Digital transformation is a big topic.  Deciding where to invest has always been a challenge?  

Depending on who you ask, digital transformation programs can range anywhere from building new products, improving IT, accelerating sales & marketing, or doubling down on R&D.  And if you happen to be working within the highly regulated industry – such as financial services or pharmaceuticals – there are additional factors to consider.

Deciding where to invest (and where not to) is both an opportunity and a challenge. 

If you get it right, it will not only impact the company’s bottom line but may also result in improving human life. If not, you end up wasting precious time, money, resources, and morale.

To help us figure out how to invest for transformation in a highly regulated industry, I interviewed Nat Jovanovic, former Chief Digital Officer at Sanofi Pasteur Vaccines

Most recently, Nat Jovanovic was the Chief Digital Officer for Sanofi Pasteur Vaccines.  Where she was responsible for managing a $20-30M annual portfolio of digital transformation programs and consistently delivering 10X – 20X returns.  

Prior to Sanofi, Nat ran technology and innovation strategy, as well as commercial insurance digital and analytics solutions, at AIG.  She has over 20 years of international experience, spanning Global 500, McKinsey, MIT PhD, and startups.  She is passionate about helping diverse teams capture the biggest opportunities, move ideas to reality, and deliver fast positive impact even in heavily-regulated environments. 

What follows is a condensed and lightly edited version of our interview.

Nat Jovanovic, thank you for joining us.  Can you please share with our audience what type of products you have built? 

Nat Jovanovic:  Mustafa good to be here.  Thank you for having me.

Most recently, I was at Sanofi Vaccines which is a fully-integrated 7-billion business unit with R&D, manufacturing, medical scientific liaisons, and commercial operations or sales. Our digital and innovation portfolio covered all of these functions with new digital solutions, automation, and data insights.

Dozens of our programs are confidential to the company, but there are two that were shared more publicly: 

First is called Elefight and it is about gently nudging people to practice better health habits. This includes small nudges like washing hands, and bigger ones such as getting preventive immunizations. It started two years ago, just at the beginning of the pandemic, and has grown to million+ people internationally.

The second one was the partnership with Evidation Health, where we took a more holistic approach to health. The community of Evidation participants share their information – both when they went in for a doctor’s visit and in their regular life. The combination of medical and life information helps to better manage chronic conditions such as diabetes or COPD.

The best part about our digital portfolio was that the primary goal was protecting and improving people’s health, and in the process it also realized revenue and profitability for the company.

Wow, that is an impressive portfolio.  And quite broad indeed.  I am curious, how did you decide which programs to invest in?  Do you have specific criterias?

NJ:  Deciding where to invest means considering many factors, but we used three primary criteria to help us gain confidence that we were investing in the right programs.

First was impact.  We wanted to make sure that we were working on things that would make a real impact at the scale of the company. We looked for numbers that were not a “rounding error” in the grander scheme of the company’s size. Sanofi Vaccines is a $7 billion company, so we aimed to operate on a level that is noticeable. This is an ambitious goal, but it’s possible.

Second item was to not dilute the existing business. Now, whether you’re a small or large company, publicly traded or private, investors look for profitability that is in line with industry trends. So even if you have a very large solution that could grow the revenue, you should also ask yourself “does the profitability of this solution positively or negatively affect the average profitability of the company?”. 

And then finally, we looked for conditions of success. We’re looking to establish the conditions of success in advance so that the initiative can have as smooth of a road ahead of it as possible. This includes, for example, talking with the right people from the beginning. People often worry that if they share an idea with – for example, legal or compliance – too soon that there will be too many concerns and the idea will “die”. Especially in heavily-regulated industries, I insist on talking with the right people from key functions as soon as possible – otherwise you risk developing an idea for months and then having to re-work it due to legitimate concerns. And sometimes, these key functions can turn out to be your biggest allies in executing an idea.

Nat, these criterias are great.  But allow me to poke at it a little bit.  When you are evaluating a new proposal, it’s almost impossible to determine what is the potential impact to P&L or will it move the needle.  Or more specifically a $7 billion needle.  

How did you manage to overcome that?

NJ:  Great question.  

Most people think that to meet success criteria on a large-scale project you need months just to prepare the proposal.

One of the things we implemented were fast and iterative answers. For example, when we first consider a proposal we’d compose a list of key questions or assumptions, and look for the “10-minute answers”. Right there in the meeting, or over quick messages, teams would look for what’s the best information we can collect with a few minutes of effort using public or proprietary information, pinging a quick consult to an expert, etc.

If the 10-minute answer is already decreasing our confidence, then you’ve spent just 10 minutes and you can reconsider if the idea is worth further effort.  If the answer is encouraging, then we would go to a 2-day answer.  The 2-day answer means going and talking with more experts, digging a little bit deeper in terms of data, finding any prior attempts on the same or similar idea, etc.

Usually, by the end of that first week, we would have enough information to triangulate whether something has enough solid information behind it. We could say we are 30% or 90% confident in the answer. If it’s low, there is no shortage of other ideas to explore, and this helped the team relax a bit and let go of ideas more easily. If it’s high, we move to conditions of success. These are just example numbers, which you can adjust for your team’s, company’s or industry’s conditions. You might need to start with a “30-minute” answer if the team is more junior or unfamiliar with the industry.

But you did not stop there.  Right?  If I remember correctly from our previous conversation, you had your team always checking up on the metrics to see if you were moving in the right direction?

NJ:  Absolutely. It’s very common in big companies to measure only on a quarterly basis.

For most of our investment portfolio, we measured monthly, and sometimes more frequently. For example, if it’s an early initiative or if we have a major growth campaign, we’d measure on shorter spans of weeks.

This also helps the team identify pain points or issues sooner, and enables us to work on the most important problem that would have the biggest positive impact.

I am sure this was not easy.  Data driven or metric driven is not how most organizations do digital.  Did you find it hard to install this discipline?  How did you go about doing it?

NJ:  Any change can be difficult to accept. After some initial questioning, people shifted to new ways of working. In a while, a funny thing started to happen – People actually liked the investment and metric approach.

Before people would hold on to their projects because they wanted to work on it and were afraid that if the project stopped they would not have something to work on. But with regular metric reviews, the teams themselves come to realize if a project isn’t doing what it’s expected to do. And since we always had a pipeline of new projects, the teams realized that if they themselves kill a project, then there were a whole slew of other ideas that they could work on – with even bigger impact than keeping a project on life support.  

You make a good point.  Investing is one thing.  But sometimes killing a program is even harder.  How did you guys manage that?

NJ:  You know, I was very lucky.  Because we’ve put in those criteria and conditions for success upfront, the teams often pulled the plug themselves.  Or if they decided not to pull the plug on the entire project, they would say: “Well, if we apply the principles of the overall portfolio within a single project, then within this project, we should continue working on these features and capabilities and kill everything else.”  It’s like the product ownership mindset, and what features do you prioritize?

Nat, this has been great.  One last question.  Any other tips or advice as others are trying to put into place their own version of an investment formula?  

NJ:  I think of energy as a precious resource.  And so it reminds me of the first law of innovation, which is to “go where you are loved”. When someone is excited or on board with an idea, that is the person to staff on it – or if it’s a sponsor, that is the idea to pursue. Innovating is difficult, so at least start from an energizing point.

Second advice is not to give up too quickly.  When you are pursuing an idea and you are getting a lukewarm response, remember that is natural.  Ideas sometimes go through 4-5 phases.  The first phase people might tell you “No, that’s a bad idea”. The second phase “No, we tried it, it didn’t work”. The third phase is “No, we hired consultants to do it for us, and they couldn’t do it either”. And then eventually you will hear “Oh, I get it now. Can you deliver it yesterday?”

And that is where the 10 min research comes in.  Because it helps us get through the phases much more quickly.  And then we decide to either double down or move on.

Nat, there is so much more that I wanted to talk about.  Especially about your framework of conditions of success.  Unfortunately, we are running out of time.  Thank you for being our guest and if you like, we can have you come back to go a lot deeper on other topics.

NJ:  Mustafa thank you for having me.  I always enjoy our chats.  And yes I would love to come back.