BACK TO Business ResilienceZINNOV PODCAST | Business Resilience
Large companies often undergo extreme changes that are triggered by external events such as strategic mergers and acquisitions, change in investor group, and today, the current pandemic and the resultant recession. Changes like these ultimately impact not just the business line, but also customers and employees. Organizations that have stood the test of time, have resilience built into their system; in a sense, they are antifragile, where they do not just hold their own against these stressors, but become stronger. But what enables such organizations to build this inherent business line resilience? How does it translate from a process and a structure perspective? What are the other leadership aspects that leaders need to double down on to fortify their businesses in the face of both external and internal stressors?
In this episode of the Zinnov Podcast, Pari Natarajan, CEO, Zinnov is in conversation with Dominique Cerutti, CEO of Altran to understand how despite having undergone rapid transformation across various business facets, Altran has displayed resilience that is deep-rooted in the structure and fundamentals of their organization. Together, Pari and Dominique share perspectives on the key tenets of building business line resilience.
Pari: Hello, everyone, and welcome to this episode of the Zinnov podcast. I am Pari Natarajan, CEO of Zinnov, and your host for today. This podcast is about business resilience. But there are leaders who have been able to build systems and processes that allow organizations to go beyond resilience and become antifragile. These are the organizations that get better when under external and internal stressors. Today we have with us, one such leader – Dominique Cerutti, the CEO of Altran. Dominique has more than 25 years of industry experience and has led Altran over the last few years through a major transformation. Welcome, Dominique.
Dominique: Thank you, Pari. It is really a pleasure and privilege to discuss this important topic of business resilience. And by the way, I believe it is particularly key in today’s context of the pandemic and the resultant global economic crisis, for organizations to demonstrate their ability to protect their employees and also ensure resilience. Thank you, Pari.
Pari: Let’s dive into the questions. Dominique, Altran has been through significant growth and evolution over the last few years, and has become a strong, yet complex business. How do you ensure that your business remains scalable and resilient during such a transformation?
Dominique: In fact, resilience or scalability is not something that we do on top of our transformation; it is at the core of transformation. Over the last five years, the Altran team has undergone a significant transformation. We scaled the North America business from almost nothing in 2014 to ~USD 1 billion. We went on to make bold and challenging acquisitions – like Aricent acquisition. We built superior global engineering centers in Ukraine, India, and Morocco to expand our footprint. We’ve also been adopting a free synergetic service model, focusing on the early stage innovation of our clients, and then deployment at scale, which is engineering services, and we are now capable of working from offshore delivery centers as well. This gives us a significant resilience and cushioning against any potential shock, and we knew that we might have to confront another shock, so we were running stress tests after the ’09 crisis. So, this is what we have done in terms of resiliency. Talking about scale, we have gone from a headcount of 19,000 at the end of 2014 to a current headcount of more than 50,000; we have more than doubled the revenue and have more than doubled the profit. We function with a view of industrialization, to ensure scalability. So, resiliency and scalability is at the core of our transformation.
Pari: When you started the transformation, it was during the boom of the economy. But considering the occurrence of a black swan event that COVID-19 is, what are some of the key aspects that you had to do to ensure your business and service resilience as you went through this transformation?
Dominique: I have been in touch with many of my CEO colleagues, including the competitors, during this crisis. I think all of us are trying to do the same. What we are doing at Altran appears to be rather successful. The first obsession that we developed at the early stage of the crisis was people protection. We were keen on taking care of our people regardless of the impacts of the crisis on the financial returns. We spent several weeks in protecting our people and have gone to the extent of renting aircraft to repatriate them. The next phase was to ‘resist’ – the business was under significant pressure. So, we found out our defence position and secured it, avoiding a collapse of the business. We are now in what we call the ‘restart’ phase – getting our people back to work, resuming discussions with clients, so on and so forth. Resilience is the capacity that an object or company possesses, that enables it to come back to its initial state after a stress. In fact, we are not going to become resilient, instead, we’re trained to adapt, which is more than resilience. Some industries that we operate in have undergone a permanent change – for example, the aerospace industry. The automotive industry has also undergone a reset in the way they operate. Therefore, training to adapt will be a challenging, yet, a fascinating exercise in the upcoming one or two years.
We’re trying to change the way we operate for industries that are being reset like the aerospace and automotive industry. It means that we have inherited overcapacity, and that will stay forever. But it will be taken care of through reskilling initiatives and by redirecting our engineers. We don’t want to layoff our people or redeploy them in other industry. We identify opportunities and move to those areas – for example, the boom of electric vehicles in the auto industry.
So, protect, resist, restart – that sums up to resilience for us. The next phase is to adapt to the new market conditions. We see an opportunity in every adversity. For example, everyone thought the aero industry is deteriorating – but, despite the fact that we have inherited overcapacity, we believe that if we check and rebase line, the aero industry is a growth industry.
Pari: It’s interesting that you’re not just looking at resilience but also focusing on adapting; looking at the current scenario as an opportunity to reskill your team and exploring newer areas for growth. However, you added another layer of complexity. Altran is now a part of Capgemini, and it all happened during this lockdown period. You are currently preparing for the integration process. How do you ensure that these models are flexible enough to extend to the new structure?
Dominique: It was a large-scale acquisition because Capgemini spent almost USD 5.6 – 5.7 billion on the acquisition, so, you can safely assume that they didn’t do that by accident, or just for size. It was based on business complementarity and synergy view. They have also looked at Culture proximity. We are engineers, and they are into consulting but at the end of the day, it is a collective bunch of highly educated people working for clients. The complementarity of our business and technology expertise helps a lot. We speak the same language and share the same passion for delivering value for clients. We have similar corporate cultures and values. When we discuss P&L, for instance, there is large scale cooperation within the group. When we’re discussing our global Engineering Center, our KPIs concur. So, that’s helping. There is a strong alignment in our operating models. We have Next Core, they have Invent; they are very strong in offshore, and we are too. We recognize the same service models in our organizations, and we have the same obsessive views of aligning our models throughout the project to go to the next level. There is complementarity like I mentioned. These factors make the integration process seamless.
Pari: It is great to know that there are organic synergies between the two companies. All the best with the integration process. Dominique, coming back to the topic of resilience and antifragility, resilience needs to be inherent across all facets of an organization – leadership, employees, processes, customers, and even investors. How are you ensuring an equal distribution of focus and resilience across all these dimensions?
Dominique: I don’t see any of the dimensions that you mentioned, in isolation. I see an alignment between everything. McKinsey’s 7S Methodology is a good framework for reference. It says you need to start with a strategy. Once you have your strategy, you need to make sure that you have a structure that is aligned to your strategy. And then, you need to have efficient staffing. Then, you need to align your system with the shared values, and so on. In my career, I have never worked on any kind of domain in isolation – for me strategy, organization, acquiring superior skills, building my processes, working on my values, and taking care of my people – all these aspects are always aligned. If I touch something in one of those domains, and if I modify my strategy or modify my organization to suit a new market like Asia or the US, I might end up reiterating on the other dimensions. The biggest pleasure of being in business is to be able to align all those domains, all the time.
Pari: It’s amazing how you are able to have a systems thinking with respect to defining strategy, and execute that relentlessly in spite of both external and internal stressors over the last few years. Thank you, Dominique, for sharing your insights based on your experience in leading transformation over the last few years. I would also like to thank the audience for listening to this podcast.
Dominique: Pari, thank you very much for inviting me today.
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