The hardest point was not to get the technology up and running. The hardest point was to convince them that their business model is not getting disrupted when they share that data.
That’s the conclusion that SAP CEP Christian Klein came away with when the enterprise tech giant worked with a group of automotive industry CEOs to create a more resilient supply chain through sharing of data. There was, inevitably, caution among them about what impact such transparency might have on their individual competitiveness.
It’s a hard sell, but it can be done, argued Klein, during a discussion around data sharing and collaboration at last week’s World Economic Forum meeting in Davos:
We came to a point where there's only a win/win for everyone here because we're gonna share the data anyway when we procure our stuff with each other and buy stuff with each other. You need to give people these win/win situations.
There are examples when it might be thought that such win/win bonuses would be obvious, a case in point being the development of COVID tracing and notification apps. But even here, said Klein, the resistance to data sharing was present:
The discussion we had to share data, in an anonymous way, was unbelievable, in a situation like that, where we can save lives with technology. But next day we'll share all of our data on social media! I said, ' Hey, look in such a situation, can we please come together as a country? And then I went to [European Union President] Ursula von der Leyen and said, 'Why can we not do this in the European Union? Because maybe even during COVID, people travel from Germany to Austria. Would it not be great if we can use the same technology there?’.
But the EU has some very firm ideas when it comes to data transfer and data sharing, as has been seen so many times in the part - step over the corpses of Safe Harbor and Privacy Shield? Some of the resulting attitudes actually harm European competitiveness, argued Klein:
In Europe, a tech start-up, definitely doesn't have equal opportunities when you work on AI like [you would] if you create a start up in the United States...At the end, you cannot train your algorithms as you could if you created your start-up in the United States. This is why we need global policies and these global policies should also consider equal opportunities and also diversity so that we're not going to have one or other communities getting disadvantaged. We need to come together, but we don't even come to this point in Europe. The European Union is not one union when it comes to digital transformation. Every country makes their own sovereign cloud.
There’s no need for, for example, France and Germany to have their own cloud, he added:
Do one! It's better, it's more cost effective, it's better for the data flows, and we come to one regulation. It's better for everyone. At the end of the day, it just makes no sense. This is where we need to ask the public sector to create more of these global policies, especially in a world where everyone moves a little bit backwards on globalization.
The current situation causes “unbelievable harm”, he suggested:
This is where we need to learn that we need to create, get this friction out and trust the technology, but, of course, also have this opt in. Everyone can decide if she or he wants to participate, but let's get this friction out and let the data flow and then still everyone on the consumer side can decide and opt in.
US retail learnings
Coming at the data sharing debate from a US perspective was Laura Alber, CEO of retailer Williams Sonoma. The company began life working with a ‘paper catalog in the mail’ model, before moving online. Today, 65% of its business comes from e-commerce. Alber said:
Now that we've transitioned online, there's so many uses to that data. At the same time, when I bring this up, I'm sure some [people] think this is super creepy and why would I want to have you know that? You're just going to oversell me. Well, the truth is, it's irrelevant.
Having lots of data to hand can strongly benefit the customer, she argued:
The reality is, furnishing your home is not easy. Things are hard to deliver. They're hard to put in your house. They're hard to remove from your house. And oftentimes, you make a mistake. The biggest mistake is you buy too much furniture and it does not fit. Now, imagine if I can tell you what things go together. Not because I have good taste, but because I have seen combinations and patterns and products that work perfectly together in your type of home. You have a red dining room. I know you have a red dining room. I'm gonna show you exactly three choices that are most successful in that kind of space.
Now take it further and have a room planner for this in 3D and I can put into that designers tricks. You know, how not to make the mistake of over furnishing. Even though the room is 10x10, there's a door there, so you're not going to put the chair next to the door because it's going to open and hit the chair. But when you look at it on a schematic, you might think that's okay. So how do you take an online tool room planner and show 'danger', the furniture doesn't fit because of the door or the window or this or that. We're using a lot of data from consumers and successful designs to help you design your room if you would like that.
There are simpler arguments to be made as well, such as opting into emails, she added:
We have first party data. I mean the challenge of third party data, we have solved because we have our loyalty program and our own credit card. But what you if you're a baker and you just want baking stuff - why should I send you all this [marketing collateral]? All these emails about something you're not interested in? It's annoying. But it's actually quite interesting to get an email on something you're interested in.
Picking up on Klein’s opening remarks around supply chain optimization, Alber layered her own views on this on top of a wider conversation around sustainability:
We're one of the most sustainable home companies. We're the only one that makes the Bloomberg list. We get a lot of credit for it. It's still super hard to know exactly where the wood is from. So, you buy sustainable wood, but is it? Have we checked every single person that sold every single thing? Supply chain tracking is a really important piece that I'd love to see more development on. We're trying to really stay on top of what are all the choices, what are all the options to really have that information. As we try to reduce our carbon footprint, and also make sure that there's no social issues with anything that we make, this would really help us make sure that it is what we think it is. I put that out there because I wish more people were working on that.
The truth is, it's really hard to really do it. I mean, academically, yes. UPC, RFID, all of those things would work. But how do you make sure it actually stays on in the different places or that that too isn't fraudulent? I like the idea of throwing down the gauntlet to say to my competition, 'Beat me at sustainability. I'm happy to share all my data, tell you everything we do'.
Where all boats rise, is if we share data on subjects that are very difficult…One could say I shouldn't tell who my most green supplier is, but on the other hand, maybe I should. That's not happening. People are competitive. Some of those people have limited production anyway, but there's not as much sharing of information amongst competitors in the retail business on those things. And I think it's a really important subject. For some reason, everyone sees it as very competitive or it's not the most important thing to talk about.
Klein’s comments on the EU’s attitude to data sharing is something I’ve waited a long time to hear a European tech CEO stand up and say. Of course, we need protections and regulations in place, but at times the EU stance has been excessively draconian and does damage competitiveness. The national sovereign cloud example is the prime offender. While the US can be said to be at the opposite extreme, the validity of what Klein says about it being easier to be a start-up in a data-centric field is something that the Eurocrats in Brussels and beyond need to pay attention to.