Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio. Tim, how often
Speaker 1: do we talk about companies going all in on digital
Speaker 1: or hear from leaders, CEOs and more saying that's exactly
Speaker 1: what they're doing, especially during the pandemic. I mean, that
Speaker 1: is exactly what we heard over the last sixteen months, right.
Speaker 1: And our next guest says, fun, you can go digital,
Speaker 1: but it really needs to be about blending digital and
Speaker 1: traditional business functions if you want a competitive advantage long term.
Speaker 1: I think it's so timely that we're going to talk
Speaker 1: to this guest, especially on a day when we're all
Speaker 1: in on big tech and we're talking a lot about
Speaker 1: digital strategies. We certainly are. Rob Siegel is a general
Speaker 1: partner at ex C Capital, also a lecturer at Stanford's
Speaker 1: Graduate School of Business, and the author of The Brains
Speaker 1: and Braun Company, How leading organizations blend the best of
Speaker 1: digital and physical. He joins us on the phone from
Speaker 1: Silicon Valley, Rod, How you doing, I'm doing great, Tim,
Speaker 1: Thanks for having me. What do you what do you
Speaker 1: think of when you hear a company say what what?
Speaker 1: Carol just said, because they tell us that all the
Speaker 1: time that the key to growth is making sure that
Speaker 1: you disrupt your existing business model, but do it in
Speaker 1: a way that allows you to not actually cannibalize what
Speaker 1: exists already. But digitization is really really important, but it's
Speaker 1: not a panacea. And increasingly, what I see through the
Speaker 1: companies I invest in as a as a as a
Speaker 1: venture capitalist, but also those that I get to study
Speaker 1: through my work at Stanford, is that the best companies
Speaker 1: right now are blending the best of both digital and physical.
Speaker 1: And we saw this, you know, the pandemic accelerated this,
Speaker 1: that it wasn't just enough that we could shop online
Speaker 1: and communicate online. You're all about case, Yeah, you're all
Speaker 1: about case studies in this book. So give us a
Speaker 1: few examples of some of these best companies. Well, so,
Speaker 1: on the retail side, we saw magnificent performance from home Depot,
Speaker 1: from Best Buy, and from Target, who really invested in
Speaker 1: infrastructure and logistics as well as a great digital capability
Speaker 1: where people could shop that way. And we also saw
Speaker 1: obviously Amazon has done a tremendous job. And so we're
Speaker 1: seeing organization in functions like retail, financial services, even healthcare,
Speaker 1: doing a great job of making sure that there's both
Speaker 1: a digital and physical component to everything that they do. So,
Speaker 1: you know, it's in an interesting time to be talking about,
Speaker 1: especially when we've seen increased Chinese oversight of uh they're
Speaker 1: big tech companies specifically about data collection and China wanting
Speaker 1: more at the government, the Chinese government wanting more control.
Speaker 1: Do you believe that because of this combination of brains
Speaker 1: and braun that some of those big tech companies they
Speaker 1: do have too much focus on kind of the brainy
Speaker 1: element of what they're doing and that they need to
Speaker 1: be either more diverse or more government oversight. Well, you
Speaker 1: raised an interesting point, Carroll, and that what's going to
Speaker 1: end up happening is how supply chains will we configure
Speaker 1: Where manufacturing jobs are going to be placed is a
Speaker 1: function of the global economic competitiveness, largely written by the
Speaker 1: challenges in the United States and China. And so no
Speaker 1: matter what you manufact tour, no matter what you deliver
Speaker 1: to your customers, as every good becomes connected, right because
Speaker 1: there's a software component and the connectivity component to everything
Speaker 1: digital organization, they're going to have to think about where
Speaker 1: they're going to put their factories and factories can be
Speaker 1: you know, traditional you know manufacturing factories. We do also
Speaker 1: have additive manufacturing will which will allow you to put
Speaker 1: basically factories at your customers client sides. And the companies
Speaker 1: are going to think about how they construct all of
Speaker 1: their digital and physical attributes. And historically companies are in
Speaker 1: Silicon Valley haven't had to do that, and that's going
Speaker 1: to have to change. Hey, rob we can learn a
Speaker 1: lot from companies that have been really successful in this transition,
Speaker 1: but we can also learn a lot from companies that
Speaker 1: haven't been. What are some examples of companies that didn't
Speaker 1: successfully make this transition and we can learn from that. Well,
Speaker 1: you can think about that. For example, Borders back in
Speaker 1: the day did not do a good job of figuring
Speaker 1: out what Amazon was going to be doing to their business,
Speaker 1: how they partner, how they you know, made sure they
Speaker 1: talk to their customers. And we're seeing I think a
Speaker 1: lot of the large mobility company really struggle. One of
Speaker 1: the companies we look at in the book is Daimler,
Speaker 1: which is a manufacturing and design engineering powerhouse, but they've
Speaker 1: really done a very poor job on connectivity, on software,
Speaker 1: and so they're really struggling behind companies like Tesla, which
Speaker 1: you're going to do a phenomenal job and are doing
Speaker 1: a phenomenal job of designing cars digitally first, and soon
Speaker 1: that you mentioned China earlier, China will become an export
Speaker 1: player in the automotive market. And so you can see
Speaker 1: a lot of the incumbent carmakers really trying to fight
Speaker 1: what they were doing before, which was basically bending metal
Speaker 1: and designing great machines instead of thinking these devices as
Speaker 1: if you will moving sensors on wheels, Well, what's interesting,
Speaker 1: and I think about, in particular our audience, how do
Speaker 1: they need to think about what you're saying in terms
Speaker 1: of long term investment plays well, if you are thinking
Speaker 1: about a physical company or something was with a physical DNA,
Speaker 1: one of the questions you want to be asking is
Speaker 1: are they investing in things like analytics and digital infrastructure?
Speaker 1: Are they hiring the right type of people. Are they
Speaker 1: developing competencies in ways that they can communicate with their customers.
Speaker 1: We also need to think about are they changing, you know, creatively,
Speaker 1: their business models as well as the technologies that they developed.
Speaker 1: Are they really reaching out to their customers. One of
Speaker 1: the companies we studied was Kaiser Permanente to the large
Speaker 1: healthcare provider. And you know Bernard Thompson used to when
Speaker 1: he would come to Stanford and talk to the students,
Speaker 1: really kind of showed empathy, empathy for all the players
Speaker 1: in the ecosystem, his doctors, his nurses, the communities, he
Speaker 1: was in, the patients, and he really understood where everybody
Speaker 1: was shaping their business. And so the question we have
Speaker 1: to asked about the large incumbent organizations are they doing
Speaker 1: those things? Are they really taking risks and running towards
Speaker 1: the disruption or they just trying to hold on to
Speaker 1: what they have before. All right, So it's interesting, Um,
Speaker 1: if the companies don't get it right and do that
Speaker 1: combination rob of brains and braun, then what well, then
Speaker 1: everybody who works there should probably update their LinkedIn profiles
Speaker 1: because you know what is going to happen, and what
Speaker 1: what digital enables is you have companies that can come
Speaker 1: into new market segments and maybe you didn't see them coming.
Speaker 1: I mean a great example is that as Stripe and
Speaker 1: what Stripe has done in payments and transactions in ways
Speaker 1: that a lot of the large existing players didn't see
Speaker 1: who were in kind of bee the whole transaction and
Speaker 1: merchant process and account and so you've got to really
Speaker 1: kind of be playing offense on this because you don't
Speaker 1: always know where the attack is coming from. You know,
Speaker 1: what happens when Uber and DD going to logistics and
Speaker 1: what impact is that going to have on Federal Express
Speaker 1: and ups and DHL. So people are gonna be completely
Speaker 1: rethinking their business models and the technologies and the market
Speaker 1: that they can go after. Hey, Rob always like to ask,
Speaker 1: and we only have about twenty seconds left. Um. People
Speaker 1: who teach a business schools lecture, a business schools lecture
Speaker 1: at Stanford, where do your students want to go work
Speaker 1: right now? So it's funny they a lot of times
Speaker 1: they want to actually go to what I'll call the
Speaker 1: sexy tech companies or they want to start their own companies.
Speaker 1: We are starting to steal a lot of you know,
Speaker 1: of the students, and we teach students from all over
Speaker 1: the world. We're actually looking at a lot of the
Speaker 1: larger established organizations who are doing some really interesting things.
Speaker 1: So it's not just that everybody wants to do their
Speaker 1: own startup anymore. We're starting to see people who actually
Speaker 1: want to go in and actually have some big impacts
Speaker 1: in some of the larger organizations because they really exciting
Speaker 1: things going on there. That is an interesting trend um.
Speaker 1: Rob Segel, thank you so much. Really enjoyed this general
Speaker 1: partner Next Capital, author of the Brains and Braun Company,