by Clint Boulton

Avery Dennison rolls out DICE, a digital business booster

May 11, 2020
Artificial IntelligenceDigital TransformationInnovation

Avery Dennison’s new digital business initiatives roll up cloud, AI, IoT and other technologies to the tune of more than $30 million in earnings. CIO Nicholas Colisto breaks down the company's model.

infinity symbol / continuous cycle / binary tunnel / digital transformation
Credit: doguhakan / robertiez / Getty Images

If anyone can attest to the value of executing within the first 90 days of joining a new company, it’s Nicholas Colisto, who interviewed more than 100 business peers upon joining Avery Dennison as CIO in early 2018. The consensus from his findings was clear: Staff sought to be more innovative when it came to injecting digital capabilities into the $7.5 billion provider of label technologies and adhesives.

“There was an appetite, ambition and desire to operate more as a digital business,” according to Colisto, who took his cues from reading The First 90 Days: Proven Strategies for Getting Up to Speed Faster and Smarter, the seminal onboarding tome by Michael D. Watkins. “But we knew we couldn’t just sell digital products overnight.”

So Colisto, who also authored a best practices playbook for CIOs, conceived DICE, a digital business operating model that blends digital and physical assets, buttressed by education, innovation and partnerships.

Digital transformation means different things to most enterprises, but a widely accepted imagining is one that includes the use of emerging technologies and processes to optimize existing business models, or better yet generate new revenue streams independent of the physical business operations. DICE hits on both areas while boosting productivity and profitability in the business base and achieving growth in high-value segments.

The three pillars of DICE

DICE, which garnered Avery Dennison an IDG 2020 CIO 100 award for technology innovation, leans on three programs to serve these goals: Learning, Lab, and Links.

An enterprise-wide education program co-created by IT and HR, Learning offers employees educational services steeped in design thinking, agile and competency with digital technologies. The company blends “digital fitness” workshops, webcasts, e-learning, instructor-led training and external events, to achieve this.

The Lab enables Avery Dennison and its partners to co-create and scale new digital products and services. It includes a five-step innovation methodology (learn, discover, plan, prototype, scale and support) that incorporates design thinking, agile principles, minimal viable product development and culture change. Cloud and other technology platforms are part of Lab, as well as now standard business and “citizen development” processes that enable digital experiences for employees, customers and factories, as well as the creation of new digital products.

Encompassing productivity and collaboration tools, Avery Dennison’s employee experience (EX) capabilities enable staff to access information from anywhere and on any device, leveraging AI for context. Employees use biometric recognition to access many of these applications.

Customer experience (CX) tools map the customer journey from the time they land on Avery Dennison. It includes MyAveryDennison, an online tool based on Commerce Cloud, that helps customers find and purchase products. Janela Smart Products Platform meanwhile leverages blockchain to allow makers of apparel and footwear products to connect an item-level identity to a digital profile on an IoT platform.

The digital factory experience taps IoT and real-time monitoring and analytics to automate manufacturing processes, shortening cycle times and improving operational efficiency and product quality. Finally, the digital products experience includes RFID products that have a unique, serialized label and are connected via IoT sensors and cloud software. It includes Freshmarx Temp Tracker, an IoT and cloud tool that helps restaurants automate temperature and humidity monitoring of their coolers and freezers, thereby preventing spoilage. Another digital product, Apparel Brand Protection, prevents merchandise loss in the supply chain.

Finally, Links is an outreach program that includes intrapreneurs, customers, suppliers, universities and consortiums to drive digital optimization and transformation. Link’s goal is to innovate like a startup and scale like an enterprise, Colisto says. Of the partners, which include tech stalwarts such as Google, and IBM, Colisto says: “We know we can’t do it alone in IT. They want to help you innovate using emerging technology.”

Digital KPIs and governance models

The company tracks success via digital KPIs, including interactions and revenues processed through digital channels, and shares the metrics with the entire company. An internal rate of return (IRR) clocks the profitability of investments related to DICE.

In 2018, IT helped the company generate more than $30 million of earnings before interest and taxes (EBIT), Colisto says. Of that sum, $8 million comprises ongoing benefits related to digital programs. For 2019, the EBIT could be as much as 50 percent greater, though Colisto is still calculating that sum.

Colisto refuses to take the lion’s share of the kudos for DICE. Rather, he credits Avery Dennison’s formation of a Digital Operating Committee, represented by leaders from various functions and business units, with providing thought leadership and facilitating collaboration to inform better decision-making around the initiative.

The move to DICE has also made Avery Dennison more nimble, a critical advantage during the coronavirus pandemic, which has impacted supply chain and other key business processes across many sectors. During the COVID-19 outbreak, many companies are ramping up rather than dialing down their digital innovation efforts.

Colisto shares some of the tips that ensured the success of DICE.

Meet with your stakeholders. Confer with individual stakeholders to learn about their goals and aspirations on a five- or 10-year horizon. Conduct interviews and ideation sessions and roundtables to learn pain points and spark creative ideas.

Identify leaders as advocates. Assemble a cross-section of stakeholders from differing disciplines, who will carry the transformation torch and figure out how to overcome challenges.

Shift from a know-it-all to a learn-it-all culture. Businesses are loaded with people who have “been there, done that.” Challenge this assumption to ask what they might learn, rather than know. More than 20 Avery Dennison leaders involved with DICE attended a digital leadership accelerator program at UC-Berkeley, where they learned best practices for leveraging emerging technologies.

Think from the outside-in. Recognize the needs of your customers with “beginners’ minds” to create delightful solutions and touchpoints that will resonate.