Innovation @ scale

APIs as Digital
Factories' New
Machines?
 Nowadays, Tech companies capture most of the market value
7 out of the 10 biggest market
caps worldwide
are tech companies.

GAFAM have the 5 biggest While more than half of Humanity

market caps, representing (& rising) is online.
around $4Tn cumulated. 51% of the population represents 3.8B
people.

Tech
Talent Company Other
company

Apple Amazon Microsoft

Years before Years before Years before
trillion
since IPO
38 trillion
since IPO
21 trillion
since IPO
33
Internet Penetration, 2018
Apple, Amazon and Microsoft are
the three first companies to reach a 10 years ago?
trillion dollars valuation, all from the
Tech sector. Only 2 of the 10 biggest market caps worldwide
were tech companies (Microsoft and Google).

*as of 31 May 2019.

Tech companies took the advantage on traditional companies
After digital revolution comes the customer value era.

200s 1800s 1930s 2000s 2015s

Performance Daily performance of ROI & apparition of the Introduction of Digital revolution brings
grading of royal employees (Scotland first dashboards ARPU out new customer-centric
family members manufactures) (France) (Telecoms) players questioning
(China) traditional KPIs

Stakeholder era

Productivity era Finance era Customer era

1200s 1910s 1970s 1990s 2018-2019

First follow-up of Taylorism introduces EBITDA is The Balanced Scorecard Amazon, the “customer
margins (Venice the calculation of time introduced to evaluates financial & non- company”, is valued $1 trn
merchants) per movement (US highlight cash flow financial performance
workers) capacities (US) (US) Customer approach
expands to take into
account all stakeholders
 2.4M
“Brand” followers on
Instagram
is at the __

core of their Channel slack with

top 100 customers
business. for co-construction

Through
__

“70% of online
storytelling, sales & traffic come
from peer-to

community and
-peer referrals”

Emilie Weiss,

user-centricity
CEO & founder

Source: Recode Decode (Jan 2019), interview of Glossier CEO Emily Weiss
Digitally Native
A cosmetics tech company
Tech staff
40% of Glossier staff are tech profiles

Own tech solutions

Warby Parker’s proprietary algorithm to perfectly place
virtual frames on the user’s face

Data at the core of operations

Casper tracks user data at each touch-point and
constantly runs A/B testing to test new ideas and
solutions

Glossier competitive advantage :

• Shade Selector & Try it on : Tool that detect skin tone and
suggest products from a photo
• Point of Sale System (POS) : Online and offline data
synchronization
 Vertical integration economic
advantage
A single line of products
Something as simple as flowers

Control over the supply chain

Traditional market:
4 to 5 intermediaries taking
10% to 20% fees each

Producer Consumer
7 days
,

Producer Consumer
2 days ,

Source: Bergamotte’s podcast & interview

Becoming a software company works...
Nike, from shoe ware to software

In 2006, to expand their shoe
ecosystem and become part of their
customer’s journey, Nike entered the
digital gadget realm by introducing a
small sole-insertable chip.
In 2012, Nike created the Fuelband Nike recognized that Apple hardware
that users wore on their wrists and was more sophisticated and the
worked in parallel with Apple’s iPhone. adoption rates of mobile phones were
higher than fitness wearables, so 2014
was the end of the Fuelband. Leaving
the hardware to Apple and developing
its own software, Nike’s mobile app
platform, Nike+, came out as the
winner.
Today, having built an in-house
digital team, Nike has launched a
myriad of Nike+ mobile application
platforms that collects users’ real-
time data while integrating
themselves into users’ fitness lives.

… but you won’t get a differentiated competitive

advantage by installing an ERP better.
No more product centric, think customer centric
Looking at the new economy with different “glasses”.

Traditional Economy Vs New Economy

Industrial economy, centered on products Usage economy, centered on customers

Revenue = Unit price x number of products Revenue = Revenue per customer x number of customers

From markets... …to customers’ needs

Marketing mix (4P) User experience (4C)
Competition on one offer Competition on one particular need
Market share Usage share / Share of wallet

From a chain... ...to an ecosystem of partners

Added value Circular value
Value chain Closed loop of value
Assets owner Network orchestrator
Number of suppliers Length of network & diversity of connections

From core business... ...to mission statement

5-year plan 30-year vision, 6-month action plan
Growth & margin Customer Lifetime Value
Business portfolio Experience platform
Every company will need
their own “Software
Factory”,
to scale innovation
Into the rabbit hole
“Initiatives Matrix” are already well deployed in France

Share of CAC 40
having a specific initiative

70%

60%

50%

40%

30%

20%

10%

0
Digital Corporate Accelerator Incubator Startup
Factory/Lab venture studio

Disclaimer : a important number of initiatives are hybrids (depending on the companies and their needs).
1990s to 2000’s promised land.
The mainframe and the laptop

Any standard corporation Market

Distribution or consumer
Revenue: 1bn€
EBIT: 100m€
FTE: 10 000

BU BU BU …. BU
1 2 3 n

Infra: IT, CAPEX

Executive Committee
2000s to 2017 promised land.
A web site, communities, ecommerce and smartphone gadgets

Any standard corporation Market

Distribution or consumer
Revenue: 1bn€
EBIT: 100m€
FTE: 10 000

BU BU BU …. BU
High enthusiasm but limited 1 2 3 n
impact
1 Ten’s of FTE concerned.
2 Many initiatives everywhere
(POC, MVP).
3 Very little impact on business:
Infra: IT, Gestion, Moyen generaux, Digital Lab, Studio ...
0,1% at best.

Executive Committee CDO

The next optimal.
Innovation @scale and software Factories

Any standard corporation Consumer

Distribution or Direct to consumer
Revenue: 1bn€ + 10%
EBIT: 100m€ + 5%
FTE: 10 000 digital fluent

BU BU BU BU BU n+1
Need for global impact ….
1 2 3 n
1 All of FTEs must acculturate xx xx
to digital.
2 Initiatives must be distributed xx xx
to all customers.
3 Software must be self-edited.
4 Shareholders must be engaged SOFTWARE
and finance the transition.

Executive Committee together

Shareholders
Software is shifting
away from being
a department
to becoming
a competitive
advantage,
making it a lever
to drive growth
in your market
USE CASE
Sephora boosting CRM to offer
an omnichannel experience
Sephora helps sales assistants make personalized
recommendations to clients based on purchase
history and preferences.

Sales assistants can access the global omnichannel

CRM anytime anywhere on their tablets. They can
consult the products already purchased by the
consumer (in store and on the internet).

An automatic recommandation service then

advises them on the proposal to make to the client.

The sales assistant is also responsible for helping the

consumer in their discovery of technical devices in
the store such as connected terminals where the
consumer can buy all products from the brand
catalog and have them delivered.
Speaking about building a customer-centric strategy,

Getting started ?
What are the big challenges?

1
Give software access to
legacy systems (IT)
where the business runs
4 Harmonize cultures through
common languages and rituals
(market, technique, logistics, R&D...)

2 Make innovation for all

customers, all distributions, 5 Define
and promote data
all employees through operational
and measured cases

3
Make sure the first items
leaving the tech factory 6 Use digital to redefine
and become the industry
are competitive advantages standard on your difference
(for all customers, all
distributions, all employees)
A tale of two companies…

Company A Company B
Is a leading French Is a French clearance
department store, store chain
part of an RB-scale
group
A company-centric viewpoint breeds in differentiation

Company A Company B
Buying Buying
Sorting Sorting
Advertising Advertising
... Selling
...

If their businesses are identical, why would their IT

stacks differ?
Focusing on a differentiated core through customer taxonomy

Company A Company B
Our clients are inspired by finding the Fun, smart shopping thanks to recurring
best products according to their current deliveries from top brands, at incredible
needs, but also through exclusive prices.
experiences.

1. CURATION 1. IN-STORE GAMIFICATION

2. HOSPITALITY 2. LOYALTY

3. EVENTS 3. REAL-TIME

If they focus on their core value propositions, then their

IT stacks need to be custom-made
Adapt to the new experience standards on each customer touchpoint

I buy products
in store or online

I select 5 6 I try new toys

products 4
I search for brands
and products 3 7 I share my experience
with others

I plan on buying
stuff 2 8 I replenish on my
favorite products

I watch videos
tutorials 1 9 I try
new ones

Before the purchase During the purchase After the purchase

New ways to catch the attention New ways to connect with New ways to engage your customers
of potential customers your customers and create lasting relationships with them
Then find YOUR magic
Prose using machine learning for
customization
Brooklyn-based Prose, which launched in January
2018, is a direct-to-consumer shampoo brand that
allows consumers to create personalized hair care
products by completing a brief quiz. It is designed
to give the company’s Artificial Intelligence an
understanding of each consumer’s unique hair
needs, from age, hair type, and hair length to
specifics such as physical activity level,
environmental factors, diet, sensitivities, and
fragrance preference.

A custom formula is then created based on these

answers, and packaged in a bottle decorated with a
label that has your name on it. While it uses
technology to formulate the product, Prose was
inspired by a very old concept: the apothecary. “All
beauty products used to be personalized,” said Prose
co-founder and CEO Arnaud Plas in a statement.
“We wanted to find a way to modernize this
process.”
Organization & Alignment only solution ? An API platform of course

(this slide forged @APIdays 2012)

Key challenges

● Architectures
● Microservices
Refactorings
● Legacy Upgrades
● Corporate Design
systems
● Methodologies
and glossaries
Internal software vendor model

Warning !!
Strong governance
needed

Your
Your business
business software
editor

New software entity that will provide and contract its

platform of services to the legacy company.
In a nutshell
Don’t use technologies (and apis)
to create new digital business.

Build your software to upgrade

YOUR business competitive edge
for all customers, all employees,
all brands, all channels…
 Innovation @ scale

Thank you

cyril.vart@fabernovel.com