Download the digital transformation magazine
The digital transformation is seen by 89% of French SME directors as an opportunity. Yet how many know where to begin? What are the key elements for a successful transformation? In this special edition of Apax Talks, they discuss their experiences and best practices, taking us straight to the heart of digital strategies of Apax Partners investments.
How should digital technology be integrated into a company’s mission?
Interview with Gregory Salinger, Chief Digital Officer of Apax Partners
Why must a company have a clear mission?
First of all, a company’s mission defines its raison d’être: what will make it successful with its customers, employees, partners and more generally how it will be useful to society.
It defines the company’s direction or heading and its level of ambition over the long term. Lastly, a mission ensures overall consistency among the company’s initiatives. It’s the company’s compass.
Obviously, it’s easier to arrive at your destination if you have the right heading and a good compass.
Why does the advent of digital technology require rethinking a company’s mission?
Because the world is rapidly changing! Microsoft is a perfect example. At the outset, the company’s mission was to put “a PC on every desk and in every home”. Now that this mission has been largely achieved – at least in the world’s developed economies – the company’s challenges have evolved. Microsoft has now moved to the cloud and to artificial intelligence.
Digital technology is bringing about fundamental changes and is opening up unprecedented value creation opportunities in all businesses, be it in B2B or B2C. A company’s mission must be re-evaluated in light of this.
Can you give us an emblematic example?
Let’s take one from our portfolio: Marlink. The company was historically a satellite communications operator specialised in maritime applications. With the advent of digital technology, Marlink‘s business model has evolved to respond to the new needs of its customers. The company is now a major player in maritime digitalisation, a true connected vessel facilitator.
We have other examples, too, such as Sandaya, which has evolved from a traditional camping group to a leading new-generation specialist in high-end outdoor accommodation. Its new mission has made digital technology a major avenue in its transformation.
What are the key milestones in this transformation?
The CEO must absolutely be the leader on the subject. He or she must involve the entire management team relatively quickly, so as to take advantage of each person’s expertise and especially so as to ensure that management takes the project to heart and appropriates it. The project must be iterative and involve as many people as possible.
This is exactly how the story played out at Melita, a Maltese telecommunications company that offers cable television, fixed and mobile telephone and high-speed internet services. Apax Partners has recently sold Melita after supporting the company for three years. CEO Harald Rösch has been a strong leader on the subject of digital technology. He and his management team redefined the company’s mission, making the customer the focal point of their plans. The results of aligning Melita‘s business with the new mission were particularly significant. The company’s Net Promoter Score rose by 80 points and the number of calls to customer support dropped by 90%. With the new services and the new modus operandi, these results contributed greatly to boosting Melita‘s growth.
What company has an emblematic mission?
For me, Tesla is an interesting example. Tesla has a particularly ambitious, broad and inspiring vision. Its mission is to “accelerate the world’s transition to sustainable energy”. If you look at the impact of this mission on the company’s valuation, you’ll see that Tesla is now valued higher than Ford, even though Ford sells 20 times more vehicles per year.
The reason is that its addressable market is much broader than the simple sale of vehicles. Its potential topline is therefore much higher. The second reason has to do with Tesla’s credibility. The markets seem, at least for the moment, to have confidence in Tesla’s ability to implement its vision and its mission.
In conclusion, a clear, shared and ambitious vision, together with credibility in execution ability can have a considerable impact on a company’s performance and valuation. This is valid for new entrants, such as Tesla, but also for well-established companies.
