Assessing Digital Maturity and Driving Change with Benjamin Minard (Agoria)

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[General intro omitted.]

Chad Perry:

Today we’re speaking with Benjamin Menard out of Belgium. Benjamin is an innovation expert with Agoria, a nonprofit organization founded in 1946, based in Brussels, with 1900 members comprised of technology companies across every sector of the economy, including manufacturing. Agoria’s mission is to promote innovation through access to resources, like technical expertise, market guidance, industry specialists, and government policy. And Benjamin is here to share the practical conclusions of a 2019 study that Agoria conducted with over 400 small to medium sized manufacturing companies in Belgium. Benjamin, great to have you with us today.

Benjamin Minard:

Hi, Chad. Nice to hear you. And thank you for the invitation.

Chad Perry:

Now, before we dive into this research, I’d like to get a little bit of context on your background. So what exactly is your role at Agoria, and what is Korea all about?

Benjamin Minard:

Agoria is the biggest federation in Belgium. We represent the interest of technology industry. So, we have mainly manufacturing industry but also digital industry. Which makes it very interesting because we have both supply and demand side of the digital transformation market. And we represent more than 300,000 employees in Belgium. So, we are really in the heart of the industry. My room within the Federation is to empower digitalization of small, medium sized, but also large industry. I am so working in digital industry environment. I have a business background and also technology background, and therefore, I tried to do my best to help companies transform themselves and take all the fruits of the digitalization.

Chad Perry:

So Agoria is all about helping technology companies. And so you guys recently did this research with Belgium manufacturers, and that’s now available as a white paper online. But the point of this conversation today is to understand what exactly came out of that research in terms of actionable steps for small manufacturers? So I’d like to look at the three pillars that you guys came up with. But to do that, I want to take a step back for a minute and ask what exactly was the motivation behind doing this project?

Benjamin Minard:

We began, two years ago, to look for objective data about the transformation of SMEs. Because SMEs accounts for 70% of employment in Belgium, so it is a very key component of our economic viability. And in fact, we didn’t find a lot of datas. So we were quite astonished because they are a lot of research for big companies, a lot of research that deal with startups and scale ups world. But in fact, the SMEs were a bit forgotten. So we decided to conduct a large survey with 400 SMEs. So what is the definition of SMEs for us? These are companies that have 50 to 250 employees, that is the European definition of small and medium sized companies. And in fact, we conducted 400 surveys with more than 200 hours conversations. So there was first insight is that SMEs were really motivated to answer these questions. And we surveyed our industrial players, so not only manufacturers, but the whole ecosystems, also service providers for this manufacturing players.

Chad Perry:

Yeah, and that’s an important perspective to get. So why do you think that middle part of the market being so large, why do you think that they have been ignored in the research?

Benjamin Minard:

Well, there are two explanation. The first one is that in the media, but also for the politic, SMEs are quite present for a long time. So there is no buzz around SMEs. When a startup or a scale of come onto the market. It’s brand new, it’s a new perspective. And it’s also, of course, interesting. But we also have a lot of SMEs that are leader on their market, sometimes niche market but also sometimes big markets. And also, SMEs are less organized than startups and scale ups because there are a lot of incubators, accelerators, a lot of structures. But if we look at SME world, we miss a bit, these accelerators and incubators for SMEs that also need to behave as a startup from constantly transforming their business to survive in this really competing world.

Chad Perry:

Yeah, that’s a really good point. It’s easy to assume that if somebody has been in business for a while, I mean, some of these guys, I’m sure have been in business for decades, that they’ve got everything under control. But they do have to compete with the startup mentality, that’s part of what the digital transformation is all about is forcing everybody to change and be more competitive.

Benjamin Minard:

Absolutely, and there is a kind of competition. Of course, markets are distributed by startups and scale ups. And that’s great, because at the end, companies are creating and delivering more value to the society. And that’s really interesting. But we really stretch the fact that nobody has to be forgotten in this story. Everybody has to get equal chance to succeed and to create new value. And so, yes, this is a really important perspective for us, because it is also about employment. If SMEs lose ground on the competition, many jobs will be impacted. And the role of the federation is also to protect the competition of the competitivity of our companies, all our companies, to protect jobs. This is what we observed today. That was also one of the key motivation for this research.

Chad Perry:

Yeah, and part of the reason that research like this is so important is because these small businesses don’t, they tend not to have the kind of resources that you would either find in a large organization or a startup that is backed by investors. And so that makes it particularly hard or intimidating, or just creates barriers to being able to make substantial changes in the business. But as we find out, it’s not really necessary to have a lot of money. And in fact, you don’t really want to go dump a bunch of money into something that can be a step by step organizational transformation. So with that, I’d like to look at your three pillars of digital maturity. So can you tell me a little bit more about that?

Chad Perry:

One more comment before diving into that. This is also a technology adoption. What we observed before the survey is that SMEs are lagging behind big companies in terms of adoption of advanced technology. And this has a huge impact on their competitivity. And so, the first question we had in our survey was, why should industrial SMEs invest in digitalization? And so this is really interesting to understand their motivation to move to better understand how we can activate more transformation. And in fact, the first motivation was, I want to boost my efficiency. I want to reduce my cost. So this is what we call a bit defensive approach. Which is great, which is positive, no problem is that. And second motivation was I want to upgrade the quality of my offer, I want to increase the quality of my customer relationship. So the third one, which accounts for 25% is I want to increase my competitive position. So what we observe directly is that we have two approach, in fact. The first one is pretty defensive, I want to reduce my cost. And the second one is pretty offensive, I want to create new revenues, new market territories to increase the relationship with my customers. And yes, we observe that most of SMEs are going with the defensive strategy rather than an offensive one. So it’s great to be efficient. But don’t forget to create new revenue streams. That was also directly visible in the motivation.

Chad Perry:

Yeah, and both of those can have an impact on downstream customer value. I mean, if you get more efficient, you can get better at catching problems so that you can increase the quality of your product or, you can… I talked to one guy recently who was talking about being able to minimize recalls of products. So, efficiency is important, like you’re saying, but to truly embrace and make this transition, you have to start thinking about not just maintaining a competitive baseline, but being able to make better products and go out there and ensure that you stay present in the market.

Benjamin Minard:

Yes, in fact, there is no opposition. Between defensive and offensive strategy, the best is to mix both because you need efficiency, and you need value creation to succeed. So as a professor rom MIT said, it is really important to have a balanced portfolio of digital innovation initiatives. So you can take more profit from all your initiatives. If you just invest in innovation, or just invest in efficiency, you will get less results that if you combine both aspects. This is a really key message and also to come back on your comment. It is always possible even without a lot of money, to make a try to learn and to have some new initiatives. And so it’s really about experimentation. Don’t hesitate to give a try to an idea with a very limited amount of money. And you will increase your learnings, your insights and step by step. Or you forgot this idea is not a problem, or you improve the idea. And maybe that at the end you will conduct, if the risk is under control, you will may become the more expensive test, and then finally, go to market or radically change a process within your company. But it’s possible to start small and to end big. This is absolutely possible with digital transformation.

Chad Perry:

That’s an idea that we hear a lot is this idea of failing fast to where you take very small, manageable risk. And the idea is not to necessarily guarantee that you’re going to have some outcome, the outcome is not something necessarily that’s going to be useful, but the outcome is going to be valuable no matter what, because you’re going to learn and you’re going to understand whether the risk is truly worth it before you invest a lot of time or money or people resources into it.

Benjamin Minard:

Absolutely. This is really important. We speak about failing fast returned that… We believe also that the mindset behind failing fast was maybe not the good one is succeed fast. Because I don’t know a lot of managers who said, yeah, my leadership motto is to fail fast. And it’s possible to win fast also. But of course, we both understand the idea. There is absolutely no problem to let go of an idea and instead going on with another one. So risk reduction is a very, very important component. And when I speak with the audience, there are a lot of engineers, very Cartesian people. So, when I speak about risk, they feel very comfortable with that because it’s their daily job. And so, we also developed some tools to make a good prioritization of ideas and opportunities. It is what we call the opportunity map. And we have a lot of dimension that can be shared with the audience. Because if you give a score to all of these dimensions, then you have an average score, which is IT say, a T shirt estimation or very quickest to originally. But it’s very interesting, because then you have the ability to choose, but also to identify potential risk sources.

Chad Perry:

Yeah. And I’d like to point out that everything that we’ve talked about right now is about people. It’s about culture, it’s about everything other than technology. The technology is just kind of a supporting factor.

Benjamin Minard:

Yeah, absolutely. There is also another Professor George Westerman, that said, digital transformation is not about digital, it is about transformation. And there are many, many quotes like this. But for us, it was really important to check with data if it was true. And so what we did is isolate the 10% of our respondents that were the most difficult. We call it the champions. By the way, these champions are both active and mature with business process digitization, and digital innovation. So they combine both perspectives. What we observe, what the data gave back to us, is that originally my data scientist colleague search was a bit lost. Because we were searching for correlations and we didn’t find any correlation with regions. As you know, in Belgium, we have Flanders Wallonia, the French part of the country and the Flemish part of the country. These are really different part. Between sectors, size of companies, etc. there was no correlation, meaning that there is no clear evidence that one sector or one region could behave better than another. But on a moment, we crossed some digital transformation success factors because it was the third part of our questionnaire with the 400 companies. And we’ve seen that in fact, the champions all adopt five key digital culture components. And it was really interesting for us because the data has confirmed that digital mindset was a key success driver.

Chad Perry:

So how does this play into the pillars of digital maturity. Because now you’re really talking about extracting kind of a framework that we can use to understand steps that are necessary to take to replicate this success.

Benjamin Minard:

Yes. So in fact, we could then define seven steps that could lead to successful digital transformation, really based on this figures. The first one is start with concrete projects that deliver tangible short term results and work your way up from there. It’s much more complicated to define a big transformation plans and say, okay, I’m ambitious. I want to change this and this, and we should change our culture. It’s really, really intangible. But if you say, okay, from an employee user experience, from a customer user experience, or whatever experience it is, I can really identify and pin point and I really want to solve it, thanks to digital technologies. And so you start with a problem and then with some alternatives solution. And this is a really, really good point. But then you also have a second step, which is what we observed is that in only 50% of SMEs have a responsible for digital transformation. And so the question is not to have a Chief Digital Officer or someone that is a full time Dedicated to digital transformation, it’s not reality for SMEs. But at least someone should be accountable in the company for that question, because there are a lot of ongoing projects, silos kind of organization. And so someone should be dedicating his time to build leadership, to build culture to improve technology, adoption, etc. This is really key.

Chad Perry:

Even if you’re only able to undertake a very small task one thing at a time to try to change your business, you need to have somebody who owns the outcome of that change.

Benjamin Minard:

Yes, because we used to say that data has no boundaries, data are moving away from one department to another, from one company to another. So the way we are organized is not adapted to the data management. So we speak about the divided company model, and which is a much more flat organizations. And saying instead of having sales and marketing, having the leadership on a question, and then asking sometimes some information to other departments. We have a team that needs to solve that problem. And depending on the data, and the interactions, we build different teams that can go between each other. But above this organization, which is pretty flat, we also have someone that made the link between all of these ideas, datas, insights, and so on. What we also say is that the goal is not to move from one hierarchical model to a very flat model. It is also not realistic. But the goal is really to use depending on the nature of the project, one kind or another. So, let me just explain this, is this is daily business. You have an order and you need to deliver 200 units and this is what you do for a while. No problem, you have a hierarchical company, everybody knows his task, performance and at the end, we can even improve from 0.2%, for instance, to process. This is classic way of working and this is good. But then when it is about innovation and exploration, you cannot behave the same way because you cannot predict the future. So, in that time, you will adapt to uncertainty and the only goal is to reduce risk as fast as possible. And this is only possible if you combine expertise, people with the right mindset, and then step by step with humility, you will better know your market or your employees and at end, you could eventually, launch a nice product or a better experience.

Chad Perry:

That’s a very key distinction right there is that hierarchical command and control or organizational structures are very common, and they work really well, for certain outcomes. But the digital transformation, what makes this difficult, is that you’re trying to manage risk for a lot of unknown variables. You don’t know what will work. We don’t know what the future looks like in 5-10 years. So you have to adopt your approach to innovation to recognize that and not try to shoehorn it into a traditional hierarchical structure.

Benjamin Minard:

Absolutely. If you want to get some more information about the divided company approach, you can just go on YouTube, and you search for Dave Gray JRA epsilon. This is really interesting to just kind of inspiration. We believe also that every company, every organization, has to find his own path, his own way to address this, because it’s very personal in a way. But what is common is that there are a lot of tools and methods that could be used today to facilitate this new project management style. Because in fact, we have a few years of experience with digital transformation. For instance, the business model canvas, which is now pretty known. This is a good canvas to create a common language within the company. So what all these tools have in common is that they create pretty basic canvas that help people to collaborate. So the collaboration is really important. These canvas create a common language and also force people to simplify the rational to fasten the decision and to accept that even if we don’t have all the details of all the assumptions, it’s possible to start somewhere and to move on. So this is, for us, a really important key is to say better than thinking about, just ask your neighbor, ask your partner. As Steve Blank would say, get the hell out of the building. You need to make experimentations, you need to adopt a Lean Startup approach. It doesn’t mean that you will be a startup from one day to another. It just means that you take the best of the startup approach. And as SME, you have a strong point because you are pretty agile, but you can also combine this with an history with experience with a large customer base. So in fact, you are a bit between startup and big companies. And you can in fact, play with startup agility, and big companies asset’s. So this is pretty interesting. And SME need to be conscious about that, and know to really move on this to get a competitive advantage.

Chad Perry:

So that’s step one, and two. So the first step is start small. The second step is make sure that you have somebody who is accountable. And so there are additional steps that we can take, what do those look like?

Benjamin Minard:

Yes, it’s also important to create involvement and coaching of old staff, notably the people that are responsible for the project. Okay, that’s great, you have a structure. But then from scratch, you need to think user adoption. Is it a customer? Is it an employee? You need to work to promote and support digitalization within the companies. Because at the end, even if it’s a five stars product, if the adoption of this product is not validated, you will have made the job for nothing. So it’s really important that everybody in the company understands why do we do digitalization? What does it mean for me? Every employee should be able to answer the question. Yes, I understand that digitalization from a business strategy perspective is that doesn’t speak to me. What I want to understand is what is the positive impact digitalization could have for me, and eventually, how could I contribute to that movement? Even if I’m not a specialist in technology, I’m able to pinpoint a specific problem that could possibly be solved by digital technology. And so at the end, we built a problem identification basis, which is great. And we also share with all the company that it’s possible to address these problems. So we all are in our way, innovators, whatever the solution is, everybody can contribute positively to that moment. This is a really important point.

Chad Perry:

Yeah, yeah. So you got to make sure that your employees are buying in to the digital transformation. You have to make sure they know what’s in it for them, as well as what’s in it for the company.

Benjamin Minard:

Yes, and really make the implication of the user as soon as possible, when the product or the process is built, they should be involved. That is a really key message.

Chad Perry:

So then that’s number three. So what does number four look like?

Benjamin Minard:

Yeah, well, there was an insight that was pretty surprising for us. This is, less than 50% of SMEs cooperate with external digital partners. So let me give a concrete example. I met a company, 100 people that is active in steel. And they were looking a few weeks for a partner to develop an ERP system, Enterprise Resource Planning system. But after a few weeks, they decided to build their own ERP even if they’re not specialists.

Chad Perry:

Oh, wow, yeah.

Benjamin Minard:

This is not an isolated case. There are many of companies in the SME family that do not cooperate with external partners. So 50% are making their own solutions. So this is a really risky approach for two main points. You need to maintain the solution you have developed. Even a small kind of easy solution needs to be maintained and that’s not easy because as you know technology is evolving every month. It’s really risky. There are also diverse security questions, etc. The second point is also that we observe that companies that are open to the world, open to partnerships, they learn faster than others where are the new opportunities, what are the good ideas etc. They do not hesitate to challenge their own ideas versus others. And so, in a world which is ambiguous, versatile, it’s almost impossible even for big companies to have all the expertise in house. This is almost impossible. So, SMEs really need to focus on what they do the best. And for all the rest, they need to work with partners.

Chad Perry:

Yeah, it’s such a good point. As a software engineer, I’ve actually seen both in the industrial sector as well as outside exactly what you’re talking about. So this can, custom tools can be extremely powerful and extremely effective, but the risk is very high. And as you said, you really need to have a lot of different specialties. And if you’re even just employing a handful of engineers, that expense gets very large, very quickly. So for a lot of reasons, it’s a bad idea, unless you really, really know what you’re doing.

Benjamin Minard:

Yes, we also try to understand why the situation is like this. And so we have also some explanations from the supply side that told us the problem with some SMEs. Of course, there is no generalization here but with some SMEs, it’s really complicated to start a project, because they didn’t made the job before sending a request for proposal or request for information right. So there is a lack of maturity. And so our job, as affiliation, is to improve this maturity so that a good discussion is possible between both demand and supply side. So this is improving the market dynamics. But on the supply side, it’s not always easy to understand what is their positioning, what do they offer? Because some say, yeah, we can offer every kind of services because we have the staff, so don’t hesitate to contact us. Okay, great. But it has to be more concrete. So with our program, Digi Coach, we try to facilitate the communication, the understanding between both supply and demand side. And with really concrete tools, we are really convinced that it’s possible to address this question.

Chad Perry:

Yeah, and to put that another way, what really needs to happen is, regardless of what you’re doing, whether you’re hiring an outside supplier or doing something internally, you really need to understand why you’re doing what it is that you’re trying to do. And you need to understand the outcome that you’re trying to achieve. And that’s a big problem in software, in business in general.

Benjamin Minard:

Yes, there are many companies that start a project, because some others do that and so they feel obliged to do that. And so what they said it’s, well, in fact, digital transformation, it’s so large, there are so many different perspectives. In fact, we are lost. And so what we did also with that 400 people on the questionnaire, we decided to build what we call a Digi Scan. And in fact, we provide a structure based on business process transformation, digital innovation and digital culture. And we say okay, you can enter a few questions, and then you will get your own maturity versus the maturity of the sector. So you already have one information. Are you okay? Are you too far? But then it’s up to you to take the decision, but we center on the fact that if the benchmark is too far away from them, it may be not a good point for them. So be cautious. But in fact, the structure is really important and that structure is very detailed so that people can better map the digital transformation on transformation and understand where their focus is.

Chad Perry:

Yeah, and then I’d like to come back to this idea of digital maturity, because I know that that’s what your three pillars are anchored around. But let’s keep going with this idea of these actionable seven steps. So we’ve looked at five steps so far, four steps, five steps so far. So let’s keep going on that. What’s the next step?

Benjamin Minard:

Yes, as I told, we observed that many people had a strong focus on business processes. And so we say, no problem, it’s really important. But please keep in mind the opportunities of innovating products, services and business models. So our key message is that it’s important to constantly look for new revenue streams. That can be a new market, a new product, that can be a new way to capture value of the market, make a try for a subscription model. So, if you look back at the first step, don’t transform the whole model from a transactional basis to a subscription, because the risk is too high, but maybe on one or two products just give the possibility, an optional possibility, to make a subscription. And then observe what is the reaction of the market. So constantly experiment with the market to innovate and to create new revenues. Because you know that you will be disrupted one day or another by a player. So this is absolutely clear. So you need to disrupt yourself before other will do and then you can maintain your competitivity.

Chad Perry:

Oh, that’s such a good way to say it too to disrupt yourself first.

Benjamin Minard:

It’s really interesting. Imagine that you do not launch new products, you will learn so many things that it will also have a positive impact on your classic business. Because you get so many insights from the market or your employees, I mean, innovation can be also for employees or partners and value chains. But you need to learn fast and adapt fast. If you do so, you will naturally transform yourself. And you rather than writing a 50 pages strategy on digital transformation and that will last 12 months and etc. Just make test and test again and you will learn what you need to do.

Chad Perry:

So then what is the next step after that?

Benjamin Minard:

Then you need also to think about the whole value chain. So you have a certain position on the market and you have suppliers and you have customers. But this logic is moving very fast. You may have the possibility to attach the final user, because it’s possible maybe to launch an e commerce platform, or you have some suppliers that will disappear, because it’s possible to deliver the service that a third party delivered, or you integrate the service provider. So it’s really important to think, not only on the product, but also to disrupt your position in the value chain, or to at least anticipate what is going to impact. Because maybe you will be impacted by a player that is in the value chain and that decided to integrate your activity. So it’s really important to do that. And to do so, you need to better understand what your customers need and then you will be able to protect also your position in the value chain. And in the manufacturing sector, you have the possibility to equip your products with sensors to capture data, so that you better understand how are your products use. And then you can improve the value created by your product because you better understand how they are used by the final user. And so this is really interesting because thanks to technology, you get that information that was impossible to get before.

Chad Perry:

Right. And this is a really good point because there are two threats that you just described there. If you’re a supplier or if you’re somewhere actually really anybody anywhere in the supply chain, there are two threats to you. One is that the service or product that you offer becomes obsolete, so people just don’t need it anymore. Or that, in an effort to cut costs and be more efficient, companies may figure out how to go around you. And so you need to be aware of those things as they’re happening because they could have a substantial impact on your ability to even exist at all in the future.

Benjamin Minard:

Yes, it’s really interesting because if you collect data, you have the possibility to provide completely new services. So we have a company which is member of Agoria. And they predict a full range of machines for cultivating potatoes. And in fact, they collect a lot of data when the machine is used. They made some comparisons with John Deere, for instance, which has a huge customer base, and combining their data with other data’s they are now able to give really specific advice to the cultivators to improve their efficiency. And they’ve made really step by step approach. So first, equip or machine with captors and sensors. Then, building a platform to analyze and to share these data. Then, combining their own platform with other available platforms so they built or they are integrating in a larger system. And so you know that step by step, sensors, platform of platforms or integrated platform. At the end, their job is completely different today. They not only provide machine, they provide consultancy, and almost for free. So they could improve radically the loyalty of their actual customers and attract new customers. And this is also a very good example, because in Agri food, thanks to data, the world of Agri food producers, agricultures, is changing completely. And this could have an impact on industrial players, but also on small players, because data are making accessible to everyone. So this is really the thinking about what their user needs, then how could the data solve this problem? And what is my role between the industry? How can I contribute to the industry?

Chad Perry:

I can’t remember. Are we on Step six or seven? Have we wrapped up that?

Benjamin Minard:

Yeah, we were on step seven.

Chad Perry:

Okay, perfect. So that makes a lot of sense. That’s very actionable, practical steps that we can take to at least start this journey and to continue to evolve and to cycle through this transformation. Now, I know that you guys, you mentioned digital maturity. So this is something that cuts across all of those steps, all of the ideas that we’ve talked about, and it gives you a framework to assess where you are in terms of this transformation. So can you tell me a little bit more about those three pillars?

Benjamin Minard:

Yes, so the first pillar is about business processes. So we interviewed people on business processes. The first question was about applications. And what do we mean by application? It’s finance and legal maturity, human resource, digital maturity, sales and marketing, prediction and services. This is the up level. But then we have also another very important area, which is combining the data, sharing the data, with speak here about ERP system, customer relationship management system. How do we have this horizontal layers that makes it possible for HR sales and marketing etc. to combine data? And then the first layer is connectivity and infrastructure. Do you have access remotely to your office? Do we have an intranet? Do we have a good level of cybersecurity? What about the connectivity within the plant, etc.? And so, for HR, for instance, we asked do you plan or do you have already achieved in this different area? So are you using paper? No, we already solved that problem. We are paperless. Are you working in the cloud? Are you analyzing your data? Are you creating dashboards to take informed decisions? So this is gradually going from paper to dashboard and analytics based decisions. And this was the questions that was repeatedly asked for all the different business applications area for a shared data and connectivity and infrastructure. In fact, what we were able to see is the extent to which companies did not planned or already achieved a series of challenges in business operations.

Chad Perry:

So that’s your first pillar as you’re looking at what is your maturity level in terms of using digital tools to facilitate more efficient business processes. So your second pillar is, you mentioned, all about innovations in product and business model. So tell me a little bit more about that.

Benjamin Minard:

Yes, just to finish the first pillar, just to give you a score. If you look at Digital frontrunners, so what we call this is our O champions. Their maturity score, it’s a percentage, it’s 72. And for the remaining companies, it’s 42, which is pretty good, in fact. So what we could observe is that a lot of SMEs are already activated, a kind of, digital transformation for business processes. So this is pretty good. But then looking at digital innovation, so we ask people about their product service innovation, business model innovation. First insight is that service companies, so the company is delivering services to the manufacturing sector, they already transform their relationship with customers, thanks to digital tools. So they are pretty mature on that aspect. Consider one in two service companies digitized its services. But if we look at manufacturing, clearly, there is a lack of advanced technology adoption, just to give you an example and to put in perspective this question. If we speak about artificial intelligence adduction, we could say that 73% didn’t make any plan in terms of artificial intelligence. And so for them it’s not about artificial intelligence, it’s just understanding where are the data, so 80% of the data produced in manufacturing are not used and will never been used. So it’s about data and then big data, and then artificial intelligence. It’s a step by step process. And so Agoria will also send civilized authorities, which are investing massively in artificial intelligence. So this is great, of course, it is important. But don’t forget that a vast majority of manufacturing players are not concerned. So they should receive some support to better understand what their data means for them and how to make a better use of it. And so, we have pretty low scores in terms of technology adoption and digital innovation. And we believe that authorities, federations, really need to play a role on this. Because, you are efficient, this is great, but that somehow… Because we have also a program, which is called factory of the future. There are 40 factories, which already made seven transformation to get a factory of the future. So these are among the best in Belgium. And then the plant manager of the factory told me, this is great, because today I have a kind of favorite, my plant is incredible. I can do what I want to do. I’m very flexible. But a problem is that I don’t have gasoline, I don’t have fuel to feed my plant which is going too fast. I need to make new business and I also need because they are in the automotive sector. I need to address my customers differently because they speak about solutions and I speak about performance. So the language, everything is different. And so we believe that we really need to emphasize is innovation aspect and to guide manufacturing, to change their mindset by saying, you not only need to understand what your customers want, you also need today to understand what the customers of your customers want. We call it b2b2u, business to business to users. Because if you understand from a user perspective, you’re better off, your product, you will be much more convincing when speaking with your customers, you will even help your customers to better understand their users. So, you need to have an ecosystem approach and not only a bilateral discussion with your customers. And we observed that some are making or adopting this approach. And once again, in the automotive sector, they get better results. So they put some captors, some sensors, but they also conducted some market analysis as the final user. And then they get a competitive advantage against the others, which we’re really focusing on failures and really engineers aspects of the product.

Chad Perry:

Yeah, it’s almost like it expands your feedback loop. So you can now get feedback from how your products are being used out in the world, as opposed to just feedback internally about how you’re building your products.

Benjamin Minard:

Absolutely. And it opens a lot of new perspectives. It also suggests that if we speak about a solution to a specific problem, you may be a part of the solution. And as an SME it’s really important. If you cooperate with other SMEs, to build the solution, you are not only protecting your market, you’re also protecting the solution to be exported elsewhere, because it’s much more complicated to export an ecosystem. You know, you give a product, it’s possible to be bought or to be copied or somehow you are vulnerable. But if this is a system of contributors that together propose a solution to the market, it’s almost impossible to easily take the solution and make it elsewhere.

Chad Perry:

Yeah, good point. I think we need to wrap up here in a few minutes. So I want to take a look at this final pillar of business culture. And then I’ll also have a quick question around the current situation and the current climate.

Benjamin Minard:

Right, so we addressed largely the seven steps that are key components to be successful in the digital transformation. And this is based largely inspired by five factors that are characteristics of digital cultural mindset. The first one is the appointment of a person responsible for digital transformation. The second one is integration of digital transformation in the business strategy. What we observed is that someone there is a digital transformation strategy on one side and then business strategy. And in fact, these are interconnected, they should be developed together. What we also observed is that when you approach digitalization, some companies say, okay, we define the strategy at top level, and then we spread it all around the organization. Others say, yeah, we have a bottom up approach. We gave the possibility to everyone to make a proposition to kick start a digital project. So, top down and bottom up. In fact, we observed that the best are those that combined both top down and bottom up approach. So there is a clear framework that everyone is able to contribute to that framework.

Chad Perry:

Right, and that makes a lot of sense because those strategies, like you said, they are very interconnected because digital exists to support the business. The technology should support the business outcome. So you can’t have a digital strategy or you shouldn’t, without a business strategy to justify it.

Benjamin Minard:

Absolutely. And this is what we always repeat, and we are a technology federation, so it makes even more sense. First, define a clear business strategy that could evolve along the time, that at least it is defined and discussed. And then from that, you can build a consistent digital strategy. Digital is there to serve business objectives. This is a really important point. And yeah, we observe in the fact that many companies have people struggling because they want to give a priority to the digital strategy or to the business strategy, etc. No, this should be defined completely together.

Chad Perry:

So you were talking about five different points there of culture that kind of drive these practical steps. Was there anything else there?

Benjamin Minard:

Yes. So I repeat again, working with external digital partners, and involving and coaching staff, in the digitalization process. In many companies code that does not involve staff at the starting point of a project or so this is really important not to wait a prototype to involve people. Even for ideation, we could invite some customers, some partners, some users to the reflection, that is really, really complicated for companies to change that mindset.

Chad Perry:

Yeah, and that’s really the bottom line of culture is you’re changing mindsets, you’re changing habits, and that is absolutely foundational to the entire idea of digital transformation of remaining competitive.

Benjamin Minard:

Absolutely.

Chad Perry:

So with that said, I want to take a quick look at how things have changed, given that this research was done in the summer of 2019. And now we’re almost into May of 2020 and obviously the world is a totally different place due to Coronavirus and all of the effects of that. So what are you seeing now? Are there things that have made you change your mind or are you seeing even more validation of the digital transformation?

Benjamin Minard:

The first point is that in 2019, we observed that 83% of SMEs, industrial SMEs told digital is an opportunity, but only 44% considered that digital would impact their sector. So it was pretty ambiguous. But today, I believe, this has to be confirmed that many more companies would say, we were impacted because we did not consider on that time that digitalization was so important. Because in the manufacturing sector we measure with our members, week after week, the level of activity. So it was less than 50% two weeks ago, now it’s 52%. And so to ensure business continuity, which is really key, it’s not always possible of course and depends on the context, but some players could not ensure business continuity because they lack of laptops, remote working, teleworking, etc. Which is pretty dramatic because it was absolutely possible to anticipate that situation with or without Coronavirus. A single observation is also to say it’s probably likely that the divide between the champions 10% in the major companies 40% will be higher after decreases. Because the followers will see the train accelerating over and over again. Thanks so due to decreases, and it will be more complicated for them to catch the train back. So for it, it’s really a priority to say to these companies, we are here to help you, we will finance that. Because if you don’t do that, you will not survive. The society is also changing because they are more digital adoption. You see it in education, the way you pay in the supermarket, cashless payments, for instance. There are a few things we were talking about, that are low, within a few weeks realized in the society. And so you can also imagine that making business will be different. Maybe not meeting your customer face to face, but making a remote meeting. You’re not going to attend in another country to affair because it’s not possible, so you have to find a workaround. But maybe that workaround will be more efficient, people will realize this. So if you are not digital, you will lose a lot of opportunities. And we are really concerned about that.

Chad Perry:

Yeah. And manufacturing tends to lag behind in its adoption. Obviously, we’ve seen that through the data, but also anecdotally, I’ve experienced that myself. So really, what’s happening is we’re seeing an entire industry that’s being forced into this new way of operating. And what you’re talking about is a growing chasm between those who respond well to it, and those who don’t respond to it.

Benjamin Minard:

The key point and, Steven Vanvelahan, that is also a famous digital analyst here in Belgium, he made a good metaphor. He said, in 2007, we had for the banking sector, a financial stress test. This was difficult, but it was also necessary. And we noticed a few years later, thanks to that crisis, there was a kind of a better governance, a better system, better financial system, more sustainable. And then he said, today, we live in a digital stress test, period. Of course, some won’t survive. But for the whole community, it should be a better situation after the crisis than before decreases. It’s difficult. It’s even dramatic for some people. But all together, we can help with a better digital adoption, with change of behaviors, etc. The situation with global be better within two to three years than before, thanks to digital technologies. And also because digital technologies, as we have already said, it is serving the society. It is not to make money. It’s really to serve the society. We observed in Belgium and certainly in the UK, that a lot of initiatives based on digital is a mindset that could serve hospitals, patients, because there was a cooperation, because there was a solidarity, because some technologies could accelerate tremendously, the possibility to find a solution. Because data is everywhere, and if you combine citizens data, probably you will better identify the disease and be able to identify those that are should be incremented. If you have a look at how digital conserve decreases, this is clear that we can find some very positive initiatives and this is great. But then, on the other hand, we have also some negative aspect because, as I already said, the digital divide for citizens and for companies will be more important if we don’t act today, and also massively. Also, because, at least in Belgium, we noticed that public authorities are not that major regarding digital adoption. So, just to give you an example, as you know, in Korea, one of the success factor to address the epidemic, the pandemic now today, is that it could identify people with an application and put them in quarantine and all the contacts also was warned etc. In Belgium, there will be apparently no support to develop this kind of app. While Germany, France, Italy, etc. adopt this. So we will rather use classic call center with people interviewing citizens etc. which is not really efficient. Because we are still scared, authorities are still scared about privacy. But in fact, there is much more privacy with the technology solution than with a call center, because they will need to disclose all this personal data with public data. So, there’s still a long way to go. And this is, as a whole, the society, the company, the individual citizen.

Chad Perry:

Yeah, well said. I mean, there’s a lot of opportunity. There’s a silver lining in the crisis, but it also requires an awareness of what’s going on and a willingness to embrace the things that need to be done to get us past the problem and into a solution and into a future that is better for everybody.

Benjamin Minard:

And so to help find your way, and because it’s a really personal way on the transformation, we developed at Agoria program, which is called Digi coach. And the mission of Digi coach is to support companies, not only SMEs, I would say companies, to launch new digital projects and experiments with the highest success possible. So it’s really not about making the transformation, but setting the right conditions to succeed the transformation. And then we developed a few tools, webinars, workshops, and we also have experts that can help company to succeed and we based our product, our program, on the results of this survey. Because we had the possibility to test, for instance, Digi Connect, which is an online tool that put in contact the supply side and the demand side. We find it not acceptable that an SME does not find a solution provider, because we know there is always a solution provider ready to help an SME. So we try to solve this. Or Digi scan, which is a survey that makes it possible to identify your digital maturity, and to benchmark it with the sector so that you can take better decisions, etc. But this is really to improve the market dynamics and to make it all together succeed. Because at the end, it’s not my company that will succeed, but all together, we can succeed and transform our companies to better serve the society.

Chad Perry:

Great. Yeah, that sounds great. So what is the URL for your website so that they can access these tools?

Benjamin Minard:

You can access thankstoagoria.be/digicoach.

Chad Perry:

Okay, perfect. And so one final question. If somebody wants to get in touch with you or get in touch with Agoria, what is the best way to do that? Maybe Digi coach is one way to do that, but what would you suggest?

Benjamin Minard:

Well, I can let you my personal email, which is Benjamin@agoria.be. Don’t hesitate to get in touch with me if you have a question or a suggestion or proposition. I will be more than happy to answer.

Chad Perry:

All right, great. Well, Benjamin, thank you so much. Really appreciate it.

Benjamin Minard:

Thank you so much. And I really appreciate the discussion. And I’m really here to help you through and don’t hesitate to get in touch.

Chad Perry:

Perfect. Thank you.

Benjamin Minard:

Thank you so much. Bye bye.

[General outro omitted.]