Around the world, there are over 5,500 companies operating for over 200 years since their foundation, excluding government, education or religious organisations. These companies are located across the world, most notably in Japan (3,146), Germany (837), the Netherlands (222), and France (196).
Here are the oldest:
Kongo Gumi
Kongo Gumi, established in 578 AD, is the oldest, continually operating company in the world. Its headquarters are located in Osaka, Japan. This construction company was founded by an immigrant, who was commissioned by Prince Shotoku to build the Shitennō-ji Buddhist temple. Kongo Gumi was a family-run company for around 1,400 years until 2006, when the company struggled financially and became a subsidiary of Takamatsu. Before the merger, it employed over 100 individuals and had an annual budget of around $70 million. It continues to specialize in Buddhist temples today.
Nishiyama Onsen Keiunkan
The second oldest company in the world is Nishiyama Onsen Keiunkan, a hot spring hotel in Hayakawa, Japan. It was founded in 705 AD. In 2011, it was recognized by the Guinness Book of Records as the world’s oldest hotel. This 37-room hotel has been managed for over 1,300 years by the same family. It is located near the Akaishi mountains and derives its hot water from the nearby Hakuho Springs.
Koman
Founded in 707 AD, the Koman Hotel is the third oldest company in the world. It is a ryokan or a traditional Japanese Hotel. It has communal baths and rooms with tatami mats. It was established by Gonnokami Hiuke, who was inspired to start the hotel after dreaming of four gods. In his dream, the gods told him he must live in that location to protect his family over the generations. He built a shrine dedicated to the Gods on the hotel’s premise. His descendants went on to open bathhouses In Kinosaki Onsen located nearby.
Hoshi
Hoshi Ryokan is another traditional Japanese hotel which was founded in 718 AD, making it the fourth oldest company in the world and the third oldest hotel. It is located in the Awazu Onse region of the Ishikawa prefecture in Japan. Management of this hotel has stayed in the same family for 46 generations.
Genda Shigyo
Genda Shigyo, a ceremonial paper goods company, was founded in 771 AD. In 794, it moved its headquarters to Kyoto when the city became the capital of Japan. Today, its offices can be found between the Kyoto Imperial Palace and Nijo Castle. This company specializes in mizuhiki, colorful paper twisted into cords. These cords are used at events such as funerals and weddings.
Stiftskeller St. Peter
Stiftskeller St. Peter is the 6th oldest company in the world and the first on the list to be located outside of Japan. This restaurant can be found in the city of Salzburg in Austria. It is the oldest restaurant in the world and the oldest company in Europe. Stiftskeller St. Peter was founded in 803 AD within the monastery of St. Peter’s Archabbey. The restaurant claims to have served several famous individuals over the last few centuries, including Christopher Columbus and Wolfgang Amadeus Mozart.
CNBC’s 2020 Disruptor 50 list is a great source of companies whose breakthroughs are influencing business and market competition at an ever accelerated pace. In particular, this year, they are poised to emerge from the Covid-19 pandemic with tech platforms that have the power to dominate.
They are turning ideas in cybersecurity, education, health IT, logistics/delivery, fintech and agriculture into a new wave of billion-dollar businesses.
A majority of them, in fact, already are billion-dollar businesses: 36 disruptors this year are unicorns that have already reached or passed the $1 billion valuation mark. Maybe more important this year: 37 have hired new employees since the pandemic began, and 19 have pivoted their products or launched new ones to meet the challenges of the pandemic.
Technology is already a major part of our daily lives and the public markets, and that will only increase on the other side of Covid-19, from the future of food supply to health-care diagnostics and the way we shop, study, work and pay.
Here is CNBC’s top 50 ranking:
| 1 | Stripe | Unlocking the lockdown’s biggest value |
| 2 | Coupang | Beating Bezos at his own online game? |
| 3 | Indigo Agriculture | The future of farming is carbon negative |
| 4 | Coursera | Online ed’s biggest test begins |
| 5 | Klarna | No online sale left behind |
| 6 | Tempus | Precision medicine for the Covid crisis |
| 7 | Zipline | Medicine takes flight autonomously |
| 8 | SoFi | The future of your financial future |
| 9 | Neteera | Contactless health |
| 10 | Gojek | Indonesia’s original ridehail, growing up |
| 11 | WeLab | Branchless banking |
| 12 | DoorDash | The most in-demand in on-demand |
| 13 | Heal | The next big thing in medicine: housecalls? |
| 14 | Movandi | A network key to the 5G future |
| 15 | Better.com | Closing the mortgage gap online |
| 16 | Grab | Southeast Asia’s super app |
| 17 | Lemonade | A.I.-ing the end of the insurance agent |
| 18 | Root Insurance | Replacing demographics with real driver data |
| 19 | Healthy.io | Home-based health testing |
| 20 | GoodRx | Technology tackling the high cost of health care |
| 21 | Eat JUST | Just the egg, no chicken |
| 22 | goPuff | The convenience store gets more convenient |
| 23 | Affirm | Building new credit history |
| 24 | Kabbage | A main street lending lifeline |
| 25 | Chime | No-fee banking |
| 26 | Dave | Taking down the overdraft Goliath |
| 27 | Trulioo | Verification for a more virtual world |
| 28 | Ripple | A crypto answer to money transfer |
| 29 | TALA | Making microloans add up to a billion |
| 30 | Didi Chuxing | Riding a post-Covid pickup in China |
| 31 | SentinelOne | Cybercrime is up; so are defenses |
| 32 | Butterfly Network | A smarter ultrasound |
| 33 | Marqeta | Paying with a full deck of cards |
| 34 | Apeel | Ridding the world of rotten produce |
| 35 | K Health | Primary (smartphone) care |
| 36 | Databricks | Data help for data nerds |
| 37 | C3.ai | The world’s biggest brains building an even bigger one |
| 38 | Attabotics | Amazon’s ant-size competition |
| 39 | CLEAR | Biometric screening for a new world of hidden dangers |
| 40 | Snowflake | A data warehouse in the cloud |
| 41 | Airbnb | Your delayed destination |
| 42 | Duolingo | The universal language |
| 43 | LanzaTech | A carbon-capture moonshot |
| 44 | Ginkgo Bioworks | The world’s most advanced manufacturing |
| 45 | Guild Education | Upskilling America |
| 46 | Robinhood | The new bull market-makers |
| 47 | Convoy | A monster trucking problem solved |
| 48 | Beautycounter | A makeover for the cosmetics industry |
| 49 | Impossible Foods | Doesn’t seem so impossible anymore, does it? |
| 50 | UiPath | The robots are coming for your boring, repetitive job |
TikTok competes with Snapchat and Instagram as the social media platform of choice for most young people.
Since its launch three years ago it has grown rapidly to 1 billion users, and is in the news because of its Chinese origins. While it is definitely a hit with young people, the US President is less keen, using security concerns as an excuse to escalate trade wars.
TikTok’s infectious 15-60 second videos, most often in the form of choreographed dances, have spread rapidly in lockdown. In the UK, for example, 27% of 18-24 year olds now use the app, compared to 7% back in March.
TikTok was created by Bytedance, often described as the world’s largest “unicorn”, founded in 2012 by Zhang Yiming. The business was recently valued at around $100 billion following substantial investment by SoftBank (double the potential value of its TikTok subsidiary).
Like his compatriot Jack Ma, 37 year old Zhang had an inauspicious start to his career. Having studied software engineering in Tianjin, he joined Chinese travel start-up Kuxun in 2006, its fifth employee, later becoming its technical director.
In 2008 Zhang joined Microsoft, but felt stifled by the corporate environment and soon left to join another start-up, Fanfou (created by Wang Xing, who later founded Meituan Dianping). When Fanfou failed, he returned to Kuxun, which was acquired by Expedia, formerly part of Microsoft. He left to start his first business, in online real estate, 99Fang.
Zhang now had the entrepreneurial bug, and saw in the rapid growth of mobile phone usage, an opportunity far beyond making calls. In China, and other emerging markets, phones were many people’s first experience of the internet, yet phone apps and interfaces were poor. Chinese users had a new thirst for information, and he saw the opportunity of artificial intelligence to push relevant content to users in more personal and intuitive ways.
Bytedance initially launched Toutiao (meaning “Headlines”) which focused on using AI to aggregate and recommend news to individuals, both from established media and user generated content. Most investors turned Zhang down for funding, seeing a Chinese tech market already dominated by the likes of Alibaba, Baidu and Tencent.
However Zhang soon found a profitable niche in entertainment apps, sharing viral jokes, memes and videos, It’s first app Neihan Duanzi gained 200 million users in 2017, but was closed down by Chinese censors for being “incommensurate with socialist core values”.
Zhang soon returned in 2016 with Douyin, a Chinese social network that creates short music, lip-sync, dance, and comedy, mostly in the form of short videos. This functionality was significantly enhanced with the acquisition of the American app Musical.ly in 2018, which also led to the launch of an international version of the app, branded as TikTok, later that year.
Zhang remained acutely aware of China’s censors, the concerns of other nations, and the experience of Huawei. He sought to separate the TikTok business where possible, for example by storing all of its data in USA and Singapore. In June, Kevin Mayer, previously chairman of Walt Disney International joined TikTok as CEO, and as Bytedance’s COO. TikTok, with over 1 billion users, is now twice the size of the Chinese version, Douyin.
In the last month, the US government threatened to ban TikTok from the USA, unless it was sold to an American company. Zhang’s old friend Microsoft stepped forwards, and is now exploring a $50 billion acquisition of the social media business. Having already acquired LinkedIn, Microsoft recognises that networks and content are as important as software to its future growth.
As businesses emerge from the initial crisis of the Covid-19 pandemic, many of the impacts are becoming clearer. Brian Chesky, CEO of Airbnb which lost over $1 billion in direct revenues during the last 6 months, says that he now realises that his business will have to fundamentally change. “We got to big, we made some wrong decisions. We need to go back to what we are really about, connecting people. We will change dramatically” he said this month.
Some of the short-term Covid-19 survival measures, like Airbnb’s introduction of online home tuition classes – from cookery courses to salsa dancing – were a great success, and will continue. Some suspended business activities will resume, change, or never return. For many industries – from travel to healthcare – there will be lasting structural change.
Now is the moment, as we shift from survival to slow recovery, that businesses need to be decisive in what to do, and what not. Already, some companies – like Avon, Coursera, Door Dash and Stripe – have made decisive choices during the lockdown period, and are now thriving amidst the turbulence.
The “Survive and Thrive” Matrix
I created this “Survive and Thrive” Matrix as a simple four box framework for you to decide: what to continue, and what to change:
As you work through the “Survive and Thrive” matrix consider:
- What can we learn from our survival actions, both the temporary activities that we will not continue, and the new actions that we will continue?
- How can we embrace the new activities in ways that might lead to more lasting change, even change our view as to future possibilities and strategic goals?
- As we restart activities that were temporarily suspended, how can we ensure that we do not fall back into our old ways, and inefficiencies?
- How can we combine the new/enhanced and restarted/adapted activities, and accelerate them to create advantage, and shape the new emerging markets?
As Chesky made choices, both in crisis mode when the pandemic hit, but also now in recovery, he has stuck to a key principle … make decisions “future back”. By this he means don’t make decisions purely on the present, but start by thinking what is the future you still want to create, how are the conditions to get their changing, and what will be most important.
This takes both foresight, how you see the changed future, but also insight, how the attitudes and behaviours of consumers are changing, and will change. Obviously, a business with a strong clarity of purpose, will have a better starting point for decision making. Equally, as human and technology issues become more significant, and social and environmental issues become more urgent and popular in society, there are new factors to embrace in making the right choices, and developing innovative ways forward.
Helping you “Build Back Better”
“Build Back Better” is a new online program for business leaders, developed in partnership with GERBUS Academy, starting on 2 September, with 3 x 4 hour online workshops, in which I will work directly with you.
It is your opportunity to step back and reimagine your business, how it can most effectively recover in the short-term, in a way that also creates a better business for the long-term.
The pandemic and subsequent recession are moments of dramatic change in every market, for customers and business. It is challenging, but also a time of opportunity. In fact, 57% of the Fortune 500 companies were created during downturns, when attitudes and priorities shift.
The post-pandemic world is a unique chance to rebuild your business in a better way, one which is more sustainable, more agile and resilient, more future-proofed.
How will you “build back better” after Covid-19?
The program is accessed through GERBUS Academy and will have a global context, but at the same time, practically applied to the specific context of your own business.
The program is build on practical insights from around the world – how companies from Airbnb to Zespri and coming to terms with the consequences of chaos and uncertainty, change and transformation. For some it is a complete pivot in terms of products and services, for others it is a rush to become a truly digital business.
However at the same time, to seize the opportunity of this moment, not just to rebuild the way we were, to to build back better – for a better future – in a more agile and resilient, customer-driven and future-proofed way – but also to address some of the most pressing challenges – how to align business and society, technology and humanity, profits and a higher purpose.
Over these three intensive, practical yet stretching, half-day online sessions, I will guide you through a process for accelerating your business recovery as we move from crisis to downturn, and also shaping your business for a better future.
Sign up for the program here.
“The future of work” has become a hot topic in recent months – the end of the office, the shift to distributed working, careers to contracts, functions to projects, jobs displaced by machines. Yet the real challenge is not people, but the organisation structures that still limit them.
Consider these facts … Only 1 in 5 employees believe their opinions matter at work, only 1 in 10 have the freedom to experiment with new solutions, and 1 in 11 say they can influence important decisions.
“This is a waste of human capability. We must do better” says Gary Hamel, co-author of the new book “Humanocracy: Creating organisations as amazing as the people inside them.”
Humanocracy
“In a world of unrelenting change and unprecedented challenges, we need organisations that are resilient and daring”
“Resilient, creative, and passionate” are the qualities organisations now need, says Hamel and co-author Michele Zanini, yet many organisations are “inertial, incremental, and inhuman”. Organisations should be rebuilt “to free the human spirit”.
“Humans are adaptable, creative and passionate – but organisations are mostly not”. Even though openness, flexibility, and creativity are essential, our current bureaucratic organisations are not allowing us to pursue those qualities, he says.
The BMI Tool
Hamel suggests that most of the bureaucracy that stifles organisations is invisible, so leaders should calculate the “Bureaucratic Mass Index” (BMI) of their organization.
“People pay attention to things that can be measured. To dismantle bureaucracy, then, the first step is to be honest about how much it’s costing your organization” he says. These costs fall into seven categories:
- Bloat: too many managers, administrators, and management layers
- Friction: too much busywork that slows down decision making
- Insularity: too much time spent on internal issues
- Disempowerment: too many constraints on autonomy
- Risk Aversion: too many barriers to risk taking
- Inertia: too many impediments to proactive change
- Politics: too much energy devoted to gaining power and influence
Not all of these costs can be easily measured, but that shouldn’t deter you from working to calculate your organization’s bureaucratic burden. Hamel calls it the BMI, or bureaucracy mass index.
Here’s a link to the BMI self-assessment tool
Examples of organisations “as amazing as the people inside them”
Of course there are some great examples of amazing organisations that do release the power of humanity. The legends of Southwest Airlines and Zappos have been updated by new examples in recent times, who have gone beyond front line empowerment to reimagine their entire ways of working.
Just this week Siemens, the huge German engineering company said that it wants “a different leadership style, one that focuses on outcomes rather than on time spent at the office … trusting and empowering employees to shape their work themselves to achieve the best possible results.
In my forthcoming book “Business Recoded” I explore more of these companies. I talk to Jos de Blok, founder of Buurtzorg, Zhang Ruimin CEO of Haier, and many others. Some seek to reduce levels of hierarchies, to focus on outcomes not inputs, to create self-managing teams, to let employees choose their own bosses, and much more.
Here are a few of them:
Buurtzorg, the Dutch healthcare business … read more
Haier, the Chinese home appliances leader … watch more about the Rendanheyi model
Red Hat, the open sourced tech business
Supercell, the Finnish gaming business … read more
Valve, the US entertainment company … read more, including their internal handbook
WL Gore, the American textile innovator … read more
Image: Unsplash
In an exclusive extract from my forthcoming book Business Recoded, meet one of the most inspiring business leaders, shaking up today’s world. He embraces the opportunities of relentless change, the power of disruptive technologies, and the courage to create a better future in his own vision. In the book, I explore the stories of many of the world’s most fascinating leaders right now, and develop 49 codes that help you redefine the future of your business, and yourself.
The Leadership Code of Evan Spiegel
Evan Spiegel sits in his loft-sized office, taking up the top floor of Snap Inc’s head office in Santa Monica. On the beach outside, young people chat and surf, sunbath and play. Inside, his Snapchat platform enables those same teens and young twenty-somethings to stay connected day and night. Spiegel is one of the them, still in his twenties, but also a multi-billionaire tech entrepreneur founder of Fast Company’s “world’s most innovative company” of 2020.
A little like his hero Steve Jobs, Spiegel studied design at art college, followed by an internship at Red Bull, which taught him much about consumer culture. At Stanford he launched a start-up with classmate Bobby Murphy, initially called Picaboo, which evolved into Snapchat in 2011. He dropped out of college when the app reached 1 million daily users a year later. In 2014 Mark Zuckerberg offered him $2 billion for the business, which he turned down, instead choosing an IPO in 2017, which valued the business at $30 billion.
Then everything went wrong. Spiegel rapidly grew his team to thousands, putting himself at the heart of all technology development, yet Snapchat was haemorrhaging users, losing 5 million in 2018, and losing most of his senior team. The stock price dived by 90% and most people thought it was all over. However, Spiegel wasn’t finished, knowing that he needed to fix his business, and his internal workstyle. With Murphy he reimagined the app around what consumers liked. He invested heavily in Augmented Reality (AR) tools, and also added crazy rabbit ears to photos, which might sound like a gimmick, but were loved by his young audience.
Apple and Alphabet see the future of the smartphone eventually migrated to some form of headset device, but Snap is focused on its cheap and fun Spectacles, cool designs with built in AR cameras.
The team drove for new types of content, developing a Netflix-style platformfor short 5 minute movies with teen-specific content, and a second app called Bitmoji which allows users to make Simpsons-like caricatures of themselves, and then placing your avatar into animated movies alongside your friends, in Bitmoji TV.
What emerged was a very human approach to technology. While many older audiences might trivialise those rabbit ears, Spiegel knew they could make his technology business cool, desirable and incredibly human.
In recent months, Snap has responded to the Covid-19 lockdown by providing new types of support to users, including a teen-focused mental health app “Here for you” with videos on how to cope with stress and anxiety, and how to support others. Last month Spiegel also formed a partnership with Headspace, creating a series of “mini” meditation apps.
Here’s what happened at Snap’s recent virtual Partner Summit 2020:
https://www.youtube.com/watch?v=l7cd65DdP2w
Making technology “more human” will be a key step to progress in forthcoming years. This could be like Pokémon Go embracing augmented reality in gaming or using gaming itself to transform activities such as shopping, like Alibaba’s gamified incentives to attract shoppers its 11:11 Shopping Festival, or Kahoot making education more fun.
© Extracts from Peter Fisk’s forthcoming book Business Recoded
I first met Avon’s new CEO, Angela Cretu, during a customer-centricity masterclass I was delivering in Budapest a decade ago. As we talked about the primacy of the consumer, and how to create better propositions for them, she was adamant that in her business it was the network of self-employed sales representatives who were most important, and the proposition to them.
For years, Avon has stood out for its distinctive business model. It’s network-based model of peer to peer sales has thrived, selling to friends and neighbours within local communities, inspired by Avon’s support in “empowering women” to achieve independence, success and personal wealth. It also thrives on representatives recruiting their own local teams of representatives, with those at the top of “pyramids” able to potentially make millions.
However all of that changed with Covid-19. For years, despite declining sales and increasing competition from a new breed of direct and community-based beauty brands like Glossier and Beauty Pie, Avon had resisted a shift to digital. As competitors embraced natural ingredients and new business models, Avon clung to its old model of success.
Cretu, a 45 year old Romanian who has been with Avon for 22 years, took on the top job after the company was acquired by Brazil’s Natura for $2 billion last year, (Avon rejected offers of $10 billion back in 2012). The Sao Paulo-based company, led by Roberto Marques, has also acquired Body Shop and Aesop in recent times, restyling itself as Natura & Co.
Within weeks of starting her new role, one of Avon’s few growth markets, China, was locked down. Other key markets like Spain and Italy quickly followed. Cretu’s first response was to her 5 million self-employed sales representatives, providing masks and safety guidance. But the business was in deep trouble, unless it changed quickly.
“It was a wake-up call to our business” she says, “Everybody came together in ways I could never have dreamt of. This spirit has accelerated the appetite for people to change and adopt new ways to work almost overnight”.
A new digital sales platform was rolled out within 8 weeks, giving representatives new digital tools to build their own websites within the Avon ecosystem, migrate their contact databases, and establish new forms of relationships with consumers. Avon reconfigured its logistics to offer deliveries direct to consumers, once ordered through representatives.
“We have learnt that we have to stop acting in a hierarchical corporate way and start acting like a network of professionals, empowering one another, making fast decisions” she says.
Image: Angela Cretu
Many companies have pledged to reduce their carbon emissions, often using offset-type tactics to alleviate their guilt, and sometimes going further to the point of neutrality, where they leave the world no worse than before they started. This is nothing new. Al Gore’s An Inconvenient Truth woke us up to the challenge a decade ago, yet we have still not responded as we all need to.
Microsoft stepped up earlier this year, to go further, and committed not just to reduce its emissions, but to go “carbon negative”, wiping out all the carbon the company and its suppliers have emitted since its founding in 1975. Since then, Microsoft has released a series of announcements updating its progress.
This is a big deal, as Vox Magazine described: “The company is setting new standards, especially in the discipline and transparency it is applying to the effort, and to bring other companies, both suppliers and competitors, along with it, using shared metrics and data. There is more it could do, of course, but its more than most, and will make a real impact.”
3 types of carbon emissions
The carbon emissions of a company (or person, city, or country) can be divided into three types:
- Scope 1 emissions come directly from resources the business owns or controls, like furnaces or delivery vehicles.
- Scope 2 emissions come from the power plants that generate the electricity the business uses.
- Scope 3 emissions are indirect, “embedded” in the materials and services the business uses, representing the emissions of the full supply chain (eg business travel, carbon emissions embedded in every plane ticket.)
In the early days of corporate climate engagement, companies typically measured and reduced only their direct energy emissions (scope 1 and 2). But in the past several years, in part thanks to the example set by companies like Dow, Unilever, Apple, and Microsoft, measuring and taking responsibility for scope 3 emissions has become the new norm.
This is significant, because for most companies, including Microsoft, scope 3 emissions are substantially larger than scope 1 and 2 combined.
“At Microsoft, we expect to emit 16 million metric tons of carbon this year,” president Brad Smith wrote in a January blog post. “Of this total, about 100,000 are scope 1 emissions and about 4 million are scope 2 emissions. The remaining 12 million tons all fall into scope 3. Given the wide range of scope 3 activities, this higher percentage of the total is probably typical for most organizations.”
Microsoft as a sustainability leader
Microsoft announced it has completed the largest-ever test running data center servers on hydrogen fuel cells, which can be powered by zero-carbon hydrogen generated from renewable energy. Currently, even if they run entirely on renewables, data centres have diesel generators on site for long-term backup in case of an outage. With 160 data centers worldwide and multiple generators per data center, that adds up to a lot of diesel generators. The company has pledged to phase them all out by 2030. That’s why it is testing fuel cells as backup power.
This is just one of a string of climate initiatives that go back almost a decade. The company has been 100 percent carbon neutral, through the purchase of carbon offsets, since 2012. In 2013, it implemented an internal carbon tax on the scope 1 and 2 emissions of all divisions, with the revenue going toward sustainability improvements. It created a business unit focused on climate solutions, which produces things like AI for Earth. It recently succeeded in buying enough renewable energy to account for all US domestic operations.
Microsoft’s latest sustainability report recounts all these efforts and more, including substantial efficiency upgrades at its campuses. In 2016, it won a climate leadership award from EPA.
“We’ve seen them as a leader since 2013,” says Nicolette Bartlett, climate change director at the Carbon Disclosure Project (CDP), a global clearinghouse of corporate sustainability data. The CDP has a scorecard, which takes into account hundreds of sustainability and transparency metrics, and Microsoft has consistently gotten an A. “It really matters to them,” Bartlett says.
In recent years, thanks to the IPCC report and pressure from investors and employees, concern over climate change has risen to the highest levels of the company. Josh Henretig, who spent 12 years on the company’s global sustainability team, rising to senior director before leaving in February, says he witnessed the shift from his team pushing to his team being pulled. “We started to almost stumble under the full weight and examination that the executive team imposed on us around the question: What’s really required?” he says.
“At this stage,” says Verena Radulovic, director of corporate engagement at the Center for Climate and Energy Solutions, “Microsoft has enough experience with reducing its own emissions, and support from its leadership to keep doing so, that it is able to take its climate commitment to a more ambitious level.”
Towards “carbon negative: by 2030
In January 2020, Microsoft made a startling announcement: Not only will it reduce its scope 1, 2, and 3 emissions by 55 percent, it will continue beyond that and go carbon negative, drawing down more carbon than it emits, by 2030. By 2050, it will draw down enough carbon to account for all the company’s emissions since its founding in 1975. “It set a new bar for what is considered climate leadership,” says Radulovic.
This represents a radical acceleration of Microsoft’s carbon reduction efforts:
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Brad Smith, the company’s president, was backed by CFO Amy Hood and CEO Satya Nadella, who together laid out a set of principles that would guide the company’s approach:
- Grounding in science and math
- Taking responsibility for our carbon footprint
- Investing for new carbon reduction and removal technology
- Empowering customers around the world
- Ensuring effective transparency
- Using our voice on carbon-related public policy issues
- Enlisting our employees
Nos. 1 and 2 are about proper measurement, scope 1-3 emissions, and historical emissions. “While we at Microsoft have worked hard to be ‘carbon neutral’ since 2012,” Smith writes, “our recent work has led us to conclude that this is an area where we’re far better served by humility than pride.”
“We had some very heartwarming, but also uncomfortable, conversations,” says Henretig.
Through these discussions, the company concluded that voluntary offsets are insufficient. It is now moving to a model where it directly contracts with renewable projects through power purchase agreements, (PPAs) — it is aiming to hit net zero for its scope 1 and 2 emissions by 2025 — and will compensate for what it can’t directly reduce with negative emissions.
In this area, especially, Microsoft is showing real leadership.
As for No. 3, the company announced it will establish an investment fund that will target early-stage clean energy technologies, aiming to spend $1 billion over the next four years.
Some critics have argued that the venture capital model, built around big bets with potentially big returns, is a narrow way to approach the needs of the energy sector. Just recently, for instance, the International Energy Agency argued that crucial early-stage technologies need enabling infrastructure to continue developing.
“I think it’s a missed opportunity,” says consultant and former corporate social responsibility (CSR) executive Lindsay Baker. “There are opportunities to invest in infrastructure and other types of projects that have a market rate of return, more in line with just getting your money back — I would really like to see corporations making more of those kinds of investments.”
Baker also notes that there are “plenty of opportunities for charitable giving that will help move the needle on climate,” including in lab-stage research or companies still in product development. A company like Microsoft, with well over $100 billion in the bank, could put some money toward these other areas as well, or at least divert a portion of its $1 billion to them.
Nonetheless, a billion dollars in VC money is nothing to sneeze at. Nor is the signal Microsoft has sent to other companies by committing to a goal it admits it does not yet have the technology to achieve. It says going carbon negative will require “negative emission technologies (NET) potentially including afforestation and reforestation, soil carbon sequestration, bioenergy with carbon capture and storage (BECCS), and direct air capture (DAC).”
Some of those technologies don’t exist at meaningful scale yet, and Microsoft is making a concerted effort to accelerate them. Especially if it can inspire other companies to make similar investments — Amazon announced a $2 billion climate fund in June — the spillover effects will help boost the entire sector.
“While much of Microsoft’s focus is on technologies that will help it reduce its own footprint,” says Radulovic, “the hope and vision is that these technologies will scale and others can use them.”
No. 4 is about products and services Microsoft will design that will enable its clients to reduce their own emissions. We will return to No. 4 in a bit, since some of the biggest controversies reside here.
No. 5, transparency, is another area where the company is showing leadership. Every year, Microsoft will publish a sustainability report, breaking down its emissions and progress against its goals. It has had its targets verified by the Science Based Targets Initiative as being in line with a pathway to limiting temperature rise to 1.5°C. In reporting its emissions, it is following the World Resources Institute’s Greenhouse Gas Protocol. And it is sharing its data with the CDP. In short, it is modeling best practices in transparency.
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The practical steps to get started
Microsoft chief environmental officer Lucas Joppa published an update on Microsoft’s progress:
First, Microsoft is joining with nine other large companies — A.P. Moller-Maersk, Danone, Mercedes-Benz, AG, Natura & Co, Nike, Starbucks, Unilever, and Wipro, along with the Environmental Defense Fund — in Transform to Net Zero, “a cross-sector initiative to accelerate the transition to a net zero global economy.” It will run on much the same principles that Microsoft laid out for itself, including science-based measurement and transparency, with a commitment to knowledge sharing and norm-setting.
“When you look at the reach of these initial eight companies, as well as the supply and value chains of those companies, you start to get a pretty big market share,” says Jenn Crider, senior director of communications at Microsoft. It will exert a pull on other companies to use “a common and standardized approach to the math, the language, and the accounting,” she says.
Second, Microsoft debuted a sustainability calculator that will help its cloud clients calculate and reduce their carbon footprint. Third, it pledged to be completely free of diesel fuel and diesel generators by 2030. Fourth, it raised its internal carbon tax and broadened it to encompass scope 3 emissions. Fifth, it updated its Supplier Code of Conduct to require suppliers to calculate and report their full emissions.
Sixth and perhaps most intriguingly, it has issued a request for proposals (RFP) seeking, for this fiscal year, a million metric tons of “carbon removal from a range of nature- and technology-based solutions that are net negative and verified to a high degree of scientific integrity.” It recognizes that these technologies are not fully developed, acknowledges that it will make mistakes, and says it is explicitly “using this RFP to harvest and share best available science and market intelligence on carbon removal,” to make things easier for other companies that want to follow suit.
“Someday, CO2 removal will be fully commoditized,” says Julio Friedmann, a carbon researcher at the Center for Global Energy Policy at Columbia University, who has helped advise Microsoft on its RFP. “These actions help put us on that course.”
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Seventh, Microsoft announced the first investment from its $1 billion Climate Innovation Fund: $50 million will go to Energy Impact Partners, “a leading venture capital firm focused on decarbonized, decentralized energy industry transition that shares learnings among partners and facilitates collaboration.”
Eighth and finally, the company is taking action on environmental justice, partnering with renewables developer Sol Systems on 500 megawatts of distributed solar energy projects “in under-resourced communities, working with local leaders and prioritizing minority and women-owned businesses.” Given that the average residential rooftop solar system is a bit over 5 kW and commercial solar rooftop systems around 100 kW, that’s a lot of solar projects, representing the “single largest renewable energy portfolio investment Microsoft has ever made.”
Alongside those projects, the company will provide $50 million in “community-led grants and investments that support educational programs, job and career training, habitat restoration and programs that support access to clean energy and energy efficiency.”
Read more at Vox Magazine
It was not a time for focusing on profits. It was a time for looking after people. As the Covid-19 pandemic swept across the world, locking down cities and nations, economies quickly felt one of the most dramatic shocks of recent times, and its far from over. Many jumped to protect employees, and then using their assets to support society. Louis Vuitton’s perfume gave way to hand sanitiser, Burberry’s production lines converted to protective clothing.
Yet at the same time, other companies thrived. Pharma companies quickly swung into the search for vaccines, while technology companies ramped up their support to home workers, home educators, and remote living. Online retailers too quickly became essential parts of our lives, as we switched to digital lives, unlikely to return to old behaviours. Eric Yuan’s Zoom online platform became a favourite, while new entrants like China’s Pinduoduo turbo boosted their growth.
So who did best?
A recent analysis of 6 month (Jan to June 2020) growth in market capitalisation, by Financial Times, reveals some obvious but also interesting insights. Not least is the staggering growth of the leading companies:
1. Amazon. Market cap added = $401.1bn
Amazon anticipates it could spend $4bn to keep its logistics running during the coronavirus crisis.
As world leaders ordered their citizens indoors, Amazon became the emergency port of call for those desperate to stock up on vital household goods — a rush that led the company to temporarily shut its warehouses to “non-essential” products. Record revenues followed, but also soaring costs. Chief executive Jeff Bezos warned as much as $4bn could be spent on virus mitigation, such as testing labs and thermal cameras — potentially pushing Amazon into its first quarterly loss since 2015. Still, the accelerated shift to online shopping and the increased importance of its cloud computing business in the remote work era drove Amazon’s stock to all-time highs.
2. Microsoft. Market cap added = $269.9bn
75m people used the Teams communication app in a single day in April, up from 20m in late 2019.
Microsoft’s shift to the cloud under Satya Nadella has left it well-placed for a world where large numbers of people are working remotely. The Teams communication app has become a way for workers to stay in touch. The Azure cloud computing platform has become a more critical part of the digital backbone for many companies. Microsoft even has a way to satisfy the personal: a record 90m players turned to the Xbox Live gaming service in April.
3. Apple. Market cap added = $219.1bn
The iPhone maker managed to rake in $58.3bn in revenue in the March quarter, despite closing all of its retail stores.
While all of Apple’s 500 stores around the world were forced to close, revenues in the opening quarter were resilient thanks to robust online sales. Apple managed to release a new iPhone, iMac and MacBook Air, drawing more users into an ever-expanding ecosystem of wearables and services. Apple executives predicted sales of some items would even accelerate, as millions of consumers working from home would opt to upgrade their electronics. Investors crowned Apple the first $1.5tn company.
https://www.youtube.com/watch?v=4An0ndagZsQ
4. Tesla. Market cap added = $108.4bn
402 miles: the range of Tesla’s latest Model S, underscoring its technological lead.
The clear technology leader for battery-powered cars, Tesla is outpacing legacy competitors as they struggle to retool factories and perfect software. Meanwhile, chief executive Elon Musk is promising to upend the entire model of car ownership with fleets of self-driving robotaxis that would charge by the mile. Still, even Mr Musk said on Twitter, on May 1, that the “Tesla stock price is too high”. Since then it has climbed even higher.
5. Tencent. Market cap added = $93bn
Online gaming revenues rose 31 per cent in the first quarter.
Chinese people isolated at home turned to Tencent’s virtual worlds. In its hit games such as Honor of Kings, users shelled out for new weapons and outfits. Tencent’s video subscriber numbers swelled to 112m, its music streamers jumped to 43m and monthly users of its social media app WeChat — indispensable for buying noodles and verifying users’ health during the coronavirus period — hit 1.2bn. In a global spending spree, Tencent has exploited falling valuations: it recently acquired Norwegian game developer Funcom, took a stake in German developer Yager, and poured capital into an array of fintech start-ups.
6. Facebook. Market cap added = $85.7bn
39 per cent — the rise in advertising impressions at Facebook in the first quarter of the year.
Knocks to Facebook’s advertising business during the pandemic have been offset by its 2.6bn entertainment-starved users spending more time on the platform. Small business advertisers slashed their marketing budgets. But Facebook’s engagement levels exploded, increasing its advertising impressions. The company has launched new video chat and livestream features, as well as an ecommerce play to rival Amazon, known as Facebook Shops. However, its content moderation capabilities have been stretched by coronavirus-related misinformation and conspiracy theories. Chief executive Mark Zuckerberg has come under fire from employees for failing to flag incendiary or misleading statements from US President Donald Trump.
7. Nvidia. Market cap added = $83.3bn
Hours spent playing games on Nvidia’s platforms jumped 50 per cent during lockdowns.
Nvidia’s graphics chips have become a mainstay of gaming machines and machine learning systems, insulating the company from the worst of the downturn. Sales of gaming chips were dented by the closure of internet cafés in China, while the automotive industry, a big customer, has experienced a collapse in sales. But Nvidia’s business has been helped by the growing importance of ecommerce in selling new graphics cards, along with a shift towards online gaming. It has also been riding a boom in demand for data centre chips from big internet companies, as AI becomes a more important component of their services and overall digital activity jumps.
8. Alphabet. Market cap added = $68.1bn
Even as advertising collapsed at the end of March, YouTube’s revenue was still growing nearly 10 per cent.
Given that online advertising went into sharp decline as the crisis unfolded, early signs suggest Alphabet has shown surprising resilience. Sectors such as travel and local services may have dried up, but in other areas Google — which supplies virtually all Alphabet’s revenue — has reported that demand is holding up better than expected. Search advertising appeared to stabilise early in the crisis, after touching bottom in late March. The Google cloud computing platform, Meet video app and Play app store have benefited from the shift of work and entertainment online.
9. PayPal. Market cap added = $65.4bn
7.4m — net new users in April.
The pioneer of online payments has found increased relevance in the real-world pandemic, rolling out new capabilities for merchants to handle contactless payments in physical stores. PayPal facilitated the transfer of more than $1bn in federal loans as part of the US Small Business Administration’s Paycheck Protection Program. Its money transfer app Venmo was popular, pre-coronavirus, for friends settling dinner bills. Now, the company says, it is witnessing larger, cross-generational transfers — such as socially-distanced withdrawals from the Bank of Mum and Dad — and increased usage for paying for goods and services that might otherwise have been paid for with cash.
10. T-Mobile. Market cap added = $59.7bn
T-Mobile added 452,000 postpaid phone subscribers in the first quarter.
The US wireless company benefited from the twin forces of lockdowns, which made people more dependent on their phones for connection, and the closing of its long-awaited merger with rival Sprint. The deal made T-Mobile the third-largest player in the US telecoms market, trailing AT&T and Verizon, and is expected to give the big phone companies more pricing power.
11. Pinduoduo. Market cap added = $55.2bn
Shoppers on its platform increased to 628m.
The ecommerce group benefited as hundreds of millions of Chinese turned to shopping from their smartphones rather than going to malls. As demand rose for its ultra-cheap goods, the total value of transactions over its platform soared and revenues were up 44 per cent in the first quarter. Its annual shopper count is fast approaching the 726m who shop with its chief rival Alibaba.
12. Netflix. Market cap added = $55.1bn
183m global subscribers by the end of Q1, a 23 per cent jump from a year earlier.
Netflix added twice as many subscribers as it had forecast in the first three months of the year, as the largest paid streaming service entertained global lockdown audiences with shows such as Tiger King, La Casa de Papel and Love is Blind. The biggest boost came from Europe, the Middle East and Africa, where it signed up nearly 7m subscribers in the first quarter. The company is enjoying a “perfect storm”, said Michael Nathanson, analyst at MoffettNathanson. “The longer the current situation lasts, the bigger the benefit to Netflix.”
13. Meituan Dianping. Market cap added = $53.6bn
Food delivery orders had bounced back to 90 per cent of their pre-pandemic level by mid-May.
China’s “everything app” was hit hard by the country’s lockdown, which closed many of the restaurants it partnered with to deliver meals — its largest chunk of business — as it swung to a loss in the first quarter. But by May, executives were upbeat as food delivery and travel booking recovered. Analysts said that high-end restaurants, which were afraid of “cannibalisation” and “bad user experience”, had no choice but to turn to the platform for deliveries. Its average ticket price climbed 14 per cent in the first quarter and many riders began delivering to set spots in apartment buildings, saving them time and improving their efficiency.
14. Shopify. Market cap added = $51.4bn
62 per cent more new Shopify stores were created from March 13 to April 24 than the previous six weeks as locked-down retailers rushed online.
Canadian company Shopify overtook eBay to become the second-biggest ecommerce group after Amazon by US market share last year, processing $61bn worth of merchandise globally. The pandemic accelerated shopping’s shift online, with Shopify among the prime beneficiaries — doubling its valuation since the start of 2020. Start-ups such as Allbirds shoes and global groups including Heinz are among hundreds of thousands of brands using its software and services to sell directly to customers — cutting out middlemen such as Amazon.
15. Zoom Video. Market cap added = $47.9bn
Zoom video calls reached 300m participants a day in April.
The video conferencing company has come to symbolise the work-from-home boom of 2020, making its fake digital backdrops a cultural touchstone of the coronavirus crisis. Opening its business-focused app to a wide group of non-paying consumers and educational institutions brought challenges, but also helped turn Zoom into a household name. Wider usage brought attention to its security lapses and while some prominent companies warned their staff not to use it, the controversy did little to hurt business. By the end of April, the number of medium and larger companies using Zoom was up more than three-fold from a year before, while revenue soared 169 per cent.
Others, further down the top 100 list, include:
19. AbbVie. Market cap added = $37.7bn
Received approval for its $63bn deal for Allergan, the maker of Botox.
20. Kweichow Moutai. Market cap added = $35.5bn
Maker of China’s best-known distilled spirit, with profit margin above 90%.
22. Alibaba Group. Market cap added = $32.8bn
Alibaba’s cloud unit grew 57%, but sales stagnated for Tmall and Taobao marketplaces
26. Roche. Market cap added = $27.1bn
One of the diagnostics “Big 4”, has benefited from antibody tests for coronavirus
32. Novo Nordisk. Market cap added = $19.8bn
Net profit in the first quarter was $1.74bn. One of the world’s largest insulin producers.
37. Mercado Libre. Market cap added = $18bn
Sales on the Latin American ecommerce platform surged 76% in April.
51. Nestlé. Market cap added = $14.2bn
Nestlé’s petcare division boasted 13.9 per cent organic growth in the first quarter.
75. Hermès. Market cap added = $10.6bn
$2.7m of sales were made in a single day at a Hermès store in Guangzhou when it reopened
77. Spotify. Market cap added = $10.3bn
130m global subscribers by the end of Q1, up 31 per cent from a year ago.
85. TAL Education. Market cap added = $9.4bn
4.6m students were signed up in February, a 57 per cent year-on-year rise.
92. Just Eat Takeaway. Market cap added = $8.9bn
Having merged with rival Takeaway, it will now pay $7.3bn buy US rival Grubhub
95. L’Oréal. Market cap added = $8.7bn
The world’s biggest cosmetics company saw online sales jump 53% in the first quarter.
96. Snap. Market cap added = $8.6bn
Source: Financial Times
Image: Unsplash
The future might seem incredibly uncertain right now. It’s only human to be fearful and even initially paralysed to the point of inaction. But for leaders it needs to be more.
Andy Grove, former CEO of Intel, once said “Bad companies are destroyed by crisis, good companies survive them, great companies are improved by them.”
Change drives new attitudes and behaviours, new ideas and solutions. If we see innovations take off rapidly in good times, when there is no need to change, imagine how the right ideas can grow when there really is a burning platform.
57% of companies were founded in a downturn
A study by the Kauffman Foundation found more than half of the companies on the Fortune 500 list – 57% to be precise – were launched during a recession or bear market.
That means it’s likely that right now, amidst apparent economic chaos, some of tomorrow’s best companies are just getting their start. All of these companies started during the midst of recessions, seizing the opportunity of changing attitudes and behaviours, as other battled to survive:
- Disney … Walt Disney Productions launched their first animated cartoons in the depth of the 1929 Great Depression, bringing a smile to people in tough times
- Burger King … started as Insta-Burger in California, using a new machine called an Insta-broiler to cook meat faster and cheaper as post-war America struggled in 1953
- Microsoft … Bill Gates and Steve Wozniak launched their first software in the downturn of 1975 as companies sought efficiency through collaboration and speed.
- CNN … Ted Turner launched the world’s first 24 hour news channel in 1980 as USA plunged into a double-dip recession, and people had an urgent hunger for fast news.
- Apple … In 2001 Steve Jobs launched the iPod amidst the debris of the dotcom bubble bursting all around, reviving the fortunes of Apple which started in 1975’s downturn.
These companies typically jumped on moments of change, as moments to start anew. Not with the same old businesses as before, but with new concepts and new business models. Where it offered something at a much cheaper price, or faster and easier, or a latent opportunity just waiting for some airtime.
Innovators in downturns outperformed others by 14% over next decade
The companies that grew the most during the 2008 crisis were those that invested in innovation.
Some time ago, Harvard Business School’s Nitin Nohria joined forces with its business administration professor Ranjay Gulati looked into the financials of more than 4,700 public companies over three global recessions: 1980, 1990, and the 2000 bust.
Their results were brutal. 80% of companies endured a painful recovery, with only 9% of the sample group improving their performance and outdoing rivals in their industry.
So which companies make up this 9%? Were they the organizations increasing their innovation investments, as with the study of the 2008 financial crisis? Not necessarily. According to Gulati and Nohria, “Businesses that boldly invest more than their rivals during a recession don’t always fare well either. They enjoy only a 26% chance of becoming leaders after a downturn. And companies that were growth leaders coming into a recession often can’t retain their momentum; about 85% are toppled during bad times.”
So if investing in innovation during a downturn isn’t the key to success, what is?
Harvard Business School came to the same conclusion we did. The secret is striking the right balance between defense and offense. Successful companies are those that cut costs to survive while simultaneously investing in future growth.
Survive and thrive: defensive and offensive strategies
Nobody enters a recession knowing what’s going to happen, even less so when there’s a pandemic involved. The best you can do as a leader is to set up a portfolio of activities designed to improve efficiency and take advantage of opportunities. You’ll need closed feedback loops to move with agility.
When it comes to reducing expenditure, the research suggested that it’s better to work on improving operational efficiency rather than opting to fire staff, which can lead to dips in morale, problems scaling up, and additional costs down the line when rehiring.
- Re-configure your supply chain to cut out the middleman
- Change how your teams are organized and give them more decision-making power
- Set targets with a special emphasis on cutting costs
- Research what new entrants in your competitive arena are doing and what you can learn from them. By now, you should be looking at competition beyond your industry. If that’s not the case, do it now!
- Co-create solutions with your partners to improve efficiency
- Use capacity from underperforming units to help other parts of the business
To go on the offense, you basically want to do two things. Firstly, change as customer needs do. To achieve that, you’ll need to empower and protect your service design, user experience, and customer research teams.
Secondly, use the insights your team gathers to host a massive opposite thinking exercise – this will enable you to spot non-obvious opportunities.
- Taking advantage of depressed prices to expand in new markets and increase your asset base.
- Increasing investments in R&D and marketing to put yourself at an advantage when the crisis is over. The resources saved by improving operational efficiency (as we mentioned earlier) and the extra capacity you have lying around should help you finance much of this expenditure.
- If you must prioritize projects, focus on exploring business model innovations rather than shiny new technologies. Statistically, an ingenious business model is more likely to give you a competitive advantage as it will be harder to copy.
- Again, I can never stress it enough, stay closely connected to changes in consumer behavior and their needs. Use customer insights to guide your investments and strategies.