For the past two years, Malcolm Frank, Chief Strategy Officer and Chief Marketing Officer of Cognizant, has largely stepped away from the firm’s day-to-day operations to conduct research into how CEOs, CFOs and CIOs can and should adapt business practices to leverage the information that surrounds every person, device, process and organization. The result? What he and Cognizant call ‘Code Halos’, the fields of information that surround people and products they purchase. In April Frank co-authored the book, Code Halos: How the Digital Lives of People, Things, and Organizations are Changing the Rules of Business. Frank sat down with Consulting to discuss Code Halos and their inevitable impact on nearly every business now and in the future.
Consulting: Let’s go back a few years. How did this all come about?
Frank: This started out of our Center for the Future of Work. About four years ago, we launched a technology transition around SMAC—social, mobile, analytics and cloud—and we thought this will fundamentally transform the future of work. How firms are organized, how they interact with their customers, how they generate value… A lot of firms are going to go through a real fundamental shift. We stared doing research around this and started asking some questions: Why did Company A win and Company B lose?
How did Myspace screw that up? How did Yahoo let Google through? Blockbuster seemed to have everything; how did they lose to these guys who were just sending DVDs through the mail? It became very clear to us that there was this concept of the Code Halo, there is the physical you and then there is the virtual you. And companies that not only recognized the virtual you, but also knew how to interact with it in a meaningful way were the clear winners.
Consulting: And what does that mean for the future? And for your clients?
Frank: We think this is a management challenge for the next ten years. We’ve been very pleasantly surprised how we’ve been escorted into the C-suite to engage in this conversation. Our clients are all recognizing how significant this is and they realize that what happened to a Blockbuster isn’t isolated to that industry. They realize that if they don’t get their act together this could happen to them. Clients are realizing that they need to interface and interact with customers in a completely different way.
That’s sort of the Amazon and physical realtor story. We are seeing retail and investment banking do this. Banks are trying to say they are relationship based but they are not. Banks are realizing that if they could see the financial code halo of that person, they could begin to understand what their needs are and how to tailor products or services to them in a meaningful way. That’s when we see clients get this concept really quickly and see how it could impact their business.
Consulting: Is this change being driven mostly by the consumer?
Frank: Yes, absolutely. Customers who have experienced this in other industries are saying this is nuts. How is it that Pandora knows exactly what I want to listen to but I’ve banked with you for 20 years and you have no idea who I am? The other factor, I think, is a real sea change that’s going on with the Millennial generation. These people have grown up in this environment and it’s actually a departure for them when they go and buy their first life insurance policy and they are shocked that they have to sit across the desk from a sales person.
Consulting: What do clients want?
Frank: Clients are raising their hands and saying that they want to do this around their customer, but they also want to do it around their products. That’s what GE is doing around jet engines. For instance, we’re working with a bunch of car manufacturers to build code halos around their cars. Then the consumer and the company can co-manage that car, monitor its performance and troubleshoot problems before they ever occur. How are consumers using the car? Manufacturers can then use that information to better design future cars.
It’s all leading to the mass personalization of products. Cars used to have to be one-to-many, but now the car can become one-to-one. It’s the iPad mentality—the physical machine everyone buys is the same but every iPad gets highly personalized to the end user.
Consulting: So they see the potential?
Frank: They do, but they also are really frightened. In our consulting engagements, we play what we call the “Google game.” We ask them: What if Google came into your industry? People get spooked because they realize pretty quickly how they could be completely dis-intermediated. Then there’s the big box retailers—twelve years ago, they all thought they’d get “Amazoned” but still, 90 percent of purchases come through retail stores, but “show-rooming” is a real issue. So, we’ve created what we call the intelligent store. Your smart phone will actually create a map for you of your local store, pinpointing your products and offering discounts and coupons.