Peter Fisk

By 2010, Eren had moved to Silicon Valley, working for several startups. He had partnered up with two other Turkish in the Valley to pitch an e-learning platform. They pitched 30 investors, and they got rejected over and over. His drive and curiosity primed him for a life beyond the expected. And when he first got the internet, his life changed forever.

The path from the village in Turkey to running the leading online education marketplace was not a straight line. In college Bali said he could imagine “a world where anyone could learn anything — from any expert in the world.” Bali and a co-founder created a product with Udemy’s vision six years ago in Turkey. They failed.

Named in the San Francisco Business Times 40 Under 40, Forbes 30 Under 30 and Business Insider’s Top 100 Innovators, Eren brings his entrepreneurial drive and ambition to Carbon to reimagine healthcare and build the world’s largest hospital.

Interview with Thrive Global

https://www.youtube.com/watch?v=SLzi4GeoRiQ

 

In a recent keynote at the San Francisco Founder Institute, Bali compared and contrasted his own entrepreneurial journey and experience across two separate startup ventures, and illustrates some broader lessons for the cohort of new companies to takeaway as they continue to grow their ventures. Here are 5 insights he shared:

1. Internet Levels the Playing Field.

Bali explains that wherever it goes, the internet levels the playing field. He compares the ability for entrepreneurs today to develop breakout global businesses, from anywhere in the world, to the rise of the young Norwegian world chess champion, Magnus Carlsen.

Back in the day, you could only be grandmaster, you could only expect to be the world champion, if you were born in the Soviet Union or one of the major areas where chess was very competitive. But now with the internet, it’s so much more democratized. Now who gets to the top is far more diverse across a lot of countries, and Norway which is a small country has the world champion; Magnus Carlson for instance is from Norway, and so the Internet definitely democratized the concept of being competitive at chess.

Bali explains that his own startup success story is also one of an improbable boy who came from nowhere, and that only the internet made it possible, saying,

I was born in a very small village in the southeast part of Turkey, kind of a very rural village with not too much opportunity… But something happened that changed my life: my oldest sister was going to college, and my parents bought her a computer. So over the summer, I had access to the computer. I started finding mathematic resources and communities, and long story short, I ended up self-training myself in advanced mathematics using the internet and nothing else, and I ended up winning a national gold medal in Turkey for mathematics.

If you listen to the audio, you can tell that Bali does not tell this story to brag about his algebra skills, but instead to emphasize why entrepreneurs absolutely must think globally, both in terms of their future competitors and in terms of their own addressable markets.

2. Some disruptions hide from the entrenched competitors.

Talking about underlying factors of startup success stories, Bali says,

To start a very successful company, two things have to happen at the same time. First of all, your idea has to work, has to be a good idea. In addition to that, it also has to be somewhat controversial idea – if everyone thinks your new idea is great, the best thing you can get is a small exit to an established company.

While it is certainly true that the hottest startups receive early acquisition offers, I think Bali is also saying something more: that many great startups succeed because their future competitors don’t yet see them as threats, even after they’ve initially launched and already begun to disrupt the established market.

Because a startup’s go-to-market strategy can be so novel, the older entrenched competitor is often skeptical of the new innovation, and much slower to adapt than it should be. This extra time can allow a nimble startup to begin growing userbase and refining its offering, all while still somewhat under the radar of the big competitors.

Along the same lines, but more emphasizing the spirit of innovation, Bali notes,

Sometimes something that sounds just so crazy that there’s no way you can do it, is sometimes a much better idea than something that seems very viable and doable.

3. Entrepreneurs must actively network in order to fundraise.

While Bali admits that he was able to very quickly raise a round (and with much more favorable terms) for his second venture Carbon Health, he credits the Founder Institute with being absolutely critical in helping him build the network he needed in order to raise funding for his first venture, Udemy. He says,

Fundraising was not easy at all, but still it was great to start with some network. It’s really hard if you’re not a Silicon valley native or a person who has a huge network in the Bay Area. If you’re not in that kind of minority of the population, it’s really critical to get some initial network who will make some introductions, introduce you to more people—so for us, I don’t think there’s any way we could have got this up and running without the Founder Institute.

4. Reimagine new ways to deliver familiar, needed services.

Talking about the genesis of his second business, Carbon Health, Bali emphasizes that he not only wanted to improve inefficiencies in healthcare, but find a solution where he offer improvements at scale. Noting that Uber built the largest ridehailing service without owning a single taxi, and Airbnb essentially became the largest hotelier without owning a single room, Bali says,

We were looking for a more scalable model, and we realized when we started working with hospitals that we could centralized the user experience for physicians and for patients – all the technology, all the design, all the marketing for a provider brand – but we decentralize all the physical clinics. So we’re running some clinics ourselves, but by and large, the clinics that operate Carbon Health are actually owned by hospitals – they love this user experience, and they want to provide this in their own geographic region. The physical clinics are owned by the hospital, the physicians are employed by the hospital – so we don’t have to take that whole financial risk, and we can actually scale this to thousands of different clinics.

5. Get out the door, and go talk to your customer.

Last, Bali echoes a tried and true tenant of entrepreneurship: go talk to your customer. Ideas are cheap, but strong execution on ideas is rare. Very few founders succeed by staying at their office desk or lab bench—instead, entrepreneurs solve problems by talking to real people who experience real problems. Asking prospective customers smart questions always saves entrepreneurs countless hours of wasted time.

Bali admits that even in his second startup, he re-learned that his team was not the same as his real users were. Answering a question about whether wearables or other health monitoring devices were a major part of Carbon Health, Bali replied,

That was one of the things that I thought was so important that we should do it ASAP – and it ended up that we deprioritized it, because the reality is that once we opened the clinic and started seeing real patients, we realized this was not even in the top 10 priorities of the real patients, who wanted reliable prescription alerts, lab results, and essentially getting in and out faster. So if you’re a technical person like me looking at healthcare from the outside, it sounds like one of the top three most important ideas; in reality, it’s maybe idea number 30.

Purpose defines what the business contributes to the world, or equally, why the world would be a lesser place if the business did not exist.

Purpose creates an enduring cause which the business is willing to fight for. For some this might be an urgent call to action, for others it might be a more personal inspiration. Saving then planet, or achieving your potential, with Nike, or seeking happiness, with Coca Cola.

Tesla exists to “accelerate the world’s transition to sustainable energy”, Starbucks to “inspire the human spirit”, Dove to “help the next generation of women realise their potential”, Microsoft to “empower people to achieve more”, and Swarovski to “add sparkle to people’s everyday lives.”

Purpose creates a richer sense of meaning in your business, inspiring employees to raise their game, to transform and grow themselves and the organisation. It encourages a strategic focus, to rise above the distractions of today, to align on bigger goals and to innovate more radically. Productivity and performance typically follow.

Consumers seek purpose-driven companies

Consumers prefer them:

• Cone/Porter Novelli found 66% people would switch to a purpose-driven brand, and to 91% of millennials. Also 78 % of consumers would tell others to buy, and 73% would defend them
• Edelman Earned Brand says 50% of consumers across 14 major markets, are belief-driven buyers, and they skew younger, with higher percentages among Millennials (60%) and Gen-Z (53%).
• Fuse Marketing, says 85% of Gen-Z are more likely to trust a brand, 84% more likely to buy
• Sustainable Brands and Harris Poll found 80% of people say they are loyal to businesses that help them achieve “the Good Life” (defined by four major components: balance and simplicity, meaningful connections, money and status, and personal achievement) and 76% believe making a difference in the lives of others is necessary for living the Good Life.
• Accenture found 53% of people disappointed with a brand’s words or actions on a social issue complain about it, with 47% walking away in frustration, with 17% not coming back.
• Wall Street Journal found that “Almost 60% of Americans said last year that they would “choose, switch, avoid or boycott a brand based on its stand on societal issues,” compared to just 47% in 2017.
• 2018 Edelman Earned Brand study found that “nearly two-thirds (64 percent) of consumers around the world will buy or boycott a brand solely because of its position on a social or political issue.”

Consumers pay more:

• Nielsen found that 2 in 3 consumers will pay more for products and services from brands that are committed to making a positive social impact.
• IBM research and National Retail Federation found 70% of purpose-driven shoppers pay an added premium of 35% more for sustainable purchases, such as recycled or eco-friendly goods.” (based on 19,000 consumers in 28 countries)

About purpose:

• Harvard Business Review found that purpose helps “redefine the playing field” in a way that opened up new territories for growth, and “reshape their value proposition” in a way that broadened their mission.
• Fortune survey by New Paradigm Strategy Group found that nearly 72% of the adults surveyed agree that public companies should be mission-driven, as well as focus on their shareholders and customers. In that same poll, 64% of respondents say that a company’s primary purpose should include ‘making the world better’.
• Edelman Trust Barometer reports that “80% of consumers agree that a business must play a role in addressing societal issues; they want a company to take actions which increase profits, improve social conditions, and make the world a better place.”
• Deloitte’s Retail Trends 2020 report, which outlines the top six retail trends for the coming year, found that an “authentic purpose is now as important as digital to the next generation of customers.”
• Accenture Strategy’s ‘From me to we: The rise of the purpose-led brand’, 30,000 consumers, found that 62% want “companies to take a stand on current and relevant issues like sustainability, transparency or fair employment practices.”

More creative and innovative

• Harvard EY Beacon Institute survey found that “companies with a strong sense of purpose are able to transform and innovate better.” Executives with purpose have “greater ability to drive successful innovation and transformational change.”
• 53% said their organization is successful with innovation and transformation efforts, while less than one-fifth (19%) report success at companies who have not thought about purpose.
• Deloitte Insights 2020 Global Marketing Trends Report also found that purpose-driven companies report 30% higher levels of innovation.
• Harvard Business Review, found companies with above-average diversity have 19% higher innovation revenues and 9% points higher EBIT margins.
• Also, when Fortune-500 companies were ranked by the number of women directors on their boards, those in the highest quartile reported a 42% greater return on sales,  53% higher return on equity

And growth

• Kantar Purpose 2020 study demonstrates that over a period of 12 years, the brands with high perceived positive impact have a brand value growth of 175%, versus 86% for medium positive impact and 70% for low positive impact.

Employees seek purpose-driven companies

Attracting talent:

• Inc, found that millennials, who will make up 75% of the workforce by 2025, are looking for socially responsible employers.
• Cone Communications Millennial Employee Study found that 64% of millennials won’t take a job if their employee doesn’t have a strong CSR policy, and 83% would be more loyal to a company that helps them contribute to social and environmental issues
• WeSpire found that Gen-Z is ‘The first generation to prioritize purpose over salary. They read Mission Statements and Values documents to select where they work and want their employer’s values to match their values. They expect consistency and authenticity and will call you out, often publicly, if they don’t see it. They will leave companies they believe are hiding or putting too much spin on bad news, ignoring their negative environmental or social impacts, or that have toxic workplace cultures.’
• Peakon says Gen-Z is “the only generation to reference social concerns within employee comments. Raised in a time when the effects of climate change are making weekly headlines, it shows that they care deeply about the world around them.”

Employee performance

• Gallup’s Employee Engagement Poll found that only 34% of American workers were “actively engaged” (defined as “those who are involved in, enthusiastic about and committed to their work and workplace”)
• Organizations and teams with higher employee engagement and lower active disengagement perform at higher levels.
• Compared with business units in the bottom quartile, those in the top quartile of engagement realize substantially better customer engagement, higher productivity, better retention, fewer accidents, and 21% higher profitability.
• Fast Company found that ‘most millennials would take a pay cut to work at an environmentally responsible company.’

Reducing turnover

• Deloitte Insights 2020 Global Marketing Trends Report found that purpose-driven companies had 40% higher levels of workforce retention than their competitors.
• Benevity’s Engagement Study,  found that turnover dropped by an average of 57% in the employee group most deeply connected to their companies’ giving and volunteering efforts.
• Studies show that the total cost of losing an employee can range from tens of thousands of dollars to 1.5–2 times an employee’s annual salary, which for U.S. companies totals more than $160 billion a year. This shows that giving employees a sense of meaning in their work has tangible and hugely impactful benefits.

Investors seek purpose driven companies

A 20-year study by the Torrey Project explodes the myth that an ethical, stakeholder-driven approach to business cannot lead to shareholder returns by examining the long-term historical performance of different sets of companies including the S&P 500, Jim Collins’ “Good to Great” companies, Raj Sisodia’s stakeholder-focused “Firms of Endearment” and Ethisphere’s 2019 “Most Ethical Companies.”

After comparing these 4 sets of companies’ financial performance on the NASDAQ and NYSE over the past 20 years, they found that while Ethical Companies do enjoy a higher level of stock price growth (50% higher than that of the S&P 500 over the same period), stakeholder-focused companies (Sisodia’s Firms of Endearment) had the highest growth of all in stock price (100% higher than that of the S&P 500 over the same period).

This data has two clear conclusions. (1) Ethical business behavior correlates with high financial returns. (2) Companies who take things one step further and adopt a stakeholder-focused model (that explicitly serves employees, customers, suppliers, business partners, investors, local communities, the environment, and society) have historically shown even higher returns than standard ethical companies.

Current Investors:

• According to Morningstar, “net flows into sustainable funds this year are on track to triple their 2018 total, driven by ESG (environmental, social and governance) factors as well as the desire to make a social impact.”
• Bank of America Merrill Lynch report predicted a “tsunami” of capital flowing to “good” stocks, fueled by high levels of interest among women, millennials, and wealthy individuals. They say over the next two decades, $20 trillion in assets will flow into sustainable funds and strategies, nearly equaling the market value of the S&P 500 today (some $24.7 trillion).

Future investors:

• Coldwell Banker, says the “Great Wealth Transfer” will see an estimated $68 trillion passed down from boomers over the next 30 years, and by 2030, Millennials will hold five times as much wealth as they have today.
• DeVere Group, survey of Millennial investors found that some 77% of them say that environmental, social and governance concerns are their top priority when considering investment opportunities.
• It found that ESG concerns topped traditional factors such as anticipated returns (cited as most important by 10% of those polled), past performance (7%), risk tolerance (4%) and tactical allocation (2%) when making investment decisions.
• Swell Investing’s ‘Money Meets Morals’ survey found that 84% of Gen-Z investors are either already invested in socially responsible or impact investments or plan to invest this way in the future. Nearly one in three Gen-Z investors (31%) said they would be willing to allocate 50% or more of their investment portfolio to socially responsible or impact investments. One in four millennial investors would do the same.

 

Steve Jobs said “the only way to do great work is to love what you do.”

In a remarkably personal address, the Apple founder and CEO advised graduates to live each day as if it were their last.

“Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life,” he said. He’d been diagnosed with pancreatic cancer a year earlier.

“Because almost everything — all external expectations, all pride, all fear of embarrassment or failure — these things just fall away in the face of death, leaving only what is truly important,” he continued. “Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.”

Jobs said this mindset will make you understand the importance of your work. “And the only way to do great work is to love what you do,” he said. “If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.”

Settling means giving in to someone else’s vision of your life — a temptation Jobs warned against. “Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition.”

JK Rowling said “it is impossible to live without failing at something.”

The author of the “Harry Potter” series told Harvard’s class of 2008 about the dark period she experienced before achieving success. “An exceptionally short-lived marriage had imploded, and I was jobless, a lone parent, and as poor as it is possible to be in modern Britain, without being homeless. The fears that my parents had had for me, and that I had had for myself, had both come to pass, and by every usual standard, I was the biggest failure I knew,” Rowling said.

But when she was at the bottom, she realized that her life went on, and she decided to press forward. “You might never fail on the scale I did, but some failure in life is inevitable,” she said. “It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all — in which case, you fail by default.

“You will never truly know yourself, or the strength of your relationships, until both have been tested by adversity. Such knowledge is a true gift, for all that it is painfully won, and it has been worth more than any qualification I ever earned,” she said.

Tim Cook said “call upon your grit. Try something.”

Apple CEO Tim Cook delivered the 2019 commencement speech for the graduates of Tulane University, offering valuable advice on success.

“We forget sometimes that our preexisting beliefs have their own force of gravity,” Cook said. “Today, certain algorithms pull toward you the things you already know, believe, or like, and they push away everything else. Push back.”

“You may succeed. You may fail. But make it your life’s work to remake the world because there is nothing more beautiful or more worthwhile than working to leave something better for humanity.”

Sheryl Sandberg said “not everything that happens to us happens because of us.”

During the Facebook COO’s deeply personal commencement speech about resilience at UC Berkeley, she spoke on how understanding the three Ps that largely determine our ability to deal with setbacks helped her cope with the loss of her husband, Dave Goldberg.

She outlined the three Ps as:

• Personalization: Whether you believe an event is your fault.
• Pervasiveness: Whether you believe an event will affect all areas of your life.
• Permanence: How long you think the negative feelings will last.

“This is the lesson that not everything that happens to us happens because of us,” Sandberg said about personalization. It took understanding this for Sandberg to accept that she couldn’t have prevented her husband’s death. “His doctors had not identified his coronary artery disease. I was an economics major; how could I have?”

Stephen Spielberg said “your job is to create a world that lasts forever.”

“This world is full of monsters,” director Steven Spielberg told Harvard graduates, and it’s the next generation’s job to vanquish them.

“My job is to create a world that lasts two hours. Your job is to create a world that lasts forever,” he said.

These monsters manifest themselves as racism, homophobia, and ethnic, class, political, and religious hatred, he said, noting that there is no difference between them: “It is all one big hate.”

Spielberg said that hate is born of an “us versus them” mentality, and thinking instead about people as “we” requires replacing fear with curiosity.

“‘Us’ and ‘them’ will find the ‘we’ by connecting with each other, and by believing that we’re members of the same tribe, and by feeling empathy for every soul,” he said.

Shonda Rhimes said “ditch the dream and be a doer, not a dreamer.”

American TV producer told grads at Dartmouth to stop dreaming and start doing.

The world has plenty of dreamers, she said. “And while they are busy dreaming, the really happy people, the really successful people, the really interesting, engaged, powerful people, are busy doing.” She pushed grads to be thosepeople.

“Ditch the dream and be a doer, not a dreamer,” she advised — whether or not you know what your “passion” might be. “The truth is, it doesn’t matter. You don’t have to know. You just have to keep moving forward. You just have to keep doing something, seizing the next opportunity, staying open to trying something new. It doesn’t have to fit your vision of the perfect job or the perfect life. Perfect is boring and dreams are not real,” she said.

Gallery of Commencement Speeches

Steve Jobs at Stanford in 2005:

 

Elon Musk at Caltech in 2012:

https://www.youtube.com/watch?v=MxZpaJK74Y4

JK Rowling at Harvard in 2013:

Bill and Melinda Gates at Stanford in 2014:

Shonda Rhimes at Dartmouth in 2014:

Matt Damon at MIT in 2016:

Barack Obama at Howard in 2016:

Donavan Livingston at Harvard in 2016:

Sheryl Sandberg at Berkeley in 2017:

Mark Zuckerberg at Harvard in 2017:

And a montage, of a few more themes:

We all tend to have a preferred or “natural style” of leadership.

Leading in a way that feels right and natural to you, is both easier for you, and more consistent and authentic for others. Whatever your style, people will engage with and trust you more, if they know that you are genuine.

At times though you may need to adapt your style, or embrace aspects of other styles for a specific purpose. Daniel Ek, CEO of Spotify, for example, found that he was too laid back for his teams when they were looking for direction and focus. He worked on making the most of his own style, with aspects which met this need from his teams.

There are many theoretical models of leadership to take ideas from, and it can get very confusing.

Kurt Lewin classified leadership styles into autocratic, participative and laissez-faire. Tannenbaum and Schmidt saw leadership as a continuum of styles, ranging from autocratic to freed, but saying that the best style at any time depended upon a variety of factors, such as the leader’s personality and the situation they faced.  Daniel Goleman, who coined the phrase “emotional intelligence”  developed a framework of six different styles built on a leaders ability to emotionally engage with people in different ways – visionary, coaching, democratic, pacesetting, affiliative and commanding.

Here is a useful decision tree exploring the different approaches:

To summarise:

Leading in an inspiring style … when you want to encourage people to work with you in creating a better future, providing energy and direction to move forwards:

• Transformational … “Imagine if “… opportunity to grow, change, self and organisation
• Visionary … “Come with me” … a new direction, empathetic, builds confidence
• Pacesetting … “We can do this” … driven to achieve, is energising but also exhausting

Leading in an nurturing style … when you want to support people to be their best, although not necessarily about thinking about being creative or moving forwards:

• Servant … “Here for you” … secures resources and support, so people can act as see fit
• Coaching … “Try this” … empathy, supports individual needs, but less directive
• Affiliative … “People come first” … empathy, reassures and builds team, but can lack focus

Leading in a more less engaged style … when you want  to let people get on with their work, trusting that they have capabilities and desire to do the task:

• Laissez-faire … “Do what you think” … entrusting people to deliver, giving them space
• Transactional … “You know what to do” … clear tasks, and intervene if not delivered
• Bureaucratic … “Follow the process” … clearly defined steps, good when technical or legal

Leading in a commanding style … when you want to be in charge and make the decisions, often when you believe people don’t have the capabilities to decide:

• Consultative … “Tell me what you think” … you listen to people and then decide yourself
• Persuasive … “This is what, and why” … you decide then seek to persuade them it is correct
• Autocratic … “Do what I tell you” … you are commanding, demotivating but can work in crisis

Knowing when and how to adapt your leadership style to different situations can have a huge impact on how your team will respond.  For example if you are trying to build capabilities within your team you may find that the coaching leadership style works best.  If you have urgent deadlines, then pacesetting. If you need to be highly structured and compliant, the bureaucratic. If you want people to work together to create a better future for all, then transformational.

Ultimately you will need combinations of different styles for different people on different occasions. How you combine these approaches, in a way that works authentically for you, will determine your personal style.

It’s a difficult time. All around us, the chilling news updates on our screens and social media are relentless as the COVID-19 pandemic multiplies across continents. The human tragedy, concern for our loved ones, frustration at politicians, admiration for health workers, disbelief at those still socialising, adaptation to new routines under lockdown, affects us all. As a society there is a huge concern for each other, whilst as business leaders we also know we have to keep our business going too.

Sitting in our homes we click onto a succession of conference calls, seeking to work through the chaos. In the suburbs of Santa Clara, California, 50 year old Eric Yuan joins his latest call. The palm trees swaying behind him make for a surreal setting. He could have chosen a day on a Hawaiian beach, or even the spectacular Mount Tai in China’s Shangdong Province, near to where he grew up. That’s one of the many benefits of his web conferencing service, Zoom, now the world’s fastest growing, where you can easily choose any background you want. No more embarrassing peeks into your home to distract your colleagues or clients.

It has been a crazy time for the Chinese American since Zoom’s $15.9bn IPO last year. As the world’s stock markets have tumbled by 25-35%, Zoom has doubled in value since January, making Zoom now worth $35bn. Yuan stills own 20%, but the new billionaire is one of the most frugal people you will meet, remembering as a teenager in China how he hunted through rubbish dumps in search of scraps of metal to sell in order to fund his education.

As a teenager he was captivated by the success of Bill Gates, and studied mathematics and computer science at Shangdong University. Drawn to the US by the dotcom boom of 1997, and despite not speaking English, plus 9 attempts to gain a visa, he landed a job writing code for online conferencing service Webex. After the business was sold to Cisco, he became VP of engineering. However he could see that mobile and cloud technologies were rapidly emerging, and could transform the user experience, yet his Cisco bosses did not share his passion.

He left in 2011 to start his own company from the ground up – a simpler, more intuitive, app-based experience to meet the rapidly evolving world of remote and collaborative working. Initially calling is Saasbe, he turned to former colleagues to help him fund a team of 30 engineers back in China work on his new idea. Even his former Webex CEO threw in $3 million. He worked tirelessly for two years on the new app, a lightweight web client that would work on any device, even with slow or patchy internet connection. He also added more human features, like the choice of virtual backgrounds.

Zoom launched in 2013, initially targeted the corporate market, and creating networking solutions like Zoom Rooms with partners such as Logitech. Within a year he had 40 million subscribers, including 65,000 organisations. In 2017 the business reached “unicorn” status with subsequent rounds of funding, now with around 2000 employees (a third still based in China), and also started exploring new areas such as virtual reality. Yuan uses a “freemium” business model based on subscriptions, with the first 40 minutes free of any call with up to 100 participants, although the platform caters for anything to 1000 people.

In 2018 Yuan was ranked the #1 CEO in USA based on Glassdoor’s ranking which is based on employee votes. He was also chosen as EY’s Entrepreneur of the Year.

Since January this year, Yuan has seen huge growth in Zoom, becoming indispensable to the world’s schools, businesses and governments as COVID-19 shut down the physical world. Yuan offered free access to all schools, resulting in around 1million app downloads every day. He’s been surprised too be the innovative social applications that have emerged – from virtual fitness programs, virtual music concerts, and virtual drinks parties.

Remote working, though, is nothing unusual for Yuan. He typically only makes two business a trips a year, aware of the inefficiencies and environmental impacts of travel, when you can simply click onto Zoom. Yet he is a big fan of human engagement, defining Zoom’s mission as “delivering happiness” and even measures performance on user happiness, as an equal to financial results.

“Free market capitalism is one of humanity’s greatest inventions and the greatest source of prosperity the world has ever seen. At the same time, its single-minded pursuit of profit has led to rampant inequality and the looming threat of climate catastrophe – and now threatens to destroy the society on which it depends.”

I’ve been following the work of Harvard professor Rebecca Henderson for some time.

Her new book, published by Hachette, comes out next month Reimagining Capitalism in a World on Fire, although Penguin, her publisher in the UK has chosen a slightly different title, Reimagining Capitalism: How Business Can Save the World. Maybe there is something about differing psychologies in that?

Of course this is a huge topic right now. From BlackRock Larry Fink’s recent demands to the companies who he invests in, to demonstrate a purpose beyond profit, to Salesforce’s CEO Marc Benioff new book Trailblazer on how business is the best platform for change. From the Business Roundtable to the World Economic Forum, we see new debates and intent emerge. And we also see great examples, like Danone and Patagonia, of companies already doing better:

• Finding more purpose
• Creating a Better Business
• Danone’s transformation with purpose
• Why purpose-driven companies do better
• From purpose and strategy to action and impact

The increasingly extreme weather of recent times has reenergised people as to the urgency and importance of addressing climate change. The accelerating inequality in wealth between rich and poor is causing more outrage. The inadequate support which business gives to employees, particularly as highlighted in America with low incomes and little healthcare, has been brought into the open through the impacts of COVID-19 pandemic right now. The incoherence of business and society.

Or maybe there is a glimmer of new light. As LVMH rushes to transform perfume manufacturing into hand sanitiser, Index turns fast fashion into protective health worker gear, GM and Tesla accelerate production of hospital ventilators, maybe there is a glimmer of hope. Like Microsoft’s Satya Nadella says, business is used to creating futures, now we need to create a better one.

Stakeholders, purpose, sustainability, inclusion, are clearly big words of our times.

Henderson’s skill, honed through years of fabulous teaching of bright and challenging students at Harvard Business School, is to connect these topics in a coherent narrative for business leaders. Her British-sounding accent is also quite striking (?!). And whilst her subject matter is serious, and her voice full of measured passion, she clearly has a sense of humour too:

Henderson’s rigorous research in economics, psychology, and organisational behaviour, as well as her many years of work with companies around the world, gives us a path forward. She debunks the worldview that the only purpose of business is to make money and maximize shareholder value. She shows that we have failed to reimagine capitalism so that it is not only an engine of prosperity but also a system that is in harmony with environmental realities, striving for social justice and the demands of truly democratic institutions.

Her deep understanding of how change takes place, combined with fascinating in-depth stories of companies that have made the first steps towards reimagining capitalism, provides inspiring insight into what capitalism can be. With rich discussions of how the worlds of finance, governance, and leadership must also evolve, Henderson provides the pragmatic foundation for navigating a world faced with unprecedented challenge, but also with extraordinary opportunity for those who can get it right.

Let’s consider “the economics of purpose” because that word “purpose” can be thrown about like mission statements, without much thought about its meaning, or its profound implications. Watch this:

More generally, we need to see the connections. Lots of folks talking purpose come form the sustainability angle. But it has a fundamental impact for the challenges of shareholder value, the shift to stakeholding, and future economic models:

Here are some great resources from her:

Why is Change so Hard and What Can Be Done?

• “Unpacking the Dynamics of Successful Change: Ten Insights from the Private Sector.”Chapter 3 in “Transformational Change in Environmental and Natural Resource Management” (Routledge, 2016). Edited by Michael D. Young and Christine Esau.
• “Architectural Innovation: The Reconfiguration of Existing Product Technologies and The Failure of Established Firms.”Jointly with Kim Clark, March 1990, Administrative Science Quarterly, Vol 35, p9‑30.

Making the Numbers?

• “’Short Termism’ and the Puzzle of Only Occasional Disaster.” Jointly with Hazhir Rahmandad and Nelson P. Repenning, November 2016, Management Science.

What is Organizational Purpose? And Why Does Purpose Drive Performance?

• “Real Effects of Relational Contracts.” Jointly with Steven Blader, Andrea Pratt and Claudine Gartenberg, May 2015, American Economic Review, Papers and Proceedings.

Why Do Firms Have Purpose?

• “The Firm’s Role as a Carrier of Identity and Reputation.” Jointly with Eric Van Den Steen, May 2015, American Economic Review, Papers and Proceedings.
• “Management Practices, Relational Contracts and the Decline of General Motors.”Jointly with Susan Helper, 2014, Journal of Economic Perspectives, Volume 28, Number 1—Winter 2014—Pages 49–72.

What Do Managers Do?

• “Exploring Persistent Performance Differences Among Seemingly Similar Enterprises.”Jointly with Robert Gibbons. Chapter 17 in “The Handbook of Organizational Economics” (Princeton University Press, 2013). Edited by Robert Gibbons and John Roberts.

What Will It Take to Reimagine Capitalism?

• “Making the Business Case for Environmental Sustainability” Chapter 2 in “Leading Sustainable Change” (Oxford University Press, 2015). Edited by Rebecca Henderson, Ranjay Gulati and Michael Tushman.
• “Do Managers Have a Role to Play in Sustaining the Institutions of Capitalism?”Jointly with Karthik Ramanna, February 2015, Brookings Institute.

Useful Cases

• “Aetna & the Transformation of Health Care.” Jointly with Russ Eisenstat and Matthew Preble, February 2018.
• “Gotong Royong: Toward Sustainable Palm Oil.” Jointly with Hann-Shuin Yew & Monica Baraldi, March 2016 (Revision Date: June 6, 2016).
• “Greening Walmart: Progress and Controversy.” Jointly with James Weber, February 2016.
• “Omar Selim: Building a Values-Based Asset Management Firm.” Jointly with George Serafeim and Shannon Gombos, January 2015, HBS No 115-021.
• “1worker1vote: MONDRAGON in the US.” Jointly with Michael Norris, March 2014, HBS No 314-061.
• “Henry Schein: Doing Well by Doing Good.” Jointly with Rafaella Sadun, Aldo Sesia and Russell Eisesnstat, February 2014, HBS Case No: 714-450.
• “Xylem: Let’s Solve Water.” Jointly with James Weber, September 2013, HBS Case No: 313-082.
• “Royal DSM: Fighting Hidden Hunger.” Jointly with Noah Fisher and Mary Shelman, May 2013, HBS Case no 313-085.
• “Triodos Bank – Conscious Money in Action.” Jointly with Kate Isaacs and Katrin Kaeufer, June 2013, HBS Case No 313-109.
• “Sustainable Tea at Unilever.” Jointly with Frederik Peter Nellemann, December 2011, Harvard Business School Case 712-438.

It’s a difficult time. All around us, the news updates on television screens and social media are relentless as COVID-19 multiplies across our cities, nations and continents. The human tragedy, concern for our loved ones, frustration at politicians, admiration for health workers, disbelief at those still socialising, adaptation to new routines under quarantine or lockdown, affects us all. As a society there is a huge concern for each other, whilst as business leaders we know we have to keep our businesses going too.

In years to come we will look back, sociologists and economists, at the way in which we behaved, and the positive and negative impacts it had. Questions will rage about the causes and effects. From the impact of climate change and urbanisation that likely sparked the leap of the virus from animal to human, the global connectedness of travellers that accelerated the contagion’s spread, to the panic buying of some, and the total lack of social responsibility of others.

Of course, Bill Gates was right when in his 2015 TED Talk, he argued that the biggest threat to humanity was not economic or conflict, but a global pandemic for which we were woefully unprepared.

Business impact, and accelerated innovation

The impact on every business has obviously been significant. The travel and hospitality industry was perhaps the first and most dramatically affected. As travel bookings were cancelled, airline share prices plunged (United -57%) as did hotels (Marriott -48%) and booking engines (Expedia 53%). Worst were the cruise lines, with the sight of quarantined ships around the world (Carnival -68%).

In the medical world, scientists are racing to find a vaccine. As they seek to accelerate their research and development, human trials have already started on possible solutions, but it is still 12-18 months away. Incredible, considering previous vaccines took 20 years. Other anti-viral drugs may help patients to recover faster, like Avigan developed by Fujifilm, the former maker of camera film, in 2014. 3M is racing to manufacture millions of new hospital ventilators, whilst Dyson has used its air purifier technology to develop CoVent, a new ventilator in just 10 days, and is now racing to produce 20,000 of their new design.

And other companies have jumped in with support. LVMH quickly converted production of perfumes to hand sanitiser, although it didn’t come with a Louis Vuitton label. Maverick beer brand Brewdog meanwhile developed its own branded santitizer, Brewgel. Both companies gave all stocks free to people in most need. At the same time, Foxxcon transformed its iPhone production into making hi-tech face masks, and Spanish fashion business Inditex shifted to producing protective clothing for health workers.

Andy Grove, the former CEO of Intel, once said “Bad companies are destroyed by crisis, good companies survive them, great companies are improved by them.”

So how do commentators see the business impacts around the world?

Consumer impact, a seismic shift online

BCG analysis of consumer behaviours shows an interesting comparison between Seattle (where COVID-19 first struck in the USA) and the national average. It shows huge drop in transportation and fitness as people stayed at home, but significant increases in groceries, both online and physical, pharmacy and entertainment.

Home delivery services may be a significant “beneficiaries” of our behaviour changes, both during the crisis, and beyond it too

• Domino’s Pizza is urgently seeking to hire about 10,000 workers, from pizza chefs to delivery drivers, in response to a surge in home deliveries, all done without public contact.
• CVS said it needs at least 50,000 more instore staff, home-delivery drivers, distribution centre employees and customer service professionals.
• Amazon is seeking 100,000 more delivers and has introduced a 24 hour rapid recruitment process, supported by AI-based application analysis and rapid online training.
• Instacart, one of the fastest growing grocery delivery companies is seeking to recruit 300,000 new staff, pickers and packers, plus deliverers, to meet the demand of shoppers in isolation at home.

Indeed this shift online is likely to be the most significant business legacy of COVID-19. The shift to home shopping and food deliveries is one example, but even more significant for millions of students is the shift to online education as schools and universities seek to move teaching and assessments online, and in healthcare where much faster and safer advice and diagnostics can be delivered by smartphone consultations and online AI-enhanced analytics.

Economic Impact, dramatic falls on stock markets

Stock markets around the world have seen substantial declines, with most indexes down by 25-35%. USA and European markets were relatively late to appreciate the severity of the coronavirus. Some stocks actually increased in value throughout early February even as the virus was spreading far beyond China, showing how many in the west acted in denial or underestimated the virus impact:

The consequences for many companies will be quickly felt. Particularly for those where their entire revenue streams is abruptly halted, like airlines and car manufacturers, realtors and restaurants, but also for small businesses and gig workers, and those who depend on them. For so many of these companies, margins are slim, and there is no ability to keep paying salaries. Some companies however are doing what they can

• Netflix recently announced that it has set up a $100 million relief fund for cast and crew members, including third parties, working on studio productions that have been halted by the coronavirus outbreak.
• Starbucks has reopened over 95% of stores in China, including sites in Wuhan and the Hubei province, whilst in USA it has committed to paying all staff for at least 30 days whilst stores are closed
• Governments too are recognised their role to support society –  Sweden for example is paying 90% of salaries and deferring tax payments for up to a year at a cost of €27.5bn to the country’s treasury, equivalent to 6% of GDP.

Whilst China received initial criticism for not stopping the initial outbreak of the virus in its tracks, back in January in Wuhan, its subsequent actions seem to have been effective in slowly the spread to the point where business is starting to get back to normal. China’s action included extreme quarantine for anyone with symptoms, tracked through citizens needing to update their daily temperature readings through a government app. Also noticeable was the massive change in air pollution, as the grey smog across industrialised China dissipated for 6 weeks. Now, however, the roads of Beijing are clogged again, and China’s economy is recovering as shown by BCG data:

Action plans for business leaders

McKinsey has brought together a useful checklist of what business leaders should be doing right now. Based on analysis of what companies are effectively doing they propose 5 focus areas, with 18 workstreams of action:

 

 

However every business needs to tread a fine line, between putting people first and profits second. Last week a Wall Street Journal editorial suggested that we may soon face a dilemma, a terrible choice to either severely damage our livelihoods through extended lockdowns, or to sacrifice the lives of thousands, if not millions, to a fast-spreading virus.  If businesses are hugely damaged and many jobs are lost, this could have a great human impact than death. I don’t think that’s a reasonable choice.

McKinsey, instead, have focused on safeguarding lives and livelihoods.

Economic forecasts suggest a 1-3 year downturn

The most positive forecast by McKinsey is that China will undergo a sharp but brief slowdown and relatively quickly rebound to pre-crisis levels of activity. While GDP is expected to drop sharply in Q2 2020, some signs of normal life are returning in Beijing, Shanghai, and most major cities outside Hubei. In this scenario, China’s annual GDP growth for 2020 would end up roughly flat, wiping out the growth of 6 percent we expected just three months ago. Nevertheless, by 2021, China’s economy would be on the way to regaining its pre-crisis trajectory, if not adversely affected by developments in the rest of the world.

In this scenario, the virus in Europe and the United States would be controlled effectively with between two to three months of economic shutdown. Monetary and fiscal policy would mitigate some of the economic damage with some delays in transmission, so that a strong rebound could begin after the virus was contained at the end of Q2 2020.

In a more pessimistic scenario, China would recover more slowly and would perhaps need to clamp down on regional resurgences of the virus. It would also be hurt by falling exports to the rest of the world. Its economy could face a potentially unprecedented contraction.

The US and Europe could also face more dire outcomes in this scenario. They could fail to contain the virus within one quarter and be forced to implement some form of physical distancing and quarantines throughout the summer. This could end up producing a decline in GDP at an annualized pace of 35 to 40 percent in Q2, with major economies in Europe registering similar performance. Economic policy would fail to prevent a huge spike in unemployment and business closures, creating a far slower recovery even after the virus is contained. In this darker scenario, it could take more than two years before GDP recovers to its pre-virus level, placing both Europe and the United States.

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.

Finding your North Star to survive and thrive

As business turns to the challenge of survival and renewal, beyond the current economic shocks, to get through what is likely to be a significant global downturn, probably a recession. There are big challenges, but also opportunities:

• Survive – cut all non-essential costs, and preserve cash – better to close temporarily than to limp along at full cost, look after your people as best you can, and do what you can for communities and society in relevant ways.
• Focus – reprioritise, even reimagine your business, right now – what to stop, where to accelerate, how to change – and at the same time be productive yourself – new ideas, new skills, new projects – and stay positive.
• Thrive – Finding new opportunities to innovate and grow – right now, for example, we are seeing a huge surge in people switching to digital services, e-Education when schools are closed, e-Health when we need urgent care.

Being set adrift in a stormy sea means that all the strategies  and plans you did have are thrown away. Instead you need something to keep guiding you. Something to give you direction, and maybe a little hope. Something to frame what you could do, not just what you did do. Purpose is your North Star:

• Purpose – finding your bigger idea is more important than ever right now – like sailors in stormy seas, we need a rough direction to head in, but this is your choice – not just what you do now, but your bigger ambition, passion and goals.
• Concepts – once you have a purposeful direction, what is the value you bring – how do you make the world better in some way – start to create strategic concepts, big ideas beyond today’s business, ways you could make a mark on the world.
• Actions – aligning your actions to the purpose and concepts – some of it might be doing what you do now, simpler or faster or cheaper; some of it will be doing new things, adjacent and aligned to your current activities, but guided by purpose.

With a clear sense of purpose, even the stormiest seas can seem less bewildering – or days locked in your home, might seem like a unique opportunity to pause and think about where you are going in life and work. With a clear sense of purpose, you can steer your way through and out of today’s chaos, to find a better tomorrow. But start now!

The future might seem chaotic and uncertain. 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.

Look at our changing behaviours right – everybody is suddenly working from home, quickly realising that multi-screen video conferencing, mixed with playing with the kids, and saving on the torturous daily commute is not so bad. Or when calling a doctor, we are asked to shift to online screening and video calls, which are far more personal and efficient for both. Or as schools close, kids form peer to peer learning groups, online seminars and interactive assessments.

The new lifestyles have been possible for some time, now we are using it. Afterwards, will we go back to the old ways?

Here are a few of the recent articles which I found inspiring:

• Rita McGrath, author of the new book Seeing Around Corners which is all about looking for the signals of when markets fundamentally change, wrote a fabulous blog post on Thoughts in the Midst of an Inflection Point
• Amy Webb, a futurist who has just launched her annual report Tech Trends 2020, offers a simple tool you can use to see plausible future states early, with How Futurists Cope With Uncertainty
• Umair Haque, explored 5 ways coronavirus is finally forcing us to make the (radical) socioeconomic transformations we should have made long ago, in his post The Upsides of a Global Pandemic
• Yuval Noah Harari, wrote a great FT article saying this storm will pass, but the choices we make now could change our lives for years to come, called The World After Coronavirus

Seismic changes that lead to downturns are nothing new – economic cycles that thrill us in the upturns, and then just when we realise that times are good, we’re on that rollercoaster to tough times again.

Business progress, is marked by a cycle of boom times and struggles. And whilst the external world may be largely responsible for the disruption in growth, the result is often a time of frantic innovation as businesses use a downturn to reset, and reinvent themselves and their industries. As we enter the so-called fourth industrial revolution maybe it is not so surprising that the world’s economies are looking more turbulent again.

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.

Finding your North Star to survive and thrive

Of course looking after people is the first priority, staying safe and healthy, and helping those in most need. Business can help short term – like we see right now with LVMH turning its perfume factories to making hand sanitizer, Tesla making hospital ventilators in its car plants, Inditex making protective clothing for health workers.

Then business turns to the challenge of survival the current economic shocks, to get through what is likely to be a significant global downturn, probably a recession. There are big challenges, but also opportunities:

• Survive – cut all non-essential costs, and preserve cash – better to close temporarily than to limp along at full cost, like the airline SAS has already done by immediately shutting down for an unlimited time, but with plans to return.
• Perform – build resilience and sustain performance – be it in terms of supporting social efforts, but also in streamlining and refocusing your existing business – at the same time use any downtime productively – new ideas, new skills, new projects – and stay positive.
• Thrive – Finding new opportunities to innovate and grow – right now, for example, we are seeing a huge surge in people switching to digital services, e-Education when schools are closed, e-Health when we need urgent care.

Being set adrift in a stormy sea means that all the strategies  and plans you did have are thrown away. Instead you need something to keep guiding you. Something to give you direction, and maybe a little hope. Something to frame what you could do, not just what you did do. Purpose is your North Star:

• Purpose – finding your bigger idea is more important than ever right now – like sailors in stormy seas, we need a rough direction to head in, but this is your choice – not just what you do now, but your bigger ambition, passion and goals.
• Concepts – once you have a purposeful direction, what is the value you bring – how do you make the world better in some way – start to create strategic concepts, big ideas beyond today’s business, ways you could make a mark on the world.
• Actions – aligning your actions to the purpose and concepts – some of it might be doing what you do now, simpler or faster or cheaper; some of it will be doing new things, adjacent and aligned to your current activities, but guided by purpose.

With a clear sense of purpose, even the stormiest seas can seem less bewildering – or days locked in your home, might seem like a unique opportunity to pause and think about where you are going in life and work. With a clear sense of purpose, you can steer your way through and out of today’s chaos, to find a better tomorrow. But start now!

Black swans, K-waves … time to thrive in a crazy world

“Black swan” is a metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalised after the fact with the benefit of hindsight.

The phrase “black swan” derives from a Latin expression; its oldest known occurrence is from the 2nd-century Roman poet Juvenal’s characterization of something being “rara avis in terris nigroque simillima cygno” (“a rare bird in the lands and very much like a black swan”). When the phrase was coined, the black swan was presumed not to exist. The importance of the metaphor lies in its analogy to the fragility of any system of thought. A set of conclusions is potentially undone once any of its fundamental postulates is disproved. In this case, the observation of a single black swan would be the undoing of the logic of any system of thought, as well as any reasoning that followed from that underlying logic.

The theory was developed by Nassim Nicholas Taleb to explain:

1. The disproportionate role of high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance, and technology.
2. The non-computability of the probability of the consequential rare events using scientific methods (owing to the very nature of small probabilities).
3. The psychological biases that blind people, both individually and collectively, to uncertainty and to a rare event’s massive role in historical affairs.

Taleb’s “black swan theory” refers only to unexpected events of large magnitude and consequence and their dominant role in history, and COVID-19 is one of the most significant, certainly in terms of its dramatic effect on the world’s economy in recent weeks. Such events, considered extreme outliers, collectively play vastly larger roles in shaping economies, markets and societies than regular occurrences.

Russian economist Nikolai Kondratiev was shot by firing squad on the orders of Stalin in 1938. He died for what he believed was the truth. His execution was ordered because his academic work propounded that the capitalist system would not collapse as a result of the great depression of 1929. This truth Stalin did not want to hear, and his work suppressed for over two decades.

Kondratiev’s analysis described how international capitalism had gone through many such “great depressions” and as such were a normal part of the international mercantile credit system. The long term business cycles that he identified through meticulous research are now called “Kondratieff” cycles or “K” waves.

The K wave is a 60 year cycle (+/- a year or so) with internal phases that are sometimes characterized as seasons: spring, summer, autumn and winter:

• Spring phase: a new factor of production, good economic times, rising inflation
• Summer: hubristic ‘peak’ war followed by societal doubts and double digit inflation
• Autumn: the financial fix of inflation leads to a credit boom which creates a false plateau of prosperity that ends in a speculative bubble
• Winter: excess capacity worked off by massive debt repudiation, commodity deflation & economic depression. A ‘trough’ war breaks psychology of doom.

Increasingly economic academia has come to realize the brilliant insight of Nikolai Kondratiev and accordingly there have been many reports, articles, theses and books written on the subject of this “cyclical” phenomenon. An influential essay, written by Professor W. Thompson of Indiana University, has indicated that K waves have influenced world technological development since the 900’s. His thesis states that “modern” economic development commenced in 930AD in the Sung province of China and he propounds that since this date there have been 18 K waves lasting on average 60 years.

COVID-19 has already sparked a huge fall in stock markets around the world. Maybe we were already on the edge, and it was due, and it just pushed us over.

So what am I doing right now … and how can I help?

Now that I think back, I remember some of the seismic moments when the world was gripped by fear and panic, and how so many great projects and opportunities emerged.

When “shock and awe” launched the Gulf War of 1990, I was a young brand marketer at a global airline. I remember joining an urgent taskforce of smart minds across the business to think through survival strategies. I remember sitting alongside the CEO Liam Strong and others, working on The World’s Biggest Offer, which became a thrilling project.

In 2001 when the terrible scenes of 9/11 terrorism were flashed across every screen in my London office, we froze in shock and panic, but then quickly swung into action. As stock markets plunged, businesses shifted for the first time to online working, as we rushed in the following weeks to create tools for collaborative working, learning and support.

And when the financial crisis of 2008 crossed the world like an economic tsunami, I remember being asked by numerous companies to quickly prepare articles and webinars to help companies and their employees to reprioritise strategies, but also to think creatively about how to survive and thrive whilst everyone else was losing their heads.

Now in 2020, what will you do? Maybe start off by dipping into my most recent Fast Leader magazines, in which I seek to capture what’s happening right now around the world, with ideas and inspiration for you and your business. It’s for business leaders who are ready to think smarter and act faster. You can download them free right now:

• Fast Leader March Edition … How Bob Iger digitalised Disney … Tan Le, the Vietnamese refugee brainwave innovator … 10 years at the Moonshot Factory … 99%: Mass impoverishment and how we can end it … and more
• Fast Leader February Edition … Man and Machine in Las Vegas … A Better Kind of Capitalism … World’s Most Sustainable Companies 2020 … Quantum Mechanics of Chinese Business … and more
• Fast Leader January Edition … No Human is Limited says Eliud Kipchoge … Jensen Huang, the World’s #1 CEO … Finding your Purpose …. Blue Oceans win the Oscars of Business … and more

I’m here to support business as they urgently change direction, work in new ways, rethink priorities, but also seek to stay positive, and look forwards. Tune into my forthcoming webinar:

• Fast Leader Live: Thriving in a Crazy World, March 26 at 1730 (UK time) … Sign up here
• Fast Leader Live: Finding your Purpose, April 14 at 1700 (UK time) … Sign up here
• Fast Leader Live: Exponential Innovation, May 7 at 1730 (UK time) … Sign up here
• More dates to come!

Also

• 25 Online Tools for Smarter Working … don’t just Skype, here’s how to create a better online work or learning experience.
• Creating your future fast and digital … Workshops on Rethinking Strategy, Innovation, Change and Leadership

More great reads

So here are some of the best articles I’ve come across for preparing, surviving – but also thriving – in times of downturn:

Companies Need to Prepare for the Next Economic Downturn by Martin Reeves, Kevin Whitaker, Christian Ketels … Whenever it happens, it won’t look like 2008.

What Companies Should Do to Prepare for a Recession by Kevin Laczkowski and Mihir Mysore … Here’s what successful companies did last time around.

How to Survive a Recession and Thrive Afterward by Walter Frick … A research roundup.

Seize Advantage in a Downturn by David Rhodes and Daniel Stelter …  A downturn opens up rare opportunities to outmaneuver rivals. But first you need to put your own house in order.

Save or Invest? How Companies Should Navigate Recessions by Ioannis Ioannou and Caroline Flammer … You need to do both; one or the other isn’t enough.

How to Be a Good Boss in a Bad Economy by Robert I. Sutton … Finds ways to provide more predictability, understanding, control, and compassion.

Layoffs that Don’t Break Your Company. by Sandra J. Sucher and Shalene Gupta … Research shows that job cuts rarely help senior leaders achieve their goals.

Roaring Out of Recession  by Ranjay Gulati, Nitin Nohria, and Franz Wohlgezogen … Master the delicate balance between cutting costs to survive today and investing to grow tomorrow.

What do you think of when you hear “innovation lab?”

You may have in mind something closer to the original innovation lab, which was the Skunk Works at Lockheed Martin started decades ago.

Innovation labs have shifted beyond the traditional, insular R&D role of the past – maybe you recall the secretive projects of Xerox PARC or Bell Labs – and today typically focus on two roles :

• Focus on developing innovative concepts and business models without the distractions, demands and expectations, breaking down cultural and organisational obstacles, of everyday business.
• Focus on developing new ventures, that require collaborative working and investments with external partners – be that other companies, new start-ups, and specialists – and may even lead to a new business.

With that in mind, here is a definition: “An innovation lab is an open, collaborative space where companies and organisations team up their employees from different departments with outside partners, tech experts, designers, and academics, seeking to emulate the culture, speed, tech integration, and disruptiveness of a start-up, in order to develop new products, services, experiences and business models that take advantage of new business strategies and advances in technology.”

There are many different types of innovation labs – you will probably have heard of incubators and accelerators too. These typically focus on incubating new start-up businesses which have less resources or experiences, or accelerating start-ups to a scale-up phase by adding more corporate structure, collaboration and more. They may be run by independent companies, or venture capital funds who want to ensure that their investments are spent effectively, but they might equally be run by larger corporates who want to bring start-ups  into their fold, either to share in their entrepreneurial culture, or to have first option on the outcomes.

Here’s a vision of DZ Bank’s innovation lab, “The Think and Do Tank” showing how it seeks to combine radical ideation, with rapid development (design thinking, lean sprints etc) and accelerated implementation:

Of course many companies also develop innovation labs as vanity projects – colourful bean bags, lots of white boards, bikes hanging from the ceiling, a few robots sliding around, table football in the corner, you get the idea – but innovation labs can play a really important role in driving more radical ideas, new cultures, and future growth.

Here is a list of typical goals of a typical innovation lab:

• Faster development of new products and/or explore new business models that solve core client needs and drive company revenue.
• Shift the company culture towards greater innovation, tech integration, and collaboration both internally and with outside groups.
• Enable change from their existing strategy to a new business strategy (more customer-centric, digital transformation, design thinking, etc.).
• Stave off the threat of digital disruption from competitors, especially start-ups.
• Demonstrate products and capabilities to current clients, potential clients, and business partners.
• Foster partnerships with outside companies, startups, and leading academic organizations.
• Explore the potential of new technologies independent of current product development, to solve client problems in new ways.
• Be a working lab to collaborate with clients to solve their specific challenges.
• Be a stage for presentations and videos, in the age of YouTube and Instagram.
• Open a collaborative space closer to industry innovators and tech centers.
• Collaborate with customers to co-create and get feedback about new products.
• Appeal to, recruit, and retain digitally-skilled new talent.
• Create multiple innovation centers focused on different client vertical markets, geographic regions, or high-potential new technologies.

Industry and academic experts have studied how innovation labs markedly shifts business models and improves product/service offerings. Here are two key findings:

• Continually Manage Stakeholders To Ensure Successful Innovation Actually Gets Used: When an innovation lab develops a breakthrough new product or business model, there will likely be resistance to folding that new product back into the core business units or starting a new standalone division. Strong communication and buy-in from key stakeholders within the company will grease the wheels and help new innovations take root. This has been the experience of Tendayi Viki, Managing Partner, Benneli Jacobs, as described in Forbes, and Scott Kirsner, editor, and co-founder of Innovation Leader, as interviewed in Forbes.
• Ambidextrous Organizations Are More Successful: Most corporations focus their innovation lab on either incremental innovations that match their current business model or breakthrough innovations that disrupt their current business model. Ambidextrous organizations focus on both. These ambidextrous organizations are much more successful than companies that focus on only incremental or only breakthrough innovation. That’s the finding of Charles A. O’Reilly III and Michal L. Tushman, professors and consultants on innovation, as published in the Harvard Business Review.

Here are some of the world’s most celebrated innovation labs – research and development, creative and design – spaces which effectively explore, develop and accelerate new ideas to our worlds:

Boston Dynamics

Boston Dynamics began as a spin-off from MIT, where they developed the first robots that ran and moved like animals. Now we are taking the next step, combining the principles of dynamic control and balance with sophisticated mechanical designs, cutting-edge electronics, and software for perception, navigation, and intelligence. Boston Dynamics has an extraordinary technical team of engineers and scientists who seamlessly combine advanced analytical thinking with bold engineering and boots-in-the-mud practicality.

Chinese Academy of Sciences

CAS act as the national scientific think tank that provides advisory services to the government on all issues regarding science and technology, but also in the context of developing the economy and social improvement. It is the largest research organization in the world with over 60,000 researchers working in 114 institutes across China. Based on the total number of research papers published in Nature and its affiliate network, CAS ranked #1 among the world’s leading research organizations.

CERN

CERN (Conseil Européen pour la Recherche Nucléaire) is the European research organization, primary focused on particle physics, investigating smallest observable particles in the universe and their fundamental interactions. It operates the biggest particle accelerator in the world, the Large Hadron Collider that works on antimatter and the discovery of W and Z bosons. CERN is also, of course, the birthplace of the World Wide Web which started with a project named ENQUIRE by Tim Berners-Lee and Robert Cailliau sometime in 1990.

Deepmind

DeepMind is the world leader in artificial intelligence research and its application for positive impact. “We’re on a scientific mission to push the boundaries of AI, developing programs that can learn to solve any complex problem without needing to be taught how. If we’re successful, we believe this will be one of the most important and widely beneficial scientific advances ever made, increasing our capacity to understand the mysteries of the universe and to tackle some of our most pressing real-world challenges. From climate change to the need for radically improved healthcare, too many problems suffer from painfully slow progress, their complexity overwhelming our ability to find solutions. With AI as a multiplier for human ingenuity, those solutions will come into reach.” It famously sets challenges for AI to outperform humans at chess, go, and StarShip.

Fraunhofer Society

The Fraunhofer Society is an organization of a total of 69 premier German Institutes all across Germany, specializes in various fields of applied science. One of the famous projects of the Fraunhofer Society is the MP3 compression algorithm. They also contributed to a popular video compression standard MPEG-4 Part 10. The organization has seven research centers in the United States and three in the Asian region.

MIT Media Lab

”The combination of computing and communication, as we know it now and can expect it to evolve in the decades ahead, will vastly expand human creative capacity” said Jerry Wiesner, when opening the Media Lab in 1986. For over 30 years Media Lab researchers have anticipated and created technologies to make our lives safer, cleaner, healthier, fairer, and more productive. But along with benefits, technology’s everyday efficiencies have also brought their share of issues: obesity, poverty, ethical implications, bullying, divergent politics. The Media Lab’s antidisciplinary research community is uniquely equipped to address these concerns, leveraging the best that technology has to offer, and connecting technology back to the social and the human. Current Lab research examines the deeper implications of where technology creation and adoption has led us — and where we want to go next.

Nestle R&D Accelerator

The Nestlé R&D Accelerator, located at Nestlé’s R&D center in Konolfingen, Switzerland, provides a world-class acceleration platform for start-ups, students and scientists. At the R&D Accelerator, they can leverage Nestlé’s unique dairy and plant protein expertise to quickly bring products from ideation to commercialization.

Nestlé R&D Konolfingen is a fundamental part of the Swiss innovation ecosystem. It is the company’s largest research and development center for dairy products and plant-based dairy alternatives. The R&D center develops new product concepts for Nestlé’s dairy and infant nutrition businesses before they are introduced to consumers around the world.

Nike Innovation Center

Four and a half years in the making, Nike’s new 750,000-square-foot LeBron James Innovation Center in Beaverton, Oregon, marks the first time the company has ever combined apparel, shoe design, and athlete analysis all under one roof.

Palo Alto Research Center (PARC)

Located in Silicon Valley, PARC is a renowned Open Innovation company that’s been at the heart of some of the most important technological breakthroughs of our time. We bring leading scientists, engineers, and designers together to form bespoke teams across a series of Focus Areas that we believe are the future of technology, science, and innovation.

Creativity and science are core to PARC’s mission to reduce the time and risk attached to innovation. We draw on our revered history and our energy for the future to create technologies that improve our world and solve complex challenges.

Working with PARC means benefiting from something unique. Because every technological challenge is different, the team you work with will assemble and grow organically, based on your innovation goals. It’s this approach to combining expertise and capabilities that have led to some of our most interesting and exciting R&D, technology and IP projects with startups, government agencies and Fortune 500 partners.

Samsung Digital City

Samsung’s secretive R&D labs just outside of Seoul, where CEO Hyun-Suk Kim is leading a team of researchers working on automotive tech, wearable robotics, the country’s future 5G network, and new mobile healthcare technology.

Unilever Foundry

Unilever’s approach to innovation includes a networks of innovation labs, start-up accelerators and ideas incubators. Unilever Foundry is its global startup collaboration platform, partnering with the world’s best startups to accelerate business innovation globally. Separately, based in the Netherlands, the new Global Foods Innovation Centre is an inspiring, sustainable, and practical building that facilitates innovative ways of collaborating.

X by Alphabet

X is a diverse group of inventors and entrepreneurs who build and launch technologies that aim to improve the lives of millions, even billions, of people. “Our goal is 10x impact on the world’s most intractable problems, not just 10% improvement. We approach projects that have the aspiration and riskiness of research with the speed and ambition of a startup.”

Read my article: A Decade of Moonshots at Alphabet’s X … addressing huge problems, with breakthrough technologies, creating radical innovation

Spanish eco-fashion brand Ecoalf this month launched in the Japanese market with a joint-venture with Japanese clothing company Sanyo Shokai. Ecoalf opened its first store in Tokyo as part of the omni-channel strategy that will cover retail, online and wholesale.

However what really caught media attention was its reuse the back of old advertising posters, another example of its “up cycling” approach.

Javier Goyeneche, Ecoalf’s founder and CEO, who features in my forthcoming book Business Recoded talked about his passion for creating a more sustainable life, and whilst it started in turning plastic bottles into shirts, is now becoming a much more diverse approach to making better use of life’s waste materials – from coffee grounds to ink cartridges – and turning them into something new and interesting.

In launching the new Japanese venture, Goyeneche, said “I am pleased to announce this partnership with Sanyo in Japan, a market where we see significant growth opportunity specifically in the sustainable fashion lifestyle. What we do, how we do it and with whom we do it, is key for Ecoalf. This is why Sanyo’s 70 years of extensive expertise and tradition in the Japanese market is a best-in-class alliance for Ecoalf’s successful expansion into Japan”.

Isao Iwata, president, Sanyo Shokai, added “According to WWF reports, if mankind continues to live as it does today, we will need resources equivalent to those of two planets by 2030. Moreover, measures are being considered at the national level to deal with marine pollution caused by plastic garbage as an international issue. Through our business activities, Sanyo, together with Ecoalf, will work to create a new business model with low environmental impact and to promote a sustainable society both for the next generation and for the future.”

EcoAlf was created by Javier Goyeneche in 2012 to realise innovation in recycled clothing. The idea for a truly sustainable brand was born from a deep frustration with the excessive use of the world’s natural resources and the amount of waste produced by industrialised countries – specifically by the fashion industry. But Ecoalf is more than a conscious clothing brand; it is a mission to create the first generation of recycled products with the same attention to quality, design and technical properties as the best non-recycled products in the market.

Javier Goyeneche was born in Madrid, Javier studied in Spain, London and Paris, while also taking part in top international equestrian competitions. He received his degree in Business Administration from the European Business School and continued with post-graduate work in International Marketing Strategies at Northwestern University in Chicago.

In 1995, he founded Fun & Basics, specializing in contemporary fashion handbags and accessories. Within 10 years, Javier grew the business to 350 points of sale and 70 branded retail stores. His accomplishments were recognized by the industry when he was awarded Best Young Entrepreneur of Madrid in 2005.

Although he achieved tremendous success with Fun & Basics, Javier gradually grew frustrated with the amount of waste he saw being produced by the fashion industry. He embarked on a mission to create an entirely new concept that would combine his design sensibility and understanding of the fashion consumer with the latest in recycled materials. In 2008 he launched EcoAlf..

Under his leadership, the company has grown steadily and now produces a full lifestyle collection of outerwear, swimwear, casual apparel, shoes and accessories. Javier has strategically expanded EcoAlf ’s distribution to include many of the world’s most prestigious department stores and specialty retailers. In 2012, he oversaw the opening of an integrated EcoAlf  concept store, showroom and office in Madrid. Most recently Javier spearheaded a partnership with Apple, supplying the company with cases for its MacBook Pro products. Moving forward he will continue to forge strategic alliances that will position EcoAlf  as a leader in fashion and accessories crafted from recycled material.

The concept of the brand came after the birth of Goyeneche’s son, Alfredo (the company is named after him) when I was reflecting upon the world we would leave to the next generation, and my frustration with the excessive use of the World’s natural resources.

EcoAlf was born in 2009. Goyeneche’s idea was to create a fashion brand that is truly sustainable.

All studies showed that we are presently using five times more natural resources than the planet is able to auto-generate. We cannot live in this world as if we have another one to go when this one is ruined.

Goyeneche spent the three first years on sourcing and developing fabrics. The problem was that when I sourced the market for recycled materials the offer was small and of very poor quality. Most fabrics only contained a very small percentage of recycled material (15-20%).

So he found the need to start creating partnerships with factories in order to develop fabrics, lining, straps, labels and cords using recycled materials.

The goal was to create the first generation of recycled products with the same quality, design and technical properties as the best non-recycled products to show that there is no need to use our world’s natural resources in careless way.

Discarded fishing nets, post-consumer plastic bottles, worn-out tires, post-industrial cotton, and used coffee grinds…where people see trash I see high quality raw materials.

Hopefully, in a near future, their vision and efforts will encourage others to move in the same path, as more sustainable fashion labels will emerge resulting in a global compromise towards recycling and sustainability.

When EcoAlf first emerged, their first challenge was to change people´s conceptual approach of recycling, as recycling and quality did not seem to connect. People imagine them taking their grandmothers quilt and making a simple rough backpack.

Their efforts during the past years have clearly proven that recycling connects with quality and design, resulting in boosting a change of mentality where people now believe trash equals natural resources with the same quality.

Think micro and act macro. Goyeneche believes this change will be not be driven by governments but by small companies who will step by step guide the small customer towards this world compromised with recycling and sustainability and demonstrate that things can be done in a different way.

By investing in R+D and traveling around the world, he started to identify the ideal manufacturing resources, and started to build carefully the foundation that would become EcoAlf.

Today the company has 11 active alliances around the world (Taiwan, Korea, Portugal, Mexico, Japan, Spain, etc.) that allow us to continually develop all necessary elements to manufacture with recycled materials.

In the short time of EcoAlf existence, 30 million plastic bottles and 40 tons of fishing nets were recycled to make its products.

There are too many people complaining and a few pushing to change things. All industries should act, react and focus all resources in I+D. Natural resources are not endless and we need to start acting now, as we can still change the world we all live in.

If you want to make a difference don’t let anybody tell you “it’s impossible”!!

EcoAlf is working on a major project for a while now. Until now, EcoAlf has been reducing waste by recycling materials from landfills but my personal challenge has always been to help cleaning up the ocean.

The idea is to collect marine debris with the help of Fishermen and recycle them into consumer products. I had spent the last year investigating the feasibility of the project and finding all the right partners, such as recycling facilities, spinners, weavers and most importantly Fishermen Associations. Because the Fishermen are pulling up a huge amount of plastic in their nets and have always been throwing it back in the sea. Simply because that was how it was done during generations.