SSA & Company Notebook | Summer 2018

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A note from our President:

As Chairman of the Columbia University Deming Center Advisory Board, I recently attended the annual Deming Forum. The discussion centered around today’s unprecedented disruption and the need for clear processes around keeping an organization and its people ahead of the curve. Innovation is not a “nice to have.” It demands a delicate balance of strategy and agility.

In this issue, we hear from Deb Henretta, G100 Companies Partner and former Group President of e-Business at Procter & Gamble, on how companies can win in digital and what senior leaders need to know to transform their businesses. We also explore the implications of disruptive technology on operations in retail and financial services and delve into the workforce of the future. We close with insights on human capital, shared by our sister firm The Miles Group (TMG).

– David Niles, President of SSA & Company and G100 Companies

Ideas That Made Us Think

Fast Fashion Retailers Using Technology to Try to Win Back Customers

In the battle for profitability, several well-known consumer brands are adopting AI to combat losing market share. With shares down 56% in the last three years, H&M is revamping its strategy and abandoning its long-standing practice of stocking similar merchandise in stores worldwide. The company is now using advanced data to customize what it sells in individual stores. Facing competition from startups like Boohoo.com and Missguided, who have greater agility to adapt to changing trends and churn out clothing quickly, Zara enlisted Intel and Fetch Robotics to help it shift gears towards faster fashion. Meanwhile, retailers like ALDO have brought on Celect to predict customer demand in real time, allowing them to optimize inventory by store and improve online order fulfillment. While both H&M and Zara have implemented new data strategies to weather the rapidly changing retail landscape, they also serve as a cautionary tale: even disruptors eventually get disrupted. Companies must continuously seek ways to move fast, pilot innovation, and enable a culture of risk-taking. Those who succumb to inertia will soon scramble to stay relevant.

“Platformification” Trend in Financial Services Requires New and More Agile Operating Models

Fintech continues to transform banking, which is steadily evolving into a platform business. Finding ways to capture idle money has become more important than ever. Numerous digital-only banks now partner with Betterment, an online investment company. Micro investing app Acorn rolled out a debit card, Spend, and opened up 50,000 checking accounts in two days. However, a recent survey found customers are more likely to select a digital investment option from their primary bank; the top reason for doing so is ease of transferring money between accounts. Several institutions have already responded. Fidelity joined forces with Fifth Third Bancorp to offer automated advice. Chase opened Finn, a digital bank for millennials. Goldman Sachs acquired numerous fintech firms. While the switching costs for customers positions legacy companies to take advantage of the ‘platformication’ trend, they face the challenge of running parallel operating models to serve two distinct audiences. Those who best serve increasingly-digital consumers and find the nexus with traditional customers will thrive in the digital age.

In Amazon’s Blended Workforce, Machines Help People Work Faster and Smarter

Amazon continues to model how a blended workforce enables companies to remain agile and productive on a massive scale. While it has long used robots to move merchandise in its warehouses, Amazon’s executives now rely on technology to make critical buying decisions previously handled by humans. Its algorithms, refined through years of monitoring customer behavior, take the company out of the guessing game, allowing Amazon to tweak its offerings quickly and efficiently and freeing workers to focus on other areas. Joel Sutherland, supply chain professor at University of San Diego, says, “Nobody else has the resources and expertise to pull all of these emerging technologies together to remove humans from the process as much as possible, while making things more reliable and accurate.” Leading companies today recognize that decision-making must triangulate numerous inputs. Increasingly, artificial intelligence and machine learning will become key inputs. Companies that embrace a blended workforce and build an operating model around it best position themselves for success.

A CEO’s Winning Formula: Integrating Digital and Navigating Its Disruptions

As CEOs and senior executives continue to push for digital transformation, understanding where to start and how to drive success can be daunting. Deb Henretta has written a series of articles on how to thrive during this challenging process. She stresses that winning in digital does not come from slowly tweaking the margins of your business but rather to approach the transformation more holistically. CEOs must build smart strategies and business plans that weave digital into the very fabric of their business models and organizations. Moving those plans forward starts with people and enrolling CHROs in the effort can help speed up digital transformation across the enterprise. Additionally, digital transformation and enterprise transformation should not be seen as two separate initiatives. To win in our increasingly digital world, companies must bring the outside in, get the inside out, and build the right culture and capabilities. Deb and SSA & Company started a series on digital transformation, #Run2Digital, on LinkedIn. We invite you to join the conversation by following #Run2Digital and sharing your thoughts and ideas.


SSA & Company Quick Hits

Thought starters from the business world

1. Secret recipe for the perfect salad: kale, edamame… and data. Fast casual eatery Sweetgreen is tracking diners’ menu choices and to keep its offerings current.

2. China angling for an A+ in AI. The country is investing heavily in academic and policy modifications designed to make AI its top priority.

3. Goldman Sachs touts the firm’s trustworthiness with its investment in unhackable blockchain.

4. Waste not, want not: France seeks to end the practice of destroying unsold clothing by mandating that unsold clothing be donated to the homeless.

5. A new type of trade in financial services: top financial firms like Blackrock are hiring twice as many techie employees as they are investors.

6. Good news/bad news on cyberattacks: Good news: companies are getting better at thwarting attacks. Bad news: this hasn’t helped reduce the damage when attacks occur.

7. AI’s tricky foray into arbitrating taste. Sotheby’s joins forces with Thread Genius to match artwork with buyers.

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