7 years ago I met Edip Ilkbahar, a Turkish entrepreneur who told me about his fantastic Hillside Beach Club on the beautiful turquoise Mediterranean coastline. He was redefining the luxury vacation, in terms of service and experience, but also in terms of business model and how to deliver it.
His passion for customers, for creativity and for the very best service were enticing. At the time he was also launching other locations, hotels and also city-centre fitness and entertainment concepts. Hillside was rapidly defining itself as a lifestyle concept. The branded music compilations captured the mood, but it was the Hillside people who made it real. In 2012, I told the story of Hillside in my book Creative Genius: The Business Leaders Handbook to Innovation.
Over the years we have kept in touch, and when we have met for lunch, Edip always has a hunger for learning about what is new, different, better, incredible. Whilst the number of boutique beach clubs and resorts has proliferated, he has worked hard to keep Hillside ahead. Now, the evolution of Hillside Beach Club has been captured in a great new case study by Harvard Business School.
The study was developed by Harvard’s Senior Professor Rajiv Lal, who exclusively focuses on marketing and guest-oriented organizations and is an esteemed authority in this area. Through one-on-one meetings with İlkbahar, plus his managers, employees and guests, Hillside Beach Club’s authentic approach to service, original marketing insights and innovative management methods have been thoroughly examined.
Operated by Alarko Holding Tourism Group, the luxury resort is praised for its authentic management methods, motivated staff and popularity with guests in a case study named “Delivering the Ultimate Family Vacation in the Mediterranean”. Through an analysis of Hillside Beach Club’s practices, students can appreciate and learn what it takes for management to create and maintain a successful company culture and achieve exceptional rates including 99% guest satisfaction and 68% repeat guests.
In training and motivating its staff, behavior over technical training and human motivation over systems are what really matter to Hillside Beach Club. The case study highlights the resort’s “happy employees, happy guests” philosophy, and mentions the renovations to staff accommodation to ensure they’re well cared for. Testament to the success of this approach, employees stay at Hillside Beach Club for an average of 6.2 years.
Speaking of Hillside Beach Club’s mission to create a “feel good factor” amongst staff and guests, Ilkbahar said “We are bound to our employees, as well as our guests. We are in the business of making people feel good, we define feeling good in the real sense, not through notions like possessing or luxury, but as the emotions that you feel sitting under your favorite tree or the joy of having a friend over at your home. This philosophy of making people feel good with sincerity has helped us gain many guests that keep coming back, and staff that stay with us for many years”.
To cater to evolving guest demands, Hillside Beach Club employs a culture of “continuous improvement” and closely aligns global trends with human psychology to introduce new and diverse experiences each year. The Harvard case study credits the resort’s innovative offerings such as the “Hillside Beach Order” app which allows guests to place an order without leaving their sun-lounger, as well as its “Chief Instagram Officer” job advert campaign which received 62,000 applications and achieved the “Best Social Media Project” award in the 14th Golden Spider Web Awards.
Hillside is the luxury lifestyle brand that is redefining the rules of cool – by ignoring its competitors, and defining the aspirations of its customers.
Described as “heaven-on-earth” Hillside Beach Club, on the Turkish southern coast, luxuriates in a perfect bay of turquoise blue water, pine trees and the most amazing views. This is where luxury meets tranquillity, service meets perfection. With the most personal, flexible service from its smiling and attentive hosts, designer hotels are made to look like mediocre commodities.
The beach club, the secret haunt of the likes of Richard Branson and Renzo Rosso, is just one jewel in the crown of Hillside Leisure, the lifestyle brand from Turkey that also numbers a range of city hotels, restaurants, shopping malls, spas and fitness clubs within its portfolio. In a world, where design and service are always looking for a new edge, Hillside is recognised as a global treasure.
Edip Ilkbahar, executive vice president of Alarko Tourism Group, has overseen the development of the brand and its unrivalled properties – starting with a new approach to fitness clubs in the centre of Istanbul – a live DJ selects the beats that inspire you to work harder – and then developing spa hotels and the beach clubs in a plan that now looks to London and Paris for its next frontiers.
“We don’t think of ourselves as a hotel, or a resort. We don’t think of the product, or even the service” says Ilkbahar proudly. “We think of concepts – be it the lifestyle that people aspire to, or the environment in which they seek to be seen in, or a special world in which they want to disappear in”. The Hillsider magazine was one of his early innovations, helping to define the brand as a contemporary lifestyle,that goes far beyond the world of hospitality.
“This is a team effort” says Ilkbahar, explaining how his people are constantly exploring how can they stretch and change their properties, surprise and inspire their guests. “We don’t see any hotel or resort as the benchmark. We learn from little things in all sorts of places, and keep evolving”.
Guests lie at the heart of his concepts. “This is about much more than customer focus. We try to think like the ultimate guest, and imagine what heaven would feel like for them. Then we set about creating it” he says, explaining that innovation starts by understanding individuals much more deeply “for beyond the conventional research surveys or focus groups”.
Hillside Su, near Anatalya, is perhaps the most architecturally striking property of all. Designer Eren Talu uses a palette of three colours – white, red and black – whilst everything else is done with lights and mirrors, including a awe-inspiring lobby dominated by six gigantic, rotating disco balls. Hillside Su is chic, lean and intensely cool – like staying in a giant iPod, in fact it even has its own record label.
At night, the beautiful people come out – dressed in white, plus retro Adidas. And these are just the staff. Rooms are white on white, with two enormous double beds – one for the room, and one for the balcony, from which you really can dream under the stars. With the most luxurious cottons, the most exotic cocktails, organic cooking and Balinese massage, Hillside creates an experience that stimulates all the senses.
Ilkbahar and his team are brimming with innovation and ambition. This month they launch their latest venture in the centre of the Istanbul, a city that is now at the cutting-edge of design. A new hotel, fitness centre, restaurant and boutique shopping complex is based on the concept of fast luxury – a workout in thirty minutes, the perfect meal in the remainder of an hour, instant luxurious gifts to pick up on the way out.
“We don’t follow trends, we set them” says the passionate leader “We don’t watch our competitors, we sense where customers are going. We define cool, and help people to find it”.
Want to be inspired?
Visually, dramatically … immersed in an “incredible orgasm of future symbiosis” … which captures the speed, excitement and potential of our changing world? Then watch Jason Silva.
Jason is the host of National Geographic Channel’s Emmy-nominated series, Brain Games, broadcast in over 100 countries. Venezuela-born, from 2005 to 2011 he was a presenter on Current TV, the independent cable network created by Al Gore. He left the network to become “a part-time filmmaker and full-time walking, talking TEDTalk.”
“A Timothy Leary of the Viral Video Age” was how The Atlantic described television personality, filmmaker and philosopher Silva, who has also been described as “part Timothy Leary, part Ray Kurzweil, and part Neo from ‘The Matrix.”
“Just as the biosphere stands above the world of nonliving matter, so an ‘abstract kingdom’ rises above the biosphere. The denizens of this kingdom? Ideas”
“To entertain such ontologies is to re-contextualize one’s self as a marvelous conduit in a timeless whole, through which molecules and meaning flow, from nebulae to neurons and back again.” says Tim Doody
Silva is a self-professed wonderjunkie, the creator of the web series “Shots of Awe”, micro-documentaries exploring creativity, innovation, the co-evolution of human and technology, futurism, metaphysics, existentialism and the human condition.
The videos, which “play like movie trailers for ideas,” according to The Atlantic, have spread like wildfire across the internet and have been viewed more than 9 million times.
The Imaginary Foundation described him “like some kind of Ontological DJ, he recompiles the source code of western philosophy by mixing and mashing it up into a form of recombinant creativity, which elevates understanding from the dry and prosaic, to a sensual cognitive romance.”
“A great artist is but a conduit for an expression that resonates with something that is greater than him or herself.”
“We might say that both the artist and theneurotic bite off more than they can chew, but the artist spews it back out again and chews it over in an objectified way, as an external, active, work project” said Ernest Becker.
Others have described Silva as “a modern performance philosopher, a Digital DJ, a re-vitalizer and remixer of optimism, and above all, a curator: of ideas, of inspiration, and of awe… like a trumpet player or modern-day digital Mingus, he jams, riffs and rhapsodizes through a tumbling thicket of ideas with such a sharp and vital alacrity that it can take the breath away.”
Of course, he’s not to everybody’s taste. But he is certainly provocative, entertaining and inspiring.
“The pleasure we derive from journeys is perhaps dependent more on the mindset with which we travel than on the destination we travel to.” Alain de Botton
“Immersion is the experience of losing oneself in a fictional world. It’s what happens when people are not merely informed or entertained but actually slip into a manufactured reality.” Frank Rose
“A single thread of self generation ties the cosmos, the bios, and the technos together into one creation. Humans are not the culmination of this trajectory but an intermediary, smack in the middle between the born and the made… The arc of complexity and open-ended creation in the last four billion years is nothing compared to what lies ahead.”
Kevin Kelly
Adidas is helping to clean up the Earth’s oceans by using the waste floating around the world to make shoes. The sportswear company has teamed up with Parley for the Oceans, an environmental group that raises awareness of pollution in the ocean, to produce pairs of trainers made from recycled ocean waste.
While only 7,000 pairs of the UltraBOOST Uncaged Parley will be made initially, the company says it plans to make more. “We will make one million pairs of shoes using Parley Ocean Plastic in 2017, and our ultimate ambition is to eliminate virgin plastic from our supply chain,” Eric Liedtke, an Adidas executive.
https://www.youtube.com/watch?v=iisMyJdkyqg
Priced at €200, the shoes, which contain 11 plastic bottles, will be available in Adidas stores and from the company’s website in mid-November. The upper part of the shoe is made from 5 per cent recycled polyester and 95 per cent waste plastic taken from the waters around the Maldives, while recycled material was also used to make most of the rest of the trainer, including the heel, lining, and laces. As well as the Parley trainers, the company is also using recycled ocean waste to make limited edition football kits for Bayern Munich and Real Madrid.
https://www.youtube.com/watch?v=U7K8VIqmj-M
“Nobody can save the oceans alone. Each of us can play a role in the solution,” Cyrill Gutsch, the founder of Parley for the Oceans, told the Verge. “It’s in the hands of the creative industries to reinvent faulty materials, products, and business models. The consumer can boost the demand for change.”
Plastic floating in the world’s oceans has become an increasing problem in recent years. A major report in January said oceans would contain more plastic than fish by 2050 unless the world took radical action to stop rubbish leaking into the seas.
At least eight million tonnes of plastic ends up in the ocean each year, the equivalent of a rubbish truck of waste every minute, according to the report from the World Economic Forum. The rate of plastic pollution is only expected to increase as more and more plastic is used globally, especially in emerging economies with weaker waste and recycling regimes.
Kasper Rorsted announced he was leaving Henkel for Adidas in January 2016. Everyone was surprised, he had two years to go on his contract and still a lot to be done at Henkel; Rorsted had successfully raised the prominence of the group’s brands in the US, such as Persil detergent and Schwarzkopf shampoo, and, despite losing a recent acquisition bid, further gains seemed possible. Rorsted oversaw a tripling of the company’s share price, and its rise to become one of the best performers in the DAX index. Immediately following the announcement of Rosted’s move, Henkel’s stock slumped 4.1 percent.
One thing is certain: with his move to Adidas, Rorsted has put himself in a position to lead a turnaround of similar proportions. With the athletic fashion industry going through a revolution, Adidas is on the marks to finally mount a challenge to an increasingly unsteady looking Nike.
Super Dane
After studying at the Copenhagen Business School and the Harvard Business School, Rorsted began his career in the technology sector. He climbed trough the ranks at Oracle and Compaq (later Hewlett-Packard), before ending up as Hewlett-Packard’s Managing Director for the EMEA region. He was let go from the company in 2004 following weak performance, and, despite being offered a number of positions at other technology companies, he chose to move to Henkel, a producer of laundry, beauty and industrial adhesive products.
His time at Henkel represented a massive turnaround of the business, from both a financial and cultural perspective. The family-controlled company was founded in 1876, and had long been stuck in a stupor of complacency. In 2008, when Rorsted was appointed CEO, he and his young team of managers put in place a range of ambitious goals for the company, including increasing pre-tax profit margins to 14 percent by 2012. At the time, Henkel consisted of over 1,000 brands, 200 production sites and three separate global business units. Less successful brands were cut, and the group went through a reimagining of its vision statement and employee values charters. A new performance evaluation process was also introduced that compared employees by their performance relative to their peers, rather than abstract targets.
The results spoke for themselves. By the end of the 2012/13 fiscal year, Henkel comfortably reached its profit margin target. Emerging markets then represented 43 percent of the group’s global sales, while the number of brands it produced dropped to below 400. It was the clear strategy efficiently communicated by Rorsted that drove this success.
However, more recently, Henkel has been forced to face slightly more muted prospects. In July 2015, the firm lost out in a bid for Procter & Gamble’s beauty brands, including Wella, Clairol and Max Factor. The failed bid, while not disastrous, dented prospects for significant further growth into the US market. On a positive note, the company’s range of industrial glues has been seeing increasing demand in China, its biggest market. However, while there are still opportunities for further growth at Henkel, the figures it has been posting in the last few years are unlikely to be maintained. The situation at Adidas, on the other hand, is very different.
https://www.youtube.com/watch?v=1D-_JuhQiBQ
Adidas is back
Adidas gained global popularity in the 1970s and 80s, immortalised in the Run DMC hit My Adidas. In recent years, though, the company has struggled. Long-time rival Nike has dominated the last decade. Now, Adidas is perfectly placed to return to its former glory.
Sportswear, or ‘activewear’ as it has come to be known in certain circles, has benefitted from a surge in popularity recently; health and fitness has transformed from the hobby sphere to become a lifestyle concept, and the fashion industry has been forced to meet changing expectations. While trainers and running clothes used to be purely functional, activewear is now as fashionable on the street as it is in the gym. With this shift in style, the industry has become substantially more lucrative. Clare Varga, Director at trend forecasting agency WGSN, said that in the last seven years the activewear industry has grown a spectacular amount. “It’s globally valued at something ridiculous now, about $350bn. It is huge.”
Modern technology has also led to the development of versatile new fabrics. “Performance fabrics are now sort of indistinguishable from non-performance fabrics”, explained Varga. “They look beautiful and are very casual. The clothing industry has been quite flat globally for a few years, but activewear has been a real bright spot, and because of that we’ve seen everybody wanting a piece of it.”
Style and substance
The rise of activewear has posed a conundrum for both fashion designers and traditional activewear manufacturers. While the biggest names in fashion have a dedicated following, in the past their moves into activewear have disappointed; while often looking good, fashion designers have lacked the authenticity, credibility and technical proficiency that established firms such as Nike, Adidas and Puma have in spades. Varga said this led to clothing that just didn’t work well for its intended purpose. “You can, maybe for a season, get away with just doing something like printed leggings. But, at the end of the day, if you want to actually stake a claim in the active sector, it’s got to function.”
The reverse has been true as well. Activewear makers, while more than capable of making clothing that is perfectly suited for physical activities, struggled to make anything that caught the eye of the fashion-conscious. Varga said there was even some resistance at first. “In a way, some of the biggest sports brands were a little bit snobbish about it, almost dismissive of it as a trend. ‘We’re pure performance, we don’t need to go down this road’ was the message.”
But as the activewear market became too big to ignore, collaborations between activewear companies and well-known designers have emerged as the go-to solution. Activewear makers benefit from a fresh perspective and fashion credibility, while designers gain access to the technology and authenticity of established sports brands.
Varga said that, while some early collaborations were a little mismatched, more recent lines have proved to be stunning successes. Nike and Gyakusou produced a particularly commended collection, and Puma joined forces with Rihanna to bring star power to the brand.
Varga added Adidas has been at the forefront of some of the most impressive collaborations. “The Y3 Yohji Yamamoto Adidas collection is probably one of the most high-profile brands at the moment, and the whole world is salivating over the Alexander Wang and Adidas collaboration that dropped. Of course, you have to mention Stella McCarthy and Adidas, that’s another awesome, awesome collaboration that has really revolutionised what Adidas is doing.”
https://www.youtube.com/watch?v=JbAA6pqf13Y
Balancing act
Adidas’ current strength is a parting gift from its outgoing CEO, Herbert Hainer. He took up the position in 2001, and went on to become the longest serving CEO in the DAX index. It wasn’t an entirely smooth ride, however, and in 2014 he faced investor revolt as the company slipped further behind both Nike and Under Armour, while becoming the worst performing company on the German exchange for that year. Instead of quitting, Hainer gave managers more decision-making power, forged closer ties with retailers, and invested in smaller factories in Germany, allowing faster production of limited-quantity items. This extra autonomy and agility let Adidas quickly build hype around trainer lines, develop limited run styles, and rapidly react to changing tastes. It was this new structure that ultimately led to Adidas’ wildly successful collaboration with Kanye West on the Yeezy line. Once again, Adidas’ fortunes have been tied to the music industry.
Another position Adidas is strong in is technology. Varga said maintaining a balance between performance wear and lifestyle projects is perhaps the biggest challenge for most sportswear makers, but a real strength at Adidas. The majority of activewear may not be used for its intended purpose, but it still needs to function properly to remain credible.
“One of the things I think they’ve done extremely well is that they have a technology that works in both ways”, Varga explained. “Adidas’ ‘Boost’ technology that they use in all their elite performance footwear is also used in some great lifestyle models as well. It’s technology that is very easy to understand and actually feel the benefit of.”
This is where arch rival Nike hasn’t looked as strong in recent times. While having come out with some truly outstanding technology, many of the company’s innovations have been dismissed as mere gimmicks. One example is Nike’s Back to the Future-inspired self-lacing trainer, the Nike Air Mag. While impressive, such technology is not going to appeal to the wider market any time soon.
With these innovations, Adidas recently overtook Under Armour to regain the title of second-biggest sports footwear company in the US. Nike’s top spot is likely to be a target for Rorsted.
Running lean
Despite only just having stepped into the role, Rorsted has set about fixing a gaping hole in Adidas’ portfolio. In 2005, Adidas reached a deal to purchase US sports equipment maker Reebok in an attempt to compete with the seemingly untouchable Nike. Whereas Reebok was flying high in the 80s, its brand never managed to recapture the same popularity. Varga said Adidas has never really figured out what to do with it. “I think it is a bit of a dead weight around their neck. It’s finding its feet now that they’re moving into the cross-fit territory. I think they have to work out if it has a future or whether they should sell it.”
Rorsted has quickly announced a plan for a revival of Reebok, with the brand set to undergo a major restructuring. Reebok will close stores, move its headquarters and cut 150 jobs to return to a sustainable level of profitability. While the long-term future for Reebok may be under question, a leaner version of the company is a definite within the next few years. In any case, it seems Adidas is in safe hands with Rorsted. “I think he’ll have a very clear vision, and I think he’ll take the brand further”, said Varga.
While the growth Adidas has seen since Hainer’s restructure is almost certainly unsustainable, the company has positioned itself well to ride activewear’s wave of growth with a renewed relevance and the all-important cool factor. With the foundations laid and Rorsted in a prime position for success, Adidas is once again ready to tread sport fields and pavements across the world.
This year’s Future Book Forum brought together many of the world’s leading publishers in Munich on the 3-4 November in an incredible two-day event, enabled by Canon.
Reinventing the book.
Over the last three years, the event has co-created a vision of the future for “book” publishing, explored how new technologies and knowledge come together to drive innovation, focused on new insights about how consumers of different generations seek and consume knowledge and media, and developed a new business case to drive future growth. It has become a genuine community of industry leaders ready to shape the future in stretching, but also practical ways. This year, we took another leap forward, to take a real-life book, and reinvent it, together.
Changing the game.
So what drives disruption and reinvention? How do other industries, companies and entrepreneurs, create a better future? We kicked off our 48 hours in Munich with a high-energy insight into the world’s most exciting “Gamechangers” (you can explore 100 case studies here).
We all know the stories of Airbnb transforming the world of accommodation (now with more rooms than the top 5 hotel chains), Uber in transportation (and also off-shoots like UberEats, now the world’s largest food delivery company), and Netflix (maybe we can learn directly from the way in which new business models, big data and personalisation have transformed movies).
Just think of some of the most recent innovations, over the last three months:
NuTomony: Singapore’s driverless taxis beat Google and Uber to make autonomous vehicles happen in a niche market
Pokemon Go: over a few summer months, augmented reality went mainstream, and now generating significant revenues
Surf Air: fly anywhere around their European executive jet network for 2500 Euro per month, unlimited travel business model.
Udacity: launched nanodegrees to anyone online – 6 months study, $600 per term, and a job or money back guarantee
These companies are creating the future in their own vision, shaping their industries to their advantage, and to the needs and aspirations of the 21st century. They don’t play on the edges, or tinker with products, they fundamentally rethink the way in which their markets work – starting with customers, considering new business models, channels and pricing, products and services, experiences and relationships. They connect physical and digital worlds (an artificial divide), they harness the power of addictive ideas and intelligent networks (the two biggest drivers), and they have the boldness to make it happen (that means leadership). They change “the why, who, what and how”. They dream, and they deliver.
The power of ideas.
When the world’s largest taxi company owns no cars, the largest media company owns no assets, the largest retailer owns no inventory, then the rules of changed. We live in an ideas world. Everything else follows, skills and resources can be acquired or partnered. Ideas. Big ideas. Ideas have the power to change the world. That’s why Thinkers50 focuses on curating the world’s best ideas for business. They bring together all the latest thinking – from blockchain in technology to holocracy in organisations, the 100 year life to collaborative consumption, and much more. They have created a platform to identity, rank and connect all of the world’s top business gurus. And to share their ideas with business leaders.
Starting point.
For this year’s Future Book Forum, Thinkers50 were asked to create a manuscript. 50,000 words containing 50 letters from the world’s leading thinkers (Dan Pink, Tom Peters, Scott Anthony and many more). This was our starting point. Ultimately, the book will be launched by Thinkers50 (in whatever format that might be) at the European Business Forum to be held in Odense on 9-10 May. 6 months therefore to make whatever we create happen.
The manuscript was delivered … Now, over the next 48 hours, our challenge was to reinvent the book – everything from the title and big idea, to format and style, to the user experience and production process, to the communication and distribution, business model and ongoing activity to bring it to life, and sustained over time. Wow. No small challenge then. And as an echo of all those other “gamechangers”, the challenge was to think 10 times (not 10%) better. Radical!
Fast innovation.
My challenge in designing and facilitating the process was to find a way to compress what I normally do as an innovation process – over 3 workshops, typically over 6 weeks, into a very short time – with 300 people.
My Innolab process is typically about opening up to generate better and bolder ideas – shaping and connecting them into a winning concept – and then closing down on what, how, when.
The three two-day labs, became three 90 min workshops. 10 groups of 30 people, thinking and then sharing together – the world’s leading publishing minds, trying to solve the challenge in a fast, diverse and exciting way. The process brought together the best aspects of design thinking, new business models, user experience, and market acceleration – in the Ideas Lab, Design Studio and Launch Pad.
Part 1: IdeasLab.
Most books start with an author and idea, then seek an audience. We wanted to start from the target audience, their issues and aspirations. Design thinking is all about finding the right problem to solve, by understanding people more deeply, then quickly developing hypotheses and concepts to help stretch and shape their ideas further.
Insights that emerged, applicable to all books, included:
“Book” is a bigger concept than a book … content which can be shared in any format and platform, which can also be interactive and evolving over time. It’s therefore more than content too.
“Connect, context, content” … Start with the audience, develop a title and solution around their context, and only then create focused and relevant content.
Develop a thread beyond a physical book … that starts from where the audience starts, then connect platforms to share initial knowledge, building interaction over time.
Specific choices emerging for the Thinkers50 book were:
Audience: “Future shapers” … business leaders, and those who aspire to be, but also other audiences like governments, students, children with a curiosity or focus on the future.
Title: “Letters to the future” … letters are a remarkable medium, rarely seen today. And unlike a conventional book, they are short, human, personal, treasurable and potentially interactive.
Concept: “The big ideas to know” … concise, important, topical and relevant ideas – for example, as real letters, into a coffee-table book, then smaller formats – stimulating replies and community.
Part 2: Design Studio
Having agreed a clear direction for the concept, we were now more easily able to focus on the user experience. Starting from the different audience motivations, to follow a journey through which the book can be introduced, stimulate, facilitate, support and keep evolving over time. This includes how to combines apps, websites, books of different formats, events, workshops and interactions. Only once the user experience is defined, should we think about the production process, including for example how digital technologies can deliver new business models (like pay per chapter), custom branded (like sponsors), personalised content, global delivery on demand, and the ability to stay updated.
Insights that emerged, applicable to all books, included:
Each platform has purpose … each format of content (app, website, book, etc) has a distinct, complementary and supporting purpose, creating a value-adding (amplifying) user journey.
Content beyond words … Text is heavy and dry. Think how to use different types of graphics – from cartoons to photos, infographics, lists, Q&A, dialogue, video, podcasts, more.
Content to conversation to community … communication is by definition two-way, but books limit this. How to use multi formats to create interaction, a conversation that grows as a movement.
Specific choices emerging for the Thinkers50 book were:
Experience: “Letters to read, write and share” … Letters encourage more letters, the thinking grows, like 21st century chain mail. Send individually, collect together, receive more.
Journey: “Start physical, stretch digital, be both” … send letters, collect in coffee-table book, weekly calendar, ask author, readers write more, new book with new thinkers, and on.
Formats: “High Medium Low” … Coffee table book (plus letters to collect, author video, author line), Pocket book (plus video and online/podcast), Digital platform (app, web, digital letters).
Part 3: Launch Pad.
Most publishers are incredibly poor at marketing their books. It is published and forgotten within weeks (maybe days). Yet books are just the starting point – of a conversation, of a community. They are the idea catalysts to build interaction, define an agenda, mobilise people and interest and actions. This is how people get more value, and where publishers can realise more value, and drive profitable growth. What is the market model (distribution channels, pricing formats and levels, business model, communication activity)? How will the book be activated and sustained (interplay of formats and audiences, relationship building, updating content, adding new, building conversation, a real community, building a brand)?
Insights that emerged, applicable to all books, included:
Engage people creatively … more human, more distinctive, more meaningful pre-launch promotional activity, then gradual launch of formats/packages (like movie launches).
Modular pricing … Packaging of content “HML” for pricing, with options for micro/custom payments (e.g. chapters) or inclusive (subscription). Freemium to make access simple bottom-up.
The growing book … keep refreshing, adding, reinventing the concept so that the book evolves over time, getting richer and better. Becoming a brand beyond a book.
Specific choices emerging for the Thinkers50 book were:
Communication: Pre-launch build up through letter (and question) of the month by PR and social media; the “letter in the bottle”, time capsules, author networks with personalised letters. Post-launch with P2P chain letters, “fit for the future” events, global and local
Price packaging: HML packages with modular pricing – premium iconic book €150, collect letters, buy per chapter (to total), videos, or indie/corp subscriptions. Also sell co-branded bulk versions to sponsors (banks, tech companies)
Sustaining it: Build a global conversation, with an active community (ideas club). Anybody can write a letter, local and personal, discovering new ideas, sharing new insights. Growth platforms re-concepting to magazine, TV channel, and events. And extending the brand “Letters to …”.
Making it happen.
This now becomes the blueprint for the book’s development. Over the next 6 months, we will evolve the concept into a physical book and much more – embracing all the best ideas, a real-time case study of reinventing the book.
Some of the interesting questions right now include do we actually need a publisher. Maybe not in the traditional form. But the challenges of editing, formatting, producing, tech building, promoting, distributing, selling rights and more – and most significantly – who will pay for it, is now to be defined. We have options and ideas for partners and business models, which now need to be decided.
We don’t have all the answers – but do we have an incredible start. We have a blueprint for the future, and to deliver a real concept in a few months, with exciting content and future possibilities. We will continue to work with Canon and the Future Book community to share the ongoing story, and embrace their further input and even participation.
We know that books must go beyond print, and beyond content. They need to be conversations, building a community. They need to have content that matters, and can be personalised. They need to grow over time. Launch is just a beginning.
You will be able to follow the progress at letters.thinkers50.com
My book “Gamechangers” is all about businesses who are shaking up their markets, shaping the future to their advantage. At the heart of this is disruption.
The best companies increasingly shape their industries in their own vision. They redesign them to their advantage, in ways that make it hard for other companies to compete. Jack Welch once said “You need to destroy your own business before somebody else does – to think like a disruptor”.
The phrase became popular initially through TBWA’s Jean Marie Dru who explored brand disruption (and in particular, how to use disruptive communication techniques in order to change attitudes and behaviours). This was useful in that it changed mindsets, but it needed substance to sustain it.
Harvard’s Clay Christensen focused on disruptive technologies (and in his definition, how an new often simple technology can outperform and existing technology over time). For me disruption is both of these and much more – anything which radically shakes up a market.
Whatever your definition of disruption – reinventing a category, finding new space to compete, reframing brands with a bigger idea, or simply being better or cheaper, faster or smarter than the competition – then its not hard to start disrupting.
Here are 12 simple but effective “disruptors” to get you innovating:
Disruptor 1 >>> Break the rules … inspired by Uber’s taxis on demand, Airbnb’s house sharing … start by defining the existing rules (conventions, behaviours, regulation), then explore how to “break” and redefine them.
Disruptor 2 >>> Think opposites … inspired by Ugly’s modelling agency, Beats by Dre large headphones … as Edward de Bono said, this is the easiest creative tool … define all the attributes of the market, then reverse them.
Disruptor 3 >>> Unusual combinations … inspired by Apple’s iPad, Beauty’in combines cosmetics and food … Leonardo da Vinci described innovation as this – start by thinking about a paradox, then combine the extremes.
Disruptor 4 >>> Find new audiences … inspired by Zipcar’s on demand for students, Nintendo for seniors … like Blue Ocean Strategy, find unserved customers, and then explore how to be relevant to them.
Disruptor 5 >>> Give it away free … inspired by Skype’s videoconferencing, Spotify’s streaming music … the perfect challenge – if the core product was free, explore how would you make money in other ways.
https://www.youtube.com/watch?v=W7CB91pZURA
Disruptor 6 >>> Make it virtual … inspired by Amazon’s Kindle, or Udacity’s online university … digitalise the total experience, be it on mobile or in the cloud, how to remove physical constraints.
https://www.youtube.com/watch?v=SIWw3LKimNA
Disruptor 7 >>> Reduce complexity … inspired by Twitter’s simple messages, Nest’s smart thermostats … simplicity is the ultimate sophistication, said Steve Jobs – how can you simplify the experience, smarter.
https://www.youtube.com/watch?v=1qkSkOn4h-A
Disruptor 8 >>> Remove a component … inspired by Dyson’s bagless cleaners, Cirque de Soleil’s animal-free circus … eliminate one major aspect, in a way that creates convenience or interest.
Disruptor 9 >>> Border crossers … inspired by BMW iDrive from gaming, Nike Shox from F1 cars … This is my favourite technique, learning from other sectors where consumers already adopt new ideas.
Disruptor 10 >>> Develop the ecosystem … inspired by Nespresso’s pod system, Nike’s iTunes and AppStore … harness the power of networks, a closed (or open) system, connecting partners, suppliers, consumers.
Disruptor 11 >>> Create new business models … inspired by Dollar Shave Club subscription, Netflix personalisation … this can have the most impact, reinventing how the business works – supply and demand, revenue and cost.
Disruptor 12 >>> Go to extremes … inspired by Virgin Galactic’s space travel … big ideas can change the world, but also learning from extremes (like Ford’s breaking system, from NASA Space Shuttle)
The”Creative Disruption” Workshop is a high energy and facilitated process of 1-2 days, driven by your big issue, driving more radical ideas and practical innovation.
The best companies increasingly shape their industries in their own vision. They redesign them to their advantage, and even in ways which make it hard for other companies to compete. Jack Welch once said “You need to destroy your own business before somebody else does – to think like to challenger, a start-up, a disruptor”. Whilst disruption is typically overused as a term and under delivered in reality, it can be a powerful approach to strategic thinking, holistic innovation and culture change..
Objective
To reinvent your business, industry or category
To create an mindset and process for creative disruption
To develop specific disruptive innovations that will shake-up your market
Agenda
Rule Breakers: rethinking every “rule” (assumption, convention) of your market
Rethinking Assets: defining every asset, then exploring how it could be used new ways
Border Crossing: applying ideas from other markets and companies (what would Apple do)
Accelerated creativity: generating more ideas faster, connecting and stretching them further
Rapid evaluation: prioritising the best ideas so far (HML x 4) and making the best better
Concept definition: defining each emergent concept, customer and technical specifications
Disruptive Impact: evaluating the impact, and planning the where and how for more resonance
Deliverables
Idea Generation: More, more radical, more interesting ideas for your future
Concept Specification: Clearly defined innovation concepts, ready to make happen
Disruption Plan: Not just the “what” but the “when where and how” to disrupt too.
Format
Executive team, brand or marketing teams
1-2 day workshop (can be packaged as a high energy “Disruption Day”)
LinkedIn has become the world’s largest recruitment platform.
This is partly by Reid Hoffman’s design to find a strong revenue-driving application for his networking site, but also by a realisation of more traditional recruiters, that this is the world in which talent now lives, and is the best way to find and engage them.
The site has therefore taken to becoming a thought leader on the future of recruitment, or maybe a different word will dominate in a gig-working, frequent-deskilling, 100-year-living world.
They asked companies the big question “Which of the following new and upcoming trends do you think will play a significant role in shaping the recruiting industry for the next 5 to 10 years?”
Interestingly, the responses ranged from defining and measuring quality of hire to proving the ROI of recruiting tools.
Check out the map below to see the most popular answers by geography:
Here are 3 insights we drew from this data, and what you can do to prepare:
Insight 1: There’s global consensus that improved candidate and job matching will reshape recruiting.
Improved candidate and job matching means finding the right candidates faster with better technologies and algorithms. In 2020, perhaps recruiting will look more like online and mobile dating where matches are determined both by keywords and other fit factors.
Top tip: Accelerate your job views and enable better candidate matching. Have a 30 to 60 minute intake meeting with your hiring manager to clarify what the candidate will do in their job. Use industry-standard keywords in the job posting that aren’t company jargon. Choose the promotional channels and tactics that align with where your target talent is spending their time. When you’re reaching out to matched candidates, illustrate the career opportunity and what’s in it for them, not just the job requirements. Do this by sharing about the culture, team, and company trajectory.
Insight 2:In China, big data is a big deal.
When we asked Chinese recruiting leaders to name the top up and coming trends in recruiting, using big data was number one. In China, where there are billions of professionals, it may be essential to be quantitative and data-driven versus rely on gut instinct and antiquated processes.
Top tip: Arm yourself with data. Size your target talent pool overall, and by the criteria you’re most interested in (company, city, industry, etc). Set hiring manager expectations about the size of the market and tweak the job description as needed. Use LinkedIn’s free talent pool reports on SlideShare to understand both talent supply and demand, and tailor your InMail messages based on our data about what your target talent wants in a job. You can use LinkedIn Recruiter to measure the size of your target talent pool with your search criteria.
Insight 3:European recruiting leaders believe recruiting will become like marketing.
While this is a popular belief in Europe, almost half of all global recruiting leaders believe this trend will continue to shape recruiting in the next 5 to 10 years. Given how rapidly the concept of talent brand has taken hold, recruiters may evolve to become like marketers sooner than we think.
Top tip: Make your talent brand known through cost-effective channels. Start with free LinkedIn tools like individual recruiter profiles, your company page, and attracting company followers. Post compelling content on your blog and encourage employees and recruiters to share it organically. Create a more robust content strategy with tips from our e-book, 5 Steps to Boosting Your Talent Brand Through Content.
Learn more about making the case for talent brand budget and return on investment in our Employer Brand Playbook.
In the latest 2017 research, key insights were:
Talent acquisition now has a prominent seat at the executive table
The recruiting organization has never been the most glamorous department in the company. It doesn’t directly bring in revenue or create game-changing products. Yet, it is the quiet enabler behind these company successes and this has not gone unnoticed.
Over 83% of recruiting leaders state that talent is the number one priority in their company and that their team regularly meets with the C-suite. This confidence also carries over into workforce planning — 75% of leaders say that their team is key to the company’s efforts there.
Recruiters will be even busier this year and are focusing on finding mostly sales, operations, and engineering talent
The importance of the recruiting department of course translates into more responsibility. The majority of recruiting departments, 56% of all respondents, expect to have to hire even more people this year.
While the global numbers are very positive, this is the first time in five years when the year-over-year growth is slowing down. This subtle cooling of the job market reflects hiring slowdown in Brazil, China, and parts of Europe.
The top sources for quality hires are employee referrals, job boards, and social professional networks
Speaking of finding talent, almost half of recruiters say that employee referrals are their top source of quality hires. That not surprising, given that referred employees are faster to hire, perform better, and stay longer in the company. The other sources that complete the list are job boards and social professional networks, along with staffing firms and internal hires.
Budgets go to traditional tactics, but branding tops investment wish list
Having a glimpse into how other recruiting teams spend their budgets is always exciting and this is the first year we have this data. It turns out that because recruiting budgets are so tight, leaders tend to spend them rather conservatively. Over 50% of the spend for most companies goes to job ads and recruitment agencies. Around 17% of the budget is allocated to technology which allows the teams to create leverage and automate their workflows (especially important when headcount for recruiters is tight).
Despite recruiters sharing that employee referrals are the top source of quality hires, very little budget gets allocated to referral programs. Same with employer branding – described as one of the most important trends, it is one of the last places where teams invest.
Where it got really interesting is when we asked leaders where they’d invest if money weren’t a constraint. At that point, 53% of leaders say that they would prioritize investing in long-term strategic plays like employer branding, 39% in tools, 38% in candidate experience, and 29% in upskilling their teams. If you are looking for “venture bets” for 2017, exploring some of these areas may be a great idea.
Diversity, screening automation, and data are key future trends
Given that recruiters report limited headcount and budget, while hiring demands are growing, it makes sense that automation is top of mind for the industry. Automation would increase the speed of screening candidates, minimize human bias, and help assess soft skills more precisely. Many companies are also interested in diversity and purpose initiatives as a way to differentiate from competitors and boost engagement. Large companies are driving the focus on big data, listing it as their #1 trend.
A great FT article this week captured the challenge for today’s marketers, suggesting that ad agencies have long past their sell-by date, and that marketers need to wake up to their lazy dependence on an outdated medium. Whilst digital is talked about, it is still seen as an add-on by many, rather than the creative heart of engaging consumers.
Bill Bernbach, a founder of the DDB advertising agency and widely regarded as father of the modern marketing industry, once said that advertising “is fundamentally persuasion and persuasion happens to be not a science, but an art”.
Brands spend more than $540bn worldwide on advertising, according to eMarketer, the research company. Yet marketing is increasingly grappling with significant problems. Whether reaching millennial consumers who want to escape marketing messages, or “cord-cutting” television viewers, who ditch cable and satellite subscriptions in favour of ad-free Netflix, advertisers are having to work harder than ever to find their audience.
Technological change has made the task harder still. Ad blocking software has created real problems for digital publishers reliant on display advertising. Ad fraud is a similar worry, with the World Federation of Advertisers, whose members include McDonald’s and Unilever, recently warning of “endemic” digital ad fraud and claiming that up to 30 per cent of all online ads are never seen by real humans. The WFA is forecasting industry revenue losses of $50bn by 2025 unless marketers take immediate and effective action. “Is it human beings seeing ads or just a machine? And if it’s a human being is it actually a consumer?” says Brinsley Dresden, head of advertising and marketing at law firm Lewis Silkin.
At the same time, there is a big shift in consumer behaviour. Smartphones and mobile devices are fast becoming primary sources of entertainment and advertising dollars are flowing there at an increasingly rapid rate. Facebook and Google have become the biggest recipients of digital ad spending. Combined, they accounted for 75 per cent of all new online ad spending in 2015, according to the Internet Trends report published this year by Mary Meeker of Kleiner Perkins Caufield & Byers, the US venture capital fund.
In the US, 85 cents of every new dollar spent on digital went to the two companies in the first quarter of 2016. This shift has profound implications for media buying agencies that make money by placing ads for clients, as well as for the clients paying for ad space.
The emergence of a digital duopoly caused some concern at the ad industry’s annual shindig in Cannes this summer, with private discussions taking place about creating a “third block” of TV advertising inventory to rival Facebook and Google. The talks centred on owners of television networks pooling inventory but it is unclear whether the talks have progressed much.
The emergence of new digital platforms and services means brands must also rethink the way they sell their products. For example, Instagram and Snapchat have different audiences and require shorter, punchier ads compared with traditional 30 second TV spots.
Christopher Vollmer, global entertainment and media advisory leader for PwC’s Strategy& consultancy, says advertising “has always been a combination of art and science. Technology is now becoming a third variable”. Advertisers “have to get all three of these things right”. Not all aspects of advertising’s tech revolution have been a surprise.
Video has become a big driver of advertising online and on social media. “It tends to get the most consumer engagement on social media and mobile devices,” Mr Vollmer says. This was one factor driving telecommunications company AT&T’s blockbuster $85.4bn bid for Time Warner, which faces a year of regulatory scrutiny and no guarantee that it will be approved. Time Warner owns one of the media industry’s most impressive content portfolios, spanning CNN, the Warner Brothers film and television studio, and HBO, the premium cable channel.
The ability to sell advertising against some of Time Warner’s content was a big factor in the proposed deal. New technology means the combined entity would be in a powerful position in selling advertising targeted to individuals and specific consumer groups. Technology advances should, theoretically, make it easier to market products. Elie Kanaan, executive vice-president of marketing at Criteo, a digital advertising group, says the industry must do a better job of targeting its messages to the right consumer groups. Criteo uses available data and internet cookies — data sent from a website to a browser — to identify shopping patterns in order to send relevant ads to the right online or mobile user.
This targeted approach means the advertising beamed at consumers on their mobile devices can be more relevant. “Consumers want a seamless experience . . . they don’t want aggressive advertising that is intrusive,” he says. The company recently worked on a trial with several London retailers that installed beacons sending signals to the smartphones of shoppers. The beacons collected data about how long the people spent in the shops, as well as information about the items they spent time looking at.
Advertising is rapidly moving towards the personalised advertising world depicted in the Steven Spielberg movie Minority Report. But will this new era of targeting result in brands selling more products? The most important aspect is engaging the consumer, says Mr Vollmer. “There’s no shortage of screens and there’s no shortage of impressions. But there’s a shortage of high value connection points between brands and consumers, which is the whole point of advertising. You have to create effective engagement with the consumer that gets them to buy.” In this respect, advertising is the same as it ever was. Technology may have disrupted it but the industry’s artistic heart still has a big role to play.
Michael Porter is seen as the guru’s guru, the world’s best management thinker, the godfather of strategy. Born in Ann Arbor, Michigan, 69 years ago, he credits his own Harvard professor Chris Christensen with inspiring him and encouraging him to speak up during class, hand-writing Porter a note that began: “Mr. Porter, you have a lot to contribute in class and I hope you will.”
At Harvard, he took classes in industrial organisation economics, which attempts to model the effect of competitive forces on industries and their profitability. This study inspired his “five forces analysis” framework. 18 global bestselling books later (including Competitive Strategy, Competitive Advantage, Competitive Advantage of Nations, and On Competition), and a 6-time winner of the McKinsey Award for the best HBR article of the year, Porter is said to be the most cited author in business and economics
In an interview for “The Lords of Strategy” Porter said: “What I’ve come to see as probably my greatest gift is the ability to take an extraordinarily complex, integrated, multidimensional problem and get arms around it conceptually in a way that helps, that informs and empowers practitioners to actually do things.”
Just as a reminder of his Five Forces … Porter’s model assumes that there are five important forces that determine competitive power in a business situation. These are Supplier Power (how easy it is for suppliers to drive up prices), Buyer Power (how easy it is for buyers to drive prices down), Competitive Rivalry (the number and capability of your competitors), Threat of Substitution (ability of your customers to find a different way of doing what you do), and Threat of New Entry (the ability of people to enter your market).
Are the Five Forces still relevant today?
Competitiveness has always been at the heart of Porter’s thinking. All of his bestselling books have focused on this theme, and his definition of strategy (“the creation of a unique and valuable position, involving a different set of activities”) is based on your competitive difference, or advantage.
I have five big problems with Porter’s famed but outdated approach. This is how I believe strategy has changed, with the new 5 priorities for strategic thinking:
Strategy is about direction and choices … In dynamic markets, strategy becomes a roadmap to future growth, finding the best opportunities to shape markets to your advantage, in ways that create long-term sustainable value. It is about where to compete, and then how. How is not just about being different, but developing purpose, more innovative postures and trajectories, business models and customer experiences, programs and tactics. Porter’s model suggests that markets are stable, and finding a position is enough to survive almost statically over time.
Customers matter more than competitors … We all recognise the power shift to customers, the search for deeper insights, analytical and intuitive, predictive and personal, to be relevant, to find and engage the best customers, and grow with them over time. Customer-centricity has become an enduring pursuit of every business, not just in terms of serving them well, but in recognising them as a guiding star. Porter hardly mentions customers relative to competition. I would suggest that it is more important to be relevant than different. Positioning is about relevance more than difference.
Markets are dynamic, so are competitors … In connected and convergent markets, boundaries blur and competitors can not only challenge you physically and virtually from any part of the world, but also from other sectors. Equally for you, your strategic opportunity might be to move across these sector and geo boundaries, or fuse them together. Communication becomes media becomes entertainment becomes sport. Competitiveness matters of course, but it is more about out-thinking others – rethinking markets and business models, solutions and experiences – then just being a little different – cheaper or better.
Organisations are ecosystems, not value chains … The traditional linear model of suppliers in and distributors out, just doesn’t work anymore. We used to assume we needed to make things ourselves, to focus on our core competencies. The thing is, these competencies are usually the things that made is good in the past, but are unlikely to do so in future. We need to let go of our product, competence, and integrated mindset. They limit our thinking, and blinker our strategy. Somebody else can do most of what we do better, so lets partner with them, and maybe even find complementary services too. Ideas are out starting point, and advantage.
Big is not always best … The implicit assumption is that companies win through scale. More widgets, more people, more revenue, more share, more power. This is increasingly not so. Many companies sought to be big to generate cash to cover the huge capital cost of big factories and operations. They addressed homogenous markets with largely undifferentiated products and services, and each extra product added equal profit. That’s old thinking. Today’s winners succeed through better vision and ideas, then executing them more profitably. Typically with partners, typically laser focused on niches of highly relevant customers across the world – staying small, agile and smart.
In my view, today’s winning strategies are about creating the future, engaging the customer, and creating long-term value for all stakeholders in more innovative ways. Competitive advantage is not just about positioning, but about out-thinking and out-performing the competition. Strategic thinking is about making sense of the future better than others, and then shaping that future to your advantage.
Of course, my thinking is not unique – it is common sense, and what you see in the best companies today – and you can read about my approaches, tools, workshops and more here:
Strategy … shape the future, change the game, find new growth
Customers … being relevant, deeper insight, design thinking
Innovation … rethinking business models, and customer experiences
So is Michael Porter still relevant today?
It might sound like no. Certainly to his obsession with competitors. But Porter has actually changed too. Here are extracts from two articles about Porter’s relevance in today’s markets. The first by Nilofer Merchant argues that five forces is no longer relevant in an era of social, collaborative, and networked businesses. The second by Laura Levis focuses on Porter’s new passion, social progress, and making it equal to prosperity.
Extract 1: Strategy in a digital and social world
Imagine that you wanted a new home theater system. But instead of spending hours in Best Buy or on Amazon comparing configurations and assembling the parts you needed, you could signal what you wanted and a company would create it for you. You might simply Pinterest the elements you liked, including information about your space or noise limitations (“One-bedroom apartment on busy street in New York,” or “suburban space that needs stuff protected from little kids”), and then have a retailer give you a personalized, optimal configuration.
Right now, social is largely seen as a way to amplify messages (“Like” us on Facebook!) or to create conversations around customer service (“We’re so sorry you’re having a problem,” the persistent tweet from @ComcastCares). These two key functions — Marketing and Service — are regularly discussed as shaped by social era dynamics.
But the social era can — and will — be more than that. It will help us decide what we make, how much we make, and how we finance that production. While social media doesn’t shift Porter’s model, the social era surely does.
Big Isn’t Enough. Winning in the social era is about being fast, fluid, and flexible. Let’s think about the way that changes our modes of production. Size once gave organizations purchasing power. Being big used to enable high barriers-to-entry, keeping out potential competitors. Big had the dollars to buy the mass-market access to consumers back when mass media was the only way to reach an audience. But when the capital requirements to enter markets have declined, the marginal cost of reaching consumers is effectively zero, and one-off production is not hard to do… being big offers a much smaller advantage than it used to. Being big ain’t enough, anymore.
Most existing big organizations — the 800-pound gorillas — subscribe to Michael Porter’s value chain framework. As I mentioned in the first part of this series, this model optimizes for efficient delivery of a known thing. Organizationally it means Z follows Y, which follows X. It carries with it one fundamental assumption: that customers are tangential to the process.
There is no question that Porter’s work has helped shape (some would say, “invent”) modern-day strategy. I’ve used his ideas for over 20 years of running companies big and small, and I consider myself a fan of his thinking. But, to put it bluntly, Porter’s value chain is antiquated in the light of the social era. It was created at a time when being big and having scale was in itself a key aspect to competitive advantage and profitability.
Generic vs. Distinct. People buy two categories of things: the distinct and the generic. The distinct items are the things that have a limited quantity, that are artisanal in nature, and that are worth paying a premium for. The generic items are, well, the things you might find on Amazon.
When companies like Best Buy or Target are simply aisles of what you can find online, then it’s easy enough to become the storefront for Amazon. Everything that is undifferentiated is going to be delivered in ever more efficient, low-cost ways. Porter’s value chain is well suited for this mass-market, cost-driven approach, where customers remain at the end of the value chain.
But for organizations wanting to thrive in the social era, being distinct is key to both profitability and winning. While there has always been a market for bespoke, differentiated items, until very recently that market served a tiny fraction of the uber-rich. But today, both macroeconomic forces, and technological advances mean that customized products aren’t just for the one percent. Instead, customized products and experiences can be for everybody, at least some of the time.
How will the smartest, nimblest companies move away from less-profitable generics and into more-profitable distinct goods and services? By using the rules of the social era.
Extract 2: Social Progress beyond Profit
What are the ingredients of a healthy, inclusive society—one that offers its citizens opportunity, happiness, and a positive quality of life? According to Lawrence University Professor Michael E. Porter, models of human development based on economic growth alone are incomplete; nations that thrive provide personal rights, nutrition and basic medical care, ecosystem sustainability, and access to advanced education, among other goods—and it is possible to measure progress toward providing these social benefits.
Porter’s 2015 Social Progress Index (SPI) developed in collaboration with Sarnoff professor Scott Stern of MIT’s Sloan School and the nonprofit Social Progress Imperative—ranks 133 countries on multiple dimensions of social and environmental performance in three main categories: Basic Human Needs (food, water, shelter, safety); Foundations of Wellbeing (basic education, information, health, and a sustainable environment); and Opportunity (freedom of choice, freedom from discrimination, and access to higher education). Porter considers the index “the most comprehensive framework developed for measuring social progress, and the first to measure social progress independently of gross domestic product (GDP).”
The index, he explains, is in some sense “a measure of inclusiveness,” developed based on discussions with stakeholders around the world about what is missed when policymakers concentrate on GDP (which tallies the value of all the goods and services produced by a country each year) to the exclusion of social performance. The framework focuses on several distinct questions: Does a country provide for its people’s most essential needs? Are the building blocks in place for individuals and communities to enhance and sustain well-being? Is there opportunity for all individuals to reach their full potential?
The United States may rank sixth among countries in terms of GDP per capita, but its results on the Social Progress Index are lackluster. It is sixteenth overall in social progress: well below Canada, the United Kingdom, Germany, and Japan in several key areas, including citizens’ quality of life and provision of basic human needs. The nation ranks thirtieth in personal safety, forty-fifth in access to basic knowledge, sixty-eighth on health and wellness, and seventy-fourth in ecosystem sustainability. “We had a lot of firsts in social progress over the years in America,” Porter points out, “but we kind of lost our rhythm and our momentum.”
About 20 or 30 years ago, for reasons Porter says he cannot completely explain, the rate of progress in America began to slow down. As a society, he points out, Americans slowly became more divided, and important priorities such as healthcare, education, and politics suffered. “We had gridlock, whether it’s unions or whether it’s ideological differences, and—although we’ve made some big steps in certain areas of human rights like gay rights—if you think about the really core things like our education system and our health system, we’re just not moving,” he says. “I think our political system isn’t helping, because we’re all about political gains and blocking the other guy, rather than compromising and getting things done.”
Meanwhile, he notes that even though other fast-growing nations such as India and China haven’t been able to attain a level of social progress commensurate with their economic progress either, certain countries such as Rwanda have “knocked the cover off the ball” in terms of social progress. “They went through a genocide, were devastated, and, to bring the society together, there was a consensus, led by the president, that their first job was to re-energize and restock the society and the capacity of their citizens,” he says. For example, the country achieved a 61 percent reduction in child mortality in a single decade, and today, primary-school enrollment stands at 95 percent. Rwanda also ranks high for gender equity, as women constitute a majority of the parliament—partly he says, because a lot of men were killed, but also because the country set out to be a place where women are not just equals, but leaders.
Porter hopes his continuing work on the index will help explain why the United States is “doing poorly” relative to other countries that are doing well. His team had “a pretty big mountain to climb” just to get the SPI recognized by national leaders and scholars, mainly because GDP has become the main way of measuring a nation’s success. The goal now is to get the United States to use their tool at the state and city level to assess local performance, and then set priorities for improvement.
In terms of progress for the average citizen, Porter warns, the United States is more threatened now, globally and economically, than it has been in generations. This phenomenon, he argues, reflects a legacy of anti-progressive politics, as well as bad economic policy. As a result, “We can’t fix our tax system, we can’t improve our infrastructure, we can’t deal with our public schools, and we can’t rein in this excessively costly legal system that we have that doesn’t necessarily achieve better results.”
Yet the Social Progress Index, Porter hopes, could prove to be a useful tool that will propel the business world in the right direction. He is currently working with leaders on the national level in several countries, including Brazil, Colombia, and Paraguay, where the SPI is a core element of their national development plan. “Now the general awareness is that this is a critical tool and a necessity—people are starting to use it in thinking about how we [achieve social progress] in our country, in our society, in our region, in our city,” he says. “We’re encouraged—but we’ve got a long way to go.”
Porter has found a new passion … Progress beyond profit
Is Porter still interesting, relevant and important today? Yes! Not because of his old thinking – the competitive strategy, the five forces – but because of the way he has reinvented himself, or better, seen a higher purpose. To see the important role of business in society, and how it wins when the world wins.
You can meet Michael Porter at the Thinkers50 Europe Business Forum in Odense on 9-10 May 2017, when he will deliver the prestigious European Business Lecture, focusing on the challenges and best opportunities for business leaders to drive growth and innovation in today’s world.
American Express launched Small Business Saturday 7 years ago – focused on the most important shopping holiday in the USA, the first Saturday after Thanksgiving. The idea was to encourage shoppers to patronise bricks and mortar businesses that are small and local.
At first glance, AmEx has little in common with small business owners – it is one of the world’s most ruthless and successful finance companies, and well known for it high merchant charges, which is why so many small shops, cafes and businesses don’t accept it. or at least they didn’t.
AmEx has instead established an incredibly strong relationship with small and local businesses, being their champion, maybe even saviour. How? Through “Small Business Saturday.” Since it was launched in 2010, the initiative has stimulated an annual average spending of over $5.5billion, received endless marketing awards, and has even managed to get the US President actively supporting its cause.
Small Business Saturday keeps growing. Here are 3 important marketing lessons we can learn from American Express
Connect people with each other
A Stanford University study shows that people perceive time to be of greater value than money. We view “how we spend our time to say so much more about who we are than how we spend our money.”
Part of Small Business Saturday’s success comes from creating an event that does more than give shoppers a good deal — it creates an experience participants want to share with others. Shoppers on Small Business Saturday say they leave feeling more connected with members of their community. The event gives shoppers an opportunity to invest in people and businesses they care about.
“It’s not just a shopping experience; it’s really more of a social experience.”
Look beyond the event itself
I love the African proverb “If you want to go fast, go alone. If you want to go far, go together.” It would have been quicker for American Express to have hosted a direct marketing campaign. It could have avoided the time demand of coordinating with businesses owners nationwide and still could have achieved a boost in holiday sales. But American Express chose to move slower and go further. By creating a day centered on other businesses’ involvement, American Express gave year-round legs to its one-day event.
Small Business Saturday helps this local business owner make an impact on her customers throughout the year, not just on Small Business Saturday. Small business owners are using the materials and strategies from Small Business Saturday to bring in more local shoppers year-round. Because of how greatly this event benefits business owners, American Express has genuine year-round ambassadors for Shop Small Saturday.
Build a movement.
American Express has created a national movement. It piggybacked off the national shopping holidays, invested in its customers, and gave local businesses the opportunity to make the day their own. What is your movement?
Here’s a the story of how it began, in 2010:
In 2016, Amex introduces the Shop Small Studio:
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https://www.youtube.com/watch?v=_VtJ5YgljKw
What it means for one restaurant chain, The Infatuation:
https://www.youtube.com/watch?v=yYzTw539bYo
And more small business owners get ready:
https://www.youtube.com/watch?v=oVRhteA3UpM
In the UK, Small Business Saturday is 3 December 2016.
