The Case for Digital Transformation: 5 New Business Realities Every CIO Needs to Embrace

Kelly Smith

CIO & CSO at Hagerty

Learning Objectives

Please Join the CIO & CSO of Hagerty, Kelly Smith in this Executive Interview where he will discuss the role company culture plays in digital transformation. He will also explain the positive impact digital transformation had on customer engagement, employee innovation, productivity and more.


"I believe that digital transformation is an interesting phrase because it's actually more about culture than technology."

Kelly Smith

CIO & CSO at Hagerty

Transcript

Britt Erler

Hello and welcome to the CIO VISIONS Leadership Virtual Summit hosted on Quartz Network. My name is Britt Erler, QN Executive Correspondent, thank you so much for joining us. Please welcome our Executive Speaker here with us today, Kelly Smith, Chief Digital Officer and Chief Information Officer at HUD Ready, as we discuss a case for digital transformation, and five new business realities that every CIO needs to embrace. Welcome, Kelly. It’s a pleasure to have you here.


Kelly Smith

Thank you for having me. Britt, I really appreciate it.


Britt Erler

Of course, and I am thrilled to dive into this topic today, because I believe it’s really forefront for a lot of leaders within the industry. But before we do, so, if you wouldn’t mind giving the audience a quick background about yourself and your current role.


Kelly Smith

Sure. As you said, here at Hagerty, I actually have a slightly unusual role in that I’ve got traditional CIO responsibilities on the one hand, and again, classic Chief Digital Officer responsibilities, on the other: data storage, network, compute, telephony, collaboration. Over here, you know, driving the innovation side. Besides being a car guy, which I am, that unique nature of the job is really kind of why I’m here. But you know, I think I like to joke with my team that I bring an entrepreneurial baggage to the table, because I also come from a venture startup background as well. It’s been an interesting collision in my career between working both in startups and then large companies like Starbucks, MGM and Hagerty. Yeah, it’s been a fun journey. Maybe I’ll share some tidbits that I’ve learned along the way with you here today.


Britt Erler

Absolutely. You have quite an extensive experience. And you’ve really seen, I’m sure just how the industry has changed more than the last couple of years. This new virtual world that we’re now living in, I mean, it changes every single day. So let’s talk about some of these digital practices that are really most important now and driving success for the business.


Kelly Smith

Yeah, it’s this really interesting question, because I suspect we could probably talk for hours on this one. Um, when I think about this, I think what we’re effectively seeing for CIOs or for CEOs or for, for anybody, it’s just this constant reminder that just, I know it sounds cliche, but you know, keep coming back to the customer. While I admit that it sounds cliche, the truth of the matter is that historically, you know, the customer experience, part of the CIOs responsibility wasn’t necessarily the area where they were the strongest, right. And I think, in some ways, that’s kind of how we got here with this Chief Digital Officer type of role. So this renewed focus on the customer, this renewed focus on on working from the experience backwards, appears to be kind of a meta trend right now that everybody’s really having to focus on. And I’ll sort of close answer this one answer. I’m originally from Seattle, and, you know, watching Amazon kind of come up in my hometown, the way it did I remember early on, you probably do, too, Jeff Bezos answered so many questions, with some variation of this answer that basically said, Look, we just obsess about the customer. We don’t obsess about our competitors. We just, we all work hard to do what’s right for the customer. It never quite. I didn’t internalize at the time, that what he really meant and how deeply he really felt about it, it sounded a little bit like a soundbite. Now, I feel like I understand that a lot more. And, yeah, it’s a really simple thing to do. But it’s simple concept. Right? It


Britt Erler

seems so commonplace, you know, and I talked to a lot of leaders in multiple industries. And really, that’s become the focus is customer experience. And you wouldn’t necessarily think of it, you know, for it for CIOs, because you think of that more as kind of in the marketing department, that customer experience, but really, it is so vital for every department in the organization to understand what that really needs means and what you’re driving towards. And I want to talk about that a little bit deeper in terms of the company as a whole and the role that your company culture really plays in the overall digital transformation.


Kelly Smith

Yeah, you know, I believe I’m not the first one to say, of course, it’s been said many times, but I believe that digital transformation is an interesting phrase, because it’s actually more about culture than technology. And if you think about it, it must be true in a way because our world has stories of companies that, you know, Blockbuster videos, perhaps the most notorious example, but they’re modern day examples to where, you know, there was a digital transformation, but didn’t like go the way they want it. And they transform themselves right out of business. So the fascinating thing about that is, if we’re all getting the same newspaper in the morning, or if we’re all reading the same internet, which I presume we are, what happened? How could this be? Sure. And so it must not just be about technology, right? It must not be as easy as writing a big check to a consulting company. Because if it were that easy, we wouldn’t have these stories, and people would would go do that. So it’s really truly about culture. And it’s really, truly a very difficult exercise, I think.


Britt Erler

And, you know, to continue on with that, how do you get employees to jump on the bandwagon, so to speak, make sure that they’re trained up and also understand really, why it is so vital to the company as a whole.


Kelly Smith

Um, you know, I think one of the things that my former employer Starbucks, you know, what they did in the early days, they set up a department on another floor, pretty much more or less separate from the rest of it. And they call the digital ventures and it rolled up to its own C level executives. And that was really, really before there were a lot of Chief Chief Digital Officer type roles kind of coming on. And that’s not the case anymore. Now, it all rolls up to one organization, but at the time, in the beginning, that was exactly the right thing to do. Because, effectively, you need to be able to recruit a level talent. And not just recruit, but keep, retain a little talent, that’s really, really hard. And so what they decided to do, especially in Seattle, where you’re competing with Microsoft, and you know, these new offices from Google and Facebook in that area, you know, they basically said, Look, this is not going to be it, this is going to be a place where you can innovate, you can think outside the box, you can work with like minded peers. And that was, that was kind of the secret sauce. I don’t think every company has to do that. But what you do have to do is you have to honestly assess whether or not you can change your culture quickly enough for you to respond to the rate you want to and it varies from each company, I know for sure. It starts from the CEO down meeting need the support of the CEO, it can’t just be your responsibility. So every scenario is a little different. And depending on your circumstance at your company, you may choose to run a different play.


Britt Erler

I couldn’t agree more. And I think it’s it’s so key, what you mentioned that it really starts from leadership and trickles down to the rest of the organization. You know, they’re really the ones that are pushing this passion project, so to speak. You know, and you see time and time again, a lot of companies implement these new technologies, these new platforms, they spend all this money to realize that it doesn’t fit, you know, their organization as a whole. And they can’t get their employees on board. Because either it adds more work to the table, you know, it’s not benefiting the certain areas that they were hoping it does, you know, so as you said, it’s really knowing your company from the inside out, knowing your people and what ultimately is actually possible. And, you know, and we’re seeing this big push towards digital transformation across all sides of the business, but what truly are the actual benefits? Aside from the obvious?


Kelly Smith

Um, I’m not sure what would necessarily be considered obvious, but um, you know, I think, uh, again, I think every situation is different in our in our case at Haggerty, you know, to be completely candid, we, like other companies in our in our business, a lot of our work is done through a call center. Okay. And, um, the non obvious part of digital transformation is that you, you aren’t just worried about providing a great experience to your customers, but you’re really worried about providing great experience to those people who do that hard work, which in many companies like ours, or even my former employer MGM those you know, Call Center folks numbers in the hundreds or even 1000s. And if you don’t give them good tools to do their job, where they’re focusing on providing a higher value experience versus a purely transactional experience, then it can be a pretty tough place to work. Frankly, if the interfaces they use to do things like change your billing address, or add a new credit card for you, or add a new product for you, if that’s difficult, it affects productivity, it affects morale. So that’s not very obvious. And so when the, when we talk about the customer, all of the time, I believe you’re also talking about the experience you provide your employees, because when you’re in our line of work, and your customer oftentimes is a co worker. The obvious part of that example could be you get cost benefits, right? So in our case, a lot of people call in because they forgot their password, that probably wouldn’t surprise you, or they want to get their let’s say, their insurance card, that probably wouldn’t surprise you. And so what we want to do is try to make the percentage of calls more about more complex, high value issues, and not some of those where it’s really the customers trying to navigate a bad experience that we find. Those are not the kind of things to drive calls. Um, you know, again, just kind of reflecting on on my my former employer. Many people yourself probably included you better trade shows in Vegas once or twice. I’m guessing. You might remember during tradeshow period, that, you know, there’s there’s a line to check into your hotel sometimes. Oh, yes. Right. It’s sometimes that line you might be in that line for what do you think, Brit, you’ve been? How long? Have you stood in the Bellagio line? Sometimes


Britt Erler

Sometimes 3045 minutes.


Kelly Smith

So what’s fascinating about that, and that you can, is it fair to say that’s relatively recently like in the last? Yeah.


Britt Erler

I mean, pre COVID? Yeah. So recent, right before that hit? Yes.


Kelly Smith

Right. Pretty amazing. Right? So 2020 2019 2018? Yes. It’s amazing. Because when it’s finally your turn, to get to the front desk, what’s actually going on there? What’s happening? The


Britt Erler

basic functions, I feel


Kelly Smith

like, you know, they ask you for your ID. So you both exchange plastic cards with one another? Yeah. And so my point is, like, nothing horribly miraculous is really happening up there, right? Certainly not any more than, you know, checking into an airplane and like, not going to the counter at delta, then going straight to the plan. And so, effectively, what you see there is a structural problem in the business, it’s not a technology problem. And so the non obvious parts there are, you know, why is that happening? Mm hmm. It’s interesting, isn’t it?


Britt Erler

It is, and, you know, you see all these different basic data functions, like you said, just with the hotel checking in, that could be simplified and streamlined by just implementing a simple process, making it digital. Maybe I can just check in online, that would be great. Unless they’re upgrading me to the suite, then that’s a little bit different. But, yeah, we understand your mentality there. And I think another side to that, too, which, which may hold some companies back would tell us especially is the risk factor that I think we see a little bit more now as everything moves through this digital transformation space. And, you know, from your experience, what would you recommend to CIOs to make sure that they’re still protecting their business, even as they’re starting to move it along? And you know, digitally transform it, implement new virtual strategies, platforms? Like?


Kelly Smith

Yeah, I think, you know, protecting the business is, is an interesting phrase. Um, I have a feeling different people would sort of interpret that differently. You know, I think, I think that what you’re trying to do, is, in a way kind of future proof the business, the way you protect the business in a way I’m using future proofing. I’ll try to say it another way. I think the way the way you protect the business is to be very clear eyed around where the puck is going. And then make sure that you’re pouring the concrete you’re pouring the foundation to to get there. So an example would be where where’s the puck going? In terms of customer engagement, so I would submit to you that data driven marketing, trigger based marketing, automated marketing, personalization, like that’s where the puck is going. Right? Our former example with the hotels rather than standing in line for 45 minutes, what perhaps really should be happening is they have a completely great view of your history, you always get the Cabana, you always book a spa trip up to nice restaurants, and therefore we more or less can consider you within a segment. Let’s say I have a lot of traveler, right? Well, that would be great. Yeah. Do they know that about you today? Literally, no. Right? Right. Um, so to protect the business, you kind of have to start the work now. To deliver on the experiences where the PUC will well, and truly be, in a couple of years, we’re getting all the signals, we all kind of see already. We know what we’re supposed to do. And then it just becomes a question of like, okay, well, are we are we doing that? In my area of work? A lot of times, it means, you know, talking about things that probably much of the world doesn’t really want to talk about, like, for example. Okay, gee, well, you know, the way most customers are going to interact with me in the future might be, you know, this thing, right. And so what I may want to ask myself is, are my systems of record and exposing API’s that I need to make a great experience on the mobile app so that you can do your personalized marketing for me, right, really simple things. Sadly, harder to do easy to say, but but hard to do, right? Just go getting to figure out for yourself where the puck is going. Don’t go all in basic.


All in just like in Vegas all in. But it’s very true. Yeah.


Britt Erler

Eventually, you know, this will be all at our fingertips, we’ll be providing companies that information right there for them through our smart devices through our computer. So it’s really interesting to see kind of the way of the world and where it’s going. And another question I know the audience is interested in is the correlation between digital maturity, and also what that means in terms of financial performance. Talk to me a little bit about that.


Kelly Smith

What it means in terms of financial performance, so um, I think when we talk about digital maturity, it’s a really good question. Like, what? What do these we love to throw these kind of phrases around in technology? Digital transformation, digital maturity? What are we really talking about here? What are we really saying? Well, you probably should be meaning, things are more efficient, not less efficient. Okay, I can buy that. Great. You probably should mean, you’ve got increased customer satisfaction. You don’t want to stand in line to check into the hotel for 45 minutes. What if there’s no line at all? And you just walk past the front desk and go straight to your room and your phone is your key?


Britt Erler

Great.


Kelly Smith

What if it means we talked about employee engagement earlier? So what if it means higher levels of rated? Genie proven employee engagement? What if it means that the easy one, of course is more revenue growth and more profit? Right? So basically, I would submit to you that all of those things must be true. Use the term digital maturity, and the traits or the characteristics around why all that happens is actually quite simple. You have better product and or service quality. That’s it, better experience, better product experience, better service experience, and the result is all those things. And so, what somebody could do, I suppose, is just sort of say, Okay, well, let’s just work backwards. As a CIO or a CTO to do some of those scenarios, right? What do I actually need to do? And I think what you’ll start to see is you’ll start to see Fortunately, a few really, really simple themes. You don’t have to boil the ocean, but I do think you can distill it down to some simple themes. One would be a, you probably need to be a better steward of your data tomorrow than you were yesterday. Right? Because I can’t do the automated marketing or the trigger based marketing or the personalization or the recommendations to Britt that are appropriate for her Based on her last three or four visits, unless I actually have a way to capture the data, and then act on the data the right way and certainly in the right time wouldn’t make any sense for me to push you a cabana offer like, the Monday after you got back from Vegas? Probably. No. Yeah, it’s so true. So it should be revenue, growth, profit, you know, those are those are the kind of alignments that you want to see with maturity, customer satisfaction rating, employee engagement rating, you know, probably nothing terribly surprising, I guess.


Britt Erler

No, I completely agree with you. And like you said, it is really kind of all common sense. But we’ll see really how it grows in the next couple of years to come. Because I feel like every single day, there’s something new that’s coming up that we’re like, Okay, well, here we are. So it’s really been an incredible time. And, you know, to wrap up this conversation with you today, you I think there’s a lot of CIOs that are really at the beginning of this journey, and then some that are right smack in the middle. And they’re thinking, Okay, where do I go from here? You know, where do I go to move my business board, and make sure that I’m not going into completely wrong direction, final pieces of advice that you have for them.


Kelly Smith

Um, I just gonna speak for myself, in my own experience, I really deeply appreciate that every company and every culture really, really is different. But I think what I would say is to try really hard to think in, you know, very simple terms. And, and don’t get distracted by a lot of the buzzwords that come in all of us around these terms, like digital transformation, and I’m talking about things like AI or chat bots, or or blockchain, right. Um, it’s, it’s not really about those things, necessarily. It’s, it’s fortunately simpler than that. It’s about doing older things better and faster and cheaper. We talked about, like the front desk thing, right, like, fix the obvious problems and fix them? Well, um, and then the next thing I would say, in this is a really simple one is, technology by itself. Isn’t the magic, the secret sauce, you can surprise and delight people in lots of little ways. It’s really more about just hiring the people with the passion around that topic. And they’ll build it the way they need to build it, but just look for ways to unexpectedly surprise and delight people and otherwise mundane, you know, experiences that they might have with you. The third thing I’m going to say is, I think that get really aggressive about solving customer issues. Well, because in my experience, the biggest proponents that I’ve had in former companies were with people who actually had a problem with me before highly vocal supporters, much of the time will be started as customer service issues. And so I think really leaning in on those, and over rotating in terms of not just fixing their problem, but using that engagement moment with them, where you have their attention to turn them into a lifetime proponent. Right? It’s a magical moment when someone has a problem. Right? Right. Those are just three things that come to mind.


Britt Erler

No, I completely agree. You know, even though you think a problem, no, it’s the end of the world. But really just one more touch point with them, you know, to get them excited about your company as a whole. You know, and that’s very rare to find sometimes. So it’s exactly take take that relationship step as you can. And I think this is great advice for not only companies, like I said, that are beginning stages, but even if they’re in the middle, small, large, we’re all seeing this kind of come to a point where we have to evolve and we have to move forward. So this is definitely something everyone needs to be on board for and, and ready to kind of take the reins and and jump in, as you said all in and I think I think this is a great starting point for people. So Kelly, thank you so much for being here. It’s been an absolute pleasure. And thank you to our audience members as well. Not to worry if you have additional questions. There will be a discussion forum underneath this presentation. Please enjoy the rest of the CIO VISIONS Leadership Virtual Summit and we’ll see you again soon. Thank you


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