January 4, 2020 Episodes
Episode #56: How Intelligent Automation Will Empower People, Transform Organizations, & Improve Our World
In today’s podcast, we interview Pascal Bornet, Author & former Head of AI, Automation, and Digital Innovation at McKinsey & Company
If you’ve already started & led the intelligent automation practice for McKinsey & Company, one of the world’s three largest strategy consulting firms, and prior to that you did the same for Ernst & Young, one of the “Big Four” accounting firms, where do you go next? If you’re Pascal Bornet, you and your co-authors publish a book that instantly becomes the standard reference work on intelligent automation. In this opus, you collectively distill all the valuable experience & insights gained over the years working on some of the world’s biggest & most complicated automation projects. By doing so, you not only illuminate and dispel much of the mystery surrounding automation, AI, and digital transformation, but you advance its democratization for the masses. And you title it, what else, “Intelligent Automation”.
We speak with Pascal about the monumental work he and his co-writers recently completed. Our discussion ends up revealing how automation raises the importance of the employee experience to the same level as the client experience, the key to getting middle management on board supporting a digital transformation, and the three most important metrics which best capture the effectiveness of automation to an enterprise.
Guy Nadivi: Welcome, everyone. My name is Guy Nadivi and I’m the host of Intelligent Automation Radio. Our guest on today’s episode is Pascal Bornet, author and former head of AI, Automation, and Digital Innovation at McKinsey & Company, a well-known worldwide management consulting firm. Prior to that, he founded and led the intelligent automation practice for Ernst & Young. Pascal recently co-authored a book titled “Intelligent Automation, Learn How To Harness Artificial Intelligence To Boost Business And Make Our World More Human”. Now I’ve read this book cover to cover, and I’ll tell you, it’s not just a book. It’s more like an automation anthology that centralizes everything you need to know about the current state of the art of automation, and where it might lead us. It also contains what’s claimed to be the largest list of intelligent automation use cases publicly available. Pascal and his coauthors deserve a lot of praise for putting together this resource, which I think may become required reading for everyone in this field. The book also contains some provocative predictions, such as intelligent automation has become such a business imperative that 50% of the S&P 500 will churn within a decade, because legacy organizations will find it too difficult to adapt to the new “automation first” paradigm. There’s so many things to talk about in this book, and we’re thrilled Pascal Bornet is able to join us from Paris, France to do a deeper dive on some of its content. Pascal, welcome to Intelligent Automation Radio.
Pascal Bornet: Guy, thank you very much for inviting me and very glad to share my passion with you today.
Guy Nadivi: Let’s dive in. Early in your book, you provide a fascinating analysis of some well-known companies based on their profit per employee. Not surprisingly, digital leviathans like Facebook, Apple, and Alphabet Google’s parent company are most profitable. These are relatively new companies, which you contrast with much older organizations like IBM and McDonald’s whose profit per employee is anemic by comparison. You then go on to say, “All businesses are going digital. The winners will be those who do so the quickest and to the greatest extent.” And a little further down you add, “One thing is sure. The winners, even the survivors will be highly automated with the bare minimum of human involvement.” Let’s pretend I’m the CEO of a major Fortune 500 company with a lot of legacy business lines comprising my enterprise. I want to survive this coming paradigm shift, and I want to leverage automation to transition to the next phase for my enterprise. What would you tell me should be my first step on the road to radical digital transformation?
Pascal Bornet: Thanks Guy. That’s a great question. That comes very often in discussions with CEOs about how their strategy and the vision they should have for their business. I like to explain to them that there are two ways to go. The first one is either to modernize the legacy business or create a brand new digital business. Both of these options have their pros and cons, and we explained this in the book, but let me give you a hint of each of those drawbacks and advantages of each of these options. The first one to modernize the legacy business. It’s quicker to implement. It’s about implementing intelligent automation technologies through machine learning, robotic process automation, workflows, and others. Redesigning the processes that are currently existing, involving the people that are currently performing those more manual processes. It seems as a CEO, that you’re really playing with your assets, your current assets. That’s really where the passion comes from a CEO point of view and where the energy would come. I think those can be the advantages of going this way. The inconvenient constraints of going this way are very heavy basically, and it sort of what changed management, getting the people to change the way they are working, getting to change the IT systems, legacy IT systems as they are today. This takes, as all of us know, all of us that have gone through these transformations, a lot of efforts, a lot of resistance from the teams, and in terms of the time of the transformation, it will take also longer. It’s typically a transformation that is a six months down the road minimum up to 18 months, and even more, depending on the scope. Now, going to the second option which is creating besides the legacy business, creating a brand new business. Brand new division, think of it like a new division or new business units, which we call a pure digital business. The advantages is that you don’t create any impact on your legacy business, which is working very well. That is still working and delivering the benefits and the profits that you’re expecting, and that your shareholders are expecting. You’re not risking to disturb anything in this business. You’re really isolating the risks, creating these new digital businesses, where you can try anything. My advice is to start small, but when you see that it works scale fast. You can get a small team trying different technologies, building a first pilots on one of your processes. For example, onboarding of client for a certain product. See if it works, showcase to the legacy business that it’s working. When this new digital business is working, you have two options, either you… and I’ve seen both of them, either you use it as a showcase to the legacy business to demonstrate that those new technologies are working well. They are working well on those on a few processes and incorporate step-by-step those new digital concepts that have been demonstrated into the legacy business and use it as catalyst for the change of the legacy business. That’s one option. The other option is move your legacy business into the new digital business. I have seen some very successful stories in that, banks for example, that have created a completely online new digital business besides the legacy brick and mortar one, and that’s have slowly moved their employees into the new business unit, and that have been able to accelerate the transformation because they’ve started small, but really been able to scale it quite fast, because no risks, no constraints. I’ve seen it being very successful. Those are the different ways for a CEO to consider vision around the transformation into intelligent automation with each of them have their risks. There are pros and cons, but this is what I’ve seen. The last one is really the one that is the most impactful.
Guy Nadivi: Well, let’s talk about impactful things in a segment of your book entitled “Avoiding $10 Trillion of losses due to fraud, errors, and accidents per year”. You drill down a bit on how intelligent automation can mitigate these staggering and very impactful costs. Now, I’ve often talked to organizations about the benefits of automation eliminating the potential for human errors without eliminating the humans, and that this alone could easily result in the biggest return on investment for them when it comes to automation. Yet, for some reason, eliminating the potential for human errors is never one of the top reasons why organizations invest in automation. Why do you think that might be?
Pascal Bornet: I think it’s a matter of short term return for the shareholders. I think all of us shareholders, at some point, we all own some shares in companies on the stock exchange or whatever and I think we can all understand that’s what we expect our dividends and those dividends need to be paid from profits. That’s why most of the CEOs, at least for the listed companies have in mind that any of the initiatives they would implement should get transformed into money benefits. On the other side, we can see the family-owned businesses. It can be big companies as well now that are taking less this space. I’ve seen them being more successful in those long-term transformations. When we talk about intelligent automation, I’m used to say that it’s not a destination, but it is a journey. It’s not a one-off investment and you get the return and everything stops. No, it’s about building a capability. The dynamic in the company to constantly watch the market, watch the advancements of technologies and understand how those technologies can bring ever and ever more benefits to the company. Those benefits are not only money benefits. I think the other reason is that it’s very difficult to estimate the gains from elimination of errors, for example, or increase of quality, while it’s very easy to calculate the returns from releasing job roles in a company. I think this is the reason why a lot of companies have failed at their attempt to transform themselves with automation. Because if you only think about money return, you go against one of the key principle of those transformations, which is keeping the people at the center. I’m used to say that those transformations are made by people for people. That, I mean, intelligent automation doesn’t exist if people don’t implement it, don’t design it and if people don’t use it at the end, so it’s critical. The people dimension is critical. I think in the future, we might also see some changes in the mindset of the CEOs that are more focused on money return. I think the trigger of this change has been in the COVID-19 crisis that we are living in currently. We’ve heard a lot about in the last decades about the criticality of client experience, and client experience was in the mouth of any CEO as a key element for business success. I think it’s going to stay the same, but on top of this, now we have employee experience becoming as important or maybe more important dimension. We’ve seen during this crisis, the current crisis that the companies that have been successful have been the ones that have been able to manage their people remotely, motivate them remotely, make them work remotely, give them the assets and the tools they need to work remotely. Those companies have thrived in the … they have not only survived, but they have thrived in the current crisis. Employee experience, I think is becoming a key component in the business world.
Guy Nadivi: You just mentioned COVID-19 which you talk about in your book and use it as an example of why it’s important to build societies that are more resilient to crises like the COVID-19 pandemic. Pascal, from what you’ve seen, how much has the need for greater resiliency grown as a justification for deploying intelligent automation?
Pascal Bornet: That’s a very timely topic and we’ve seen all organizations around the world suffering from, from this crisis, hospitals, commercial enterprises. All of them faced issues, first of all, getting their cash in from their clients. Secondly, staying involved with their clients. Thirdly, getting their operations still up and running. Finally, as I just said, getting their people still engaged, motivated and still working towards achieving the vision. All companies have suffered and currently we are very busy and so the people like me in the intelligent automation field are getting a lot of requests from those companies that didn’t make the jump before. I think all those companies currently are reflecting and understanding that digitalizing and automating their business – while it was a question of competitiveness before the crisis – has now become a question of survival. I think that all the businesses that are not currently implementing those transformations or have not done it before, are just surviving because of the subsidies of the governments. It come to work in the long term. Again, I think it’s really a question of survival of the businesses nowadays.
Guy Nadivi: You draw upon a very clever medical metaphor when talking about what’s required to transform an organization with intelligent automation. In your book, you described the transformation requiring surgical precision with automation being administered like medication at just the right dose and the organization’s pulse needing to be checked regularly. Tony Saldanha, a former vice president of Procter and Gamble was on the podcast last year and talked about a “corporate immune system” in place to keep an organization healthy. Specifically, he stated that, “It is the middle management layer that’s on the critical path and has the potential to slow down or even block change.” Pascal, what’s your prescription for dealing with obstructionist middle managers who act subversively towards automation encroaching upon their section of the organizational body, often in direct contradiction to upper management directives?
Pascal Bornet: That’s funny. I have a similar experience as well of middle managements that can be constraints to a transformation. I think before all the management, the C-level is the most critical in a transformation and getting them involved clear about their vision and mobilizing the whole company is the most important. But as you said sometimes, even though all those efforts are going the right way, the middle management is not there or not doing what is expected from them. This can lead to some issues. When I saw that in a few companies, it was about the way we’ve solved this issue has been to involve those people as much as possible in the transformation, getting them to own the transformation, to be part of it. The way to get there is about getting them to understand what is the transformation about. What are those technologies about, understand as well, what are the objectives and show them how those objectives can be served by this transformation and by those technologies. Educate them on that. I think another key point is about aligning their KPIs on the achievement of this transformation and the success of this transformation. That’s critical. I think that’s a very important point. As I said, make them participate and get their teams to own as well the transformation. Sometimes you get those middle management having no choice then follow the dynamic of the transformation because their teams are doing it. Sometimes the action is as well to focus on their teams and when they see their teams being so involved, so focused on making this transformation happen, they know they have to change because they are the layer between the management that is already focused on getting the transformation done and their teams that are as well getting into the same direction. To get their teams to help push the transformation, something very useful that we have been using over the last few years, are what I call the “democratization of technology”. Basically using technology that requires minimum skills from business users, for them to implement technologies – intelligent automation – to improve their own work, their own daily work. Think of low code platforms. Think of some RPA platforms in some way that require very limited skills and that everyone can use to improve their own daily work. When you use this type of technology is not only, of course, you can help to drive the transformation at higher speed because you have more hands working towards implementing it, but and most importantly, you change the mindset of the company. Because when people are the actors of the transformation, they start to own it. They really see the benefits because it’s touching them on a day-to-day basis. They start to be the champions, the change agents. They are sure that this transformation should happen and it really helps to change the dynamic. To summarize, my point is it’s all about change management. It’s all about aligning the KPIs, but it’s also about using some emerging technologies that help us today to involve more the people and the democratization of technology is a key aspect, it becomes a key aspect in getting all the people in the dynamic of the transformation.
Guy Nadivi: In your book, Pascal, you talk about some of the key enablers for success in implementing automation. They include the well-established idea of having an automation center of excellence, a COE, as well as an automation operations center, an AOC, to deal with ongoing maintenance and innovation for automation that’s in production. Given the growing strategic importance of automation to an enterprise’s competitiveness and resiliency, is it time for these automation functions to be unbundled from IT, so that automation can become its own department reporting directly to the CEO via a Chief Automation Officer?
Pascal Bornet: That has been a recurring question for the last five years I think, where lot of the companies have been wondering whether they … should the intelligent transformation be owned by IT, by business, by both, or by none. My experience on that is that there is no one answer. It really depends at the end of the day. It really depends on the context of the company, the management, and the governance that is put in place after that. Still, if a client asked me … if a company asked me, which one would you recommend? I’ve seen the business-owned transformations being more successful. I think it is for the simple reason that those transformations are impacting the business processes to the lowest detail of those processes. A change at such a level of detail, at the level of a click or at the level of a prediction on a certain indicator, is only understood by the business and the best people to implement it are the business people. Now, of course, business people are busy driving the day-to-day work. Very often we will advise the creation of a specific, as you said, a center of excellence that will regroup the business people, business analysts at some point. That will also use the IT skills. While the business should own the transformation, IT should govern or support those transformations in the sense of no one in the company knows better how to implement a technology program than an iT department. No one knows better how to manage changes in technology, maintain technology than IT. IT should be involved definitely, but more as a support, more as a governing body, making sure that the deadlines, the implementation processes are in place, and supporting the business in this transformation.
Guy Nadivi: Pascal, you’ve seen a lot of automation projects for a lot of different organizations. Is there a particular metric you like above all others that best captures the effectiveness of automation to an enterprise?
Pascal Bornet: I think in the book we make these analyses, this research comparing different companies and analyzing them on what we think is the most representative metric of the level of automation in a company. Which is how much a company is able to generate as profits per employee, and of course the higher, the better. It means the higher, the more the company is leveraging technology to automate a maximum of its processes. This is very quantitative. I think on top of this, we should add some more qualitative ones, like the level of customer experience that we usually try to quantify using KPIs like net promoter score, the NPS. Another important one, as I mentioned before, employee experience is becoming more and more important. I think surveys in the company regularly taking the pulse of the people in the company, making sure they are energized and involved into the company day-to-day work, but also the day-to-day transformation as well is key. I think the three key indicators, one is the profit per employee. The second is the customer satisfaction through the NPS. Third one is employee experience through surveys and these type of studies.
Guy Nadivi: Pascal for the CIOs, CTOs, and other IT executives listening in, what is the one big must have piece of advice you’d like them to take away from our discussion with regards to implementing automation?
Pascal Bornet: I would say one thing is, I mean, don’t wait. Don’t wait! Your competitors are doing it already. Especially in the COVID times, as we discussed before, it’s now becoming a matter of survival, any condition to thrive. I would give as advice, take the advantage of these constraining times to get the budgets, to start or to amplify your intelligent automation transformation.
Guy Nadivi: All right. It looks like that’s all the time we have for on this episode of Intelligent Automation Radio. Pascal, it was a real treat having you come on the show today to talk about some of your books, extensive insights. I plan to check it regularly to see how well the predictions are going that you and your coauthors made. Maybe we can even have you come back on the show down the road to do a predictions review.
Pascal Bornet: Excellent. I would love to. Thanks a lot Guy for having me.
Guy Nadivi: Pascal Bornet, author and former head of AI, Automation, and Digital Innovation at McKinsey and Company. Be sure to get his book, Intelligent Automation at Amazon, Barnes and Noble, and other fine book sellers. Thank you for listening everyone, and remember, don’t hesitate, automate.
Author & former Head of AI, Automation, and Digital Innovation at McKinsey & Company
Pascal Bornet is a recognized global expert, thought leader, and pioneer in the field of intelligent automation (IA). He founded and led the IA practices for Mckinsey & Company and Ernst & Young (EY), where he drove hundreds of IA transformations across industries. Bornet is a member of the Forbes Technology Council, and he was awarded Global Top Voice in Technology 2019. Bornet is an influencer on the topic of IA with more than 300,000 followers on LinkedIn and Twitter.
Pascal can be reached at:
Pascal’s book “Intelligent Automation – Learn how to harness Artificial Intelligence to boost business & make our world more human” can be found at the following:
Book Website: https://intelligentautomationbook.com/
Book Depository: https://www.bookdepository.com/Intelligent-Automation/9798691819230
“When we talk about intelligent automation, I'm used to say that it's not a destination, but it is a journey. It's not a one-off investment and you get the return and everything stops.”
“…if you only think about money return, you go against one of the key principle of those transformations, which is keeping the people at the center. I'm used to say that those transformations are made by people for people. That, I mean, intelligent automation doesn't exist if people don't implement it, don't design it and if people don't use it at the end, so it's critical. The people dimension is critical.”
"All companies have suffered and currently we are very busy and so the people like me in the intelligent automation field are getting a lot of requests from those companies that didn't make the jump before. I think all those companies currently are reflecting and understanding that digitalizing and automating their business - while it was a question of competitiveness before the crisis - has now become a question of survival."
“…when people are the actors of the transformation, they start to own it. They really see the benefits because it's touching them on a day-to-day basis. They start to be the champions, the change agents.”
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Episode #18: Implementing Automation From A Small Company Perspective
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