In this interview series on inspiring digital technology leaders, we take an inside look at how enterprise technology leaders make systems work in some of the largest and most complex business environments in the world. Meet the Individual, Understand their Challenges, and learn about Their Vision of the Future.

An Interview with Paul Schwefer

Introduction

Too often we can get transfixed on technology when we talk about architecture, agility, service orientation and platforms. But this is not what enterprises of the future do. They think of architecting their entire enterprise, not just technology, and they think of agility at every single level — what good is agile software development if the business operations are rigid?, and they think of building business systems around services that are realised by technology, people, process, and information. It is only when we truly think of the enterprise as a complete system like this do we make the future of enterprise possible.

Paul Schwefer is a highly experienced strategic thinker in the ways to create enterprise systems and deliver real change in highly complicated enterprises, and has been a top technology executive at several very large global organisations. His forward thinking has been refined over decades of implementing ideas based on what we now call Digital, Agile and Service Orientation. Ahead of his time in this thinking, and with many insights on getting enterprise transformations to really work, this is an interview you’re not going to want to miss.

Bitesize takeaways:

Do the unthinkable, before you do the impossible
The biggest gap is between real life and what’s on paper
We need to focus more on the platform and the interactions
Open architectures that are easy to connect together are the future
The key to good enterprise architecture is service orientation
Enterprise architecture comprises of more than just technology
You have to be agile at every level; business & technology
Flexibility in our technology is the most important feature
To make change happen, do it quickly and involve people
The business of culture is the future culture of business
Transformations are more about the journey than the destination
Innovation requires freedom to think differently, and make mistakes
Everybody can contribute something if given the right opportunity
Organisations are intelligent entities in their own right
Better diversity helps build better systems
We shouldn’t forget the social impact of technology
Software should focus on our needs first and foremost

Meet the Individual

Q. Tell us a bit about what you currently do:

I do what I enjoy! There are three different things I’m currently doing.

Independent advisor for private equity for technology and logistics — we specialise on developing companies and helping them grow at a global level through the use of technology
I am the co-owner of a technology company; we have a very interesting project at the moment called Smart City, and this will become very important as it is the digitisation of the city by utilising real-time collaboration
I also run my own company that focuses on building new business models for SMEs — interestingly even the larger companies are interested in these types of models, though normally it is designed for SMEs as it is a new approach for them. These business models include things like using outsourcing companies as part of a digital initiative and using this together with technology to improve company performance. One of the biggest challenges for SME sized companies is knowledge and resources, so I help facilitate the improvement of these and spend a lot of time bringing together different parties in an effective and manageable way with a digital approach.

Q. What motivates and inspires you to get up and go to work everyday?

The most inspiring thing is creating and influencing the future; and if you’re able to do that, then you have to do that — otherwise someone else will, and it may not be what you want. And what I want is to make the world that little bit better, which is why I have also taken on projects like one in Africa using new technology to improve access to clean water.

Q. Tell us about your journey to get to where you are today?

I started with the Atari and the Amiga in the mid 80s— the Macintosh was too expensive. I bought the Atari because this was the first one to have 1 MB, and I used this for many years — in fact a professor friend of mine was using that same Atari for some things until 2012 — over 25 years!

My first industry job was with Mercedes and I was involved in a project to bring the computer to the shop floor, where the staff used the computer in their day to day operation — this was in 1986, which was quite early. From then onwards I learned a lot how to do that, and that people are key to being successful with these things. From then on I’ve always worked on using technology for company development and improvement, for around 14 years with Daimler, and then moving into the Group CIO role with Continental AG. The idea was to use technology as the main driver for globalisation and for greater profitability, as well as creating “one company”. This is much more than just technology itself, it is really something where you redefine the role of technology in a different way and we did it very successfully.

Then the time at DHL, which was a more difficult time for me. Before I joined, I discussed with the CEO about what DHL were doing, but still did not want to join initially because I did not believe in the ability of the organisation to change in the way that they wanted to. However, he and other board members told me that they had to change and that they would change, so they could differentiate from competition, which is why they needed a person like me. Unfortunately this wasn’t the case, and despite joining and working toward that change, the organisation was just too resistant, and the situation just wasn’t set-up to allow this to happen. From the DHL experience I have learned that you shouldn’t start something if you don’t really believe from the very beginning that the approach and environment will make it possible.

From that time onwards I’ve been independent and worked with many companies on Digitalisation, and since we had a lot of the digitalisation even in Daimler, it means I’ve been working on this for something like nearly 30 years. It is interesting to see that many of the ideas today are quite common and have been in use even as long ago as 20+ years. The way of thinking and using technology hasn’t changed greatly, despite the new names we have for things.

Q: What has most shaped your way of thinking?

I like to continually learn and adapt my thinking on how to do these types of things, so there are many influences along the way, both positive and negative experiences. So there’s not any one thing in particular that has revolutionised my way of thinking, but a lot of evolution and growth around my core ideas and beliefs. Times like the DHL experience are where I think I’ve made my biggest mistake in choosing to take on something that I didn’t believe would work. But even there I think we did some really great things, because the most challenging part of these stories is not about implementing the future, it is the migration to that future — this part is even more important than defining the vision. Defining the migration approach step by step is really an artful skill and this is something that we did in an excellent way in the DHL programme, and this was done through architecture — the existing and future world is then connected in a way that you can have these clear migration paths that you can control and manage as part of a transition strategy. A lot of companies know what they have, and what they want to have in the future, but then they talk about a big bang from old to new. This will always fail because people cannot just switch like technology can, so you need to have gradual steps.

Another interesting learning is that if you try to plan disruption, you cannot really do that (for example saying that in 2 years and 3 months this, this, and this will happen) because you need to manage the next day first, which changes things. You need to have the vision so you have a direction, but it is unrealistic to not think about how things will change as you move toward that vision over time.

Q. What books or podcasts do you recommend for Enterprise Technology Leaders?

The books I would recommend that have influenced my way of thinking:

1. Everything from Edward de Bono about Lateral Thinking

2. The Innovator’s Dilemma by Clayton M. Christensen

3. Originals: How Non-Conformists Change the World by Adam M. Grant

However, I’m actually much more inspired by philosophy and literature in general, and I read Immanuel Kant or Johann Wolfgang von Goethe or Wolfgang Musil regularly.

Understanding Their Challenges

Q. What do you personally spend most of your time doing?

Most of my time is spent talking with people and enabling them in different ways. As I’m not the guy doing the implementation itself, I need to help others to do that themselves, I have to be a coach and guide them, and be there for them if they need some help. So not telling them what to do, but where they are and what they need to do to get to that point, and when they do get there, I need to be setting them their next challenge. It is not just about getting from A to B, but helping them get from A to B in the necessary incremental steps. Sometimes it can be too much to think about going from A to B in one step, so I need to help them to build up from the starting point gradually, building up strong foundations along the way.

Q. What is the most important thing you focus on to make the organisation successful?

I don’t think we need to talk about technology itself. I think it is important — especially what you can make out of it — but I think this is only the basis for what you’re going to do. So what’s important to achieve is the right culture. You have to look at the company culture because it is one of the most difficult things to achieve or change. Culture eats strategy for breakfast. It is all well and good having a strategy, but if you don’t have the culture that is willing to make it happen then it will not work. I once presented a talk on this in India called: “The business of culture is the future culture of business”. If you want to globalise, you have to have a clear company culture and this has to be separate from your social heritage and it has to be clearly defined. In most of the global companies this is non-existent — you tend to have a lot of local cultures, but not a joint culture that works for everyone.

My basis for company development at Continental AG was a clearly defined and communicated value system. If you’re not clear about the values you share then it is quite difficult to measure. Culture and Values are things that have to be brought together and clearly communicated, and based on that you then have to develop the individuals. In many cases, the pressure on people who want to innovate is so great as they have two tasks: their normal operational tasks, and the innovation itself, and this just isn’t possible. If you want to innovate you have to free up the people to do that. And not just the resource itself, but also the way of thinking. These people need to be entrepreneurs, and need to have that kind of value system, and be independent of the normal operational hierarchy.

Q: What are the challenges in building that value system and culture?

People and regions need to agree to it. Many companies say they have this already, but in reality it is just on paper. The problem is how to really live that. This is something you have to do top down — if you don’t live it at the top, then you can’t expect others to do it. When you live this yourself it is a great demonstration to everybody of how to do that. In most cases, and whenever I talk to companies about that, they say they have that already. So I ask, how can you prove that people are really living that culture? It is hard to do that. The whole reward system has to be able to drive that behaviour, derived from the value system. If your rewards are not based on the value system then people have different motivations to what you want them to have. The biggest gap is the one between real life and what’s on paper. In many cases people don’t want to hear that — and it is these cases where you realise that things won’t be successful because they don’t really want to change things, they just want to define things and talk about their ideas, rather than the difficult implementation bit.

Q. What are the most expensive mistakes you have seen made in organisations, and how did they happen?

The mistake DHL made with their transformation programme cost them a hell of a lot of money*. Before I joined I predicted what would happen in the long run, and within a year it was clear that people in the organisation weren’t really interested in change. It wasn’t the technology, or even the architecture that we designed around the middleware platform in particular, as this was designed specifically for dealing with the complexities of large migrations. It was the resistance to the necessary changes of the new business model — things like transparency and openness — nobody really wanted that, and unfortunately nobody in the organisation was strong enough to make it happen. For example, we weren’t allowed to communicate what was possible with this new approach — so there was very little internal communication, and no external communication. Disruptive change is not possible in a decade — you need to do it as quickly as possible — even three years is the most time you can give to that. If you give it 10 years, you will never get there.

* [editor note: public reports state DHL’s NFE write-down losses to be over €345m, with speculations on the total cost to be nearer €750m; NFE was in various stages of progress for over 7 years until it was finally cancelled. Paul was involved for around a year, before deciding to leave. He sponsored the successful middleware platform strategy led by myself that has gone on to supersede the NFE strategy to help DHL effectively transform its business more incrementally.]

Q: Do you think DHL learned from that experience?

They learned not to start such programmes, and that the organisation is too big and the culture too weak to plan such a change. They will therefore do everything in an evolutionary way. I don’t think they will ever take a disruptive approach.

It is the same in other companies — for example a company I have worked with in the past have been successful for 40 years, and because of this they don’t see that there is any need to change from that successful model. Of course times will change. And there is a need to have the discussion about what can be communicated as to why they need to change. The problem is that if they don’t start now, then it will be too late.

I like to use the idea of “Do the unthinkable, before you do the impossible” — it is important to really rethink things before you try something that seems impossible.

Q. What drives the complexity in Enterprise Systems?

From a technology point of view this is something I’ve been challenged with for 25 years. I don’t think we have the software today that we really need. Packaged software is a nightmare because there is none that exists that can run in a truly collaborative way, and that’s because it really isn’t in their interest. As a real life example: We had a board meeting with the SAP CEO, and we asked the question of how collaborative the software is, and the answer was that it was perfectly collaborative as everyone uses SAP, and SAP to SAP integration is easy. In a talk I gave recently I have declared the end of the packaged software because with digitisation we have to overcome that style of approach. You can’t have a tightly integrated inflexible solution in today’s digital systems. The market is currently dominated by these kind of suppliers, which in fact is very bad for true digitisation of enterprises.

Q. What are the biggest challenges when building and managing enterprise systems?

The integration of solutions is the biggest challenge. If you go for an architecture that is based on open systems then you need the ability to integrate systems. And you need an architecture where these components can effectively interact. If you don’t have this it will never work. This enterprise architecture comprises of not only technology but also strategy, people, process, projects, etc. This is what I like to call the architecture of the enterprise framework. You need to have this up front so that you know the direction you need to go in — you can then start where you have biggest urgency or need, but you always aim in the right direction.

There’s no single way to get to where you need to, it is usually quite individual to the company on how they get there. For example, at Continental AG, I was responsible for the integration of a 130 year old worldwide acting company, 55 thousand people, 10 billion in revenue. In that process we found embedded a total of 19 different companies with different heritages, systems, cultures, etc. To overcome that we established a portfolio that helped us determine how to bring the most value in the shortest amount of time through prioritisation. But still we needed to ask the question whether the organisation wanted to really integrate these companies into one. So I used examples of what it would mean at the end if we took certain approaches. So we clearly defined the total cost-benefit of taking the integration approach. This ended up being a great decision. I’ve not seen many organisations really make that approach work in such an open and collaborative way.

Q. What is your view on Agile and Enterprise Architecture?

This is a very interesting question. When people ask me what the strategy for technology is, and in particular what tools we should select to use, I always answer with the principle that technology needs to support what the business needs, and should be flexible enough to adapt as the business changes over time. Flexibility and agility has always been a key element of how I’ve envisioned technology departments working. This starts even at the lowest level of the technology, like being able to switch out the hosting platform technology, e.g. HP, IBM, etc, but this flexibility needs to be continued all the way up to how you operate the business and how you swap out suppliers supporting your services — even at the operational level.

For example, when we looked at a manufacturing plant — how long would it take you to swap from product A to product B — people hadn’t really thought about that, and when we went through this people realised that it could take as long as 4–5 years in some cases. They realised that this was not acceptable by the market, and that we needed to change this to be able to make this change in a maximum of 2 years. So the whole strategy of technology and the business operation was derived from that. This was quite revolutionary at the time in that industry.

To be truly agile, you have to be agile at every level, including the business model and operations — not just technology. One of the key elements in the architecture is Service Orientation. To me this means you can take out or bring in new services as and when you need them, because it is all clearly defined how it all works together. Before that there used to be a lot of focus on process orientation, which is still important, but it is service orientation that really gives you the flexibility. Especially when it comes to sourcing, because when you buy a service from the market you want to make it work quickly, and I think a key value of Digitisation is collaboration.

So in the future I don’t believe we will just take over companies like we do now, instead we will want to work with them collaboratively — so that it’s a win-win for both. In this scenario, a focus on high level service orientation is essential if you want to make these external services work for you consistently with everything else internally. Therefore the whole structure of the company, if you want to make it agile, has to take on this architecture at each level, and that each service is independent and works together flexibly with services you don’t yet know about. This is the approach I have used for the last 15 years. Back then we didn’t use the terms Digital or Service Orientation, but the essence of the ideas were the same. I’ve found that these approaches are successful and really work.

Q. What has most influenced your change programme — positively and negatively?

The most important point is to make the individuals in the organisation stronger. I strongly believe in organisational intelligence. Organisations have an intelligence that is based on the aggregate of the behaviour and knowledge of the individuals. If you get the right people into the right positions this makes all the difference. So, the individual and their contribution to the organisational intelligence is the first thing to get right.

The second thing is diversity — if you have just one type of person/thinking, it tends not to work as well; it works much better if you can bring all sorts of different thinking into the process, through socialisation and sharing of knowledge, as well as direct collaboration. Everybody can contribute something if given the right opportunity, and the more diverse the people are, the better the results are. The interesting point is that you need an open culture where you can exchange views and a huge tolerance for making mistakes — and allowing whoever wants to take the lead to be able to take the lead if they provide reasoned arguments and facts.

I believe these are the biggest levers for success.

Q. What is currently holding companies back from having the tech/engineering credibility of a Google/Facebook/Amazon?

The big difference between these companies and older companies is that these companies have started small relatively recently and have built their cultures during this time, so older companies can’t really do that as they’re already established. Changing a mature and complex company is much more challenging than building up a new company. So, what you often see today at these large traditional companies is the creation of incubated startups as a kind of competitor to their existing products or services.

If you want to do something disruptive in these companies then you can either build it up from a greenfield approach, or you can use a change process, which is not something that these more modern companies have had to do a lot of yet. I use a measurement I call the Digital Maturity Index to assess companies against best practice.

Also, you shouldn’t say that you want to be the new Amazon, because Amazon is Amazon, and you can’t just copy that. What you should say, is, what are they doing better than organisations in the past, and what can we learn from that. This way you can improve yourself inspired by these companies, but you can’t just copy what they do directly, which is often a mistake people make.

Their Vision for the Future

Q. What are the 3 key changes that Technology Leaders should focus in the modern world?

The first is that we have to disrupt the traditional large technology provider market because their behaviours and motivations will not support us in how we need to move forward. In Germany I have co-founded the national CIO organisation, and the idea was exactly that — to address the vendor domination challenges and establish more of a user driven market. Unfortunately that hasn’t really happened yet as these companies are in a very strong position. This is something I would like to see happen — to see solutions that are really made to benefit the users, and not just the providers.

The second point is that we have to change from acting as a discrete company to embracing collaboration. Today a better term is coop-tition — a blending of the ideas of cooperation and competition. Where companies can come together and work for a win win situation, rather than the normal way of working in a customer supplier relationship or simply competing with each other.

The third is where we move from process to service orientation. You don’t think of your company as a whole, but as a collection of services that work together, and to really be able to source those services from the market. It can be a combination of collaboration and sourcing that brings the highest value. If you don’t measure and have no transparency on the result it will not work.

Q. What is one thing about the future of technology that you believe in, but most people generally don’t know, or disagree with?

There is no limit for technology. For example, AI (and AGI) will continue to develop. We can’t stop the progress of the technology but we can assess the social impact of that — and it has to be planned. This is something that is quite important. Automation and autonomous systems will have a huge impact on the world of work. The workers council here in Germany and similar institutions, including people like myself, have been involved in understanding these issues at this very early stage and are planning for how to handle the effects.

If you look back 50 years in Germany, 60% of work was in ‘normal industry’, and if you look back 100 years it was different again, and today we are looking at around 70% services. In the UK, normal industry work has gone down to around 20%. As a society everything is changing. But there is huge technology resistance in society because people are afraid of what it means. This is a problem for the whole society, not just for companies. So we need to understand the social impact. It is much easier to succeed with change if you involve people early on. This is something I learned early in my career at Daimler, where getting people involved helped them to accept and embrace the change.

The human being needs to be at the centre of the discussion, and the social impact needs to be thought about at the same time as the technological opportunities. Most of the technology leaders only look at it from the technology point of view, and don’t look at the other implications, but if we look at the human aspect as well, then change will happen much faster and more smoothly.

Q. How can we build better technology organisations?

We have to follow a clear architecture — this gives you the full view of all aspects of your enterprise. Starting with a vision and ending with a technology solution, and all the bits in between, including the people and processes involved.

Secondly, we need to focus on migration — this leads to the point I made earlier that the technology architecture itself has to be much more flexible. We need to move away from the big monolithic packages to more open standards based systems and platforms. We need to talk more about the platform and the interactions. This is a new way of designing technology that goes against the more traditional way of existing big vendors, which is all about limiting you to their solution, rather than helping you get the best solution.

I am also convinced that greater diversity in the people involved in designing systems will help us in building better systems.

Q. What do Enterprise Systems of the future look like?

Open architectures that are easy to connect together are the future. We will not have so many ‘new inventions’ in the future, but more from combining existing solutions, so we need this openness to enable that. For example, the German railway now collaborates with a food chain and when you arrive at a station you can find your grocery order waiting for you there. This is a bit unusual, and shows that you can’t know all combinations upfront, so you need to be open to allow all these opportunities to emerge.

One of the biggest challenges I see in some big B2B organisations is onboarding a new customer — for example, this can take up to half a year to onboard someone new, which is crazy when you think about it. It should be much more plug and play and easy to connect. This means a truly service oriented and open architecture, that is compatible at the business level as well as at the technical level. The reality is that there is not an existing technology solution that allows this today.

The importance of data in the future is much greater. The use of personal data is increasing exponentially. This will become more of a priority for business models to leverage. There is a need to manage data for the individual and provide access to companies that would like to use that data to provide a service to the individual, and possibly rewarding the individual for the use of their data.

I think that the owner of the data should always know what is going on with their data, and that money should be driven more toward these owners, and not just to the brokers. Data is essential for collaboration, but on the other hand you also have to protect it, so that others don’t misuse it. It is necessary from an architectural point of view to secure this and provide fine grained and changeable access to this information. This is an area which needs to be addressed, and is still an open field today, but I think it will come soon.

Paul kindly provided his time, knowledge and insights in this interview as part of my research for an up-coming book: Mastering Digital: how technology leaders, architects, and engineers build the Digital Enterprises of the Future

You can contact Paul on LinkedIn.