How Pernod Ricard increased employee enthusiasm for AI

While many companies’ digital transformation efforts falter when employees resist, Pernod Ricard’s careful push to encourage employees to adopt new tools powered by artificial intelligence sparked buy-in.

The company’s success in gaining employee acceptance surprised Harvard Business School professors Iavor Bozhinov and Edward McFolland III. They expected the 200-year-old French spirits company to face significant backlash from employees who are used to selling and marketing products in traditional ways without the help of AI.

“We went into this study with the hypothesis that it would be very difficult, if not impossible, to pull this off,” says McForland, an assistant professor. “I was very pleasantly surprised by the fact that they did a pretty good job. Better than any other technology company I’ve seen.”

Pernod Ricard’s digital journey, the world’s second-largest spirits company, provides guidance for solving a common challenge facing organizations today: how to engage employees in adopting advanced technologies that executives are investing in to streamline operations and improve profitability.

“It only creates value when people actually use it,” says Associate Professor Bozinov. “It may be the best tool, but if no one uses it, who cares?”

McForland and Bozinoff say the key to a smooth adoption is to proactively address resistance and provide the right training and support to employees who are reluctant to try new digital tools. The researchers, along with François Candron of the BCG Henderson Institute and Nicolina Johnson and Emer Moloney of the HBS European Research Center, wrote the May 2024 case, Pernod Ricard: Unplugging Digital Transformation.

Employees are also skeptical at first

A global company with 90 production facilities in more than 70 countries, the beverage giant has built its success on local market expertise and traditional relationship-driven sales and marketing, with staff often relying on intuition and intuition to determine profitable paths.

However, by 2020, managing increasingly complex brand portfolios through analog processes felt unsustainable to company leaders. Additionally, company leaders believed that digital transformation would enable sales and marketing teams to become more data-driven and spend more efficiently.

Pernod Ricard has developed an ambitious solution to create four major digital programs powered by AI. The two main tools were:

• D-STAR is a system that utilizes machine learning to optimize store visits and product recommendations for sales representatives.

• Matrix used AI to allocate marketing spend across brands and channels.

The real test came when we introduced the tools to our employees. Initial developments revealed the depth of employee skepticism. In France, some marketing managers resisted the Matrix’s recommendations to scale back some marketing activities because they objected to their emotional attachment to certain brands. Salespeople in Germany were concerned that D-STAR would reduce their company’s strategic efforts, which for many is the most important part of their job.

Some of the resistance arose from legitimate concerns about job security and professional identity. But many reflected deeper organizational challenges. Employees had little reason to trust or invest in tools they didn’t ask for or didn’t understand.

How did the company get buy-in?

To convince employees that the tools are valuable, Pernod Ricard has developed a deliberate approach based on four key pillars.

Demonstrate true value through testing

The company conducted A/B testing to prove that the tool produced measurable improvements. When we implemented D-STAR in France, stores where salespeople followed AI recommendations saw increased net market share and increased net sales compared to the control group.

At that point, the benefits weren’t just theoretical. These were significant improvements that the sales team could see as a result.

Remove risk from deployment

Pernod Ricard has restructured performance evaluation to remove fear from the equation. Sales reps who missed their goals despite following AI recommendations were not penalized, but sales reps who ignored the tools and missed their goals faced increased scrutiny.

“If you follow the recommendations and still don’t quite meet your quota, that’s okay,” says Bozinov. “But if you don’t follow the recommendations and don’t meet your quota, that’s OK.”

Invest in education and support

The company has created dedicated deployment teams for each market deployment, including local change management specialists, data analysts, and trainers. Employees received extensive education on how to use the tools and also learned why the tools were valuable. Additionally, the company created a hotline for employees to immediately report issues or seek help.

Leverage internal champions

Perhaps most importantly, Pernod Ricard has named respected employees in each market who can serve as technology ambassadors. “They identified the people they spoke to,” McForland said. “These are people who have been around for a while and have a very good reputation.” Once these influencers adopt a tool, adoption by their peers usually follows.

This strategy has worked by transforming digital transformation from something imposed from above to something employees want to actively engage in. “This was just genius: Instead of ‘I want this, I need this’ and ‘I have to have this,’ it allows employees to pull it rather than management pushing it,” McForland said.

By 2023, D-STAR achieved an 85% adoption rate across its deployed markets, and Matrix reached a 60%-70% adoption rate, despite being more disruptive to traditional marketing workflows. The tools provided have increased sales by 1.5% to 4.5%, depending on the market, and increased marketing efficiency by up to 15%.

Balance control and accountability

The researchers say key insights from the study highlight the need for companies to strike a balance between so-called “spans of control” and “spans of responsibility.” If AI tools give employees less control over their work processes, organizations will also need to adjust what responsibilities employees have.

Pernod Ricard recognized this tension and addressed it by, for example, telling salespeople who use D-STAR that they won’t be blamed if following the AI’s recommendations doesn’t work out.

“In many cases, the introduction of AI results in a reduction in span of control, but for very few organizations this is matched by a change in scope of responsibility,” says Bozinoff. “This creates a negative incentive to deploy tools, because even though you have less control, you still have responsibility for the same thing.”

Advice to other organizations

Based on this study, researchers say companies may want to consider the following advice to encourage employees to embrace new tools.

• Start with a pilot program to prove your value. Don’t deploy the tool company-wide until you can demonstrate tangible benefits in a managed setting. By first testing in selected markets, Pernod Ricard was able to refine both its technology and implementation strategy.

• Build a dedicated implementation team. A successful implementation requires full-time resources to manage the migration. These teams should include change management experts as well as technical staff.

• Address the human side early and often. Researchers say most digital transformation failures are due to people issues, not technology issues. Invest heavily in training, communication, and support systems.

• Align organizational processes, not just technology. It’s not just about adding new tools to existing workflows. Redesign processes, incentive structures, and accountability measures to align with new capabilities. For example, Pernod Ricard offered additional bonuses to employees who successfully used the tool.

• Aim for 85% adoption before scaling. Pernod Ricard did not introduce the tool to new markets until existing markets reached an 85% adoption rate (a threshold to ensure that the technology and processes worked reliably).

As AI becomes more central to business operations, the Pernod Ricard case offers hope to traditional companies concerned about bringing their workforces up to speed to become digital natives. According to researchers, success is not about having cutting-edge technology. The key is to have the organizational capacity to effectively implement the technology.

“It’s not a question of if we should do this, but when,” Bozinoff argues. “And the answer is yesterday.”

Image: Ariana Cohen Halberstam using assets from AdobeStock.