Abbey Road Sessions: Veera Johnson on Traceability, Transparency and Blockchain

Jeff Kavanaugh: Transparency is a key theme in the world today. Veera Johnson just came from meetings with British parliament on this topic. Veera what were you talking about?

Veera Johnson: The main agenda we talked about was, what can businesses actually do now in order to create and understand better solutions? To understand where their raw materials are coming from and what is happening to the raw material as it goes through the supply chain.

Jeff Kavanaugh: Great, and that is what we're talking about in today's conversation. Welcome to a special edition of the Knowledge Institute Podcast, where we talk with thought leaders about achieving resilience in the era of stakeholder capitalism. I'm Jeff Kavanaugh, head of the Infosys Knowledge Institute and today we're coming to you from London's iconic Abbey Road Studios. We're here with Veera Johnson.

Jeff Kavanaugh: Veera is the co-founder of Circulor, empowering better business through traceability. She's held a number of senior and executive positions in the worlds of finance and management consulting. She's probably best known as the founder and CEO of ProcServe, a specialist eCommerce solutions provider that was sold to Basware in 2015. More recently, Veera has worked with and advised a number of finance and private equity organizations, where she used her vast experience and personal network to help them develop their portfolio and asset valuation.

Jeff Kavanaugh: Veera, thanks so much for joining us.

Veera Johnson: You're welcome. And thank you for having me.

Jeff Kavanaugh: Absolutely. First of all, let's explore a little bit what got you out of retirement and back into the game here in the area of transparency and traceability.

Veera Johnson: Doug, my co-founder and I spent quite a bit of time trying to understand how we could use technology to solve the challenge of traceability in the supply chain. And we spent about a year and a half just really trying to understand one, whether it was solvable. And two, whether there was a pressing need for business to become much more responsible, and that's when we started Circulor in 2017.

Jeff Kavanaugh: Circulor seems to play on the word circular. Is that intentional?

Veera Johnson: It is. It's to create effectively what I would call a network of participants in a supply chain, that allows the manufacturing organizations to properly understand where the raw material that is in their products, before they are sold to consumers, is actually coming from. The challenge that we currently have in business today is that beyond the tier one contract and relationship, it's very, very difficult to actually get visibility of who their suppliers are and who supplies them. Therefore, when it becomes the accountability to report on where the raw material is that they are currently using, nobody can actually categorically prove that this is a source it came from and this is the process that it went through.

Jeff Kavanaugh: What's amazing to me being in business for a long time, especially in the consulting world earlier, is it's hard enough to know what's going on in one plant or just across your company, let alone being accountable for actually everything happens coming out of the ground all the way to the consumer and back. How are companies and even governments dealing with this?

Veera Johnson: At the moment it's a really difficult challenge. The vast majority of organizations either have nothing in place at all and therefore cannot meet the regulatory requirements. For example, the conflict minerals regulations that come out next year require all manufacturers who use conflict minerals in their end product, to be able to account for the provenance of where that material came from. And currently they cannot do that. Where they can, it is a very manual, paper driven, spot check process. So it is an audit function and that it is open to a number of challenges. It's open to fraud, it's open to materials being sourced from unethical sources, from malpractice in business processes and so on.

Jeff Kavanaugh: So you're saying even this so-called digital age, people are pushing paper to prove where things came from?

Veera Johnson: Absolutely. That's the thing that we are absolutely tackling with what we're doing with Circulor. We create a digital identity for the raw material at source, including all of the characteristics that comprise that item or that mineral or that ore. And as it goes through the refining process, we capture what additional material is added to it as it changes state. But we're capturing not just the digital content details for the material. We're actually tracking how the material changes state as it goes through the supply chain as it becomes something else.

Jeff Kavanaugh: Then you're not using paper for this, right?

Veera Johnson: No. We digitize the entire process. So we're tracking the actual raw material, but we're also digitizing the actual capture process as well.

Jeff Kavanaugh: This digital, I think you and I spoke before, you mentioned that Blockchain's being used a lot for it. Is that how you're tracing these things?

Veera Johnson: We're using elements of Blockchain. We're using Hyperledger, which effectively is a Blockchain foundation that has allowed us to develop our capability using a combination of Oracle and Amazon web services. So we've built an enterprise level solution for corporates that is what I would call, a private permission ledger. So the data is not public, which means I'm not using huge amounts of data mining or database power if you like.

Jeff Kavanaugh: Private permission ledger. Well, it sounds like a marketing buzzword. It's interesting because it really calls to mind that you somehow have tapped into the internet and digital and yet you've also kept it very private.

Veera Johnson: Absolutely. Absolutely. And that's based on our experience of trying to encourage as many participants in the supply chain to get involved and engage, to let them know that actually their data remains their data. All we're after is the detail and the information intelligence about the material that they're processing in their supply chain. So it keeps all the commercial information private. There are also private channels between suppliers that we can set up that allows them to share information with each other, that is not visible to anybody else. The beauty of what we've done is that we create what I would call an immutable record of that transaction, which means it cannot be tampered with. It is visible, it cannot be changed once it's written to the ledger. So effectively it is a traceability as a service ledger.

Jeff Kavanaugh: Traceability as a service. Wow. It's mind blowing. It doesn't seem like you're talking to a first level manager in an IT department somewhere in the bowels of a company, you're actually talking to literally parliament, government leaders, senior executives. What has been the transition when this has gone from a tech discussion to one of leaders?

Veera Johnson: I would say probably two types of conversations. One is about taking ownership of the traceability components of their reporting requirements. So they are genuinely able to meet, through applying a solution like Circulor, and being able to report up to the board level, up to their peer group, up to their investors. That they are taking responsibility for sustainability in their organization.

Veera Johnson: The second part is the cost saving that occurs because we're removing the huge sections of the paper-based compliance processes, which then allows them to really focus on putting in compliance and audits the points at which there are anomalies in the system. So the system is not perfect. It will not capture and change everything. What it does, it allows the process as is to be captured, the data to be captured. So for example, the project we have with Volvo is to track cobalt from the mine in Africa. All the way through the refining process as it goes into a car manufacturer. And to prove that the battery that goes into the car has been sourced from this particular place. These are the materials that have been added to it, and this is the battery manufacturer and the location that it was produced at.

Jeff Kavanaugh: Yeah. It's amazing because you're down to a elements of, like you said, a trace material. In this case a conflict or special material, in this case cobalt, that is so essential. It isn't just batteries, cobalt has many elements of electronics from smart phones. Is this something that's taken a long time to get to this point or has there been this tipping point or just convergence of understanding that somehow triggered it?

Veera Johnson: I would say there were two things that really drove us to this point. One was understanding how to architect the traceability platform that we have, to make it as frictionless as possible for end manufacturers to engage with adopt and use. And the second is being the regulations coming out next year is requiring manufacturers to do something about this now, which means that we've reached that confluence point of being able to meet a specific need in a digital way with an immutable record using a traceability platform.

Jeff Kavanaugh: You said regulations coming out, are those for a small segment of industrial manufacturers or is it a broader swath across industry?

Veera Johnson: It is a much broader wave of industries that will be affected. So it is any organization that uses conflict minerals in its process. So it touches aerospace, it touches car manufacturers, it touches cycle manufacturers, battery manufacturers. So it is quite a lot. There are clearly other regulations that exist that impact other industries. For example, cotton, palm oil, recycling.

Jeff Kavanaugh: The clothes basically you're wearing. So it's not that it's come out of nowhere, but basic consumer hasn't been as aware of this. So it's bursting on the scene very quickly as a boardroom discussion.

Veera Johnson: Absolutely. And to date there have been very few genuine, real live uses of Blockchain working in a business environment.

Jeff Kavanaugh: And that's the point I was trying to make is this looks like this clear and present danger, so to speak. That finally is on the radar where unlike people having a hammer looking for a nail, you're actually trying to solve an existing problem using this technology.

Veera Johnson: Absolutely, absolutely. But it's not without its challenges. I would say that it has the same challenges as any software as a service solution. It requires the organization to fully engage with this because by creating transparency, you're actually highlighting where things are wrong.

Jeff Kavanaugh: You're holding a mirror.

Veera Johnson: And you're holding a mirror to the organization and within their supply chain. So you need all of the participants in the supply chain to engage fully with this. And what the system allows the manufacturer or the supplier or their suppliers to understand is if, for example, I'll use a Volvo example of cobalt. If some of the cobalt did not come from a licensed mine and it appears further down in the process and it's been combined with cobalt that is from an unlicensed mine, it actually flags it up as an anomaly in the system. Because there will be no tag to that bag of cobalt because it will be coming from an unknown source. So whilst we can't fix the problem, we shine a light on it that allows the manufacturer to investigate what has gone wrong and change the supply chain, change supplier, or change the process.

Jeff Kavanaugh: Speaking of that mirror it almost... not almost, it does test the resilience, tests the governance that is within a company to stand up to that. Knowing that especially in the short to medium term, noting where things are wrong, will proceed actually fixing them. At least being aware of them and everyone being okay with that while they're trying to solve this. And in the meantime create these smart phones or deliver these batteries that have these products.

Veera Johnson: Absolutely. And the intention is not to stop the process because the battery still needs to be manufactured. It's about shining a spotlight on where things aren't quite what they should be. So for example, if a certain mass of ore comes into a refining process and a completely different unexpected amount comes out in a shorter timeframe, it highlights that something is not right in the actual refining process, for example. So our challenge as we implement for clients is to understand who are the participants in the supply chain? What is the actual material that needs to be tracked? Capturing the characteristics that make it unique and then understanding what happens through the process, and helping the clients adopt the solution to make it work for them. And because of the way we architected the solution, the platform does not need the back office systems to do anything other than provide us the data. We provide what I would call an API plugin, so a simple application, plug into their back office system to allow us to extract the data. So we've already automated part of their process for them.

Jeff Kavanaugh: Got it. Once again, you're listening to the Knowledge Institute, the Abbey Road sessions where we talk with thought leaders about achieving resilience in the era of stakeholder capitalism. We're here with Veera, co-founder of Circulor, empowering better business through traceability.

Jeff Kavanaugh: Veera, as companies are thinking about doing this, what is the biggest obstacle that you see?

Veera Johnson: Being afraid of genuine transparency because what they don't know, they don't want to know. And therefore the conversations that we typically have range from providing them with tools to be able to better meet the regulatory requirements, reporting requirements. Or quite often helping them get visibility of their supply chain so they have more control over it. Then we enter into conversations about the other benefits of doing this. And therefore some of the challenges that they're going to face doing this.

Jeff Kavanaugh: So you walk before you run with them, you get them a little more comfortable with maybe some tactical benefits before the more strategic ones. So you're one part psychologist, one part tech platform. Yeah?

Veera Johnson: We help them sleep better at night as I would describe it.

Jeff Kavanaugh: Well put. Well put. What's a big misconception that the general public might have about Blockchain or about this traceability?

Veera Johnson: I think at the time when Blockchain first really was discussed properly, it was confused with cryptocurrency and Bitcoin. So it became known as the solution that did that. And actually it has nothing to do with that at all. But Blockchain is just an IT capability, that if used correctly and architected correctly can actually solve a real world problem. It is not about just mining data that was for a specific use case. So quite often we spend... We've tried to avoid using the word Blockchain anymore, but we have been caught out a few times with people automatically assuming that it is about Bitcoin, that is about crypto and it so isn't.

Jeff Kavanaugh: You're partnering with companies and certainly you've mentioned all these very executive and senior discussions, there's still an IT department in most companies, do you interact with them at all on these journeys?

Veera Johnson: Absolutely. We typically interact with the procurement, the compliance and the finance and IT teams.

Jeff Kavanaugh: When you do, do you find that they have all the capabilities they need? Do they have the skill sets needed? Is there a gap?

Veera Johnson: There's typically not really a challenge from their perspective. I think once they understand and are convinced of how our technology works and how we integrate with them, and what little they have to do at their end to work with us, typically the IT conversation is very rapid. The harder challenge is engaging with the compliance and procurement teams because they have to mandate or find ways and mechanisms to get their tier one and their tier two suppliers to participate. And usually that's driven through an economic reason, that they are the main client and therefore they're requiring their tier one suppliers to provide them the data that they need.

Jeff Kavanaugh: We're starting to hear more and more about this triple bottom line and just like with GAAP and IFRS, their reporting requirements that come in as this becomes... as transitions from an optional to a required set of reporting. How is what you're doing feeding into that or helping the ability for that triple bottom line?

Veera Johnson: So effectively one of the tools that we give to our clients once they've started using the system and as we start to collect the data, is a management information dashboard. Which captures the entirety of their process from effectively source, all the way through their supply chain partners, if you like. That dashboard is then presented to them in a way that helps them report up to the board, meet the government regulatory requirements. So whatever processes they have internally, we're trying to help them make them better by giving them much more data, rich data.

Jeff Kavanaugh: Are you ever asked, this reporting and compliance is great, but can it actually help my business as well?

Veera Johnson: Absolutely. We're at the early stages of trying to understand the two ends of the economic and benefits case if you like. One of which is the most obvious one. The benefit case is the cost avoidance of errors, cost avoidance of costly mistakes that will have an impact on their public reputation. The second area in terms of benefits case is, what benefit do they get out of actually using the system so that they can make better decisions about what is actually happening in their supply chain? For example, reducing their supply chain, changing it to give them a better view on cost management, for example.

Jeff Kavanaugh: All right. You mentioned coming from meeting from parliament, you mentioned leaders. You may have a unique vantage point in this whole public private partnership. What's your perspective on how governments and regulatory bodies are working with enterprises?

Veera Johnson: I think where government can genuinely help us and this is some of the conversations we're already having. We're currently talking to Lord Chris Holmes, who leads the cross-party government committee on general sustainability using Blockchain for business use. To increase the focus on transparency to increase the focus on traceability. And in our conversations with him we're exploring two angles, one of which is him advising us in terms of how more we can do, and what are the material and data should we be capturing to help the sustainability agenda in terms of the UN specific goals. The second part is as part of his work on the committee, perhaps finding a way of supporting him to introduce the right sort of regulations that cover the wider industry groups, that will benefit from using a traceability solution like ours.

Jeff Kavanaugh: I liked the way you said, "The right sort of regulations." Because people can commonly view regulations as an albatross or an anchor, and perhaps one of the most important changes over the last 20 or 30 years is this recognition of well, maybe there are certain elements of regulatory that are good and what is the right sort? Given all this, what are the three things a company, a leader can do to advance on this journey?

Veera Johnson: That's a great question. I think the first is embracing the traceability agenda and really being open to at least starting the process of understanding what is happening within their own internal organization. The second would be to reach out to their tier one and their tier two suppliers and start those conversations, about wanting to create some form of data sharing partnership. So that they understand properly what is actually helping their sustainability agenda. And I think the third is reporting. Reporting internally, reporting to shareholders, to consumers, to their stakeholders, to their peer group.

Jeff Kavanaugh: Great. Well, I know that you've got some other commitments later today and it's been a pleasure talking with you. Wrapping things up a little bit. Maybe you could share a couple of personal items. Who has been a major influence for you in your life?

Veera Johnson: I would say there've been a couple of individuals who have been absolutely fantastic in terms of understanding the potential that I have, continue to have. That they coached me in a way that encouraged me to take more risks, to become more confident, to take on challenges that I would typically have shied away from. And have also taught me through that process to ask for help, to ask for mentoring, to ask for guidance. And they have now become not just mentors and guides to me, but personal friends.

Veera Johnson: The other is, I remember reading a book, I think it was published in the late '90s. And it was the biography of Sir Alex Ferguson, and it really resonated with some of the things that I was going through at the time in terms of his experience and the way he explains the challenge of dealing with team, inspiring team, inspiring cohesion in teams. But also being visionary in terms of being not compromising and unwilling to compromise his vision and goals. And continually supporting the individuals that he brought into the team by nurturing them, by expecting the best of them, by making them accountable and it really resonated in terms of how it helped me apply some of those lessons to when I built ProcServe

Jeff Kavanaugh: Great. This has been very interesting. How can people find you online? How can they read more about what you're doing?

Veera Johnson: Just by googling me. There's quite a lot of stuff that comes up. I've been featured in a number of mentoring and coaching books, which provide not just my stories but other amazing leaders and the journeys they went through and the things that inspired them, the things that they learned from. I was also featured by the FT as the IT role model. Again, because I was constantly taking on interesting, unique and challenging IT roles, in order to try and use IT as a change maker for industry, for business.

Jeff Kavanaugh: Great. And also everyone you can find details about Veera on our show notes and transcripts at infosys.com/iki that's I-N-F-O-S-Y-S dot com, forward slash I-K-I, in our podcast section. Veera, thank you for your time and a highly interesting discussion.

Jeff Kavanaugh: Everyone, you've been listening to the Knowledge Institute, the Abbey Road sessions. Where we talk with thought leaders about achieving resilience in the era of stakeholder capitalism. Thanks to our producer, Yulia De Bari and the entire Knowledge Institute team. And until next time, keep learning and keep sharing.