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Digital transformation report sweden july 2017

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Digital Transformation Report 2017
@Qvartz and Microsoft have interviewed leading Swedish companies in many industries about Digital Transformation and the practical aspects of it. Understanding the What, Why and How of Digital Transformation. There are many commonalities across industries and between companies, but my key take-away is that there is no silver bullet. You can’t use the cookie cutter and use the same solution over and over again. Each company and situation is different and therefor each company approach needs to be different, both in What, How and timing. This report strengthens my view that Microsoft is in a unique position to support our customers as we continue to invest in both our platform, but more importantly, in our customer relationships.
When we are in a strategic partnership with our customers we can really support them in all stages of the Digital Transformation Maturity Curve. Many of our larger customers have different units/divisions that are in different stages of the maturity curve and Microsoft’s flexible, scalable and versatile platform and way of working allows us to support the customer as needed in throughout the company.
The report also reinforces the validity and importance of Microsoft’s four pillars of Digital Transformation: Engage your customer, Empower your employees, Optimize your operations and Transform your products.
The report will give you a benchmark of where Swedish customers are on their Digital Transformation journey and some insights into the What, Why and How.

Publié dans : Business

Digital transformation report sweden july 2017

  1. 1. Digital Transformation Report 2017 Going Digital-First Digital Transformation in Major Swedish Companies JULY 2017 — THIS DIGITAL TRANSFORMATION REPORT IS COMMISSIONED BY MICROSOFT
  2. 2. Contents Foreword 5 Key Highlights 7 Participating Companies 13 Why? 19 Importance of Digital Transformation 20 Business Focus and Strategic Focus in Regard to Digital Transformation 20 Digital Transformation Maturity 24 What? 25 Engaging Customers and End-Users 27 Transforming Products and Services 27 Optimizing Operations 27 Empowering Employees 27 How? 33 Capability 1: Digital Leadership 37 Capability 2: Functional Clarity 41 Capability 3: Way of Working 47 Capability 4: Competencies 51 Capability 5: Governance and Performance 55 Capability 6: Technology Development 59 Capability 7: External Collaboration 65 Conclusion 69 Contributors 71
  3. 3. 4 THE DIGITAL TRANSFORMATION REPORT 2017
  4. 4. THE DIGITAL TRANSFORMATION REPORT 2017 5 Foreword The world is changing faster than ever, and Sweden is in the epicenter of that change. We are widely considered one of the most prolific technology hubs in the world. Together, we are riding the wave of the fourth industrial revolution powered by the cloud – with the outset of changing not only the digital domain, but the physical and the biological domains as well. We see customers engaging in new ways and demonstrating completely new behaviors. New business models are arising in ways that challenge the current models at their core. Product innovation is happening with an ease that was previously impossible. And the traditional definition of an organization – the notion of mobilizing a set of human resources to pull in the same direction – is disappearing as companies are forced to adapt to the digital world and employees to new ways of working. To navigate in the era of digital transformation, we need to understand both the motions and the key drivers that enable us to respond to the digitization of our society and our businesses. We have already spent some time understanding the ‘what’ of digital transformation. But for us to adapt to new business models and new ways of strategizing, we also need to understand the ‘how’.
  5. 5. 6 THE DIGITAL TRANSFORMATION REPORT 2017 We have initiated this report to create a benchmark; to learn from the digital leaders in Sweden. By studying their best practices, we can learn from their experience – and we can create a framework to better understand the initiatives and the progress we are making toward the new world. I hope you will find the insights of this report useful and inspirational in your business’ continued journey of digital transformation. – Joacim Damgard, CEO, Microsoft Sweden
  6. 6. THE DIGITAL TRANSFORMATION REPORT 2017 7 Key Highlights Across all the participating companies, interviewed executives make it abundantly clear that digitalization has claimed a highly important position on the executive management agenda. The strategic importance of leveraging digital technologies to stay relevant in the value chain and improve performance has been acknowledged. Transforming organizations to execute on the promises of digitalization is one of the most important challenges to address in this new era. Driven by this new digital opportunity space as well as the accompanying threats to the status quo, executives are hard at work identifying the most effective internal structures to facilitate their digital transformation journey. This report serves to shed light on how top executives in Sweden perceive the business landscape changing as a result of digitalization, and how companies operationalize their efforts to succeed in reaping the benefits. In addition, it aims to highlight best practices for the benefit of learning from companies in other industries that have reached a higher degree of maturity in a particular area of digitalization.
  7. 7. 8 THE DIGITAL TRANSFORMATION REPORT 2017 Key Highlights There is absolutely no doubt – digitalization brings a host of opportunities to companies in virtually all industries. Across Swedish companies, executives are realizing the fundamental impact digitalization has on their businesses. There is broad recognition that the effects are real, and that the pace and transformational power of digital developments will only increase as we move forward. Executives are continuously trying to understand how they can adapt and manage their firms to fully leverage digital opportunities, and how they can gain sustainable impact through engaging with customers, transforming the product or service of- ferings, improving operating efficiency, or further empowering their employees. Furthermore, there is a broad appreciation for the need to make signif- icant changes to existing organizational structures to realize the potential from getting digital trans- formation right in the new-look digital reality. Digital Transformation Has Moved to the Top of the Strategic Agenda In 19 of the 20 companies interviewed for this re- port, executives indicate that digitalization is either the ‘most important’ (7) or a ‘very important’ (12) strategic priority. Additionally, it becomes clear that digitalization generally has strong support with top management across industries. Senior stakehold- ers such as the CEO or even the board of directors often take a role in driving or actively supporting the digital agenda. Most of all, interviewed company executives expect digitalization to impact their core business and its downstream and upstream value chain relations – which does not come as a great surprise. Though, it is interesting to note that many B2B companies that have traditionally not interacted on any large scale with their end customers/users see digitalization as an opportunity to create services adjacent to their current offering – moving them significantly closer to both the customers and end users. Awareness of How and Where Impact Will Happen Has Increased Significantly Almost all company executives say that a lot has happened in the past few years, and expectations for the near future are high and continuously rising. Several executives tell stories about how the dia- logue around digitalization was almost non-existent just a couple of years ago while it is now discussed in almost every context. Executives are becoming more and more convinced as to how they believe digitalization will hit their particular business and transform their organizations. The first priority in running digital initiatives is often to engage cus- tomers on a deeper and more meaningful level; 13 out of the 20 executives rate this at least as impor- tant or more important than any other area within digitalization. The related transformation of prod- ucts and services as well as increased internal op- erating efficiency are also seen as highly important parts of the digital transformation agendas. All Companies Engage in Digital Initiatives, but Most Struggle with the Overarching Transformation This report sets out to highlight differences be- tween companies and industries as well as best practice examples of digital initiatives encountered in one industry that can be transferred to anoth- er industry. One obvious common denominator among the companies is the focus on digital in some shape or form, ranging from overall trans- formation programs to niche projects in specific functional or business areas. Not surprisingly, companies in more tech-savvy industries, such as telecommunications or media, as well as industries with a large share of consumer-facing services tend
  8. 8. THE DIGITAL TRANSFORMATION REPORT 2017 9 to work with digitalization in a more integrated way on an everyday basis. However, it also holds true that companies within more traditional industries have a clear focus on digitalization and significant ambitions for the future. Generally, the focus for these companies tends to be skewed toward op- erational efficiency rather than e.g. transforming products and services. That being said, regardless of industry, most companies are still struggling with how to drive digital transformation, and have a long way to go before fully harnessing the power of becoming digital-first companies. Successful Digital Transformation Requires Balancing Management’s Long-Term Vision with the Line Organization’s Ability to Innovate and Execute While executives have realized the strategic impor- tance of getting digitalization right, the implica- tions on how to adjust the organization to enable more agile and innovative internal processes are less clear. Only 5 out of the 20 companies feel that they have a reasonably high degree of clarity con- cerning what business unit – or which manager or executive – is in charge of articulating a company- wide direction for digitalization or executing on that direction to ensure agility and speed in driving digital initiatives. Meanwhile, emerging digital methods are often allowed to co-exist with the tra- ditional ways of working to ensure that organiza- tional creativity and sense of ownership is not lost. The recipe for success seems to be to set a clear future vision and instill a sense of corporate-wide responsibility for driving innovation and improving day-to-day operations, while having a central func- tion acting as a catalyst for driving digital initiatives and rolling out best practices. Infusing an Already Strong Brand with Digital Is Enough to Attract Talent, but More Is Required to Retain It Capabilities required to master the digital world are increasingly similar across industry lines. While deep industry knowledge is still as important as ever, digital natives move freely between industries at an unprecedented rate for most of the inter- viewed companies. The nature of the job market and the ever-increasing demand for their services mean that the war for talent is fiercer than ever before. This has several implications for companies; it requires them to become more agile in adapting their company culture, how they organize them- selves to create attractive environments and the ways of working. Even so, this might not be enough to sustain talent over time. Hence, companies are turning more and more toward partnerships to grow ecosystems and source-critical capabilities externally.
  9. 9. 10 THE DIGITAL TRANSFORMATION REPORT 2017 1-5 scale with 1 being "Not an important driver at all" and 5 being "A very important driver". Importance Maturity 1-5 scale with 1 being "Not an important driver at all" and 5 being "A very important driver". Importance Maturity 4.5 2.8 Digital Leadership ‘Executive sponsorship and digital leadership’ is the one transformation capability that business leaders across industries agree is in the most mature state Steadfast backing of the digital agenda by senior management is one of the most important drivers for successfully running digital transformation. This ideally entails getting the full executive team to take ownership of the digital transformation agenda, where especially the CEO plays an important part, and engage actively in driving and ensuring the progress of digital transformation initiatives – both personally and through dedicated, next-level leaders with deep digital competencies. Most companies have the right intentions, but many face challenges in conveying the importance of digital initiatives as information as cascaded to the line organization. Hence, ensuring agility and speed of execution across organizational silos can be an issue even though leaders at the most senior level are committed. Functional Clarity Difficult to strike the right balance between a centrally organized coherent digital direction and local execution responsibility to ensure speed and agility Almost all interviewed companies have a challenge in combining top-down coherent transformation with innovative and agile local execution. This often leads to a struggle as to what digital initiative responsibility should reside where in the organization. Only a rare few of the 20 companies seem to have found a winning formula for this, particularly in relation to clarifying the digital role and mandate on Group level. There is, however, no one-size-fits-all recipe for solving this. Some companies experiment with digital innovation hubs outside the regular line organization, while others seek to establish a culture where thinking is permeated by digital awareness every bit of the way. Competencies New competencies are scarce and difficult to attract – but even more difficult to nurture and retain The companies generally have strong employer brands in the job market place and are skilled at identifying and attracting new digital competencies. They are, however, much less proficient at retaining and assimilating them into the core of operations. With only 2 of the 20 companies considered as being skilled at both attracting and retaining personnel critical to digital development, there is certainly large room for improvement. Way of Working Many companies experiment with running agile projects and using social collaboration platforms, but there is still a long way to go from theory to practice All companies partaking in this report acknowledge the importance of adapting new approaches and methodologies in the workplace, and almost all companies are able to point to some best practice examples where a lean startup approach that is more explorative and iterative has been used. However, the majority of respondents still indicate that there is a long way to go to fully realize the potential from working in new ways, with existing organizational structures and unwillingness to change in parts of the organization as two of the major obstacles yet to surmount. 4.7 3.6 Digital Leadership Executive Sponsorship 1-5 scale with 1 being "Not an important driver at all" and 5 being "A very important driver". Importance Maturity 4.5 3.0 “Speed” “Coherence” Startup mindset Scale with confidence 1-5 scale with 1 being "Not an important driver at all" and 5 being "A very important driver". Importance Maturity 4.4 3.0 Identify Attract Retain
  10. 10. THE DIGITAL TRANSFORMATION REPORT 2017 11 Governance and Performance The new, fast-moving digital reality creates a clear need for companies to rethink existing governance models that have emphasized stability and predictability above all else Often, interviewed executives point out that the governance models that have been used in the past will not work in the future. Instead, new governance models characterized by a higher degree of decision-making autonomy and based on a broader range of evaluation criteria, including metrics that are customer-centric and/or focused on initiative progress, will be required. Despite this, most respondents feel that too often, traditional governance models are used when assessing large-scale digital initiatives, which results in suboptimal assessments of business impact. 1-5 scale with 1 being "Not an important driver at all" and 5 being "A very important driver". Importance Maturity 4.3 2.7 Foresight&facts Ambiguity & risk Technology Development Enabling fast-tracking of selected parts of the digital development without compromising the operational IT is a critical aspect of succeeding in digital transformation The majority of respondents acknowledge the need for a two-speed technology setup, and many find it challenging to cope with the high pace of development, especially to ensure coherence across initiatives and traceability of developments done, while handling rigid legacy IT systems. Some do, however, consider themselves successful at ensuring an agile digital development process while at the same time efficiently operating day-to-day IT. Most companies also leverage some form of external resources to gain access to newest technology developments, which could be difficult to attain if development was fully insourced. Full-stack Inhouse Two-speed IT Outsourced 1-5 scale with 1 being "Not an important driver at all" and 5 being "A very important driver". Importance Maturity 4.3 2.9 External Collaboration Leading organizations have managed to create collaborative ecosystems to create a dynamic and innovative culture, strengthen digital capability needs, and access otherwise unattainable experiences Impressively, the frontrunners have already managed to create ecosystems across country borders and industry lines, including companies of all sizes, from startups to international conglomerates. Often, companies that are relatively smaller in the industry are able to use their agility to leapfrog the competition in this area. There are also a few examples of companies running open innovation initiatives such as incubator programs with access to internal venture capital. However, although there are some great examples among the interviewed companies, the majority still have a long way to go and primarily use external collaborators as ‘vendors’ that provide input and contribute to specific projects – rather than seeking value via unlike partners in totally new domains. 1-5 scale with 1 being "Not an important driver at all" and 5 being "A very important driver". Importance Maturity 4.0 2.9 Inspiration from outside vendors Value-creating partnerships Multiple unexpected collaborations
  11. 11. ‘Digitization brings fundamental change to all business areas and the competitive landscape is increasingly complex as a lot of innovation is driven by other companies than the traditional incumbents. SEB has managed to partly get out ahead of this and is well positioned to capture business opportunities internally and through external partnerships.’ – SEB
  12. 12. THE DIGITAL TRANSFORMATION REPORT 2017 13 Participating Companies The purpose of this study is not to determine the importance of digital transformation – we all know that digital transfor- mation is key to staying relevant and growing your business in the future. This study takes a more practical approach. The purpose is to get a thorough understanding of the what, why, and how of digital transformation among some of the major players in the Swedish market. To this end, we have spoken to corporate executives in some of the major Swedish companies about what they do to gear their companies for the future, and how they build digital- first companies from a business perspective. How do they use digital transformation to address the challenges they face in a variety of areas?
  13. 13. 14 THE DIGITAL TRANSFORMATION REPORT 2017 Major Swedish Companies The focus of this study is on the transformation process itself rather than on the status quo. It is therefore much more interesting to look at what the well-established companies are doing to adapt to the new world than to look at what the new digital players are doing right. For the purpose of this study, we approached 20 large Swedish companies and talked in-depth with their executives about their digital transformation efforts. These are the companies with the most resources to drive major digital transformations, and where the potential impact is largest. Furthermore, these are large and complex organizations, where a digital transformation is a major undertaking that is not completed overnight, but something that requires significant dedication and C-level buy-in to succeed. The companies surveyed are very important for Sweden. One third of the 20 largest Swedish com- panies are included in the report. Broad Industry Coverage Disruptions play a major role in some industries. In the financial sector, for example, technology is dras- tically reshaping the industry both inside and out. In other industries, digitalization does not happen at the same pace; perhaps specific legislation causes roadblocks, perhaps the industry dynamics do not lend themselves as naturally to digitalization, or perhaps the benefits are just not that clear yet. However, all industries and companies see technol- ogy as a critical strategic enabler as well as a force to be acutely aware of with respect to preserving exist- ing business domains and competitive advantages. This study therefore covers seven major Swedish industries ranging from construction and manu- facturing to media and finance. The companies’ respective digital transformation processes are in different maturity stages; some have been frontrun- ners, and some are still trying to jump from idea to implementation. Seven Major Industries Covered in the Study Major Swedish Companies with Significant Revenues Included Consumer products Services Construction Finance Industry & manufacturing Transport & energy Telco & media Participating Companies Total combined revenue: SEK > 1,000 billion
  14. 14. THE DIGITAL TRANSFORMATION REPORT 2017 15 Digital Responsibility Resides in Different Functions Across Companies In this report, we examine digital transformation from a business perspective. We have interviewed executives from the participating companies with the aim of talking to the people with the highest organizational rank and a dedicated responsibility for managing digital transformation in the compa- ny or another high-ranking person with compre- hensive insight into and knowledge of the compa- ny’s digital transformation process. In 7 out of the 20 companies, this led us to a com- mercial function (e.g. CEO or marketing), and in another 7 companies, we met with people from group strategy functions and/or business devel- opment functions. In 5 companies, we spoke to an executive with specific responsibility for digital (e.g. CDO). Only in one case did we talk to a CIO. The interviewees are senior executives in their respec- tive companies. Almost all respondents report to the executive office; 12 report directly to the CEO, 6 directly to a C-suite member other than the CEO, and 2 report one level below. A Comprehensive Study at the Executive Level This study is among the most comprehensive stud- ies of digital transformation conducted at an exec- utive level among the largest companies in Sweden. The participating companies have been very posi- tive about the study. They have not only provided insights for us; they have also gained in-depth knowledge of their own maturity and progress in comparison to the market and their peers, and they can draw inspiration and get ideas from each other as well. Majority of Interview Respondents Report to the CEO Representation Primarily Comes from Commercial and Strategy Functions Commercial Strategy Digital function Business develop- ment IT 13 report to the CEO 4 report to Executive Committee 3 report to Top Management 8 6 4 1 1
  15. 15. 16 THE DIGITAL TRANSFORMATION REPORT 2017 Participating Companies Länsförsäkringar SKF MTG Telia Vattenfall SEB Electrolux SAS ÅF Telenor Folksam Ovako PostNord Coor Schibsted Swedbank Brothers NCC Sandvik Coromant Circle K
  16. 16. The media industry has been part of spearheading the glob- al digitalization. Its products and services lend themselves naturally to digital transformation, and the possibilities for new thinking and development are almost endless. Disrup- tion has become the norm, and the industry is in constant motion forcing players to be truly agile and adaptable to keep up and stay relevant in the markets. At its core, MTG has always been a frontrunner. From the establish- ment of the first commercial and privately-owned TV channel in the Nordic region 30 years ago, to the current position as a leader in dig- ital entertainment with multiple distribution channels, the compa- ny has been in constant motion to stay at the edge of new trends and challenge the status quo. Along with new entrants and competitors, consumers are putting a lot of pressure on the industry; they want to be able to choose what to consume, how to consume, and when to consume it, at higher quality and lower prices. As part of their digital transformation strategy, MTG focus- es on being innovative and digitalizing the core business end-to-end, e.g. by digitalizing operations and reshaping traditional products and services into new digital formats (e.g. Viaplay, Viafree, etc.), but also by complementing the internal innovation with what they call ‘Ventures’. The sole purpose of Ventures is to sniff out promising new digital businesses that match MTG’s overall strate- gy and have the potential to add additional value to their service offerings. Once they have been identified, the new businesses are screened and assessed before MTG decides whether to invest in them. Through this strategy, MTG tries to combine swift internal innovation with what is available in the market, and has broadened their product range to include the next generation of entertainment experiences in e-sports, gaming, and multiplatform networks among others. MTG’s ambition of being frontrunners in the media industry development has led them to drive many internal digital transformation initiatives, but also to create a completely new focus area called Ventures. It is basically an M&A ma- chine that identifies, screens, and invests in digital businesses in line with the overall MTG strategy to broaden and improve their service offerings. About MTG MTG is a leading international digital entertainment group headquartered in Stockholm. MTG started out as Scandinavia’s first commercial TV channel in 1987, but their brands now span TV, radio, and entertainment experiences in e-sports, digital video networks, and online gaming. ‘The transformation pace has increased a lot lately, especially in our busi- ness where you really can’t talk about digital transformation; it is more daily business, and the pace of transformation will accelerate further’ ‘The ambition is to be the leading digital player in every market, and the CEO has taken personal responsibility for this’  MTG Case Study
  17. 17. Throughout our history, there has been a need to commu- nicate across distances and send messages and items from one place to another. In the 17th century, sending a letter from Stockholm to Gothenburg entailed an adventurous trip of at least seven days. Today, we live in a time of con- stantly accelerating desires for safe and quick cross-border communication and logistics. The process of communicating messages from one end of the world to another has been im- proved greatly with major disrup- tions to the postal industry, first with the invention of the telegraph and telephone, and later with the introduction of the internet. How- ever, there is still a great need for shipping physical products across distances – and in today’s business climate, it needs to be done with speed and reliability. In 2016, PostNord delivered 5 billion letters and shipments and 142 million parcels to the Nordic region’s 25 million residents and two million busi- nesses. Through their expertise and unique distribution net- work, PostNord are changing the landscape for tomorrow’s communication, e-commerce, distribution, and logistics. Digitalization is increasingly being integrated into all systems and services, and digital initiatives are changing how PostNord do things across the value chain. This has a created a need for developing new digital functionalities with a much more agile way of working where PostNord successfully has applied an MVP-mindset. The results have been really good, one fruitful project has been the new consumer app which has gained widespread adoption. Another successful example has been the creation of a portal, which allows the cus- tomers to keep track of their shipments in real time. In the portal, customer can see where each shipment is, when it is expected to be delivered, if it has been collected yet, and much more. This allows large customers, like H&M for ex- ample, to know exactly when their products will be in stock, and whether some parcels are flagged as delayed. This in turn enables them to provide a better service to their own customers as they can keep them apprised of the situation. Throughout the chain of customers, information is the key to good service. ‘Earlier, we always worked to create new services or products that were 100% complete and tested; now we launch, change, and build functionality over time, which is a completely different way of working’ ‘We are focusing a lot on trying to co-create solutions together with our custom- ers – we do so to learn more about the full value chain and typically, we can find win-win solutions’ PostNord is rolling out a customer portal in which their customers have a complete overview of all their shipments in real time. This digital service is offered to all customers and integrates PostNord’s system with the customers’ interfaces, allowing the customers to track their shipments at all times, which puts them in a position to offer a better service to their own customers. PostNord Case Study About PostNord PostNord offers communication and logistics solutions to, from, and within the Nordic region. PostNord AB was established in 2009 through the merger of Post Danmark A/S and Posten AB. The parent company, PostNord AB, is a Swedish public limited company with headquarters in Solna, Sweden. PostNord is owned 40% by the Danish State and 60% by the Swedish State.
  18. 18. THE DIGITAL TRANSFORMATION REPORT 2017 19 Why? Is digital transformation a strategic priority in its own right or merely a tool in a strategy toolbox? Do companies use it as a pillar to support their current business or as a key to their future business capable of unlocking adjacent or even entirely new business areas? And for which of their strategic objectives do companies believe that leveraging digitalization will be most important? In this section, we investigate how digital transformation is prioritized and perceived in the participating companies and how far they have come in maturing their digital strategies, initiatives, and efforts.
  19. 19. 20 THE DIGITAL TRANSFORMATION REPORT 2017 Importance of Digital Transformation Digitalization is vitally important for companies, and the executives know it. This study confirms that digital transformation is considered one of the most impor- tant focus areas for the executive management. Seven of the interviewed companies single out digital transformation as the highest priority on their list, and 12 other companies mention it as one of their most important priorities ranked equally with a few other areas. Only one com- pany considers digital transformation impor- tant, but ranks other areas as higher priorities. This confirms the theory that digital transfor- mation is no longer an IT issue or a small part of the overall company agenda, but a top priority for the management team. As companies strive to become increasingly digital in some areas, the digital transformation agenda progressively becomes more integrated into the overall business agenda. Some companies already think you cannot talk about digital transformation per se, since it has become an inte- grated part of day-to-day business. Business Focus and Strategic Focus in Regard to Digital Transformation We took a close look at where the business executives aim their digital transformation efforts to create more impact. Do they focus on the core business using digital to improve their current products and service offerings and gain efficiencies in their operations? Do they seek to open up new revenue streams and gen- erate growth in adjacent business areas? Or do they spend their energy and resources on completely new business areas and even reshape their business models completely? Because of the current business climate where newcomers and smaller digital players are con- stantly emerging and capturing business and market shares from the large incumbents, one might think that the participating companies would be as focused on leveraging digitalization to develop in adjacent and new business areas as they are on im- proving the core business. However, what we see is that companies believe that digitalization can be leveraged to create high im- Most important 7 12 1 0 0 Very importantImportantLess importantNot important The Importance of the Digital Transformation Agenda at the Highest Executive Level Create business from the core Create business in adjacent areas Create new business(es) 1: ‘Digital’ articulated as not important 2: ‘Digital’ not articulated as part of top management agenda 4: ‘Digital’ among a wider range of top strategic priorities 3: ‘Digital’ less important than other priorities on the top management agenda 5: ‘Digital’ singled out as one of ‘top three’ most important strategic priorities Why?
  20. 20. THE DIGITAL TRANSFORMATION REPORT 2017 21 pact in their core business. What is perhaps more surprising is that a large share of the responding companies do not believe that digitalization will be a key lever for creating impact in business areas that are entirely new to the company; as a matter of fact, only one company responded that digitalization is a very important lever to this area. Disruptive opportunities and development of new business models are the most common discussion topics regarding how to leverage digitalization in companies. Yet almost all participating companies anticipate that digitalization will mainly affect their core business. Across industries and irrespective of the companies’ digital maturity, this is the general opinion. What we do see is that companies that are focused more on new/adjacent business areas typ- ically come from B2B industries and want to extend their offerings, e.g. from products to services. Furthermore, the majority of the responding com- panies believe that digitalization is a key lever to staying relevant and defending their current market position against competition as well as to improving their internal efficiency. In addition, about a quarter of the respondents believe that digitalization is a very important lever for generating significant rev- enue growth in the coming two-year period while the other three quarters do not have quite the same opinion. How much do you currently focus your digital transformation efforts and resources on each of the following areas? Core business Adjacent business New business To which degree are the digital transformation efforts focused on creating impact in the core of the company’s current business? To which degree are the digital transformation efforts focused on creating impact in business areas that sit on the border of the company’s current business? To which degree are the digital transformation efforts focused on creating impact in business areas that are entirely new to the company? Not at all Low degree Some degree High degree Very high degree Avg. Prioritization Avg. Prioritization (only 18 responding companies, 2 answers N/A) (only 18 responding companies, 2 answers N/A) Avg. Prioritization 4.7 3.4 2.4 Not at all Low degree Some degree High degree Very high degree Not at all Low degree Some degree High degree Very high degree
  21. 21. 22 THE DIGITAL TRANSFORMATION REPORT 2017 8 out of 20 7 out of 20 Digital Transformation Maturity Curve Digital ambition articulated. Sporadic initiatives launched. Explorative mindset and approach. Digital still treated in conventional way. Many ‘islands’ of digital activity. Frontrunner in selective areas. Tolerance of new ways of working. Still limited business impact from digital. Transformationalsophistication Mobilized Incubated
  22. 22. THE DIGITAL TRANSFORMATION REPORT 2017 23 4 out of 20 1 out of 20 Emerging collective digital experience. Digital enabling of core activities. Translation of digital to tangible results. Clarity of digital game plan and priorities. Company thinks and acts ‘digital-first’. Digital impact in adjacent and new business areas. Core business model(s) reinvented. Appreciation of exponential speed. Accelerated Integrated
  23. 23. 24 THE DIGITAL TRANSFORMATION REPORT 2017 Digital Transformation Maturity Most of the companies are still at the beginning of the digital transformation journey. Only one of the participating companies is considered ‘integrated’, meaning that they have a digital-first approach to the entire organization. This entails their core business being optimized digitally, them leveraging new digital opportunities in adjacent and new business areas, and their business model being changed to fit the new reality. Digitalization is embedded in their processes from product development to end-customer. Four of the companies are in the ‘accelerated’ phase. They develop their core offering as well as new or adjacent business areas through digital initiatives, and they are able to translate digitalization into tangible results. They have a clear digital ambition, which is anchored broadly in specific priorities and goals. Seven of the companies are in the ‘incubated’ phase. They drive digitalization in selected areas, and they might even be frontrunners in some of them. They are open to new ways of working, but have yet to implement a cross-organizational digital strategy, and the benefits they reap from digitalization are still limited. The final eight companies are still in the phase we call ‘mobilized’. They have an explorative mindset, they have recognized digitalization as a strong driving force, and they have articulated digital ambitions. However, they often revert to ‘business as usual’ when it comes to making strong bets, and their efforts are more sporadic and less coherent, with lower impact as a result. ‘Digitization brings fundamental change to all business areas and the competitive landscape is increasingly complex as a lot of innovation is driven by other companies than the traditional incumbents. SEB has managed to partly get out ahead of this and is well positioned to capture business opportunities internally and through external partnerships.’ Why? — SEB
  24. 24. THE DIGITAL TRANSFORMATION REPORT 2017 25 What? The interviewed executives from the participating companies all agree that digital transformation is a major priority going forward. Even so, do they actually use digitalization to engage their end customers, transform their products and services, optimize their operations, and empower their employees? We now look at which areas the companies focus their efforts on to become digital-first.
  25. 25. 26 THE DIGITAL TRANSFORMATION REPORT 2017 Engage your customers Digital Transformation Domains Empower your employees Transform your products and services Optimize your operations A company’s ability to change internally can be studied by deep-diving into its strategy, people, processes, and technology. These four domains allow for the creation of feedback loops, which can help the companies draw insights from data and convert them into actions. Our study examines how intensely the companies focus on each domain. This systems-based ap- proach helps us understand how they prioritize when it comes to extracting value from digitaliza- tion, and how mature they are when it comes to a holistic and systematic digital approach across all domains. Each company’s transformation process and matu- rity tells a story of how it impacts its industry and operational environment. Harnessing data for a complete view on the customer journey, drawing action- able customer insights, and delivering personalized, differentiated customer experiences at scale. Providing insights to employees to drive faster and better decisions and creating productive workplaces where things get done while protecting the organization, data and people from critical risks. Accelerating business responsiveness, improving service levels, reducing costs by moving processes from analog to digital, and anticipating the future with intelligent processes. Optimizing delivery mechanisms, adding value-adding services, personalizing content, differentiating deliveries, etc. to improve value propositions and capture emerging revenue opportunities. ‘We have spent the majority of our effort on driving digital initiatives to further engage the customer, which among other things have resulted in a successful app that has been awarded multiple times’ What? — LÄNSFÖRSÄKRINGAR
  26. 26. THE DIGITAL TRANSFORMATION REPORT 2017 27 Engaging Customers and End-Users The most important digital focus area for the par- ticipating companies is engaging customers and end-users. Only six of the participating companies indicated this to be less than to a ‘High degree’. Knowing the needs of customers is a prerequisite for offering the best products and services to the customers, and the customer experience – B2B as well as B2C – is critically important to staying rel- evant and maintaining a competitive position. It is therefore no surprise that digital efforts with this aim are a high priority for companies. Furthermore, there is a tendency for companies in some indus- tries to move from being B2B-focused to engaging more with end-users through various digitally enabled services. Transforming Products and Services The next important area is the transformation of products and services, which covers everything from developing and improving existing products through new features and functions to developing entirely new products, services, business models, and platforms. 10 of the 20 companies rank this aspect as either to a ‘High degree’ or to a ‘Very high degree’. Largely, companies focus on trans- forming existing products and services to work in a digital environment rather than rethinking existing products and services to make a more transforma- tive change. This is partially a consequence of many respondents still being in the early stages of digital transformation. Optimizing Operations Tied with transformation of products and services is optimizing operations. Most companies have worked on automating and digitalizing operations for some time now, and are getting better at gen- erating data across the value chain and using it in their production, while other companies are still at the beginning of their journey in this respect. Com- panies with traditional lines of business are often frontrunners in looking to digital transformation for optimizing operations and increasing efficiency. Empowering Employees The lowest priority among the respondents is empowering employees. Only seven companies mention this as an area they focus highly on. Many seem unsure of how digital initiatives can play a role in empowering employees, and many say that this area has simply been down-prioritized in the light of matters that are more urgent. Frontrunners have realized that using digital initiatives in this area leads to higher employee satisfaction, which increases productivity and reduces employee turnover. ‘We have launched a strong global brand for our customers – now we also want our employer brand to become equally strong’ — CIRCLE K
  27. 27. 28 THE DIGITAL TRANSFORMATION REPORT 201728 THE DIGITAL TRANSFORMATION REPORT 2017 Focus on the Digital Transformation Domains Domains Engaging customers and end-users The degree to which the company prioritizes digital-enabled initiatives to engage customers and end-users, e.g. by using concepts such as big data, self-service, VR/AR and AI to create customer insights, personalize interactions, and improve the customer experience. Empowering employees Transforming products and services Optimizing operations The degree to which the company prioritizes digital initiatives targeted towards empowering employees, e.g. by using digital tools and platforms to enable better communication, closer collaboration, and improved employee productivity and flexibility. The degree to which the company prioritizes leveraging digitalization in order to transform their products and services, e.g. by augmenting existing products and services with digital features and functionalities, and developing entirely new products, services, platforms, and business models. The degree to which the company prioritizes the use of digital-enabled initiatives to optimize internal operations, e.g. by enabling process automation, real-time monitoring of operations and predictive modelling to anticipate customer support requests, etc.
  28. 28. THE DIGITAL TRANSFORMATION REPORT 2017 29THE DIGITAL TRANSFORMATION REPORT 2017 29 4.0 3.1 Avg. Prioritization Avg. Prioritization 3.7 3.7 Avg. Prioritization Avg. Prioritization Not at all Low degree Some degree High degree Very high degree Not at all Low degree Some degree High degree Very high degree Not at all Low degree Some degree High degree Very high degree Not at all Low degree Some degree High degree Very high degree Prioritization
  29. 29. 30 THE DIGITAL TRANSFORMATION REPORT 2017 What? What digital leaders do to rethink product and service transformation • Build digital service wrappers around traditional products and services. • Create new business models and go-to-market strategies by embracing emerging trends and rethinking the existing value proposition to fit in a digital world. • Make data-driven product design decisions based on capturing and analyzing end-user data and data from other open sources. What digital leaders do to rethink customer engagement • Develop products and services with the intimate understanding of their own business in mind, and create meaningful long-term relationships where the customers are in control of their own experiences. • Master big data analytics to draw unique customer insights, gain a complete view on the customer journey, and ultimately create segments with tailored offerings. • Consider how new technologies such as machine learning or artificial intelligence can be used to deliver personalized service experiences to stand out from competition in the next years.
  30. 30. THE DIGITAL TRANSFORMATION REPORT 2017 31 What digital leaders do to rethink employee empowerment • Create a culture supporting employees to innovate, adapt, and go after business opportunities in real time without cumbersome hierarchical processes. • Establish a flexible and collaborative working environment empowered by open communication, creativity, and multiple touchpoints for employees to interact on. • Enable a data-driven way of working with easy access to data from multiple digital sources for both internal and external strategic decision-making. What digital leaders do to rethink operations optimization • Adapt new technology and gain efficiency from connected devices in the whole value chain, impacting factory productivity, sales efficiency, and customer satisfaction. • Optimize output based on demand forecasts and predictive modeling anticipating and solving customer issues before they become critical. • Automate procedures and processes to increase quality and delivery of speed, improve service levels, and reduce operational costs.
  31. 31. Automation and digitalization are not new concepts for the manufacturing industry. They have for a long time been ingrained in the manufacturing process, making this more efficient and leading to higher quality outputs. While this transformative work earlier has been focused on the manufacturing process itself, digitalization is now seriously disrupting the industry on a bigger scale. It is changing entire value chains, impacting everything from design and factories to sales and marketing. Manufacturing companies need to get on board and figure out what role they should take in the value chain and how to leverage experience and know-how in the digital world. Sandvik Coromant is in the process of adjusting for the future; they believe that digital initiatives hold great revenue potentials, but the investments and efforts need to be made now. The development efforts are focused on two specific areas: operational excellence on the one hand and transformation of value proposition, products, and services on the other. The former is about digitalizing and further automating the core operations and the internal know-how. The latter means – by building on the digitalized know-how – moving more into providing services with attractive offerings that are understandable for customers and improve for example their efficiency and down-time rates. Sandvik Coromant works on and offers digital solutions in three areas; pre-machining, in-machining and post-machining. With integrated IT systems, Sandvik Coromant can e.g. collect real-time data from customers on their machining performance and immediately turn it into actions, which can result in much more targeted (and lowered overall) maintenance and repairs, thus reducing down-time by up to 50% in customer operations. About Sandvik Coromant Sandvik Coromant is the world’s leading supplier of tools, tooling solutions, and know-how to the metalworking industry. With extensive investments in research and development, they create unique innovations and set new productivity standards together with the customers, who include the world’s major automotive, aerospace, and energy industries. Sandvik Coromant has 8,000 employees and is represented in 130 countries. ‘The amount of built-in knowledge in this company is huge and an important com- petitive edge; the challenge is to digitalize and leverage it more in the design of future services and customer interfaces while protecting it from e.g. cyber attacks’ ‘We have automated and digitalized our operations over the last decades, so this is not new; however, the shift we see now is more fundamental and creates a bigger clash between the old and the new’ The shift in focus from mainly selling products to selling extensive services and know-how is a natural step for Sand- vik Coromant. If the customers are willing to participate in the process early on and share information, Sandvik Coro- mant can collect data in real time and significantly improve operations on the customer’s machines. By using integrated IT systems, the tools, machines, and data work together to create even better solutions. Sandvik Coromant Case Study
  32. 32. THE DIGITAL TRANSFORMATION REPORT 2017 33 How? Digital transformation is a delicate balancing act between the old and the new. Executives and companies constantly walk a thin line between optimizing their current business and preparing their business model for future disruption. Between engaging and motivating their employees and developing technologies that could potentially replace them. What do they do to stay on the digital transformation tightrope when they do not yet know where it leads? Let us dive into the nitty gritty and take a closer look at digital transformation at an operational level.
  33. 33. 34 THE DIGITAL TRANSFORMATION REPORT 201734 THE DIGITAL TRANSFORMATION REPORT 2017 Identification and Scoring of Seven Key ‘How’ Capabilities Capabilities Digital Leadership 1 To what degree do you have executive sponsorship and broad, capable digital leadership of your digital transformation agenda? Functional Clarity 2 To what degree do you have clarity of the functional responsibility for articulating a company-wide direction and for executing operational digital initiatives to secure agility and speed? Way of Working 3 To what degree is a startup mindset and methodologies (processes, tools, etc.) adopted into the relevant parts of the business (and corporate working practices)? Competencies4 To what degree are you able to identify, attract, assimilate, and retain the necessary competencies to succeed with your digital transformation agenda? Technology Development6 To what degree do you have an agile technology development setup that ensures fast tracking of build and scale development activities without compromising your operational IT? External Collaboration7 To what degree do you leverage complementary resources in open and collaborative ecosystems to enhance your transformative capacity? Governance and Performance5 To what degree does your governance model support the desired future mindset, new way of working, and agile decision-making process necessary to succeed with your digital transformation agenda?
  34. 34. THE DIGITAL TRANSFORMATION REPORT 2017 35THE DIGITAL TRANSFORMATION REPORT 2017 35 1. Not at all Avg. ImportanceAvg. Maturity 4.7 4.5 2. Low degree 3. Some degree 4. High degree 5. Very high degree 4.3 4.0 4.3 4.4 4.5 3.0 2.9 2.8 2.8 3.0 2.7 3.6
  35. 35. The travel industry used to be all about papers. Tickets, itin- eraries, boarding passes, guidebooks, in-flight magazines, you name it. This has certainly changed in recent years, but SAS has gone above and beyond. SAS believes that innovation and focus on the customer experience is the key to generating new revenues, so they set up a new department called Customer Journey & Loyalty. Within the department they also started the SAS Lab – an innovation lab which aims to equip the compa- ny with the digital capabilities that will help it reimagine the future of transportation. The Lab uses new technology to make life easier for travelers. A major innovation is the SAS app, which lets you book your tickets, check in, and board the plane using your phone. It had such a great impact that it was chosen as the best European airline app. But it provides much more than the most common travel necessities. It also features airport maps, weather forecasts, and an inte- grated guidebook, where you can create your own maps, rec- ommend destination sights and restaurants, and ask for advice from your friends. In terms of pioneering digital transformation, however, the app’s most significant feature is the integrated ‘suggestion box’. Nobody knows the travelers’ needs better than the travelers, and through the app, the SAS Lab gets feedback and devel- opment ideas in real time. This puts the airline in a unique position to pioneer digital transformation in the industry. SAS set up the SAS Lab to be industry pioneers in digital transformation. They are working on electronic bag tags, biometric scans, wearable technology, microchips, and virtual reality. About SAS SAS is Scandinavia’s leading airline. In 2014/2015, a total of 28.1 million passengers traveled with SAS to 119 destinations in Europe, the US, and Asia. SAS is a member of Star Alliance, which provides customers with access to a far-reaching network. Altogether, Star Alliance offers more than 18,500 daily departures to 1,330 destinations in 192 countries around the world. ‘SAS’ commercial vision is to make life easier for Scandinavia’s frequent travelers. Being at the forefront of digital development and delivering new digital solutions is instrumental to realizing this vision’ ‘SAS’ travelers love our app because it makes life easier for them’ SAS Case Study
  36. 36. THE DIGITAL TRANSFORMATION REPORT 2017 37 Capability 1: Digital Leadership The success of digital trans- formation is highly dependent on executive sponsorship and digital leadership – but it is apparently easier said than done Leading Practice Someone from the executive management fully owns the digital transformation agenda and is responsible and held accountable for its continued progress. Dedicated next-level digital leaders with the right competencies relentlessly drive the digital transformation initiatives.
  37. 37. 38 THE DIGITAL TRANSFORMATION REPORT 2017 To what degree do you have executive sponsorship and broad, capable digital leadership of your digital transformation agenda? ‘Over the past 18 months, digitalization has been placed more centrally on the agenda. The challenge is not to develop the digital strategy – it is to understand how to execute and implement’’ Limited executive sponsorship of the digital transformation agenda with relatively vague digital leadership focus and competencies across the business. High level of digital transformation focus among executive management and the leadership team, but leadership profiles and competencies still very much focused on “traditional” business. Uncompromised executive sponsorship with a highly capable digital leadership giving full priority to digital initiatives, often at the expense of near-term traditional business priorities. Not at all 0 2 8 6 4 Low degree Some degree High degree Very high degree How? Avg. Importance Avg. Maturity 4.7 3.6 Digital Leadership — TELENOR
  38. 38. THE DIGITAL TRANSFORMATION REPORT 2017 39 Even if the ‘how’ dimension overall is relatively immature compared to the other areas, it might not come as a surprise that for the many business leaders we have spoken with, the most mature dimension is the sponsorship from the executive management. This ideally entails getting the CEO in a lead role setting an ambitious digital transfor- mation agenda, taking ownership of the key pri- orities, and taking part in driving and ensuring the progress of digital transformation initiatives – both in own actions and through dedicated, next-level leaders with deep digital competencies. Most, if not all, of the interviewed executives signal that the majority of senior management in their companies have the right intentions and focus their efforts on how to succeed. However, many also report that there are large differences in how important digital transformation is considered, especially when cascaded further down the organ- ization. There are natural conflicts built in based on current short-term profit goals and long-term development goals as well as between the old and the new. In addition, a number of companies men- tion bridging the gap between senior management and the rest of the organization as a challenge. This of course points toward cultural aspects as well as Digital Leadership ExecutiveSponsorship ‘We have a clear direction! We are, however, not experts in digitalization, but we are getting better and better’ ‘We have very clear ambitions and direction from the management team, which is a key starting point’ — SWEDBANK — NCC
  39. 39. 40 THE DIGITAL TRANSFORMATION REPORT 2017 the importance of middle management and their ability to keep pace with C-level impatience. Even if CEOs and their executive peers are willing to take on risk, go into unchartered territory, and have the stamina to relentlessly drive efforts in transforming their companies, a large challenge seems to be to empower middle management in their efforts as well as in finding and developing next-level leaders who combine deep industry insights and hands-on digital experience. Although most companies recognize the need for leaders who are both conversant across the current busi- ness and digitally diligent, having such leaders is in practice more often the exception rather than the rule. The highlighted characteristics of the leader- ship type that is sought after include the ability to understand the intrinsic values of the business they operate, and a visionary, daring mindset combined with digitalization experience. The latter includes having a detailed understanding of the new ways of working, identifying the competencies necessary to build digitally-minded teams – and establishing the culture to attract these. In addition, having a doer attitude is necessary to succeeding in an en- vironment where speed of change is inevitable and increasing. Another highlighted challenge is how to secure agility and speed of execution across organiza- tional silos. It is proven difficult enough in projects and of course even more so in the line organization over time. Recipe for Success: • Executive sponsorship is a must have: Ensure full and strong executive sponsorship from the CEO and the management team as a starting point for your digital transformation journey • Digital leaders are a new breed: Put efforts into employing and developing the right profile(s) to spearhead and run the digital transformation execution in your organization, from the top to the lowest level • Get into the details: Most leaders are digitally savvy when it comes to strategic direction, but speaking the digital language fluently requires hands-on experience and a much more detailed understanding of what the digital transformation entails How?
  40. 40. THE DIGITAL TRANSFORMATION REPORT 2017 41 Capability 2: Functional Clarity Coherent visions and strong mandates to drive digital transformation Leading Practice Speed, agility, and execution power are obtained through coherent, company-wide digital transformation visions with strategic priorities and a clear direction and strong responsi- bility mandates for driving and carrying out the operational digital business-line initiatives.
  41. 41. 42 THE DIGITAL TRANSFORMATION REPORT 2017 Functional Clarity Limited clarity of ‘who owns’ the responsibility for setting the corporate wide digital transforma- tion direction, and some- what unclear responsibil- ities between the center and local level. Freedom to execute dig- ital initiatives in business units, but somewhat lack of an overall direction setting to ensure coher- ence and company-wide impact. Optimal balance be- tween center and local, with a coherent digital transformation vision and direction, and suf- ficient local power to execute digitally in the line of business. To what degree do you have clarity of the functional responsibility for articulating a company-wide direction and for executing operational digital initiatives to secure agility and speed? Avg. Importance Avg. Maturity 4.5 3.0 Not at all 0 5 11 4 0 Low degree Some degree High degree Very high degree How?
  42. 42. THE DIGITAL TRANSFORMATION REPORT 2017 43 There seems to be a wide variety in how companies define responsibility for digital transformation. Some companies do not have any appointed role at all and try to ingrain responsibilities into each P&L-responsible BU, while others have installed a CDO or placed responsibility in the corporate strat- egy function. In 7 of the interviewed companies, the business responsibility for digital transformation resides with the CDO or Group Strategy function, while there is no formal role in the 13 other cases. No matter the chosen model, almost all surveyed companies seem to have a challenge in combining the top-down, coherent transformation approach with the more decentralized approach, which creates local ownership close to actual business decisions. There also seems to be a struggle in what should reside in the line function vs the IT function, and in how to prioritize initiatives across portfolios. Anchoring the mandate and getting company-wide acceptance for the responsibility is another chal- lenge mentioned by the companies establishing a CDO-like function. Some companies address the challenges by es- tablishing separate digital innovation units with end-to-end responsibility outside the ordinary line organization. The overall purpose is to overcome the challenges inherited in the traditional organi- zation structures. The mission varies between more ambitious disruptive agendas and reinventing certain products or processes. Others rely more on the established organization by creating additional structures and processes (formal or virtual) to make sure alignment is created between BUs, IT, and the corporate function. ‘We have installed a digitalization council to keep track of initiatives and take decisions when prioritizations are needed’ — POSTNORD
  43. 43. 44 THE DIGITAL TRANSFORMATION REPORT 2017 Recipe for Success: • Assess your digital transformation maturity: Know your people, competencies, cross- functional capabilities, etc. and understand where the greatest potentials are to get a balanced view of the starting point vis-à-vis your overall target/vision and the required change needed • Define who should be responsible for the direction: Assess your need for central direction, i.e. need for push if people do not do it themselves or need for corporate coherence on the direction vs. need for exploration of opportunities from people close to the market • Define your execution setup: Distance from initiatives to regular business/operations dictates need for decentral (BU) execution vs. execution in dedicated DT initiative unit (need for coordination vs. execution) • Communicate and revise: Make sure it is clear to everyone how responsibilities are divided and how potential conflicts of interest are resolved, and do not underestimate the need for repeated messaging as well as active and outspoken support for the direction and the execution setup – be prepared to change the setup further down the road when the organization becomes more mature or issues arise How? ‘There is a strong entrepreneurial spirit in the organization providing a foundation for leaders to own and drive digital transformation within their own domains, as well as driving a strong central transformation agenda – really the best of both worlds’ — ELECTROLUX
  44. 44. ‘You cannot really talk about digital transformation anymore. Its ingrained in our day-to-day business and we need to continuously reinvent ourselves to stay on top given the pace of how the industry is moving’ – MTG
  45. 45. No industry is excluded from the power and change of digitalization. In construction, new digital solutions are continuously entering the global market creating smarter business and more efficient use of natural resources. Con- structing companies are currently integrating virtual reality solutions to show new products, buildings and prototypes before they have even begun the building process. The ongoing adoption of 3D printers will also revolutionize the market for smaller projects, as minor players will be able to construct products on their own to lesser cost. Robot- ics and automatization will also transform the daily activities for many construction workers. It is only a matter of time and cost versus benefit before these trends will be fully adopted by the major- ity of construction companies. NCC decided to focus their first digital disruptive business model around digital recycling connected to the handling of surplus materials. Current handling is costly, time-con- suming, wasteful and bad for the environment – so there was much that could be done in the area. The project was initiated as a startup to create the right progressive atmosphere, able to attract the best startup talent available. As an external entity, fully owned by NCC, Loop Rocks is able to benefit from the startup culture as well as a blue chip company’s financial stability and distri- bution networks. The business solution connects those who are in need of material with those who wants to get rid of it. Both parties share the working and transportation costs and becomes a part of the new circular sharing economy – like Tinder for construction materials. All Loop Rocks users benefit by reducing time, costs, and envi- ronmental impact by using less virgin masses and unnecessary transportation resulting in lower CO2 emissions and excavation impact, adding value from both a financial and environmental standpoint. The network opens up for anyone to connect to the ecosystem, resulting in disruption for players that make money off today’s inefficient handling of masses at the expense of the environment. Loop Rocks provides transparency, working to make the entire construction industry more circular. About NCC NCC is one of the leading construction and property development companies in Northern Europe, with sales of SEK 53 billion and 16,800 employees in 2016. With the Nordic region as its home market, NCC is active throughout the value chain developing and building residential and commercial properties and constructing industrial facilities and public buildings, roads, civil engineering structures, and other types of infrastructure. NCC also offers input materials used in construction and accounts for paving and road services. NCC creates future environments for working, living, and communicating based on responsible construction operations that result in sustainable interaction between people and the environment. ‘We are not experts in digitalization, but we are getting better and better – we are good compared to the construction industry, but average compared to other industries’ ‘With Loop Rocks, we are challenging players who make money from today’s inefficient handling and, at the same time, opening up for others to join the ecosystem’ Loop Rocks is an open platform and app for the smarter and more efficient handling of rock, earth, and other secondary construction masses at construction sites, and between businesses and private individuals. It is a user-centric app, which simply connects supply and demand of construction materials. Last year, Loop Rocks was one of the finalists for Ecolab’s Circular Economy Digital Disruptor award. NCC Case Study
  46. 46. THE DIGITAL TRANSFORMATION REPORT 2017 47 Capability 3: Way of Working While good ideas and new concepts are aplenty, there is still a long way to go from theory to practice Leading Practice Corporate working practices increasingly adopt a startup mindset and methodologies, which involve an uncompro- mised focus on customer needs as the point of departure for development activities and the application of the lean start- up approach working with the concepts of minimal viable products, sprints, fail fast, and build-measure-learn loops.
  47. 47. 48 THE DIGITAL TRANSFORMATION REPORT 2017 Way of Working Early stage understand- ing of the need for a startup mindset, but very limited actual experi- ence in the business and a general tendency to work in the ‘old way’ with digital development. Emerging experience with working in the ‘new way’, with a startup mindset and with several of the actual concepts in- volved, but still limited to selected organizational environments. Broad appreciation of a startup mindset, dis- carding the ‘traditional way’ of working with an increasing experience across the organization in applying a lean start- up approach. Not at all 0 3 1 Low degree Some degree High degree Very high degree To what degree is a startup mindset and methodologies (processes, tools, etc.) adopted into the relevant parts of the business (and corporate working practices)? Avg. Importance Avg. Maturity 4.5 2.8 7 9 How?
  48. 48. THE DIGITAL TRANSFORMATION REPORT 2017 49 Inspired by emerging and successful startup chal- lengers in many industries, new ways of working are generally gaining recognition among estab- lished companies. Since the beginning of the 21st century, the lean startup approach, rooted in the lean manufacturing methodology and particularly relevant in relation to digital transformation, has become highly regarded both academically and by corporate frontrunners such as GE, Coca-Cola, Cisco, etc. In contrast to traditional ways of defin- ing and running projects – ‘big design’ up front and waterfall-based – the lean startup approach is more explorative and iterative, and moreover often pragmatic. The main characteristics of these processes, which include minimum viable products, sprints, fail fast, and build-measure-learn loops, are the strong focus on customers and users and the high speed and agility of digital development. All companies in this study acknowledge the im- portance of adopting these new approaches and methodologies, and most of them have to some extent introduced one or several of the new and more agile ways of working. Within some of the frontrunner companies, the new approaches have gained a strong foothold on the digitalization agenda, and a ‘digital first’ mindset has started to develop with a point of departure in customer needs rather than in existing products and solu- tions. However, the majority of respondents still indi- cate that there is a long way to go before the new working practices are fully adopted into the daily routines. Most companies are still in the very early stages of testing out new concepts like sprints, pilots, and MVPs in pockets of the organization. Startup mindset Scale with confidence ‘We have a very entrepreneurial setup in our way of driving the digital initiatives. We work in sprints, and if the business case is positive and we believe in the idea, we have a short time to market’ — COOR
  49. 49. 50 THE DIGITAL TRANSFORMATION REPORT 2017 How? Recipe for Success: • Highlight potential: Identify business benefits from new ways of working, e.g. from sprints, MVPs, and similar new working practices • Set the team: Ensure a talented cross-functional and multi-capable team with an exploratory mindset and a relevant mandate that can get things done • Set the structure: Set up the structure for how to run the new ways of working, including how to ensure not to lose oversight, and make sure paper trails and learnings are captured for future developments • Test and prove concepts: Be pragmatic and seek short-term results by turning issues into outputs through pilots or prototyping within weeks or maximum a few months ‘We are moving rapidly toward an “iterate and learn” mindset across both IT and business functions. We are not fully there yet but the speed and value this approach brings to our enterprise is clear to all’ The limited adoption rate of new ways of working can often be linked to an unwillingness or inability among many employees to change. In order to en- courage a positive attitude toward new initiatives, many companies actively seek to highlight internal examples where new and more agile ways of work- ing have enabled the successful development of concrete solutions. Such examples are necessary to boost internal change readiness and the facilitation of increased cross-functional collaboration – both are key success factors in driving digital transfor- mation. In addition, many indicate the challenges with the integration and co-existence of traditional and new ways of working where many state that both are needed for the foreseeable future. — ELECTROLUX
  50. 50. THE DIGITAL TRANSFORMATION REPORT 2017 51 Capability 4: Competencies The war for talent is intense, and companies are fighting first to attract and then to retain the strongest digital competencies, which to an increasing extent move between industries Leading Practice A prerequisite to successful digital transformation is the abil- ity to identify, attract, develop, and retain new competency profiles such as designers, tech developers, data scientists, and entrepreneurs. A further necessity is the ability to assim- ilate these new competencies into the core of the business to create digitally enabled teams that combine and integrate new functional competencies and deep industry experience.
  51. 51. 52 THE DIGITAL TRANSFORMATION REPORT 2017 Competencies Limited clarity of which new competencies to seek and how to integrate them into to the business, leaving a bias clearly tilted towards traditional competency profiles in leading positions. Understanding of which competencies to seek and attract, but a yet unproven track record in retaining the new competencies due to challenges with integrat- ing them into core of the business. Strong ability to not only attract but also retain new competency profiles by actively engaging relevant communities, configuring effective teams, creating desirable working environments, etc. Not at all 0 0 13 3 Low degree Some degree High degree Very high degree To what degree are you able to identify, attract, assimilate, and retain the necessary competencies to succeed with your digital transformation agenda? Avg. Importance Avg. Maturity 4.4 3.0 4 How?
  52. 52. THE DIGITAL TRANSFORMATION REPORT 2017 53 Identifying, attracting, developing, and retaining the right competence profiles is one of the most important drivers of getting digital transformation right; however, the high demand for specialized digital competencies makes the war for talent a key challenge for all companies. Competition comes not only from traditional larger players, but also from smaller-scale startups, which can often offer a work culture that is more attractive to the sought-after profiles. The participating companies generally have good employer brands in the market and appear to be skilled in both identifying and attracting new digi- tal competencies. However, they are less proficient in retaining and assimilating them into the core of operations as well as integrating them with the more ‘traditional’ functional and industry-related expertise. With only two companies assessing themselves as having a high degree of success in both attracting and retaining new essential digital competencies, this is a digital transformation driver with a lot of improvement potential. Generally, the supply side of talent is currently falling short of the growing demand for emerging competency profiles. Additionally, the sought- after profiles tend to value fast-growing and less established work settings and cultures, meaning the established corporations not only fight each other for these profiles, but also the smaller-scaled companies and startups. Companies in this survey point out that key drivers of getting the right com- petencies are environments that foster creativity and innovation, digitally savvy managers who can speak the language and attract younger talents, and a clear and exciting description of the digital transformation journey the company is on. This appears to be easier said than done. To supplement in-house digital competencies, companies are relying heavily on external resourc- es to provide specialized digital knowledge and fill potential capability gaps, and some companies are struggling to find the right balance between inter- nal and external resources. External competencies allow for highly specialized and up-to-date capa- bilities that are often too expensive to build inter- nally. However, by relying too heavily on external competencies, a company’s internal digital capa- bility level may remain underdeveloped, and the Identify Attract Retain ‘We are able to attract talented people with a high level of digital competence; the challenge is always to retain them given the numerous options they have across industries’ — BROTHERS
  53. 53. 54 THE DIGITAL TRANSFORMATION REPORT 2017 How? Recipe for Success: • Understand competence requirements: Invest in understanding the possibilities of bringing new skills on board and map how valuable they are to the company (hire digital leaders who understand this) • Balance internal and external competencies: Decide which skills to have in-house and which to outsource • Create an attractive environment: Establish environments to attract and nurture new profiles, if necessary via independent units • Communicate the journey: Define, describe, and communicate the digital journey your company is on/about to embark on to attract the necessary talent ‘Sometimes, it is beneficial to hire a junior person with a new perspective rather than someone bringing deep knowledge within one specific area – of course, we try to get the right mix’ knowledge transfer from development initiatives to line organizations responsible for implementation becomes limited. It is highly important to find the right mix of inter- nal and external digital competencies. The key is to be conscious of where to allocate which kind of resources to ensure agility, speed, and up-to-date knowledge while at the same time maintaining and developing the internal competence level. Some companies are dependent on strong inter- nal control of operational systems and processes and rely on external competencies only for the development of new systems, whereas others are comfortable outsourcing operational systems and allocating internal resources to digital develop- ment initiatives. Many companies are actively responding to the need for establishing more entrepreneurial work environments. Some, such as Telia and NCC, have established separate divisions for building new dig- ital enterprises. Large exposure to executive man- agement has generally proven to be a prerequisite for these separate units to ensure traction given the uneven balance between 10-20 people working with future ideas and many thousands of people focusing on existing business. — SWEDBANK
  54. 54. THE DIGITAL TRANSFORMATION REPORT 2017 55 Capability 5: Governance and Performance Digital development requires a flexible governance structure with room for and focus on exploration of new ideas and new priorities Leading Practice A governance model that supports the digital agenda and ensures that the company ‘stands its ground’ when facing tough prioritization dilemmas. This necessitates a govern- ance model that tolerates uncertainty and supports a more exploratory mindset and new ways of working. It includes a strong mandate to the people responsible for the digi- tal transformation, decision-making processes structured around the desired way of working to ensure speed and agility, and the use of relevant evaluation and prioritization metrics for development activities focusing also on custom- er/end-user engagement and initiative progress.
  55. 55. 56 THE DIGITAL TRANSFORMATION REPORT 2017 Governance and Performance To what degree does your governance model support the desired future mindset, new way of working, and agile decision-making process necessary to succeed with your digital transformation agenda? Traditional governance model with a gravitation towards linear thinking and a tendency to push the company back to regular processes and decision criteria. Introduction of new governance mecha- nisms including decision processes and bodies, evaluation metrics, etc., but difficulty in making it work in conjunction with the traditional govern- ance model. Digital transformation ambition clearly sup- ported by a new gener- ation governance model including minimum interference decision gate models, light de- cision bodies, progress metrics, etc. Not at all 1 8 Low degree Some degree High degree Very high degree 7 Avg. Importance Avg. Maturity 4.3 2.7 0 4 How?
  56. 56. THE DIGITAL TRANSFORMATION REPORT 2017 57 Traditionally, companies have been organized with an emphasis on ensuring stability and predicta- bility. However, today’s fast-paced digital reality requires companies to rethink and set up more adaptive governance models that spur explorative approaches, allow for iterative processes, and tol- erate failures – while at the same time allowing for overall control of the company direction. The adaptive governance approach is characterized by a higher degree of decision-making autonomy and relies on a broader range of evaluation crite- ria that – in addition to traditional top- and bot- tom-line metrics (e.g. ROI and payback time) – also focus on metrics that are more customer-centric and focused on initiative progress (e.g. number of solution releases, number of attempts/failures, and real-time customer experience feedback). In general, there is strong recognition among the surveyed companies that current governance models need modification in order to cope effec- tively with digitalization. Companies have different starting points; some, for example, establish CDOs with strong mandates while others push mandates down to the line organization with the challenge of ensuring cross-company coordination. However, while there is intent to get this right, many execu- tives admit that it is difficult to establish the right organizational setup that supports the desired agility and speed while at the same time making sure it works for the whole company. The dilemma is often centered on how to establish a governance setup that allows for the freedom and autonomy of digital units to carry out development initiatives independently to ensure speed, while at the same time exercising some degree of control to ensure coherence with the overall strategy and contin- uously verifying the concrete value and business optimization potential of digital initiatives. This balance is difficult to strike, but highly critical. Viability Desirability Possibility Digital Scorecard Foresight&facts Ambiguity & risk “Old World” “New World” ‘We have worked a lot with incentives and leading by example – every manager has some form of digital target; however, we are not 100% there yet’ — MTG
  57. 57. 58 THE DIGITAL TRANSFORMATION REPORT 2017 How? Recipe for Success: • Establish governance setup that balances speed, agility, and control: Set clear directional guidelines (coherent with strategy) including outspoken ambitions and customer- centric measures, ensure that the people responsible have the power, mandate, and budget to get things done (at the right speed), and make sure the company-wide agenda has traction • Promote alternative evaluation metrics: Build metrics that determine progress and value, especially in relation to the customer, e.g. number of new customers onboarded, customer instant response, activation rate, and behavior • Ensure organizational ownership: Make sure people buy into the new solution, and hold on to it even under pressure Although most companies have a clear digital vision and have already embarked on multiple ambitious digital initiatives, there still appears to be a tendency to fall back on (or continue to use) the more traditional governance model when assessing large-scale digital initiatives. Consequently, the majority of respondents acknowledge the need for adjusting or supplementing their governance setup as well as their evaluation and prioritization metrics to better prepare for the digital world, particularly relating to digital initiatives characterized by high uncertainty. Therefore, it is very important that the governance principles and mindset are well anchored and bought into all the way to the top as well as horizontally across business functions and units. This is even more important if the re- sponsibility is organized in a central or separate function since the impact and funding most likely will happen in an existing BU, and hence – in order to maintain speed – an agile governance model is paramount. ‘Our traditional business models are not adapted to handle what digitalization might entail, also creating challenges for driving digital initiatives across the company’ — NCC
  58. 58. Capability 6: Technology Development Companies are struggling with rigid and complex legacy IT infrastructures which often hinder speed and focus on digital exploration activities Leading Practice Establishing a bi-modal technology capacity with the ability to combine stable operations with development efforts driving digital transformation while continuously ensuring a constructive dialogue between two domains to enable later integration. This requires the ability to work around complex IT legacy infrastructure by creating some form of separation between exploratory development initiatives and daily operational processes. THE DIGITAL TRANSFORMATION REPORT 2017 59
  59. 59. Technology Development Technology develop- ment process primarily based on a ‘one mode’ approach with limited infrastructure support- ing agile build and scale development activities. Two-mode technology development setup fit for both legacy and ex- ploratory development, but with significant com- plexities when integrat- ing and/or migrating the two modes. Enterprise-wide capa- bility to operate two separate but coherent technology modes, one focused on predictability and the other focused on exploration, to catalyze digital transformation. Not at all 6 4 0 Low degree Some degree High degree Very high degree To what degree do you have an agile technology development setup that ensures fast-tracking of build and scale development activities without compromising your operational IT? 10 Avg. Importance Avg. Maturity 4.3 2.9 0 How? 60 THE DIGITAL TRANSFORMATION REPORT 2017
  60. 60. Ensuring an agile digital development setup that enables fast-tracking of development activities without compromising the operational IT is a crit- ical aspect of succeeding with the digital transfor- mation agenda. Almost all companies in this study acknowledge the need for a two-speed technology setup, and a majority of the interviewed companies find it challenging to cope with the high pace of development while handling rigid complex leg- acy IT systems that have evolved over time into a patchwork of separate systems. The ability to work in two speeds to ensure the agility of digital devel- opment initiatives is therefore seen as inescapable for established companies to be able to efficiently execute digital initiatives. The majority of respondents currently work with some version of a two-speed technology setup, and some consider themselves somewhat success- ful at ensuring an agile digital development pro- cess while at the same time effectively operating day-to-day IT. However, many put forward chal- lenges in legacy systems requiring a lot of attention and resources, in getting their technology platform and environment to be sufficiently agile and capa- ble, in how to put in place a balanced prioritization process, and in ensuring traceability, common definitions, and adequate documentation of the faster-paced development efforts at the same time. Another frequently mentioned issue is the com- plexity related to integrating solutions and systems from the two technology development speeds. This is particularly prevalent when an organization ‘We have put a lot of efforts into creating an agile development setup, and we are running two-speed IT development – it is paying off and we are really on the right track’ Full-stack Inhouse Two-speed Outsourced Single-speed — VATTENFALL THE DIGITAL TRANSFORMATION REPORT 2017 61
  61. 61. How? sits on old core legacy systems that limit the agility when it comes to developing solutions that depend on integration to back-end systems and platforms holding transaction data, billing data, etc. Most companies leverage external technology development resources to strengthen agility and to stay focused on their own core, non-technology activities. Working together with the right partners and knowing what tasks and responsibilities to outsource can provide improved overall perfor- mance while at the same time giving access to the newest technology developments, which would be harder to attain if technology developments were completely insourced. ‘We are at a very good level in R&D, creating solutions to customers and with new technology in general through our decentralized approach. In addition, we have a central PMO that prioritizes development initiatives, but agility and speed need to improve further’ Recipe for Success: • Run your IT at two speeds: Separate the exploratory mode from the predictable mode, but take subsequent integration (e.g. to transaction data, billing, etc.) into account early on • Coordinate and calibrate: Create a clear view of development initiatives and prioritizations, and keep a close and strong collaboration between the developers, operational IT resources, and business • Leverage external capabilities: Outsource selected areas to external resources for agility and speed to keep maximum focus on the core business — ÅF 62 THE DIGITAL TRANSFORMATION REPORT 2017
  62. 62. ‘The energy system is in the middle of a fundamental transformation with significant effects on both society at large and the players in the industry. Energy production is getting more small- scaled and distributed, which leads to a need for increased intelligence in the distribution network as well as new ways of communicating between the growing number of production units. Vattenfall is a key player in this ecosystem and we need to be in the forefront of understanding and driving this development, especially from a digital perspective’ – VATTENFALL
  63. 63. The banking industry is caught in the middle of a global disruption. New products and services such as Bitcoins and peer-to-peer lending have changed the standard banking practices, and the old players need to change to stay relevant in the new industry. One of the potential threats to the traditional banks are the small FinTech startups. They are taking over niche by niche starting with the crossroad between customer pains and revenue pools. Their strength is in their focus. The banks are still stuck in their groove trying to cover the whole market, whereas the small enterprises can perfect and launch their niche products immediately. Digital transformation is high on SEB’s list of priorities. They are working throughout their value chain by connecting customers in the front end, automating their operations, creating data and insights, and focusing on innovation. They have set up an internal innovation lab, but they have also chosen an old, but proven strategy for countering the competition from startups: if you can’t beat ‘em, join ‘em. That is why they invested SEK 85 million in the Tink savings app. For SEB, partnering with the best and most promising FinTech startups like Tink is part of a grander strategy. Instead of going through the internal design, approval, development, and testing, they invest in a turnkey solution for a product their customers want and need – which can be further developed and integrated into their own traditional banking services. With the investment from SEB, Tink has upgraded the app to Tink 2.0 and included more of the services you expect from a bank; for example, you can now pay your bills or transfer money in the app. This strategy benefits both SEB, Tink, and the customers; it is a win-win- win situation. About SEB SEB is a leading Nordic financial services group. In Sweden and the Baltic states, SEB offers financial advice and a wide range of financial services. In Denmark, Finland, Norway, and Germany, the bank’s operations have a strong focus on corporate and investment banking based on a full-service offering to corporate and institutional clients. ‘Our position makes us a popular FinTech collaboration partner, but even so, we still lose a lot of great opportunities because there are simply so many to compete for’ ‘This is what our customers want today. Our customers expect us to provide the very best in the market, and we want to be able to deliver’ For SEB, the SEK 85 million investment in the Tink savings app was only a small step in their new strategy. SEB is involved in several FinTech partnerships, drawing on the expertise of external partners to deliver on what their customers want. The startups create strong niche products, which can be strengthened further through SEB’s capital and integration of traditional services. SEB Case Study
  64. 64. Capability 7: External Collaboration Companies have started to collaborate with external partners to gain inspiration, strengthen delivery, and access new and exploratory business domains Leading Practice Clear acknowledgement that the organization should not – and cannot – do everything itself. Leading practitioners col- laborate with digital natives and complementary resources in open ecosystems to gain external inspiration and support, and to stay challenged. Among other things, this can involve running open innovation initiatives such as hackathons and accelerator programs, and working closely with startup com- panies, venture development firms, and academia on devel- opment activities. Additionally, external collaboration can fa- cilitate a structured approach to continuously challenging the organization, e.g. through external digital advisory boards. THE DIGITAL TRANSFORMATION REPORT 2017 65
  65. 65. 66 THE DIGITAL TRANSFORMATION REPORT 2017 External Collaboration To what degree do you leverage complementary resources in open and collaborative ecosystems to enhance your transformative capacity? The use of external collaboration partners is primarily focused on sourcing expertise from external ‘vendors’ that provide input and contribute to projects in closed environments. Openness towards value- creating partnerships, often in non-traditional areas, to create leverage, ensure execution speed, and/or open new do- mains that are otherwise difficult to reach. Full appreciation of op- erating in ecosystems of partners, often together with competitors, to take advantage of knowledge and assets outside the enterprise despite the possible risks involved. Not at all 0 5 1 Low degree Some degree High degree Very high degree 4 10 Avg. Importance Avg. Maturity 4.0 2.9 How?
  66. 66. THE DIGITAL TRANSFORMATION REPORT 2017 67 Drawing on expertise from external partners in an open and dynamic environment supports the internal capacity to drive digital transformation. Leading organizations have an open mindset and collaborate with various types of external partners in external networks and ecosystems. They do so with a clear view of opportunities in the market, how to best cooperate with partners, and what value collaborations can bring to the business. Across the surveyed companies, various forms of collaborations have been initiated to assist in driv- ing the digital transformation. Companies under- score that they are unlikely to master everything or to be able to employ all talent needed, and therefore, external collaborations will be a key success factor going forward. Almost all companies surveyed also underline the increased importance of more external collaboration due to the ever- increasing development/innovation speed and fast-paced emergence of new competitors. Collaborations can take many forms, and the per- ceived benefits for the incumbent companies are clear. On the other hand, incumbent players have certain advantages like large customer databases, access to capital, and market intelligence – some- thing which smaller firms or companies in different industries lack. This provides for win-win situations. Collaborations across industries are also increasing, and some companies think it will be of strategic importance to ‘lock in’ important players into co- operation. Inspiration from outside vendors Value-creating partnerships Multiple unexpected collaborations ‘We are not large enough to have all capabilities in-house so we have an “ecosystem” set-up in which we run digital initiatives together with partners, customers and suppliers’ — COOR
  67. 67. How? 68 THE DIGITAL TRANSFORMATION REPORT 2017 ‘External collaborations have not been prioritized earlier, but with our new setup, we aim to shift from ad-hoc to more systematic collaborations and new ecosystems’ Recipe for Success: • Get engaged: Understand what is out there and how to leverage external input to seek value in new domains • Build an open mindset: Collaborate externally through an open mindset and challenge traditional collaborative partnership models • Share successes: Communicate successful collaboration initiatives to build internal momentum and reduce barriers for future external partnerships However, the differences in focus and maturity are currently relatively large, and most companies are in the early phases of development. A few compa- nies draw on startup capabilities, e.g. through the organization of events such as hackathons, some collaborate with academia, whereas others have created a full ecosystem of partners with whom they collaborate to innovate and stay on the front- line of developments. External collaboration is clearly an important area, but many companies struggle to define the right model for cooperation and engagement as well as to stay focused/prioritize given the many oppor- tunities. One specific challenge brought up that hinders the development is the perceived issues connected to handling ownership of data/IP. — TELIA

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