 So, if you could put all your, which are probably Huawei phones on silent for this press conference. Good afternoon, ladies and gentlemen here in the room, and welcome to this press conference from the 12th annual meeting of the new champions here in Tianjin, China. And good morning to our audience, which might join us from Europe as of now as well on the live stream. Welcome to you as well. We're joining a press conference on the digital transformation of enterprises. And the purpose of this press conference is to discuss what are the, what are the challenges, what are the roads to success for companies to get ready for the digital transformation, to go through digital transformation. It's also dedicated to the launch of a report that the World Economic Forum is launching here today together with Bain and Company on that exact same topic. I'm very pleased to present to you today a wonderful panel to discuss these questions with us. To my immediate left, I'm joined by my colleague, Helena Laurent, who's the head of government engagement and a member of the Executive Committee of the World Economic Forum. And I should add in this context leads the forum's work on the future of production. So I know many of you have written articles in the last days about the best factories in the world, three of which are actually based here in China. So very happy to have you here. Helena, right at the heart and center of our panel, we are joined by Uriel Longri, who's a partner at Bain and Company and has been, let's say, essential, I think, is fair to say to this report, but also to the work of the World Economic Forum in general on digital transformation. Further down the line next to him we're joined by Sebastian Herzog, a good chance for me to play out my German accent here to the fullest, who's the senior vice president of Axel Springer High based in Germany. And last, but definitely not least, we're joined by Deepak Krishnamurti, a little bit more difficult with the German accent to pronounce, who is the chief strategy officer of SAP based in the US. Without further ado, welcome my fellow panelists. Helena, let me hand over to you what's the forum, let me just simply ask what's the forum doing in the space of digital transformation and why is that important for an international organization dedicated to public-private partnership? Wonderful, thank you, Georg. Wonderful to be talking to everyone today. I think we have all established that the fourth industrial revolution is something that needs to be on our agenda. We need to recognize that there is an opportunity to be gained from taking new technologies and applying them to explore productivity. The big question, of course, is how to do that? So the fourth industrial revolution is on everybody's minds, it's on everybody's lips, it's a source of conversation. How do we go from talking about this to actual application in our factories, in our companies? So one of the exciting things that actually, my colleague Derek O'Halloran is in the front row here, he has been working on for some time, is to think about digital disruption and digital transformation, to explore that in the context of a range of different industries, to recognize that opportunity and quantify the opportunity, not just for business but from a societal and environmental standpoint and say what does this really look like? And then the most recent piece of work, and this is the rather wonderful report I would encourage everyone to look at, done in collaboration with our colleagues from Bain, this is then the blueprint for how. And this was done over the past year. We tend to draw from our broader stakeholder network. So this is cross industry, it draws on chief strategy officers, it draws on chief digital officers and then puts together, well, if you are a CEO now thinking about the fourth industrial revolution, what actually are the next steps? We lay those out. I think you will talk about those steps a little bit more and how we came to those conclusions. For us though, Georg, you asked, well, how do we then use that? We see this as incredibly important because once you start moving down this track, once you start on that journey, you of course discover that you cannot do that alone. This comes from, again, the cross industry collaboration, the recognition that there needs to be a conversation between business and government, the broader range of stakeholders who need to be involved. And so I think the goal of the team is now to put together what we call communities of practice or purpose. These are communities that say, how are we going to enter into the fourth industrial revolution, go beyond what in our production work we call pilot purgatory, go into really seeing the productivity gains that we know are out there. And that's going to be a very exciting next step for us. We're looking forward to supporting that in a sort of the search for inclusive and sustainable growth. Thank you very much, Helena. Real, Helena already mentioned that you will give us a bit more a deep dive into the report. And for those of you who didn't catch it the first time, I'll show it once more. It's also available as of now on our website. So please go download the report, read it, and look at it. Real, from your perspective, what are the key findings of the report and what are your personal highlights of the report? It's hard to summarize a year worth of work in a few minutes, but I'll try and I'll try to keep it brief. You know, probably the first thing is that experimentation is easy, but transformation is hard. And that's probably been the biggest challenge for the companies on the panel and the companies that we worked with over the course of the last year. A lot of companies find themselves stalled when it comes to transformation. And that's because of the tension that all of them experience in their management teams, on their boards of directors, between the people we grew to call dreamers and doers. The dreamers are the people who imagine the car. And doers are the people who are trying to build a cheaper, better, faster horse. And they're at odds with each other and as a result it's hard to move forward. And so one idea that the group came up with was the idea of thinking about strategy and thinking about a road map in two opposite but very complementary directions. Present forward, that's the way of the doers, that's the cheaper, better, faster horse, but also a future back. Where's the industry going to go in 10 or 20 years and how do we lay out steps that move us in that direction? And then the last thought I'll leave you with is stepping stones. A lot of companies basically, they didn't call them stepping stones, but when they described their approach they were effectively moving along stepping stones. And what that means is not that you take it a step at a time, but rather what it means is that you don't see step two until you take step one. And you've got to be comfortable with that and you've got to rewire the enterprise in terms of ways you make decisions, ways you fund programs in order to move along those stepping stones. Thank you, Uriel. Sebastian, let me get to you. I should probably manage before I ask my question to you, is that you work for Axel Springer High, which is part of, but not the global publishing house you might be familiar with, but it's basically a consulting arm of that. So maybe if you give us a two or three sentence background on Axel Springer High. But my question to you would also be with the clients you work with, with the people who come to you for input. How far are most removed from that transformation phase that Uriel mentioned? How many are still in that experimentation phase? Well, let me answer that last part of the question first. I believe you can take the Gartner hype cycle for the whole topic of transformation. So we meet people and NCOs that are at the beginning, so they haven't done anything at all. They just realized, and that also happens in 2018, that digital is now on their agenda. So they are in the very beginning and they just want to experiment. But we also work with clients. They have the feeling they have done everything. They've done startup investments. They've launched an accelerator, launched an incubator, played around with some APIs, did a hub, did a lab, did a garage, whatever. And then the CEO looks back and said, hey, by the way, my colleague in the board, the CFO guy, he just made a thumb of all the money we invested over those three, four years. And we have the feeling that apart from PR, marketing, and some fancy stuff, there's not the real impact. And they come to us and say, OK, what is the real thing? And that's why I believe why also the report which you brought up and just the discussion we had earlier on today is so important. Because I believe if you are serious about digital transformation, then it is really about making impact and having a clear goal of driving business. So I believe at the end, it all has to come back to either increase revenue and with that also increase your profit. If you do not have that ambition, it ends up with playing a lot. So long answer, but we see company of a full range of where they are. I think all of those companies have the feeling that the time to experiment kind of needs to be limited. And this is what came back to you. Tyward Springer also realized that Springer made a significant transformation over 12 years, completely transforming the company from one media house to know a portfolio of actually 700 companies, 200 of them direct investments. And that changed a lot in terms of structure, governance, but also then changed a lot of leadership things. And they were very, very serious. There was a big bet and now it's like 12 years down the road. Thank you very much. Deepak, your title is Chief Strategy Officer, but we spoke briefly before and you mentioned that a lot of the work you do is actually directly tied to innovation activities that SAP do. So can you talk a little bit about that and how a company of the size of SAP is thinking about innovation, both for itself, but also for the companies you work with? Yeah, the idea of innovation is probably a broad base, right? It's no longer about just one small unit in an organization focusing on innovation. So there are different models of innovation. There are things that you do continuously improve on what you do and that's still innovation. And the stuff that you need to do dramatically changes who you are. That is probably transformative innovation or disruptive innovation. So from a strategy perspective, we focus on both areas. And starting off like now I would say like seven years back when SAP realized that the future needs to be digital and it's going to be cloud, mobile, big data, we took an ambitious goal of like how do we transform ourselves from a company that was very successful for 30, 40 years as a software company in the on-premise perpetual licensing world to a cloud company that's going to focus on new business models on subscription-based revenues. So the idea of transformation and innovation aligns with also what the report also talks about. It's around three big things from my perspective. One is around the business model transformation. So you have to go and transform your business model that's aligned to a mission of the company. And in our case, the mission was helping our customer run better and driving customer success. So as long as you align your business model transformation to the goal of your customers, in this case around delivering a software as a service that delivers better outcome for your customers, you have a good chance of succeeding in your business model innovation. The second component was all about product innovation. That's where technology comes into play. Now people confuse digital transformation with technology all the time. To me technology is probably the least important aspect of digital transformation but the most overhyped aspect of digital transformation. But technology is important. You still need to figure out how do you go and build the next generation platform. I think the world's gone from what I would call the industrial automation era to business process automation to digital transformation over the last 40 years. And we are at the precipice of intelligent automation or the new AI, the fourth industrial revolution coming in. So everything that's digital is going to be much more intelligent going forward. And companies need to be ready for it, need to have the technology backbone and infrastructure to be ready for it. And SAP is doing it internally but also helping our customers do it. The third piece is probably the hardest one which is around cultural transformation. And the report talks about it from a governance perspective. I think the cultural transformation is probably the most important part of a digital transformation story and that's the one that's hardest to do. So it goes back to some of the things that we talked about earlier, you all, which is how do you go transform a company in terms of both the digital dreamers and the doers and also infuse it as a part of the DNA of the company. So in our case, it was all about going and trying to go create an open ecosystem. We're investing in startups. My team runs a small innovation function that is focused on early stage investments in startups, something called SAP.io. Slightly different from what we do traditionally but the idea is to go invest in interesting companies that can be part of the ecosystem because no company can do it all by themselves. And finally, it's also about DNA, right? So sometimes like you can't have the DNA in-house. So you might want to do really smart acquisitions to bring the DNA in-house so that sometimes you've got to learn from the acquired companies but have the DNA of doing things differently. So making some smart acquisitions, investing in MNA to the extent that's possible, as from a capital structure perspective, helps in transforming the DNA and you got to bring in the people that are part of the acquired companies to the leadership team so that they take the DNA and transform the company's culture. So it's a multifaceted way to go drive innovation. There's no one way to do it but as long as you are consistent across the business model, the product and technology and the culture, then you'll at least have a chance to be successful in digital transformation. That's a wonderful bridge to my next question, Deepak. The three of you, you have to basically think about these things faster than your clients, right? That's why companies come to you and ask for your advice. And you mentioned briefly the people and I'd be curious to hear your thoughts on skill and talent. With the technologies developing so fast, how can you keep up both as the companies you mentioned here but also at your own companies to get these people on board and get them ready to do these transformation, what might be the biggest challenges? So today, like a few from a technology perspective, everybody talks about a huge skills gap in technology, right? So in terms of having the right digital skills, like skills in AI, machine learning, IoT, all of these are big skills gaps. I think there's an opportunity to do some retraining, re-skilling. There's also an opportunity to bring in an external workforce that is flexible enough that you can manage. There's an opportunity to create an ecosystem of partners that you can work with. There are all opportunities to go and bridge the skills gap. I think skills is one thing. You can hire a few hundred Python programmers who are building machine learning algorithms, but if they're not doing the right product, if they're not building the right outcome for the customers, it's never going to be successful. So having an understanding of the business outcomes that you want to achieve and marrying that with the technology skills that you need to either hire or retrain is going to be critical. That's what we see broadly. There's always a big gap and challenge with respect to hiring more and more data scientists. I've seen more data science projects fail than succeed. In fact, I've seen like seven out of ten fail, and maybe three out of ten succeed. And most of these data science projects, they're all stuck in some kind of what I call a prototype proof of concept hole, right? So that's kind of where they are in. It's really hard to scale them because it ends up being a nice proof of concept, a shiny object, but never you cannot transfer that to the core DNA and the core business model of the company. And that's where the challenge is. Thank you. You want to add to that? Yeah, I fully agree and I would add that like my hypothesis is that mindset will always be skill set, which means actually what you said, like software is the least important part of transformation and skills are the least important part of the whole cultural aspects. So I believe instead of trying to retrain the whole organization, instead of trying to tell your employees that they need to change, I would rather change the incentive structure, change the rules how a company actually works. So Springer actually did a very, very aggressive way of doing that. They eliminated corporate careers 100%. That means when Springer started to actually follow those 200 direct investments and startup investments, et cetera, they said, okay, if we do that, we have to make sure that all the perks and benefits that are usually on the corporate level, not on the startup level, that needs to be completely turned around. So at the moment it's more attractive to work in a subsidiary of Springer that it is to work at the corporate level. On the other hand, like all the people taking care of the investments, they don't have a carry on their investments. Why? Because if you have the carry, you go for the corporate role. So if you want to make a career, at Springer, you have to, as we did, you have to fund your own company. You have to put your money where your mouse is and really become an entrepreneur. So Springer actually took every single department and asked themselves whether that could be a company. And if the answer was yes, they literally sized and seized the company down into a huge portfolio of different legal entities, having an MD of that company being part and being owner of your own company. And that is very... I'm working with one of those sister companies and it's very, very interesting to be in such an entrepreneurial mindset. And that changed the whole company, it changed the whole structure and culture. So just fully agree. Oriel, that sounds to me a little bit like the problem sometimes lies with the C-suite level in companies when the transformation fails. Would you agree? Putting you a little bit on the spot here. I think it's a really tough challenge to get your arms around. I think there's a reason why it is so hard to find an incumbent that has transformed fully. And it's not just the old innovators dilemma. It's also that I think over time, not just C-suite, but companies have convinced themselves that the product that they serve is the same thing as the raw need that they're supposed to answer. And that's not the case. Our view is that the product is temporary and that the raw need is permanent and that you need to have the courage to go out there and rediscover that raw need and come up with innovation, freeing yourself from today's product, freeing yourself from today's customer experience and even the economic model. And that's not just the C-suite, that's everybody. Frankly, I mean you could argue that the financial markets are pretty shy in accepting large companies transforming themselves. Then much rather you keep doing what you do, that's safe and then they'll invest in somebody else if they want something else. Patience is not the strong suit. I would agree. Thank you very much. I've been very selfish in asking a lot of questions. We of course have a lot of members of the media in the room. We have microphones here. If I could see a show of hands, if you have any questions, no, that gives me the opportunity to get in one of my questions again. Now, there's this old saying that doctors are the worst patients. Now, we've spoken a little bit about the companies you advise and you work with, but let's talk a little bit about your own companies. Is it true that doctors are the worst patients? Basically what from the work you do, we've done for the report, all the case studies you've seen here, taking also as a learning to your own company. This is a question to all of you. Who wants to go first? Oriel, you're at the center of the panel. I'm happy to start. One of the things that we talk a lot about in the report is how in a digital economy, being easy to do business with, being a good partner, becomes a really important source of competitive advantage because more and more, you can't do everything alone and so you need partners around you and you need to be easy to do business with. I come from a company, a big company, that has a very strong culture and we're very good at what we do, but we have to work with more and more companies from different walks of life and so one thing that we're working on, I think we're making a ton of progress on that, is to learn how to work with a much larger ecosystem of partners to be a lot easier to do business with and despite the fact that we have a very well-traveled way to deliver our work, we are able to work productively with third parties that might not be part of the same culture or have learned the same set of tricks for how to deliver value to a client. Yeah, so I would say, average doctors are really bad patients, but good doctors end up being good patients, so I would imagine that a company like SAP will eat its own dog food, drink its own champagne any day. So I think the jokes apart, the idea of transforming digitally is not an option anymore. I think it's like any company and every company that's living in a marketplace today, we all know that what's happening in the outside world, it's the pace of change is incredible. Any day there's like a new competition coming up, if not in the core home market, like from China, just probably one of the most disruptive economies, so companies like SAP, Bain, every other company is challenged by the disruption that's happening from a marketplace and more importantly, customers have choice. The customers have choice more than ever before. So if SAP doesn't deliver value to its customers, they're going to look elsewhere. So that gives us the passion and the motivation to go change every day and that's the reason why more and more companies are investing in innovation, both organically and investing in all of these new technologies, but also trying to build out an ecosystem and trying to go create a vibrant community that can come together in a very different way. And so I would say I'm fairly comfortable with where we are. We could always transform faster, but compared to where we were, this year we'll end up with more cloud subscription revenue than our on-premises revenue, so that is a good benchmark for us in terms of digital transformation, so we're still Germany's most valuable DAX company. So all of those factors are obviously reflecting on the growth that we have achieved so far, but we need to do more to continue pace and stop innovation that's happening. I think if I look at the report and the four different doffing pillars of the study, then I think for us, and that counts for Axis Springer as well as for us as Axis Springer High, the whole topic around how to orchestrate the digital transformation seems to be most relevant. I believe, like most companies of us, we are good in terms of strategy, we get our head around the business model, so that's kind of set. And the enablers, I mean, I talked a lot about the cultural aspect, I think this is something we already have ticked, but how to orchestrate that, because I believe this is something which has a lot to do with the new way of how to deal with leadership, like I believe the old way leadership was done that a CEO of a company actually defines the direction and convinces the team to follow, whereas the Axis Springer CEO, Matthias Döpfner, he always says, I don't know where the media industry is going and it's not my role as a CEO to tell everyone, it's my role to organize a company or to take the term orchestrate a company that actually finds that answer continuously on a daily basis. Same for us, I mean, we are a young company one and a half years old and we start in the consulting area, but I would say it's not the role of our CEO to define what the future consulting business looks like, it's our role to, again, define a company that, or orchestrate a company that finds that answer on a daily basis and this is the luxury of being a new market entrant, but I really like the force pillar of the report. Yeah, just to build on that, I mean, if you look at the very intriguing questions throughout this, I think there were three that really came out for me, one being how will you act and how will you make progress without being certain of the end game, a complete sort of reversal. The other two I thought were really intriguing for organizations to ask is have you imagined a six-star offering in a five-star world? Maintain the level of excellence whilst everything changes around you and then to your point, have you built a sponsorship spine? I love that concept of sort of where's our backbone as we move into that fourth industrial revolution and the backbone isn't just from the leader, it's an entire organizational change. Thank you very much. So, Matthias Döfner does not know where the media industry is going. I know, however, that our journalists have to be leaving soon, so let's see if we have any more questions from the audience. Yes, if you could get the microphone there. Give us some time maybe to put on the headphones in case you're asking a question in Chinese. And if you could state your name and organization for the benefit of our online audience as well, please. Okay, thank you. I'm Lin with Taijin Magazine based in Beijing. So, Mr. Lankli just mentioned that in the company there are dreamers and doers and they have different opinions with digitalization. So, I wonder do you have an effective way in your daily work to persuade those companies who lack motives to change and not just tell them that you have to change but really, I mean, give them incentives to change. So, in your daily work, how do you do that? Thank you. Thank you. Yeah, I think the, first of all, it's very rare these days to meet with management teams and companies that do not want to change. I mean, everybody wants to change. The question is, you know, how much, how fast, where, but not whether you want to change. Now, having said that, the value of understanding this idea of dreamers and doers and frankly, the value of just saying the words is that you immediately see people turn to each other and laugh and say, well, you're a dreamer and you're a doer and we've known this forever but we've never had that concept, you know, and so we've never called each other by those names and then when you lay it out and say, listen, we are moving in the direction of the car but they'll be stepping stones and if you're a doer, we're going to first we're going to first do, you know, X to the horse and we're going to take it faster, we're going to add this, we're going to add that and people start to understand that yeah, we're moving in the direction of the future but the things we're going to be doing for the next, you know, two, three, five years are going to make sense. They're going to make money. They're going to have a return on investment and so if you're a doer, you feel good because you're making more money in the next three to five years and if you're a dreamer, you feel good because you're moving in the direction of a future, you're not just, you know, taking incremental steps. That's a pretty relaxing thing and for all the executives involved but it does require articulating a vision for the future and then working back and saying what are the things we can do now that move us in the direction. It also requires landing the point that even though you're not exactly sure what the endgame is, as long as you have a general idea for the direction, you've got to get going now. It's not an option to wait until you're 100% sure and then get moving because by then it's too late and so it's about, you know, general direction of travel, not exact point of arrival. Maybe one other point I would add is that I think it's super important to overcommunicate why you're doing something and more importantly, what does it mean for the individuals in that organization. So it's very interesting to talk about disruption, new technologies, new innovation, and abstract level but the idea of overcommunicating to every single audience in the organization, not just the people in the product or the technology function but HR, finance, recruiting, everything, right? So everybody needs to be in sync and like reiterating the purpose over and over again and trying to translate that at the grassroots level even though the change is minimal. Just tell people what they should be doing differently tomorrow or the year from now and that overcommunication is critical for companies to succeed. Thank you very much. We have one more question from the gentleman in the middle. Microphone is coming. Thank you. One question is for the SAPs because my understanding SAP really is a software very famous company and at this digital age and my understanding is SAP is benefited from this because you are trying to push more, you are helping companies to more digitalize. And what's really, from your point of view what's the digitalization for SAP and is there any challenge for SAP to engage in this digitalization trend? Yeah, so the question is what does it mean for SAP to digitize and digitalize itself? And then what are the challenges? Yes. So there's multiple challenges when you look at SAP trying to transform itself. So I mentioned M&A as a way to transform. So SAP acquired a number of companies over the last seven years. So integrating cultures which are global companies, these are all companies in Silicon Valley, Seattle and other parts of the world, integrating it into one consistent culture was something that we did over the last three, four years and continues to be an ongoing progress, making sure that we are in touch with the new innovations that's going on in the marketplace. So it could be blockchain, it could be quantum computing, it could be something else and making sure that SAP is at the forefront of those innovations and taking those innovations and consuming it internally but also for our customers and making it simple for our customers is an ongoing learning for us in terms of how we do that better and better. And finally, from a challenge perspective, again, I go back to the marketplace. There's always disruptors, there's always a lot of competition around and you have to be one step ahead in terms of thinking about what could happen and plan for the future and put that plan in place in terms of innovation. So we created an innovation function that's purely focused on what we call disruptive horizon three innovation. We re-infense the investments, focus on new technologies that are coming in and that's not focused on driving revenue for the company in the short term but looking at innovations in the long term and how does SAP be prepared for that long term innovation? Thank you very much. If we don't have any more question and since we're a Swiss organization, mindful of the time, I would close the press conference here but I would be amiss not to give a shout out first to Lucy Cummings, who is one of the key authors of the report as well who's here in the room with us. So thank you for joining us as well and of course Derek, her counterpart from the forum as well who leads our system work on the digital economy and society. So thank you very much for all of you here in the room. For those of you watching and a special thank you to all my panelists. Thank you.