Pasi Hurri of BaseN Corporation On How To Use Digital Transformation To Take Your Company To The Next Level
Be paranoid about security: Very soon, most of your intellectual property lies in algorithms and digital recipes creating and controlling physical things. You must treat security as a continuous process and have defenses at all layers. Make sure to give your customers control over their data — most will anyway give you access in exchange for better service. It’s all about trust.
As part of our series about “How To Use Digital Transformation To Take Your Company To The Next Level”, I had the pleasure of interviewing Pasi Hurri.
Since establishing BaseN Corporation in 2001, Pasi Hurri has been holding the position of Chief Executive Officer. Prior to founding BaseN, Mr. Hurri spent more than a decade in senior technology management positions. With his strategic thinking inherited from the Finnish Air Force, Mr. Hurri has always emphasized the importance of deep situational awareness, according to Clausewitz principles.
Thank you so much for joining us in this interview series. Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I am originally a radar engineer from the Finish Air Force, which has immensely impacted my understanding of critical infrastructures and their resilience. The Finnish Air Defense System is highly distributed and designed to withstand even 50% of infrastructure loss, and I started to think that this should apply also to other systems outside the military domain. In business, situational awareness as well as building, operating rigid mission critical systems and processes are key to avoid vulnerabilities, to be safe, and to head into a prosperous future.
Another aspect that formed my approach to business comes from my childhood. Since I was seven years old, I enjoyed building and programming all kinds of devices and robotic appliances. When I was 12, I modified my first radio-controlled car. Having seen Star Wars, I wanted a car that could control itself, so I attached the radio set to the relay controller of my Commodore 64. This initially enabled me to drive the car from the C64 keyboard, save, and replay its routes. Today, this would be called artificial intelligence. I had this curiosity to create, and understand more and more complex systems, and to use technology to make certain tasks automated and easier. Since high school, I played with the idea of having my own company, but I only had the guts to actually do it when I was 30. But better late than never.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
One of the most memorable mistakes I made comes from one of the first Board of Directors meetings that we had in 2002. I sent the materials for the meeting to our board members on Friday and the meeting was on the following Monday. When I rushed into the meeting, I announced to my board that I was presenting an updated version of both my CEO report and our financial report. I handed out the printouts to everyone. Our Chairman of the Board at the time, Mr. Jan Inborr, looked at the paper and then asked me puzzled “What is this?”. I explained that it’s the updated version from what I emailed to them on Friday. He slammed the papers on the table and said, “It just became apparent that the CEO had not prepared for this board meeting. So, I’m concluding the meeting and the new board meeting is in one week from now.” Bam. I was left sitting alone in the boardroom for some time, concluding that he was correct, and I had not thought about it.
When people make decisions about important items, they all need to have the same information coming into the meeting. Sharing something new without leaving them time to consume and digest is a no-go. It was a horrifying cold shower moment for me as a new CEO but a very good learning experience that situational awareness also applies in decision making.
Situational awareness is also shared awareness and no teams can work effectively without it.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
Continuing with the late Mr. Inborr, he has been my biggest influence what comes to management and holding people accountable. In addition, when I look back on my time with the Finnish Air Force, there is one other person who influenced me greatly — my commanding officer when I was at the radar station. One day he came up to me and said, “You know, today there is a slightly special flight coming in. Are you prepared?” I assured him that I was, and then I asked what flight that was. He answered, “It’s the Air Force One.” He took a good look at 19-year-old me and added: “We are prepared. So, just lead it to the Helsinki-Vantaa Airport.”
That was quite exciting for me to interact with the US President’s plane and give them directions. When the plane was on ground, my commanding officer told me, “Well done. You know what? I have never done that myself.” So, with his 10s of years of experience, he selflessly preferred giving that experience to me. This made him a significant person impacting my thinking on how I want to lead my own people.
Is there a particular book, podcast, or film that made a significant impact on you? Can you share a story or explain why it resonated with you so much?
One film that comes to my mind time and again is “Scent of a Woman” from 1992 about a young student in need of money who ends up with a job to care for a blind man, played by Al Pacino. At its core, the film is about integrity and not leaving people behind. That’s something I have not seen strongly elsewhere, and I think it’s an important message for organizations. It shows how easy it can be for people to disregard values and responsibility for a short-sighted benefit.
Extensive research suggests that “purpose driven businesses” are more successful in many areas. When your company started, what was its vision, what was its purpose?
We are still on the same path since 2001. Our purpose is managing millions of things to create situational awareness and to make digital things real. Anything digital should not be considered a support function or a nice add-on, it should be considered the key fabric of any business.
While the core architecture of our platform has always remained the same, we are now working more with digital twins and digital transformation to tackle companies’ antifragility. When you look at today’s enterprises, many of them quickly become very fragile and prone to having problems, when instability in the international situation, natural disasters, or the Corona pandemic occur. But the companies, which use our kind of thinking and products, state that they sustain. That is why we are saying that BaseN ensures both financial and planetary sustainability. By sustainability, we not only mean the environmental side but also that the companies themselves sustain and that both the people working there as well as their customers are thriving.
Are you working on any new, exciting projects now? How do you think that might help people?
We are working on Universal Digital Twins. This means that every product would have a digital twin, no matter how small or cheap the product is. We want to see an intelligent digital twin created even for a bubble gum. The digital twin of a pack of gum that you buy from a store would carry the full lifecycle of the gum, ensure proper recycling and use of safe ingredients. This digital fabric would then become a universal standard just like the universal product code.
This universal digital twin would solve big underlying problems that we currently still face in our societies. Most of today’s manufacturing and production operates in fire-and-forget mode. The lifecycle of products is generally not managed anymore after the customer receives them. However, to create a more sustainable world, we should not only talk about recycling but about the normal flow of materials when they move from one product to another.
Thank you for all that. Let’s now turn to the main focus of our discussion about Digital Transformation. For the benefit of our readers, can you help explain what exactly Digital Transformation means? On a practical level what does it look like to engage in a Digital Transformation?
Digital transformation means creating digital twins for every aspect of the business, including customers, products and production machines. I know that some companies are talking about digital transformation only as IT solutions that people are using or just one aspect of the product getting digitalized. But I think that digital transformation is about moving the most valuable assets into the digital realm so that, eventually, the digital product that a customer receives is more important than its physical parts. These physical parts will transform to be only additions to the core digital entity.
For digital transformation to be successful, all products of a company should be digital services, which have physical assets as needed. All the information is securely gathered and used to improve the service every day. Companies need to take a bit of a helicopter view on their businesses, from the customers all the way to the production floor, to see what the current information flow is and how it can be changed to create full situational awareness. Once you have that, you can suddenly start designing completely different kinds of processes. And you will unleash your potential for innovations by combining all available assets, experience and information.
Which companies can most benefit from a Digital Transformation?
Basically, any business, regardless of it being a sewage treatment plant or a bubble gum manufacturer, benefits from digital transformation. However, those with millions of individual customers benefit the most as tracking millions of products is currently still a tedious and incomplete process that slows down innovation. Having digital twins for each and every product suddenly enables companies to mass-customize their products even when they have 10 million customers. You can still customize the service to each one of them.
We’d love to hear about your experiences helping others with Digital Transformation. In your experience, how has Digital Transformation helped improve operations, processes and customer experiences? We’d love to hear some stories if possible.
One of my favorite customers at the moment is Norsepower, who has commercialized a 100-year-old innovation, which is called a rotor sail. The rotor sail is a rotating cylinder on top of a passenger or a cargo ship. It creates thrust like an ordinary sail on a sailboat but with a different physical process. However, it was not commercialized in 100 years because it had to be carefully managed and adjusted. The original inventor envisioned that there would be a team of three people continuously adjusting and tuning it on a ship. But this was not a practical scenario because those three people would have to be trained extensively, and the manual process was also prone to errors. Now that we created a digital twin for the rotor sail, and managed it in our platform, it suddenly became viable business. It also saves large ships up to 15% of fuel, which is massive.
Another favorite customer of mine is Trimble. For them, we have created digital twins out of large construction sites, where thousands of people work. This enables additional safety and efficiency. All tools and all the safety equipment have digital twins. Even all the workers and subcontractors have individual digital entities. Overall, this creates full situational awareness of very busy construction projects, where many bits and pieces constantly move around. With that, suddenly all the typical hassles and timekeeping problems diminish.
Has integrating Digital Transformation been a challenging process for some companies? What are the challenges? How do you help resolve them?
The biggest challenge in companies is that there is not enough trust or desire to actually change their businesses. Some businesses are so traditional that they take digital transformation projects only to show that they have them. But they are not really changing their businesses. Digital transformation is a leap of faith. You really reconsider your entire business model and all your assets. It requires looking with a critical eye on everything you have and more importantly, what is possible to achieve with them.
This is something not all leaders are capable of. There are many managers who are very capable of managing existing processes, but not so many are able to see future opportunities. Then, there are some who actually see it but are not ready to take the leap, for one reason or another. In my opinion, leadership is the biggest issue. It requires a change of mindset that starts from the top and then moves down to every person in the company.
Ok. Thank you. Here is the primary question of our discussion. Based on your experience and success, what are “Five Ways a Company Can Use Digital Transformation To Take It To The Next Level”? Please share a story or an example for each.
- Be paranoid about security: Very soon, most of your intellectual property lies in algorithms and digital recipes creating and controlling physical things. You must treat security as a continuous process and have defenses at all layers. Make sure to give your customers control over their data — most will anyway give you access in exchange for better service. It’s all about trust.
- Ensure scalability: This is especially important for companies with data coming from millions of customers. It is not only a technical or architectural challenge, but also a very much financial one.
- Design your product(s) as global: This requires that your digitalization and/or digital twin provider has global reach what comes to networks and data centers. You don’t want to end up building separate backends in different countries and continents.
- Prepare for ever faster release cycles: Your product will inevitably update in a faster release cycle than before. Make sure your digitalization/digital twin provider is in sync with this and won’t become a bottleneck if and when you need to roll out in 20 countries simultaneously.
- Build in sustainability: When selecting your core suppliers, make sure their strategy is linked to yours what comes to your product roadmap. A service designed for the latest entertainment app might disappear in a year, potentially leaving your product stranded, no matter how large the supplier.
In your opinion, how can companies best create a “culture of innovation” in order to create new competitive advantages?
I believe that situational awareness is key to the culture of innovation. You need to understand all you have, and where your business is in the global ecosystem. You must have digital twins for all your products, all your customers, all your facilities and even all your finances. Without them, you can only partially innovate. But once you have the whole picture, you can involve everyone in the company in the innovation process and that is critical for success. It allows you to give people authority that they can actually come up with something new by looking at the same data. The situational awareness that is achieved through digital twins is today’s most important competitive edge. We have already seen that the most valuable global companies are those that keep track of their products and customers.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
Circling back to my mentor Mr. Inborr, he told me to, “avoid people who always have something else”. It turned out to be quite a harsh but true statement. People who always have something else on their mind going on, ultimately prevent you from fulfilling whatever you are doing. That means one should focus on working with people who can solve a problem that you have rather than working with people who only lean on what they cannot do. In a way, this life lesson also found its way into our company’s values: reliability, loyalty, passion, and no nonsense.
How can our readers further follow your work?
I regularly write for our nBlog, it can be found on BaseN’s website, www.basen.net. Of course, I and BaseN can be also found on LinkedIn, Twitter and YouTube. We also run a podcast that can be found from the popular podcast platforms Spotify and Apple Podcast, it is called “IoT for the Rest of Us.”
Thank you so much for sharing these important insights. We wish you continued success and good health!