Some could argue that moving from being the CIO of one of the largest sporting brands on the planet to the CTO of a cigarettes company is an unusual move, if only on the assumption that their ideals and objectives are surely in stark contrast.
But try telling that to Philip Morris International’s forthright CDIO Michael Voegele, who made the jump from Adidas in 2019 prior to being promoted to his current position earlier this year, and is now charged with embedding IT within every aspect of the business, and helping it fulfil its mission of being a smoke-free organisation by 2025 — all as he continues to focus on his own self-development.
Phillips Morris International (PMI) products are sold in over 180 markets, and the company owns six of the top 15 market brands, including the once-iconic Marlboro, which has long been the world’s best-selling cigarette.
But with cigarette consumption falling, the mission is now to move the 175-year-old company’s business away from combustible tobacco to non-combustible products, such as e-vapes. And that is no mean feat when you consider that Marlboro alone accounted for 37% of total shipment volume at PMI just two years ago.
Digital transformation drives business change
Voegele worked at Adidas between 2011 to 2018, first as its VP of group functions and head of enterprise architecture before later going on to be senior VP of IT sales and, from 2015, working as the firm’s CIO. And it was in the latter role that Voegele would go on to deliver a digital transformation strategy, reshaping the IT organisation and strategy and making the business more customer-centric.
Now, he appears on a similar trajectory at PMI, where he says the core objectives between the two industries are surprisingly similar. Voegele notes that both industries have business models that have remained largely the same for 40 years, and have global management structures with regional hubs, as well as a reliance on Asia-based supply chains. Both, he adds, understand that brand and marketing can be more powerful than products. The difference, he says, is that PMI is having to pivot to new markets and revenue streams in double-quick time.
“While the journey we went through at Adidas was a 10 year journey, it’s basically a two to three year journey at PMI,” says Voegele.
In a bid to go smoke-free, and with PMI targeting 50% non-smoke revenue by 2025, Voegele has sought to make significant changes to his IT teams.
IT strategy focuses on centralisation
A previous bi-modal approach to digital innovation and IT infrastructure has been shelved in favour of IT centralisation, while his senior IT team has been built out to include a CIO responsible for the global IT organisation, a CTO accountable for infrastructure, cloud architecture and integration, as well as a chief data officer and CISO for data protection, risk management and security.
“It’s a little bit of an expansion of the classic infrastructure and applications, with security and data being part of it,” says Voegele. The value of this senior IT leadership team has been to free Voegele up into offering greater value to the business.
He expects all of his immediate team to constantly be learning and adapting, and to align technology decisions with business strategy.
This isn’t to say there’s a perfect IT model, with Voegele freely admitting there’s ‘unresolved conflict’ between centralising IT for scale and speed, and the speed and innovation which you can get from a decentralised model that takes you closer to your customers.
“How can we get the benefits of both being brought together?” he asks, admitting that it’s this question which keeps him up at night.
Tech can improve product development
Voegele believes that starting with technology will put any product-focused business on the wrong footing, and later down the line likely to falter from poorly thought-out IT decisions. He says that the IT leadership team must therefore consider the needs of each part of the business, and match the technology needs accordingly. This means that IT leaders themselves must be having conversations with the right personnel, and understand how technology decisions can impact everything from supply chain sourcing and contract manufacturing to financial forecasting.
With PMI now being a multi-category and multi-product business, Voegele says that IT needs to understand the entire lifecycle of product development, and the role technology can play at each stage — which means more face-time with line-of-business managers.
“I have weekly and monthly meetings with the supply chain, with our head of operations, our commercial head, but also with the markets,” says Voegele. “That is where the reality happens, where the consumers are, and where the issues occur.”
It’s here where fusion between IT and product development is happening in real-life at PMI. Voegele, a former smoker himself, shows off an IQOS 3 DUO heated tobacco product and suggests the company has started to investigate how digital and data capabilities can help improve performance, customer experience and churn. He says that PMI is now “closing the feedback loop from the consumer to product development” through these new connected devices and PMI’s IoT technology.
For example, he says predictive maintenance can prevent device and battery downtime, while firmware updates can suggest when the device is overheating and potentially susceptible to failure. Commercially, the device can collect information on how it’s being used by the customer, which can be fed back to sales and marketing teams.
“If our thinking is not coming from a consumer-centric perspective, you cannot create those connections. And then everything you do in technology is actually disconnected.”
CIO self-development takes reflection, curiosity
Voegele says there is a greater need for organisations to be agile and adaptable, but believes that this also holds true for CIOs themselves, particularly when it comes to self-development.
“A lot of people says they are constantly learning, but they are not reflecting. They listen to online courses, they write like crazy … then they go out and repeat that stuff.”
Too often, says Voegele, he’s interviewed aspiring IT leaders who have simply read and repeated the top business leadership books. Instead, he urges leaders to take the time to pause and reflect whether they share that view, or whether there are holes in the argument.
“Learning needs to be followed by reflection. The reflection is where the actual learning happens.”
He adds that whereas travel has historically broadened his mind and ‘fuelled’ his own learning, digital and IT leaders now need to look for new sources of inspiration. Being curious about learning new things, and from a diverse range of voices, can ultimately help navigate problems and improve performance. It’s a philosophy borne out of PMI’s objective to be the ‘fastest learning organisation in the world’ through its Digital Academy programme and other initiatives, as well as its focus on building more diverse and inclusive teams (31% of tech teams are female at PMI, so says Voegele).
“If you are curious like a kid then you’re open to everything … if you’re not curious, you stay where you are. You’ll feel comfortable, you don’t need input from other sources, you just do the things you have been doing in 20 years [time].”