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Artificial Intelligence and Business Strategy
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Drawing on previous experience working in nine countries for organizations like Google and Samsung, Barbara Martin Coppola joined IKEA Retail as its chief digital officer to oversee the furniture retailer’s digital transformation, improve its customer experience, and foster the company’s ongoing commitment to sustainability.
In this episode of the Me, Myself, and AI podcast, hosts Sam Ransbotham and Shervin Khodabandeh speak with Barbara about how she empowers cross-functional collaboration and “testing, and iterating, and trying, failing, and starting again” to realize successful technology projects. She also shares the context behind some recent customer-facing AI tools the company has launched to assist customers through the buying process and free up front-line workers to focus on customer engagement instead of operational tasks.
Read more about our show and follow along with the series at https://dev03.mitsmr.io/aipodcast.
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Transcript
Sam Ransbotham: Words matter. In particular, the words we use to describe technology within an organization matter. While IKEA product names may be hard to pronounce, the retailer is crystal clear about how it talks about technology. Today, we talk with Barbara Martin Coppola, the chief digital officer at IKEA Retail, about indirect benefits from artificial intelligence.
Welcome to Me, Myself, and AI, a podcast on artificial intelligence in business. Each episode, we introduce you to someone innovating with AI. I’m Sam Ransbotham, professor of information systems at Boston College. I’m also the guest editor for the AI and Business Strategy Big Ideas program at MIT Sloan Management Review.
Shervin Khodabandeh: And I’m Shervin Khodabandeh, senior partner with BCG, and I colead BCG’s AI practice in North America. Together, MIT SMR and BCG have been researching AI for five years, interviewing hundreds of practitioners and surveying thousands of companies on what it takes to build and to deploy and scale AI capabilities across the organization and really transform the way organizations operate.
Sam Ransbotham: Today we’re talking with Barbara Martin Coppola. She’s chief digital officer for IKEA. Barbara, thanks for taking the time to talk with us.
Barbara Martin Coppola: Thank you for having me.
Sam Ransbotham: The title of our podcast is Me, Myself, and AI, so we tend to focus on the individual and the individual story behind technology. Let’s start there. Can you describe your current role at IKEA?
Barbara Martin Coppola: I’m chief digital officer at IKEA Retail, which is the world’s largest furnishing retailer, with 367 stores in 30-plus markets. And my role really is, I’m responsible for the overall digital development business for the company, as well as the digital transformation.
Sam Ransbotham: You’ve got a pretty significant background — roles at Google, and YouTube, and Samsung, Texas Instruments. And then school in Spain and France. Can you connect things you’ve learned in some of those past roles to how you’ve applied them to your current role?
Barbara Martin Coppola: I have worked now in four different industries — in semiconductors, then I went to consumer electronics, pure digital, and now I’m in retail. And in all those places, digital technology played a very, very important part. I’m connecting the dots between everything that I’ve learned in the past, both in business models, in different ways of organizing companies, different cultures, and leadership as well, to lead the company toward modernization, digitalization, and different business models.
My time at Google, for instance, taught me what performance is, and what I mean by that is how to use agility, iterations, and measured outcomes of projects. At Samsung, which to me was the best example of execution I’ve seen in my life, I was based in South Korea and [saw] the power of the collective. So how does it translate now to the environment at IKEA? Once the consensus is reached, then … be clear about “OK, now we’ve got the decision; [let’s] go.”
I can go on and on, but at the end of the day, I think it’s adapting to the different cultural norms and trying to bring [them] from other places and actually augment it for the benefit of the company, and the well-being of people, and the reward that it can be to achieve things together.
Shervin Khodabandeh: That’s great. Barbara, how does AI fit into the overall digital road map?
Barbara Martin Coppola: AI is absolutely core — essential. I really believe that data is the most important asset a company has today. AI is being applied pretty much every step of the way in the value chain of retailing. It has potential for pretty much everything, and so it is a choice of focus, and it’s a choice of business outcomes and where do we put the data scientists to be creating magic, really. We focus the creation of AI toward different values or outcomes.
That plus the appetite of the company to create amazing things — knowing how AI can be a magic wand, if we want it to be, then the belief of the company that this is a key component for the success and [competitiveness] of the company matters a whole lot as well.
Sam Ransbotham: Is there a particular project that you can give us some details on that you’re excited about, that’s happened recently, or that your team has been involved with?
Barbara Martin Coppola: There’s one, actually, that I love personally. It’s about democratizing design. What do I mean by that? You know this feeling where you want to decorate something as beautiful as what you have seen in the store, but you don’t know where to start? And so what we have done is just, with the comfort of your mobile phone, you can scan your room, take pictures along the way. And then, through visual AI, we actually give you back a picture, where you can move the furniture, you can delete it, and you can actually fit in 3D models of IKEA furniture that adapt to the size of your space. So imagine how powerful that is. It’s visual AI. It’s [from] an amazing team based in California called Geomagical Labs, and I am very, very, very excited. It’s coming up in the coming months, and I think it’s going to revolutionize this anxiety of filling up a space without being a decorator.
Shervin Khodabandeh: I want you to know that I am sitting at an IKEA desk that I bought 15 years ago. And it’s moved with me.
Sam Ransbotham: Does it fit? You don’t know from virtual reality if it was going to fit there or not.
Shervin Khodabandeh: It’s perfect. I love it so much. I arrange my house around it. And I have exactly your chair, also, which I bought with the desk.
Barbara Martin Coppola: Good. I have exactly the same setting here, actually. It’s one of those that goes up and down, and so when you get tired of sitting in a Zoom [meeting], you just go up and you feel better.
Shervin Khodabandeh: But seeing that you have that makes me feel that I made the right choice.
Barbara Martin Coppola: Yes.
Shervin Khodabandeh: There must be so many other examples, particularly for like a traditional retailer that is underexplored or not even on their radar, because I look at your background, and you’ve been in digital-first companies where everything’s been built on an understanding of digital and data and technology. And then, at a place like IKEA or other iconic retailers, where — I have to assume — there is a transition or a transformation that needs to happen from old school to new school. What are some of the things you’ve observed or some lessons or some advice for other retailers who sort of are used to a different way of doing things? And now they have all this opportunity, the magic wand that you were talking about, but how do they know where to create that magic and what’s the art of the possible with it?
Barbara Martin Coppola: It’s a great question. I believe that AI is unlimited, and so it’s really saying, “OK, what space do we want to get better at?” and have the open-mindedness to make different functions work together, especially digital functions and data scientists. I’ll give you an example. IKEA went [from having] big blue stores outside of the main cities — and that was the main business model — to having not only a variety of different stores, but also a lot of digital touch points. And so that creates a lot of complexity. How does the flow of goods need to be operated so that the costs are not going through the roof? And that challenge itself is so complex that it requires AI to be able to be solved for.
There are many variables: There is demand forecasting; there is the size of the goods; there is the availability of items; there is a price. And so, at the end of the day, AI applied to this space is pretty much the only way to operate the business in a modern way. So just with that, and [e-commerce] increasing so much during the recent years — we have 5x’ed e-com in three years, actually, at IKEA — we have saved, thanks to AI and enabling the stores to be fulfillment centers … the creation of 15 customer distribution centers. That is not only great economically, but it’s great for the planet as well. And so it’s multiple possibilities in a positive way that when you start understanding the power of this, the demand is higher than what we can actually achieve. So then the next challenge is, how do we scale AI so that we can embed it everywhere in the company?
Shervin Khodabandeh: So … to paraphrase you, it requires open-mindedness, and imagination, and focusing on “What are the things we want to do differently?” But also, it’s hard work, right? Because you’ve got to then get teams that are not used to working together — the scientists and technology teams — to work with store operators and managers. What do you think is the biggest misconception in the minds of traditional retailers, or just traditional companies, about AI?
Barbara Martin Coppola: Well, one that I think is fairly common is that AI will come and disrupt people. There is a fair amount of fear that all the knowledge that people have built — a bit of a gut feeling managing the business — would actually be displaced as well. But when people start to actually understand that it’s augmenting them and not displacing them, and that it’s at the service of human beings, and at the service of business, people really start demanding it. But it takes seeing it, using it, being in those cross-functional teams, being outside of one’s comfort zone, and then being very happy to see that the positive outcome was not just a sort of black-magic technology; it was made by human beings and by this cross-functional team that created this. So at the end, it’s a human process after all.
Shervin Khodabandeh: So this digital transformation that you’ve taken IKEA on has been probably even a bigger cultural transformation. And you talked about this with the World Economic Forum, about how the purpose and mission and culture of IKEA will not change. But yet we’re talking about [how] some elements of the culture and some openness to imagine or collaborate or rethink roles has to change. How do you navigate that balance? I mean, how do you keep the purpose and the DNA intact and infuse these radical — sometimes radical — changes into the company?
Barbara Martin Coppola: It’s really important that people feel that their identity as a collective company does not change, and that is rooted in the mission and the values of the company. That is somehow the compass; whatever one is facing, you always have that to come back to. It’s a collective identity that is important to maintain and that normally should give you strength for actually adapting to new challenges. And that is not easy, because adapting to new challenges at the speed of the change that we’re seeing around us requires new leadership.
It requires a leader that is able to not have all the answers, that is able to surround herself or himself with different skills and let go of ego to be able to be listening and leading toward common achievement. And that is something that I grew up with — a different type of leadership that was very, very self-assured and knew all the answers. And that is not what I believe is required right now to be able to succeed. So [it’s] a huge change, not only in leadership but also in the culture, so that the company can move forward, adapt, and create and be happy in the process as well.
Sam Ransbotham: That “being happy” is important. One of the things that Shervin and I’ve just written about in a recent report is on these cultural benefits from artificial intelligence. Like you said, so many people have this feeling of the fear of people [losing] jobs and “Oh, no!” — the technology scare [that] maybe the magic wand is a dark magic and not good magic. How do you make sure that that culture is progressing in the way that you want it to progress and that it’s improving? How are you orchestrating that process?
Barbara Martin Coppola: It’s interesting because the fear when one gets closer to getting to know how the sausage is made, and how the outcome can be incredible, and how the success is collective, at the end of the day, it becomes actually a very powerful experience. And so for the people who have been exposed to what this can do for them, it becomes actually a transformation, I would say, in their own mentalities to move forward, to want more. At the same time, word of mouth is really important — word of mouth of those experiences with people that are trusted in the company, that will speak [about] how the experiences went. [Having] the leadership that is not digital talking about it and celebrating it is really important as well. And then the vocabulary of the company changing and how the whole management will be data-centric.
There’s actually a sentence at IKEA that says, “We are people-powered and data-centric,” which did not exist four years ago. And now it’s one of the centerpieces, so there [are] a lot of important small signs as well as bigger strategies and, of course, talks and education and onboarding that need to happen all at the same time. And all in all, we’re all human beings; we can be suspicious of the things that we don’t know. When we get close to it, then we start feeling the power of knowledge, which is really great.
Sam Ransbotham: What you’re describing is the virtuous cycle, then, of small improvements … that lead to this word of mouth, that lead to a better appreciation and understanding and increase the knowledge rather than having to know everything, but learning as you go.
Barbara Martin Coppola: Learning as you go. And this is the whole philosophy around testing, and iterating, and trying, failing, and starting again. When you think about it, it started being a digital practice, but it’s now, I believe, widespread in the whole company. It’s de-risking the projects by making them really small, trying them; if they work, then you can scale. It lowers the risk, lowers the stress, and overall the company can be trying new things without the fear of being perfect all at once. And that is a fascinating thing to watch, to talk [about], and [see] how this [is] influencing, from the financial way of steering the company to ways of working, all the way to creating and daring [to do] things that previously would take a lot more courage to do.
Shervin Khodabandeh: Yeah, and in many ways, this comfort with experimentation and imperfect results — that’s the recipe for learning. And also, you had to rely on judgment. And the other thing I really liked in what you said is, it’s not a big bang of “From tomorrow, we’re going to do things this way,” but it’s a journey. And I think you’ve given some very good examples of elements of that journey — how, slowly, the hearts and minds of people will change. That’s been very inspiring.
Barbara Martin Coppola: Absolutely. And if you throw in the accelerator of COVID in there, then here you go. Imagine [it changing] from night to day, [with] the heart and the soul of IKEA, the stores, suddenly all closed. And pretty much everybody [was] transitioning to create fulfillment centers in the stores, because e-com was 10x-ing overnight. So imagine the adaptation that it takes [for] people [who] have worked in different roles to suddenly give that up and just jump into this new way of working and actually make it happen.
Sam Ransbotham: You mentioned earlier the idea of vocabulary, and I think it’s interesting, the words you’ve chosen to talk about this. You talked about the COVID accelerator; you weren’t talking about it in terms of the … I don’t know, I can think of other words that would be much more negative to frame that. It looks like you’ve found some ways to use that as an accelerator in what you’re doing. I wanted to come back to some of what you were saying about sustainability, because I think there’s a connection there with that as well.
Barbara Martin Coppola: Absolutely. And to the comment that you just made, there is a quote, actually, from the founder of IKEA, Ingvar Kamprad, that says, “Never waste a good crisis.” That explains a bit of philosophy to which, in the middle of disruption, personal drama, and collective [worry], one can put the mind to saying, “Can we actually get something good out of this?” and, in spite of the fear, going, working together, throwing out all the old silos, and maybe slowness, and going into action, and actually succeeding cross-functionally at something that seemed difficult at the beginning. So overall, it’s a remarkable human story of going higher in the midst of a drastic and horrible setting, really. But you had a question about sustainability.
Sam Ransbotham: What I was thinking about was, I was connecting your example of the virtual furniture, and you talked about 15 fulfillment centers that you didn’t have to build. And so both of those things seem like ways that artificial intelligence can help with sustainability. First, clearly, the fulfillment example makes sense. But I was also thinking about your virtual reality one. That’s someone who isn’t buying a bunch of furniture, taking it home, and deciding they don’t like it, and then taking it back to the store. So I’m guessing you didn’t start that project as a “Hey, we can save some carbon here,” but it certainly is a nice benefit. Are there other areas you’re doing similar sorts of things?
Barbara Martin Coppola: Yes. First, I love how you think about this. I think there’s definitely a beautiful benefit, sustainability-wise. It’s one of the biggest priorities —
Sam Ransbotham: I’m glad just not to drag the furniture home. That’s all; that’s what I’m happy with.
Barbara Martin Coppola: Which is indeed another benefit. But what I would say is, sustainability is one of the core, core focus [areas] for IKEA, and so the company is transforming its business model into a circular business model. So that means that we would reuse the furniture; we would reuse the material. And when you think about that, the whole logistical aspect needs to be completely rethought. And in the midst of that comes data, traceability, and a whole new value chain that needs to be assembled together. It doesn’t happen overnight, but it’s happening in little chunks that are quite remarkable and are really cool. This past Black Friday, for instance, we allowed people to resell their old furniture to IKEA, and that was made [possible] through a website, [where] they would actually give their furniture back, and we would either resell it, or repurpose it, or just use the material again.
Three hundred thousand pieces of furniture were resold. Imagine the amount of forests and material that that represents. So more and more, it’s “How can we be intelligent and imagine a different business model, where affordability is an equal to sustainability?” We do not want sustainability to be for the few people. We want sustainability to be for everyone. And so that means that IKEA needs to figure out a way of making the whole value chain economically circular and valuable so that we fulfill the promise of, by 2030, not only [being] positive climate-wise, but also having a circular business model.
Sam Ransbotham: I’m sure you can see this from your sort of overview of what’s happening within the organization, but what about the individual workers who are more in contact with customers? How do they sense these changes? I guess they can see, for example, the augmented reality app. Are other changes that you’re making visible to the front-line workers? And if so, what are they?
Barbara Martin Coppola: Yes, there are visible changes to them — not to the end consumer — which [are] all the tools that we offer them for a much more efficient way of working. I’ll give you one that we’re trying that is actually quite cool. You know the IKEA cafeterias, and so people go with their trays. There is now a visual AI tool that scans the tray and is able to know how much the person needs to pay. And so the cashier is now free to interact, to counsel, to help people. And, to be honest, it’s so much more rewarding than having the traditional cashier job. And this is just another example to say, “Can we enable humans to do what humans do best and allow machines to do the more repetitive tasks, and liberate ourselves to have that connection and that humanity that we believe is very rewarding?”
Sam Ransbotham: And I’ll draw a contrast between the world that seems to be moving toward humanoid-looking robots to interact with customers, when what you’ve said here is, that’s what the people working want to do. I think it’s a beautiful tying of the function to the great application of it.
Barbara Martin Coppola: It’s this philosophy to think that technology and AI, in my opinion, need to be at the service of human beings. And so either they augment us, or they have this exponential benefit to get to an outcome faster. But at the end of the day, when you think about it, we control technology, we make it happen. And so technology is a bit of a reflection to who we are as humans, and that is something that we bring with us — our positives and negatives — when we do the technology. And that’s why putting a mirror to ourselves and looking at ourselves and understanding our creation is part of a lot of ethical dilemmas at the same time that are ongoing in society.
Sam Ransbotham: Good. I’d like to congratulate us all for not making any meatball jokes.
Barbara Martin Coppola: Guess what: There is a candle with [the] scent of meatballs now. Believe it or not, it is true.
Shervin Khodabandeh: Well, my parents are 88 and 87. And every week, their thing to do is, they go to the local IKEA store and have the meatballs.
Barbara Martin Coppola: That is so cool.
Shervin Khodabandeh: They’ve been doing it for years.
Barbara Martin Coppola: I love it. You know, the veggie meatballs are getting a lot of traction now. And it’s part of the whole sustainability movement, but still, people prefer the meatballs. It’s an icon of IKEA. It’s crazy, yeah?
Sam Ransbotham: Barbara, wonderful talking with you. I think the one element that’ll probably stick with the listeners is this indirect effect of technology on effects like culture that you keep mentioning, or on sustainability. We tend to think on these first-order effects of technology, and you’ve really brought out a lot of the second order. And you did characterize that technology as a magic wand, and I’m going to bristle a little bit about that; I don’t like people to think that these things are magic. But what you focused on is more, I guess, the magician holding the wand rather than the wand itself. I think that’s an important thing. Thank you for taking the time to talk with us. We’ve really enjoyed it. Thank you.
Shervin Khodabandeh: Yeah. Thank you so much. It’s been great.
Barbara Martin Coppola: Thank you so much for having me.
Sam Ransbotham: On our next episode, we talk with Sidney Madison Prescott, global head of intelligent automation at Spotify. Please join us.
Allison Ryder: Thanks for listening to Me, Myself, and AI. We believe, like you, that the conversation about AI implementation doesn’t start and stop with this podcast. That’s why we’ve created a group on LinkedIn, specifically for leaders like you. It’s called AI for Leaders, and if you join us, you can chat with show creators and hosts, ask your own questions, share insights, and gain access to valuable resources about AI implementation from MIT SMR and BCG. You can access it by visiting mitsmr.com/AIforLeaders. We’ll put that link in the show notes, and we hope to see you there.
