlights include‌
One of the best events I have been to recently. You managed to get so many impressive people together CEO & Founder, DueDil
A thoroughly thought provoking discussion CEO & Co-founder, Gloo Networks
digital:mastered • 24
Media
Data
Online advertising is a broken and opaque industry. Many problems lead back to the dominance of Google and Facebook, and they are unlikely to want to change the rules any time soon. Whilst there was a clear consensus that the whole supply chain - from advertisers to publishers - needs to adopt common standards and practices, no one player seems ready to take the necessary action to begin cleaning up the industry.
Data continues to be the hottest function in town, with a wide range of companies vying to attract the top talent from a limited pool. Roles need to offer unique and meaningful work, interviews must be technical, and data scientists should be supported in continuing academic contributions alongside their day jobs.
Companies in attendance
Companies in attendance
Very well organised. Great network
Such an impressive group
CEO, Patient
CEO, m/Six
HealthTech
RegTech
Despite progress being made in the past year, the biggest issue facing UK HealthTechs remains the labyrinthine NHS. Understanding the different touchpoints and agendas of different parties in the NHS can aid in navigating this maze. Outside of the NHS, the slumbering Big Pharma giant is starting to wake up to innovation.
As a nascent industry, RegTechs face a host of issues. Winning large customers is hard as riskaverse banks prefer ‘safe’ options, rather than innovative solutions offered by lesser-known RegTechs, and onboarding these large clients can take years. RegTechs must not focus all their energies in chasing marquee clients; instead, they should pursue a wider variety of potential customers.
Companies in attendance
Companies in attendance
Scaling a business in Berlin The key takeaway from our Berlin CEO roundtable is that - as companies scale - founders need to relinquish control. This means learning to trust the team, and hiring well. Berlin is an attractive location, but talent is scarce; being personal, flexible, and open to step-up candidates can all make this easier.
Companies in attendance
digital:mastered • 25
Working with companies across the growth curve
digital:mastered INSIGHT AND NEWS FROM THE UP GROUP
Coming Up... BOARD DINNERS
VC-Backed
September Amsterdam
Women on Boards, London
October
Berlin
November New York
PE-Backed Topics to include: Culture CMO to CEO PropTech Cyber Security AI Wellness
Corporate
2017 Digital Leaders Remuneration Report Our benchmarking guide to compensation across the digital ecosystem.
digital:mastered • 26
Embedded in tech deals
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