TECHNOLOGY & CYBERSECURITY

BEST IDEAS 2020 TECHNOLOGY & CYBERSECURITY

One way or another, every leader today is in the tech trenches. Lessons from the front lines.

FOR CEOs, TECHNOLOGY IMPLEMENTATION CAN BRING an exhilarating rush—or it can be their bête noire. But every business leader today recognizes the importance of getting their arms around technology and using it to take a major step forward for their companies, whether it be in the arena of artificial intelligence, ERP, cybersecurity, advanced manufacturing or something else. To help you out, Chief Executive turned to eight fellow CEOs who have been dealing with or planning for significant technology implications for their own companies or who guide organizations that help others adopt the next new thing. Most of these folks didn’t start their careers having anything to do with—or maybe any interest in—the kind of big leaps in technology that they’re overseeing today. But as all forms of new technology have swept through business, they’ve stayed ahead of the surge. And that’s what every CEO must do.

Several of our eight CEOs offer advice on dealing with the ubiquitous impact—and the infinite possibilities—of AI. Another chief explains how to win over employees and customers who may be skeptical about a company’s next big technological step. There’s also a head’s up that voice-recognition technology is the next big thing for all businesses, perhaps surprisingly starting with B2B companies.

We hope these ideas, excerpted from interviews, give you some insights for your own technology implementations—and maybe some extra enthusiasm. And we thank these CEOs for sharing their lessons, hard-earned or otherwise.

SOFTWARE OWN ERP YOURSELF

JACK STACK, CEO SRC Holdings, Springfield, Missouri

We are the U.S. leader in remanufacturing—rebuilding previously sold or worn-out products—to OEMs in the agricultural, industrial, automotive and other markets. We’ve got lots of locations. And we are in the middle of installing a new ERP [Enterprise Resource Planning] system companywide.

My biggest piece of advice about that is for CEOs to get as quickly as they can to the point where both sides of the coin—your IT department and your implementers—take the need for actually installing a new ERP system very seriously. And that’s up to you.

What happens over time is that under your old ERP system, people create their own spreadsheets because they’re so frustrated with a centralized IT department. It doesn’t give you the service you need, or it costs you a tremendous amount of money. So, people at various locations start writing their own HR systems, their own CRM systems, and before you know it, you have a bag of worms. Moving someone from one department to another requires their understanding of a completely different system.

We’re writing a new song with our new ERP system and getting everyone singing from the same songbook. But like with every implementation, we had 12 months of backand-forth to get the software people and the users to fall in line with each other. You can just expect initial failure on implementation.

And CEOs aren’t that educated in terms of what ERP is going to do, just that it’s going to boost productivity. So, people have been after you for five years to do it, and you’re kind of flying by the seat of your pants.

That’s when you have to get the software people and the user people in the same room, and as CEO say, “Damn it, this is going to work, so don’t come back in here pointing fingers. I don’t even want to hear that it’s not going to work.” You can’t be understanding or sympathetic. And, at that point in time, it begins to work.

Because their attitude is different—they have no choice. The CEO told them to shape up and is no longer sympathetic to the difficulties of implementation.

ARTIFICIAL INTELLEGENCE TRY AI IN 2020

DAVID OSBORNE, CEO Virgin Pulse, Providence, Rhode Island

We work with employers to help employees enforce their personal “wellness” efforts, ranging from kicking bad dietary habits to getting more sleep.

We keep adding capabilities, and one of the keys is using artificial intelligence to massage information that will help our platform become more predictive of individuals’ health risks. We can use data analytics and AI to match people to the right types of habits and programs for them and, in the future, to actually do coaching via bots.

Whatever business they’re in, CEOs should be ambitious about finding ways to implement AI. It can be intimidating because it’s so broad. But put the right investment in organization and structure in place and capitalize on the data you collect. AI can be contagious.

To go along with that big vision, though, you should start small. Get the initial piece under your belt, then you can advance from there. Having a big vision around AI is great, but roll it out, piece by piece. Then let it evolve. Change the culture and become an analytics-first company even if you’re able to roll out just the smallest component.

And along the way, market your early wins, both internally and externally. Every part of your organization could be interested in thinking about AI if you have a vision or a strategy, from sales to marketing to back-office functions. And if you celebrate wins externally as well, then they’ll flow back internally, too.

LEADERSHIP WIN OVER THE MUSHY MIDDLE

CHRIS MAHER, CEO OceanFirst Bank, Toms River, New Jersey

We think about technology as hardware, software and apps. It’s important stuff, but even more important than that are the cultural implications of using technology and how it gets adopted by employees, partners and customers. And the most difficult part of that process is to win over the people in the middle, who aren’t sure about it but can be gained.

Our big gambit has been to embrace mobile banking technology that is at least on par with any national bank, taking a tremendous investment of time and money. We believe once people choose a financial company to work with on a digital basis, unseating it is difficult. The seamlessness of the technology provides such a great user experience that you’d hesitate to leave. So you have to be early in.

The business problem is getting our consumers and employees to embrace the technology we build. That requires a change in behavior patterns and overcoming discomfort with learning something new: to use our electronic wallet, to use video banking services instead of going to a branch. We needed more than 500 customer-facing employees to work through a digital-retraining program. Many were happy to be part of it. Some aren’t with us anymore because they wanted to be back in a brick-and-mortar place where life was a little simpler.

But many were in the middle. They were not comfortable with the technology; it’s not why they came to the bank; it wasn’t the job they wanted to do. We used a few ways to win them over.

Each of them went through our seven-week retraining program, which combined an online classroom and interactive tests. Probably more important, we changed the way we measured performance and how we paid them. Mobile activation of an account became a significant metric in front-line compensation. We’re also evaluating entire branches on the number of customers they move over to mobile.

We also got that middle tier of customers involved. We gave them $5 checks that they could only deposit through mobile image capture. Once you take a picture of just one check with your phone, you’re never going back. As CEO, this wasn’t something I could delegate. And I’ve had to live and breathe this because the organization would have resisted me otherwise. I’m using our mobile system and video all the time. They look to you, and the commitment of the organization is reflected in the commitment of the CEO.

CULTURE MAKE CUSTOMER PRIVACY THE PRIORITY

MARK SIMPSON, CEO Acoustic, New York, New York

We run the largest independent marketing cloud since our separation from IBM in July. That has landed us in the middle of what I think will be one of the hottest technology topics of this year: how businesses treat the privacy of consumer and customer data.

I think protecting that data is one of the new corporate social responsibilities alongside the environment and social issues. More regulators are seeing it this way too, including in Europe, where the EU coordinated itself into single guidance on consumer data. Next up are new regulations in California.

Companies are able to grab more data, and businesses have a responsibility to manage that data in a responsible manner. That happens in some instances, and in others— like the many big breaches of credit-card data—not so much. It’s even more important in a world where all that data is online and easier to access than ever before.

Every business has customers in some form or another, and CEOs need to make it a high priority and a corporate responsibility to protect those customers’ data. The harm they can do to both individuals and businesses by gaining that information is very significant.

To do this, you need to make it a priority within your business. Ensure that the right information-security protocols are put into place. Ensure that your company adheres to all the regulations and rules coming out and have the technology to be able to manage customer data within those rules and regulations. Make sure your IT team is a central and fundamental part of your business and that they’re ensuring the security of data within that business.

PROCESS IMPROVEMENT NIBBLE AWAY AT IMPLEMENTATION

MIKE DENNISON, CEO Fox Factory, Scotts Valley, California

We have made parts at a handful of plants around California, including machining locations in Silicon Valley, for a long time. We’ve had a poorly built supply chain, which creates frictional costs and headwinds in the business. We needed to establish ultra-efficient, automated manufacturing in a supply-chain environment where we could be successful.

So, we decided to build a 350,000-square-foot plant in Georgia, where we could put all of our functions in one place, housing all of the operations we had in California. This move has involved an opportunity to revisit our Oracle [ERP] implementation and get it better structured for what we do, adding software tools to make warehouse management and shop-floor controls much better. What we’re learning is that as eager as we are to deploy our new facility in its entirety, the thing we have to be conscious of is not moving too fast. The whole process of moving our production from West to East really takes the better part of a year. You don’t want to create bad habits, to bring them with you. That would create a long-term productivity headwind. So we’re going slower than we’d planned to make sure we can scale these new ideas and new ways of manufacturing into the business. Take anodizing, for example—coating metal parts for protective and durability purposes. We are consolidating that in Georgia. We think that will create a huge opportunity for us to be more responsive and have less inventory stuck in external locations. But this process is fairly new to the organization and getting it right will depend on taking the time necessary to make it a big part of our manufacturing process.

FIELD TRIPS GO WHERE THE INNOVATORS GATHER

MARK MASSICOTTE, CEO L’Anse Manufacturing, L’Anse, Michigan

We provide precision machining to the investment casting and specialty-products industries. I’ve seen a lot of technology change in the industry and have participated in a lot of it. This year, for instance, we’re adding a milling and turning machine with five-axis capability and six-station pallet change.

It’s a steppingstone for us to enter advanced manufacturing and 3D-printing technology. It’s $1 million worth of equipment that will give us a huge advantage technology-wise, providing tighter tolerances and more discipline. I expect it to take the whole organization into the advanced-manufacturing world.

But CEOs have got to understand this world before they can invest in it. That’s why I tell people to attend America Makes or some other big program and see what the big guys are doing, what they’re throwing a million

dollars at, and be part of it. Go where the cutting edge is—and learn.

DISRUPTIONS HEAR VOICES

JOSH SMITH, CEO Metova, Little Rock, Arkansas

Voice is the prevailing wind in technology. It’s going to be as big as the touch screen, or maybe bigger. We’ve slowly evolved with how we interact with machines from punch cards to keyboards to a mouse to the fluidity of the touch screen.

How do humans interact? It’s the next evolution of the device, for convenience. Everything eventually will be voice, in the vehicle or anywhere else. Alexa already has helped more people get familiar with voice capabilities. And also for cybersecurity. Cybersecurity will help push that, tying voice and facial recognition together in two-factor authentication. So CEOs need to rethink how they’ve done business, maybe stepping outside what the company has done for years. It’s not a superficial, five-minute conversation; it takes a lot of work.

For CEOs to chart the right course in voice, you need to truly know your existing customers. How do they interact with your products? What is it about voice that could alleviate pain points in your processes? Can you lead the customer by using voice in certain interactions? You can’t just apply it across the board.

And voice is probably going to be more important for business-to-business companies sooner than others because of how the human workforce is being replaced with machines. If you’re in manufacturing, you’re going to see it first. You’re going to need to interact with machines.

Adoption in B2B will happen first just because it drives down costs, whereas on the consumer side it’s a matter of user adoption. That’s a slower process and doesn’t necessarily affect the financials of the business.

CHANGE MANAGEMENT WHAT’S THAT, WATSON?

JAY WEINSTEIN, VICE CHAIRMAN, MARKETS AND INDUSTRIES EisnerAmper, New York, New York

We’re making significant investments in what we call smart-auditing tools for our professional-services clients for financial statements, taxes and so on. Our value-add is advisory, but in delivery we’re using [IBM’s AI system] Watson to help us with routine, mundane accounting tasks to drive up efficiency and drive down costs.

We’re applying Watson to data collection, contract analysis, revenue recognition and other tasks that are less interesting and very time-consuming. This includes reading the backs of leases and customer contracts—tasks that take people a long time and don’t get them motivated. AI is a great application for those kinds of things.

But one reason we’re doing it is because we had a relationship with IBM and a consulting company working with them. If not for that relationship, we probably would have been less motivated to enter this program, because AI is difficult to work with. It takes significant time in education and resources, though the payoff is significant.

We focus some of our strongest auditors on teaching Watson and making sure that the output Watson gives us is in a form that people can use and understand. Our first cut with it was technically beautiful but not in user-friendly form. We had to change it and revise it once we got user groups involved. So get them involved in the learning aspect early on, which will help you further down the road.

These were low-hanging fruit for AI because they were heavily manual tasks, and we could automate much of the work. But now it gets tougher as we move into higher-level things, such as having AI look at a tax return and pick out anomalies. But we’ll get there. CE

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