Digital Transformation: In this Global, Digital World We All Must Learn to Work Together!

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Author:Michael Ruckman
Source: PLUS magazine

What trends are influencing global technological evolution? What should companies do if they want to survive and thrive in a rapidly changing world? What differences are there in the digital transformations of Latin America, Central Europe, Eastern Europe, and Central Asian countries? PLUS magazine talked about these and many other topics with Michael Ruckman, Founder and President of Senteo, a boutique consultancy with an impressive track record in business transformation.

“Business must be adaptive”

In your opinion, what is the main benefit or drawback that the ongoing global digital transformation in banking and retail has to offer the world?

People have been talking about a digital transformation in banking and retail for a long time. But in reality, new technology and globalization are leading to more profound changes in the world around us. Consumer behavior is changing, or evolving, at an extremely fast pace, which makes it important for businesses to adapt at a similar pace to avoid missing out on new opportunities.

Digital transformation and globalization facilitate increased competition in business. Technology allows us to compete with China, South Africa, South America, anywhere really. The entire world has become a potential customer and competitors from anywhere in the world can compete with us in our home markets. Scary really!

What do you see as the key trends?

I would probably highlight three main trends.

The first – using technology to decrease operational costs for businesses. This depends on how far a company can move away from paper, stamps, signatures and so on, in order to generally improve throughput, speed, and reduce cost. It’s important to understand that there is a limited range of benefit here, as you cannot increase speed or decrease costs endlessly.

Secondly – using technology to improve the quality of customer relationships and exploring new forms of value creation for customers. Here companies can benefit from almost endless opportunities to improve their competitive advantage and increase revenue.

Right now, virtually everyone is focused on reducing costs. But once companies understand that they’ve reached the limit for cost-cutting, they have to start thinking about increasing revenues, and this is where improving the quality of contacts, dialogue, and customer relationships becomes much more important. To do this, you must move past balance-oriented and product-centric business models and move towards customer-centric, solution-based offerings. If in the past, the main objectives for a business were to cheaply and efficiently mass-produce something and then to spread that out to the widest possible audience; now the main challenges are strong customer relationships, quality dialogue and regular contact with the customer to help the customer with solving problems, improving quality of life, and realizing goals – this is much more complex territory for businesses.

The third trend is a certain half-way point between online and offline, and here I’m talking about “phygital” – the combination of the physical and the digital experience, or, potentially better defined, an experience with all of the benefits of digital (speed, convenience, cost, etc.) that is carefully choreographed in a physical environment with the added value of human contact and guidance.

Banks have large networks of branches, and retailers also have a very sizeable physical presence. However, with advances in technology, customers have moved online for many, if not most, of the things they did before in physical spaces. The recent pandemic only accelerated this migration and solidified new habits of how we interact with businesses.

Nevertheless, people still find it valuable to visit a physical location to resolve complex problems that are too difficult or confusing to resolve virtually. Also, many tasks that are better completed with human guidance are better placed in a physical environment, or, at the very least, over video to allow for discussion and adaptation to concrete, individual needs (we call this human-guided digital). Learning how to use new technology, gaining new knowledge, creating a plan, designing a customized solution – many customers will prefer a human to be involved in situations where they are unsure or need advice and guidance. So the purpose and role of physical locations will change significantly in the near future, and those companies that implement these changes first will gain a major competitive advantage.

And of course, you have some experience with implementing phygital projects?

Yes. Actually, we have quite a bit of experience in this area. In fact, I started my career managing large scale transformations of branch networks for banks in Europe, then Latin America, then Central Europe, then Eastern Europe, and now Central Asia and the Middle East. Over the course of the past 27 years, advances in technology have greatly changed the reasons why a customer might come to a physical location and also greatly affected customer expectations from the physical environment. This evolution happened faster in some markets and slower in others, but it has followed almost the same path everywhere.

What causes the pace of transformation to vary from country to country?

In Western Europe and America, the transformation took place gradually over the course of 40-50 years. This is a very long time frame, but it happened gradually because there were no examples to follow, and there were all of the old ways of doing things. Legacy systems, old operating models, mindset, processes, values, etc. – all things that needed to be changed, needed to evolve

In Russia, for example this transformation took place much faster – over about 15-18 years.

Why is that?

In emerging / developing markets you can forget about legacy models and start implementing the new solutions right away. There’s no need to gradually evolve the old systems and old operating models because everyone can see the benefit from the new way of doing things. I guess there are still those that resist, but the resistance is much less when there are such clear examples of better ways to do things. Also, in most cases the old systems are so outdated, that no one would disagree that the new systems are needed.

I am not saying that this kind of transformation is easy… but it is easier.

What should companies do to succeed under these conditions?

The main challenge for businesses is to identify how quickly they can change their organizational model – their organizational structure, their management model, their performance metrics and so on. It’s important to understand the scope of organizational change, so that you can quickly and competently adapt the business to new conditions. One very helpful solution is to implement the performance metrics of the target model as a first step. If everyone can see the analytics and desired performance targets clearly, it is easier to see that the old model is not performing and must be changed.

Another thing to consider is that classical management theory and traditional business models were designed for stability, but in this new global, digital world, businesses must be quick. They must adapt to the rapidly changing needs, preferences, and behavior of their customers. If implementing a particular piece of technology takes, say, one to two years, then by the time that technology has been implemented, it’s already obsolete. Iterative development and adaptive business models will be the target for businesses wishing to maintain some form of competitive advantage and customer loyalty, and that change is no small change.

As I said a few minutes ago, implementing the analytics, and here I will say “customer-oriented analytics,” as a first step will be a very strong choice for those wishing to find guidance during this transformation journey.

“And so, you got, kind of, la segunda conquista”

In the second half of the 90s you worked in Latin America, where a lot of foreign companies were acquiring local companies to capture the market opportunities. What was the market like then and how did it change?

I started doing this particular type of work in Spain and worked throughout Western Europe, largely in the banking industry. At the time, many European and American banks wanted to expand their presence in Latin America. So the next phase of my career had a few years managing large scale change projects in Argentina, Colombia, Brazil, Chile, Venezuela, Mexico, and… I think you get the picture.

In contrast to local financial institutions in these countries, the foreign banks were very advanced in terms of their strategy, processes, management, and technology. In Latin America I had a lot of technology projects, specifically in the banking industry, like the first in the region video conference systems for sales and customer service, migrating customers to the use of multifunctional ATMs, the first steps in online self-service channels, information kiosks, etc. All these things were new there, and some of the stuff we did was even new for other parts of the world. As I said, without the legacy systems and approaches, we were free to do a lot of things that had no precedent in other parts of the world. In any case, every new technology that we introduced required some organizational change for it to stick, so it was never simply project management. It was always guiding change.

Spanish banks, specifically, came in with new sales processes, new strategic market tactics, new pricing models and features, and this created a significant shift in customer expectations that pushed the whole market forward. All these new, foreign competitors changed the Latin American market as a whole!

And so, you got, kind of, la segunda conquista, or the second conquering of the same land. There’s a story that local people talked about often while I was working in Latin America, specifically about the Spanish banks and Telecoms. 500 years ago, the Spaniards came on ships with horses and weapons to take the riches of the land back to Spain. In the 90s they came on airplanes with mobile phones and briefcases, and they acquired the local riches again in the form of banks, telecom providers, and retailers.

For local players, this created huge, new challenges. They had the choice of improving, and fast, or perishing. And so, a massive transformation of the local market took place. It was a very interesting time!

Around that same time, also in the late 90s, you worked in the Czech Republic, in Europe. Was the situation there different from Latin America?

Actually, yes, in late 1999 I moved to Prague to head up two business units for Central and Eastern Europe, and surprisingly to some, these are pretty similar stories. Things often repeat themselves in the world, I guess. At the time I was working for PricewaterhouseCoopers, based out of Prague, and I was responsible for what was called “e-Business Advisory,” which probably would be called digital transformation today, and also “Large Scale Program and Change Management,” which probably would be called business transformation today. We quickly expanded the practice to Slovakia, Hungary, Poland, Turkey, and Russia. And after that, to all of Central and Eastern Europe.

This was a time when Central Europe was actively developing as part of the European Union and was ready for change. Major Western banks, already present in the market, were buying up local financial institutions in the region. They brought with them new technologies, new approaches, new skills. Local players either had to get in shape to compete, or die out and sell off their business completely.

So, quite a similar story to that of Latin America.

In the early 2000s you ended up in another large, interesting and developing market – Russia. Wast this another similar story?

Honestly, in Central Europe everything was a bit more predictable. I remember my first trip to Russia in February of 2001. I had a lot of meetings scheduled, so I came a day early to visit a couple of bank branches and try to get a feel for the level of maturity in the market. I walked into a Sberbank branch, and Sberbank made quite an impression, and not in an entirely positive sense. I walk in, and there’s a security guard with a bullet-proof vest, a machine gun, and a scowl…. And he asked me, “What do you want?” I thought to myself “Wow, this is how you greet customers here? That’s pretty amazing!” I asked my interpreter if this behavior and tone was because I am a foreigner, and she said, “No, it’s worse for us; with you he was being polite.” Which is to say, they had a pretty long way to go to get even close to a Western standard.

Anyway, the transformation in Russia was a bit different in nature. This market was largely closed to many Western approaches for a long, long time. People were simply not familiar with them. And, perhaps, the biggest challenge at the time was finding willing individuals who could be introduced to Western concepts. Mostly, at that time in Russia, we came up against the mindset of, “We are the biggest. We know everything.” But we had to teach people to look at the world in a different way, to broaden their horizons, which took more patience and determination than it did in Latin America or Central Europe.

It’s important to understand that managing large-scale change and transformation requires a different type of consulting. Traditional consultants come to clients, look around, hand the client a list of recommendations to implement… and then they leave! Managing large-scale change in an organization requires assessing what skills and competencies the company is lacking, and then the consultant must educate, guide, and support the client in developing new competencies and skills to gain a new competitive advantage and capture new opportunities. This special approach to consulting is not always easy to find, and it is not easy to perform either, but it is essential to ensure the success of these types of change initiatives.

When we started in Russia, there was kind of a resource vacuum. It took a while to get things started, and it definitely took a while to convince people that these new approaches would work, but over time, there were more and more people on board for the changes being proposed.

The resources were scarce in the first 1-2 years, but within 4-5 years you started seeing more qualified and motivated specialists and managers, and then the market started developing more quickly. From 2001-2004, the change was slow. From 2005-2008 we were gaining momentum. From 2009, after the financial crisis, and until 2014 the pace of change in the market, the scale of its transformation was simply astonishing! Even today, there are things happening in Russia that are more advanced than in the West.

“Uzbekistan could implement this evolution even faster”

What could you say about the Central Asian market? Will it develop according to the general trends you’ve outlined, or are there some specific conditions… a unique path?

With respect to different markets, I would say we can probably rely on the ’80-20 rule’. Which is to say, 80% of evolution consists of general principles, and 20% of local conditions. When considering local conditions, it’s important to account for all of the opportunities they provide and structure them appropriately. This is crucial! Over the last 26 years I’ve learned to trust my instincts and my intuition with these things. It’s very interesting when you can ‘feel’ the change… the transformation. If we can genuinely follow it with our emotions, we can engage and inspire people to embrace changes. Then they will quickly accept them and move forward, and this will only happen taking into account the local specifics. Coming in with completely foreign concepts and forcing them on the local market conditions will typically meet resistance both from the teams implementing the change and from the potential partners and customers.

It’s important to avoid the mistakes made in other markets, in other countries. If you can do this, you can evolve even faster, but you must incorporate all of the local specifics to ensure success.

The opportunities in Central Asia are very interesting. There are lots of people, and not many legacy technologies that need to be replaced. Implementing new approaches, in theory, should be fairly easy. But the most important thing is to engage and educate people. And inspire them for the change and the opportunities that lie before them.

What are your thoughts on the market of Uzbekistan?

I think that everything that I’ve said about Central Asia could be applied to Uzbekistan. It’s a very interesting territory from the point of view of size and economic opportunity. If you can support transformation and educate people, you can glide through many stages of development that you had to struggle through one by one in other places. And you can implement successful ideas right away. That’s important.

How many years will Uzbekistan need to transform?

In America this process has been going on for 50 years. In Western Europe, probably, about 35-40. In Russia, as I said, 15-18 years. In think that Uzbekistan could implement this evolution much faster, in 8-10 years if people don’t get caught up in the typical set of mistakes that are usually made in these types of market transformations.

What are your expectations for the international PLUS-forum “Bank and retail: Digital transformation and interaction”, which will take place on 25-26 May in Tashkent? You are going to speak and host a master-class.

PLUS-forum looks like a very good partner, we have had many discussions about how to help each other. This event is a very interesting occasion to get to know people, to show yourself and to continue preaching our ‘religion’ of customer-centricity how to evolve business models. It’s very exciting!

It’s a great opportunity to meet potential clients and partners. We are a boutique consultancy; we would not be able to do what we do without local partners.

That is to say, can we expect you to partner with companies in Uzbekistan in the near future?

Yes, yes! There is no company in the world today that can do everything by itself. Thus, partnership and productive collaboration – these are crucial elements of success in business.

Some companies try to build a little ‘castle’ of their own: they are closed off, no-one from outside can get in. But this approach has long been obsolete. In this global, digital world we all must learn to work together.


Over the last 25 years Michael Ruckman has worked as a consultant for banks, retail chains, technology companies, telecommunications providers, and even governments in over 30 countries. He has managed countless projects, ranging from business strategy to complete business and organizational transformations.

Michael is best known for implementing projects in the sphere of customer experience, relationship management and loyalty in the banking industry. Digital, corporate culture and business-model transformation have become his specialty.

Ruckman’s portfolio includes projects for brands like Abbey National (Santander), Alfa-Bank, Atlantico (Millennium BCP), BNP-Paribas, CBRE, Citibank, Europolis, the Georgian Ministry of Justice, Home Credit, IBM, ING, Ivanhoe Cambridge, Megafon, Telefonica, VTB, Wembley Stadium and many others.

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