This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Tim, how often do we talk about companies going all in on digital or hear from leaders, CEOs and more saying that's exactly what they're doing, especially during the pandemic. I mean, that is exactly what we heard over the last sixteen months, right.
And our next guest says, fun, you can go digital, but it really needs to be about blending digital and traditional business functions if you want a competitive advantage long term. I think it's so timely that we're going to talk to this guest, especially on a day when we're all in on big tech and we're talking a lot about
digital strategies. We certainly are. Rob Siegel is a general partner at ex C Capital, also a lecturer at Stanford's Graduate School of Business, and the author of The Brains and Braun Company, How leading organizations blend the best of digital and physical. He joins us on the phone from Silicon Valley, Rod, How you doing, I'm doing great, Tim, Thanks for having me. What do you what do you think of when you hear a company say what what?
Carol just said, because they tell us that all the time that the key to growth is making sure that you disrupt your existing business model, but do it in a way that allows you to not actually cannibalize what exists already. But digitization is really really important, but it's
not a panacea. And increasingly, what I see through the companies I invest in as a as a as a venture capitalist, but also those that I get to study through my work at Stanford, is that the best companies right now are blending the best of both digital and physical. And we saw this, you know, the pandemic accelerated this, that it wasn't just enough that we could shop online and communicate online. You're all about case, Yeah, you're all about case studies in this book. So give us a
few examples of some of these best companies. Well, so, on the retail side, we saw magnificent performance from home Depot, from Best Buy, and from Target, who really invested in infrastructure and logistics as well as a great digital capability where people could shop that way. And we also saw obviously Amazon has done a tremendous job. And so we're seeing organization in functions like retail, financial services, even healthcare, doing a great job of making sure that there's both
a digital and physical component to everything that they do. So, you know, it's in an interesting time to be talking about, especially when we've seen increased Chinese oversight of uh they're big tech companies specifically about data collection and China wanting more at the government, the Chinese government wanting more control.
Do you believe that because of this combination of brains and braun that some of those big tech companies they do have too much focus on kind of the brainy element of what they're doing and that they need to
be either more diverse or more government oversight. Well, you raised an interesting point, Carroll, and that what's going to end up happening is how supply chains will we configure Where manufacturing jobs are going to be placed is a function of the global economic competitiveness, largely written by the
challenges in the United States and China. And so no matter what you manufact tour, no matter what you deliver to your customers, as every good becomes connected, right because there's a software component and the connectivity component to everything digital organization, they're going to have to think about where they're going to put their factories and factories can be
you know, traditional you know manufacturing factories. We do also have additive manufacturing will which will allow you to put basically factories at your customers client sides. And the companies are going to think about how they construct all of their digital and physical attributes. And historically companies are in Silicon Valley haven't had to do that, and that's going
to have to change. Hey, rob we can learn a lot from companies that have been really successful in this transition, but we can also learn a lot from companies that haven't been. What are some examples of companies that didn't successfully make this transition and we can learn from that. Well, you can think about that. For example, Borders back in the day did not do a good job of figuring out what Amazon was going to be doing to their business, how they partner, how they you know, made sure they
talk to their customers. And we're seeing I think a
lot of the large mobility company really struggle. One of the companies we look at in the book is Daimler, which is a manufacturing and design engineering powerhouse, but they've really done a very poor job on connectivity, on software, and so they're really struggling behind companies like Tesla, which you're going to do a phenomenal job and are doing a phenomenal job of designing cars digitally first, and soon that you mentioned China earlier, China will become an export
player in the automotive market. And so you can see a lot of the incumbent carmakers really trying to fight what they were doing before, which was basically bending metal and designing great machines instead of thinking these devices as if you will moving sensors on wheels, Well, what's interesting, and I think about, in particular our audience, how do they need to think about what you're saying in terms of long term investment plays well, if you are thinking
about a physical company or something was with a physical DNA, one of the questions you want to be asking is are they investing in things like analytics and digital infrastructure? Are they hiring the right type of people. Are they developing competencies in ways that they can communicate with their customers. We also need to think about are they changing, you know, creatively, their business models as well as the technologies that they developed.
Are they really reaching out to their customers. One of the companies we studied was Kaiser Permanente to the large healthcare provider. And you know Bernard Thompson used to when he would come to Stanford and talk to the students, really kind of showed empathy, empathy for all the players in the ecosystem, his doctors, his nurses, the communities, he was in, the patients, and he really understood where everybody
was shaping their business. And so the question we have to asked about the large incumbent organizations are they doing those things? Are they really taking risks and running towards the disruption or they just trying to hold on to
what they have before. All right, So it's interesting, Um, if the companies don't get it right and do that combination rob of brains and braun, then what well, then everybody who works there should probably update their LinkedIn profiles because you know what is going to happen, and what what digital enables is you have companies that can come into new market segments and maybe you didn't see them coming.
I mean a great example is that as Stripe and what Stripe has done in payments and transactions in ways that a lot of the large existing players didn't see who were in kind of bee the whole transaction and merchant process and account and so you've got to really kind of be playing offense on this because you don't always know where the attack is coming from. You know, what happens when Uber and DD going to logistics and what impact is that going to have on Federal Express
and ups and DHL. So people are gonna be completely rethinking their business models and the technologies and the market that they can go after. Hey, Rob always like to ask, and we only have about twenty seconds left. Um. People who teach a business schools lecture, a business schools lecture at Stanford, where do your students want to go work right now? So it's funny they a lot of times they want to actually go to what I'll call the sexy tech companies or they want to start their own companies.
We are starting to steal a lot of you know, of the students, and we teach students from all over the world. We're actually looking at a lot of the larger established organizations who are doing some really interesting things. So it's not just that everybody wants to do their own startup anymore. We're starting to see people who actually want to go in and actually have some big impacts in some of the larger organizations because they really exciting
things going on there. That is an interesting trend um. Rob Segel, thank you so much. Really enjoyed this general partner Next Capital, author of the Brains and Braun Company,