IBM’s Insights on the Best Ways to Approach New Business Frontiers

March 3, 2020

IBM explored some of the ways that marketers and organizations are adapting to new business frontiers.

At the 2020 ANA Masters of Data and Technology Conference, IBM CMO Michelle Peluso took stock of some of the technological advances that have had and continue to have a massive impact on businesses. She illustrated these developments with a number of examples.

Call Centers: The bank Crédit Mutuel transformed its call center with the introduction of chatbots, which were able to absorb 60 percent of the call volume. Callers who grew frustrated with the chatbots were rerouted to humans. The diminished call volume handled by humans did not, however, necessarily reflect a diminished role, as they became responsible for retraining the algorithm on which the chatbots ran to better meet customer needs.

Supply Chain: The chemical company Yara, which is heavily involved in crop production in part through its fertilizer business, created a transparent supply chain, which gave farmers access to such ample amounts of data (including that related to crops and weather) that they were able to micro-target the resources that they needed for tasks such as irrigation. The company boasts that that the innovation can make food production up to 50 percent more efficient.

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HR: Peluso related how AI is changing the credentials needed for many jobs. For instance, because AI can execute some of the responsibilities that cybersecurity professionals have traditionally been responsible for, the people who fill those roles need not necessarily hold the same degrees they once did. At the same time that AI is making jobs more accessible it is also making compensation more equitable, as it can be used to weed out bias (e.g., gender bias) in decisions about pay.

While the impact of new technologies is being felt across a wide swath of business functions, marketing is an area where that impact is being felt with particular force. Peluso pointed to a number of ways in which that impact is manifesting itself.

Data Democratization and Insights: Thanks in part to refined data collection and analytic practices, IBM has been able to achieve 100 percent visibility into every marketing dollar spent, tracing a path from each of those dollars to the revenue it generated. These insights are effectively available to every marketer in the organization. Moreover, IBM’s Watson Alerts offers marketers guidance for how to shift their spending for improved performance going forward. In addition, Watson Accelerator predicts creative optimization.

Blockchains: The proliferation of intermediaries who intervene between advertisers and the appearance of their ads in front of consumers has produced opacity and inefficiency. Indeed, whereas some years ago 85 cents of every dollar made its way to consumers, now, Peluso estimates, only 40 cents of every dollar does. By recording transactions and the history of ads’ appearances, blockchain’s ledger technology provides a single source of truth that in turn can offer transparency and traceability and aid reconciliation and fraud-avoidance.

AI and Chatbots: Peluso predicted that these technologies would soon all but end one-way broadcast advertising and usher in an era of conversational, interactive advertising. As an example of an early manifestation of this trend, Peluso cited the work that Behr had undertaken with Watson. The paint company has created an AI-powered chatbot that invites users to chat with it about their painting project. By asking the user a series of questions about the room he or she is painting, the purpose of the color switch, and the effect sought, the chatbot is able to offer a tailored color recommendation.

As significant as changes such as these are, upheavals in the modern business landscape are in many cases forcing companies to undertake more sweeping changes to their very organizational purpose.

Nike: Once a modest shoe company focused on runners, the organization has transformed its mission to bring innovation to every athlete, e.g., by putting chips in shoes to monitor performance. Nor are these offerings exclusively for elite runners like Steve Prefontaine: in Nike’s view, everyone with a body is an athlete.

Hertz: No longer a rental car company, the organization has reconceptualized itself as provider of fleet management and driver services. Instead of viewing ride-sharing apps as a competitor, Hertz views them as a market, insofar as it can rent cars to those selling rides on apps such as Lyft and Uber. It also offers car subscription services — ideal for millennials who are reluctant to buy a car outright for themselves.

CVS: Instead of remaining content to be viewed as a pharmacy, CVS is remaking itself into a local health and wellness brand, expanding health service offerings through its Minute Clinics. Ultimately, it hopes to be able to take on many functions traditionally executed by emergency rooms, believing it can bring new efficiencies and improved customer service to the market.

Q&A with Michelle Peluso, SVP, Digital Sales and CMO at IBM

Q. You described how AI is going to create two-way communication with consumers. How do you get consumers comfortable with that kind of communication with organizations?

A. Obviously, everything has to be opt-in. But that’s the baseline. We have to be data stewards for our companies. Data standards and governance are so important. We have to be clear about what data we’re gathering, how we use that data, and whom we share it with. We’re going to have to be passionate about those topics.

Q. How do you see AI contributing to the creative process?

A. We’ve been exploring things: Can AI craft music? Can it craft highlight reels, for instance, for the U.S. Open? We’ve even given individual users the ability to use AI to create personalized highlight reels based on factors such as their favorite players. With Watson Accelerator, we’re also looking at things like creative optimization. The human will always be paramount in creativity but there may be some ways in which AI can help us.

Q. As a CMO dedicated to Agile at scale, what are some of the ways you bring your personal executive leadership together with your teams around this methodology? How do you continue to tweak it?

A. Most Agile teams get stuck at middle management and above. That is because most of us have grown up in a hierarchical world and have appreciated the hierarchy. We get to call staff meetings and the one-on-ones. We get to set the tone. Plus we do have a legitimate need to aggregate information across broad teams. So the first thing we did was train the leaders, figure out how we were going to work differently. How do we join stand-ups rather than have people come to us for staff meetings and one-on-ones? How do we prioritize? How do we ask the right questions of teams to help them develop a growth mindset? How do we help them prioritize their work? When they’re making their burn-down charts, how do we help them make clear decisions about what work is most important? How do we define outcomes better? Teams without clarity as to outcomes can’t do great Agile work. So first was train the leaders.

Secondly, we put everyone in disciplines on a team and we invested six months in training all of our people to help them learn Agile practices and beliefs.

Thirdly, we put coaches in all of our locations to help them find out how to improve.

Fourthly, we spend a lot of time each quarter on Agile health checks. Each team self-assesses Agile principles and behaviors and devotes a sprint to improving on things they could get better at. So they might be doing great as a team, but not connecting great with the sales team. Or maybe they’re not uncovering sources of data. They’ll then put real team time into getting better at those things. So those are just a few of the ways that we’ve made Agile work at scale.

Q. What are you seeing in attribution?

A. It’s really important to us because we have 6,000 events a year. We spend a lot of money on marketing and have a lot of touchpoints, so really understanding what matters for consumers and investing in multi-touch attribution has been critical for us. And it’s been surprising and delightful for us because we learn new things all the time.

Let me just give a few highlights from wheat we’ve learned. One is that silos don’t serve consumers. Clients looking for cloud services may very well also be looking for security. So we have to break our own silos down. Secondly, TV actually does work for us more than you would think. Thirdly, multi-touch attribution has been opening up new avenues for us in account-based marketing. Multi-touch attributions has been helping us understand how much we need to touch certain organizations and job roles to make sure that they understand the IBM value proposition.

Q. How can marketers utilize new technologies to better identify and address problems that could otherwise slip through the cracks and go unnoticed until they require deep investments of time and resources?

A. A lot of it starts with data. Why do most companies fail to get beyond proof of concept or fail to get to scale results? Two reasons. One is data. Are you collecting it, organizing it, and governing it? The other is that they don’t change the way they work, including skills. Those are really the two stumbling blocks to scaled transformation. That’s why we have to responsibly steward data, ensuring, for instance, that an “engaged visit” means the same thing for every channel around the world. We’ve got to figure out how to have a common language. Once we do that we can do great visualizations and help marketers make better decisions. Once we do that we can think about how to bring new technology to bear.


"Marketers, Technology, and a Changing Business Landscape." Michelle Peluso, SVP, Digital Sales and CMO at IBM. ANA Masters of Data and Technology Conference, 3/3/20.

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