Arif Rafiq has worked for a number of leading technology firms, from AOL to Yahoo! to being a General Manager of a business at Amazon. He also founded and ran a content management software provider. When he joined McDonald’s as the company’s first ever chief digital officer, he had an understanding of digital business and digital disruption that few among digital immigrant organizations have. In his role, he defined the future of our customer experience, powered by technology for that company.
Nearly two and a half years ago, he joined Volvo Cars as Chief Digital Officer and Global Chief Information Officer. Again, he brought an unusual perspective to an industry that was new to him. He focused on two areas, chiefly:
- Using digital to create a more seamless experience when buying a car
- Leveraging digital technology to create a more connected experience once customers have the car.
Rafiq has combined his past and his present in choosing to be based primarily in Silicon Valley. As such, he has developed an ecosystem of partners to deliver all that is necessary to deliver his vision for the company. He describes all of the above and more in great depth in this interview.
(To listen to a podcast version of this interview, please click this link. Atif Rafiq was recently named President of Commercial and Growth at MGM Resorts International, this interview was conducted just prior to that announcement.)
High: You are the Chief Digital Officer and Global Chief Information Officer of Volvo Cars. Could you take a moment to describe your set of responsibilities?
Rafiq: In some environments, the CDO’s responsibilities are separate from what has traditionally been considered IT. We have brought these responsibilities together. By combining the CIO’s traditional responsibilities, which have typically been under IT, with what CDOs are doing in regard to the consumer, we are uplifting all of the digital products that we build. This is taking place in all of the software that we build within the organization so that we can move with the speed and agility necessary to stay relevant and to create new capabilities for our customers. We believe this is a great move for Volvo because the world is moving extremely fast, and whether you are building for the consumer or internally, everything needs to move with speed and agility.
High: The CDO is one of those roles that is defined quite differently in different organizations. To my knowledge, you are developing a digital technology transformation within the organization. This transformation is focused on the customer experience and the building of digital products. Could you give some examples of those products? How do you see the customer experience changing, especially in the auto industry?
Rafiq: We think about the customer experience in two buckets, and we are trying to make some radical changes to both areas.
- How people get their hands on a car. Purchasing a vehicle is a laborious process that people typically do not enjoy, so we are looking at ways to radically simplify that process. To do so, we need to give people the interfaces, such as e-commerce, so they can be in control and understand the different options that they have. These options include which types of cars we have, if they can configure them, and how quickly they can get their hands on the car they want. We have pioneered the idea of subscription, which is a big step for us. People are quite familiar with Spotify, Netflix, and other subscription models, so we thought about using the same model for cars. We provide a flexible way for people to get their hands on a vehicle without having to go to a retail site and work out all of the details. Instead, you simply whip out your phone, and in a few taps, you understand the pricing, the car options, and we schedule a day for you to pick the car up. The term of the subscription is typically two years, but we are working on making that more flexible. This experience is powered by digital products, and it is inclusive of everything that the customer needs;
- What they can do with the car once they have it. A car is a device on wheels, so everything is connected through a car cloud. We have an app where you can do everything from starting your car and getting it warmed up in the winter to being able to share your car with a friend or family member when you are out of town. We are pushing the envelope regarding the capabilities of using cars and lowering the friction when you want to do business with us.
I have rebranded what people typically call IT to Enterprise Products. This function covers everything from how we manufacture and produce cars, to the design and development of those cars, to how we work as employees. We have tens of thousands of employees across the globe, and they need to collaborate and be productive. When I came in, I wondered why we work in such an innovative and agile way for what we do externally only to work at a slower and more legacy pace internally. That does not make sense. There is a great deal of software required, so I have the same ambition for software development and products, whether they are for internal or external phasing.
High: You have been with Volvo for two years, but this is your first stint in the auto industry. You spent time at a number of leading digital enterprises, such as AOL, Audible, Yahoo, and Amazon, and you have had product responsibilities as well. To what extent has it been useful to be an outsider coming in? Have you drawn analogies from your past experiences in ways that a veteran of the industry would likely overlook?
Rafiq: I believe the CDO’s primary responsibility is to provide fresh external thinking and to re-imagine the company for today. My first move at a new company is to ask the question, “What would Amazon do?” I asked that during my first two weeks at McDonald’s, and I put something on the table within a month around how I believed that could look. I went through a similar exercise at Volvo with the Board of Directors. While Amazon does not directly compete with McDonald’s or Volvo, we want to set a high bar for how we think about what our business is about. We need to determine the nature of the product and service and how we make money from that. We can either build incrementally from what we have been doing for decades, or we can go in another direction.
Volvo has been around since 1927, so it is an enduring company. However, it is entirely different to work backward from the way good looks. Our first order of business is to define the way good looks. This allows us to understand the ambition that [one] needs to fill and make it happen. Once a global company has clarity on this, it can make the bold moves necessary to make that happen because it possesses the resources to do so. These moves can entail reorganizing, entering partnerships, bringing in new talent, retraining people, or making different capital commitments. The elements that people call transformation become easier because you can put a plan together to move towards that higher ambition. In doing so, you can build momentum, which I believe feeds on itself.
High: Leading Volvo Cars’ California operation has allowed you to develop a solid number of partnerships with the broader tech ecosystem and the venture capital community. Can you elaborate on how you have gone about that?
Rafiq: Fortunately for me, the company decided to put a small satellite in Mountain View, California several months before I arrived. At the same time, we began talking to the largest tech companies out there, including Google, Amazon, and Uber, regarding what we could do together. All of those conversations ultimately resulted in strategic partnerships. The location is key because it gives us proximity to these companies, which allow our teams to co-create with our partners. With Google, for example, we partnered on embedding a version of Android in our cars. We all know what infotainment systems are in cars, and they have been difficult to use. Because a car is a device on wheels, we came up with the idea of having an infotainment system that was based on Android. We knew that there would be many benefits to that because even without their phone, the customer is able to have all of the necessary information, such as their calendar and contacts, available to them in their car. Moreover, we have all suffered from the car being behind the phone when it comes to navigation and mapping, and this solves that problem. We have been one of the first two companies to move in that direction. Instead of just dipping our toes in the water, we have started to think of the car as a device based on an Android operating system. Customers will start to see that within the next few years, starting with Volvos. I do not believe that this would have been possible if we did not decide to have a strong California presence. We are scaling this up, and the operation will likely be 10 times larger than when I came in.
Regarding what we do there, we are focused on product development and e-commerce, the latter of which is being developed in Sweden as well. Additionally, we have a partnership and business development capability there. Not only are we looking to work with big tech companies, but we want to work with and invest in young startups that can push the envelope. We have invested in Luminar, a company that focuses on lidar technologies, and FreeWire, one that focuses on fast mobile charging. We believe that lidar technologies and the idea of fast charging an electric car are excellent innovations to bring to our customers. The only way to bring this to life is by having local talent, so we have pulled people from great Silicon Valley experiences. We have combined the networks that they bring with the networks that I have. I am close with companies such as Greylock Partners, Andreessen Horowitz, and Sequoia Capital, and we hope that using these partners will continue to give us a bit of an edge.
High: Silicon Valley is one of the most difficult places to draw and keep talent due to the number of opportunities in the area. How have you built your team? Further, how have you conveyed Volvo’s value proposition to make this an attractive option to the great technologist who have so many other options?
Rafiq: Talent is essential because if you have the right strategy and the right talent, success is bound to happen. Our CEO Hakan Samuelsson made a great trip to Silicon Valley several years ago, and he met with top venture capitalists, one of which was Marc Andreessen. Mark put him together with me, and we began to brainstorm ideas. One idea led to another, and I found myself in the company. Once I arrived, people began to think that it was an interesting hire since I was from Silicon Valley and because I would be based in the U.S. This represented a different move, so people began to notice.
To kick it off, you need to start with the right person to send the right signal to the marketplace. That is crucial because talent is savvy, and technologists know which companies are just talking versus the ones that are prepared to back that talk up with some bold steps. Above and beyond, I believe we are lucky because automotive is hot these days. While working at a high-flying company, such as Google or Facebook, allows you to do some interesting work, you might be one of 50 people doing what you do. On the flip side, when you come into automotive, you might be the first person who does something for the industry. People appreciate this unique space because they believe that changing how cars work will allow them to make a real impact that will last for many decades. This may involve how phones and cars come together, how cars drive themselves, or how you lower friction to make a car work similar to Spotify or Netflix. The focus will now be on retaining this talent, which involves building great careers for individuals who come in with these backgrounds. We want them to be able to make a difference in what they came in to do and with the challenges that will come up for years to come.
High: Since the CDO is a new enough role, you are one of the few people who have held the office more than once, as you spent over three years as the CDO of McDonald’s. Can you talk about the differences between your CDO experiences? Further, what did you learn from your first experience that has colored the way in which you have defined your second?
Rafiq: There is a tremendous upside in combining the digitization work of the consumer with what has typically been considered IT under a CIO. The main benefit is that you can have end-to-end control and accountability over what you are supposed to deliver. We can say that we want to be an e-commerce business and make it easy to have customers deal with us directly. This provides them with the pricing, the configurations, where the car is, and the status of the vehicle’s readiness. There are many systems involved, so when a company separates the CDO role and says, “you own the front end and how the experience looks, and someone else owns the systems behind the scenes to enable some of the information and data flow,” that can work, but it is harder and slower. These aspects are dependent on each other, so a joint CIO/CDO role creates clear ownership and accountability, which is important because it promotes speed.
At the same time, coming into this new role has forced me to learn. While I have been involved with engineering and product development for a long time, doing it for a company that has been around for 90 years creates new elements that I have had to pick up. In a big business, you will not do everything yourself. Instead of having engineers on your own payroll and building everything, you will use third parties, consultants, and software. In a large company, the scale of that is huge. You have to manage vendors and do strategic sourcing. At this scale, these areas make a huge difference in terms of operational efficiency and cost. I have put a focus on this area the past few years, and it is an area where I have had to put people around me so I can do a good job for the company.
High: As you look to the future, which trends are beginning to make their way onto your personal roadmap?
Rafiq: I have talked a great deal about digital health, and my thoughts have been evolving. I am a big believer in this, and I believe when you step into a car one day, it is going to be similar to stepping into a giant Fitbit. There is so much technology inside a car right now, and there are many opportunities around the sensing and the perception of how the technology can understand your state, well-being, what your health is, and how it can contribute to that in a secure, private, and comfortable way. As an example, some cars will shift to having a camera that faces the driver. There is a massive opportunity to use that for safety when it comes to drowsiness detection or for when diabetic’s glucose is falling. Through pupil dilation, the cameras can tell with a pretty strong confidence level whether those conditions are occurring. The sensor capability is evolving quite rapidly, and the cost of the sensor is falling.
From there, you can start thinking about artificial intelligence and machine learning [AI/ML]. This has the ability to enable interiors to understand the problem before it occurs on people. While that is not Volvo’s core business, we can work with companies who are trusted by consumers to think about people’s health and well-being.
I believe sustainability is crucial, and it is part of Volvo’s mission and purpose. Our purpose is to give people the freedom to move in a way that is personal, safe, and sustainable. When we talk about sustainability, it is not just about using an electric car. Instead, it is about the supply chain, how we are sourcing materials, and what those materials are. In the future, I believe that everything will be quantified, including individuals’ footprint on how they are affecting the planet. While you may be charging the car electrically, you need to go back to the source of that electricity to see if those are renewable sources. Companies need to view sustainability as a core attribute of their product and service, rather than just a CSR area, and I believe that Volvo is the perfect company to lead the charge.
High: Much has been written about autonomous vehicles. There has been some speculation that if it is done so well and so safe, that it will have a major positive impact on road accidents. Some even believe that driving may become illegal because the computers are so much better at it. How do you believe that technology will develop, and how excited are you as someone who is helping drive that progress?
Rafiq: The notion that technology has the ability to radically alter how people live their lives has gone from science fiction to a mainstream belief. This is especially exciting for those of us who enjoy thinking about breakthrough technology and the disruption it has caused. I enjoy thinking about the practical aspects, such as making something stick, getting adoption, and having the technology become mainstream. I believe that is where we are with autonomous vehicles. Today, I believe the strategy for companies is to fine-tune how they can get user behavior to kick into effect and have this deep technology become something that helps people.
As an example, driving in traffic is extremely painful for people. When you are moving, you feel good from a physiological standpoint, but when you are stopped and competing with others, it does not feel good. As an industry, we need to be smart about how we apply the breakthrough technologies that we are coming up with. If you could take your hands off the wheel, keep your position in line, and focus on something else, that could be a way to get this flywheel going while we solve more complex use cases. Autonomous driving has largely been driven by technological breakthrough. However, we need to come at it from the user perspective. We need to look at where this creates the most value for them, and we need to focus on the adoption, getting people to try it, and making people love it.
Peter High is President of Metis Strategy, a business and IT advisory firm. His latest book is Implementing World Class IT Strategy. He is also the author of World Class IT: Why Businesses Succeed When IT Triumphs. Peter moderates the Technovation podcast series. He speaks at conferences around the world. Follow him on Twitter @PeterAHigh.