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Michael, thank you for sitting down with us
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and sharing your story.
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Thank you for having me, and I'm really
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looking forward to our conversation.
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Michael, you launched a major
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customer-journey-at-scale transformation at Alfa-Bank
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about two years ago. Could you share
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what was the scale of that transformation,
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and what were the results?
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I'm glad to share the story. We started
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a little bit over two years ago. At the moment
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the entire bank only runs on customer journeys,
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so both in retail and in corporate.
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In retail, we have seven different customer journeys,
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and in our SME business four different customer journeys.
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I could tell probably countless stories, but one of the
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vivid ones - the very first journey we launched and which
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propelled the speed of change into all the other products -
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was in credit cards, and the team has done amazing results.
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In nine months, basically they almost tripled the sales
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while reducing the acquisition cost in half.
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So, Michael, from your experience,
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what is the difference between organizing
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work by customer journey from organizing work
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in the traditional setup?
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I would say the key difference
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is that in the traditional way of organization,
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it creates a lot of silos, so it's created by departments.
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Every department has their goals, their KPIs - clearly -
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and to find the common goal, to find the unified
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set of KPIs, is always very challenging,
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and that creates a lot of issues of communication,
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et cetera. Customer journeys
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help bridge all of that, having the single goal,
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having the single set of KPIs across
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all of the journey owners, in a way,
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and all of the departments that are involved.
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So, how many people are in these customer journey teams?
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Across these 11 journeys, we have around 1,100 people.
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So some journeys have as little as 60 people,
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and the biggest journey has almost 200 people.
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But it's actually a very large part of the organization.
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What's interesting is that we were
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able to reduce about 25% of the staff
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because the work became so transparent.
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Because every single department, in a traditional way,
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had their own ideas and projects, and many of them
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may have overlapped; many of them created other gaps.
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And a lot of it was work that was not necessarily strategic.
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What I like about the customer-journey process
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is that before, and you asked me a question
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about traditional way of working,
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we had these quarterly reviews.
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And it was a show. You always talk about good stuff.
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You never have time to talk about bad stuff.
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And in the customer journey process, every single two weeks
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the entire team presents results.
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They are presented over an hour and a half,
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which gives enough time to talk
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about all of things that happened and didn't happen,
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and do it constantly.
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That's interesting, you started with
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one journey, two journeys, and you expanded to 11 journeys
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over time, so it's almost a customer-journey-at-scale
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transformation, but what you're describing
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is also an agile-at-scale transformation.
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How do these two things intersect at Alfa-Bank?
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Agile, of course, has a lot of the elements
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that are used in customer journeys.
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But in my interpretation, our IT teams
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have been working in agile for years,
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but it never necessarily created the impact that we see now.
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And the main difference is the
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customer journey looks holistically
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at the entire customer experience, rather
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than just a way of working with some changes
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and being able to iteratively make mistakes or progress.
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It's all about holistically
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looking at the entire experience and then
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choosing the effort where you want to work in the agile way.
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And when you create
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these 100-person journey teams, it's clear
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from your description that they're coming
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from multiple silos of the bank, and you're creating
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a cross-functional journey team.
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How easy or difficult was that?
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How did you do that?
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You probably nailed it on the head.
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(laughing) Okay.
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That's probably the biggest challenge.
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Starting these journeys, and of course, scaling them.
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And I basically say it's three key P's,
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and they're all about, people, people, people.
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So, number one, people, is actually
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convincing the department heads
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to give up their resources to put in these journeys,
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where they don't directly, administratively,
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and functionally tell them what to do. The journey does.
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That's the very first element of challenge.
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The second P, once again, is about people.
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The people that are inside of these groups -
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they have very different routines how they work.
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Some of them could be very effective, some may not,
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and to inspire them to work in this way
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is also a big challenge. And the third challenge,
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and once again, with people, as you go along with these
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journeys, you actually find that even though
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many team members may be inspired,
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or they want to work in this environment,
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they're just not capable to work there. They could
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be very effective in other places but not
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in this particular environment.
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So, in our experience, we had to rotate
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over a third of all of the team in order
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to then structure the teams that would be
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very, very, effective working with the deadlines,
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working with the new routines, working with the new tools,
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having a very different set of culture.
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There are challenges all across.
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But did you also have to do any hard changes
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in terms of performance management
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and other enablers to make this happen?
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Oh, yeah, of course.
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The first one, the main cultural aspect of this:
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just two years ago, every single department
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had their own set of KPIs.
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And now the team has one set of KPIs, the entire team.
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So there is no one who could be very successful in that team
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or unsuccessful. Either the entire team brings success
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and everyone benefits from it, or the entire team
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doesn't get to the result and no one benefits from it.
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So, from the cultural perspective,
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from the way we allocate resources, the way
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they interact with each other, became transformational.
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One of the things that I noticed sometimes
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when we talk about journey transformations
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is: Where is the additional investment?
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Where are the additional dollars?
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Did you invest a lot of additional dollars
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into this program, or did you use
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your existing budgets and people to manage this program?
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In the beginning, we invested a lot more.
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But I would say, overall, if I look at two years back,
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I'd say we're spending more or less
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the same in terms of capex but getting a lot more value.
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In terms of people, as I said, we're able
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to actually reduce the number of people
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that work with the changes,
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and doing it in a much smarter way.
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Overall, it's definitely P&L and ROI positive.
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It looks like you've enjoyed this ride a lot.
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Yeah.
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What were some fun moments of this journey?
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Well, number one,
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I have to say growth is fun.
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Growth creates a lot of excitement.
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Growth creates a lot of innovation and new opportunities.
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From our perspective, in launching these customer journeys,
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the first fun was about, "Hey, let's
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try to do things in a new way."
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Let's actually try to enjoy, and how do
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we attract the top talent that doesn't
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want to work in a typical environment,
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in these quarterly reviews? How can we make it
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a lot more agile?
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How do we make it a lot more iterative, more engaging?
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So, this was a way for us to dramatically
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increase speed, and dramatically increase
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the excitement about change.
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What role did BCG play in this transformation?
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How did our teams collaborate with your teams?
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It had different phases.
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So, first, it was all about creating for us
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the concept and actually customizing
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to our environment. What works in Australia or in India
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may not work in Russia. And they've
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done a very good job of actually giving
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us the right set of methodologies,
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setting up the right routines, setting up the right metrics.
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Then the second part was all about using tools.
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How do we look at research? How do we look at data?
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How do we look at diagnosing processes?
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How do we prioritize, et cetera?
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It was a really, really instrumental
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part of the engagement. But I'd
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say the third element, which was probably
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the most important for us, and for me.
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I never felt that we had
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our team in the bank and BCG
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as a separate entity, just advising us.
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So, it still really is BCG,
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and actually the last names, that worked with us,
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because at the end of the day,
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I believe it's all about the people.
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It's not the brand on its own.
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The people that work with us from BCG
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have really become the integral part of the team.
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First of all, they share the same success we share,
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or don't; I think that's from a motivation perspective
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as well. And then the way we work together,
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they're really part of the daily work, daily routine.
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They have the same type of stuff
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we're trying to do.
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So, really hand in hand.
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Thank you so much, Michael, for sitting
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down with us and sharing your story. It's fantastic,
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and congratulations on the fantastic results.
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Thank you.
Thank you so much.
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Thanks for your support.
Thank you.