Summer session eyes opportunities, risks of digital disruption

Nearly three-quarters of a century into its existence, Safelite Group has reason to act like a market leader – it is one.

The ubiquitous Columbus-based glass repair and replacement services company has a presence in all 50 states, with the capability to serve about 97 percent of U.S. drivers. Even 70 years after its founding, it’s in growth and acquisition mode.

That doesn’t mean, however, that Safelite isn’t keeping an eye out for disruptors waiting in the wings to turn the business on its ear.

“We’re looking over our shoulder,” said Bruce Millard, the company’s vice president of digital and customer innovation. “We’re asking, ‘Who has the velocity to potentially cause us problems?’”

Millard was one of four speakers at the second of two summer sessions focused on top business challenges and co-hosted by The Risk Institute along with three other centers housed at Fisher College of Business: The Center for Innovation and Entrepreneurship, the National Center for the Middle Market and The Center for Operational Excellence. After surveying the state of the “talent war” in July, the centers brought together industry executives and academic experts to offer a mix of exciting developments, sobering realities and paths forward in the rapidly shifting world of data analytics and digital disruption.

In his kickoff keynote, Jeremy Aston of tech communication giant Cisco Corp. shared how much — and how little — has changed in how companies are viewing and preparing for the threat of digital disruption. Cisco’s Global Center for Digital Business Transformation in a 2015 survey of nearly 1,000 executives found 15 percent said digital disruption was already occurring in their respective industries. At the same time, a scant one in 250 of those surveyed said digital trends would have a transformative impact on their industry. Fast-forward to a new survey round this year and the shift is staggering: Half of those surveyed said disruption was ongoing, while nearly one in three foresaw a transformative effect.

“Today, we’re under pressure to transform and perform,” said Aston, senior director of the Go to Market and Offer Monetization Office at Cisco.

One statistic that changed little in the two-year span hints at a gap Cisco’s research has found between companies’ awareness and action. In 2015, a quarter of those surveyed said they were “actively responding” to digital disruption. That number rose to just 31 percent this year.

“That is a dangerous game to play,” Aston said.

While the media/entertainment trades and Cisco’s own technology products and services niche are easily most vulnerable to disruption, few – if any – parts of the economy are immune to companies born in today’s digital-first world. Speaker Mark Kvamme, a former Ohio economic development official and partner at venture capital investment firm Drive Capital, shared a dynamic portrait of companies in Drive’s investment portfolio that could have a transformative impact. One of them, Columbus-based startup CrossChx, has launched an artificial intelligence-enabled tool for the healthcare industry that synthesizes and automates high-volume, repetitive tasks — prior authorizations, appointment reminders — outside the scope of patient care. On the analytics front, Columbus-based FactGem — run by Megan Kvamme — is helping companies translate hordes of data from far-flung sources into actionable intelligence.

All these innovations, Kvamme said, point to an unavoidable truth: “The amount of change we’re going to see in the next five to 10 years is going to spin everybody’s heads.”

A world of opportunity, however, also means a world of risk. Professor Dennis Hirsch, who runs the Program on Data and Governance at Ohio State’s Moritz College of Law, closed out the session with a look at the tricky terrain of data analytics in technology, which already has destroyed some players (student data repository InBloom) and led to serious brand damage for others (Uber).

“Big data is a crystal ball,” Hirsch said, “and that means it can be used for good — and for bad.”

As companies move forward, Hirsch said, it’ll be incumbent upon them to establish processes and guiding values that protect customers and treat them fairly. Technology and its innovative uses for data, in fact, are outrunning the law itself.

“The law hasn’t caught up, and to some extent it never will,” Hirsch said. “We need to be asking, ‘What does it mean to be responsible beyond just compliance?’”

A key tool companies can use as they make decisions on these issues, and the broader world of digital transformation, is a decidedly non-technological notion at heart: process. From a legal and ethical perspective, that means establishing them on the front end to mitigate the risks of leveraging big data. From a business agility standpoint, Aston of Cisco said in opening the day, that means having a perspective that extends beyond the flashy innovation itself.

“We have to make thoughtful decisions,” Aston said, “and we can’t just be focused on technological outcomes. What’s the business outcome you need to drive?”

Resilient By Design

In our interconnected, 21st century global economy, unexpected— black swan— events in one corner of the globe can have a ripple effect through global supply chains and impact customers like we have not seen in the history of global trade. In a January 24 session on supply chain resilience, we explored how companies who are prepared for such events can come out stronger and thrive, while others who may be less prepared or not at all, risk significant impact to revenue, brand and at the extreme, the very viability of the underlying business.

Session presenters included:

  • Joseph Fiksel, Executive Director of the Sustainable and Resilient Economy program at The Ohio State University and a faculty member in Integrated Systems Engineering. Dr. Fiksel is an international expert in sustainability and resilience with over 25 years experience in the space.
  • Keely Croxton, Associate Professor of Logistics at The Ohio State University. Dr. Croxton has a developed expertise in supply chain resilience, focused on helping companies balance their inherent vulnerabilities with their management capabilities in order to effectively mitigate disruptions in the supply chain.
  • Darrell Zavitz, Vice President (Retired) Shared Services/Supply Chain, The Dow Chemical Company. During his tenure with Dow, Darrell drove best practices into each of Dow’s businesses including Resilience, Six Sigma/Lean, and Network Design.

Between 1900 and 2010 global natural disasters have grown exponentially, arguably impacted by climate, global crowding and connectivity. With the frequency of black swan events accelerating, the traditional COSO Framework for Enterprise Risk Management (Objective Setting, Event Identification, Risk Assessment, Risk Response and Control Activities) is no longer a sufficient means to view the world.

Today, more than ever, risks cannot always be anticipated. The risks may be very hard to quantify and adaptation may be needed to remain competitive. Resilience strategies in turbulent times would suggest that a more comprehensive strategy to the abruptness of change and the magnitude of change is warranted.

Introducing SCRAM™

The SCRAM (Supply Chain Resilience Assessment & Management) Tool™ is based on more than a decade of research at The Ohio State University and was highlighted as an alternative framework allowing companies to focus on balancing vulnerabilities with capabilities. With this balance, a business will achieve balanced resilience and improved performance over time.

An ability to assess vulnerabilities and capabilities, look for gaps and build capabilities is at its basic level the key to building supply chain resilience. The more resilient a firm is, the less likely the firm will see swings in performance.

SCRAM™ in Action

The Dow Chemical Company began SCRAM implementation several years ago. Their focus on supply chain resilience and being agile drove a strategy shift. The project was in three phases:

  • Phase 1:   “Get Fit” | Manage the Cycle
  • Phase 2: “Change the Rules” | Dampen the Cycle
  • Phase 3: “Change the Game” | Break the Cycle.

The approach taken by Dow in its SCRAM implementation began with a rapid qualitative assessment. This included an electronic survey involving 30-40 business resources devoting an hour or so to the assessment. The SCRAM methodology was then used as a filter to prioritize and sequence business urgency (opportunity and commitment). Model those results and follow with and audit to value delivery.

Session Takeaways

  • Risk tolerance and resilience capabilities tend to change as companies grow.
  • Companies need to develop the right portfolio of capabilities to match the vulnerabilities they face.
  • Every disruption presents a learning opportunity.
  • A critical leadership requirement is to develop a culture of resilience in the organization.
  • To maximize return on investment, companies should design for inherent resilience.
  • Measuring and managing enterprise resilience is still an emerging field, ripe for collaboration between industry and academia.