Technology, Culture, and Digital Transformation with Paul Daugherty, Chief Technology Officer, Ac...

I'm doing great, thanks for having me on the show, Michael.

Yeah, sure. You know, the topics you mentioned, you talked about tech, culture, and digital transformation, and those are just great topics that define a lot of what we're doing at Accenture. So it's a great lead and a great set of topics for the day. Accenture, I assume most people know something about Accenture, but just to give you the real quick story, we're a company with about $32 billion in annual revenue, approaching somewhere on the order of 390,000 people, moving toward 400,000 people. And our business is really about bringing technology and innovation to businesses and helping businesses achieve their digital transformations by applying the range of services that we have. So that's what we're all about, which is why I think this is such a great topic that you've teed up here, Michael. My role in the company is part of our Global Management Committee, working for our CEO, Pierre Nanterme. My objectives are really to look at where we're positioning Accenture and where we're taking it a few years from now to make sure that what we're doing and the services we provide are as relevant and even more relevant with tomorrow's technologies than they are with today's. To accomplish that as CTO, I have a range of responsibilities, starting with our research and development, our Accenture Technology Labs, and areas like our strategic minority investment program where we invest in some of the smaller companies that we believe are future leaders. I'm also responsible for overall technology alliances and partnerships with all the companies you'd expect us to be partnering with, as well as the new emerging companies. And I'm also responsible for our emerging technology businesses, the smaller businesses that we're incubating around new technologies such as wearable technology, virtual reality, and things like that. So that's what I'm up to.

Yeah, I mean, the way I think about Accenture is Accenture really exists at the intersection of technology and business. The DNA of our company is around, think of it as that double helix of twisting together the technology and business impact and bringing business-relevant technology innovation to our clients. So that's really what we're all about. Technology really runs through our whole business. If you look at the five businesses of Accenture, we start with Accenture Strategy, but our focus on strategy is around the intersection of strategy and technology and business. We have a Consulting business that's very focused around management and technology consulting and applying these transformations into our businesses with an industry context. We have Accenture Digital, which is all about the digital set of technologies that's transforming business. Accenture Technology itself, which is the delivery of the new technology as well as all the technology we deploy to customers. And Accenture Operations, where we have the full stack of operations capability from infrastructure through business process, again powered by technology. So technology really is the common thread that runs through our whole business, and Accenture being a leader in technology is what allows us to stay ahead and grow market share and grow our business as you described.

Yeah, that's something we think about a lot because we're in the era of digital transformation. That's the defining change that's happening in business right now, and you see it in every industry, in every part of the world. We recognized this several years ago. In 2013, we came out with a technology vision that talked about the fact that every business is a digital business. At the time, I remember that being provocative. I'd go to a lot of clients and they'd say, 'Nah, you know, we're not a digital business, we manufacture, we do whatever we do.' It was provocative at the time, but it became an accepted idea. Since starting back then, we started making some changes in our business. We created Accenture Digital, we created a different sort of strategy practice fusing together the digital strategy and the technology with it, made a number of other changes in our business to position ourselves for the digital transformation. And that's why, if I look at our results, we recently talked about our business, we talked about rotation to the new, rotation to digital, cloud, cyber, and the new technologies. And we announced that 40% of our revenues, so 40% of our business, is in that new set of technology, and that business is growing well over 20% a year. So what you see happening is the fact that we've been early in making these transformations to our businesses has allowed us to do well in the market, gain some market share, bring the right relevant services to our clients as they're in this era needing a lot of help. And that's what we're all about. This idea of digital transformation and continuing to drive the transformation of our own business, along with being the leader in driving those transformations for our clients, is really what we think about all the time.

Yeah, the technology is an enabler and the catalyst, and we're in this period of amazing technology change. It's a time of exponential change and growth, which is hard for a lot of us to even comprehend, and we're at the early stages of this. So for all the amazing innovations and gadgets and big business innovations we see every day and every week, it's the early days, and we're going to over the next five and 10 years see an amazing array of new innovations that are going to transform the landscape for companies. But the challenge is, one of the things we talked about in our vision is there's already too much innovation available for companies. Most companies have far more technology at their disposal than they have the ability to digest and deploy the technology. So we talk about this idea of a digital culture shock, where we see many companies stuck between their legacies, stuck with some cultural changes, stuck with uncertainty around how to innovate. And that's what we're trying to address: how do we unlock this digital culture shock and help clients with the technology adoption capabilities so that they can take advantage of the innovation that's there. And that's where the broader set of services that Accenture has come into play. We have the strategy group that can work with our clients on understanding digital and what's happening. If you're in the industrial equipment business, should you become a two-sided B2B platform and change your business model, move away from a product-oriented business model into a platform-based services model? Those are big questions that will shape the futures of companies and shape winners and losers in the future. That's in strategy. Consulting is about what you said around process transformation. There's an opportunity in front of us now and in front of every company that we haven't seen since the 90s to really reshape and re-engineer the way the company does business based on the availability of data and machine learning, machine intelligence, etc., wrapped into business processes. The ability for us to deploy consulting people who understand different industries and business processes and can lead that change through clients, and come equipped with the data sets and the tools and the data science to do it, is really what's part of that business. Our technology business is about deploying solutions using agile new techniques, DevOps, continuous integration, delivering in new ways. We call it liquid IT, in addition to the traditional delivery that's important for many types of problems our clients have. And then operations is operating business on a continual basis for clients with digital, and our digital services kind of wrapping around all of that. That's a little bit more on how the business works and addressing your question.

Yeah, that's a great question, a great point. To prelude to the answer, to back up Belal's point, we did a survey last year with the World Economic Forum, along with some work we're doing for the Forum in India on digital transformation. The survey came out with results that said 87%, so roughly nine out of 10 executives, believed that the digital technologies that were coming would disrupt their company within five years. So nine out of 10 is saying this is going to disrupt their companies within five years, a striking, high number. Only 7%, less than one in 10, said they had the roadmap and understood what to do. And that's just a striking dichotomy that we see with people understanding the nature of the change and disruption but being uncertain about the roadmaps. I think that data kind of lies at the heart of the question there, and I think we're in an era where a lot of companies are searching for the answers. I think one thing that certainly is not the right thing to do now is the old-school way of looking at a long-term strategy forecast and spending a year developing your five-year strategy. Those days are done. What we believe the right approach is, is more of an agile approach to strategy as well. It doesn't just apply to systems development. So understanding how to get a more nimble organization and culture in place, how to get more early experimentation in place, develop the kind of guidelines on what you need to do, and then fail fast using the internet mantra. An old line that we've used for years that still applies, or applies even more I think today, is this idea of think big about the possibilities and understand where you might take your business. Think about, using my example earlier, the B2B business platforms and big ideas, and start small to experiment, get the experience, and be ready to scale fast where you have the successes. Think big, start small, scale fast is more relevant today than it ever has been.

Yeah, I think that's a great attitude to take. I think the CIOs who are leading this change are taking that type of view. I think it's a tremendously challenging time to be a CIO or technology leader in a company because things are changing so fast. And if you're the CIO, you're responsible for keeping the business going, keeping the lights running, as well as developing the new innovation for the business. I think those CIOs that are taking on that kind of mindset and looking at how do they become the coach to the rest of the organization in understanding the changes in technology, educating the business, and being at the forefront of the change are the CIOs who are doing very well in this generation of technology change. I think the CIOs and organizations that are struggling are the ones that are a little bit more in support mode and a little bit stuck. It's not that one's good and one's bad, it's just that in this environment, the business is going to move so fast, the demand for speed is so great, that you have to, as a CIO or as a technology leader, be in front, being part of the change rather than waiting for the change to hit you. So I think taking that kind of approach that you described from the CIO you worked with is the pattern we see in success. And it's something I see with our CIO, Andrew Wilson, who I know you've talked to on your show before. It's a great example of Andrew in our business taking a very proactive view and developing a vision on developing the best digital workplace to support Accenture, and then figuring out how to get the rest of the organization there. That type of mindset I think is really important.

Yeah, a number of things. I think the first thing is around getting on the front foot with it. The CIO needs to be actively participating in the dialogue on the business change and where the business is going and how the technology enables the business change. Now, that varies a lot in companies. In some companies, the CIO is in essence the Chief Digital Officer as well and is the one the organization goes to for that kind of technology insight. In many other organizations, there might be a Chief Digital Officer or somebody else tasked with that kind of role. But regardless of the nature of the organization and degree of responsibility for technology and digital technology, I think the CIO needs to make sure they have a seat at the table and are carving out that seat at the table to be part of the change and shaping what's happening. So that's a first part of it. A second part of it is what you hinted at with your earlier question from the CIO you talked to, which is making sure that as a CIO you're adapting, you're developing different speeds in the organization. People talk about two-speed IT or multi-speed IT or whatever it might be. I'm not a big fan of just the two-speed concept, but I think this idea of having a very fast, nimble capability to move at the pace of business is really critical, so that it can be seen as the enabler and the change agent in that think big, start small kind of program, in addition to scaling fast, which is what it has always been good about. So I think developing that different kind of approach and mindset, different skill set around the new technologies is important. And that then leads to a culture and talent issue for a lot of organizations. If you look at what you've got in the organization across your in-house organization and the partners that you work with, do you have the talent in terms of the insight and the strategic thinking, the skills and the right technologies, the knowledge of the right cloud architectures, big data, digital architectures, etc., to take your organization where you need to? And most organizations recognize they need to go through a talent change as well as a culture change to make sure it is operating in this new mindset. And then the final fourth thing I'd highlight is the need to really think about new architectures, because the new world needs to look a lot different than today's world. So thinking about how you evolve the current architecture, nobody's got a clean slate, a greenfield, but how do you take the current architecture you have, amplify the APIs and new approaches to increase and improve the access to the legacy technology, improve the access to all of your technology to other stakeholders, and think about the right way to embed agile architectures and new types of techniques into the technology you're deploying. So those are some of the things I'd highlight.

I was just going to tweet myself a question, but that's a good one. It's important because most organizations, I'd say Accenture included, need to shift their culture a bit because of the pace of change that's coming from a technology perspective. As I said earlier with strategy, the days of top-down, dictated, multi-year strategy are gone. In the same way, the era of very rigid, fixed organization structures are gone, and people need to work differently. The pace of change and innovation is only going to increase. So a leader at the center of the corporation or leadership's ability to drive the change in the organization just isn't going to work. The winning companies aren't going to be able to win if that's what they're trying to do. So understanding how the culture of the company changes to become more innovative and more adaptive as it goes is really essential. That's something we're really focused on at Accenture. We're talking about it a lot within our company, is an innovation-led culture. Our purpose, as we've defined it, is to be the leader in bringing innovation into business. And to do that, what we need is an innovative culture, innovative people at every point in our organization who are focused on that. And I think that's not just our company, that's true of many, many companies, I'd argue most companies in the digital era, because the pace of change is going to be so extreme. You need an organization that can adapt quickly, that accepts change as a new normal rather than as something you just do once in a while, and that embraces and recognizes innovation, understands how to bring that into the business. There's a line that I love that I've read a number of times over the years that says, 'Culture eats strategy for breakfast.' And I believe that's really true. We're in an era where strategy is extremely important. People need to point their companies in new directions. But the thing that's really going to get you to that strategy is having the culture that's aligned with the purpose, where people's purpose fits your organization's purpose, and you're moving in the same direction.

Yeah, this is something that's evolving very, very rapidly. But I think the reality is business models are changing very rapidly in lots of different ways. I talked earlier about platforms and the idea of platforms. We believe that the move toward digital platforms is really a profound shift in the way business will work in many industries. And we've seen that happen already. The platforms started with Amazon with e-commerce, iTunes with the music platform, etc. But if you look at the analyst forecasts or if we look at what's happening in the industries, we expect dozens if not hundreds of different industry platforms to develop. Such things like GE's Predix platform, which is their technology, but then it's the new way they're approaching healthcare around those businesses. We just had an announcement with them yesterday on something we're doing together in healthcare. If you look at what Philips is doing with HealthSuite, their platform for connecting patients, providers, and physicians. You have many other cases like that. You see the emergence of platforms which are changing the business model. So for GE, back to them as an example, if you listen to Jeff Immelt and Bill Ruh, the GE Digital leadership, it's about changing from a product to a services model where the services are enabled and delivered through a platform. And the platform, what's important about the platform is it allows you to deliver services from an ecosystem of partners to deliver greater value to your customers. And that kind of change is really what's going to define the future of many industries. You see it happening already in lodging, Airbnb and things like that, moving through many, many industries. So platforms are a key part of the change. I think the other thing that changes with business models is some of the changes that technology brings into the way you need to think about your own business. Some of this gets into stretching the boundaries on your thinking, but if you look at what's going to happen to the insurance business as you have more autonomous vehicles, as an example. The CEO of Volvo came out recently and said when they introduce their self-driving cars in several years, their autonomous vehicles, they're going to self-insure as a way to get the purchasers and passengers of the self-driving cars more comfortable. So what happens to insurance in that type of world? There are many other impacts where the boundaries between the industries blur and shift a little bit. It causes you to rethink where your focus is and how you need to compete. We see that happening in many, many cases.