Digital Transformation, the Holy Grail and the Disruption of Business Models

In this interview, Andreas Hinterhuber and Michael Nilles, CDO of Henkel, discuss the game-changing opportunities that the digital transformation opens to companies that embed a digital core into their business models. Michael Nilles sees digital transformation as the search for the Holy Grail: a force that is not easy to find, not easy to capture and that has the potential to dramatically improve the customer experience. In B2C, the Holy Grail is Henkel’s beauty ID ecosystem, a series of connected devices harnessing big data augmented reality allowing to create meaningful, personalized and direct relationships with customers. In B2B, the Holy Grail is Henkel’s digital twin along the digital thread. Henkel builds a digital twin along the entire value chain of the customer – starting with the initial customer request via deployment until and after sales service – in order to sell outcomes to customers. In B2B the digital twin enables outcome-based servitization. Digital technologies are thus more than enabling technologies: digital technologies allow to create fundamentally new, disruptive business models. At a fundamental level the digital transformation is, according to Michael Nilles, built on two shifts: a move from the product towards a software stack and a move from single products to open platforms. These two, fundamental forces are, in this view, the basic building blocks of every digital transformation: these are the pathways towards the Holy Grail. The digital transformation needs small, agile teams with end-to-end responsibility for project delivery, the mind-set of a start-up company and customer obsession. The final aspect that this contribution discusses are metrics of digital transformation. Key metrics are digital efficiency/productivity, digital revenues and digital growth (net of cannibalization).