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APIdays Paris 2019 - Innovation @ scale, APIs as Digital Factories' New Machines? by Cyril Vart, Fabernovel

  1. Innovation @ scale APIs as Digital Factories' New Machines?
  2. 10 years ago? *as of 31 May 2019. Talent Company Tech company Other MicrosoftAmazonApple Apple, Amazon and Microsoft are the three first companies to reach a trillion dollars valuation, all from the Tech sector. Years before trillion since IPO 38 Years before trillion since IPO 21 Years before trillion since IPO 33 7 out of the 10 biggest market caps worldwide are tech companies. GAFAM have the 5 biggest market caps, representing around $4Tn cumulated. Only 2 of the 10 biggest market caps worldwide were tech companies (Microsoft and Google). Nowadays, Tech companies capture most of the market value Internet Penetration, 2018 While more than half of Humanity (& rising) is online. 51% of the population represents 3.8B people.
  3. Tech companies took the advantage on traditional companies After digital revolution comes the customer value era. 200s Performance grading of royal family members (China) 1800s Daily performance of employees (Scotland manufactures) 1200s First follow-up of margins (Venice merchants) 1930s ROI & apparition of the first dashboards (France) 1990s The Balanced Scorecard evaluates financial & non- financial performance (US) 1910s Taylorism introduces the calculation of time per movement (US workers) 2015s Digital revolution brings out new customer-centric players questioning traditional KPIs 2018-2019 Amazon, the “customer company”, is valued $1 trn Customer approach expands to take into account all stakeholders 1970s EBITDA is introduced to highlight cash flow capacities (US) 2000s Introduction of ARPU (Telecoms) Productivity era Stakeholder era Finance era Customer era
  4. “Brand” is at the core of their business. Through storytelling, community and user-centricity 2.4M followers on Instagram __ Channel slack with top 100 customers for co-construction __ “70% of online sales & traffic come from peer-to -peer referrals” Emilie Weiss, CEO & founder Source: Recode Decode (Jan 2019), interview of Glossier CEO Emily Weiss
  5. Digitally Native A cosmetics tech company Tech staff 40% of Glossier staff are tech profiles Own tech solutions Warby Parker’s proprietary algorithm to perfectly place virtual frames on the user’s face Data at the core of operations Casper tracks user data at each touch-point and constantly runs A/B testing to test new ideas and solutions Glossier competitive advantage : • Shade Selector & Try it on : Tool that detect skin tone and suggest products from a photo • Point of Sale System (POS) : Online and offline data synchronization
  6. 2 days , Vertical integration economic advantage A single line of products Something as simple as flowers Control over the supply chain Traditional market: 4 to 5 intermediaries taking 10% to 20% fees each Producer Consumer 7 days , Producer Consumer Source: Bergamotte’s podcast & interview
  7. Becoming a software company works... Nike, from shoe ware to software In 2006, to expand their shoe ecosystem and become part of their customer’s journey, Nike entered the digital gadget realm by introducing a small sole-insertable chip. In 2012, Nike created the Fuelband that users wore on their wrists and worked in parallel with Apple’s iPhone. Today, having built an in-house digital team, Nike has launched a myriad of Nike+ mobile application platforms that collects users’ real- time data while integrating themselves into users’ fitness lives. Nike recognized that Apple hardware was more sophisticated and the adoption rates of mobile phones were higher than fitness wearables, so 2014 was the end of the Fuelband. Leaving the hardware to Apple and developing its own software, Nike’s mobile app platform, Nike+, came out as the winner. … but you won’t get a differentiated competitive advantage by installing an ERP better.
  8. No more product centric, think customer centric Looking at the new economy with different “glasses”. Traditional Economy Industrial economy, centered on products Revenue = Unit price x number of products New Economy Usage economy, centered on customers Revenue = Revenue per customer x number of customers Vs From markets... Marketing mix (4P) Competition on one offer Market share From a chain... Added value Value chain Assets owner Number of suppliers From core business... 5-year plan Growth & margin Business portfolio …to customers’ needs User experience (4C) Competition on one particular need Usage share / Share of wallet an ecosystem of partners Circular value Closed loop of value Network orchestrator Length of network & diversity of connections mission statement 30-year vision, 6-month action plan Customer Lifetime Value Experience platform
  9. Every company will need their own “Software Factory”, to scale innovation
  10. Into the rabbit hole
  11. Disclaimer : a important number of initiatives are hybrids (depending on the companies and their needs). Share of CAC 40 having a specific initiative Digital Factory/Lab Corporate venture Accelerator Incubator Startup studio 0 10% 20% 30% 40% 50% 60% 70% “Initiatives Matrix” are already well deployed in France
  12. Infra: IT, CAPEX Executive Committee BU 1 BU 2 BU 3 …. BU n 1990s to 2000’s promised land. The mainframe and the laptop Any standard corporation Revenue: 1bn€ EBIT: 100m€ FTE: 10 000 Market Distribution or consumer
  13. 2000s to 2017 promised land. A web site, communities, ecommerce and smartphone gadgets Any standard corporation Revenue: 1bn€ EBIT: 100m€ FTE: 10 000 High enthusiasm but limited impact 1 Ten’s of FTE concerned. 2 Many initiatives everywhere (POC, MVP). 3 Very little impact on business: 0,1% at best. BU 1 BU 2 BU 3 BU n Infra: IT, Gestion, Moyen generaux, Executive Committee Digital Lab, Studio ... CDO …. Market Distribution or consumer
  14. The next optimal. Innovation @scale and software Factories BU 1 BU 2 BU 3 …. BU n BU n+1 xx xx xx xx Any standard corporation Revenue: 1bn€ + 10% EBIT: 100m€ + 5% FTE: 10 000 digital fluent Need for global impact 1 All of FTEs must acculturate to digital. 2 Initiatives must be distributed to all customers. 3 Software must be self-edited. 4 Shareholders must be engaged and finance the transition. Consumer Distribution or Direct to consumer Executive Committee together SOFTWARE Shareholders
  15. Software is shifting away from being a department to becoming a competitive advantage, making it a lever to drive growth in your market
  16. USE CASE Sephora helps sales assistants make personalized recommendations to clients based on purchase history and preferences. Sales assistants can access the global omnichannel CRM anytime anywhere on their tablets. They can consult the products already purchased by the consumer (in store and on the internet). An automatic recommandation service then advises them on the proposal to make to the client. The sales assistant is also responsible for helping the consumer in their discovery of technical devices in the store such as connected terminals where the consumer can buy all products from the brand catalog and have them delivered. Sephora boosting CRM to offer an omnichannel experience
  17. Speaking about building a customer-centric strategy, Getting started ?
  18. What are the big challenges? Give software access to legacy systems (IT) where the business runs Make innovation for all customers, all distributions, all employees Make sure the first items leaving the tech factory are competitive advantages (for all customers, all distributions, all employees) Harmonize cultures through common languages and rituals (market, technique, logistics, R&D...) Define and promote data through operational and measured cases Use digital to redefine and become the industry standard on your difference 1 2 3 4 5 6
  19. A tale of two companies… Company A Is a leading French department store, part of an RB-scale group Company B Is a French clearance store chain
  20. A company-centric viewpoint breeds in differentiation Company A Buying Sorting Advertising ... Company B Buying Sorting Advertising Selling ... If their businesses are identical, why would their IT stacks differ?
  21. 1. CURATION 2. HOSPITALITY 3. EVENTS Focusing on a differentiated core through customer taxonomy 1. IN-STORE GAMIFICATION 2. LOYALTY 3. REAL-TIME Company A Company B Our clients are inspired by finding the best products according to their current needs, but also through exclusive experiences. Fun, smart shopping thanks to recurring deliveries from top brands, at incredible prices. If they focus on their core value propositions, then their IT stacks need to be custom-made
  22. I buy products in store or online I watch videos tutorials I search for brands and products I plan on buying stuff I try new toysI select products I replenish on my favorite products I try new ones I share my experience with others Adapt to the new experience standards on each customer touchpoint 1 2 3 4 5 6 7 8 9 New ways to catch the attention of potential customers New ways to connect with your customers New ways to engage your customers and create lasting relationships with them After the purchaseDuring the purchaseBefore the purchase
  23. Then find YOUR magic Brooklyn-based Prose, which launched in January 2018, is a direct-to-consumer shampoo brand that allows consumers to create personalized hair care products by completing a brief quiz. It is designed to give the company’s Artificial Intelligence an understanding of each consumer’s unique hair needs, from age, hair type, and hair length to specifics such as physical activity level, environmental factors, diet, sensitivities, and fragrance preference. A custom formula is then created based on these answers, and packaged in a bottle decorated with a label that has your name on it. While it uses technology to formulate the product, Prose was inspired by a very old concept: the apothecary. “All beauty products used to be personalized,” said Prose co-founder and CEO Arnaud Plas in a statement. “We wanted to find a way to modernize this process.” Prose using machine learning for customization
  24. Key challenges ● Architectures ● Microservices Refactorings ● Legacy Upgrades ● Corporate Design systems ● Methodologies and glossaries Organization & Alignment only solution ? An API platform of course (this slide forged @APIdays 2012)
  25. Internal software vendor model New software entity that will provide and contract its platform of services to the legacy company. Your business Your business software editor Warning !! Strong governance needed
  26. In a nutshell
  27. Don’t use technologies (and apis) to create new digital business. Build your software to upgrade YOUR business competitive edge for all customers, all employees, all brands, all channels…
  28. Innovation @ scale Thank you