Accenture CEO Julie Sweet: “Decade of Shared Success”
June 16, 2020
Andrew Schwartz: You're listening to The Reopening. The podcast that asks, "How will America work through the COVID-19 pandemic? How will we innovate, and how will it change our global economy?" Each week we invite top business leaders to share their insights on the road to economic revival here at home, and around the world.
Scott Miller: On today's episode, we're speaking with Julie Sweet, chief executive officer of Accenture. Julie joined Accenture as general council in 2010 and was named CEO in 2019 after leading Accenture’s North American business for four years. We’ll talk with Julie about the need for speed in firms small and large, the role of automation in artificial intelligence, and her personal commitment to shared success.
Andrew Schwartz: I'm Andrew Schwartz.
Scott Miller: And I'm Scott Miller.
Andrew Schwartz: And this is The Reopening.
Andrew Schwartz Julie Sweet, CEO of Accenture. Thank you so much for joining us today. As Time Magazine put it, you're someone who has the world’s CEOs on speed dial. So tell us, what are you hearing from, you know, CEOs, corporate leaders about economic recovery and resilience?
Julie Sweet Well, thank you, Andrew, great to be here. Well, I would say that it's the sort of top of the conversation these days. You know, it's interesting, since the pandemic was declared March 11th, you kind of go through cycles, right? The first couple of weeks was all about the response and, you know, remote working and then starting to get to, you know, what might change. And you know what, you know, what's the reopening going to look like, and now it's the economic recovery. And I think there are two big things that are on people's mind. First of all, you know, all of us are sort of seeing it is coming a little faster than we might have anticipated four weeks ago. I'm finding that to be a theme. No one’s predicting a “V” for example, but like that it’s a little bit better, right? Sort of cautiously optimistic. There's some geographic differences, a big theme around Asia seems to be a little bit more resilient than Europe and the US. But a major question mark around consumer sentiment, because of course 70% of GDP is driven by the consumer, and a view that it's just really not clear. We haven't got far enough in the reopening to understand those patterns yet. And so, there's a lot of caution around the fact that things seem a little bit better and that may be a reaction to just how bad we were fearing it to be.
Scott Miller: You know, one of the things that's really happened all around us as we’ve lived through this pandemic is technology has been solving more of our life's problems. I'm sure that's true for your client companies as well. It all seems to be going faster. So we can talk about whether it's actually accelerating or we just think it is.
Julie Sweet: It's a great question, but I think first you have to take a step back and say, you know “what makes this crisis unique?” And it's really unique for two reasons. First, it was the largest change of human behavior in history. Like almost overnight, a couple of billion people literally change their behavior. And that behavioral change is permanent, right? Until we get, at least, until you get a vaccine. And so, companies are dealing with an economic crisis at the same time that they're dealing with consumers who are changing their buying habits. And they're going to have to meet the consumer where they are. So that behavioral change is quite unique, you can't simply retrench a little bit, cut costs, try to ride out the economic crisis with some predictability. So that's one big change. The second big change that's relevant, though, as you think about technology is that it was happening already at a time of exponential technology change that was already driving significant transformation of businesses. We did some research in November of ‘19 that said that when you look at companies and you measure them by technology adoption and depth and culture, the top 10% were already performing twice as well as the bottom 25%. That's how we went into the crisis. Then almost overnight, because of the nature of the crisis where you had to enable people digitally to work remotely, where you had to move to contactless, where everything had to go online, right? The gap widened overnight because the leaders were so much better able to perform. We have one big retailer that has been investing an omni channel for years. Right before the crisis, we rolled out curbside pickup at 100 stores. Well in 48 hours, we had them at 1400 stores, because they were already a leader, as opposed to those who you know kind of were online, they didn't have the back office, and we're having to shore them up just to be able to make the sale, right? And so, is technology accelerating? Absolutely. Because the 90% can't just sort of, you know, take their time, right? You know it's really survival to accelerate. And so that means they've got to do a lot of other things because they need to accelerate when they have cost constraints. And so, you know, thinking about how they're going to cut costs and still transform makes this a very unique crisis.
Andrew Schwartz: Julie, you know, I've heard you talk about markets like Japan, where AI and robotics are finding you know many new commercial applications. Is this trend going to be part of a US recovery? And what does this imply for jobs in the economy? And also tell us what you've seen in Japan.
Julie Sweet: You know, it's a great question. So maybe if you look big picture, in the world today, about 20% of what can be automated has been automated. So there's a huge opportunity for automation. If you then look at where has automation, you know, kind of gone, digital manufacturing is still in very early stages, right? So the manufacturing of everything from the actual production to the warehouse, etc. Incredibly early stages. In Japan, we're partners with Mujin, which is this incredible artificial intelligence robotics company that focuses on warehouse logistics. And it's state of the art like nothing I've seen. I got to recently go. I mean, we've had a long relationship with them and I've heard a lot about them, but I got to go see and what they do is phenomenal. And the ability to really provide greater quality, you know much more safety because the absence of the need for workers, it is stunning. And so, when you think about what's happening today, where you've got to change supply chains and bring manufacturing home, because of some of the risks that companies saw, you've got legislation sort of driving there, you need to cut costs while you transform. Digital manufacturing is something we're already seeing rapidly accelerate and as you think about the need for transformation, while at the same time to cutting costs, the move to automation is moving faster and we're already seeing that. So then you take a step back and say, you know, pre crisis, how are we doing with re-skilling? Well, no one would tell you we were doing well with re-skilling, you know, and that's before you even get to issues around education which, you know, quite frankly, are global, right? And so what I do worry about is that we need to focus and scale in a very different way, because the automation that's going to eliminate jobs, we believe, we’re seeing it, it is happening faster than was anticipated pre-crisis. And we're no better off, right? In terms of the ability to re-skill. And that's where I think we have to have a clear partnership among corporate America, educational institutions, and governments to bring scale and focus and innovation to that need.
Scott Miller: You know with 20 million additional people out of work, it does focus the mind. And a lot of those people were working in small businesses. And small businesses are sort of unique, they're very important to the economy, and yet they don't operate with, sort of, the traditional big company lines of credit or equity, they’re often cash flow businesses. What is it that you're hearing from your clients, many of whom serve the small business sector, about the recovery of small businesses?
Julie Sweet: What I would say is that most companies are simply very worried about it, right? So that, in general, the large companies have done alright. And if you just even look at the S&P 500, there's a big difference between the top 100 and the next four, right? A significant difference. And it kind of continues on down. From a large enterprise perspective, you know, we all have many small companies that serve us, you know. For Accenture, it's slightly different, we do it deliberately because we have a program. 30% of our $2 billion spent in the US, for example, goes to minority women and women owned diverse companies. So those are companies, typically smaller companies, that we’re helping scale by partnering with them. But many of our clients, you know, have small companies serving them as part of the supply chain, not because they're trying to invest in them, but because it's simply part of their supply chain. And you saw a lot of the financing that's been going on, say in the aerospace and defense area where they're providing financing. So you see a lot of large companies affirmatively taking steps to, at least in their supply chain, shore up the small companies. But other areas, like restaurants and that, you know it's going to be a very difficult environment for some time. It's concerning given how important they are jobs.
Andrew Schwartz: What are the smartest companies doing to reimagine themselves?
Julie Sweet: Well, Andrew, it's funny. The way I’d answer that is not actually the outcome, but the process. And because all the large companies were not born digital, you know, I'm not talking about the digital natives, right, were very excited because they moved with great speed during the crisis. And that was true across every industry or even just as you might think about being slower and that they, you know, very excited. And everybody saying, “I don't want to go back.” But the difference between not going back is really are you changing how you make decisions? Because large companies cannot permanently operate in crisis mode. And so the really smart companies are moving to institutionalize the speed at which they just operated, which means thinking very differently about their procurement processes, their governance process, their culture, right? Is it consensus culture? I had a CEO, the other day, say to me, “look, I'm having meetings where there used to be five meetings before they met with me. And now I'm changing the culture to say, well, we can't have five meetings all remote, right? And so we're going to iterate together.” And he said “that starts with my showing up in a meeting, not with a perfect PowerPoint, you know, and strategy as well.” And, and so it's the companies who think about what has to change in their decision making to do speed that I think are the smartest companies. Because from there, they partner differently to bring the innovation because you can't innovate and reimagine yourself alone, right? They are going to make the bolder moves to do things like move to the cloud, that becomes a platform for innovation, but requires you to move quickly in partner. So that's where I start, which is not where always companies, you know, think about starting. It's not the tech, right, it's not the partner. It's alone. It's the decision making.
Scott Miller: And speed is really hard the bigger you get. I mean the aircraft carrier is difficult to turn and if you started out as a patrol bird, now you're an aircraft carrier, you've got to rethink your systems at a very basic level. Are companies actually doing that? Are your clients seeing that?
Julie Sweet: Yes, absolutely. You have it absolutely right, Scott, and I am seeing it. But I'm seeing a difference, because well everyone said, “I don't want to go back.” I'm not seeing every company CEO really appreciate what that means, because, by the way you also can't simply, you can't take a year to redesign yourself. I mean, I look at our own experiences at Accenture, I became CEO September 1st and we embarked on, I announced just a few weeks later internally that we were going to make a big change in the growth model, which is kind of how we organize our services, how we operate ourselves in our governance. And we did that in six months. So we announced it internally September 18th, I announced January 13th what we were actually doing, we went live march 1st, which is the middle our fiscal year. So it was a big change, we changed our P&L, for example. And at the time I did it was very deliberate because I had to do it completely differently than the last transformation we’d done in 2014, because we were doing it in half the time. And it wasn't designed. I didn't announce a design that that we were going to do it. And I did it consciously as “can you as an organization with 500,000 people, already $3 billion in revenue move that fast?” And you know my lesson as a CEO, is you can, you have to approach it differently. But that's the kind of speed that you need to make in terms of changing your processes and organizations, because if you say, “I want to institutionalize speed,” and then you take 12 months to design that, right? That doesn't work either, right? And so it's how you approach it. You start with, you know, what are the processes that you can change that are not boiling the entire ocean? And then “do I need to look at more fundamental changes?” And you need to do things in sprints.
Scott Miller: So saying we want to do something and actually doing it are very different things.
Julie Sweet: Absolutely.
Andrew Schwartz: While we're talking about some of the changes you made. You made changes to the structure and how women rose and were promoted and were paid at Accenture. Now, I know that you released last week a letter to the company about diversity, can you tell us about that?
Julie Sweet: One of the things that I talk a lot about is that if you want to be a more diverse company, one of the main building blocks is you have to have pay equality. Right, and so we actually made that change six years under our global CEO and we have an outstanding chief leadership and human resources officer. I was the general counsel of the time I remember being asked the question, the board asked the question, and you know, when we looked at it, we said, you know, we didn't feel like we had the right processes to ensure pay equity. And so six years ago, we put that in. And so when you look at our progress over the last six years, I would tell you one of the building blocks, it's completely in a company's control, is making sure you have pay equality. Now as we think about our journey and diversity, in any given time we were focusing on all different categories. But we really doubled down on gender to begin with, because it's applicable to us in every country in the world. And we initially set recruiting targets externally, then we set goals for percentages and for leadership. And so we had a goal by the end of 2020 to be 25% of our leadership or managing directors to be women, which we will make. And we set a goal for 2025 to be 50/50 gender equal, which we will make. And we started in 2014 at 36% and 300,000 people, we’re at 45% and 500,000 people. So, and you know, we operate at the intersection of professional services and technology. So what we've done today, and we started doing in 2015 in the US, is approach other categories of diversity and specifically African Americans and Hispanic Americans using that roadmap, because the issues are different, but we believe the road map to progress is similar. And we started setting internal goals and what we've just announced is three actions, because while we made progress, we're not happy with where we are and we're using this moment in time to say “we are going to step up our efforts to fight racism and create more economic opportunity for our communities of color in the US.” And so our three actions are, first of all, to set external goals for both the overall percentage of African Americans and Hispanic Americans by 2025, but also the percentage in the leadership, which is very important, and that's following what we've done with gender. The second thing we're doing is that we are introducing training specifically to identify “speak up and report” about racism and that builds on what we already have today, which is mandatory unconscious bias training. But what it acknowledges is that racism is different. It's not unconscious bias and we need to call it what it is, acknowledge that we have it inside and outside Accenture and then work even harder to eradicate it. And then the final thing that we're doing because, you know, black lives matter in Accenture, but also outside. And many of our people said “we want Accenture to play a bigger role in our communities.” And so we've committed to collaborate in communities where we work and live with other companies, governments, and not-for-profits to make more of an impact. And you know, this is a very important value to, you know, all of my leadership team and our people. But I also want to make sure that people understand we made the commitment, starting with gender in 2014 when we were transforming our company. And over the last 6 years we've had a 9% [inaudible], right? I mean, we've been enormously successful and we believe that it is absolutely tied to the fact that we have become more innovative, which is tied to us being more diverse. And what we find in the talent war that all people regardless of race or other kinds of diversity want to work at a company that both creates value and leads with values.
Andrew Schwartz: You know, Jimmy Carter's friend Berg Lance once famously said, you know, “ending racism isn't just good for a moral reason it's good for business.”
Julie Sweet: Absolutely. And we at Accenture are proof of that. And we've done lots of research that also demonstrates that a culture of equality makes you more innovative and drives your performance.
Andrew Schwartz: Are you going to be helping the companies that are your clients try to institute some of these policies, as well? Is that part of what you all do?
Julie Sweet: We do have a small practice that does that and so sometimes we do it as paid work, but more often, you know, we're very committed to sharing. We think that these are issues that we are better together. We think that's very important. And so, you know, I spend more time really doing it and all of my leadership, you know, doing joint event sharing practices, etc. Because we think it's part of our contribution to our communities.
Andrew Schwartz: I checked the fortune 500 and there's only four black CEOs in the Fortune 500. And so you have to think that in terms of reinventing, reimagining going forward after COVID-19 and after the sea change we're having in America now, there's going to have to be a sea change there as well.
Julie Sweet You’ve seen a lot of corporate leaders, great leaders who've been very clear about how action and sustained change is needed. And that's important that it's sustained change. You know, I'm a member of the Business Roundtable. We came out with a very strong statement; we created a committee for action. And so I am very optimistic, because I believe that we are going to move beyond as companies, we are going to move into real action and sustained change.
Scott Miller: Well, it's so encouraging to hear you not just talk the talk but walk the talk. And to see your company prosper as a result of that, so that's quite exciting. You know, we've been through a crisis here, you tend to hunker down and drive through it. We all do, but I would just as a final question, what gives you hope in the in the near term or long term?
You know, Scott, it's a great question. I have a lot of hope and, you know, it really derives from people. And it's one of the things that I think we are the greatest lesson, right? It's not about technology and how you can work remotely do all of these things, but the power and strength of people. I mean, if you think about the behavior change. People did this to stay safe and be safe and keep their communities safe. And there's so many stories of helping each other at Accenture, internally, the stories of how our people helped clients, supported each other, they're really amazing, right? And what's happening in the US today, when you see people coming out and saying, “we're going to make a change.” At the end of the day, we have to remember the power of human engagement. And so I like to think about 2020, I often talk about it as it's the decade for the delivery of the promise of technology, but it also, I believe, can be the decade of shared success. When you think about the commitment to climate change and sustainability. What we've seen around you know rallying around communities. And I think as leaders, we need to think about this idea of shared success among, you know, our people in our communities, in our companies and I have great hope that that is what this decade will be.
Scott Miller: It's about us, not me.
Julie Sweet: Absolutely.
Andrew Schwartz: Julie, thank you so much for your time today. This has been a fascinating discussion and we'll look forward to seeing you soon.
Julie Sweet: Great. Well, thanks for having me. And I appreciate it, I enjoyed it as well.
Andrew Schwartz: Thanks for listening to the Reopening. If you liked this episode, please write us a review and subscribe wherever you find your podcasts. You can also find other podcasts from the Center for Strategic and International Studies at csis.org/podcasts.