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SSA & Company Notebook | Fall 2018

A note from our President:

As we head toward the new year, we are excited to share some evolutions at SSA & Company. We recently had the pleasure of welcoming Matt Katz, Managing Partner, to our team. He brings over 25 years of global management and advisory experience working with some of the most iconic brands. Matt will grow and lead the firm’s retail and consumer packaged goods practice, as well as help manage the firm. Additionally, as we partner with clients to build next-generation businesses, we’re building a new website that better reflects impact for clients, culture, and team. We look forward to sharing it with you in the coming months.

With transformation in mind, this Notebook explores how companies are reimagining business with disruptive technologies, creative and customer-centric strategies, and new digital capabilities. We delve into talent and culture changes required to remain competitive. We also included an interesting piece on CEO activism, shared by our sister firm TMG.

– David Niles

Ideas That Made Us Think

Target Hits the Mark with Its Integrated Digital Strategy That Places Stores at the Core

Target isn’t trying to be Amazon. Instead, Target placed its stores at the heart of its digital transformation strategy, “creating a more inspiring and connected shopping experience,” says CEO Brian Cornell. Over the past four years, Target’s digital revenues grew by over 25% year-over-year and its physical stores fulfill over half of its total digital volume. Building flexibility into its stores allows Target to meet digital demand profitably. Last Cyber Monday, Target stores shipped millions of orders, capacity that would otherwise require investment in new fulfillment centers. Target enables this strategy through a new operating model for its supply chain, using predictive methods to understand demand needs and managing inventories to lower point to point shipping costs. Target lives “digital as a horizontal” with its operating model to win by improving customer experience.

Companies Need to Reimagine KPIs to Effectively Drive Business

new study from MIT Sloan Management and Google reveals that for many companies, KPIs are mismanaged and undervalued. What’s more, nearly 30% of business leaders don’t even use KPIs to drive change in their organizations. So how can companies make KPIs great again? For one, focus on the customer journey. Additionally, use KPIs as data inputs for predictive analytics and automation, not just report outputs to feed human decision-making. We see KPIs and their measures as building blocks to AI-driven operational improvements, where the system recommends actions to take and predicts the impact of those actions. We’re partnering with our clients to take this next step and digitize their management control reporting, ensuring KPIs effectively drive business performance.

AI & Automation Success Demands Next-Generation Talent Strategies

AI and automation are no longer a thought of the future. They are a current business force. The tools can offer efficiencies and create new work that could not be done before. Farmers Insurance uses AI-powered image recognition and automation to speed up the claims process. Energy companies use AI and automation to reinvent oil rig work. Merck’s Germany operations uses AI for predictive supply chain recommendations, such as when to adjust product supply or demand forecasts. With these new technologies, companies will need new strategies that reimagine talent and reskill employees. Companies must address culture and build agility in job design. For example, Merck plans to retrain its supply planners to become supply chain architects or supply chain data scientists.

The Future of Finance is Quickly Growing and Legacy Firms Must Build New Capabilities

FinTech firms, including Betterment are going after every part of the financial services industry—wealth management, retail banking, lending, and payments. These companies leverage data analytics, AI, and digital tools to transform their business models into truly customer-centric ones. Betterment chief executive Jon Stein says it took a full year to capture the first $10 million in assets; today, Betterment grabs that much daily. As of September 2018, total assets under management are $15.5 billion, spread over 400,000 accounts. Fiserv, a long-time provider of software services for the industry, has demonstrated its ability to continuously adapt, with 12,000 clients with 85 million online banking end users. Charles Schwab, Vanguard, Goldman Sachs, and J.P. Morgan are just a few of the companies leaning in to fully adopting some of these new capabilities. As insurgents take share, legacy financial services institutions that are slow to adapt may fall behind.

How Shell is Applying Digital Across its Enterprise to Transform its Business

Shell has partnered with Microsoft to implement AI, cloud computing, and IoT globally. Analytics predict when equipment needs updating. Behavior analysis of gas station customers through video cameras and AI tools improve safety. AI and machine learning improve how Shell drills horizontal wells. Overall, the company is using data and digital tools to make operations safer, boost efficiency, reduce costs, and even improve communication for its global employees. Digital has the potential to drive improvements across your entire value chain. Shell offers a great reminder of that potential. But transformation will not result from chasing every new advancement. Companies must build capability to rapidly identify, pilot, prioritize, and scale emerging technologies into their business.

SSA & Company Quick Hits

Thought starters from the business world

1. Sweetgreen was just the tip of the iceberg. Restaurants across the board are employing data analytics to make the customer experience better on all avenues

2. The death of retail? Not so fast—Americans have started shopping more in stores again as retailers adapt to new consumer behavior

3. Key takeaways from SSA & Company Managing Partner Matt Katz’s panel discussion on “The changing Retail Industry and the Impact of Amazon” at the Association for Corporate Growth’s M&A East event

4. Startup companies are looking to private investors for funding, leaving the number of IPOs in decline

5. HSBC is outfitting its branch bankers with wearable technology to enhance productivity, communication, and efficiency

6.  Say “AI” – the first piece of artificial intelligence made art was sold at a major auction house

7.  Cow-milking robots are saving farmers money and time

Exclusive Content on Modern Leadership from TMG

Stephen Miles, CEO of our sister firm TMG, offers frank, pertinent insights on modern leadership. TMG develops talent strategies for organizations, teams, and individuals—focusing on high-performance, world-class leadership.

The Double-Edged Sword of CEO Activism
In this forward thinking piece, TMG and Stanford explore the implications of CEO activism, delving into all thing’s CEO activism—the prevalence, the range of advocacy positions taken, and the public’s reaction.