Part 2 of Interview with Malcolm Frank of Cognizant: Davos, Design Thinking, Automation

Continuing my interview with Malcolm Frank, EVP of Strategy and Marketing at Cognizant. Part 1 can be found here

Malcolm, you were at Davos in January. What did you hear from the European or from the global perspective which is different from what you hear from US clients?

In individual conversations, there was a lot of focus on the relative performance of economies around the world. For example, a German executive was talking about the political mood in the US, observing "Half of your voters are angry, on the left with Sanders or the right with Trump. Yet America right now is economically the envy of the world. If the country that's doing the best is that upset, then what does that mean for the rest of us?" I thought that was a very thoughtful perspective.

When the conversations got down to business many focused on "How do you build a digital enterprise?" We saw that in particular in industry discussions. With financial services, there was a lot of interest around Blockchain. With healthcare, how do we rebuild national and individual plans based on newer technology? This year's theme at Davos was the Fourth Industrial Revolution. Some joked "Oh, I thought there were only two before, maybe there were four already." However, most everybody agreed it was just a question of how fast it's going to move and how broad and deep the impact going to be. Nobody was questioning the fundamental notion that we are at the beginning of a new, digital economy.

Design Thinking is another buzzword in your sector. Cognizant is setting up "Collaboratories" around the world - I enjoyed a lager at your midtown Manhattan one. Are those driven by the design thinking trend?

Design thinking is absolutely taking off. Yet some are confused as to what “design” means in the new business context. Think of big D design as opposed to small D design. Small D design we've been doing since the web blossomed in the mid '90s. How does something look on a screen? How will be it rendered on a mobile device? That's been the classic design if you will. What we're talking in Big D is business model design. How do you design new experiences for customers in a completely new digitally-based process?

For example we're helping several banks with a branch to the future. How do we blend next generation mobile banking with the physical branch? There's the use case when you're in the parking lot. The manager can say, "Oh, it's Mr. Mirchandani. I think it is something about his mortgage." When you walk in, there will be a manager with a tablet who will just grab you at the door, pull you into her office, solve the problem right there. Those are the types of things that require true design thinking, when we bring the best of the physical model and merge it with the best of the digital model.

Do clients look at firms like Ideo or Frog for the design and then bring you in? What is the competitive landscape there?

It's interesting. Folks look at it from one of two angles. Some will turn to classic design firm as you're describing. The problem is often they don't have the industry expertise. They certainly don't have the enterprise technology chops, and don’t focus on critical, but more prosaic, issues like process mapping and change management. On the other hand there are firms that come from a more technology or outsourcing model, that are acquiring their way into this business, organically building a way into this business. Ultimately, I think it just really depends on what the specific issue is for the client and who they're more comfortable with in terms of starting on the design process. Think of it as the difference between designing products vs. designing customer experiences vs. designing new business models.

Malcolm, let's talk about moving away from headcount based to IP-based business models, the holy grail in outsourcing. Are people still talking about it or are firms doing something about it?

Yeah, there's certainly a lot of talk about it. I laugh because I remember there was a lot of talk about this when 4GLs were new. Same when object oriented programming was maturing. Ditto with the first generation of the Web. There's a part of me that says the grass is always greener on the other side. Product firms look at us and wish they did not have to worry about waiting for contracts on the last day of the quarter. And we look at valuations of product companies and drool.

In today's world I think there are 2 things to think through. One is implementing bespoke digital solutions like we've just been talking about the past few minutes. Those, from a delivery standpoint, at least as they're currently defined, won't look much different than what we've been delivering in the industry from the past 30 - 40 years.

I think the big delta we have in the industry, today, is around platforms. Not for individual clients, but a one to many model for white spaces in specific industries. You are seeing a number of these popping up. It's still quite early, though. They could mature over the next couple of decades or at the other end of the spectrum, they could end up being like the 4GLs, where we said, "Uh-oh, it seemed like a good idea on paper but it didn't actually work out that way,"

Okay, since I am working on a book on automation and impact on various occupations, what are you seeing?

We think automation is a big deal. If you look at it from a client perspective, this may be the largest opportunity in a generation to rethink their businesses and find cost savings within their operations. We've already seen with some of the robotic process automation (RPA) that we've been implementing there are tremendous cost savings that be achieved. That is an area that I think clearly merits watching. It's also has impact on our own delivery model given we are labor intensive. I think for us, our only risk is ourselves - that we don't move quickly. I see some clients who try to hide behind regulation or security considerations to protect their business model. If those are the only moats left around you, that's pretty frightening.

I always worry will our industry have its Uber moment? I'm always paranoid about that.

Yet I don't see a disruptive competitor rushing in and gobbling up lots of market share. The digital opportunity is driving so much opportunity and change that you may see some firms gain some momentum and some slow down. If you draw a circle around the top 20 firms in the industry, it's still going to be that list. It's just going to be like the soccer league tables or Major League Baseball standings. Some of them may race to the top. Some may drop to the bottom quickly. But it will still be those names. That's how I'm thinking about it right now.

Knowing Malcolm, he thinks endlessly about such trends and he has decades of experience in the industry to draw upon