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Digital Transformation
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00:00Let me introduce briefly our guest, Tony Belloni, who has been with LVMH for a little bit more than 20
00:07years.
00:08He's the managing director and he's in charge of the digital transformation, and that's why he's here.
00:13He's on stage with us, and you know LVMH is the number one luxury group in the world with more
00:18than 75 maisons, they're called.
00:21Next to me is Nigel Vaz, who is the CEO of Sapient, Sapient Publicis, or Publicis Sapient.
00:28And it's the digital transformation hub of Publicis.
00:33Its DNA is really in digital, and it's helping companies to deliver on the promise of a good digital transformation.
00:41He also has been with the company for more than 20 years.
00:44He became the CEO three years ago, and he was born in New York.
00:50He has an Indian background, a Portuguese name, and he lives in London.
00:56Now that I've introduced everybody, let's jump into the subject of today, which is digital transformation.
01:01Maybe the first question for Tony would be, why is digital transformation or digital innovation important for a house like
01:10yours,
01:10which is in luxury, traditional shoes, leather, alcohol, which in a way, I don't have that much to do with
01:19digital.
01:20You're more into the history and the value of the past than maybe the digital transformation.
01:28First of all, hi, everybody.
01:31Thanks for the question, which is extremely relevant.
01:34We do have indeed an incredible portfolio of venerable brands.
01:39When you look at the aggregate age of all our brands, you come to over 8,000 years.
01:47So that's why we have an obsession for keeping those brands fresh, relevant, exciting, desirable for the customer of today
01:58and tomorrow.
01:59So what has to do with creativity, innovation, technology, digital, all of those are engines to be sure that our
02:10brands have that process of continuous renewal.
02:13But do you have to include technology in your product?
02:17Do you think that's the key or it's more that you have to use the technology as an enabler for
02:21what you're doing in general?
02:23We have, let's say, a broader view of, you know, we respond to customer needs.
02:33Mr. Arnaud underlined that earlier on today, but we really try to go beyond.
02:38And we go beyond with new technology, with new ideas.
02:42We have a broader definition of what innovation stands for.
02:47So technology sometimes can play a big role.
02:50And the awards that we gave away this morning show how you can add through technology.
02:57I'll give you one example.
02:58In the sustainability category, we rewarded a startup called WITERM.
03:05That leverages actually ancient artisanal sub warfare from Italian companies, but they make it more intelligent, more practical, more efficient
03:18through innovative technology.
03:20That's where you combine the two sides.
03:22Nigel, I didn't mention, but you're also the author of a bestseller book on business and digital transformation.
03:28If you look at companies in general, what are you think that the key trends or the key values that
03:36they should use if they want to follow the path that maybe also LVMH is using in its own digital
03:41transformation?
03:42Yeah, and it's a little bit like Tony just said, right?
03:46When you think about the world, I think we think about today still digital and physical, and we make this
03:52artificial separation.
03:53I think so many of us who grew up pre the world being entirely digital have that orientation.
03:59But more and more, when he talks about customers of the future, I don't think they're going to make that
04:03separation.
04:04It's one world.
04:05Because my world is one world.
04:06And in the context of that one world, digital transformation can't be equated to just technology.
04:13So my belief in terms of the orientation of how companies who are thinking about transformation need to think is
04:20a shorthand I talk about in my book called SPEED.
04:22And it's an acronym for five things.
04:24So strategy, so having a clear strategy, you know, as you heard some examples there about what the value is
04:30to the business and the customer.
04:32The second is this idea of product, product as a mindset.
04:35You are constantly evolving as opposed to your static.
04:39The experience, so how you design, how you create not just the product, but the entire experience around the product.
04:45Engineering or technology that enables so much of this.
04:48And then most importantly, data and AI, which allows you to become a living business.
04:52So, you know, the watch in my hand is from a luxury brand and a technology company.
04:57It's both.
04:58Both the experiences, the strap, the device, the thing on the device, all of those create that connected experience.
05:05So to me, luxury is all about exclusivity and aspiration, which, you know, Tony, you know, highlighted earlier.
05:11But it's also about personalization, relevance, connectedness.
05:15And so if my world is increasingly digital, how could I create that separation where the product is the product
05:22and the experience is the experience and one is digital and one is physical and there's a big gap between
05:26them.
05:26But at the same time, some companies from a non-digital background and some companies are digital natives in a
05:32sense.
05:32What could traditional, maybe, historical companies like LVMH and others learn from those that are digital natives?
05:40Yeah, and, you know, that's why I started talking about digital can't be just about technology, right?
05:45Tony talked about 8,000 years of history across those brands.
05:49Guess what?
05:50They were leveraging all kinds of technology when those brands were created.
05:54Just technology of the 15th century, 16th century, 17th century and of the...
05:59So today, digital is just what is the world, you know, around us today.
06:04So it has to be an intrinsic part of it.
06:06So if you think about what digitally native companies do, you know, inherently, they obsess about the experience, which luxury
06:13brands, of course, we know also do, right?
06:16They also, though, are really focused on how to leverage technology in order to create those experiences and the connection
06:23between those two things.
06:24But then, most importantly, they create living, evolving products that are constantly reciprocating feedback.
06:31So if you think about the transformation of a bigger organization, you know, if your budgeting cycle works on an
06:36annual basis, but you want to talk about being agile, then agile just becomes about technology.
06:41But if you're constantly thinking about how to prioritize your objectives and think about how your investments will be driven
06:47over the course of a year and those change as you're getting new input from how your business is being
06:52run, that's a very different way of working.
06:54And if you think about a lot of digital natives, you know, let's, you know, use just a simple example
06:58for people, right?
07:00How many in the audience have used Netflix versus Amazon?
07:03And if you look at Amazon's shopping experience, they do an amazing job reflecting your choices.
07:09But if you use Amazon Prime and use content, right?
07:12It's not that good.
07:13You watch the same thing and then they're constantly showing you the same movie all the time.
07:19Versus if you look at a Netflix, it's looking at your preferences, listening, and then evolving and learning.
07:24Talking about retail, which is because you create product, but then you have to sell them.
07:28And then historically retail was, there was only one way to do retailing.
07:34And now it's the digital transformation, as Nigel was saying, retail is also being totally transformed.
07:39How do you see and if you look forward, do you expect this retail industry to be impacted by this
07:45digital transformation?
07:48I think Nigel said something which is quite relevant.
07:52In fact, we were earlier on quite reluctant to embrace virtual selling e-commerce because the technology was relatively basic
08:04and because the drivers of success were value and convenience, which are not exactly the drivers of a luxurious experience.
08:14So as technology has improved, we have embraced and the customer has told us that they want to be able
08:25to shop where and when they want.
08:28So we have responded to that.
08:30It's important, and I think you said it, we don't see e-commerce replacing our stores.
08:37We have over 5,000 physical stores and we love them deeply because they really allow full immersion of the
08:46customers in the brand universe.
08:50Actually, the challenge is that of elevating the experience online in a way that we can create the same differentiation
09:00that we have created for many decades in the physical world,
09:04also in the digital world.
09:08And again, I'll make the example of Toshi, the startup that won today the Innovation Award because they are really
09:16at the core of the elevation of that experience.
09:20As you know, they focus on the last mile, and how do I make that last mile not just a
09:27small event or a practical event, but a moment of great delight for the customer.
09:34The challenge is how to be luxurious in a retail environment, digital, it's difficult, I guess.
09:41If you think about retail just more broadly, 20 years ago, as Tony was highlighting, retail used to be about
09:48we sell in the stores and we sell, the language was e-commerce.
09:54And e-commerce and the stores were separate.
09:56The incentives were separate.
09:57The way the organizations worked were separate.
10:00But if you think about us as people back then, our expectations were also different.
10:04So it was okay to see something advertised, to go online and not find the product, and then go into
10:09the store and have the store not know what you were talking about in terms of what was advertised.
10:15That was okay in retail because our expectations were different.
10:17Today, I think the average consumer's expectation is you will meet me across that customer journey wherever I am in
10:24whatever channel I'm on.
10:26And if you're a luxury brand, I expect that same interpretation of luxury across those interactions.
10:33So it can't be, you know, I mean, let's take the airline business, right?
10:36I mean, many of us travel to come here, and it's tough right now being an airline with all the
10:40disruptions and shortage of staff.
10:42But it's very concerning when an airline shows you an ad of a beautiful, wonderful, you know, loving, caring attendant
10:50pulling a blanket over somebody,
10:52but the same airline which is conveying care and thoughtfulness when your bag gets lost says, talk to the hand,
10:57right?
10:58Because that's cognitive dissonance between the promise and the experience.
11:02So my belief is today, in the world today, the brand is the experience, and the experience is the brand.
11:08And those two things cannot be divorced because when you divorce them, you create this real big cognitive dissonance
11:15between the brand promise and the brand experience.
11:18And so if you're a luxury brand, you've got to be luxury in every interaction, like Antonio said, in the
11:22store,
11:22but also the digital experience and every other touch point that you have as a customer.
11:27Don't disappoint your customers.
11:29About AI and big data, which are the buzzwords, even though today also is talking about Web3 and Metaverse,
11:36but AI and big data, is this something that you think has also will have an impact on your business,
11:44or is it something just for the Google and the Amazon of this world?
11:47No, it is certainly something that is very interesting.
11:52We have quite a rich database on our customers, which are an incredible asset for the brands
12:01as they allow to build a rich relationship with the customers.
12:08Data-driven technology is being applied more and more.
12:12The first focus is really on the customer interface, because in a world of infinite choice,
12:23there is great value to curation, to giving the customer an experience, an offer that is right for them
12:32without asking them to scan the entire universe.
12:36I have to say that that's where we are focusing first, but we are also experimenting across the entire value
12:43chain.
12:43For example, in targeting our media efforts in a better way,
12:48in creating demand planning, that because of the data available is much more right
12:58and allows to reduce waste, in optimize product development and making it faster.
13:04So there are a lot of applications.
13:06We are only starting off with that, but very busy with our tests.
13:11Do you think that we're only at the beginning of this AI and big data journey,
13:15or do you think that companies are already using them in an efficient way?
13:18I think there's lots of examples, and just in the work that we've done,
13:21where radiologists are able to look at cancers in a far more efficient way because of pattern recognition.
13:27So I think you have to think about AI today as being augmenting people.
13:32It's significantly augmenting what we do.
13:34We haven't quite reached the levels of true sentient AI really actually enabling decisioning that is complex.
13:41But to the point that Antonio was making, as you look across the organization, right,
13:46before you get to sort of really AI, you have to master the data, your own data, your customers' data,
13:51and the quality of the interactions that you have is not only on the ability of predictiveness
13:57and forecasting and demand planning that you have,
14:00but it's also on your ability as a business to respond to that.
14:03So one of the big challenges we see with so many organizations is they collect huge amounts of data.
14:08But data is only good as your ability to act on it in the moment, in the context, right?
14:13So think about this luxury experience.
14:14You walk into a luxury store that you've been buying for a long time.
14:19What typically happens?
14:20The store tenant knows you.
14:22They know your preferences.
14:23They understand your sizes.
14:24There's so much intelligence baked in.
14:26As you try to now morph this into the digital world, you can't have that drop off
14:31and suddenly start asking me tons and tons of questions without the intelligence,
14:35without the sophistication of the recommendations.
14:39So I think, you know, we've evolved past the basics of basically saying, you know, use data, right?
14:45Using data is table stakes.
14:46Everybody's got to use data.
14:47But it's how you use the data.
14:49And do you use it in a real-time basis?
14:52And are you able to act on what I've just told you, given my context, given, you know, what I'm...
14:59Because if I walk into a luxury retail store and I say, I'm about to go to the Caribbean on
15:02holiday,
15:03and, you know, the recommendations are very different than if I say, I'm about to go to Australia and, you
15:08know, spend winter there.
15:08It has to be clever.
15:09Yeah.
15:11At Viva Technology, we like when big companies meet startups, and startups meet big companies.
15:17How do you see your collaboration with startups?
15:21What is the key to have a fruitful collaboration?
15:25Is it just to buy them?
15:27Is it just to give them a...
15:29What's the good strategy, you would say?
15:30So, I start by saying that there have been a number of industries that have been disrupted, not by the
15:40usual suspects, the direct competitors, but ideas coming from left field.
15:44So, as the leaders in the luxury industry, we are very interested in being on top of ideas wherever they
15:54come from.
15:55So, the ecosystem of VivaTech is perfect.
16:00With the Innovation Award this year, we got in touch with 950 startups coming from 75 countries.
16:08So, that gives us the opportunity of knowing what ideas are being explored, getting in touch with the different people,
16:18sometimes hosting them at our Maison de Startup, running tests with the companies.
16:25There are, I think, five of our companies that are already collaborating with the startup that won the Innovation Award
16:33today,
16:34and gives us a way of giving them some support and learning a lot from them, okay?
16:42So, it's a very healthy ecosystem where we are learning.
16:46It's important to note that, and I go back to a point that you made earlier on, we have given
16:51away today six awards in different categories.
16:55Each of those categories were related to how do we make the customer experience better.
17:03Nigel, we have two minutes, so maybe in conclusion, what's the good recipe?
17:07I'd say the final thing, just to build on what Antonio said, is culture.
17:10A big part is not only the functional expertise of what these companies bring, but it's also how they run
17:15themselves.
17:16And culture is a huge part on how you think about incentives, how you think about organization.
17:20And there's a lot, traditional businesses and startups, when they come together, can learn from each other's cultures.
17:25From a startup's perspective, how to scale and how to build and grow, but also from an established business's perspective,
17:32how you integrate those five speed capabilities that we were talking about, which to a digital native is inherent.
17:38But, you know, so many times in a traditional business running transformation, it's, well, this person's focused on the strategy,
17:44that person's focused on the technology, the third person's focused on the experience.
17:47And unless you bring these speed capabilities together, you don't get the acceleration and the transformation.
17:52I think maybe I interrupted you before you gave us the meaning of the five letters of speed.
17:57So the first one is...
17:58Strategy, product, experience, engineering, data, and AI.
18:02Speed as an acronym, but also a metaphor for what you need to do to move quickly in the context
18:07of transformation.
18:08That's a good idea.
18:09Thank you.
18:09Thank you very much to both of you.
18:11And see you again next year for our next Viva.
18:14Thank you.
18:15Thank you, everybody.
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