“Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… the ones who see things differently”
These words were spoken by Steve Jobs, narrating the infamousTV ad at the center of Apple’s Think Different campaign in 1997. He had just returned to the company he co-founded. The world was dominated by PCs, and Apple had a hard time being noticed after several disastrous product launches. It was on the verge of obsolescence.
Featuring famous innovators and thinkers like Albert Einstein, Amelia Earhart, and Pablo Picasso, the “crazy ones” ad showed that Apple shared people’s desire to make a difference and change the world. It encouraged people to challenge the status quo, be a “rebel” and take smart risks to achieve greatness. Apple’s campaign hit the mark with the creative community, helping to drive its market cap from $1.6B to $15.6B within two years.
Seeing things differently is what fuels innovation. But it isn’t an easy path to take. Challenging the status quo requires effort and comes with significant risk. One example is the streaming industry, led by Netflix and now joined by many others. It has upended the traditional TV industry, but the abundance of streaming options comes with its own problems, like how to make a profit. John Battelle interviewed industry expert Rich Greenfield, partner at LightShed Partners, on what the future of streaming holds for companies and consumers.
Barcodes were invented in the 1950s. It wasn’t until 1974 when the first Universal Product Code (UPC) was read on a pack of Wrigley Gum at an automated NCR cash register in Troy, Ohio. But the days of UPC barcodes are numbered. Signal innovator Kelly Schlafman explains efforts she is leading at P&G to create smart packaging that provides consumers more information, helps visually impaired people find the right products, and optimizes recycling.
Often new approaches to business challenges are fueled by creative use of available technology. Take, for example, small stores in Latin America. Many store owners don’t have the means to invest in technology. But they all own phones and use WhatsApp. This avenue has created a whole new way of doing business that is fueling the dramatic growth of small stores.
Innovation also applies to recruiting, especially in a tight job market. Increasingly companies are expanding their talent search outside of traditional channels. Where to look for promising candidates is less complicated than it seems: just ask your best employees where they would look to find new co-workers.
One of the most thoughtful and inspiring Signal 2023 conversations was with Publicis Groupe CEO Arthur Sadoun. He leads one of the largest advertising agencies in the world, and is responsible for creative ideas that help clients grow their business. He advises leaders to build trust and say ‘yes’ to powerful ideas that require big bets. They need to nurture the rebels that might just change the world.
Steve Jobs felt the same: “They push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.”
Here’s to the “crazy ones” – all of you included.
Stan Joosten & John Battelle,
Editors-In-Chief, Signal360 / Co-founders, Signal P&G
As global brands embraced technology to directly reach consumers across Latin America, predictions for small corner stores were discouraging. Many anticipated that mom and pop stores would disappear, especially when the pandemic hit. Instead, technology delivered a boon by boosting the way these channels previously operated.
Since the pandemic, shoppers have flocked more to the small corner stores than supermarkets in Latin America, according to research firm Kantar. A 2022 report notes that supermarkets and traditional stores like bakeries grew their share by 20 percent from 2020 to 2022, but specialized and convenience stores, like corner stores, grew by 40 percent.
This growth may be spurred in part by smaller stores having access to and adopting digital tools from chatbots to WhatsApp. The technology is helping them gain more access to sales people, allowing them to order products for their shelves, and learn how to merchandise better — all by tapping into the same tech tools that some believed would harm their business. Brands are benefiting as well, by reaching smaller stores more directly and more frequently.
“Traditional stores represents the largest channel for fast moving consumer goods (FMCG) and plays a paramount role for shoppers in terms of proximity, which is becoming increasingly relevant for them,” says Gonzalo Montoya, LA Indirect Channel Capability Leader at Procter & Gamble. “Being available in traditional stores is essential to drive penetration and frequency and therefore, to grow our brands and categories.”
Small digital footsteps
Helen Córdova is the owner of Bodega Tovar in Lima, Peru. For over 40 years her family has run the convenience store, which provides goods from toilet paper to gardening tools. Her father, Alfredo Córdova, started the store, but during the pandemic he ran out of ideas on how to keep the business running. The shop wasn’t selling enough products, and suppliers had spaced their visits infrequently, just to pick up orders and make deliveries.
Helen got an idea. By using WhatsApp, she was able to communicate with both customers and sales people quickly and more frequently. With suppliers, she would message about her orders and check on the status of those items with clients she could let them know then these products would be in the store. The app doesn’t charge per message or call and so the cost was also negligible. And by adopting WhatsApp, Córdova says customers — and the store’s bottom line — grew.
“It was hard at the beginning to adapt,” says Córdova. “My dad comes from a different generation but I convinced him to start using technology, and that has made our store grow significantly.”
Helen Córdova, owner of Bodega Tovar in Lima, Peru
In 2021, one year after starting with WhatsApp, Córdova heard from a small fintech company ServiTienda, which offered her the use of compact point-of-sale (POS) terminal to process transactions and place orders with some of their major providers. The company’s only request, in exchange for the free trial, was that they have access to the data collected by their technology.
“This was a game changer for our store,” Córdova says. “We started having tighter control on our inventory, our best-selling products, accurate prices in real time and we could even identify our most valuable clients.”
Within two years of adding both WhatsApp and the POS terminals, Bodega Tovar expanded the number and kinds of products it had on its shelves, and started applying loyalty benefits to their returning clients.
Cordova’s story is similar to other corner shops across Latin America: The pandemic served as a catalyzer for the transition from analog processes to the use of technology within the enormous small corner store ecosystem in Latin America, according to Montoya.
“The stores slowly began to use WhatsApp and their smartphones more to find solutions for their businesses and finally opened the possibility of incorporating technology, from the most basic to complex apps,” says Montoya, who added he saw this shift across Latin America.
Beatríz Alcántara, another Latin American-based store manager, also started communicating with its suppliers at Mini Market Marle in Lima, Peru with apps that sales people helped set up in 2022.
“Now we are not making any of our orders in person, we are fully online with this process,” she says.
Today, Mini Market Marle places orders with providers from Coca-Cola to candy suppliers and Alcántara says the process of placing orders takes nearly half the time since she started using digital ordering options.
“Also we are very much in control with what we have and what products we need to place an order. This has impacted a lot in having our customers happy and choosing us,” she says.
Alcántara also appreciates the ability to review the prices of different products on a daily basis online, allowing her to monitor potential increases, and amend orders as needed.
“This way we can control our sales and prevent getting hit with unplanned rises like we were seeing before,” she says.
Embracing more technology
Some store owners who started with messaging apps as their first shy step towards digitalization are now going one step further by adopting electronic payments.
Alcántara and Córdova both allow customers to make electronic payments through Yape. The Peruvian fintech company is operated by Peru’s main credit bank, BCP Banco de Crédito del Perú, and allows people to send and receive money instantly from their phones much the same way that Zelle and CashApp works.
“Yape is helping to bring a lot of people and businesses to the banking system, pulling them away from informality, a huge challenge for the region,” Montoya says.
According to CrediCorp Capital, there are more than 12,000 Yape users in Peru, making more than 200 million transactions per month.
Technology in Latin America, like Yape, is helping the region with one of its biggest financial challenges: shifting the cash-only economy to increase the use of its bank system, an important move to keep track of businesses and people’s money and to increase the tax payment participation – currently at an average of 21 percent throughout the region.
Before the pandemic the number of people using cash for most commercial transactions was 45% across the region. Three years later the number plummeted to only 21%, according torecent research by Americas Market Intelligence (AMI) and Mastercard.
“In most parts of Latin America the flux of money is not digital and they are still paying most of their suppliers cash, and receiving most of their payments in cash,” Montoya says. “I think this is the next natural step.”
Montoya says that currently most of the technology used among small corner stores in Latin America are between owners and suppliers. While an occasional shop, like the one run by Alcántara, allows customers to pay with an app like Yape, the vast majority still require shoppers pay in cash, says Montoya. But he believes more stores will start to allow this customers to pay for their orders through digital apps too.
“This would increase their sales and the number of transactions to another level,” he says. “Currently they place the order through the app, but the payment is still made in cash person to person. This will change the game in Latin America.”
The challenges of introducing technology into Latin America’s retail channels remain. But store owners like Córdova and Alcántara are driving a technology revolution that could soon bring even more economical development to the region.
As the job market in the U.S. remains tight, especially for companies looking to hire experienced talent, recruiters and hiring managers are seeking new pathways to expand their workforce. Unemployment remains well below 4%, where it has stayedsince February 2022, and forecasters seeno relief for employers in sight.
In the post-pandemic haze of altered routines and rebuilt business models, employers and employees are having trouble finding each other. That’s led to recruitment efforts to seek candidates outside the normal pathways of LinkedIn or traditional job postings. Workplaces are now casting a wider net, augmenting the way they recruit. Experts say these avenues, from partnering with high schools to recruiting from the U.S. military, can expand the talent pool and ensure a robust and diverse workforce.
Zero in on specialized communities
Technical solutions have done little to give both recruiters or job-seekers an edge; hopeful employees may find themselves applying for jobs thatdon’t exist and employers may discover their best resumes have beenflagged and excluded by AI.
Job recruitment has gotten harder, says Katrina Collier, author of “The Robot-Proof Recruiter.” “I remember back in the day you would find a candidate, you would call them, and they would answer their phone because their phone was ringing and they wanted it to stop,” she says with a laugh.
But these days, she adds,“you feel like you’re just constantly coming up against barriers really to have a conversation.”
AI screening tools may be helpful, especially for positions where a large number of applicants can be expected, but they should be used alongside old-fashioned human skills, Collier says, not in place of them.
The best practice is not to seek out individuals with laser-targeted ChatGPT-honed job board postings or state-of-the-art application websites, but to identify communities of people who can excel at the work you need done well.
Collier believes professional groups are vital, and can help with the recruitment process. Developers are probably not going to be on LinkedIn, for example, but they can often be found puttering around on GitHub and Stack Overflow.
“Find your best employee and ask, where would you go to look for a job?” she says.
Consider the military
U.S. Army Veteran Stephanie Markich spent the early days of her career as a transportation officer, helping to get mail to members of the military across Europe as well as convoys into Bosnia and Croatia. She brought that expertise to P&G, starting her career with the company in supply network operations and is today a senior recruiter, Military & Veteran Recruiting. Markich remains very partial to the vets who have chosen careers at the company.
“I’ve always done military recruiting,” says Markich. “I was very impressed with the team that I met when I started with [P&G]. And I asked to be a member, kind of like, ‘Hey, let me give back.’”
Markich says the four military academies’ alumni conferences are excellent places to find job recruits with skills that translate well to a big company like P&G. She finds the traits military veterans have translates well to the corporate world, including being “great team players,” she says. And the military, she points out, is a diverse place, and people who’ve served in it tend to be comfortable among people who aren’t familiar to them.
“We hire for leadership, and soldiers bring leadership, teamwork, all of those skills that P&G values,” she says.
Seek recent graduates
Employers also often overlook young adults, says Jonathan Johnson, CEO ofRootedSchool, a charter school that aspires to help kids affected by systemic racism achieve financial freedom. High school grads like his own former students are often capable of picking up vital skills, he says, and they’re usually very fluent in new technologies and trends.
Recent graduates are also generally less transient between companies, especially if they’re given institutional support and career guidance and oversight from the jump.
Of course, people in their older teens and twenties may not know their worth or their limitations yet, and Johnson says that it’s important to set expectations especially when hiring for entry level positions.
“Employers should have the scope of their junior roles clearly defined,” he says. This includes being clear with performance benchmarks and any required credentials. Johnson notes that this kind of clarity can ensure “that success and failure is transparent for everyone to see.”
It’s also important to start small, he says. Hiring managers may want to onboard just a couple of recent graduates at first and then develop apprenticeship or mentorship programs that can help younger employees find a comfortable rhythm, along with colleagues they can lean on when they start.
“After some practice, explore what it would take to hire more,” he says.
Finally, Collier adds that one of the best ways to find new talent may be to look closer to home, and within an existing talent pool at a company. That includes speaking with staff with similar backgrounds to a job you’re hiring. Employees may have thoughts on how to locate a new co-worker, and suggestions on where to look.
“The easiest way to do research,” Collier says, “is to go and talk to the people in your company.”
When customers search for product details at a store, Kelly Schlafman wants that information to pop — almost literally. As the Intelligent Packaging Leader at P&G, her role is to get information into consumers’ hands in an accessible, engaging, and ideally interactive way. That means embedding digital apps from QR codes to NaviLens on packaging so customers can retrieve ingredient lists to product demos in the way they need. Schlafman, who is blind, believes the more ways customers can learn about what they’re buying, the better they’ll feel about what the products they bring home.
“One of the things that we’re doing as we implement these across our brands is making sure we always keep the consumer at the center,” she says. “We must be very clear on the problem we’re trying to solve for that consumer, and that informs our choice on how we bring that to life on the package.”
You can hear more from Schlafman in the video below or read our lightly edited transcript.
TRANSCRIPT:
My name is Kelly Schlafman, and I’m leading the Intelligent Packaging Program for P&G to drive benefit for consumers, retailers and the environment. If you think about our packaging over the last 50 years, many people are familiar with this 1D linear barcode, which has served us very well for about 50 years. But we were starting to see a lot of different solutions popping up, as more and more data was needed for this packaging, and this program is really intended to address this.
Intelligent packaging is all about making our physical pack more interactive, and engaging than it has been in the past. So instead of just having static content that we see on a physical label, it’s about adding anything as simple as a QR code, which can be scanned natively from a camera, or something more advanced like NaviLens, which is all about bringing accessibility to the product, but connecting to some sort of digital experience, that’s going to be much more engaging for our consumers. I happen to be blind, myself. So for me, just speaking from personal experience, one of the most interesting use cases is actually making our packages more accessible. So for me, looking at a physical pack, there’s a lot of information that I’m just not able to access when something’s just on a physical pack. But as we start to shift that into the digital world that becomes accessible, really, to all our consumers versus what we have today.
Once you shift into the digital world, the really amazing thing is you can make that content much more personalized. We can make consumers feel better about what they’re purchasing. So making sure that we’re getting it right as far as allowing them to understand what the ingredients are or allergens, or is this a sustainable product? Is it ethical? There’s a lot of information that consumers are expecting, but they’re not all expecting the same thing.As we shift this to digital, that’s really the beauty of it. You can start to make these personal experiences where we really can ensure they’re making choices they feel good about. Then when they get at home, more engaging experiences to help them make sure they’re using it correctly.
One of the challenges to bringing smart packaging to life is simply that it is fairly new. While consumers know what a QR code is, and they know what to do with it, they’re not as in the habit of scanning that in store or scanning consumer products to get that type of information. One of the things that we’re doing as we implement these across our brands, is making sure we always keep the consumer at the center. So being very clear on what’s the problem that we’re trying to solve for that consumer, and then that really informs our choice on how we bring that to life on the package, so it’s very clear to the consumer, why they would scan and what the benefit will be when they do scan.
One of the projects that P&G is participating on for sustainability is called Holy Grail. It’s an industry consortium in Europe, being led by the European Brands Association to help us make our packaging more recyclable, by allowing it to be sorted more easily. So we’re actually putting signals into the packaging that can be picked up as it moves through the waste stream, to be able to pull out food and non-food, for example grade plastics, so that we can feed back back in and really encourage the circular economy.
The most exciting thing for me in working in this space is that we’re really fundamentally changing how we communicate with retailers and how we communicate with consumers in a really transformative way versus what’s been done over the past 50 years. Seeing that come to life in market is certainly something that’s very exciting to see.
One of the things I love about this job is the multifunctional nature. I’m IT functionally, but I’ve always loved being able to partner with people with many different skills across P&G and that’s been something that I’ve had the opportunity to do with this work, also being able to really paint the future. What can be our legacy right or what can how can we really define how P&G can serve consumers better? Especially as I talk things about accessibility and transparency and sustainability these are trends I think that we’ll be around for a very long time. So being able to really put my mark on this work for hopefully decades, is exciting and one of the things I love the most about this job.
Subscribers may balk at watching advertising on their favorite streaming service. After all, as Rich Greenfield notes, they’re paying for the privilege of having their shows streamed commercial-free. But what if ads held the same lure, hook, and storytelling draw as the episodes they binge-watch weekly?
That’s the promise Greenfield believes marketers can deliver, especially on channels stocked with content, such as Disney+ or Netflix. Greenfield, who is also a general partner at LightShed Ventures, doesn’t think that shift will be easy — but he believes the potential is there.
“Imagine as a marketer the type of stories you can tell when you’ve got a consumer’s attention for that many hours over the next month or two months,” he says. “That’s liquid gold to a marketer.”
You can hear more from Greenfield during his conversation with John Battelle while watching the video below, or read our lightly edited transcript.
TRANSCRIPT
John Battelle Welcome to another Signal Conversation. I’m very excited today to be speaking with Rich Greenfield, partner and TMT Analyst at LightShed Partners and the General Partner of LightShed Ventures where he invests in the future of media, marketing and technology. We’re going to talk today about streaming which is an expertise of Rich’s and it’s not been Rich an even keeled market this past few months, so we wanted to check in with you and see what’s going on. So welcome to Signal, Rich.
Rich Greenfield
Thanks for having me. I think there’s a lot of debate over the streaming wars, and are they just beginning, how is it changing? You know, that was a term for a while, especially during the pandemic, everyone got really excited about how amazing streaming was going to be for the future media.
Right. There’s been a lot of tumult, the big build up, and then seeing the success during the pandemic of all these new streaming services, relatively new, and then, you know, sort of a chaos and wipeout since. So let’s get into it. What how would you describe the current state of the streaming market?
I think in many ways you can look at sort of the success that Reed Hastings had at Netflix, former CEO of Netflix, and then the staggering, rapid success that Disney had in streaming. If you think about it, 10 million subscribers in one day, when Bob Iger last launch Disney+, 100 million subscribers in the first year. I think the success of Netflix and then Disney created sort of a problem for the rest of the industry because everyone looked at it and said, ‘Oh my God, these stocks are benefiting from jumping into streaming, spending dramatically.’ The losses didn’t matter. It was just about getting streaming was considered a way to transform your valuation.
All of a sudden people would give you credit for having a streaming business, whether or not it made money. But it was just being in streaming. Then everyone jumped in and so you saw the Peacocks and you saw the Paramount+s and, you know, all of a sudden now you’re looking at it going ‘Wait a second. Is this actually a good business? Do we have a strategy? How do we build to become,, are we trying to be Netflix or what is our actual strategy? Why are we even doing this?’ I think that’s the sort of the tumult, I think was the word you used earlier, John, I think that might be even being kind. I mean, I think a lot of these companies, if you think about what they did historically, they were really good at creating content and selling it to whoever wanted it. If you think about “Modern Family,” it was a Fox show, but it was on Disney’s ABC. Lots of content was created by other companies. Warner Brothers was the largest producer for other companies. Funneling everything onto your own streaming service, I think was sort of unnatural. All of a sudden, all of these companies are now questioning. ‘Why exactly are we in this business? Should we stay in it? Should we go back to what we used to be good at?’ I think this is going to be a seminal next 12 months in the industry. My guess is there’s going to be a lot of companies, multiple companies who change or pivot their strategy from what they’ve been doing over the last two to three years.
Is part of that that there just isn’t enough advertising to support this because it’s obviously at its core, a subscription play. I think that’s one of the reasons everyone got so excited early in the stock market. ‘Oh my God, they’re all going to build these great subscription businesses. It’s going to be cable all over again.’ But is it that they realize that maybe it’s harder than then they thought, or they’re the market isn’t as big as they thought for the advertiser dollars to support all of this?
I think the key issue is the cable bundle was this amazing creation. If you think about it. There was no alternative. You either subscribe to cable or you didn’t. You couldn’t pick and choose. You may have loved ESPN or you may have loved Food Network. It didn’t really matter you either took everything or nothing. Sure you could have added on, you know, HBO or Showtime, but you were taking you know what ended up being hundreds of channels with effectively no consumer choice over what you chose. You were just subscribing. You the cable network, it didn’t matter which one you worked for, you never had to do any marketing. You never had to do any customer retention. In fact, it didn’t even matter how often somebody watched. Obviously would have hurt your advertising revenue. But the money from subscription you know, the dollars that were being paid from cable and satellite operators, to a cable network or broadcast network, you sort of looked up at the sky and money just can’t kind of rain down every day, every quarter. It didn’t matter how much you were being watched.
Now, let’s turn this into the streaming world. You now have to go out and actually acquire customers, retain customers. If they’re not using it, they’re going to cancel. You mentioned the word advertising. Well, if you’re not watching something, then it’s really hard to sell advertising because it’s based on time spent. I think one of the things that nobody in the streaming space is really talking about, and that I don’t hear enough of, is that none of these companies are focused on optimizing for time spent. Because think about the world we grew up on.
You’ve studied the TV world for a very long time, John, but think about the way TV worked. How many great shows did any cable network usually have in the year? One, two? It wasn’t like a cable network is built on something you watched every night. I’m sure for HBO, even a premium network, you turned it on once a week on Sunday nights to watch whatever the new episode was of whatever show you love. AMC you turned it on when there was a new episode of “Breaking Bad” or “Madmen,” but you didn’t turn it on the rest of the week. Yes, there was always a smaller group of people that might have watched religiously but they weren’t focusing on daily engagement. If you think about the tech world, I don’t care whether we’re talking about Meta, Facebook, I don’t care if we’re talking about Google, all of these companies. What they care most about is that you never leave. They all are optimizing for time spent. It is not a behavior that the media companies, these legacy media companies, they have never been optimizing and focusing on time spent. I think that’s a huge issue as they get into streaming is they don’t understand or they’re not built to create enough program to keep you there every single day. Keep on coming back and watching. Think about Disney+ some incredible content, but just not a lot of fresh new stuff. If you want to watch “Moana” on repeat, and you’re seven years old, it’s amazing. But if you’re 50 years old like me, there’s a new episode of a few series, over the course of a year, but there just isn’t a reason to watch on a daily or even several times a week basis. That’s a huge issue for these companies is not having that regular engagement. I just don’t think that topic gets enough attention. I think that’s why they’re all thinking about, ‘Oh my god, what are we doing exactly? And how do we build a business around this?’
The one company that has built a business around this and that people do tune into every day is Netflix, right? Almost 300 million households. Netflix made a lot of headlines when they announced their advertising business late last year. This is their first full year of having that business stood up. How do you think it’s going?
I think what we’ve learned is that, and I think this would be not just true for Netflix, but for Disney too, because remember Disney launch advertising for the first time on Disney+, within the same four week period that Netflix did. I think the the challenge is, when you’ve been using a streaming service for years and years, a lot of your subscribers, even the people that were, for Netflix’s case were you know, sharing passwords and not actually paying themselves. But these services were built on not watching ads. When you bring on ads, sure, there’s a tier of consumers that certainly like the lower price and will tolerate ads. Look, I don’t think at the end of the day, I don’t think people hate ads. I think people hate ads that are not relevant, that are disruptive and annoying. I think as we’ve seen,Meta may be the best example. When you make ads that feel like content, where you know, when you scroll through your Instagram feed and you see content that actually you want to buy or you want to interact with, that’s when advertising becomes compelling.
I’d say what we’ve seen to date on Netflix and even Disney+ and others, I haven’t seen anything in the streaming ad world that is dramatically different from the way ads look on television. I think that’s going to begin to change. And I think that’s sort of the answer to your question on Netflix is, advertising is going to evolve, meaning it’s not going to look like, advertising will become my guess is more like storytelling. Where if you’re watching 10 episodes of “Wednesday,” the ads will actually evolve over those 10 episodes. And a P&G or pick your marketer can actually tell a story no longer that consumer is going to binge all of “Squid Game” or all of “Wednesday,” you can tell an ongoing story across that advertising. In a way that’s not possible. When you see the way a consumer watches linear TV because you don’t know what they’re going to watch on what network from night to night. But as long as you’re binging on Netflix, and you’re watching episode after episode, imagine you’re watching the 200 episodes of “Grey’s Anatomy” or whatever the number is now. The ability to tell a story over that entire or think of “Suits” most recently, an incredible amount of viewership. Imagine as a marker the type of stories you can tell when you know you’ve got a consumers attention for that many hours over the course of the next month or two months. That’s liquid gold to a marketer.
Obviously, it’s going to lead you know, you’re going to have to rethink how you create content or advertising content.
But I think there’s another frustration in the streaming advertising world, at least that I’ve heard from marketers and people at agencies, which is it’s really hard to solve some basic problems like frequency capping and, knowing who you’re actually average, all the problems that you would think interactive television could solve seem to be intractable in this marketplace. Why is that?
Well, one of the biggest problems you have in most of the platforms that are out there, think about, Netflix was not the first company to jump into advertising on connected TVs or on streaming. But the big problem you have, and this goes back to the TV everywhere days, and the problems that everyone saw there was, not enough time spent, meaning you didn’t have enough users and enough time spent. So you ended up when you made a guarantee to an advertiser, or whenever you had these guarantees, and you fell short, you ended up having to keep rerunning the same ad over and over again.
And that’s what we see, the same ads over and over.
I think a good part of that is that there isn’t enough. You don’t have enough viewership. If you look at sort of what’s happened with the streaming services, look at the size and scale of these streaming services. Leave off Netflix, leave off YouTube, the actual amount of time spent, is very small. It’s what makes Amazon so interesting is they do have a lot of time spent, they’re finally getting into putting ads into prime video unless you pay more now for the first time. Amazon is going to be a major player now along with Netflix, I believe. But to date, most of the streaming services that have had advertising have not had a lot of time spent. They’ve been relatively small services, whether you’re talking about Peacock or Paramount+ or you know, even the ad part of Max, right. I mean, the ad part of Max was launched back when it was HBO Max, they launched an ad supported tier. You don’t hear about a lot of consumers gravitating towards those tiers. Most of these things, people sort of have lived in an ad free world. I think that makes it that much more difficult. Now raising the price of the ad free tier, keeping a lower price of the ad supported tier will drive more and more people over time to take that.I think you have a lot of elasticity to take advantage of people who don’t want to ads. But I just think it takes time when you have large installed bases. It’s going to take time for that for that shift to happen. Again, I think what you’re sort of highlighting is you’ve got the challenge of lower and lower viewership of linear TV. Advertisers are dying to be on streaming TV, and the amount of time spent on streaming TV with ads is still relatively tiny. So it’s a very tough environment for a marketer because you don’t know what to do.
What do you think the industry looks like three to five years from now? Is there going to be a lot of consolidation is it going to be everyone turns back into arms merchants to selling content to the biggest platform for the largest price like what does it look like? Does advertising grow do we solve those problems we just discussed?
I think a couple of things. One is without a doubt where there’s gonna be consolidation. I think given what’s happening in the environment, a lower viewership for broadcast and cable networks, I think it is hard to imagine, we have as many companies as we have today. Warner Brothers, Discovery, Paramount, NBC Universal, there’s going to be fewer players over the course of the next three or four years than we have today. Regulatory environments, not great. Obviously, interest rate environments not great, but I do think there’ll be fewer players.
Then second part is your question on what changes. One, I think you’ve got a little preview of it with what Disney did with Charter a few weeks ago, where Disney+ will now be part. When you sign up for cable, you’re going to get Disney+ as part of that subscription bundle. I wouldn’t be surprised to see Max you know, HBO for as long as you know it’s existed has always been a premium channel. I wouldn’t be surprised to see Max actually transform into being part of the base bundle. So you sign up for cable and you get Max and all of a sudden, there will be far more subscribers to effectively to HBO but HBO inside of Max, but Max will have more subscribers than HBO ever had.
Again, it takes down your marketing costs. Yes, you’re no longer a true DTC company. But it sort of goes to what you were saying. They were never really DTC companies to begin with, they’re going back to what they know, which is being wholesalers and that’s probably a smaller business from a valuation standpoint in terms of overall worth, but a lot safer. Just imagine if HBO could go from where it is today, probably 17 million homes pay for HBO within the bundle, if all of a sudden that number could go up to 60 million plus, the advertising opportunity would be much larger. Remember, when Disney plus is in the bundle, they’re only putting the ad supported version in. So it’s really a way to grow the ad supported piece of this much faster. I think from that standpoint, you’re gonna see other companies in the space, replicate what Disney and Charter just did. So that’s going to create more advertising inventory for sure, as well as create a better business model. Again, maybe smaller worth, but a better business model.
Then last, John, I do think that you’re going to see a couple of companies wouldn’t be surprised to see them go back and replicate the arms dealer approach and say, ‘Why are we doing this at all? This is not a great business. We’re great at making shows, and we’ll sell to the Netflix’s will sell to the Amazons will sell to the Apples, or maybe even to the Disney’s. We don’t need to be in this business too.’ That sort of plays into the consolidation point, it’s sort of similar in that idea, right? But I do think you’re gonna undergo pretty massive change. Because you know, what’s the definition of insanity is doing the same thing over and over again and expecting a different result. It’s not working, right? These companies are losing billions of dollars. It’s not just losing billions of dollars. Consumers just aren’t watching. Go to a cocktail party and ask people what are they watching? You don’t get a lot of answers. Outside of probably Netflix and Hulu are probably the two that you hear use the most, and Disney’s obviously in the process of buying the rest of Hulu, from Comcast, that’ll play itself out over the next several months. But there is a lot of other streaming services that we could go through that are just not getting a lot of consumer attention. That’s because they just don’t have enough content and they don’t know how to market to consumers on a regular basis.
Unfortunately, Rich, we have to leave it there. I could talk to you for hours about all this but we’re going to check in with you again. Thank you so much for being part of this Signal Conversation and we are going to keep our eye on the streaming market.
It’s going to be a fun, exciting, maybe a little depressing, but you’re gonna see a lot of disruption over the next course of the next 12to 18 months for sure.
Absolutely. Thank you Rich.
Arthur Sadoun, CEO of advertising agency Publicis Groupe, firmly believes an idea has the power to change a company, if they’re anchored in culture, and reveal insights about the products and services they’re espousing. (A favorite of his, as an example, remains theTide Super Bowl spot from 2018.)
But transformative ideas need a boost: trust in the work that led to them, plus the willingness and ability to put “bold bets” into action, he says.
“You need to have the power to say yes, and you need to take it,” he says. “This is how you get great work. This is how you get innovation. This is how you break the boundaries.”
You can hear more from Sadoun as he spoke with John Battelle on the Signal Stage in July by watching the video below or reading our lightly edited transcript.
TRANSCRIPT
John Battelle Now from France, and worldwide, I should add, we have our third global CEO Conversation. This with Arthur Sadoun, the CEO of Publicis Groupe please join me in welcoming him to the Signal Stage. Welcome.
Arthur Sadoun
Pleasure. It’s a pleasure.
You’re very formal guy You’re hard to talk to.
I am the smallest global CEO, you’re gonna get today you know that.
Yes. Okay. You’ve had a good year, you’ve had a lot of milestones. Yeah, personal and professional. But I want to start with a professional. You have a storied agency holding company. But, you know, you’re widely credited with transforming it. Can you tell us what the problems were that you saw and what the transformation was?
Well, I took my job in 2017. Actually, at the time, we saw three big challenges that we try to translate into strategic bets. The first at the time, when I come back in 2017, we saw that personalization was coming. You’ll remember at that time, everyone was saying, Facebook, Google is going to eat you for lunch. So the first thing we did, a strategic bet, is to invest massively in data and technology. I guess we’ll come back on that later. But that was a big one. The second one is, and I guess many of you are working with many of us, is that we were in an industry where they were too much silos, too much solos, and actually too much bozos.
This is a mantra. And we say, look, it’s time to get that out. By the way, I don’t know if Mark is around, but Mark came to one of our conference, and he said something that was striking for us, he said, ‘You need to make your own complexities visible to us.’ So we decided to erase all the P&L silos, which means that a lot of bozos left, because they like to manage by P&L, and make sure that we can truly deliver what we call the power of one.
The last thing we did, and we should never forget, is that we are in a people business. We knew the employee experience will change, and we needed to bring a new vision for our 100,000 people at the time it was 70,000, and so we create this AI platform, Marcel, and maybe we’ll talk about that later.
But what we took out of that, and I assume it’s something that you have experienced also, is that change is very hard. If you come back to 2019, for example, two years after we were there, our stock was in the toilet. The press was very hard with us. The gross was not there. And it took us like four or five years to get where we are today, we are leading the pack. We are number one in almost everything, organic growth in new business in energy. Our market cap is the first one. And maybe the only message I’ve got for you guys and some in the room, our partners is that it has been extremely hard. We have suffered a lot. We had a big difficulties during that time before getting to where we are today. But what was fantastic, is during that time, we never lost the trust of our clients. Starting with P&G. Because we were transforming together, we were pushing the bar together and Mark has been an incredible partner.
Mark is right here.
Hi.
You refer to this just now, but I kind of want to ask you directly about this. I’ve been involved in this industry for 35 years in one way or another, mostly visiting your offices and trying to get people who work for you to give me money.
Yeah. We have no money.
Yeah. I’ve just never heard that before. But throughout those three decades of being on the media side of things, and by that I mean making media as opposed to, you know, buying media. The consistent narrative is the agency is dead. The agency model is over. It’s either going to be absorbed into the Accentures of the world, or it will be brought in house and there’s no need for you guys anymore. Then I did a bit of research preparing for this. And then I asked you backstage to make sure that my research was correct. You have grown by from 70,000 to 100,000 employees in the last five years. So if you’re dead, you’re doing a good job and not looking like you’re dead.
So how do we square the perception which still exists today that the agencies you know, are over with the realities that you’re growing and you’re having one of the best years you’ve ever had?
I think the first reality is that creativity has never been so important. Creativity is at the heart of our business model, we have changed a lot, and we’ll come back to that. Even if I take it on a personal level, I came to this industry 20 years ago for a single reason is that I believe that the time and I still believe that an idea can change the future of a company. This hasn’t changed. Again, when you talk about irresistible superiority, you won’t achieve it without big ideas, that are insightful, that are in culture that are relevant to your product and services. This is really at the heart of what we’ve been doing in the past and what we are doing today. I mean, if you take a few example of what we did, I still love to look at the Tide that we did for the Super Bowl, even though it was a couple of years ago. This kind of things still is where the value is. Having said that, the big change, and maybe the reason why we’re being successful today, is that a creative idea today could be very powerful. But if it’s not powered by data, and in a way really boosted by technology, you don’t get the kind of results you want. Again, I’m not going to quote every work we’re doing with you. But if you look at what we’re doing for Pampers, through a data driven approach to make sure we have the right insights, and we connect, it is really creative at the center, powered and boosted by data and technology that makes a difference and make us go today.
That’s a good segue to the next thing I wanted to talk to you about, and you referred to it in the transformation question earlier. But you made two large acquisitions in directly in data and technology, Sapient and Epsilon. How do they play into this creative driven innovation for customers?
I wish I could tell you that we have been visionaries, but I think we have been more lucky than visionary. Because with Epsilon and Sapient, and I’m taking this in this order, although we made the Sapient acquisition before, I think we are addressing what are the two biggest shifts in marketing today. The first is a shift from cookies to identity. And this is major. I mean, I’m sure you realize that. But in a world where cookies will disappear, starting to run your marketing on identity is the only future. Why? Because this is how you’re going to get insights, real insights about real people that buy things.
Second, and I think this is key, when you look at the kind of efficiency we need to bring, this is the only way to link media investment to business outcome directly. And last, this is the only way to lead the revolution. We’re all in, which is connected TV on one side and return media on the other. I can go on and on. But these are topics that our marketer we have to address. And the only way to do it is identity. And this is a place where we are leading.
You take the US today, we have 250 million profile with around 7000 attributes, we see 65% of what people buy, and you are what you buy, and we refresh that every five second. This makes a huge difference. And this is also a big competitive advantage. The second thing that leads when you have the identity, then you can start thinking on how much you want to put on paid media and how much you want to put on your own media. You know what, hopefully for you guys, tomorrow you will rent less agencies and go more into your own digital ecosystem. When you look what we do for example for Oral B is a great example of that. When you look at what McDonald’s is doing. You’re gonna get Morgan on stage. This is awesome. You should ask her but what are the like the app at McDonald’s is revolutionizing owned media. So again, thanks to those two acquisition, we have been able to lead the change in what we believe are the two big shifts in the industry. It was a big bet. You talked about that. And I said that I almost got fired but I truly almost got fired. Because we spent in the last eight years, $9 billions in acquisition. $9 billions our competitors are two main competitors spend roughly the same kind of money in share buyback.Yeah, I hope there is no investor here. I can because there is no investor by the way. So we’re good.
I want to ask, I guess a personal question, but I feel like I’m emboldened to do so because you’ve made it a public thing. You were diagnosed with cancer about a year and a half ago. lot of people when something like this happens it’s a very private matter. It’s always is a very private matter. But you decided, instead of keeping it private. You turned it into a campaign, talking about it. The campaign’s called Working With Cancer.
First off, I hope you’re well.
I still I still have to drink a lot of water but I’m great.
Glad to hear that. Can you tell us about that, and how you made the decision to turn this into an opportunity for other people to learn and to engage at work?
Yes, I’ve was diagnosed with cancer in March 2022. And when I heard that I will have to go through surgeries, radiation through chemo, I decided to make it public because I thought first, it was important for my people. I spend most of my time in the US, I could not travel anymore for my clients, because I would meet a few meetings, also for my investors. It was not an easy thing to do, because I had to show my vulnerability, which I think is something important for everyone is that I think you can be a strength but you have to warn. So I sent him I sent a film, I always do film for any news. So I sent a film to my teams, that went pretty fast very viral, and I start to receive 1000s of emails. Those emails were all saying the sense. They were thanking me for doing that. They were telling me that they have heard for them from their loved one, those three very tough words, “You have cancer.”
Just after being scaled for their life, everyone was scared for their job. They were scared to lose it. They were scared to not progress anymore, or they were simply scared to be a burden for the organization. Too many of those people has decided to hide it. I mean, you can’t imagine the number of women that will take early days to have breast surgery. People that will go on radiation in the morning, and then come to the office. Honestly, even worse, people that will get kids with cancer, and will decide not to say because they don’t want to look weak. I
know that you guys at P&G are doing a lot of thing already and things that are very inspiring for us. But we decided to take a big initiative called Working With Cancer and maybe I’m going to let you discover the film, which was a case that won the Grand Prix at Cannes.
Can we run that film?
[Film is running]
I have to fight for my life and be alive for my family, which means I’m going to be forced to quit. I’m going to lose the one thing I have that I’m still good at.
I’m a cancer patient with no insurance.
Did I get fired for having stage four lung cancer? Yes.
Her employer fired her after she was diagnosed with stage three cervical cancer. Your cancer played a role in you losing your job? Absolutely 100%.
At the hospital where I was getting treatment, other women who would have their chemo session and be so scared that if they did not go back to work, that they would lose their jobs.
I was scared out of my mind to tell my employers.
They think you’re weak. You’re not as productive as everyone else. Physically we’re damaged goods.
A new global initiative is working to eliminate the stigma around cancer diagnoses at work.
This pledge will guarantee job security for all Publicis Groupe employees diagnosed with cancer for one year, so they can focus on treatment, not work.
A new initiative that was launched at Davos this year called Working With Cancer.
This January in Davos, we presented the working with cancer initiative to our International Business Council.
Not all Super Bowl commercials are light hearted. Some have a more serious, powerful message.
I chose to sign the pleasure of Working with Cancer the moment I saw it, I realized how valuable this is for an organization.
We are very proud to support the Working With Cancer campaign.
We’re taking the working with cancer pledge
Bank of America is happy to join the working with cancer pledge.
I am not aware of anything like this ever coming together before.
We are proud to be a founding partner of the Working With Cancer pledge.
Help save lives, period.
[Film ends.]
It takes a legendary admin to turn a cancer diagnosis into a movement. So congratulations.
Thanks.
One of the core pillars of the program is employee value equation and experience and that that really just gets to the heart of it. Did you have any, you know, concerns or worries about, about going public and being vulnerable in front of all of your employees?
This is what we’re preaching. First of all, we are spending our time preaching for transparency for the companies, for the brands, for the leaders, and you will always win when you’re transparent, which is what I tried to do here, what I did here. Second, yes, I learned the lesson is that in this new world, I think that vulnerability is a force. Showing your vulnerability is a force and I feel 10 times stronger today than I was 18 months ago. I feel 10 times happier because when you have suffered as I felt you enjoy life way better. I still work like beast, but I enjoy it way more. More importantly, I think that when you’re lucky enough to come back from this I see you get stronger and showing your whatever it is always something good.
By the way, you did win the Health Grand Prix.
By the way if I thought I one day that cancer will give me a Grand Prix in Cannes. I definitely took the best out of it. I can tell you that.
Backstage he said he and Mark at Cannes were like the two grumpy old guys up in the gallery in the Muppets.
Yeah. and we were right by the way.
But it’s nice. It’s nice to win I’m sure no matter what. Speaking of AI, we have a question in the audience here. How do you see artificial intelligence and data analysis impacting how brands interact and motivate consumers and consumer behavior?
Wow. I need another 30 minutes I guess, and we have six.I’m pissed off with what is happening at the moment.
Do say more.
I mean, it looks like AI has been invented with ChatGPT. It’s ridiculous. Makes no sense. I mean, I was talking with Julie, she was on stage but she’s gone, she was agreed with me. I mean, AI has been at the core of almost everything we do for years. Let me take just a couple of examples.
Not with you guys, but with others, we refresh II in the US in terms of media, every five second, every five seconds, thanks to AI, it’s at the heart of what we do on media. Creative, which we do with you. I mean, it boosts our creative process in many areas.
Don’t get me wrong, Gen AI will get us way better. But what we’re already able to do in terms of personalization, in terms of efficiencies, in terms of making sure that this is in a safe environment it’s just awesome. And if you look at what we’re doing with our people with our AI platform, Marcel, we are already there. So don’t get me wrong, there is still a lot to do. But I think it’s a mistake to think that it is a new thing. It is something that this happened a while ago, it is a huge revolution. Honestly, if you look at what has happened in the last 20 or 30 years, between digital mobile, and now AI, AI might be the biggest because we’re going to put technology in the hands of everyone. But I don’t want anyone to sit in this room, that AI is not already at the core of many things that we do together and that you do on a day to day basis. Just that we have more opportunities coming every day. As long as seen, it’s very important to say that to marketers AI, without first party data is nothing. There is nothing you can do in your business, if you’re still on cookies, and if you’re not on third party data with AI, you won’t progress in any way. That’s something that we need to really understand, which is taking back control of customer to be able to offer them personalization in the right way, is what will make all the difference.
Good advice. I want to ask you, and then just making sure there isn’t another audience question. If there is one, just put it up so we can ask it. But I want to ask you about the theme. I’ve asked everybody. So I’ll ask you the theme of “Resetting the Bar.” What does that mean to you when you heard that? That was the theme of the conference?
I was not surprised, honestly, because, again, I talked too much about Mark but as he’s here, I think that he has been resetting the bar for us all the time. And we have tried to do the same is the reason why P&G has such a special place in my heart. Our founder was saying, If you don’t lead the change, the change will lead you.’ I think this is very true. It’s about always pushing for more innovation, disruptive ideas are looking for, and making sure that we invent the future. And that will lead the future.
Having a theme like this one is, I guess, true to your DNA, is even more important than ever. Now, when you look again, to the AI revolution, what is happening in data and technology, and in the same time, the buttons to continue to push the boundary on the creative forms, for everything that we discussed about how you’re going to be able to continue to create value at the moment, why basically raising your price, by the way, and you go for premium. This is the kind of partnership I guess we have built with you guys. And there is a lot of people in the room. It would be a decade that I work with P&G in September, exactly a decade. I have learned so much from our relationship about what is modern marketing and how to push the boundary that I think that this is really right. And hopefully, you feel the same about Publicis which is we are trying to push you and push you and push you to make sure that together we progress collectively and individually.
So what makes a great client? Or maybe the more interesting question is what makes a terrible client?
It’s a client that doesn’t know how to say yes. It’s so easy to say no. It’s way more difficult to say yes.
It’s like the resting basis is No.
You need to have the power to say yes, and you need to take it because you have to be accountable for what you do. And you have to take risk. I think you guys have been taking a lot of risk. It’s a very big company that has been innovative. You need to create the trust to say yes. I think we are in a business where the only thing you need is commitment to gain trust. But a great client, and you are one of those and look at the work we’ve been doing together, as a client that understands that he has to say yes, and needs to be bold enough to say yes. This is how you get great work. This is how you get innovation. This is how you break the boundaries.By the way, this is the reason why the reason why we like what we do is the power to create big ideas, and for this, you have to make bold bets. This is what I like my job is to say yes to Epsilon is to say yes to put the power in one place. We were talking about Cannes a minute ago. Exactly six years ago, I went to Cannes and I said we’re not going to come to Cannes next year because we’re going to be AI platform. And people said AI and creativity will never happen. And by the way not going to Cannes is crazy. I got 20 million of old media explaining that I was a fool. But I had to say yes, yes, because things need to change. So I think this is what makes a good client.
Well, thank you Arthur for saying yes to come here. I really appreciate it.
Thank you.
Yalo-co-founder Javier Mata noticed that he was buying a lot more fresh fish when a local fisherman, Alan, would WhatsApp him photos and details of his weekly catch. Those conversations over a digital app, and their influence on Mata’s spending, led him to create Yalo, a San Francisco-based AI platform that helps brands bring more personalization — and conversational commerce — to online sales platforms between themselves, stores, and customers.
More than 2.5 million merchants now engage with Yalo, which is expanding into new opportunities from linking stores to financing and educating store owners about new products through the platform.
“We believe that the best experiences are the ones that are end-to-end, so managing the entire customer journey,” says Mata. “That starts with getting to know about the products or being able to market and drive and change that behavior with the different recommendations that we’re able to do on the platform.”
You can hear more from Mata about Yalo in the video below, or read our lightly-edited transcript.
TRANSCRIPT
Javier Mata
Yalo is a conversational commerce platform that’s helping enterprises all across the world, transform their go to market and helps them build a close relationship with all their customers and help them to sell more. We work with different global brands in Latin America, in Asia, in Africa, all throughout the world that are serving small and medium-sized businesses in the way they sell. We help them engage with those stores and help them to sell more with those stores by using virtual AI and intelligent agents that converse with these stores and advise them on what to buy and then allows them to buy through messaging apps such as WhatsApp and other messaging applications.
One day I was in Mexico in this market called Mercado San Juan, and in that market, I met Alan who is a fisherman. Alan not only sold me fish, but got my WhatsApp number. When he got my WhatsApp number over the next three months, I ended up buying more fish that I had ever bought in my entire life. The reason for that was that every weekend, Alanwould send me a picture and it was send me a message with the freshest catch, and he just made it very, very appealing. It was very simple to order. I would just confirm it there and he would send it to my house. At one point I started thinking, I’m pretty sure Alan doesn’t realize that we’re doing digital commerce here and that we’re doing online commerce. And I hadn’t realized that we were doing that. But it was one of the best digital commerce experiences that I have ever had in my life.That got me to think, what if we could recreate Alan or the Alan experience with artificial intelligence, and then give it to companies so that they can bring this level of personalization when it comes to their sales process in terms of recommending very compelling products, giving advice on how to buy and allowing you to buy through these messaging apps. That’s how Yalo got started. With that inspiration from Alan, we set ourselves to create these AI that now is helping companies all across the world impact more than 100 million users every month, and more than 2.5 million stores or merchants that are using our technology in our software.
The way I would explain the difference between conversational commerce and traditional e-commerce is conversational commerce is then next evolution. So traditionally, with e-commerce you have had to make a sacrifice of what you had in the offline world. The offline world allows you to have these close relationships and this personalization. So if you go to buy to a store, typically you would get advice and recommendations on what to buy. When you go to a website it is very scalable, but very transactional. Here’s the products you need to self-navigate. What conversational commerce does is it matches the best of both worlds, bringing that level of personalization and allows you to have a back and forth conversation, getting the recommendations and advice and at the same time allows you to do a purchase digitally which is a lot more efficient.
We believe that the best experience are the ones that are end-to-end, so really managing the entire customer journey. That starts with getting to know about the products or really being able to market and drive and change that behavior with the different recommendations that we’re able to do on the platform. Being able to do the sale on that, but at the same time creating other applications that allow you to solve all the needs of your customer. So an example of this is financing. There are a lot of stores that, for example, when it comes to buying products, they might not have working capital. We have already partnered with a couple of companies to be able to do that.
The other one is connecting not only with the store but connecting the entire ecosystem. In this ecosystem, you have sales representatives that are visiting the stores, you have marketers, so with the same information and with the same intelligence that we have created, we are now generating different applications. One applications for instances for the sales reps to get advice on how they should be selling and positioning the products. The other one is for onboarding of new customers, to learn and to find out about that. But the one that I’m most excited on, I think that great companies not only sell their products, but they help their customers have a better lifestyle and have a better business in this case. So all the educational content that we can generate to help these small merchants grow, it’s an area that I’m particularly excited because now we can not only send messages but we can send educational videos to all of these different stores on figuring out Procter and Gamble products, but not only that, but how to grow their particular business and get educated on that. Those were merchants and stores that typically wouldn’t have access to the same information on this content. Now we’re able to not only generate or personalize it for millions of different customers around the world.
I think there’s multiple advice that you’re gonna get and ultimately, you need to follow your gut. If you don’t, What are you going to follow? You’re going to hear a lot of different advice. I would start with that, but the gut is trained by surrounding yourself with fantastic people, and getting that sense. The second advice I would give is be obsessed about the problem that you’re trying to solve. Ultimately, companies work because you solve problems for other people. You want to make sure that you’re obsessed on the problem and that you’re passionate about solving the problem that you’re going after, because that’s where you’re going to get the energy to continually go through even when you have obstacles.The solution might change. What you start with the company and the idea that you had that was what the solution was going to be. that’s bound to change. But the problem is the thing that it’s not likely to change. So make sure that you’re obsessed and that way you can get energized to go through the different obstacles that for sure will come your way
As a computing science student, I once metJoseph Weizenbaum, the MIT professor who created an infamous computer program called ELIZA. It was a mid-60’s version of ChatGPT, able to converse with people by responding to questions with pre-set answers. Many people who used ELIZA reacted as if they were talking with a psychotherapist. For Weizenbaum, the experience drew a line between technology and humanity – he declared that technology should always serve humans.
The lesson I learned from Weizenbaum’s talk shaped my perspective of an innovator: always put humans at the center. That approach to technology fits well with how P&G people are trained to always focus on how to make consumers’ lives better, as the foundation of building a thriving business. Creators and users of advanced digital technologies like AI are responsible for making technology a force for growth as well as a force for good.
We often look to the government to set rules to help protect its citizens from harm. The European Union is taking a lead role globally with the Digital Services Act and Digital Markets Act, setting rules on how tech companies can compete and providing its users with greater controls. As Signal360’s John Battelle writes, the new rules will not only drive significant changes for the big tech platforms but also for all businesses that use these platforms. It will likely serve as a guide for how other governments – including the US – will adapt their rules.
Government itself has big challenges on how to best use digital technologies to serve their ‘customers’ – its citizens – better. Jennifer Pahlka, a digital entrepreneur and government policy advisor, created Code for America, a non-profit that brings tech leaders together to help government at all levels to make technology create better outcomes for the citizens it serves. In her Signal Conversation she shares that across all large business and government organizations, successful use of technology starts with a deep understanding of people and culture before creating strategy and policy.
Sometimes technology can help us better understand why people do what they do. In his Signal360 guest column John Dick, founder and CEO of CivicScience, explains how AI algorithms found people’s emotional well-being is currently a better predictor of how they spend money than shopping behavior or even inflation. His lesson is that marketers should focus on communicating the ‘experiences of physical goods.’
Another example of technology putting humans at the center is conversational commerce. Javier Mata, founder and CEO of Yalo explains in a Signal360 Spotlight how conversational interactions on widely adopted messaging apps like WhatsApp help small store owners stay connected with their shoppers and distributors and grow their business.
Rapidly changing technology is a constant, and so are its opportunities and risks. Accenture CEO Julie Sweet shared with the Signal 2023 audience that the largest global tech consulting company seeks to hire and invest in people who are learners. Her advice is to always be a learner, by creating new connections and gaining new insights every day.
Helping you learn is our Signal360 mission. Hopefully the topics in this issue make you think and gain a few new insights that you can apply. We’d love to learn from our ‘consumers’ – you – as well. Please feel free to send us a note (joosten.s@pg.com) with your insights and reactions, as inspiration for future topics to cover. Until next month.
Stan Joosten & John Battelle,
Editors-In-Chief, Signal360 / Co-founders, Signal P&G
Code for America founder Jennifer Pahlka has spent her career working to bring a more user-centered approach to the way government integrates digital tech. One example? Building a mobile app for SNAP applicants in California that shrank the process down from an hour to seven minutes.
“We have this incredibly structured way of thinking in government where it’s sort of a hierarchy,” says the former U.S. Deputy Chief Technology Officer under President Obama and the co-founder of theU.S. Digital Response. “That’s really hurting us.”
You can hear more from Pahlka and details from her new book, “Recoding America: Why Government Is Failing in the Digital Age and How We Can Do Better,” during this lively conversation with Signal’s John Battelle in the video below. Or read through our lightly edited transcript.
TRANSCRIPT
John Battelle Welcome to another Signal Conversation. I’m very excited about this one, a former colleague of mine who’s gone on to great heights, Jennifer Pahlka is joining us, she’s written a new book. She is a former U.S. Deputy Chief Technology Officer under President Obama, a founder of Code for America, and the co-founder of the United States Digital Response. Her book is “Recoding America, Why Government is Failing in the Digital Age and How We Can Do Better.” In this book, she makes the case that government at all levels has limped into the digital age. It’s a problem that affects more than government, any large organization can get in its own way, and we’ll be talking about that. And there’s much to learn from Jennifer’s work. So welcome, Jennifer to the Signal Conversation.
Jennifer Pahlka
It’s a delight to be here, John, thanks so much.
Let’s just start with this book. Just tell me, what prompted you to write it?
I started to see over the years working with and in government, that we’re in really an implementation crisis, and we don’t talk about it. What we talk about, are these partisan fights these fights about values. While I think the fact that we are failing to implement, the things that we do agree on is sort of depressing. It’s also, I think, more hopeful, because it’s probably more solvable than our partisan bickering. There’s actually a lot that people do agree on across whatever the aisle is today, right. We’re in the middle of some strange political realignment. I think in that realignment, there’s actually a lot of agreement that we need to just get together and get government to a place where, though, we’re still going to disagree on some things we can do the things we have agreed on. We have to build the capacity to actually execute on the laws and policies that are passed. I think if people think that way, we can spend a lot less time churning and a lot more time getting stuff done together.
It is strange that we seem to assume that things get done, if we agree on them, and they get passed into law. I think we just throw them over our shoulder and assume they’re getting done. But you started an organization Code for America, which actually attacked the problem, at its root of how government can use digital technology in a different way. Can before we get deeper into the book, can you tell us about Code for America, what its mission is and why you started it?
I think why I started and what I got out of it ended up being a little different in the sense that I like everybody thought that, right? I grew up on Schoolhouse Rock with, “I’m just a bill sitting here on Capitol Hill.” And once the bill gets passed, everybody cheers, and we’re done. When I started Code for America back in 2010, it was there’s something that the tech industry can bring, particularly the web to a world, which I learned from you, John. I got to watch as you were sort of telling the story of this lightweight, user-centered web that was very different from what had come before, and thought, “Oh, my gosh, there’s an incredible value to doing this in government,” that’s actually probably the best and highest use of the principles and values that you and others articulated at that time. But I think what I really learned in doing it was, let’s bring tech people into government was, yes, government has something to learn from tech, tech has a lot to learn from government. But really, it’s not just different programming languages in the cloud. It’s that there’s a fundamentally different way of thinking in the consumer tech world, in that web to a world, which starts from the bottom up instead of the top down and closes the loop. We have this incredibly structured way of thinking in government where it’s sort of a hierarchy. That’s really hurting us. Code for America really started as just a way to bring tech people into government. We worked with city governments. Today, it’s a much larger organization that works more commonly with states, also with the federal government, but they just really show how service delivery can be great, how it can really work for people. I think from that you back into all of the profoundly different ways that those folks are approaching a problem as opposed to the legacy ways of thinking in government.
You’ve had a unique viewpoint in that you with Code for America, you saw, you did a lot of work with local governments. You then went to the federal government and saw inside that sausage factory and how things worked or did not work. You were part of a group of really optimistic people who sort of surged into Washington and said, “We’re going to change this place.” Do you think that change occurred? It’s been almost two administrations since you joined and subsequently moved on. What did you learn? Do you have hope that that kind of change at the big level, the federal level is possible?
Oh, change is absolutely happening. You know, it’s evidenced in part by the fact that there’s all these teams now doing real user-centered work in government that just didn’t exist before. If it happened, it was sort of scraped through the edges, and people were sort of cheating to do it. I went back to DC, before the book launched, but when a number of people had read it. I’d sent it out for people to read, and I was afraid that people were going to react negatively to it. But in fact, people really welcomed it and embraced it, and were excited to get it out in the world. It was then when I started hearing from people,”Your critique of government is correct, we have had this sort of artificial separation between policy and implementation, not enough focus on implementation, but it’s changing.” They were eager to give me all these examples of the ways that delivery, to use another word that really essentially means implementation, or sort of how the public experiences implementation, delivery is becoming a much bigger focus. There is much more tension on it from the parts of our particularly federal government that would never have paid attention 10 years ago.
That’s a great legacy in and of itself. But if we can dive into the book, you identify a number of what you call core concepts throughout the book, and you tell some really entertaining stories about how things didn’t work or got screwed up. I mean, successes as well, of course, but I want to sort of dive into some of the structural problems you noticed and noted, because I think even though the audience here at Signal is mostly corporate, I think they might recognize some some similarities. Large organizations are large organizations. One of them has to do with an idea of a procedure fetish, or this idea that it’s more important to follow the rules and check a box than it is to actually accomplish something. Can you can you unpack that for us?
I encourage folks, of course, you read the book, but if you don’t, Google Nicholas Bagley’s The Procedure Fetish. It’s a short paper that is well worth your time. I think what’s exciting about his work is that he really unpacks what drives this desire to layer procedure upon procedure upon procedure. It’s anxiety about legitimacy. You’re trying to defend that whatever decision you made is legitimate through process. But then we have so much process that really accumulates. It’s not like you there’s a process and then when a new one comes along, the old one goes away, they get layered upon each other, which is how you get this sort of ossification. But you get to the point where it’s so ossified that you’re not getting anything done. Then we really do then have a real crisis of legitimacy, weirdly driven by people’s anxiety about legitimacy. You see that all over government. Of course, people blame the lawyers, but it’s really, I think, the kind of thinking that says, it’s more important that we’re safe in this particular moment than that we pull back and look at, are we actually getting the job done? I can tell, you know, any number of stories from the book about that, but I do think that folks and corporations tell me very often it resonates. We’re doing that too. We’ve got to figure out a way out of this proceduralist trap.
Yeah, and it’s interesting because large companies and oil companies for-profit companies, which of course is not the government’s MO, supposedly, although we suppose sure we could spend a long time talking about the role of money in government. But another one of your key concepts is rethink input. The people that you need to hear from in those valuable input loops. How do we do a good job at whatever were delivered. But the people that you say the people that we need to hear from are not participating. Certainly, that could be said in large corporations as well. Can you unpack this concept of rethinking input?
I’ll tell you sort of one of the ways that it really started to hit home, for me, when I was working with the team at Code for America. We had been redesigning a process for applying for SNAP, Supplemental Nutrition Assistance Program or food stamps. We were doing that because the process in California, if you went online to try to get food stamps in San Francisco County, where we were located, it was a 212-question form, it didn’t work on mobile. So while California is going, “Hey, we want to dramatically increase our participation rates,” California’s a very pro-welfare states, and it had the second lowest participation rate in the country. The only state that was worse was Wyoming. They’re not looking at the fact that, it’s not the policies, it’s not the outreach, it’s the fact that once you go to that form, if you’re not on a mobile phone, if you don’t have an hour to give, if you don’t know how to answer some of those questions, you’re just not going to get through the application process. So we put up this form that you can use, that took about seven minutes on a mobile phone, it was much easier to use.
When a colleague of mine was asked to go, sort of show the form and talk about this practice of user research in front of the consortium that had created that 212 -question form, what he saw was that there was these, representatives from the counties, and they all voted on what features were in this online application. You really had you know, this 20-something, and I call them bureaucrats, but I don’t mean that in an insulting way. They’re their public servants doing their jobs, trying to represent the needs of their county, which each county does a little bit different, and nobody in the room representing the actual users. So when my colleague Jake is up there showing what it’s like for a user to actually try to get through this form, he’s actually bringing a lot of new knowledge to these folks. Because in that case, input is all from the internal stakeholders and meeting their needs. In the language of the book, and my colleagues in the UK, it’s meeting government needs not meeting user needs. You see that all over the place.
You’re right, I think often in corporations, we have that same pattern of getting input from a lot of internal stakeholders, and then fighting over this department needs this and that department needs that, and not looking at the end users. In government, we have an additional problem, which I think is worse than in corporations, which is, we also are required to go to the public through a process called Notice and Comment. There’s various versions of at all levels. So we’re going to make a change to regulations, we put this out, people are able to comment on it, government has to respond to those comments, at least in some way. Of course, that process, which should center the people who are actually going to use the program, or the product, is hugely captured by special interests. To read the Federal Register, you are almost exclusively going to be paid to do that. The average person is not really going to go out there and do that. So we really have to look to what I think of as the discipline of product management. We can borrow from the tech industry, where product management says, “You don’t just let everybody tell you what they want. You really understand the needs of your users and figure out elegant ways of delivering that.” But that means an active approached input, going to the people who are going to use your service and making sure that their needs are centered. Then you can take care of all those internal needs and handle all those stakeholders, but you’re grounded in something that ultimately is driving towards a product that will work for people.
Did you find, just going back to that SNAP example, I mean, it’s pretty extraordinary to think you had a seven minute experience at the end there, and you started with a 212-question form that was impossible to navigate. Was there resistance to the idea of simplifying it because people were somewhat addicted to the complexity?
I think in that case, there wasn’t so much resistance in the sense that we did not ask their permission, we just created this extra form. Then people are either very excited by it, like Leo O’Farrell in San Francisco, who embraced it with open arms and tried to spread it across all the counties, or yes, they were resistant, because they had their internal business processes and this messed with that. So you had this fight between government needs and user needs.
But I think there’s so many ways in which I’ve seen people in government, with all the best intentions, who are really dedicated to what they do, yeah, embrace that complexity, because it is their sense of self worth, essentially. They know all of these internal workings of this very complicated regulation, and that’s what sort of makes them special.If you want to fight against that, you kind of have to recognize that and honor them for it, instead of degrading the value that they believe they’re bringing to the public today.
In companies when you tried to make systemic change, often, what you need to change is what’s being measured, and valued. Did you find that to be the case when working with government as well? Obviously, California very much wanted to increase engagement with in this case, SNAP. Was that a metric that became at the forefront this is our goal, we’re trying to hit this. Is that one way of creating systemic change by changing what you value as metrics of success?
One thousand percent. I think that is what made get CalFresh, this alternate app that we did successful and ultimately embraced by the state. But what’s hard about that is that it’s very hard to align a large number of stakeholders around a central metric. The other thing that can really go wrong in that approach is that people in government are very used to any kind of data or measurement being used against them as sort of a weapon. So I talk in the beginning of the book about my work with unemployment insurance backlog in California during the pandemic, and how the leadership at the Employment Development Department ,which administers UI, Unemployment Insurance, really was very resistant to a lot of the work that we were doing to try to give them some ways of understanding what was going on. Where is your backlog? Is it going up? Or is it going down, and being able to sort of analyze the assignment of the staff that they had brought in. It’s because to them, data measurement, performance metrics, are a grade that they get given, and not a compass that they use, it’s always negative. And it’s always sort of external. I think one of the keys to transformation is if you can get people in sort of those mid-levels to embrace the idea that that measurement is a tool in their hands to get where they want to go instead of something that’s being imposed from the outside, that will always just be something that makes them look bad. That shifts to a compass, rather than a grade can be profound.
That’s a great insight. Have you engaged with large companies in this work? Or maybe the launch of the book has gotten some people calling you. Have you have you found that there might be even more to do in large corporations than you thought perhaps earlier?
I will say that at a lot of talks I had people come up to me and say, “I work in a big corporation, and a lot of these problems are the same or similar.” I think a lot of the principles are relevant. I do think there’s an extra layer of complication in government in the sense that you don’t have a CEO, really. You have very distributed decision making and with Congress in the three branches of government and all the levels of government, it does make change even harder.
I think maybe there’s some comfort in that for everybody in the audience. It’s like okay, It’s it couldn’t be worse, right? Lastly, I just want to because I don’t want to take too much of your time I know how busy you are. If you had advice for this audience, people like those who come up to you at the end of your talks, as to how they might best affect change in large organizations, what would that advice be?
We’ve talked a little bit about the need to center users, and that that would certainly want the one piece of advice. But if I could add on to that, I guess I would say, for people who think from a sort of a top-down perspective, you’re usually going to think in terms of policy and strategy. It’s important to look at the ways in which those high-level frameworks get what I call, eaten by culture. There’s, of course, the old saying, culture eats strategy. In the book, I talk about how culture also eats policy. You have a particular intention. But if it is falling into a culture that essentially perverts it, it reverses the intention, then you have to stop playing with those strategy and policy levers, and start paying attention to how you can shift the culture. You’ve got to take your foot off the policy and strategy break for a little while. The only way to figure out what’s going on in your culture is to spend a lot of time with people you wouldn’t normally spend it with and get down there and see how are the practices that they are using to execute that strategy no longer faithful to the intent. What’s happened there and why have they made those choices? You’ll learn a lot and you’ll end up sort of, I think, strengthen the foundations of your company or organization in a way that’s sort of not extractive. You’re not trying to get a particular output at that point. You’re just trying to strengthen the foundation so that anytime you have a strategy goal or a policy goal, you’ll have more strength to get that that when you get there.
Well, that’s great advice. Jennifer’s book is Recoding. America, Why Government is Failing in the Digital Age, How We Can Do Better. aEzra Klein, who is someone I certainly follow, called it the best policy book he’s ever read. So it’s very high praise. I suggest everyone watching this go get that book, there’s lots of lessons no matter where you work, and what you do. Jennifer, thank you so much for joining the Signal Conversation.
Thanks so much, John. Really love being here.
What does Accenture’s Chair and CEO Julie Sweet believe is the company’s primary job? “We are a talent creator,” she told the audience at Signal 2023 in July. “I think it’s our core competency.”
Building new abilities, and teaching staff how to master them, is applied through an AI platform the company developed. The AI can mine the skills of its more 700,000 employees to find those who can be trained for a new role in just 20 hours. Not one to be proprietary, Accenture has shared the database with Workday so other brands can take advantage of the module and train their staff to stay competitive too, says Sweet.
“The only way we as companies can ensure that we bring our people along the journey is we have to be able to retrain them,” she says. “I really believe it’s a core responsibility as a company, and it is your competitive edge.”
You can hear more from Sweet in her conversation with Signal360’s John Battelle in the video below or read the lightly edited transcript.
TRANSCRIPT
John Battelle
I’m very excited to bring out a woman who leads a company that has its ear to the ground of not just corporate America, but really the whole world. That’s a great way to kick off a morning is to hear what’s on her mind and on the minds of her clients. So please join me in welcoming Julie Sweet CEO of Accenture.
Thank you so much for coming, and helping us kick this off. I want to start with the theme that we discussed with Jon [Moeller], “Resetting the Bar.” In researching your work, it struck me that we managed to have come upon a theme that is very consistent with things that you’re advising your clients to do. You have a phrase, “Total enterprise reinvention.” That’s even bigger than resetting the bar. What does that mean? What is unpack that for me?
Julie Sweet
Thanks, John. I do want to say thank you for having me. It’s very exciting. P&G is really one of the most innovative companies in the world. So to be here talking about reinvention and resetting the bar is super exciting. When we first met, I was struck by just how similar the theme of “Resetting the Bar” is for what we see. So for a moment, let me just take you back to 2013. In 2013, we said, and we were the first to say, “Every business would be a digital business.” Pretty much no one believed us. They argued. Now of course, today, no one argues.
In 2021, we looked across the globe, we looked at what had been happening since the pandemic, and we said there will be five big changes in the next decade that companies to succeed would have to harness and the first is total enterprise reinvention. Think about this today. About 90% of companies are transformers or what we call transformers. You know that. They have big transformation programs that’s driving our business, the technology business. There’s a difference between being a transformer and a re-inventor, and a re-inventor has three big characteristics. First, they believe that they have to continuously reinvent every part of the company using tech, data and AI. Transformers often do big programs and they think they’re done. P&G is a re-inventor. They have continuous innovation, and it’s across the enterprise.
The second big thing is that you think about the total enterprise. Oftentimes, transformation is about a function. The real opportunity is the connection. For example, we worked with a Brazilian automaker, that was digitizing manufacturing and connecting it to the end consumer so that they could do 100 iterations over four car models, which has to be embedded in the production line to that. The third builds the core competencies of reinvention. So it’s a culture that embraces change and innovates, like the constructive disruption. It has a very strong change management capability, and has the ability to continuously rescale and upskill talent, because in order to continuously reinvent, you can’t have to go outside at all times to hire.
You gave me a good segue there. Talent. One of the pillars of Signal is the employee value equation. When we spoke about this earlier, you really lit up because you’ve implemented something. First of all, I had no idea that Accenture has 700,000 employees. Which is a lot. You know, I mean, we have Morgan [Flatley] from McDonald’s later, she’s gonna she’s gonna top that. But generally speaking,700,000 is a big number. So if you want to reinvent how you create an employee value equation, that’s a big job. But you’ve done that. So I want to ask you about management of talent and in particular, this approach you’ve taken, the database you’ve built and how you use that.
Let me start by saying, we said there’s five big forces of change, talent is the second one, and you have to be able to access it. So great consultants, a good way to access talent. But more importantly, things like diversity, having diverse talent, you need to be able to create talent. That’s where being able to reskill comes in. Then you have to be able to unlock the potential of that talent.
We are a talent creator, I think it’s our core competency. We spend over a billion dollars a year on training our people and developing them. But the future of HR and something we started approximately five years ago is all about skills. So stop thinking about roles, start thinking about skills. For over 700,000 people, we have a database of their skills. We have algorithms that we run to say, do we agree with what they say their skills are. If someone says they’re proficient in an industry, we’re able to evaluate that. But even more important, we can run algorithms to see who is best able to be upskilled or rescaled.
After the pandemic, we suddenly needed people in security and cloud and being able to use collaborative tools like Zoom or Teams. We had to train them. We wanted people, we could train in 20 hours to do something different. And our algorithms were able to look at the skills people had and say, these individuals could be best upskilled in 20 hours. That database we built five years ago. We’ve now essentially built it for Workday, because we said, we don’t want it to be proprietary. We don’t want to keep it up ourselves. So now Workday has it as their module. And they’ve made it open so that you can connect into success factors in HCM depending on what you do. Part of the reason I’m so passionate about it is that we all see the changes in technology and how skill needs are changing. The only way we as companies can ensure that we bring our people along the journey is we have to be able to retrain them. I really believe it’s a core responsibility as a company, and it is your competitive edge. Just to give you one example, when I became CEO on September 1 2019, the first thing I did in my webcast was to announce that all of our 700,000 people would be trained in what we call, TQ. So core competencies, including AI, this was back in 2019. We said these are the core competencies of a modern worker, and our ability to do that, and then see the training and know what skills our people have, has been enormously impactful as you think about the last few years.
The idea that you could put a query into a corporation as large as yours, saying, “Okay, I want X number of workers to be ready to use this set of tools within 20 hours. Tell me how many there are, and let’s get started.” That strikes me as something that might take a few months in a traditional company to get an answer back. The fact that you have the flexible database and the ability to ask that question, I think the ability to ask questions of an enterprise as complicated as yours that is a competitive advantage. So let’s move on, because we talked about this with Jon, but a key pillar of Signal is the supply chain. It’s something that you’re also quite passionate about. What changes do you see coming in that field over the next year or two?
First of all, all my friends who do supply chain got really cool in the pandemic. They used to be like, “Oh, it’s supply chain.” And suddenly they were the stars. I have a friend’s son, who’s now studying supply chain, and I’m like, “You have entered one of the coolest areas.” So that’s a big change.
When we think about supply chain, we think there’s really three things companies have to focus on first, the ability to be proactive. We saw that in the pandemic where there wasn’t enough data, it wasn’t real time data. And as Jon talked about, when they saw the opportunities that between the demand and then the gap and filling that demand, it’s a huge growth opportunity. We’ve spent a lot of time over the last few years helping companies create the right data, access the data in real time and be predictive. Right. That’s, by the way, before Gen AI. So we haven’t talked about that yet, which is an amazing, sort of miracle that we’re as far without it. So being proactive.
The second is all about security. This is another area that a lot of companies have woken up to is that their supply chains aren’t as secure. We still see a surprising number of companies whose separate sort of enterprise IT security and the security of their operations, and don’t look at it holistically.
Then the third area, so you’ve got security. After security and productivity and sustainability, which Jon just talked about, embedding sustainability in the supply chain. Just to give a plug, because a lot of companies are spending a lot of money on it, including in supply chain manufacturing. I have a very simple advice to CEOs. If you spend more than $5 million on any technology project, make sure that the people in charge of sustainability at your company, know what the project is, and someone has intentionally said, is there an opportunity to embed sustainability and improvement in what we’re doing, rather than spend money later. Because we’ve seen so many companies do these as separate things. You really can save money by having that, and that’s what Accenture is doing. We’re trying to embed it in what we do, as opposed to saying here, you know, go put in your new ERP system, and then now let’s think about reporting for sustainability. Right? So it’s a really important thing. Like, Jon, I think it brings so much value to companies to really lead and sustainability.
Let’s dive in from the bigger view to specific to Accenture, your company. You’re leading a pretty significant transformation of Accenture. Can you tell us about that?
I became CEO, September 1 2019, six months before the pandemic was declared. Great timing. Within those first six months, I with my leadership team put in the largest change in our history. That comes off of having back in 2013, from 2013 to 2019, rotated our entire business from less than 20% digital cloud and security to 70%. Within the context of having just replaced the core of our business, within six months, we designed and implemented a new operating model that changed the P&L of our company in the middle of the fiscal year, eliminated an entire part of the matrix, dissolved our digital unit, because digital was everywhere, rotated 200, out of the top 300 leaders in a single day.
How did that go?
Really well actually. Going back to that, having changed management as a core competency. We use it tool that is data driven. I knew going into that change that I had 90% of our 5000 Managing Directors who believed in our strategic direction. And the quarter that I announced what we were doing, and most of those leaders were the ones running our P&L, we had our highest sales ever, which meantthey believed in the direction. Now I want to share that with you, because that was the quarter that I was going to announce. And then March 11, the pandemic was declared, and earnings were March 19. I never got to talk about that great quarter.
So we did this transformation. It was meant to serve our clients better have our leaders closer to our people and to be faster. So if you think about that we had 500,000 people at the time, 99% of them had something change. We operated, designed it and implemented in six months. So March 1, it went live. In September, we created another group, it was called Cloud First because the pandemic was making Cloud explode. We had told our people, when we put this model in, we’re going to be faster and more agile. In the past, if four months later, we’ve made another operational change, people would have said, “Oh, it’s too much change.” Instead, people said, “Well, she was serious.” When we created Cloud First, it was a $12 billion business. 12 months later, it was $18 billion dollars. If we had not been agile enough to make that change, we would never have captured the opportunity. When we look at what we’ve done since September 1, 2019, we’ve added had $55 billion in market cap, we’ve grown incremental revenue twice the size of our competitor. We’ve gone from 50% renewable energy to 100% renewable energy. And we had 45% women and 500,000 people in September 1, 2019. We have 730,000 people today and 47% women. So the ability to be agile to continuously disrupt which I love, we call it actively innovate and have the courage to change is really important to succeed.
As long as we’re talking about change let’s get into AI. You’ll find me both enthusiastic and skeptical at the same time as it relates to this particular technology. So I’ve covered technology since the introduction of the Macintosh, if any of you know what year that is, do not shout it out. So I seen the Silicon Valley-driven hype cycles. This is the fastest one I’ve ever seen. Except maybe threads, Nicola. But these hype cycles are real. And they can get in the way of significant and lasting impact and outcomes that can be driven by AI, which, as you point out has been happening for many years. Your company, you announced, a significant investment recently in artificial intelligence. How are you advising your clients to think about it, and to implement it?
I like the idea of balance.The number one and number two advice I give is that AI is about outcomes, not about technology. Outcomes means it’s not implementing AI, it’s are you able to change the processes, so the change management, do have the rigor in terms of what’s the business value, because guess what, it’s pretty expensive right now in terms of the cost of running it, and it’s highly inefficient from an energy perspective. So first, it’s about outcomes.
Second, is avoid the hype cycles of the past. What do I mean by that? We remember when data and analytics was really big and digitalization and all of a sudden, you’d wake up as a CEO, and you had 1000 projects, which didn’t scale, were really expensive, you ended up with IT that had you know, all these different tools, you had a lot of different consultants and very little to show for it. That has really resonated with our clients. Because beyond all the things about risks and uncertainty, is they want to make sure that they’re not jumping on a bandwagon with a lot ofproofs of concept and no value. Once you get past that, I go right back to total enterprise reinvention, right? Since 2021, what we’ve said is tech, data and AI are going to continuously reinvent. For many of our clients, so doing Gen AI makes no sense.
I was just talking to a CEO yesterday, whose data is a disaster. They don’t have hardly anydigital first mindset and products. So I said to them, wait six months, I’ll bring you some Gen AI solutions from others in your industry, you need to stay focused on building your digital core.
Getting that base so that then you can leverage the tool.
That’s right. And yes, you’ll be behind, like a P&G who’s been building a digital core has great data. P&G can go fast. For those who are in have not been making that investment, they’ve got to make sure they get there and then they’ll move faster. By the way, ultimately, they may be able to leapfrog because lots of other companies will be experimenting, and they’ll be able to learn from it, if they’ve built the core competencies, embrace change, good change management, agile organizations.
I’m really glad we have enough time for me to ask this question. I see a question from the audience as well. So I’m going to work that in next. But I didn’t get a chance to talk to Jon about this. Besides AI and talent, one of the things that every single prep conversation I had for this conference that came up was the changing environment external to the company, and the conversation in the country and around the world that Jon referenced around some topics that had been previously seen, as okay to talk about and okay to support. There’s been a backlash, for example, to ESG investing, and a claim that, you know, companies are now “woke. So you’re either woke or not woke, I’m not sure what the opposite of not woke is, but asleep? But but this this is we are now entering a political cycle where we’re bashing companies that have a point of view on this or at least express a desire for diversity and inclusion that is going to be part of the political dialogue for the next 18 months. How do you respond to that? And when CEOs ask for your advice, what do you tell them?
Well, first of all, I’m going to shamelessly borrow the line the opposite of woke is asleep. I think that’s brilliant John. So let me just share a story with you for a moment. So I once had a client who was doing a real estate development, a mixed use where you have entertainment, sports, shopping residential. I was in a meeting, I was the only woman in the room that were 11 men. They were really excited to show me because we were going to be their innovation partner. They were showing me the development and pictures and had this fabulous par with families. This is going to be a family destination. I looked at that, and I said, “Where’s the bathroom?” There was dead silence in the room. And they were, “We don’t know.” No one knew. I said, “Well, you have all these families, right?” You would bring kids. They had to go ask, and it turns out that the nearest bathroom to this beautiful park was a football field away. I said, “That’s not going to work.” You’re not going to have families with small children. Why is that important? And actually, the CEO said to me, “Julie, so I guess that’s why some diversity on my team might have been helpful.” Because this was a mixed use, families, all this, and they didn’t have anybody who reflected whole segments of those who were going to use that facility. This is something I think P&G is so great at understanding, you must reflect those who you are serving. It’s not about woke, asleep. It’s about business value.
For Accenture, we have a sustainability practice that’s growing double digits. Why? Because it brings value to our clients. We attract some of the best talent in the world. Our people care about sustainability. So we have to care about sustainability. Diversity, we are innovation-led, there’s lots of studies that say, if you don’t have diverse teams, you are not as innovative. So all of those things. This is about business value. And it’s about one more thing. And this is where, I just love the values we share as companies with P&G and Accenture is we are stewards and we have to do the right thing. Pay equity, protecting the planet and making sure that everyone has an opportunity, that is the right thing. I will never apologize for being a company that always does the right thing. I don’t think anybody should apologize for that.
Last question, from our audience member. AI was mentioned. What are some of the other core skills or competencies that Accenture measures in its employees?
So we currently have TQ. We have 11 assessments and they range from everything from AI, Cloud, data, agile ways of working, and sustainability. Those are some of the big ones. Probably the most important thing that we think about like when we’re hiring, for example, is we asked one simple question, we say, “What have you learned in the last six months?” And that really shows you what we’re looking for. We don’t care if you learn how to make paella.
It is not easy.
It is not, that’s what my husband says, that’s his specialty, except I have to chop everything up. But that’s another story. The sous chef.
Being a learner is the most important thing that we measure in the people that we hire and that we invest in. If there’s one thing that, I know we have some young people watching, those who take away is, be a learner. It is a lifetime activity. I’m a great example. I was a general counsel the knew nothing about technology and now I you know get to lead one of the greatest technology companies in the world. That was only because I was willing to be a learner.
Julie Sweet, thank you so much for coming to Signal. It was a pleasure speaking with you.
By John Dick, Founder and CEO of CivicScience
Back in February, our team at CivicScience anointed 2023 as “The Year of Emotional Well-Being.” Everything about our data suggested that consumers were shuffling their spending priorities and lifestyles in unprecedented ways. Still reeling from Post-Pandemic Stress Disorder (PPSD), they were focusing on what made them feel good, often in the face of financial headwinds, bucking decades – if not the entirety – of conventional economic wisdom.
That proclamation has continued to prove itself out.
The explosive sales in prestige beauty, the rise of nostalgia in consumerism, the record number of Americans taking vacations this past summer, and the continued urge to splurge – in the face of persistent inflation and economic strains – all reflect Americans’ conscious or unconscious desire to feel better, at any cost. This trend is particularly pronounced among women and Gen Z, who have consistently reported higher levels of emotional strain than the general population since the early days of COVID.
Well-being, almost singularly, explains the unprecedented patterns of trading off and trading down we’ve seen from consumers. It’s not just about moving from “goods” to “experiences.” It’s about the conflation of the two. Even people with high inflation concerns continue to spend more on premium food ingredients, while spending less on things like iodized salt or storage bags. Cooking quality meals makes people feel good. Ziplocs don’t.
Did you know the largest average check sizes in the quick service restaurant (QSR) category today are coming from lower-income consumers? That’s because, as people trade down from more expensive restaurants, they’re still prioritizing the “occasion” of dining out, the feeling.
It goes beyond anecdotal.
Our company has invested heavily this year in the development of new forecasting and predictive modeling capabilities, buoyed by a massive increase in our data collection, which now sees us gathering upwards of 5 million survey responses every day. And thanks to the magic of AI, we can crawl billions of time-stamped answers to tens of thousands of survey questions in our database to stitch together indices that both forecast all manner of things and identify key outcome drivers.
This is what our national retail sales forecasting model looks like:
Our models are showing a 95.7% accuracy on a monthly basis, 94.8% at 3-months, and 94.4% accuracy at 6-months. Not bad for our early efforts.
But here’s the more interesting part: These are the questions and answers in our database the AI discovered that – in combination – most accurately predict retail sales:
The first four are intuitive. It’s the economy, stupid. If I feel confident about my personal finances and the economy, I spend more. If not, I spend less.
Equally impactful to the model, however, are four emotional attributes: varying degrees of sadness, stress, and fear. They ranked above hundreds of questions we track about shopping behavior, inflation, or anything else.
In other words, well-being drives – and predicts – consumer behavior as much as anything else today. Believe the algorithms if you won’t take my word for it.
It’s possible this could change as household financial belts tighten. The return of student loan payments or a worsening job market could be the straw that breaks the Well-Being Camel’s back. But we don’t think so. If anything, consumers will dig in their heels to protect the spending categories they value most, while looking to cut back in areas they don’t.
Retail marketers would be wise to lean into this phenomenon. Highlighting and communicating “the experience of physical goods” is essential to winning today’s consumer, again, especially women and Gen Z.
PPSD is real. And it could be a generation until it’s gone.
By John Battelle
“The US litigates, the EU legislates.” That’s what one confidential source told me when I asked about the Digital Services Act and the Digital Markets Act, the European Union’s twin set of Internet regulations coming into force this year. And indeed, even as the United States government continues an endless parade of lawsuits aimed at big tech, the EU has legislated its way to the front of the line when it comes to impacting how the largest and most powerful companies in technology do business. It may be tempting to dismiss both the DSA and the DMA as limited to only Europe, and impacting only Big Tech, but that would be a mistake. It’s still very early – much of the laws’ impact has yet to play out – but there’s no doubt the new legislation will drive deep changes to markets around the world. And even if you aren’t a digital platform, your own business practices may well be in for meaningful change.
So what do the DSA and DMA do? Both pieces of legislation target “big tech” – most of the targeted companies are in the US – and require them to enact novel forms of accountability for how both consumers and businesses interact with digital services. The DSA, which came into force in August, targets “very large online platforms” with more than 45 million users in the EU – sites like Meta’s Facebook and Instagram, Apple’s App Store, Bing, Google Search, Microsoft’s Bing and LinkedIn, Snap, Twitter, and TikTok. The DSA’s goal is to define online services’ responsibilities related to content moderation, including new rules around use of algorithms and data, user choice, annual audits for compliance, and advertising to minors. In short, the DSA seeks to make the Internet a safer and more transparent place to shop, do business, and be entertained.
The DMA came into effect this past May, and focuses on “unfair” and anti-competitive behavior by the largest companies on the web – what the EU calls “gatekeepers.” These include Amazon, Apple, Google, Microsoft and Meta. Many of the DMA’s provisions address the same behavior that has prompted various US agencies and states to sue – Apple’s refusal to allow competitive app stores, for example, or Amazon and Google’s alleged practice of favoring their own products and services over those of competitors. Under the DMA, Apple and Google can no longer force app makers to use their app stores, for example. Platforms are required to share data with their customers, obtain explicit opt-in consent to use data across services, design systems that are interoperable, and are barred from using their data to gain competitive advantage.
That means search results for just about every major platform in the EU – whether it be Google, Amazon, Microsoft, and even Meta, will be changing soon. “We are still at the level of philosophy,” as to how those changes might look, said one tech company insider who asked to remain anonymous. “The laws are not yet being enforced.” But what’s certain, he continued, was that “we need to provide new choices and spaces for consumers and competitors.”
The two pieces of legislation are dense with theory and explication, but the core intent is clear. As the DMA puts it, large online platforms have led to “serious imbalances in bargaining power and, consequently, to unfair practices and conditions for business users, as well as for end users of core platform services provided by gatekeepers, to the detriment of prices, quality, fair competition, choice and innovation in the digital sector.”
In short, the EU isn’t messing around. Importantly, the new laws require that platforms be in compliance by early next year, and they must continue to prove compliance on an annual basis. And the laws create full time regulators responsible for enforcement and fines, which are steep – up to 10 to even 20 percent of a company’s EU turnover. That means tech companies can’t see fines as a cost of doing business. Net net: a lot is going to change over the next two quarters.
So how might the new laws change business for non-tech companies, both inside and outside the EU? The most direct impact will be for marketers – if you’re targeting children under 18, you’ll lose access to that personalized data on all major platforms. You may also lose cross-service data – between Google Maps and YouTube, for example – if companies like Google fail to get explicit opt in from their customers.
In addition, the DSA requires that platforms create up-to-date repositories of data on advertising purchases, exposing the strategies and investment levels of every advertiser on the platform. “The DSA requires us to give almost live information about the amount of money being spent on ads,” said the tech company insider. “I think that will be interesting for marketers.” Indeed it will be – that kind of information was previously considered top secret, and will certainly re-shuffle go-to-market strategies for most CMOs.
If you’re a vendor on Amazon, for another example, you’ll suddenly find yourself free to compete on a more level playing field. The threat of Amazon using its data to undercut you on pricing, or to create and market a generic version of your branded product, is now gone in Europe. “Amazon is not going to be able to use data from other shampoo makers to compete against P&G,” said Fiona M. Scott Morton, the Theodore Nierenberg Professor of Economics at the Yale School of Management. “And P&G will have access to tools to access, evaluate and track advertising that they place on site,” allowing the company to evaluate how their investments are performing relative to historic and industry norms.
But the true impact of the DSA and DMA may be in how the overall business ecosystem adapts over time, and this is where it pays to imagine a few out-of-the-box scenarios. Imagine, for example, that the DSA and DMA work well in the EU, and companies of all sizes begin to demand similar types of affordances in the other large markets. Might legislators adopt similar regulations once they are pressured by the likes of P&G, Walmart, or Nestle? It’s possible, says Daphne Keller, Director of the Program on Platform Regulation at the Stanford Cyber Policy Center. More likely than not, “whatever big picture changes they make to appease EU regulators will end up being done globally.”
Beyond the potential for the DMA and DSA to become de facto standards outside the EU, there are also subtle, insistent market pressures to consider. Prior to the regulations taking force, no company – whether startup or large platform – would have ever attempted to create an app store that competed with Apple. But now, “Facebook could just create an advertising program that directly installs apps on a person’s phone, bypassing Apple altogether,” points out the tech company insider. Apps installed in this fashion would not pay Apple’s 30 percent tax on app revenue – a powerful new incentive for entrepreneurs to innovate.
In short, don’t sleep on the EU’s new DSA and DMA regulations – they will not only change how consumers interact with large platforms, they may also end up changing the rules of business on the Internet for good.
Welcome to a new season of Signal 360. Summer provides some time to reflect and recharge, to get ready for what’s ahead. We start this issue with a great summary of Signal 2023. More than 4,000 people from 70+ countries joined us for another remarkable event, filled with inspiration and education on how to reset the bar.
Someone asked me recently what I learned from Signal this year. Now that I’ve had some time to reflect, I can sum it up in four words:
Balance. In a time where attention is in short supply and hype ample, it’s important to get a balanced perspective. This starts with learning and listening, both prominently mentioned by Accenture CEO Julie Sweet and GE CMO Linda Boff. Balance also applies to how to grow a business. P&G CEO Jon Moeller provided an MBA education to the audience with the most highlighted quote of the event: ‘Top line without bottom line is a waste of time. Bottom line without top line is only a matter of time.’
Substance. AI is a topic currently near the apex of hype. Fortunately, several Signal speakers cut through the hype to discuss meaningful applications that will shape our lives in the years ahead. For example, Gather CEO Sumit Agarwal demonstrated how AI acts as a genie, retrieving value from an abundance of locked-up personal data. Food-tech company NotCo CMO Fernando Machado explained how its AI ‘chef’ Guiseppe helps human chefs create new plant-based products from unexpected ingredient combinations, better than the non-plant based originals.
Creativity. “When you talk about irresistible superiority, you won’t achieve it without big ideas that are insightful.” Great words from Publicis Groupe CEO Arthur Sadoun, who reminded the audience of the importance of human creativity. Creativity requires bravery without being reckless, shared McDonald’s CMO Morgan Flatley. It’s easy to shoot down big ideas that make people uncomfortable. But saying yes creates energy and new opportunities.
Outcomes. The Signal program highlighted several P&G innovators who created new approaches to solve problems with remarkable outcomes. For example, Katie Kelly and Cem Canikoglu reduced new-hire attrition by over 50% by creating a new approach that helped new P&G people feel more connected with their colleagues and managers. Their onboarding process highlights how great innovation starts with a challenging problem to solve. Signal provided us once again with world class speakers who delivered great inspiration and education. But the true value of the program will show in how we use what we learned to create remarkable outcomes.
“Every human is talented,” states Rishad Tobaccowala in his Signal360 guest contribution. His premise is that, in a world filled with technology, talent matters more than ever. Our purpose for Signal 360 is to provide you with insights that help grow your talent, with balance, substance, creativity, and innovative outcomes. Until next month!
Stan Joosten & John Battelle,
Editors-In-Chief, Signal360 / Co-founders, Signal P&G
The theme for Signal 2023, Reset the Bar, echoed throughout the stories shared by leaders, founders, and entrepreneurs on the Signal stage this past July. Innovation is core to the success of any business, and as P&G’s president and CEO Jon Moeller noted at the top of the event, “I’m excited to see what you can do next.”
Here are the highlights from Signal 2023, ways innovators can apply these insights into growing their business in the months ahead.
Keep learning. Students learn by building new connections and gaining new insights. Accenture Chair and CEO Julie Sweet says that mindset is critical to success. She encouraged everyone at Signal 2023 to adopt that thinking throughout their career.
“Probably the most important thing that we think about when hiring, is we ask one simple question, ‘What have you learned in the last six months?’ That shows you what we’re looking for. We don’t care whether you learned how to make paella. But being a learner is the most important thing that we measure in the people we hire and that we invest in. If there’s one thing, I know we have some young people watching this, to take away is ‘be a learner.’ It is a lifetime activity.”
Boost performance sustainably. Performance is the cornerstone that drives growth for companies. Compromising on performance? That’s not an option, noted Jon Moeller, P&G president and CEO. But opportunities to improve sustainability — and consumer delight — continue, whether that’s doubling the use of recycled materials to construct packages, as P&G has done over the past two years, or developing a product that reduces the environmental impact of washing your clothes, like Tide Plus Coldwater Clean.
“We have a big opportunity to reduce our footprint, we have a big opportunity to help consumers reduce their footprint, and we have a big opportunity to contribute on a global basis to a more sustainable world. I ask that you join me in that endeavor.”
Do your homework. Publicis Groupe CEO Arthur Sadoun knows the power of bringing big ideas into the world. But as powerful as a great idea may be, there needs to be insight to make it soar. He encouraged the Signal 2023 audience to take risks and think big — but to make sure decisions are grounded in company culture and fueled by data to drive their success.
“When you talk about irresistible superiority, you won’t achieve it without big ideas that are insightful, that are in culture, that are relevant to your product and services. This is at the heart of what we’re doing in the past and what we’re doing today…This is where the value is.”
Expand expectations. Candice Matthews Brackeen knows a thing or two about expanding opportunities. As the CEO of Lightship Foundation, Brackeen has opened doors for founders traditionally left out of venture funding. She told the Signal 2023 audience to open their eyes and push the boundaries of how they see the people around them.
“I want to redefine who you keep top of mind, who is an innovator, who is a creator, who is an entrepreneur.”
Bet on AI’s potential — not its hype.
It’s hard to escape the hype of artificial intelligence and the potential the technology can deliver. But Sumit Agarwal, co-founder and CEO of Gather, encouraged the Signal audience to look beyond the hoopla to AI’s real value — giving consumers the reins to control their data. That shift will flip how customers and brands interact and open the door to new ways of connecting.
“The value of user data is priceless when it comes to establishing a relationship because it’s the basis of knowing someone and understanding someone and treating them in a way that makes them feel respected and understood….. Consumer adoption of AI in the form of personal assistants that we call genies will enable this new channel of relationship building to exist at massive scale.”
Say yes.
Staying open to new perspectives has helped McDonald’s launch product lines like the adult Happy Meal, and give customers the power to shape the brand, such as the Grimace Shake challenge. Morgan Flatley, McDonald’s Global CMO, believes saying yes to new opportunities invigorates a company. But green lights only make sense when the decision works for the brand and customers.
“It’s so easy to say no. But when you start to say, ‘Yes,’ the momentum that builds is tremendous. That is creative bravery. In the moment when you start to feel uncomfortable with an idea, how can you get to say yes? My caution is it has to still be grounded in consumer insights, it has to still be grounded in what your brand stands for and what is authentic to your brand. We can be brave but we can’t be reckless.”
Create connections.
Colin Walsh hears the chatter around artificial intelligence. But to him, the “magic superpower” he believes needs to be amplified is emotional intelligence. The CEO of Ouai, which P&G acquired in 2021, asks staff to build a user manual on how they want to work with colleagues and promote a shared understanding of their lives.
“Creating space to be seen, shared and understood is really important…. Bringing together that emotional intelligence, that awareness that people can connect, communicate and understand with who they are completely unlocks a whole ton of power.”
See yourself as the customer.
Amazon is no stranger to having access to customer data. However, the company is careful about the experience it creates around that information. Nothing is worse than causing a consumer to shut down and tune out a brand. So Jo Shoesmith, Amazon global chief creative officer suggests putting oneself in the customers space — whether inside an online shopping experience or getting an email marketing a new product.
“I do like to sit back and go, ‘How am I feeling about this as a customer?’ I troll our shopping experience. You always have to be in those experiences and look at what’s getting sent to you and how you’re feeling. That’s a pretty good reflection of how customers are feeling in the way they’re receiving that volume of messages from a digital perspective.”
Turn insights into opportunity.
To close Signal 2023, Marc Pritchard, chief brand officer for P&G, encouraged everyone to steep themselves in the insights on how to grow and transform a market. That means looking at benchmarks and then pushing through them.
“Think about the products that we have. We serve everyone. We have all potential consumers out there. But then what we do, is we get insights into each one. When we get those insights and translate those into an innovation, we have the potential to get even greater degrees of market growth.”
By Rishad Tobaccowala
Decades ago, the Book of the Month Club would offer several free options marketed as an extraordinary value. If you signed up now, you’d get hundreds of dollars of books for free.
This is how 11 volumes of “The Story of Civilization” by Ariel and Will Durant ended up in my father’s library in Bombay, India (now renamed Mumbai).
Before computers, before television, before the Internet, before even radio programming – which was very limited at that time – books were the best technology in India.
One key concept resonates decades later from “The Story of Civilization”:
Every advance in technology places a premium on superior ability.
During those early years I was also doing a deep dive in Mathematics, willed upon me by my parents who suggested that my passion to be a writer could wait until I had something worthwhile to say. Until then I needed to learn how to think.
In my final year at the University of Bombay I took eight courses – each in math. There were the regular ones such as Calculus and Statistics, but also truly exotic ones like Mechanics. I do not recall much of anything of those subjects, but one concept stood out in Mechanics: Leverage.
Leverage matters.
Archimedes famously said, “Give me a lever and a place to stand, and I’ll move the world.” This expresses the power of leverage, which, at least figuratively, moves the world. Archimedes realized that to accomplish the same amount or work, one could make a trade-off between force and distance using a lever.
Technology is leverage.
As technology is widely distributed it helps individuals as much as institutions.
A bow and arrow are leverage against those who do not have weapons. Of course, sooner or later everyone will have some kind of armament. But a great archer can use a bow and arrow to create great distance between herself and those less talented.
Every advance in technology places a premium on superior ability.
Today there are marvelous breakthroughs in technology with generative AI technologies like ChatGPT or Lensa.
Experiment and sample them all, but remember that the typewriter did not write “A Farewell to Arms” – Hemingway did.
If I had a word processor and ChatGPT, and Hemingway had a pen, he would still write better than I. If Hemingway also had ChatGPT the distance between us would be even wider. And Hemingway with a Substack would have scaled amazingly better than most.
It is not the technology, it is the talent.
Today streaming and the Internet makes one of the most popular courses at Harvard on Justice or Happiness at Yale available to everybody for free. It is not the marvels of the Internet, streaming and more that make these courses great. It is the talent of professors Laurie Santos and Michael Sandel.
Talent has scaled globally using technology like a lever. So, we should worry less about how AI will replace us but how we will leverage AI to scale ourselves, our teams and companies.
Five ways to thrive.
Here are five things we may all want to consider as we move into a new AI age.
Embrace technology: Those who embraced the fire and the wheel lived longer and were more successful than those who did not. Learn, invest, and experiment with technology. If one company has world class talent, but does not embrace technology, a good company with a talent for technology will likely end up doing better. The photograph, “Theatre D’Opera Spatial” by Jason M. Allen, recently won a photography award. It was created using the AI tool Midjourney. In many ways these new tools are the Photoshops of today.
Invest in learning: The problem with technology is that it has a shorter half-life and a faster pace for advancement. Moore’s law saw chip technology double in capacity every 18 months, but today AI progresses twice as fast. Be wary of people constantly speaking about the “good old days.” The best days are ahead, but require constant learning.
The future is carbon and digital: We are increasingly moving into a digital, data-driven, silicon-based future, but when everyone has tech, the differentiating edge will be analog, feeling, carbon-based people – whether it is talent or consumers or clients. Combining the two will be key. Art plus Science. Math plus Meaning. The Story and the Spreadsheet.
Fixate on talent: Talent is job one, two and three for all companies. Companies that win will be better at attracting, retaining, and upgrading talent that can collaborate, co-exist, and combine skills with AI. Finance will matter. Technology will matter. Logistics will matter. But people are everything. The best companies recognize that people are the differentiator and as technology scales talent will be the key. Machines greatly magnify the impact of talent who work in synergy with computers. In the future, this will be most of the jobs.
Hone your talent: Every human is talented. The key is to discover what we excel at and find ways to hone our craft and skill in ways that can be enhanced with technology. This requires continued practice, re-learning and re-imagining our work and how we will work.
At food-tech company NotCo, AI wears the chef’s hat, creating plant-based recipes for some very familiar products with some less familiar ingredients. Take chicken. The main ingredient in NotCo’s NotChicken line? Strawberries. And inside its NotMilk line, you’re going to find cabbage, pineapples, and coconut — a combo more suited for smoothies but together creates a creamy, foamy milk option ideal for iced cappuccinos.
That’s the data-driven approach from Giuseppe (yes, they named the AI) who works back and forth with some very human chefs to develop products adopted by well-known brands from Shake Shack to Burger King. At the core of NotCo’s success, says Fernando Machado, NotCo’s chief marketing officer, is asking “Why Not?” And then letting AI start inventing.
“We use AI to create a version of plant-based that could foam infinity-times better than any non-dairy, and actually, I would argue that foams even better than 2%,” Fernando Machado, NotCo’s chief marketing officer said on the Signal Stage in July. “This is all partnering with AI to make this stuff happen.”
You can hear more from Machado and NotCo’s unique approach to upending the food world today from his talk at Signal 2023 in the video below or read our lightly edited transcript.
TRANSCRIPT:
John Battelle
The beginning of Signal, the first few years, was to bring the outside in. We were focused on the digital acumen pillar of getting better and learning how to go to market and internally digest the digital revolution. Most of the entrepreneurs that came to this stage back in those early days were from the Silicon Valley. They had a similar profile as you might expect. What I’m very proud of the team here at P&G has done is brought people from all over the world who are changing the world. We’ve already seen some of them, but I’m about to introduce you to another. His name is Fernando Machado. He is the chief marketing officer of a company called NotCo, and they are reinventing the food industry. So please join me in welcoming him to the Signal stage.
Fernando Machado
Thank you, thanks for having me. I confess, it feels a little bit weird to be here. I never thought I would be at Signal after 18 years of Unilever. But it’s a real pleasure to be here. I couldn’t say no, to the invitation. When I got the invitation, I was like, ‘Why not?’ Right? In fact, #why not is wherethe entire principle of NotCo is predicated on. When the company started around seven, eight years ago, our founder and CEO started the business because he felt that the food industry was rather inefficient, a lot of trial and error, long lead times to develop things. He thought that the food industry was also inefficient when it comes to sustainability. I think we all know, like what I’m talking about here. So he started with the company in his house in the garage, I think, actually, it was in his sister’s room. I’m not joking. In his started with mayo, the company started in Chile. Mayo, in Chile, is one of the top countries in terms of per capita consumption, and he created a plant-based meal in the company.
If you go to the website, this is what you read. ‘We are a data company developing artificial intelligence to disrupt the food industry.’ I find that a little bit boring. So I’ll try to explain with my own words what we do. I cannot tell that to my mom, she’ll be like, ‘What the hell are you talking about?’ So we have an AI chef. The name of the AI chef is Giuseppe. It’s based on the Italian painter Giuseppe Arcimboldo from the mid-1500s. You probably have seen some portraits with vegetables and fruits, it’s a classic type of portrait. It’s basically like creating art with plants. That’s why the chef is called Giuseppe. What we do so far, and I’ll go back to the ‘so far’ in a second. What we do is we take animal-derived products, we do an analysis on the product like chromatography, evaluate the physical properties and all that good stuff and we do all that, we put on the AI and the AI spits five recipes. Then our chef team and R&D, so it’s always AI plus humans. We take that and prepare the recipes and go back to Giuseppe saying, ‘Hey, number three was the best.’ Then Giuseppe spitsanother five and so on and so forth. We converge into the target really quick.
One of the beauties of our model is that we are not anchored in one single ingredient. If you are like me, I drink a lot of non-dairy not because I’m lactose intolerant just like the taste. But they come with certain limitations in terms of the physical properties. I will talk about that in a second. In our case NotMilk, which is one of the products we have. By the way all the products are NotMilk, Not Chicken, NotBurger. It all starts with ‘Not.’ That’s why the name of the company is the Not Company. We say NotCo, it’s kind of easier. But it’s not just one ingredient. NotMilk has cabbage, pineapple, coconut, and so forth. If you look at the environmental footprint, for most plant-based products, they will smash the animal proxy, in terms of environmental footprint. I just pick water usage and C)2. You can see there the difference. I could have picked, NotChicken, one of the key ingredients of NotChicken, just to make the point is a strawberry, you would never guess. I think that if you ask someone from R&D to formulate a plant-based chicken, they would probably not start with strawberries. That’s also the beauty of the AI. It really pushes us out of our comfort zone, in terms of which ingredients to explore. Usually, we come up with some like really cool combination of ingredients, not chicken, this is the water usage and CO2.
I know you’re probably asking, how does it do taste-wise, because taste is the main driver of the category. InFlexitarians, which tend to be the target audience of plant-base, they don’t compromise. It’s not like vegan. Vegan, like they are willing to compromise on taste. Flexitarian they won’t. So it really needs to match the animal target and hopefully also be much better than the other plant-based products that are out there. So that’s what we target with every product. I’m not going to bore you, explain the graph and all that but it’s basically statistically significantly parity to an animal-target and superior to the main competitors in the respective countries where we have the products.
The other cool thing about our process is the time it takes to develop. I think you probably empathize that working at Unilever I was running quick stability tests at higher temperatures because I was rushing to get the stuff out so not lose the Walmart window to ship my product. And NotMayo, which was one of the first product we created, took us 18 months. As you can see, we are kind of getting better. We are not, the AI is. Actually the AI is getting better at matching the target. Right? I mean, we created a version of Cadbury’s, like NotCadbury in two months, and there is no one there in the team who is an expert in chocolate. The guy Karim was one of the founders, who was our AI boss. He’s a PhD in astrophysics using AI. He probably doesn’t know how to bake a cake. He knows AI. Our VP in the AI field, if you look at his CV is NASA. Seriously I work with someone who works for NASA? Yes, we do. So it’s a very high caliber of people developing the model partnering with R&D, and partnering with a very talented team of chefs.
NotCustard which is a product that you can buy. All the plant-based custard and plant-based shakes from Shake Shack, they are made by NotCo. If you go to Shake Shack or if you go on Uber Eats you will see the description of the product. It’s a partnership that we have with them and is a pretty awesome product. Three weeks to develop. The Shake Shack guys couldn’t believe when we came with the prototype and they try and it’s like, ‘Yeah, you nailed.’ Don’t take my word for it. Go buy it and try for yourself. It’s no wonder we have so many partnerships. We have a very strong partnership with Starbucks in Latin America with Alsea who operates Starbucks in most of the countries in America. We have a partnership with Dunkin in Latin America, we have partnership with Domino’s, we have the Shake Shack partnership. We supply either NotChicken or NotBurger to 8/9 countries for Burger King in Latin America. So we have like lots of QSR partners which is a cool way to also get the brand known because it’s a real partnership. You’re not just like the supplier. It goes on the merchandising, we do a joint advertising plan together and all that good stuff. We have a joint venture with Kraft Heinz. So we are doing every single one of the key products from Kraft Heinz to lounge in the US. This is ais a GAV for the U.S. market. So we collaborate with them. I dare you to do a NotMayo blind test at your house and someone tell me the product is plant-based. it tastes exactly the same. We just launched it NotCheese which is the Kraft Singles and there is more coming on that space. Kraft Singles NotCheese, 30% market share in the places where we have the product, 80% incremental for the retailer with a higher value. So it’s a really good story to introduce the product in retail. AndKraft Heinz is number two most innovative company, thanks to that partnership. I’m not just saying that if you go to the Forbes article and read you see what I’m saying.
But this is not the part that excites me the most. Because I think that if everyone does really well, the game of matching to the animal target, it will probably become commodity. I mean, if everyone is doing that, well, it becomes a price game. What really excites me is when I go to San Francisco, where is our R&D in AI lab, and the guards are playing with the AI in ways that I never thought would be possible. This will sound like I’m making it up. But when I was a kid, and I was a bit weird, but I used to think of a color that doesn’t exist, and for obvious reasons, that’s not possible to do. But the AI can help us do that type of stuff. I will never forget, when I when I went to San Francisco for the first time in they were like trying stuff in the kitchen. And they said, ‘Hey, Fer, people call me For, like, Hey, try this.’ And it was like chocolate, like caramel. I don’t really know what it is. So we fed what chocolate was to us, based on the chromatography and all the analysis that we do, and we asked Giuseppe to create a flavor that’s not chocolate, but that humans will like, based on the fact that they like chocolate. And they was like, ‘Holy shit.’ Look that was not a very technical term, but that was my real reaction. We showed the product to people who are chocolate experts and they could not pinpoint what the product was. They would say, ‘Oh, it reminds me of this, reminds me of that.’ But they wouldn’t say, ‘Oh, this is it.’ Because there was no it for what we created. That’s just one example. Every time I go there, they’re like, ‘Try this coffee that there is no coffee. Or hey, ‘Try this mole sauce that there is no chocolate and there is no animal product.’ It is just amazing what we can do with the technology.
These are just some examples of things that we have already launched or are about to launch. But honestly, like the limits of the technology are way ahead of some of the stuff that I’m showing here. This is a solving a real problem. I don’t know if you guys drink plant-based milk. If you do you probably know that it’s really hard to form. That’s a problem for Starbucks. Starbucks today, I sells around 70% of the drinks, they are cold drinks, which makes it even harder to form because the machinery was not necessarily developed for cold drinks. When you buy a cold drink, and it’s plant-based and it doesn’t foam, when you get to your table or when you get to your car or if you order delivery, the foam goes down. Right. So it feels like Starbucks is bullshitting you because like it’s like a headspace that’s the size. Then people go back there and ask for more milk or Starbucks, this is a hypothetical example, Starbucks has to fill more and then you know what happens with the margin? Right? So we use AI to create a version of plant-based that could foam infinity times better than any non-dairy actually. I would argue that foams even better than 2%, and it’s done certified vegan, halal, kosher, allergen-free. So this is all partnering with AI to make this stuff happen.
This is an actual example that we did in Brazil. In Brazil, there is a large segment of protein shakes. The problem with a protein shakes that are animal-derived that has animal milk is that it’s very hard to find the right balance between protein and carbs, it tends to have more carbs. So for a 15 gram protein milk-derived shake, you have like 16 grams of carbs, which is weird, because maybe they should call it a carb shake. So we created a product that has 15 grams of protein, 3.5 grams of carbs. It was very tempting, we had to project that onto a building which owns 80% of the market share in Brazil. This is just to show that we are having funbecause every time I go there, they show me something that I find mind-blowing. We are launching at the end of this year, a platform here in the U.S. which we will call NotCo drops. This is not public yet. Because like I don’t know if there will ever be a market for plant-based mole in the US. But I think is a really cool story to tell. To explain how the hell we use AI and precision fermentation to create a mole. And I want you to tell those stories. So we created NotCo drops, where we’re going to do like very limited batch in the lab and sell. I’m going to lose money, of course, doing that. It’s more of a marketing thing than a source of revenue. The first one will be a plant-based fried chicken skin, because why not? Right.
Just to close, because I don’t want to run over time. I think what I was saying next goes really well with the previous conversations. This is the cover of The Economist, I think it’s from April of this year. I love this cover. Because many of the questions that I asked about AI they relate to, ‘Oh, Fernando, do you think AI will kill all of us or steal the jobs of everyone?’ I don’t know, maybe because I’m Brazilian and I’m hopelessly optimistic about things. I think that AI to me is something that will be used to augment our ability as humans, our creativity as humans, to find solutions to problems that we could not solve by ourselves. In our case, it will be to invent the food industry for good because why not? Thank you very much, guys. Thanks for having me.
For a company to remain superior, quality should be central in every decision to ensure customers stay delighted.
So says P&G’s CEO Jon Moeller, who sees quality as a red line across all decisions — from sustainability to supply chain — to keep customers thrilled with the product they’re using. He believes that path is anchored in the supply chain, where closer quality assessment can catch concerns long before the end result is sitting in a warehouse. The upsides are lowered costs throughout production, a stronger supply chain, and confidence for the company — and from customers — in products on the shelf.
“I think there’s a huge opportunity here to delight consumers, to delight customers, to operate with lower costs, [and] to have higher quality jobs for our colleagues in supply,” Moeller told Signal360’s John Battelle on the Signal 2023 stage in Cincinnati, Ohio. “I encourage you all to embrace it.”
You can hear more from this conversation between Moeller and Battelle in the video below or read our lightly edited transcript.
TRANSCRIPT
John Battelle This is the 12th year of Signal, a dozen years of Signal, it’s extraordinary. Raise your hand, if you’ve been here. Thank you for coming back. After three years, this is the first year that we have almost every single speaker here on stage. Last year, it was about half virtual and on stage. And we only did about half full in the auditorium. This year, we’re doing full, but we also ‘Hi’ to the 5,500 of you from some 80 plus countries around the world. Thank you for joining us as well, not to mention the hundreds of people at Centrifuge, and the hundreds of interns downstairs in the conference center. And I have to mention everybody, because it’s all a part of the show.
At the back of your badge, you’ll see a QR code. And it’s important that even the folks in the room hit that and download the Hopin application, because that will allow you to put your questions in and comments and thoughts and join the thousands of other folks online in conversation, if you wish to.
Speaking of online, the world is extremely online. Every year, I get to remind all of you of what I like to call “The Wall Street Journal” front page test. If you post something online, make sure you’re cool with it being attributed to you on the front page of “The Wall Street Journal.” We are very interested in the world. being aware of how extraordinary this program is, because every year we work very hard all year to bring these incredible people to you to the stage to help all of us understand and learn what’s going on in business right now and how we can apply those insights over the next 12 months to create positive business outcomes. That is absolutely the focus of this year and every year at Signal. Let’s start with your CEO, Jon Moeller.
Jon, morning, how are you?
Jon Moeller
I’m great. How are you?
Good to see you. I’m well. Have a seat. The hot seat here. Thank you for helping us kick this off.
Happy to do so.
It’s an honor to be able to grill you in early in the morning. So you’ve been the CEO for almost two years now. What’s been the most surprising thing about your tenure so far as CEO?
Many surprising things. I think the most surprising to me, has just been the benefit from and the realization of the incredible talent, creativity and commitment of P&G people. If you look back at the two years that you mentioned, COVID, the largest land war in Europe since World War II, highest consumer inflation in 40 years.
In those two years, the combination of commodities, foreign exchange, transportation costs wiped out 50% of our profit. And what was your response and reaction? You overcame all of it.
We delivered 3% earnings per share growth last year, this year were forecasted deliver earnings per share on par with or ahead of a year ago. You did that while accelerating our top line. That top line growth is very broad. It’s across every category in the company for both of those years. I don’t remember a period of time like that. You did that while investing in innovation and brand building and market growth, so that we hold a stronger hand looking forward than we’ve held in a long time.
So I always knew that P&G people were intelligent, creative committed. But when you raise the bar, I was surprised. I didn’t know that we could do that. The reason I mentioned that is that’s why we’re here today, is to raise the bar again, on the superiority of our products, our packages, our communication or go to market capability, value for consumers and customers. To recommit ourselves to productivity, to continue constructively disrupting our business and our industry. And to do that with an organization and culture that’s ever more effective and efficient.
So I’m excited to see what you can do next. And I hope that these sessions, give you some ideas and inspiration for how that can come to life. That’s the design.
In preparing for this, I was reading a number of talks you’ve given and some articles about you. There was a consistent theme, a phrase that if you unpack it, it’s quite a read. There’s thousands of words, but I’ll let us summarize. The physical laws of the economic universe. In particular, I’m interested in this concept of balance.
Yeah, there are two of those that I think unlocked, for many of us, once we embrace them, a very different way of thinking, a different way of working, a different way of viewing success. Those two were balanced, the way it’s articulated is, ‘Better be balanced.’ I’ll come back to that. The second was the importance of being a disproportionate driver of market growth, where that’s articulated as market matters.So creating business versus simply taking business a much more sustainable and profitable way to grow.But back to balance. We weren’t balanced as a company, I was part of that, for a period of years. We careened between the rails of the prioritization of top line growth and bottom line growth and back, neither of those worked.
We started talking with each other about the need for balance across the top and bottom line. And I started that with the kind of trite saying which was, ‘Top line was no bottom line, a waste of time. Bottom line was no top line, just a matter of time.’
That’s the reaction I got people kind of chuckled, they didn’t do anything to change their behavior. So we’ve developed a chart that we’ve used at every leadership team meeting for the last 15 years. They sometimes get tired of it, I don’t. But it attempts to show what you would have to believe if you endeavored to grow total shareholder return on the top third of our peer group, which is our objective, entirely through the top line or entirely through the bottom line. If you endeavor to do it entirely through the top line, you would need to believe that this company can grow organic sales 8% every year. We’ve never done that. Our industry has never done that. So to count on that as a path forward, seems risky.
On the other hand, if you endeavored to do it entirely through the bottom line, you’d have to believe that we could grow about 180 basis points of margin every year. So five years, essentially 10 margin points, in a very competitive industry. As a company, it’s taken us 187 years to grow 22 margin points, I don’t think we’re going to grow 10 margin points in the next five years. So we have to deliver both top and bottom line. That discussion moved the needle a little bit, but there was still disbelief and discomfort with the need to do both of those. The chart actually got referred to as ‘John’s Math’ as though it were fake. So I thought, Okay, one more crack at this.
Let’s look at the voice of the market. And what does the market tell us? If we look at the correlation between our top line growth rate and our stock price, would you think that that’s a tight or high correlation or a low correlation?
What do you think? It’s very low, it’s 11%. So if all we do is grow top line, the markets are unlikely to be very happy with what we’re doing. So therefore, the value creation must be in the bottom line. The correlation between our bottom line than our share price is high or low. Also low, 17%. So delivering just one of those will not move the needle. When we combine them into a measure that you’re familiar with, operating total shareholder return, which requires both top line growth and bottom line growth, the correlation jumps to 67%.
Hopefully, if you haven’t been convinced already, when you come to ask me, which of these is more important? You know the answer. It’s both. So that’s a balance point. One more thing on balance.
We started this discussion, and we’ve had it this morning. with top and bottom line, but the world demands more from us now. We need to delight consumers, customers, each other society and share owners all at the same time. I’m convinced that if we fail to do one of those, we will fail to do all of them. As you approach your work, as you approach raising the bar as we come out of these sessions, please keep that in mind. We have a number of very important constituents, which we’re delighted to serve, and must serve holistically and completely.
I want to ask you about the theme. We’re raising the bar, but we’re resetting it because of the changes, almost constant change and seeming chaos that we have to ask different questions of our business. When you think about that phrase, what comes to mind?
I think about it, certainly that way, but also through a slightly different lens, which is just the incredible opportunity that we have. I talked earlier about the last two years. Let me just briefly go back to the last four years. If we were having a conversation four years ago, and we would have told each other look, here’s what’s going to happen, there’s gonna be a global pandemic, people are going to die, borders are going to be closed. So you’re not going to be able to get to your largest markets, the people in those markets aren’t going to be able to get to you. Supply chains are going to be completely disrupted, people aren’t going to be able to get into the manufacturing facilities into the innovation centers, into the sales offices. As I said earlier, don’t worry, that’s not all that’s going to happen, we’re going to have the largest land war in Europe, since World War II, highest consumer inflation in 40 years, foreign exchange commodities, FX, are going to wipe out 50% of your profits, there’s going to be more divisiveness, to the point that you were alluding to, both within your largest country and across the world than there’s been, again, probably since World War II.
And then all that’s done, no one’s gonna want to come back to work. What do you think? Is this going to end well? Well, thank goodness, I didn’t know about all those things ahead of time, or I don’t think I would have ended well. But what did you do? Again, just like the last two years, and this is relevant to the question that John has asked, you grew $13 billion in incremental sales, 87th percentile, the S&P 500. At the same time, back to balance, you grew $5 billion in incremental profit after tax, 92nd percentile in the S&P 500. As a result, your company became the 12th most valuable publicly traded company in the United States, the 16th most valuable in the world.
I know that you, we, are capable of amazing things. That’s the reason that I want us to spend time together, thinking about the next chapter and what’s possible, raising the bar.
I appreciate that. By the way, I should say congratulations. Because every time I have a conversation, particularly with a public company, a CEO, I stare at the stock chart for a good long time and I read the financials, it’s something I’ve done for 35 years now. And it’s, ‘Well, this is gonna be an easier conversation than I thought.’ So congratulations to all of you.
Absolutely, to all of them.
We have four core programming pillars here at Signal. They are digital acumen, which is where we started 12 years ago, the supply chain, the employee value equation, and sustainability. I want to dive into a couple of those. But I want to start with sort of my favorite, which is the supply chain.
You gave a talk at MIT, where you focused on the supply chain. You spoke about how it was a key element in growth and sustainability? Can you unpack that for us?
Sure, I want to start with something that’s very important. We have one of the best supply chains in the world, our supply organization. We talk about all the challenges we’ve been through, we would not have gotten through that without the incredible effort, work and commitment of our supply colleagues. So I hold them in the highest esteem. But you have to ask yourself, you know, across our value chain, are there opportunities. There are many opportunities. During COVID in the US, there were weeks and months and I would venture to guess years, where 24% of our SKUs, we’re on allocation. Meaning we weren’t meeting demand. Think about the opportunity if we hadn’t been constrained like that, and the reasons behind that were were very understandable, very explainable, but nonetheless, we missed an opportunity. At the intersection of some of these things like digital acumen, supply chain, there are huge opportunities.
I’ll just give you one. If you think about quality, which I’m obsessed with, because if we are truly going to be superior, it’s hard for me to understand how quality isn’t right at the center of that equation. Today largely, not entirely, we assess quality, either at the end of the line, or in a warehouse after a product’s been produced. If we encounter an issue, we have to deal with all the product that we’ve produced since that issue occurred that’s sitting in the warehouse or sitting at the end of the line. Instead, if we could assess quality, ideally, with every ingredient as it comes into our supply chain, and then on the line with cameras and sensors, we’d have a much lower cost cost quality assessment operation, that would be much better. We’d have much more confidence in the quality of our products, and we’d be able to address any issues, real time. That’s just one example of the opportunity that exists in supply chain. So we talked about supply 3.0. It includes many other items, but I’m excited about it. I think there’s just huge opportunity here to delight consumers to delight customers, to operate with lower costs, to have higher quality jobs for our colleagues in supply. I just encourage you all to embrace it.
When we spoke earlier, and I think this relates to what you just said, when we talked about sustainability. One of the sort of aha moments for me last year was how connected that is to supply chain efficiency. And supply chain means being more sustainable, and being more sustainable means a better business outcome. Can you talk a bit about the commitment to sustainability here at P&G?
I think it’s critical. Actually, I don’t think, I know, it’s critical as do you. But like with everything, it can’t be pursued in isolation. For example, we’ve chosen to concentrate our portfolio and daily use categories where performance drives brand choice. We cannot compromise on performance. We have to continue to increase our performance advantage as a way to further delight consumers and customers. And we need to do it in a more sustainable way. So I’m not interested in sustainability in a vacuum, because that’s exactly what it will be, it will be a vacuum. Because nobody in performance-based categories will buy our products if they don’t perform. So we have to deliver both. Certainly, there are aspects of that contained with us in the supply chain. But when I look at sustainability and the opportunities in front of us, I think they’re massive.
There are three areas that I think about when I think about sustainability. The first is our own footprint, and a significant part of that is our supply chain. We’ve done a great job on that already. Our emissions are down 57% since 2010, when we started measuring. We have plans to eliminate on a net basis, all of them.
If you look at recycled packaging material, our use of recycled materials to construct our packages has doubled in the last two years, it’ll double again in the next two years. By 2030, it’ll be 10 times the level that it was not many years ago. We’re now in 100% recycled packaging in Europe and our shampoo, Head & Shoulders and Pantene. Many of you are familiar with the new Gillette packaging, with the ECOCLIC packaging on Ariel. These are all tremendous in terms of enabling us to reduce our footprint and do it in a way that improves superiority doesn’t denigrate it doesn’t compromise it.
If you look at the ECOCLIC package, 70% of consumers who use liquid laundry after they have the ECOCLIC experience want to convert. We’re not denigrating performance or delight at use, we’re improving it. So that’s one column, the second column is enabling consumers to reduce their footprint. That’s where the largest part of our total footprint actually happens. We talk a lot, for example, about l the laundry experience. And 70%, roughly, of the footprint of doing a load of the environmental footprint of a load of laundry comes from heating the water to do the wash. If we can develop detergents that wash as well, or ideally better again, back back to not denigrating, but do a better job in cold water than our competitors do in warm water, we then have the license to encourage consumers to turn that dial on their washing machine. We then have the ability to talk to washing machine manufacturers and say, ‘The default setting when this comes out of your factory should be cold.’ We have an objective of reducing the average water temperature of a load of laundry in Europe by five degrees centigrade over the next couple of years. We’re already down two degrees. So we know that this can work. There are opportunities across the majority of our categories to help consumers reduce their footprint.
The last one is very important. We’re not going to solve these problems on a global basis through our traditional approach. There is no company on the planet that can solve these problems by themselves or instead capture these opportunities by themselves. We’ve innovated for years, for 85 plus, with what I refer to as closed arms. Everything’s been focused on propriety, having something that others don’t. I think that has to end, in the area of sustainability, for sure.
One example, polypropylene recycling. Polypropylene recycling exists today, but the standard process doesn’t remove odor or pigment. So what comes out of the recycling process is not terribly usable for many manufacturers. I’m sure many of you seen if you walk, walk along a river or lake somewhere, you’ll see those grey plastic park benches? That’s recycled polypropylene. Our scientists have created a process that removes odor, removes pigment, and yields 99% virgin-quality resin at the end of the process. We can’t justify, economically, construction of a facility to do that. So we’ve licensed that to a company called Pure Cycle, who is now building their first full scale production site. It’s sold out for the next five years, and they will make it available, across our industry and across other industries, carpark manufacturers, health devices and hospitals, you name it. Working together with arms open, sharing innovation with the rest of the world, we can do amazing things. We now have a process that allows us to do the same with polyethylene. Think about plastic film.
Two others real quick, but this is exciting.
We can now embed and we’re working with a consortium of 170 companies to embed a watermark and a piece of plastic that’s not visible to the human eye, but that is visible to an automatic sorter at the front end of a recycling, operation. Sorting and the cost that goes with it, in terms of what’s largely a manual process today is one of the biggest disablers for more recycling. When you start combining these things, reducing the cost at the front end of the recycling operation, improving the yield and quality on the back end of the operation, the world changes. Now we can start attracting capital from the capital markets because people want to invest in this because there’s opportunity. Last one, we announced I think it was last week, it might have been earlier this week, a new partnership with Dow, one of our longtime suppliers in China, to produce packaging to be used in e-commerce and social selling direct to consumer delivery. It’s cell-based packaging, it’s not corrugated. It does a better job of protecting the product by the quality. It is produced, importantly, with a monomer. So one input to the packaging. The reason that’s important is that makes it much easier to recycle, because you’re not having to separate components. And it scores off the charts in terms of consumer delight. We have a big opportunity to reduce our footprint, we have a big opportunity to help consumers reduce their footprint, and we have a big opportunity to contribute on a global basis to a more sustainable world. I ask that you join me in that endeavor.
Last point, I’ve talked several times about not compromising superiority, not compromising quality. That’s a red line. We’re not gonna do that. Because again, we won’t contribute anything to sustainability. We’ll lose our business in the process. So please keep that in mind as we work together on the nature of this.
We are out of time, unfortunately. I mean, you’re in charge. So if you want. But there were a few things I was hoping to ask you. But I’m going to secure a confirmation for you to come back, so I can continue this conversation with you next time. But I’ll close with this question. What are you looking forward to in today’s program? And what would you like this group including the thousands and thousands online and downstairs and across the town to take away from this?
I’d like you to open your minds. Look to be inspired. But be objective. The things you’re going to hear are not answers. They’re not directions. There are thoughts and examples that have worked for other people that I hope have merit in the work we do. But again, don’t view them as direction or answers. View them as input to your own thinking on what the biggest opportunities are for us. And importantly, enjoy the time with each other. It’s great to be able to do this again.
Yes, it really is. Jon Moeller. Thank you so much for being here.
As attrition rates grew during the pandemic, Katie Kelly and Cem Canikoglu spotted an opportunity. The two saw a pattern of onboarding inconsistencies, plus a lack of face time and daily coaching, and linked their observations to new hires feeling disconnected to their work and the company.
Kelly, Director, NA, Sales Talent for P&G, and Canikoglu, Senior Director, HR, US Sales for P&G, suggested a new approach — streamlining the process for hires so everyone had the same experience. That started with welcome materials, such as a pre-boarding checklist, to kickstart a connection to the company before their first day on the job. Next? Managers were given the responsibility to develop new hires, with coaching and skill-development a high priority.
The result? A reduction in attrition by 50%.
“We have room to grow. But I feel more confident now that the new hires that we are bringing in will have a better chance of succeeding in this company and feeling this amazing experience that they were looking for,” says Canikoglu.
You can hear more from both Kelly and Canikoglu, two of our2023 P&G Signal Innovators, in the video below or read our lightly edited transcript.
TRANSCRIPT
Katie Kelly
We’re a company of great managers, and we’re known for our terrific onboarding. But as the standards have shifted, so must we.
Cem Canikoglu
At the end of this project by now, we are now taking down the attrition by half.
Kelly
New hires were having an inconsistent onboarding experience. And so it varied from manager to manager, how they were being on boarded to the company. Our attrition went up over a pandemic. And it went up significantly above our baseline.
Canikoglu
They were having less than an ideal experience as to how the onboarded to the company, as well as how they felt connected to their work.
Kelly
We also found that our managers weren’t getting invested in from a capability standpoint to upskill and keep them relevant with some of the changes that were occurring as a result of the pandemic.
Canikoglu
So we saw the disconnect between what we thought we were doing well, versus what they perceived. So that disconnect was very obvious in our conversations, and that was kind of the highlight of the sessions we did.
Kelly
One of the ways that we believe that we can give that connectedness or sense of belonging to the P&G community to the new hires is through this new hire experience.
Canikoglu
I had a personal and amazing onboarding experience when I was a new hire. They didn’t have that. So we came up with this idea of, can we bring them into what we call a New Hire Summit, make them see each other share experiences.
Kelly
We did that by branding it with six elements bucketed into three parts. So it’s how we’re going to support our new hires, how we’re going to support our managers, and how we’re gonna support pairs.
Canikoglu
We wanted something that can turn into a management system that will sustain they’ll be here next year, and the next year, that will give us this foundation to build from. It’s a management system that can run without having a speed team or intervention every year.
Kelly
So the framework that we decided to bring to life even further through the new hire experience was the P&G Plus Me Employee Value Equation.
Canikoglu
We quickly realized that we have to elevate the expectations and standards of our new hire experience, end to end.
Kelly
What I’m most proud of, as I celebrate my 30th year with P&G is the work that I’ve been able to touch in the past 18 months of developing our new hires, is knowing that I’m developing the future leaders of the company.
Canikoglu
At the end of this project by now we are now taking down the attrition by half. So we are still not perfect. We have room to grow. But I feel more confident now that the new hires that we are bringing in will have a better chance of succeeding in this company and feeling this amazing experience that they were looking for.
It’s showtime! We are excited to bring the P&G community together for the 12th annual Signal Summit. We’ll learn from dozens of leaders, all focused on how we can reset the bar for superior performance and irresistible innovation. More than 5,000 people across the world are expected to join us.
Why do we want to reset the bar? One of the biggest challenges for a successful business is avoiding complacency. Assuming a recipe for current success will guarantee future success can lead to failure. To continue to thrive, we need to adapt our approach and actions. This requires rethinking what success looks like for business performance and innovation. Change is not a constant, it is exponential.
The Signal 2023 program is filled with many remarkable speakers, including Arthur Sadoun (CEO, Publicis Groupe), Linda Boff (CMO, GE), Morgan Flatley (CMO, McDonald’s), Julie Sweet (Chair and CEO, Accenture), and Yael Cosset (CIO, Kroger). Their insights on digital acumen, supply chain, sustainability, and employee value equation will illustrate the changing business landscape and how we can adapt for success.
Sometimes we bring back a speaker from a previous Signal event. Evan Spiegel (CEO, Snap) joined us eight years ago for Signal 2015. The world has changed a lot since then. This year Evan will share how he plans to keep Snap relevant.
Signal also includes many speakers who you may not have heard of before. Their stories are just as inspiring. In this issue, we put a spotlight on a few of them:
How Candice Matthews Brackeen wants to increase the odds for minority entrepreneurs through Black Tech Week.
Javier Pita’s passion for making the world easier to navigate for the more than 330 million visually-impaired people.
Rumman Chowdhury, Harvard Fellow and founder and chief scientist of Parity Consulting, explains the risks and opportunities ahead of the increased use of artificial intelligence for business and society.
Six remarkable P&G Signal Innovators who are changing how business is done, from supply chain optimization to improving employee retention.
One question we get asked often is “Why does P&G organize Signal?” The simple answer is that it is an investment in the future success of the company. By bringing together the P&G community to learn, we know many will use the inspiration from Signal in their work. The best compliments we get about Signal are the stories about connections people make and how it influences their actions. While Signal is an exciting and world-class event, it’s the outcomes that matter.
We look forward to welcoming you to Signal 2023! In case you are not able to join us on the day of the event, you can stillregister to access the video replays. We will also publish many program highlights in the Signal360 “In Case You Missed It” newsletter later this month.
Signal360 will be on a short summer break. We’ll be back in September. Enjoy a great summer season!
Stan Joosten & John Battelle
Editors-In-Chief, Signal360 / Co-founders, Signal P&G
Innovation is alive and well at P&G, notably through contributions from the 2023 P&G Signal Innovators, who have re-invented new ways forward in recycling, supply chain distribution, data science, media planning, and employee retention.
Each has helped to transform key sectors in P&G’s business, seeding their ingenuity throughout P&G:
Gian De Belder, Technical Director, Packaging Sustainability R&D Sustainability: Reinventing Recycling with Holy Grail
Gian De Belder helped to create a new way to recycle packaging called Holy Grail 2.0 — a unique digital watermark that increases the speed and accuracy of the recycling process during sorting.
Irene Poh, Sr. Director Data Science, AI Factory Product Lead Digital Acumen – Value creation through practical applications from the AI Factory
With AI Factory, Irene Poh is helping to uncover data patterns to optimize multiple facets of how P&G runs its operation. AI Factory transforms data into recommendations sent across the supply chain, production lines, design centers, and more.
Jefri Misawar, Japan Physical Distribution Director Supply Chain Innovation: Supply Chain Optimization Projects with Advanced Analytics
Misawar sees the supply chain as a web, and data as the link that makes these connections more efficient. Using data optimization, Jefri Misawar helped P&G boost efficiency across the supply chain, speeding up the time consumers and stores get products in hand, while also reducing errors and improving forecasts.
Jasmine Turner, Senior Strategic Media Planner, Braun US Digital Acumen: Reinventing Media in Grooming
As part of the Braun US team, Jasmine Turner is shepherding real-time data she gleans through Audience Modeler, a P&G and Amazon joint partnership, to target and funnel high-intent consumers towards a purchase — all in milliseconds. The result drives more revenue than is initially invested, and it’s all achieved through AI.
Katie Kelly, Director, NA Sales Talent Development Cem Canikoglu, Senior HR Director, P&G North America, Kroger, and NA Sales Talent Employee Value Equation – Reinventing NA Sales new-hire program to increase retention
Charged with helping to boost employee retention among new hires at P&G US Sales, Katie Kelly and Cem Canikoglu developed a pre-boarding checklist and welcome package that engaged new employees before they walked through the front door. This, along with other innovation practices including the P&G + Me initiative, has helped to lower new hire attrition from 14% to 7%.
You can hear more about these P&G Signal Innovators during the 2023 Signal Summit on July 12.
Gian De Belder, Technical Director, Packaging Sustainability R&D
Irene Poh, Sr. Director Data Science, AI Factory Product Lead
Jefri Misawar, Japan Physical Distribution Director
Jasmine Turner, Senior Strategic Media Planner, Braun US
Katie Kelly, Director, NA Sales Talent Development