Jim Hagemann Snabe, former SAP co-CEO and current SAP alumnus, shares his vision of the digital transformation of business and society and the future of work.
As a member of the World Economic Forum’s Board of Trustees, which major economic and technological developments do you see?
During the last three years, I have had a unique opportunity to work with some very inspiring people on imagining how technology will transform all industries and learning about the political challenges in much more detail. Based on this I have come to the conclusion that we are at a very significant inflection point at which most of our fundamental assumptions will be challenged and as a consequence business and society will transform radically.
First of all, the digital transformation is challenging the assumption that the product is the most valuable thing, and shifting the emphasis toward services and platforms. Some companies, such as Uber and Airbnb, have proven that if you have the right platform you can actually be very valuable without even having a product at all.
The energy industry is another example. The assumption used to be that we burned fossil fuels to create enough energy. I believe there’ll be a shift to using renewable energy, which means that energy will be basically available for everyone more or less for free, and it will be sustainable. Again, the value moves from the production of energy to balancing the energy network.
In manufacturing, the assumption so far was that companies relied on mass production in low-cost locations. I think we’re now moving production back closer to the customer. Instead of mass-producing, companies will be producing individual items and, as such, delivering more accurately on individual customers’ needs. I actually believe that we have an opportunity now to rethink the value chain and move toward more circular economy concepts where we don’t consume resources, but use them and give them back ‒ for a much more sustainable future.
I believe that we now probably have the biggest opportunity ever in terms of creating a society that is significantly better than the one we have today. We can create or reinvent entire value chains for something that’s better, more individual, and much more sustainable. The challenge will be the transformation itself. How do you get there? It’s a very big change, so it will dramatically change the way we do things: It will challenge existing jobs and create new ones. So major reskilling will be necessary.
I believe the winners will be the companies that master the physical and the digital worlds in parallel. And a lot of the work I do in my board roles is to help accelerate the digital dimension in physical companies like Siemens and A. P. Moller Maersk, so they can master both in parallel.
What could be SAP’s contribution?
To give you one example, Siemens produces wind turbines. These are equipped with sensors that provide feedback on the turbines’ maintenance levels and productivity, weather conditions, and so on. By not just producing a wind turbine physically but using the data that those sensors produce every day, Siemens is able to ensure a much higher productivity of such a wind turbine and can even change the business model from selling a wind turbine to operating a wind turbine and generating energy.
I see SAP as the enabler of this transformation. It needs to recognize the possibilities in helping companies like Siemens, A.P. Moller Maersk, and Allianz try to master the physical and the digital worlds. I think that’s a very big opportunity, way bigger than ERP was in the 1990s.
Jim Hagemann Snabe is the former co-CEO of SAP. He is currently chairman of the board of A. P. Moller Maersk, nominated to be supervisory board chairman of Siemens, and supervisory board vice chairman of Allianz. He is also a member of the World Economic Forum’s Board of Trustees.
With 25 years of experience in the IT industry, Jim is focused on leadership that revolves around innovation, digitization, and societal progress. He and his fellow co-CEO, Bill McDermott, were instrumental in driving the strategic development of SAP, leading the company to double its value and play a more responsible role in society.
Jim is an academic contributor to and member of the Board Leadership Society in Denmark and is involved in developing a new executive leadership program at Copenhagen Business School. In 2016 Jim was appointed Adjunct Professor at Copenhagen Business School based on his work around the digital transformation and its impact on business and society.
How do you see the job market evolving?
I am what I call a “concerned optimist.” I’m optimistic because I believe that this future will not only be better in the aspects I talked about, but that it will actually create the opportunity for many, many new ideas and more interesting jobs.
Some people are concerned that robots are coming and will take our jobs away. My perspective is that we need to use robots to reduce our consumption of resources and unleash human capacity and skills for the areas where they are necessary. For instance, I think it’s a mistake in Japan to consider using robots to care for elderly people. That’s an area where human skill is necessary. So let’s use the robots to unleash human potential, and not see them as a threat. We’ll then be able to release ourselves from the jobs that are more repetitive in nature and have much more time to spend on being human and creative.
I say “concerned” optimist, because we’re looking at a very big transformation and it’s happening in a relatively short period of time. We need to rethink education in general and move away from the assumption that we spend the first twenty-five years of our lives learning and then work for forty years. We need to be constantly reskilled. Companies must assume major responsibility here because the education system is not designed to do this. They must reskill people rather than just firing them when their skills are no longer needed and hiring others in their place. But if we handle the transformation well, I think we have an incredible opportunity to build a better future.
You have written book about leadership. How do you think leadership is changing in the digital world?
The point of departure for the book was my experience at SAP, which has been a fantastic journey. I asked myself, “Why was SAP so successful over so many years?” I came to the conclusion that SAP has been at the forefront of the software industry and one of the only European-headquartered global leaders because of its ability to reinvent itself from a position of strength.
Most companies try to avoid changes until they are in troubles. Many talk about a need for a “burning platform” to change everything. I believe that in the digital world, the ability to reinvent yourself comes from the ability to create a burning desire, not a burning platform. A burning desire is about the opportunity, not the threat.
“Dreams and Details,” a book about reinventing businesses and leadership for a digital future, is scheduled for publication in English in early 2018.
So my book is called “Dreams and Details.” “Dreams” is about inspiring people to pursue an even bigger common dream, a goal. That goal in my mind has to be relevant for your core, your history. You can’t leave your core, but it has to be focused on the future, not the past.
“Details” is really about practicing the few things that need dramatic change in order to achieve the dream. At SAP, particularly between 2010 and 2014, the detail that mattered the most was our ability to innovate at higher speed.
If you want to be fast in re-inventing a company you need less management of KPIs, plans, and structures and instead you need to unleash the human potential towards a common goal. I’m assuming you can’t plan the future because so many changes happen that your plan will always be wrong. We need a big dream that everyone’s excited to pursue; then we need to practice the details, the capabilities that really matter; and then we need to unleash people’s full potential.
Mark Your Calendar for the Next SAP Alumni Event with Jim Hageman Snabe in 2018
Building on the great success of previous events, we have scheduled the next SAP Alumni global event in 2018. Mark your calendar for June 15, 2018, to join us in Walldorf, Germany, together with keynote speaker Jim Hagemann Snabe, former Co-CEO of SAP, as well as other current and former SAP executives in person. For details and to stay tuned, check back at SAP Alumni Network.