Rahmyn Kress, chief digital officer and chairman of the digital executive committee at Henkel, a 143-year-old maker of chemicals and consumer goods, was awarded the Enterprise CXO Of The Year at CogX 2019, the Festival of AI and Emerging Technology, which took place June 10–12 in London. Kress is the founder of Henkel X, an open innovation platform that is designed to to help industrial players become more innovative and adopt disruptive business models. The Innovator covered the launch of Henkel X in an interview with Kress in February 2018. Capital magazine in Germany recently reviewed accelerators and innovation hubs and Henkel X was amongst the top 20 with a rating in innovation potential at parity with SAP Innovation Center Network.
Henkel X is launching in Spain on July 2nd at an event in Barcelona organized with partners H-Farm, Antai Ventures Builder, FJLabs and Axel Springer APX. Attendees include government officials, industry partners, startups, retailers, company builders and universities as well as VCs and family offices that combined manage $40 billion.
Kress is also the founder of the Beautiful Minds Foundation, which seeks to eliminate the stigma around ADHD, dyslexia and similar neuro-diversities and encourage companies to consciously integrate people who think differently and a founding partner of accelerateHER, a group that is addressing the under-representation of women in the technology industry though events, strategy and innovation. Kress is also a member of the group Male Champions of Change (MCC) and actively addresses the topics of diversity inside and outside of his own organization.
He recently spoke to The Innovator about Henkel’s digital transformation journey and the evolution of the Henkel X network.
Q: You previously were in charge of physical and digital transformation at Universal Music Group. You then built a technology company in Paris that was acquired by Accenture and then lead the venture activities of a very sizable fund with capital under management north of $1 billion. What led you to take on the job of CDO at Henkel, a German conglomerate which specializes in adhesives, laundry and home care and beauty products?
RK: I believe that large corporates have a fair chance to innovate and pivot to the new so it is with that in mind I joined Henkel, a 143- year-old family business. I believe in the mission and am willing to have the difficult conversations, to challenge and at times aggravate people because change is not always comfortable. It has been an incredible journey. But transformation is not a constant — it follows a certain time line and then transformation becomes innovation and innovation is the new constant. So after 20 months of driving the digital transformation we are concluding our phase one.
Q: What did phase one involve?
RK: Getting there required designing a common language in the digital world so that everyone in the company can communicate with the same language. The second thing we did was an assessment to determine what is the digital tech backbone that is required for the organization in the new economy to ensure that we can be at parity with our peers. We went out and designed a digital tech stack that helps Henkel to increase customer and consumer engagement. It also includes a data strategy to drive advanced analytics. At the same time we have developed a program to appoint ‘data for value’ champions in every part of the business. Their role — in every activity they do — in marketing or logistics or whatever unit they are in– is to identify the key signals of data sources that drive value within the overall business. What this has done is to take the abstract of analytics or Big Data and given it a context and value. We have established the right technologies in the technology stack and gone and implemented these technologies with partners so that now this baseline has been established and is being rolled out. In parallel to that driving customer and consumer engagement — everything having to do with understanding their desires and identifying different trends — is running on the digital stack allowing our people to pilot with the right technology. It is unthinkable to have a digital unit running a digital business while others are running the core. It always had to be one. That has been the big transformation so now we are moving to an implementation and integration into the core business. All of the new digital skills and all of the tech are being embraced and will be used to run the business going forward. The business units and my colleagues in the leadership team have embraced digital transformation in record time and therefore my role as a catalyst and pioneer has come to a natural end and that is very, very positive. I can now fully focus on growing Henkel X with Marius and expand our partnerships, VC investments and company building activities.
Q: What is Henkel X and how does it fit in with your strategy?
RK: Henkel X, which Marius [Swart] and I founded in February 2018, is the umbrella for all our digital activities with the goal of bundling and igniting our entrepreneurial energy. The name says it all: Quite close to Henkel but independent enough to drive digital change quickly — for Henkel and our ecosystem. Our philosophy is to create an open innovation platform for all partners, founders, startups and mentors. To spread this energy within our organization and ecosystem, we have defined three pillars: ecosystem, a diverse network of partners and experts sharing knowledge and ideas; experience, interactive events to promote innovative ideas and experiment; and experimentation, promoting new ways of working and the rapid development of MVPs [minimally viable products]. The aim is to bring internal experts from Henkel together with the experience and innovative strength of external partners to work together on solutions, new business models and the challenges of the future. The network is open to founders and startups, entrepreneurs, venture capital experts, industry partners, scientific institutions and students — but also to competitors, which I view as partners and peers. More than 180 mentors are already part of our Mentorship Club. These mentors are our ongoing sparring partners. Startups pitch their ideas once a month at our Show & Tell event. More than 20 concrete pilot projects have emerged from this — and this is only a fraction of our actions. We at Henkel and all of our partners are gaining tremendous value from Henkel X in the areas of innovation, marketplaces and in the relationships we are forming with entrepreneurs — and as part of that — the venture capital community. It is the hub by which all innovation comes together and ultimately such innovation drives new ways of working and new business models and new ways of doing business.
Less than 18 months after founding Henkel X we are in the top league as no one has ever started such an open innovation platform from within the industry — an inside out approach. Henkel X started as an innovation platform to accelerate Henkel’s entrepreneurial transformation.
It has grown into a unique ecosystem that creates relevance and impact for the whole industry and beyond through collaborative innovation with entrepreneurs, peers and other brilliant minds.
I invite the transformation agents of the large corporate companies and leadership to join the Henkel X network of industry partners and join our journey and trajectory to ensure we retain relevance in the years to come by collaboratively innovating and investing in technology together to establish the baseline for the industry and foster entrepreneurship.
Q: How do you measure Henkel X’s success?
RK: In part by how many POCs [proof of concept tests] we are able to do per quarter and how long it takes to activate one. In the first seven months after launch we had 23 startups at Henkel X Show & Tell events. This has resulted just within Henkel itself in 18 POCs out of which six evolved into long-term contractual relationships. That is pretty significant. Since the beginning of this year we have already done 20 POCs which shows you the rapid speed of our business units because they understand the value.
Q: Henkel X’s membership includes actors from a variety of sectors, including some of your competitors such as Procter & Gamble and Unilever. Why invite competitors into the mix?
RK: Because we all face very similar challenges — transformation affects all of us. John Chambers, Chairman of Cisco Systems, for example, predicts that at least 40 % of all companies will die in the next 10 years, if they don’t figure out how to adapt their entire organization to new technologies. We need a new approach to compete internationally. We should all come together and work together across company sizes, industries and countries to focus on each other’s strengths rather than fighting each other. It is about time that we see our peers as industrial partners rather than as competitors. Surely there are areas, where there is competition in relation to products, but when it comes to innovation, we should think, research and develop together. In terms of innovation we can also learn a lot from the music and film industries, which show how important common platforms are. Look at Daimler and BMW, who recently teamed up and founded the ShareNow platform. We all have an enormous responsibility in these times of digitization, because our goal must be to secure future growth and build ecosystems across the entire value chain to drive innovation. What we need are places, digital and physical, where we can exchange and discuss ideas. Because nobody has the resources to test and implement developments like blockchain, Internet of Things, data exchange or artificial intelligence alone. Together we can reach our goal faster, before others can beat us to it. We should not only create a Germany-wide, but also a Europe-wide industry platform for our products and services in order to change the world together. We will soon be announcing ten more industry partnerships from China and the USA to pursue and realize this goal.
Q: What will it take for Europe to be able to compete with the US and China?
RH: Basically, in Germany we are at least five years behind the USA. We have a lot of potential in Europe and especially in Germany — many exciting entrepreneurs, large companies, an incredible number of universities and specific technological know-how. Especially when it comes to Artificial Intelligence and Industry 4.0, we have so much untapped potential. Together we could build a basic structure, learn from each other, provide infrastructures and generate a fundamental force to build new technologies and drive innovation forward. The goal must be to create an environment in which entrepreneurs can realize their ideas, otherwise we will soon only be the extended workbench of China, as the smart minds will depart and we lack the structure to resist the pressure. But this also means that we all must come together to recognize opportunity in the new challenges instead of stirring up fears. Action instead of reaction.
Q: What is your advice to other companies?
RK: Steve Jobs once said ‘Let’s go invent tomorrow rather than worrying about what happened yesterday’ and I cannot imagine any better advice or a more inspiring kind of leadership. We all have guidelines and people who tell us what to do, but it is about creating things we do not know or get. Many of us stop asking ‘why’ at some point, that should not happen. The ‘why’ is very important. For example, a study recently found that the main motivator for people to successfully participate in a transformation is purpose. So do not stop questioning, create space for trying out and developing. Visit new places, be vigilant, build networks and use them. I appeal to all companies: build a corporate university. People who are supposed to invent and innovate not only need to be technically very efficient, they must also have the freedom to learn and share what they have learned in an open environment. Competence building means creating an open leadership culture, building trust, providing time for reflection and creating a value system around learning. Companies that adopt these practices regarding learning culture will significantly outperform their competitors in terms of innovation, customer service and profitability. Be brave!