Peter Fisk

Today the world is going through a very complex situation: the new normal as a result of the pandemic, how do these factors affect the Marketing industry? What are the points of no return? And, conversely, what remains?

The “new normal” is a world of increasing complexity, change and multiple challenges. We need to let go of the old world which was relatively simple and predictable.

We live in a time of incredible change. Of course, some of this is challenging – economic inflation, political uncertainty, global fragmentation. But with challenge also comes opportunity. We will probably see more change in this decade, than over the last 250 years.

This is fueled by the relentless pace of new technology, and in particular the connections of digital platforms, bio tech and nanotech, IoT and robotics, and the data and AI which emerges from it.

But in reality, tech is just the enabler of more dramatic change – of convergent, disrupted marketplaces; of changing customer attitudes and priorities; of new attitudes towards work and the role of organisations in society; and of new opportunities to innovate and grow.

In the old world, size mattered. Big companies, the largest customer bases, the highest revenue, and market share. None of that matters today.

In the new world, markets are fragmented and discerning. It’s about focus, relevance and speed.

Mass-marketing doesn’t work. Customers are not average. Transactions are not enough. People trust people rather than brands. Purpose matters. Propositions are more personal.

What matters to marketers? Customers, brands and innovation. Business needs marketers more than ever to unlock these crucial assets and capabilities, in order to make sense of rapid change, to actively shape the future markets, to respond to new entrants and disruptors, and bring the organisation together strategically and operationally to drive profitable growth.

What are the main challenges that Marketing specialists face today, taking into account the new consumer (omnichannel, digital, with social sensitivity, etc.) and the new market (more digital and technological, with more exhibition platforms)?

 Marketers need to be both strategic and operational.

In the past the strategic focus has largely been on brand building. In steady-state markets, this was relatively easy. Market structures, competitors and customers, channels and prices, value propositions and business models, changed little. Brands competed on being slightly better, or slightly cheaper. This is now all shaken up.

Business needs marketers to be the “strategic guides” through a world of relentless market-driven change. Every market is being shaken up – by changing economics, customer agendas, disruptive competitors, new business models. And much more.

Strategically, marketers need to be the “sense-makers” of fast-changing markets – to identify the new opportunities for business growth, both in existing and new markets – to explore and shape emerging markets to their advantage – to drive innovation across every aspect of business.

This is particularly driven by the convergence of traditional industry sectors – for example, telecom companies become media companies, retail companies also become finance companies, accounting firms become consulting firms.

At the same time entirely new “market spaces” emerge like home delivery companies (and in particular quick-commerce), or online gaming companies, or plant-based food companies. This is all in the power of marketers!

Or think about geography, demographics, segmentation. Why do we still largely organize our business and marketing by country. Is there not more in common between GenZ, or old people, or SMEs, across Latin America, rather having to address them separately within each country?

Operationally, marketers need to be the “data scientists” of technologically-enabled markets.

Each customer seeks, expects, a more personal experience. Particularly when they know you have some much data about them. They expect the same level of intelligence as they get from shopping at Amazon, or the same level or personal service they get from a local café.

Unlocking the intelligent power of data is the key – to anticipate the needs of customers, to engage them individually, to resolve problems before they are even known. SEO is just a starting point.

The best companies now have huge data science labs, monitoring every post about a brand, every click by a customer. In retail, for example, GPS and iBeacons in a shop, mean that every customer experience is unique, every customer have personal incentives, pay different prices.

Given your experience working with big brands, what is the secret for “traditional” brands to become “current” brands without losing their essence and value?

 Traditional brands have almost all the advantages – heritage, experience, scale, data, talent, capital – yet they lack the mindset of fast, entrepreneurial youthful brands.  Start-ups have advantages too, most significantly less complexity, less process, less fear.

Companies like Nike, have shown that a 50 year company can be incredibly innovative – look at how they have shifted to being a primarily DTC business in a short period of time – have they have embrace social networks to build communities, to engage with new audiences and agendas, to constantly reinterpret value propositions and stay relevant.

The “secret” is simple, to stay focused on the customer, and the changing customer. Not just to meet their existing needs, but constantly explore new ideas, to innovate, to inspire them.

The best companies, traditional or new, interpret themselves not as product-centric but as customer-centric businesses. Of course, experts have being saying that for 40 years. Yet most companies still interpret customer-centric as “smiling faces” or “fast response”.

Instead, think about this. Do you define your brand around your business and product, or around the customer and application?  …. Think about it … Don’t define yourself by what you do – you’re a food company, a sportswear company – but by what you enable people to do.

Nike is a sports company, not a sportswear company. Harley Davidson is not about the technically-mediocre motorbike, but about the freedom of the rider. Danone is not a food company, but a healthy living company.

And then everything else follows too – don’t focus on the sales transaction, the point of sale, advertising the product functionality, the price relative to production cost – think about what the customer seeks to achieve, how you can support them over time, engaging them in learning to use it better, and the price relative to the value they gain.

This is not rocket science. But it is still a wake-up to many marketers.

More strategically, it’s also about exploring what more you can do – don’t limit your growth to just finding more customers for existing products, or more products for existing customers – think about how you can go further – using your assets, capabilities and imagination in new ways.

Take PingAn for example. The Shenzhen-based insurance company is one of the largest in the world. It has a digital platform serving almost one billion customers. For boring insurance. What more could it do? It looked at where the growth opportunities are, the unexploited markets, and how its assets could help. Today, after just 4 years, Ping An is also the world’s largest healthcare platform.

What is the balance point between new technologies (for example, artificial intelligence) and the human component (contact with a “real person”)?

 We are human. Real people. People trust people.

Technology is simply there to enable us to do better. AI, for example, helps us to anticipate and meet people’s needs better. Robotics helps us to improve the efficiency and accuracy of processes. Think of Kava robots in Amazon warehouses, or the Da Vinci robots which perform the majority of heart surgeries. Blockchain delivers solutions faster and cheaper.

We also need people to act in human ways – to interpret emotions, to engage with empathy, to build relationships, to share hopes and fears, purpose and passions.

If you are developing a new website, a new app, a new process for your business – think about this – how does it create a better experience – not just fast and efficiency, but more personal and human too. Similarly companies how seek “digital transformation” need to recognise that what they really need is “business transformation”, probably customer-centric, enabled by digital technology.

DBS is a great example of this. For the past 4 years, the Singapore business has been ranked the world’s most innovative bank. Their strategy is to “make banking invisible”.

They want people to “bank less, live more”. Their entire focus is on implementing better payment-related technologies into everyday life – shopping, entertaining, transporting, educating. They don’t want people to spend time coming to banks, or using separate apps for money, they want people to get on with life.

In line with the previous question and with a view to friction-free marketing, what do you consider to be the most appropriate customer journey for the short and medium term?

 The biggest opportunity today is to become a C2C company. Customers connected to customers. Sharing their passions, supporting each other. Co-creating, co-selling, co-enabling what they do.

This is the best form of friction-free marketing. Where there is no company getting in the way. Of course, there is a brand – but the brand is about the customers, and their shared passion – not the company. The brand is more like a facilitator, helping customers to do what they want better.

Glossier is a great C2C example, created by Emily Weiss, and now one of the world’s fastest growing beauty brands. It is about customers sharing their love of beauty – including new ideas for products, recommending their best friends, and then sharing in the everyday use of the products.

Rapha is another great example. The cycling brand, which started in London with its first “cycle club”, which is a store but with a café in the centre, a bike store and workshop, and showers. Of course the store is where you can buy Rapha cyclewear, but more importantly it is where you meet people like you, to share your passion for cycling, to watch a race over a coffee, to go for a ride after work. Go on the Rapha app, its full of people sharing their love of cycling, as well as the products.

Given your extensive experience around the world, what are the most common mistakes that companies make when managing their brands in the face of new challenges?

 It’s time to let go – let go of what made you successful in the past – and to explore and embrace, a different, but exciting, new future.

In the search for agility and speed, creativity and difference, organisations are focusing on the power of teams. Here, in an extract from my new book “Business Recoded: Have the courage to create a better future” I explore why and how extreme teams are the future of work. 

Richie McCaw, the former captain of New Zealand’s “All Blacks”, is regarded by many as the greatest rugby player of all time.

His teams won a remarkable 89% of their 110 matches in which he was their leader, including two World Cups. He even played through one cup final with a broken foot, knowing that he was a key component of the team. Whilst he recognises that the team is always more than any individual, he also believes that a leader defines a team, brings together and creates great individuals.

After lifting the World Cup in 2015, McCaw said “We come from a small Pacific island, a nation of only 4.5 million, but with a winning mindset. At the start of each game, when we lock together in our traditional Maori haka, we know that we are invincible”.

Create your “Kapa o Pango”

The All Blacks have a bold and unwavering ambition to win, working on a 4-year cycle with a common team, and setting mini goals along the way to retain sharpness and evaluate progress. They search out the best players who bring each technical specialism, but equally who will work best together, whilst also retaining a search for new talent and skills.

Being part of the team is everything, with a sacred induction, and commitment to the higher purpose.

As a team they constantly evaluate, challenge and stretch, themselves. They search the world of sport and beyond for new ideas, ways to improve physiological fitness, mental agility or technical skills. Like most sports, whilst they have a coach to guide them and captain to lead them out. Their approach once in the game is that every one of them is a leader, all equal, all responsible, and all heroes when they win.

In his book “Legacy” James Kerr says describes some of their team beliefs

• A collection of talented individuals without personal discipline will ultimately and inevitably fail.
• A sense of inclusion means individuals are more willing to give themselves to a common cause.
• The first stage of learning is silence, the second stage is listening.
• High-performing teams promote a culture of honesty, authenticity and safe conflict.
• If we’re going to lead a life, if we’re going to lead anything, we should surely know where we are going, and why.
• Be more concerned with your character than your reputation or talent, because your character is what you really are, while your reputation is merely what others think you are.

McCaw talks about some of the distinctive beliefs which the team has embraced. These include many concepts from Maori culture, such as the “Kapa o Pango” which is the name of the haka, the traditional dance performed by the team before every match, and reflects the diversity of the nation’s Polynesian origins.  Such rituals become important in bonding the team, but also in creating its identity to others.

Another Maori concepts is “whanau” which means “follow the spearhead” inspired by a flock of birds flying in formation which is  typically 70% more efficient than flying solo.  And finally “whakapapa” which means leave a great legacy, or translated more directly,  plant trees you’ll never see by being a good ancestor.

The team always wins

Netflix has built a culture of “freedom and responsibility” which has helped it to dare to innovate more radically, and transform an industry. Pixar’s teams work together in wooden huts as an individual but collective workspace, embracing an openness of debate to turn initially mediocre ideas into billion-dollar hits.

Teams are where innovative ideas are most often conceived, futures shaped, projects implemented, and where employees experience most of their work. But it’s also where the biggest problems can arise in limiting the effectiveness of organisations.

Alphabet recently set about investigating what makes a great team, in what they called Project Aristotle, a tribute to Aristotle’s quote, “the whole is greater than the sum of its parts”.

Effective teams, they concluded, have a high degree of interdependence, more than just a group working on a project, or functionally aligned. They have a distinctive identity, and loyalty to each other. They plan work, solve problems, make decisions, and review together, and know that they need one another to achieve success.

Alphabet found that what really mattered was less about who is on the team, and more about how the team worked together. In order of importance, they found that effective teams are:

• Safe: this relates to people’s perceptions of the heightened risks of taking part, or reduced risks of acting together, determined by their confidence in each other.
• Dependable: participants trust each other to embrace their individual responsibilities,  deliver work of quality and on time
• Structured: there are clear goals, with clear responsibilities of each participant, and an agreed way of working together.
• Meaning: the team has its own sense of purpose, which is relevant to the organisation, but also to the values and ambitions of the team
• Impact: each participant’s contribution is seen as important, whilst the real measure of impact is what the team can achieve together.

Each Whole Foods store manager can act largely autonomously, aligned by clear metrics but responsive to local communities and the passions of their local team. Zappos, the online fashion retailer, also now part of Amazon, embraces “weirdness and fun” as the ingredients to sustain their team success.

Fearless and fearsome

Amy Edmondson’s book “The Fearless Organisation” focuses on Alphabet’s top priority, that teams need to have psychological safety, and how teams create safe spaces in organisations for people to be open, creative and grow.

Organisations can easily become paralysed by fear, which reduces people to conformity, to easy compromises, to incremental developments, and mediocre performance. Leaders are responsible for creating such cultures of fear, and are equally responsible for creating an environment where people can be fearless, or even together, fearsome.

Psychological safety is created through 3 factors:

• Positive tension: It’s not about always agreeing, about being nice for the sake of harmony, or constant praise. Creating an environment where tensions are constructive not destructive requires trust, allowing and respecting people for talking openly, with different perspectives, and conflicting opinions.
• Complimentary styles: Team members will have different styles of behaviour, some extroverts and others introverts, some visionary and others pragmatic, some starters and other finishers. The team values these styles as complementary and equally important.
• Collective attitude: Whilst trust is important between participants, the key aspect of safety is that it is valued by each person as important to the group’s ability to function well.  Whilst team members are individually different, they acknowledge they are much less without the whole.

Extreme teams, like the All Blacks, take these traits to the limit. They seek great individuals who are prepared to work collectively, with commitment and courage. They seek more diversity, bringing together differences of capability and opinion. They thrive on dynamic conversations that can embrace extreme ideas. And they have a profound belief, that together they can achieve amazing results.

© Peter Fisk 2021

 

Interview with Peter Fisk on the future of organisations, and the ability to embrace new talent that drives diversity and creativity within traditional organisations. The article appears in the September 2021 edition of Fast Company magazine:

Fast Company: Is seeking out such swashbuckling, rule-breaking oddballs a sound strategy for upping the innovative IQ of an organization whose leaders don’t naturally think like innovators? Why or why not? 

Organisations thrive in a world of uncertain yet relentless change on their “cognitive diversity” … much more than a agile mindset, this is the willingness to embrace ambiguity rather than wait for certainty, to embrace extreme insights and ideas over mainstream averages, and to resolve paradoxes with new creative fusions.

Innovation lies in “extreme teams” who have both the stretching challenge, and pyschological safety, to challenge conventions, and to embrace boldness. These become the new powerhouses of organisations, which have replaced formal hierarchies with self-organising organic networks, focusing on customers and opportunities, rather than organised for efficiency and continuity.

A great example is Haier, the Qingdao-based world’s leading home appliances business. In my new book “Business Recoded” Haier’s CEO Zhang Ruimin describes his “rendanheyi” approach to organisations, an organisation of 1000 extreme teams, each essentially a micro-business of no more than 100 people, but each with the support of corporate resources and branded ecosystem.

The same approach to “extreme teaming” – the ability to bring together a juxtaposition of talents, skills, perspectives and experiences – demonstrates the real power of “diversity” in its broader sense, in organisations today. Google’s Project Aristotle recognised these qualities in its search for a perfect team, as did design company IDEO in recruiting eclectic teams of scientists, engineers, artists, and business people in its design teams.

Over the last decade as hierarchical organisations have stagnated, they have sought to embrace an entrepreneurial culture, perhaps through design thinking, corporate venturing, or seeking to follow Eric Ries’ start-up bible. Instead they should play to their strengths, using their scale to embrace much greater cognitive diversity – and ultimately portfolio of projects, innovations, and businesses – in a do what start-ups could only dream of doing!

Fast Company: In our experience, Rare Breed individuals don’t want to work in environments that are dull, repressive, or where they feel they cannot be themselves. They also are more likely to be outside the mainstream in terms of racial and ethnic identity, gender identity, appearance, social interaction, and even hygiene. How can leaders evolve their cultures to be more enticing to such “fringe” people without chasing away the more conservative employees who also play vital roles in keeping things running?

Microsoft’s incredible value-creating rebirth under Satya Nadella will be written about in time, as the model of how large organisations finally reinvented themselves for a post-hierarchical age. Nadella really only used two tools to drive a cultural transformation – inspiring purpose (an empowering focus on what customers do, not the products themselves) and a growth mindset (to experiment, to break rules, to reject the old corporate model).

Today’s most enlightened organisations are becoming “platforms for talent” – creating the space, support and stories for individuals to unlock their full potential. That requires a radical shift in thinking. Of leadership understanding. Of strategic agility. And patience. It goes far beyond Google’s boot-legging or Lego’s creative play. It’s when organisations learn to play jazz, not to follow the classical score – to unlock their humanity, and human potential.

Of course, many organisations are not ready for that, or don’t have the capacity to cope with such chaos – smaller companies seek to retain single-minded focus, finance or pharma have their regulatory excuses – but ultimately they need to embrace such approaches. The Pfizer vaccine emerged out of an ecosystem of partners, most notably Biontech, who were prepared to go to extremes and pursue what seemed like crazy ideas.

The speed of transformation in so many markets around the world, requires this mental as well as physical agility, achieved by cognitive diversity – look at Jio in India, Grab in Singapore, or even more traditional organisations like Siemens in Germany, and Fujifilm in Japan. It is supported by an ambidextrous strategy – to deliver today, whilst creating tomorrow.

This requires dual transformation that builds a customer-centric portfolio of solutions for today, and a portfolio of innovative business ideas for tomorrow. “Fringe” people were only so-named when the organisations only focused on today, on the mainstream, on the core. Now there is more space, and more need. Jobs shift from function roles to projects, stability gives way to speed, crazy ideas and being different is the new human advantage.

Fast Company: Presumably, there are some people like this hidden in the headcount of any large company, afraid to show their true colors. Since it’s much easier to find and develop game changing talent in-house than to try to recruit it elsewhere, how can leaders spot and develop the people who “think around corners” who are already on their payroll?

Eliud Kipchoge is the world’s greatest marathon runner, the first man to break two hours, the double Olympic champion. 6 years ago, a fading track athlete, and having passed his 30th birthday, he was considering retiring. Instead he stepped up distance and took on the marathon. He knew he needed to change. He started doing yoga, he moved out of his nice home into a training camp, and he sought to learn everything from other sports like cycling.

He knew he needed to find something different to perform at a level nobody had done before. In the same way, organisations increasingly recognise that success in the post-Covid 2020s won’t be achieved go getting “back to normal” but by embracing difference. This is a mindset. It needs leaders with a “future mindset”, with curiosity and courage, who seek to find new directions. A mindset, that then becomes a culture in everyone.

Organisations of the future are not about status achieved through years of service, depth of expertise, or even historic performance. They bring together young and old, eclectic skills and attitudes, oddballs and misfits. To do so, they will need multiple contracting formats, and multiple working formats. This will be the great legacy of Covid-19’s disruption to the old ways of working, themselves a hangover from the industrial revolution.

At GM, Mary Barra used her acquisition of AI-driving system Cruise to symbolise and galvanise a rebirth of a bankrupt giant. Jim Snabe has done the same over the last few two years at Maersk, turning the world’s largest container shipping company, into a futuristic blockchain-based logistics network. These organisations thrive on transformational projects – forget functional roles, forget job descriptions, even forget old notions of employment.

I started my new book by saying “the next 10 years will see more change than the last 250 years”. We have already  recognise the transformational impact of shifting markets, data-driven tech, and new agendas. But it’s organisations that will make the change happen – the new ecosystems of talent, led with a future mindset, fusing together as extreme teams, and the courage to create a different,  better future.

© Peter Fisk 2021

In nature, few complex systems are organised through hierarchies. We need to develop businesses that are living, adaptive, “collectively conscious” organisations. In an extract from my recent book “Business Recoded: Have the courage to create a better future”, I explore the future of organisations. 

Qingdao is the home of Haier, the world’s leading home appliances business. Over the years, the company’s CEO Zhang Ruimin has become an innovator not only of washing machines and refrigerators, but of organisations and entrepreneurship too.

Once a devotee of the “six sigma” approach, Zhang has developed his own management ideology: rendanheyi. By dividing a company up into micro-enterprises on an open platform and dismantling the traditional “empire” management system, rendanheyi creates “zero distance” between employee and the needs of the customer.

At the heart of rendanheyi is the cultivation of entrepreneurship – by removing the costly level of middle management (Zhang famously eliminated the positions of 10,000 employees), you encourage innovation, flexibility and risk-taking.

The quantum mechanics of business

On meeting, we quickly found a common background, having both studied physics, and specifically quantum mechanics. I was curious about how he had embraced the ideas of physical science into his vision of how Haier should work as an organisation. We quickly got into a passionate, and somewhat technical discussion about atomic structure and wave theory. Whilst I’m not sure atomic physics would be many business people’s ideal topic, I was intrigued.

“When I first studied physics, I was amazed by the perpetual motion of subatomic particles. Electrons and protons coexist in a dynamic equilibrium, created by their equal and opposite charges. This sustains a continual existence, it enables atoms to come together in many different formats as molecules, each with their own unique properties, and within these atomic structures is huge amounts of energy”.

The application to business becomes clear, and also much of the founding ideas behind why and how he has developed his rendanheyi model of entrepreneurial businesses.

“Applying this idea from physics to business” he says “small teams of people with different backgrounds, skills, and ideas, can co-exist incredibly effectively. It is the ability to create small diverse teams where ideas and actions are equally dynamic, that enables a business to sustain over time. They become self-organising and mutually enabling. Ideas, innovation and implementation are continuous. And they can easily link with other teams, like atoms coming together as molecules, for collaborative projects and to create new solutions.”

As a result, he challenges the old supremacy of shareholders in the value equation, putting a premium on employees, and the value created by them and for them. However, at the same time, he recognises the need to empower employees to be more customer intimate. As a result, the rate of growth has risen from 8% to 30% in recent years.

“People are not a means to an end, but an end in themselves. We took away all of our middle management. Now things are working much better. Zero signature, zero approval. Now we have only one supervisor, which is the customer.”

Haier’s evolution has been rapid and relentless, as Zhang has driven the company from an old refrigerator factory – where indiscipline and poor quality was so rife that he took to shock tactics, taking a sledge hammer to some of the products to demonstrate that such mediocrity was no longer acceptable – to a pioneer of digital tech.

In the 1990s, Haier focused on the Chinese market, building a portfolio of high-quality standardised products. The 2000s was about internationalisation, reaching across the world, and then adding more localisation and customisation. The 2010s have been all about digitalisation, embracing the power of automation and data, to the point where Haier is now one of the world’s leading producers of “smart” products, embedded with Internet of Things, IoT, and connected intelligently.

However, the implications are profound. Today, Haier is not motivated by seeking to create the best product. With a brand purpose that seeks to make people’s lives better, it looks beyond products to services, to how it can do more to help people live in their everyday lives, with a focus on the intelligent home.

“In a digital world of globalization, connectivity and personalization, there is no such thing as a perfect product. People will buy scenarios, or concepts, where the products might be free and act as enablers for services. Haier’s products embrace IoT to ensure that they connect with other devices, with other partners in our ecosystems, and with people and their homes. In the future, maybe the product will be free, and people will pay for services – from food delivery, to home entertainment, security or maintenance.”

Organisations as living organisms

The way we manage organisations seems increasingly out of date.

Most employees are disengaged. Too often work is associated with  dread and drudgery, rather than passion or purpose.

Leaders complain that their organisations are too slow, siloed and bureaucratic for today’s world. Behind the façade and bravado, many business leaders are deeply frustrated by the endless power games and politics of corporate life.

Frédéric Laloux offers an alternative. In his book “Reinventing Organizations” he uses the metaphor of an organisation as a living system, with radically streamlined structures that facilitate active involvement and self-management.

He envisions a new organisational model, which is self-managed, built around a “wholeness” approach to life and work, and guided by an “evolutionary purpose”.

Wholeness means that people strive to be themselves, rather than putting on a mask when they go to work. This, he argues can only be achieved when they let go of the idea of “work-life balance” which encourages a compromise. By aligning personal and organisational purpose and passions, you have less stress, and contribute more.

Evolutionary purpose means that meaning and direction of the business is not defined from above but drawn from what feels right amongst people. It might be articulated in a manifesto which defines the actions most admired, the new projects that receive the most interest. And it is constantly evolving, as both the culture inside, and world outside, evolve too.

Laloux describes humanity as evolving in stages. Inspired by the philosopher Ken Wilber, he describes five stages of human consciousness, with associated colours, and proposes that organizations evolve according to these same stages. They are:

• Impulsive (red): Characterised by establishing and enforcing authority through power, eg mafia, street gangs. For business, this is reflected in the functional boundaries, and top down authority.
• Conformist (amber): The group shapes its own beliefs and value. Self-discipline, shame and guilt, are used to enforce them, eg military, religion. For business this means replicable processes, and defined organizations.
• Achievement (orange): The world is seen as a machine, seeking scientifically to predict, control and deliver, eg banking, MBA programs. For business this means Innovation, analytics and metrics, and accountability
• Pluralistic (green): Characterised by a sense of inclusion, to treat all people as equal, more like a family, eg non-profits. For business this means a values-driven culture, empowerment and shared value.
• Evolutionary (teal): The world is seen as neither fixed nor machine, but a place where everyone is called by an inner purpose to contribute, eg holocracy. For business this means self-management and wholeness.

Most organisations today are “orange”, still driven by analysis and metrics, driving profitability and growth. Examples of “green” organisations include Apple, Ben & Jerry’s, Starbucks.

Examples of “teal” organisations in the USA include:

• Morning Star – Californian tomato ingredient processor – Read more
• Patagonia – Manufacturer of climbing gear and outdoor apparel, caring for the environment and, in their words, saving the planet.
• Resources for Human Development – non-profit social services agency – Read more
• New Era Windows & Doors – Workers without pensions or severance rights organised found another way to organise, by buying and running the company themselves.
• Isthmus Engineering & Manufacturing – a worker-owned cooperative specializing in custom automation solutions and equipment.
• Union Cab Cooperative – operates the largest taxi fleet in Madison

Examples of “teal” organisations in Europe include:

• Buurtzorg – Dutch home care service, who decided they no longer wanted to be driven by corporate efficiency metrics – Read more
• John Lewis Partnership – British employee-owned democratic organisation of 90,000 partners and famous for its slogan of “never knowingly undersold”
• Evangelischen Schule Berlin – Germany
• Heiligenfeld – German mental health hospital
• Favi – French brass foundry within the car industry
• We-Q – created a team diagnostic survey tool that facilitates transformational conversations in the direction of the key teal breakthroughs

The end of hierarchy

What replaces the old hierarchies of organisations?

Henry Ford built his organisation for stability, efficiency and standardisation. Clearly defined processes and controls ensured that it worked like a machine, no space for deviance or change. Some decades later, Kaori Ishikawa went further to systemise the approach with total quality management, seen as the secret of Japan’s industrial success in the late 20th century. Efficiency was the goal, not creativity.

However, today’s world requires a different approach. Business needs to be fast and adaptive to a world of change. Technology has transformed the roles of people inside organisations, automating processes, adding intelligent systems, and digital interfaces. The value of organisations lies in its ideas, reputation and reach. Organisations embrace the connectedness of the outside world, technology enabling knowledge sharing, fast decision making, and collaborative working.

Flat organisations became fast and agile, putting customers at their heart. Yet this is all structural, and did not in itself create difference. In a world where businesses could essentially do anything, they have become more purposeful, and also more distinctive in their character and beliefs.

Expert teams don’t need the old controls. Empowered and enabled, they become more self-managing, and teams collectively work together towards a higher purpose and strategic framework that guides but doesn’t prescribe. As a result, the business develops a human-like consciousness. It resembles a complex adaptive system, where there is a wholeness built on multiple non-linear connections, combining progress with agility.

Buurtzorg, like Haier, is a great example of self-managing teams. The Dutch healthcare business provides home support to elderly people. It recognised that local teams, which acted largely autonomously had a much great commitment to their work, than if they were managed centrally using standard efficiency metrics.

Haufe Group is an innovative media and software business in Freiburg, in the heart of Germany’s Black Forest. As an organisation they have long put people first, sharing in the development of strategy, and the rewards of success. When it came to appointing a new CEO, the company realised that this couldn’t just be imposed on such a democratic structure, and so now holds elections to find who amongst peers will be the leader.

If, as Peter Drucker said, “the purpose of an organisation is to enable ordinary human beings to do extraordinary things” then organisations must evolve to make this possible.

© Peter Fisk

 

Interview with Peter Fisk on the future of organisations, and the ability to embrace new talent that drives diversity and creativity within traditional organisations. The article appears in Fast Company magazine:

Fast Company: Is seeking out such swashbuckling, rule-breaking oddballs a sound strategy for upping the innovative IQ of an organization whose leaders don’t naturally think like innovators? Why or why not? 

Organisations thrive in a world of uncertain yet relentless change on their “cognitive diversity” … much more than a agile mindset, this is the willingness to embrace ambiguity rather than wait for certainty, to embrace extreme insights and ideas over mainstream averages, and to resolve paradoxes with new creative fusions.

Innovation lies in “extreme teams” who have both the stretching challenge, and pyschological safety, to challenge conventions, and to embrace boldness. These become the new powerhouses of organisations, which have replaced formal hierarchies with self-organising organic networks, focusing on customers and opportunities, rather than organised for efficiency and continuity.

A great example is Haier, the Qingdao-based world’s leading home appliances business. In my new book “Business Recoded” Haier’s CEO Zhang Ruimin describes his “rendanheyi” approach to organisations, an organisation of 1000 extreme teams, each essentially a micro-business of no more than 100 people, but each with the support of corporate resources and branded ecosystem.

The same approach to “extreme teaming” – the ability to bring together a juxtaposition of talents, skills, perspectives and experiences – demonstrates the real power of “diversity” in its broader sense, in organisations today. Google’s Project Aristotle recognised these qualities in its search for a perfect team, as did design company IDEO in recruiting eclectic teams of scientists, engineers, artists, and business people in its design teams.

Over the last decade as hierarchical organisations have stagnated, they have sought to embrace an entrepreneurial culture, perhaps through design thinking, corporate venturing, or seeking to follow Eric Ries’ start-up bible. Instead they should play to their strengths, using their scale to embrace much greater cognitive diversity – and ultimately portfolio of projects, innovations, and businesses – in a do what start-ups could only dream of doing!

Fast Company: In our experience, Rare Breed individuals don’t want to work in environments that are dull, repressive, or where they feel they cannot be themselves. They also are more likely to be outside the mainstream in terms of racial and ethnic identity, gender identity, appearance, social interaction, and even hygiene. How can leaders evolve their cultures to be more enticing to such “fringe” people without chasing away the more conservative employees who also play vital roles in keeping things running?

Microsoft’s incredible value-creating rebirth under Satya Nadella will be written about in time, as the model of how large organisations finally reinvented themselves for a post-hierarchical age. Nadella really only used two tools to drive a cultural transformation – inspiring purpose (an empowering focus on what customers do, not the products themselves) and a growth mindset (to experiment, to break rules, to reject the old corporate model).

Today’s most enlightened organisations are becoming “platforms for talent” – creating the space, support and stories for individuals to unlock their full potential. That requires a radical shift in thinking. Of leadership understanding. Of strategic agility. And patience. It goes far beyond Google’s boot-legging or Lego’s creative play. It’s when organisations learn to play jazz, not to follow the classical score – to unlock their humanity, and human potential.

Of course, many organisations are not ready for that, or don’t have the capacity to cope with such chaos – smaller companies seek to retain single-minded focus, finance or pharma have their regulatory excuses – but ultimately they need to embrace such approaches. The Pfizer vaccine emerged out of an ecosystem of partners, most notably Biontech, who were prepared to go to extremes and pursue what seemed like crazy ideas.

The speed of transformation in so many markets around the world, requires this mental as well as physical agility, achieved by cognitive diversity – look at Jio in India, Grab in Singapore, or even more traditional organisations like Siemens in Germany, and Fujifilm in Japan. It is supported by an ambidextrous strategy – to deliver today, whilst creating tomorrow.

This requires dual transformation that builds a customer-centric portfolio of solutions for today, and a portfolio of innovative business ideas for tomorrow. “Fringe” people were only so-named when the organisations only focused on today, on the mainstream, on the core. Now there is more space, and more need. Jobs shift from function roles to projects, stability gives way to speed, crazy ideas and being different is the new human advantage.

Fast Company: Presumably, there are some people like this hidden in the headcount of any large company, afraid to show their true colors. Since it’s much easier to find and develop game changing talent in-house than to try to recruit it elsewhere, how can leaders spot and develop the people who “think around corners” who are already on their payroll?

Eliud Kipchoge is the world’s greatest marathon runner, the first man to break two hours, the double Olympic champion. 6 years ago, a fading track athlete, and having passed his 30th birthday, he was considering retiring. Instead he stepped up distance and took on the marathon. He knew he needed to change. He started doing yoga, he moved out of his nice home into a training camp, and he sought to learn everything from other sports like cycling.

He knew he needed to find something different to perform at a level nobody had done before. In the same way, organisations increasingly recognise that success in the post-Covid 2020s won’t be achieved go getting “back to normal” but by embracing difference. This is a mindset. It needs leaders with a “future mindset”, with curiosity and courage, who seek to find new directions. A mindset, that then becomes a culture in everyone.

Organisations of the future are not about status achieved through years of service, depth of expertise, or even historic performance. They bring together young and old, eclectic skills and attitudes, oddballs and misfits. To do so, they will need multiple contracting formats, and multiple working formats. This will be the great legacy of Covid-19’s disruption to the old ways of working, themselves a hangover from the industrial revolution.

At GM, Mary Barra used her acquisition of AI-driving system Cruise to symbolise and galvanise a rebirth of a bankrupt giant. Jim Snabe has done the same over the last few two years at Maersk, turning the world’s largest container shipping company, into a futuristic blockchain-based logistics network. These organisations thrive on transformational projects – forget functional roles, forget job descriptions, even forget old notions of employment.

I started my new book by saying “the next 10 years will see more change than the last 250 years”. We have already  recognise the transformational impact of shifting markets, data-driven tech, and new agendas. But it’s organisations that will make the change happen – the new ecosystems of talent, led with a future mindset, fusing together as extreme teams, and the courage to create a different,  better future.

• Next Agenda of best ideas and priorities for business
• Business Futures Project collating all the best ideas
• Megatrends 2030 in a world accelerated by pandemic
• 49 Codes to help you develop a better business future
• 250 companies innovators shaking up the world
• 100 leaders with the courage to shape a better future
• Education that is innovative, issue-driven, action-driving
• Consulting that is collaborative, strategic and innovative
• Speaking that is inspiring, topical, engaging and actionable

The Lake Biwa Marathon is the oldest in Japan – this year’s edition saw 42 local runners break 2 hours 10 minutes for the distance, the most ever in one race, anywhere – the US Olympic trial saw one runner under that time, while in the UK there were none. Yet hardly any of these Japanese runners win gold medals, or are known outside their home nation.

Japanese culture focuses on teams rather than individuals, on contribution towards  collective goals rather than personal fame and fortune.

This is illustrated by the Hakone Ekiden, a long-distance running relay, and Japan’s most popular televised sporting event. Traditionally run over three days between the ancient capital Kyoto and Tokyo, a distance of 508km, it now consists of a corporate race every New Year’s Day, and a student race on the two following days. The collegiate race is the bigger event, with 52.6 million tuning into watch this year, 40% of the population.

Every top Japanese athlete aspires to join a corporate team – becoming employees with extra time off for training. Japanese brands are seen as national icons, and representing one is seen as the highest accolade for the individual, rather than an athlete’s endorsement for the company. This year’s Ekiden winner was the Fujitsu team, followed by Toyota, Asahi, Hitachi, Honda, Mitsubishi, Nihon and Yakult.

Last summer, I read Adharanand Finn’s excellent book The Way of the Runner, about his year living in Japan, running with a corporate team. He also spent time with the “marathon monks” of Mount Hiei near Kyoto, who attempt to run 1000 marathons in 1000 days in search of spiritual enlightenment. Only 46 monks have succeeded in 130 years.

Finn realised that Japanese see sport as a route to personal fulfilment (indeed, many sports, like judo or kendo, end with the suffix -do, meaning “the way”).  Marathon running, in particular, is seen as honourable, instilling the values of hard work and commitment. He gives the example of Toyota’s HR department which uses their running team as a showcase for teamwork and discipline, with runners acting as mentors to business leaders.

Shigetaka Komori, CEO of Fujifilm, highlights the Japanese word “majime” which means serious and hardworking, a person who  can be trusted to overcome difficult challenges, and constantly drive progress. Most Japanese leaders are therefore seen as calm and stoic, rather than charismatic and passionate.

https://www.youtube.com/watch?v=KN7-EsXKzUw

Fujifilm is a great example of an organisation that “never stops” innovating, from camera film to medical imaging, from anti-viral Covid drugs to Asia’s leading skincare brand.

Being a team player is also essential to Japanese leadership. Rather than being a figurehead and decision-maker, leaders exist to consult with teams, to find consensus. This drives hierarchical working, feeling the need to be involved in everything their teams do.

Combined with a great appreciation of tradition – the world’s oldest company is Kongo Gumi, a construction company founded in 578AD in Osaka – this is a culture that has incredible resilience, makes steady progress, but can also struggle to adapt in a world of rapid change.  The world’s third largest economy, largely stagnated in recent years, is also ranked as the world’s fourth least entrepreneurial country in the world.

Seiko Hashimoto, President of the Tokyo 2020 Organising Committee, is a 7-time Olympian, a former speed skater and track cyclist, who became a politician. She stepped in earlier this year to run the Tokyo Olympics, after the previous leader, 83 year old Yoshiro Mori, stepped down because of derogatory comments about women. Indeed women only make up 15% of senior management roles in Japan (compared to 29% globally).

Hashimoto said she hopes that despite all the challenges of the last 18 months, the Olympics will “spark a change in Japanese culture, combining historic values with a future mindset”. And that “delivering Tokyo 2020 in 2021 is a symbol of looking forwards”.

© Peter Fisk 2021

Companies that integrate creativity, analytics, and purpose are delivering more than double revenue growth, claims McKinsey in an interesting thought leadership focus on marketers and other growth champions.

Their research, captured in “The Growth Triple Play” suggests that:

• Only 7 percent of companies are delivering on the growth triple play by unifying creativity, analytics, and purpose. They are driving average revenue growth of 2.3 times versus peers from 2018–19 (which increased to 2.7 times versus peers from 2019–20).
• In the period 2018–19, companies using just one of the capabilities—either creativity, analytics, or purpose—saw an average growth rate of more than 6 percent. Adding a second component saw growth rates climb to more than 7 percent. For those that employed the full triple play, growth rates climbed to more than 12 percent.
• CMO’s have a once-in-a-generation opportunity to lead growth, as 78 percent of CEOs are now banking on CMOs and marketing leaders to drive growth.

Reading in more detail, McKinsey’s team suggests that the historic shifts brought on by the pandemic have fundamentally changed the role of marketing leadership and the chief marketing officer (CMO) with 78 percent of CEOs now banking on marketing leaders to drive growth.

Based on research covering how 860 executives across the globe are prioritising investments and capabilities that help accelerate growth, the report identifies three elements – creativity, analytics, and purpose – that constitute a “growth triple play” providing at least two times the growth of peers who don’t invest in all three in tandem.

Companies that use the three elements of the growth triple play together – creativity, analytics, and purpose – achieve dramatically higher average growth rates ; 2.3 times compared to companies that don’t use any of the three elements. The results were even more dramatic during the pandemic, when the impact of using the full triple play boosted growth rates by 2.7 times.

The cumulative impact is striking. In 2018–19, companies that used any one of the capabilities – whether creativity or analytics or purpose – saw an average growth rate of more than 6 percent, for companies that added a second component, growth rates climbed by another 15 percent to more than 7 percent, and for those that employed the full triple play, growth rates shot up by 67 percent to more than 12 percent.

Only 7 percent of companies, however, have been able to use all three elements successfully in combination.

Each element of the triple play is critical.

Creativity is part of the origin story of marketing. It’s in the breakthrough ideas that have always underpinned bold, imaginative campaigns. The last revolution in marketing was all about the fusion of creativity and data analytics. What’s new today is partly the addition of purpose, the statement of a goal higher than just ringing up the next transaction.

When the CEO of Santander stood up and asked employees “How can Paypal have become 4 times more valuable than our bank?” there was an embarrassed silence. Paypal is now almost 3 times more valuable than HSBC, as valuable as Bank of America, and outperforms most investment banks too. Visa is much bigger, twice as valuable as Paypal.

What’s the future of banking, insurance and money?

In a world of rapid and relentless innovation, most financial services have become the laggards of change. While Tesla transforms mobility, Impossible reimagines food, and NextEra ignites clean energy, most of the large financial service companies have stayed wedded to their old world, either believing that their markets are impermeable to change, with either arrogance, or ignorance.

Of course there are disruptors who grab the headlines. Cryptocurrencies lead the way – the drama of Bitcoin and many other emerging models that are yet to prove sustainable. More generally, fintech has focused on the so-called neobanks – the mobile-centric start-up banks and related money management services, who are largely automating old practices in a slightly more consumer-centric way.

Yet for the large companies – retail and corporate banks like Bank of America, HSBC, Santander – nothing much has changed. Same in investment banking – JP Morgan, Credit Suisse, Goldman Sachs do what they’ve always done – and same in insurance. Of course there are sparks of ideas, but they are usually imitative, or derivative.

Yet there are some incredibly interesting and innovative companies in the financial world.

Next Generation Innovators

Consider Brazil’s Nubank, for example, which has just attracted $500m investment by Warren Buffett – or Sweden’s Klarna, reinventing advance payments online. In South Korea, Hena Bank is exploring a new loyalty network model, as is Ant Financial with its brilliant Ant Forest in China. Akbank in Turkey is playing with robots and Alior is innovating with business. And then there is the long list of neobanks – Atom, N26, Revolut, Starling, Varo, and many more.

Here’s a great summary from CB Insights on how start-ups are disrupting, and in many ways “unbundling” the conventional activities of a bank:

CB says “Tech companies are chipping away at the traditional bank’s market share. For example, stock trading app Robinhood’s commission-free approach to investing has forced incumbents to follow suit, while products like Venmo and Cash App have disrupted peer-to-peer payments”

Yesterday we hosted a Headspring Lab for financial services, where Financial Times columnist Michael Skapinker joined me to talk about the transforming world of financial services, the challenges and opportunities.

Here is my summary of the discussion:

Context of change – driven by the disruption of markets, by new technologies, new audiences, new entrants, new business models, new agenda – and accelerated by pandemic. Neobanks are just a start, digital is just an enabler of more profound opportunities for change. In general FS has lagged behind in exploring transformation beyond automation. As Jane Fraser, new CEO of Citigroup says, now is the time for FS leaders to embrace 4Cs – context, curiosity, creativity and courage.

Customer as your future guide – not just to understand and serve them, but as your guide to uncertain futures and new opportunities, like DBS – reframing your business around customers eg from car insurance to driving better – is more valuable and engaging to the customer, but also opens new revenue streams for business growth. Superapps like Grab and Jio are incredibly customer-centric, using thei4 customer intimacy and insight, embracing FS in a way that integrates with everyday life.

Sustainability as opportunity –  moving on from CSR as compliance, or ESG as governance – to harnessing business as a platform for positive change. Social issues, even more than environmental ones, engage customers emotionally – access, inclusion, equality, locality, and more. Unlocking the assets and interactions of FS to change behaviours, and solve big problems, as a competitive advantage. Examples from Aspiration to Lemonade, Nubank and Greenwood.

Unlocking the talent inside – the pandemic has driven radical behaviour change, and desire for new ways of working; young people already wanted to do more meaningful work; the old ideas of work life balance are being challenged. How to align business and personal purpose, how to find your “ikigai”, how to find work that enhances life. Like Microsoft’s Satya Nadella says, rethink organisations as platforms for talent, enabling people to unleash their ideas, rather than seeking to fit them to the needs of the organisation.

The opportunity of finance – most FS conversations focus around fintech, the disruption of start ups and the need to catch up. More powerful brands and customer integrators can all embrace finance, particularly if FS remains largely a utility inert to change. Yes, start ups from N26 to Robinhood challenge, but their are big opportunities for FS too. PingAn, China’s largest insurer, for example, asked how it could leverage its customer base and digital platform to be more. Today it has created  Good Doctor, serving a billion subscribers, embracing the power of humans and technology, a digital and physical model, and the world largest and most innovative healthcare business.

Read more in the section FutureBank together with a range of interesting case studies.

Every market has been shaken-up by the seismic shifts in consumer behaviour, global economics and emergent technology. How we live, work and learn, shop and socialise. The Covid pandemic has simply accelerated this transformation, maybe by 10 years in just 12 months.

Markets are blurred, borderless and hybrid – physical and digital, but also fusing geographies and sectors. Retail is socialised, sports are gamified, transport is integrated as mobility, and every company is a technology company. Payments are digital, entertainment is on demand, fashion is sampled virtually, healthcare is recast on an app as wellbeing.

Customers have new agendas, from social and environmental, to who they trust and how they are influenced. The exponential power of networks transforms the old rules of business, from the way people connect in new communities, to how organisations connect as global ecosystems. Speed and agility, innovation and change are relentless. Disruption, and opportunity, are everywhere.

Airbnb has redefined travel as a platform, Babylon has reinvented healthcare with AI, and Coursera has refocused education for all. Gaming brands like Fortnite are the social spaces for GenZ and launchpads for music, while super-apps like Grab and Jio puts every type of service into your hands. Indeed, Haier will soon give away its fridges and washing machines, in order to manage your life.

Leading beyond technology

“Digital transformation” is one of the most popular yet misunderstood terms in business. While new technologies, from AI-driven apps to market-creating platforms, predictive analytics and realtime marketing, are enablers of transformation, it is about much more. It is business transformation – strategic, innovative, human and relentless – and personal, or leadership, transformation too.

82% of companies recognise the need for digital leaders, according to MIT research, yet only 40% say that they are developing them. While most entrepreneurs are born digital, more established organisations and their leaders can be digital too – look at Disney or Lego, Fujifilm or GM, Nestle or Rio Tinto. Such organisations have the scale and power to create even more impact digitally.

Digital is really about a mindset. Digital leaders see their business in a new context, unlocking new opportunities for innovation and growth. Brands become part of larger marketspaces, redefined by customer context and aspiration, rather than product. Audiences, channels, solutions and value are reframed and redefined. Mikkeller’s craft beer to fitness, or Lululemon’s yoga beer for women.

Digital leaders embrace the new intelligence, speed and capabilities available to engage in new ways – from decision making to fast development, smarter logistical networks, personal and collaborative brand engagement. At the core of this are new business models – reimagining how the organisation works, internally and externally, with new services, new revenue streams, and new ways to win.

Building a future mindset

How do you build a future mindset, one that is a digital mindset, a growth mindset? You start from the future back, inspired by a world of dramatic change. Insights from across sectors spark new ideas and opportunities for what you might do. Investment banks exploring the new business models in pharma or energy, insurance companies inspired by healthcare and entertainment.

Having the courage and catalysts to open up your mindspace, creates a new marketspace of opportunities to explore. Facilitated application of insights and ideas, enables leaders to map out the challenges and potential roadmaps ahead, for business and themselves. We use sketch maps to shape a “book of dreams” that becomes a foundation to go deeper, and for practical action.

Digital leaders recognise that digital means context and culture, creativity and capability – from Amazon’s Jeff Bezos saying “it’s always day one” to Emily Weiss’ blog that became the world’s fastest growing beauty business, Wang Xing at Meituan knowing China’s customers best, to Fujifilm’s Shigetaka Komori with his “never step” innovation cycle.

While the pandemic was a time of shake-up, in markets and emotionally for everyone, it can also become a springboard to more radical transformation. We will probably see more change in the next 10 years than the last 250 years.

Now is the moment to reimagine the road ahead, to reenergise your organisation and market, and for leaders to step up with the courage to create a better future.

Across the world, markets are being dramatically shaken-up.

There’s a new order in almost every sector, not just because of technological innovation, but also because of the seismic shift in power towards Asia, a new generation of young people with different value, the critical issues facing us all environmentally and  socially. And then there was the disruption of a global pandemic, which challenged the resilience of everyone, but also accelerated consumer change, in some cases decades of change in a year.

Now the future is different. Social attitudes and digital behaviours have been transformed – how we work, learn, shop, and socialise. Working from home, we loved the new flexibility of schedule and end of commuting, but struggled to unplug, says Mintel. Online retail grew more in 8 weeks than the last 10 years, telemedicine went from 2% to 98% of all initial health appointments in 15 days. Disney+ achieved the market growth in 5 months, which took Netflix 7 years.

Across the world we see the rise of incredible new companies, and the odd comeback of older companies reimagined too.  Some of the scale is mind boggling. If we consider market value, for example, as a measure of the scale and confidence in a company’s future, then the disruptors become clearer

• Tesla soared to 10x it’s pre-Covid value during 2020, more valuable that the rest of the world’s top 10 makers combined. But also look at China’s luxury EV maker Nio, now worth more than the likes of BMW.
• Visa is now the world’s most valuable financial services company, more valuable than the largest banks like JP Morgan and ICBC. Even Paypal is now 2x the size of Citigroup, and of HSBC, and 7x bigger than Barclays.
• Exxon Mobil was eclipsed by its clean energy young upstart Next Era last year, while the world’s most sustainable companies like Orsted and Schneider now outperform the likes of BP  and Shell.
• Kweichou Moutai, the Chinese firewater-like drinks brand, is now more valuable than giants of the western corporate world like Coca Cola, or P&G, or Nestle, and 3x larger than Diageo.

In the UK, where there is still a Brexit-inspired, rose-glass view of the world, they still think that their local heroes are global leaders, but get surprised when they don’t even figure in the world’s top 100 brands.

• Amazon is now 95x more valuable than Tesco, one of the UK’s leading retailers. Tesco is still seen as a market leader by many, even when the delivery vans of Amazon circle its antiquated stores.
• Microsoft is now 35x more valuable than Vodafone, which was once hailed as a visionary tech (or at lest telecoms) business, but has lost its way through arrogance and myopia.

A new generation of British innovators

So what is left for a flagging nation like the UK, with stagnant growth and nationalistic politics, has it lost its place in the world’s marketplaces, as a source of leadership and innovation? Not quite.

ARM

ARM, currently owned by Softbank but looking to move to Nvidia, depending on approval, provides cloud services and internet of things solutions. ARM’s business model has served it well, by focusing on reference designs for semiconductors as they proliferated in types and lifecycles, staying flexible with the agile manufacturing of a global ecosystem of partners.

Astra Zeneca

Also based in Cambridge, the British-Swedish pharma business has been one of the leaders of the race to find a Covid vaccine, working in partnership with Oxford University. It has a portfolio of products for major diseases in areas including oncology, cardiovascular, gastrointestinal, infection, neuroscience, respiratory, and inflammation

Babylon

Ali Parsa created the digital healthcare business in 2013, offering an AI-enabled smart-phone based health service to its call centres where it centrally brings together many different experts for rapid patient response. It works with nations across the world developing telemedicine approaches, including GP at Hand initiative in the UK.

BenevolentAI

The London based tech firm unites technology with human intelligence to re-engineer drug discovery and deliver life-changing medicines. The technology empowers scientists to decipher the vast and complex code underlying human biology, find new ways to treat disease and personalise medicines to patients.

Cazoo

Alex Chesterman is seeking to transform the way people buy their next car. He realised that whilst people love their cars, they don’t always like the process of buying and selling them. So he created a totally new way, providing transparency, convenience and peace of mind.

Deepmind

Founded in London in 2010, now part of Google, it aims to build advanced AI to expand our knowledge and find new answers. By solving this one thing, it believes it could help people solve thousands of problems – to diagnose eye diseases as effectively as the world’s top doctors, to save 30% of the energy used to keep data centres cool, and to predict the complex 3D shapes of proteins.

Headspace

Andy Puddicombe is a former Buddhist monk with a degree in circus art. He created Headspring with one mission in mind: to improve the health and happiness of the world. Reaching more than 65 million users in 190 countries, it was one of the first meditation apps in the world and remains a leader in mindfulness and mental training.

Hopin

Johnny Boufarhat created the first all-in-one live online events platform where attendees can learn, interact, and connect with people from anywhere in the world. Hopin events are known for their full conference capabilities: stages, networking, breakout sessions, sponsors, tickets, and analytics. It’s all online—everyone can attend at no cost to the planet

Lucid Motors

Peter Rawlinson is a British car engineer who made his name at Tesla, and then set to create his own business. Based in California, Lucid calls itself the new generation of EV. Its relentless focus on innovation, luxury, and sustainability drives us into a reality where you no longer have to choose between doing great things, doing the right thing, and doing everything with the highest regard for efficiency and design.

Mediatonic

Mediatonic, founded in 2005 by friends Dave Bailey and Paul Croft is a games developer with over 300 developers across London, Brighton, Madrid and Leamington Spa and is now part of Epic Games. Best known for Fall Guys: Ultimate Knockout, it delights in creating games that are joyful, inclusive and approachable; and love the weird, the surprising, and the wonderful.

Pangaia

A fashion brand, which describes itself as a materials science company bringing breakthrough innovations and patents into the world through lifestyle products. They say their products should be beautiful whether they are made from next generation bio-materials or recycled fibres; woven with smart technology, made with as many sustainable and recyclable elements as possible.

Rio Tinto

As pioneers in mining and metals, they produce materials essential to human progress: iron ore for steel. Aluminium for cars and smartphones. Copper for wind turbines, electric cars and the pipes that bring water to our home. Borates that help crops grow, titanium for paint – and diamonds that celebrate the best things in life. During Covid, they saw a remarkable shift to using AI and digital technologies, including drones and robots throughout their mining operations.

 

 

 

Back in 1998, in a paper entitled “The Anatomy of a Large-Scale Hypertextual Web Search Engine,” Google founders Larry Page and Sergey Brin presented their prototype (initially calling it BackRub), with full text and hyperlink database of at least 24 million pages.

In a paragraph on the opportunity to drive advertising revenues, they explained: “We expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers.”

While their assumption would last for a couple of years, by 2004, at the time of Google’s IPO, they wrote: “Advertising is our principal source of revenue, and the ads we provide are relevant and useful rather than intrusive and annoying.”

Advertising is still the primary source of Google’s revenues, and the most effective and scalable revenue machine of the digital era.

Google’s business model has evolved over time, an architecture for its commercial success. Page and Brin initially assumed that advertising-based search engines would never become a great consumer product. Yet, by testing and adapting over time, they have found their sweet spot.

Business models are your living platform for business evolution, and revolution. Business models keep moving as customers change, competitors challenge, and companies grow. Indeed they lie at the heart of innovation.

https://www.youtube.com/watch?v=szbC4mZiVdQ

Business model innovation is the architectural secret behind many of the most innovative start-ups of the last decade.

Way back in 1959, Xerox created breakthrough copying machines, but they were too expensive for many companies to buy. Their advance was not the machine, but the way people paid for it – leasing the product, then paying per copy for its use, with the price descending over time.

Gillette similarly innovated their business model, selling low-priced razors to fit regular high-priced blades. 50 years later Nespresso adopted the same model.

How can you reach new audiences, changing the payment model, adding new services, using your assets in different ways, maybe licensing the manufacturing to partners, or sales to franchisees?

Business model innovation reconfigures the architecture of your business, transforms your proposition, and can massively boost your performance. Technology companies in particular, from Airbnb to Boeing, Coursera to Deliveroo, have thrived by thinking beyond the product, and fundamentally reinventing the way in which they do business.

Innovating the whole business

In Ten Types of Innovation Larry Keeley defines the most important types of innovation found across any business. Many organisations don’t just innovate in one area, but combine many of the types together.

• Profit Model: How you make money (eg Fortnite)
• Network: How you connect with others to create value (eg Huawei)
• Structure: How to organise and align your talent and assets (eg Netflix)
• Process: How you use signature or superior methods to do your work (eg Inditex)
• Product: How you develop distinguishing features and functionality (eg Corning)
• Product System: How you create complementary products and services (eg Apple)
• Service: How you support and amplify the value of your offerings (eg Zappos)
• Channel: How you deliver your offerings to customers and users (eg 3DHubs)
• Brand: How you represent your offerings and business (eg Burberry)
• Customer Experience: How you foster compelling interactions (eg Peloton)

Which ones matter most? Keeley analysed the innovation activities of over 1000 large companies over a 10-year period. He found, perhaps not surprisingly, that almost 90% of all time and resource went into product innovation.  However, when he evaluated the business impact, measured by economic value, he found that the innovations that made the most difference were network, then profit model, then customer engagement.

We waste too much time and resource focused on product innovations that deliver solutions that are largely incremental, quickly copied and offer little financial return. We spend far too little on what makes a difference, innovating how the business works.

Defining the business model

Business models explain how organisations work – how they create value for customers, and in doing so, how they create value for all other stakeholders. They can map the current business, or explore options for the future.

The approach originates from mapping “value networks” in the 1990s, understanding the systems across business and its partners through which value (both financial and non-financial) is created and exchanged – by who, how and for whom. I remember working with Pugh Roberts to create a multi-million dollar dynamic model for Mastercard which showed varying any one driver – such as interest rates, or branding – affected everything else. And thereby being able to test new ideas and optimise the model.

Business models represent the dynamic system through which a business creates and captures value, and how this can be changed or optimised. They are a configuration of the building blocks of business, and their creative reconfiguration can be a significant innovation.

Business models became fundamental to business strategy, driven by them, but also driving their content. Hambrick and Fredrickson’s Strategy Diamond is all about aligning the organisation, achieving an economic logic between strategic choices. They help to align the business, matching the right strategies for outside and inside, using the proposition as the fulcrum, and profitability as the measure of success.

Business models can often appear very mechanical, lacking emotion and easy to imitate. In 2001 Patrick Staehler, seeking to explain the new breed of digital businesses, created a business model “map” driven by the value proposition, enabled by the value architecture, creating economic value and sustained by cultural values. The last point here is most interesting, in that it captured the distinctive personality of a business, its leadership styles and ways of doing business. This is much harder to copy, and also sustains the other aspects.

Innovating the business model

New business models are the most effective way to transform organisations, to innovate the whole way in which the business works. Inspired by a new generation of businesses – Airbnb to Uber, Dollar Shave Club to Netflix – we see dramatically new business models in every market, particularly drive by collaborative ecosystems, data engines, network effects, and new payment models.

Airbnb makes money by helping you to make money out of your spare room, connecting host and guest, then taking a small fee from each. Nespresso makes great coffee, selling discounted machines, and then getting you to sign up to an everlasting and incredibly profitable direct revenue steam of coffee pods.

What if your business started leasing rather than selling, became part of the sharing economy? What if you facilitated an exchange between buyers and sellers and took a cut? How about moving to a subscription model, or a freemium model, or a referral model, or an advertising model?

We used to just think that a business simply made things, and sold them. Now it is much more complicated. Or rather, there are many more innovative ways to achieve success. Some have been around for ever, like franchising and licensing, luxury or discounter, family or not-for-profit, barter or and pay per use models, whilst others have been enabled through digital platforms.

There is an infinite number of potential business models which you could creatively develop, however some of the most common formats, applicable to almost every type of business, include:

• Advertising-based models: services are free to users, whilst advertisers pay to engage with the audience attracted, eg Google, Facebook
• Razor-and-blades models: the facilitating item, like a razor, is sold cheaply, then accessories, like blades, at a premium, eg HP, Nespresso
• Added-value models: the facilitating item, like an iPad, is sold at a premium, then accessories, like apps, sold cheaply, eg Apple
• One-for-one models: the company donates a product to a charity, or person in need, for every product sold, eg Toms, Warby Parker
• Cashflow models: high volumes are generated at low margins, payments received quickly from customers, paid slowly to suppliers, eg Amazon, Dell
• Platform-based models: brings buyers and suppliers together, typically charging both of them to connect and transact, eg Airbnb, Uber
• Subscription-based models: charging a regular, eg monthy, fee for unlimited use of a product or service eg Netflix, Zipcar
• Freemium models: these encourage trial or a basic level of usage free, but charge for additional or premium options, eg Spotify, Fortnight
• Direct to consumer models: products which in the past would have been sold through intermediaries, are sold direct, eg Allbirds, Casper

Alex Osterwalder’s Business Model Canvas emerged as the most common template on which to map a business model. He popularised the approach so much so that his supersized canvas now features in workshops throughout the world, always with an array of multi coloured sticky notes as teams debate the best combination of solutions for each box. Whilst the canvas lacks the sophistication of value driver analysis and dynamic modelling, it is about testing hypothesise in each aspect, and how they could work together, and that respect works as a thinking model.

Business models have become a practical tool for rethinking the whole business, seeing the connections and then innovating the business. In fact they offer a great platform to facilitate new strategy and innovation thinking. That’s why I’ve created the Business Innovation Program, which combines design thinking, new business models and strategic implementation – a great way to engage your team, to think about new ways to grow, and to create the future, practically.