Peter Fisk

Go shopping in Shanghai, and stores are unlikely to accept your cash or cards, instead expecting you to buzz their QR code with your mobile phone. Sit down in a Dalian Wanda movie theatre and you are invited to immerse yourself in the story with your VR headset. Anything you need at home in Jakarta, just click on Go-Jek, and it will deliver it in minutes. Look at the leaders like Jack Ma or MukashAmbani, their business philosophy and leaderships styles are more purposeful, holistic and inspiring.

What would it take to embrace the new technologies like Artificial intelligence and robotics? The best examples are probably companies like Alibaba and Tencent. How to engage customers in new and faster ways? Take a look at the incredible stories of JioPhone or WhatsApp. How to reorganise your business for smarter and more agile innovation? Be inspired by the likes of Haier or Uniqlo.

Here are the people who I will be turning to, to explore their insights and inspirations for the future of business, when I again host the Thinkers50 European Business Forum, Europe’s premier event for business leaders, on 25-26 September 2019 in Odense, Denmark.

Here is this year’s line-up, in agenda order:

Anna and Ole Rosling … Exploring the new world, Factfulness Live … following in the footsteps of their late father, Hans Rosling, they challenge our assumptions and perspectives of a changing world.

Kjell Nordstrom … Exploring the new world, Funky Business live … His book Funky Business shook up the management world 20 years ago, now Kjell is make to reshock and reinspire your brains.

Linda Yueh … Learning from new markets, economic perspective … born in Taiwan, the American and British economist and broadcaster describes an economy that is stranger than you think.

Tendayi Viki … Learning from new markets, entrepreneurial perspective … the Harvard and Stanford psychologist explores how big corporates can act like start-ups, to innovate and grow.

Christina Boutrup … Learning from new markets, technology perspective … Danish author, and an expert on the Chinese world of technology. She knows Jack Ma and Wang Jianlin better than most.

Milo Jones … Learning from new markets, intelligence perspective … the American based in Poland, from Walmart to Accenture, Morgan Stanley to IE Business School, he is also closely connected to the CIA.

Erin Meyer … Connecting the new world, The Culture Map Workshop … The Paris-based American professor at INSEAD is back, this time with a unique workshop for 500 business leaders.

Martin Roll … Winning in the new world, from Europe to Asia … from ad agencies to collaborating with McKinsey, the Singapore-based Dane specialises in Asian brand strategies.

Irene Yuan Son … Winning in the new world, from Asia to Africa … born in China, raised in America, from McKinsey, author of The Next Factory of the World: How Chinese Investment Is Reshaping Africa

Navi Radjou … Winning in the new world, from India to America … born in India, the French-American academic is author of Frugal Innovation and is now based in Silicon Valley.

Haiyan Wang … Rethinking markets, the best ideas from China … Managing Partner of the China India Institute, and lecturer at INSEAD, based in Washington DC and an expert on Chinese business.

Anil Gupta … Rethinking markets, the best ideas from China … The world’s leading expert on Indian business, now professor at the University of Maryland.

Scott Anthony … Rethinking innovation, innovating with dual impact … Winner of the Thinker50 Strategy Award 2017, Managing Partner of Innosight, American born, now based in Singapore.

Howard Yu … Rethinking innovation, innovation that leaps forwards … born in Hong Kong now living in Switzerland, author of Leap, the IMD professor has been called “the new Clayton Christiansen”

Jean-Francois Manzoni … Rethinking leadership, leading the future … the French Canadian is President of IMD Business School where he focuses on high performance leadership and governance.

Rasmus Hougaard … Rethinking leadership, leading in your mind … author of The Mind of the Leader, the Dane is based in New York City and leads the Potential Project.

Erica Dhawan … Rethinking leadership, leading through connections … She runs he own business Cotential, and is author of Get Big Things Done: The Power of Connectional Intelligence.

Alex Osterwalder … The European Business Lecture 2019 … the Swiss “strategyzer” is the outstanding business thinker of this decade, from Business Model Generation to The Invincible Company.

https://www.youtube.com/watch?v=3YBOMqSMoEE&t=183s

How can you learn from all these thinkers?

All of the above will feature at the Thinkers50 European Business Forum, Europe’s premier event for business leaders, on 25-26 September 2019 in Odense, Denmark.

Tickets are limited and available from www.Thinkers50Europe.com

Here’s what happened at EBF17:

https://www.youtube.com/watch?v=kdCLUbml9q8

Here’s what happened at EBF18:

https://www.youtube.com/watch?v=CzksDkQBB0g&t=32s

Tickets are limited and available from www.Thinkers50Europe.com

Jeff Bezos has had a turbulent year. Amazon continues to thrive, albeit with new challenges, whilst Bezos personally has had to overcome more personal challenges. He remains the richest person in the world, at least before his divorce settlement, and interestingly has paid himself the same $81,840 salary every year for the last two decades. He has never paid himself a dividend either, although he owns 16% of Amazon, worth more than $100 billion. Here are some more facts about him:

• In 1994, the then 30-year-old Jeff Bezos left behind a six-figure gig on Wall Street as the youngest ever senior vice president at investment banking firm D.E. Shaw & Co. to start Amazon in Seattle.
• He is a huge Star Trek fan. He has said that Alexa was inspired by the pop culture icon and he even had a cameo as an alien in 2016’s “Star Trek Beyond.” Amazon was almost named MakeItSo.com after the catchphrase of Next Generation’s Captain Picard.
• He made an appearance on “The Simpsons” in a 2008 episode where he and Mark Cuban (also playing himself) hang out with fellow billionaire Mr. Burns at Billionaire Camp.
• Bezos is fascinated by the Mercury and Apollo era of NASA, so much so that he funded and went on an undersea expedition to retrieve remnants of Apollo rockets.
• He is living his childhood dream. He founded his space tourism company Blue Origin in 2000, decades after he told his friends and teacher that he wanted to be a “space entrepreneur” when he grew up.
• He doesn’t use an alarm clock and tends to get eight hours of sleep. No burning the midnight oil for this CEO.
• Apparently, Bezos has always had an eye on the future. According to “The Everything Store: Jeff Bezos and the Age of Amazon,” Brad Stone’s biography of the CEO, when he was a toddler, Bezos dismantled his crib with a screwdriver because he wanted to sleep in a bed.
• It’s probably cold comfort to Barnes & Noble that while Bezos was launching Amazon and wanted a break from his garage, he would frequent the local location in Bellevue, Wash.
• Adoption is a big part of his family story. When he was very young, he was adopted by his stepfather Miguel Bezos. Bezos has four children with his now ex-wife Mackenzie, three sons and one daughter, who was adopted from China.
• Bezos spent summers when he was growing up on his maternal grandfather’s cattle ranch in Texas where he did odd jobs such as fixing windmills. His grandfather had worked for Darpa in the 1950s on space technology and was the manager of the Atomic Energy Commission’s Albuquerque, N.M., office.
• When he was a teenager, he had a job as a McDonald’s fry cook and started a small summer camp for elementary schoolers called the DREAM Institute.
• According to a Wired profile from the late 1990s, Bezos had high standards for women that he was going to date. “The number-one criterion was that I wanted a woman who could get me out of a Third World prison,” he said.
• On the drive to Seattle to launch Amazon, Bezos made sure to stop at the Grand Canyon along the way.
• The Albuquerque native attended Princeton, where he studied electrical engineering and computer science. In 2011, he donated $15 million to the school to build a center that would study neurological disorders.
• Unsurprisingly, Bezos is a voracious reader. His favorite novel is “The Remains of the Day” by Kazuo Ishiguro.

Bezos’ annual letter to Amazon shareholders

Today Bezos published his annual letter to Amazon shareholders. In it he says “Something strange and remarkable has happened over the last 20 years, third-party sales have grown from 3% of the total to 58%. To put it bluntly: Third-party sellers are kicking our first-party butt.”

It is often said that introducing Amazon Marketplace, where other retailers could compete against Amazon, was one of his bravest decisions. Bezos almost maintained it was a customer-centric decision, giving people more choice. And of course, whilst third parties have grown rapidly, Amazon continues to grow rapidly too, as the retail platform reaches ever more people across the world.

This is his letter in full, reflecting on the last 12 months:

2018 LETTER TO SHAREHOLDERS

To our shareowners:

Something strange and remarkable has happened over the last 20 years. Take a look at these numbers:

1999                3%
2000                3%
2001                6%
2002              17%
2003              22%
2004              25%
2005              28%
2006              28%
2007              29%
2008              30%
2009              31%
2010              34%
2011              38%
2012              42%
2013              46%
2014              49%
2015              51%
2016              54%
2017              56%
2018              58%

The percentages represent the share of physical gross merchandise sales sold on Amazon by independent third-party sellers – mostly small- and medium-sized businesses – as opposed to Amazon retail’s own first party sales. Third-party sales have grown from 3% of the total to 58%. To put it bluntly:

Third-party sellers are kicking our first party butt. Badly.

And it’s a high bar too because our first-party business has grown dramatically over that period, from $1.6 billion in 1999 to $117 billion this past year. The compound annual growth rate for our first-party business in that time period is 25%. But in that same time, third-party sales have grown from $0.1 billion to $160 billion – a compound annual growth rate of 52%. To provide an external benchmark, eBay’s gross merchandise sales in that period have grown at a compound rate of 20%, from $2.8 billion to $95 billion.

Why did independent sellers do so much better selling on Amazon than they did on eBay? And why were independent sellers able to grow so much faster than Amazon’s own highly organized first-party sales organization? There isn’t one answer, but we do know one extremely important part of the answer:

We helped independent sellers compete against our first-party business by investing in and offering them the very best selling tools we could imagine and build. There are many such tools, including tools that help sellers manage inventory, process payments, track shipments, create reports, and sell across borders – and we’re inventing more every year. But of great importance are Fulfillment by Amazon and the Prime membership program. In combination, these two programs meaningfully improved the customer experience of buying from independent sellers. With the success of these two programs now so well established, it’s difficult for most people to fully appreciate today just how radical those two offerings were at the time we launched them. We invested in both of these programs at significant financial risk and after much internal debate. We had to continue investing significantly over time as we experimented with different ideas and iterations. We could not foresee with certainty what those programs would eventually look like, let alone whether they would succeed, but they were pushed forward with intuition and heart, and nourished with optimism.

Intuition, curiosity, and the power of wandering

From very early on in Amazon’s life, we knew we wanted to create a culture of builders – people who are curious, explorers. They like to invent. Even when they’re experts, they are “fresh” with a beginner’s mind. They see the way we do things as just the way we do things now. A builder’s mentality helps us approach big, hard-to-solve opportunities with a humble conviction that success can come through iteration: invent, launch, reinvent, relaunch, start over, rinse, repeat, again and again. They know the path to success is anything but straight.

Sometimes (often actually) in business, you do know where you’re going, and when you do, you can be efficient. Put in place a plan and execute. In contrast, wandering in business is not efficient … but it’s also not random. It’s guided – by hunch, gut, intuition, curiosity, and powered by a deep conviction that the prize for customers is big enough that it’s worth being a little messy and tangential to find our way there. Wandering is an essential counter-balance to efficiency. You need to employ both. The outsized discoveries – the “non-linear” ones – are highly likely to require wandering.

AWS’s millions of customers range from startups to large enterprises, government entities to nonprofits, each looking to build better solutions for their end users. We spend a lot of time thinking about what those organizations want and what the people inside them – developers, dev managers, ops managers, CIOs, chief digital officers, chief information security officers, etc. – want.

Much of what we build at AWS is based on listening to customers. It’s critical to ask customers what they want, listen carefully to their answers, and figure out a plan to provide it thoughtfully and quickly (speed matters in business!). No business could thrive without that kind of customer obsession. But it’s also not enough. The biggest needle movers will be things that customers don’t know to ask for. We must invent on their behalf. We have to tap into our own inner imagination about what’s possible.

AWS itself – as a whole – is an example. No one asked for AWS. No one. Turns out the world was in fact ready and hungry for an offering like AWS but didn’t know it. We had a hunch, followed our curiosity, took the necessary financial risks, and began building – reworking, experimenting, and iterating countless times as we proceeded.

Within AWS, that same pattern has recurred many times. For example, we invented DynamoDB, a highly scalable, low latency key-value database now used by thousands of AWS customers. And on the listening carefully-to-customers side, we heard loudly that companies felt constrained by their commercial database options and had been unhappy with their database providers for decades – these offerings are expensive, proprietary, have high-lock-in and punitive licensing terms. We spent several years building our own database engine, Amazon Aurora, a fully-managed MySQL and PostgreSQL-compatible service with the same or better durability and availability as the commercial engines, but at one-tenth of the cost. We were not surprised when this worked.

But we’re also optimistic about specialized databases for specialized workloads. Over the past 20 to 30 years, companies ran most of their workloads using relational databases. The broad familiarity with relational databases among developers made this technology the go-to even when it wasn’t ideal. Though sub-optimal, the data set sizes were often small enough and the acceptable query latencies long enough that you could make it work. But today, many applications are storing very large amounts of data – terabytes and petabytes. And the requirements for apps have changed. Modern applications are driving the need for low latencies, real-time processing, and the ability to process millions of requests per second. It’s not just key-value stores like DynamoDB, but also in-memory databases like Amazon ElastiCache, time series databases like Amazon Timestream, and ledger solutions like Amazon Quantum Ledger Database – the right tool for the right job saves money and gets your product to market faster.

We’re also plunging into helping companies harness Machine Learning. We’ve been working on this for a long time, and, as with other important advances, our initial attempts to externalize some of our early internal Machine Learning tools were failures. It took years of wandering – experimentation, iteration, and refinement, as well as valuable insights from our customers – to enable us to find SageMaker, which launched just 18 months ago. SageMaker removes the heavy lifting, complexity, and guesswork from each step of the machine learning process – democratizing AI. Today, thousands of customers are building machine learning models on top of AWS with SageMaker. We continue to enhance the service, including by adding new reinforcement learning capabilities. Reinforcement learning has a steep learning curve and many moving parts, which has largely put it out of reach of all but the most well-funded and technical organizations, until now. None of this would be possible without a culture of curiosity and a willingness to try totally new things on behalf of customers. And customers are responding to our customer-centric wandering and listening – AWS is now a $30 billion annual run rate business and growing fast.

Imagining the impossible

Amazon today remains a small player in global retail. We represent a low single-digit percentage of the retail market, and there are much larger retailers in every country where we operate. And that’s largely because nearly 90% of retail remains offline, in brick and mortar stores. For many years, we considered how we might serve customers in physical stores, but felt we needed first to invent something that would really delight customers in that environment. With Amazon Go, we had a clear vision. Get rid of the worst thing about physical retail: checkout lines. No one likes to wait in line. Instead, we imagined a store where you could walk in, pick up what you wanted, and leave.

Getting there was hard. Technically hard. It required the efforts of hundreds of smart, dedicated computer scientists and engineers around the world. We had to design and build our own proprietary cameras and shelves and invent new computer vision algorithms, including the ability to stitch together imagery from hundreds of cooperating cameras. And we had to do it in a way where the technology worked so well that it simply receded into the background, invisible. The reward has been the response from customers, who’ve described the experience of shopping at Amazon Go as “magical.” We now have 10 stores in Chicago, San Francisco, and Seattle, and are excited about the future.

Failure needs to scale too

As a company grows, everything needs to scale, including the size of your failed experiments. If the size of your failures isn’t growing, you’re not going to be inventing at a size that can actually move the needle. Amazon will be experimenting at the right scale for a company of our size if we occasionally have multibillion-dollar failures. Of course, we won’t undertake such experiments cavalierly. We will work hard to make them good bets, but not all good bets will ultimately pay out. This kind of large-scale risk taking is part of the service we as a large company can provide to our customers and to society. The good news for shareowners is that a single big winning bet can more than cover the cost of many losers.

Development of the Fire phone and Echo was started around the same time. While the Fire phone was a failure, we were able to take our learnings (as well as the developers) and accelerate our efforts building Echo and Alexa. The vision for Echo and Alexa was inspired by the Star Trek computer. The idea also had origins in two other arenas where we’d been building and wandering for years: machine learning and the cloud. From Amazon’s early days, machine learning was an essential part of our product recommendations, and AWS gave us a front row seat to the capabilities of the cloud. After many years of development, Echo debuted in 2014, powered by Alexa, who lives in the AWS cloud.

No customer was asking for Echo. This was definitely us wandering. Market research doesn’t help. If you had gone to a customer in 2013 and said “Would you like a black, always-on cylinder in your kitchen about the size of a Pringles can that you can talk to and ask questions, that also turns on your lights and plays music?” I guarantee you they’d have looked at you strangely and said “No, thank you.”

Since that first-generation Echo, customers have purchased more than 100 million Alexa-enabled devices. Last year, we improved Alexa’s ability to understand requests and answer questions by more than 20%, while adding billions of facts to make Alexa more knowledgeable than ever. Developers doubled the number of Alexa skills to over 80,000, and customers spoke to Alexa tens of billions more times in 2018 compared to 2017. The number of devices with Alexa built-in more than doubled in 2018. There are now more than 150 different products available with Alexa built-in, from headphones and PCs to cars and smart home devices. Much more to come!

One last thing before closing. As I said in the first shareholder letter more than 20 years ago, our focus is on hiring and retaining versatile and talented employees who can think like owners. Achieving that requires investing in our employees, and, as with so many other things at Amazon, we use not just analysis but also intuition and heart to find our way forward.

Last year, we raised our minimum wage to $15-an-hour for all full-time, part-time, temporary, and seasonal employees across the U.S. This wage hike benefitted more than 250,000 Amazon employees, as well as over 100,000 seasonal employees who worked at Amazon sites across the country last holiday. We strongly believe that this will benefit our business as we invest in our employees. But that is not what drove the decision. We had always offered competitive wages. But we decided it was time to lead – to offer wages that went beyond competitive. We did it because it seemed like the right thing to do.

Today I challenge our top retail competitors (you know who you are!) to match our employee benefits and our $15 minimum wage. Do it! Better yet, go to $16 and throw the gauntlet back at us. It’s a kind of competition that will benefit everyone.

Many of the other programs we have introduced for our employees came as much from the heart as the head. I’ve mentioned before the Career Choice program, which pays up to 95% of tuition and fees towards a certificate or diploma in qualified fields of study, leading to in-demand careers for our associates, even if those careers take them away from Amazon. More than 16,000 employees have now taken advantage of the program, which continues to grow. Similarly, our Career Skills program trains hourly associates in critical job skills like resume writing, how to communicate effectively, and computer basics. In October of last year, in continuation of these commitments, we signed the President’s Pledge to America’s Workers and announced we will be upskilling 50,000 U.S. employees through our range of innovative training programs.

Our investments are not limited to our current employees or even to the present. To train tomorrow’s workforce, we have pledged $50 million, including through our recently announced Amazon Future Engineer program, to support STEM and CS education around the country for elementary, high school, and university students, with a particular focus on attracting more girls and minorities to these professions. We also continue to take advantage of the incredible talents of our veterans. We are well on our way to meeting our pledge to hire 25,000 veterans and military spouses by 2021. And through the Amazon Technical Veterans Apprenticeship program, we are providing veterans on-the-job training in fields like cloud computing.

A huge thank you to our customers for allowing us to serve you while always challenging us to do even better, to our shareowners for your continuing support, and to all our employees worldwide for your hard work and pioneering spirit. Teams all across Amazon are listening to customers and wandering on their behalf!

As always, I attach a copy of our original 1997 letter. It remains Day 1.

Sincerely,

Jeffrey P. Bezos
Founder and Chief Executive Officer
Amazon.com, Inc.

 

 

1997 LETTER TO SHAREHOLDERS (Reprinted from the 1997 Annual Report)To our shareholders:

Amazon.com passed many milestones in 1997: by year-end, we had served more than 1.5 million customers, yielding 838% revenue growth to $147.8 million, and extended our market leadership despite aggressive competitive entry.

But this is Day 1 for the Internet and, if we execute well, for Amazon.com. Today, online commerce saves customers money and precious time. Tomorrow, through personalization, online commerce will accelerate the very process of discovery. Amazon.com uses the Internet to create real value for its customers and, by doing so, hopes to create an enduring franchise, even in established and large markets.

We have a window of opportunity as larger players marshal the resources to pursue the online opportunity and as customers, new to purchasing online, are receptive to forming new relationships. The competitive landscape has continued to evolve at a fast pace. Many large players have moved online with credible offerings and have devoted substantial energy and resources to building awareness, traffic, and sales. Our goal is to move quickly to solidify and extend our current position while we begin to pursue the online commerce opportunities in other areas. We see substantial opportunity in the large markets we are targeting. This strategy is not without risk: it requires serious investment and crisp execution against established franchise leaders.

It’s All About the Long Term

We believe that a fundamental measure of our success will be the shareholder value we create over the long term. This value will be a direct result of our ability to extend and solidify our current market leadership position. The stronger our market leadership, the more powerful our economic model. Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital.

Our decisions have consistently reflected this focus. We first measure ourselves in terms of the metrics most indicative of our market leadership: customer and revenue growth, the degree to which our customers continue to purchase from us on a repeat basis, and the strength of our brand. We have invested and will continue to invest aggressively to expand and leverage our customer base, brand, and infrastructure as we move to establish an enduring franchise.

Because of our emphasis on the long term, we may make decisions and weigh tradeoffs differently than some companies. Accordingly, we want to share with you our fundamental management and decision-making approach so that you, our shareholders, may confirm that it is consistent with your investment philosophy:

• We will continue to focus relentlessly on our customers.

• We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions.

• We will continue to measure our programs and the effectiveness of our investments analytically, to jettison those that do not provide acceptable returns, and to step up our investment in those that work best. We will continue to learn from both our successes and our failures.

• We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.

• When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we’ll take the cash flows.

• We will share our strategic thought processes with you when we make bold choices (to the extent competitive pressures allow), so that you may evaluate for yourselves whether we are making rational long-term leadership investments.

• We will work hard to spend wisely and maintain our lean culture. We understand the importance of continually reinforcing a cost-conscious culture, particularly in a business incurring net losses.

• We will balance our focus on growth with emphasis on long-term profitability and capital management. At this stage, we choose to prioritize growth because we believe that scale is central to achieving the potential of our business model.

• We will continue to focus on hiring and retaining versatile and talented employees, and continue to weight their compensation to stock options rather than cash. We know our success will be largely affected by our ability to attract and retain a motivated employee base, each of whom must think like, and therefore must actually be, an owner.

We aren’t so bold as to claim that the above is the “right” investment philosophy, but it’s ours, and we would be remiss if we weren’t clear in the approach we have taken and will continue to take.

With this foundation, we would like to turn to a review of our business focus, our progress in 1997, and our outlook for the future.

Obsess Over Customers

From the beginning, our focus has been on offering our customers compelling value. We realized that the Web was, and still is, the World Wide Wait. Therefore, we set out to offer customers something they simply could not get any other way, and began serving them with books. We brought them much more selection than was possible in a physical store (our store would now occupy 6 football fields), and presented it in a useful, easy- to-search, and easy-to-browse format in a store open 365 days a year, 24 hours a day. We maintained a dogged focus on improving the shopping experience, and in 1997 substantially enhanced our store. We now offer customers gift certificates, 1-Click shopping℠, and vastly more reviews, content, browsing options, and recommendation features. We dramatically lowered prices, further increasing customer value. Word of mouth remains the most powerful customer acquisition tool we have, and we are grateful for the trust our customers have placed in us. Repeat purchases and word of mouth have combined to make Amazon.com the market leader in online bookselling.

By many measures, Amazon.com came a long way in 1997:

• Sales grew from $15.7 million in 1996 to $147.8 million – an 838% increase.

• Cumulative customer accounts grew from 180,000 to 1,510,000 – a 738% increase.

• The percentage of orders from repeat customers grew from over 46% in the fourth quarter of 1996 to over 58% in the same period in 1997.

• In terms of audience reach, per Media Metrix, our Web site went from a rank of 90th to within the top 20.

• We established long-term relationships with many important strategic partners, including America Online, Yahoo!, Excite, Netscape, GeoCities, AltaVista, @Home, and Prodigy.

Infrastructure

During 1997, we worked hard to expand our business infrastructure to support these greatly increased traffic, sales, and service levels:

• Amazon.com’s employee base grew from 158 to 614, and we significantly strengthened our management team.

• Distribution center capacity grew from 50,000 to 285,000 square feet, including a 70% expansion of our Seattle facilities and the launch of our second distribution center in Delaware in November.

• Inventories rose to over 200,000 titles at year-end, enabling us to improve availability for our customers.

• Our cash and investment balances at year-end were $125 million, thanks to our initial public offering in May 1997 and our $75 million loan, affording us substantial strategic flexibility.

Our Employees

The past year’s success is the product of a talented, smart, hard-working group, and I take great pride in being a part of this team. Setting the bar high in our approach to hiring has been, and will continue to be, the single most important element of Amazon.com’s success.

It’s not easy to work here (when I interview people I tell them, “You can work long, hard, or smart, but at Amazon.com you can’t choose two out of three”), but we are working to build something important, something that matters to our customers, something that we can all tell our grandchildren about. Such things aren’t meant to be easy. We are incredibly fortunate to have this group of dedicated employees whose sacrifices and passion build Amazon.com.

Goals for 1998

We are still in the early stages of learning how to bring new value to our customers through Internet commerce and merchandising. Our goal remains to continue to solidify and extend our brand and customer base. This requires sustained investment in systems and infrastructure to support outstanding customer convenience, selection, and service while we grow. We are planning to add music to our product offering, and over time we believe that other products may be prudent investments. We also believe there are significant opportunities to better serve our customers overseas, such as reducing delivery times and better tailoring the customer experience. To be certain, a big part of the challenge for us will lie not in finding new ways to expand our business, but in prioritizing our investments.

We now know vastly more about online commerce than when Amazon.com was founded, but we still have so much to learn. Though we are optimistic, we must remain vigilant and maintain a sense of urgency. The challenges and hurdles we will face to make our long-term vision for Amazon.com a reality are several: aggressive, capable, well-funded competition; considerable growth challenges and execution risk; the risks of product and geographic expansion; and the need for large continuing investments to meet an expanding market opportunity. However, as we’ve long said, online bookselling, and online commerce in general, should prove to be a very large market, and it’s likely that a number of companies will see significant benefit. We feel good about what we’ve done, and even more excited about what we want to do.

1997 was indeed an incredible year. We at Amazon.com are grateful to our customers for their business and trust, to each other for our hard work, and to our shareholders for their support and encouragement.

Jeffrey P. Bezos
Founder and Chief Executive Officer
Amazon.com, Inc.

Amazon knew that it had to reinvent its distribution system, if it was going to be able to deliver customer orders in 24 hours, and ultimately in 1 hour. Transportation was relatively easy. Dedicated Amazon vans, aircraft, ships, bikes, drones were entirely possible. The toughest part was getting the requested goods from the high-stacked shelves of its huge warehouses into the right box and out of the door within minutes of the customers ordering click.

And that started by reimagining how it’s warehouses worked. Here is an extract from Amazon’s DayOne blog telling the story of how one of their engineers came up with the answer.

When Amazon set out to build a next generation version of its robot that’s used in its warehouses, or fulfillment centres, it literally started with a blank slate. The robotics division held a contest among employees for the design, and the winner was a simple but elegant paper sketch by an engineer, Dragan Pajevic.

Pajevic also happened to be the lead engineer on the next generation robot, and he was faced with an exceptionally daunting task in 2015. He needed to figure out how to make these bots shorter, smarter, and stronger. And his team needed to do it fast, because the robots would be debuting at new fulfillment centres that were already underway in Europe.

“I knew I had to deliver,” he said.

Designing the next generation

Since 2012, when the company acquired Kiva Technologies, robots have moved tall stacks of inventory around Amazon’s fulfillment centers – having the robots wheel the inventory directly to fulfillment center associates for them to retrieve ordered products saves significant time in the fulfillment process. Working in a technology-rich environment alongside robots, also enables associates to be able to focus on more challenging tasks.

There are currently more than 100,000 of these robots working throughout Amazon’s global fulfillment centers. The first-gen robots are a foot tall, but the goal for the next-gen robots was to cut their height to 9 or 10 inches. Many fulfillment centers are more than one million square feet – about 28 football fields, making these buildings a fight for space. So designing a smaller bot would in turn open up more space for inventory, making smaller buildings feasible and enabling faster shipping times and better prices for customers.

The team of engineers went even further than the initial goal, designing a bot that stands just 7.75 inches high and contains 50 percent fewer components, freeing up significant inventory space. Aptly dubbed Hercules, or H Drive for short, the next generation robot can lift 1,250 pounds—500 pounds more than its predecessor.

Hercules’ chassis, or frame, allows parts to sit closer together, taking up less space, while the simpler design makes it easier to build and maintain. Assembled in North Reading, Massachusetts, where Amazon Robotics is based, the smaller unit also has improved functionality, making it more efficient at navigating a fulfillment center. The reductions in size will help Amazon open new fulfillment centers closer to urban centers in Europe, resulting in faster delivery to more customers.

“Complicated things are not necessarily better than simple things,” Pajevic said. “And sometimes it’s more difficult to design things to be simple versus complex.”

That idea dovetails with Amazon’s Leadership Principles, one of which is “Invent and Simplify.” The H Drive is just one example of how Amazon is investing in the process-improving inventions that iterate on existing technology, just as much as its big ideas for new inventions. Amazon values innovation for the long-term, and developing patents to continuously improve its own systems. But how do you keep driving innovation at a company that’s as diversified as Amazon? It’s a challenge that remains as stubborn as it is pervasive, and it’s one Tye Brady thinks about often in his role as a chief technologist at Amazon Robotics.

https://www.youtube.com/watch?v=JXkMevbjga4

Keeping the startup spark alive

“I’m always looking for ways to maintain an entrepreneurial spirit among my team and figure out how to weave it into everything we do,” said Brady.

According to Brady, anyone at Amazon can contribute an idea that ends up having an impact, even if it’s for a different division. The company is known for its regular internal contests and hackathons that recognize people for creative thinking. “If you have interesting ideas that have value, they will go to scale at Amazon if we’re in any of those businesses,” Brady said. “You don’t have to restrict yourself to one sector.”

But it’s one thing to spitball a bunch of new ideas; it’s another to make them stick, which is why you can’t have a robotics division made up solely of blue-sky visionaries. “Diversity of thought on my team is something I value,” said Brady.

As a senior principal technologist, Beth Marcus finds the same to be true on her team of engineers that’s dedicated to envisioning the future of Amazon Robotics. Making sure those robots continue to operate at their peak potential often requires a different skill set than coming up with the next big idea, she finds. That’s why Amazon needs lots of different types of thinkers – both can have a positive impact on the customer.

Knowing that patents are a significant part of the innovation process, Marcus helped create an internal class for engineers to encourage more patent filings. Engineers often shy away from patenting, she noted, either because they think their idea isn’t patentable or they hate the process. Yet Amazon’s employees are constantly creating both large and small inventions in their mission to satisfy customers. Amazon has thousands of granted patents. Marcus finds that Amazon’s internal patent office is better than she’s seen in any other company. The streamlined submission process makes it so simple and accessible for any employee with an invention or idea – even if they don’t have experience submitting a patent.

Putting new puzzle pieces in place

Companies often make the patent process onerous for engineers by requiring a tremendous amount of time. Amazon lightweights that process by avoiding high-level review committees and alternatively empowering individuals to approve inventions for patenting.

Amazon engineers regularly get named on filings and receive recognition in a variety of forms. For filing a patent, Amazonians receive an award shaped like a puzzle piece for each filing, and when a pending patent is approved—a process that can take about two years—the puzzle piece goes from clear to blue. These awards are also displayed virtually on the Amazon company-wide directory – a badge only to be worn by inventors. The Hercules project generated seven patents pending with Dragan Pajevic’s name on them, his first-ever patents.

It’s great to have the recognition, Pajevic said, but “a bigger driving force for me is creating something new that affects people’s lives.”

Meeting the aggressive targets for Hercules, he noted, didn’t happen because of one magic-bullet idea. Instead, the robot emerged from a series of small but important ideas and a culture that encourages people to ask, “Why stop there?”

After many such questions and long days of engineering and technology work, Pajevic watched his winning design for Hercules go from paper to reality in 2017, when the bot was rolled out across six different sites in Europe within three months. Tens of thousands of H Drives are now moving inventory to associates, and some of the bot’s features are already making their way into other robotics for additional tasks. For Pajevic, the satisfaction comes from seeing the visible impact his team’s technology is having on the customer experience – more efficiency means faster delivery and greater customer satisfaction.

“It was extremely gratifying to be able to deliver what at first looked almost impossible,” said Pajevic.

12 years ago a small group of companies began enjoying exceptional sales and profit growth, companies like Apple, Alibaba and Google to name just three. They didn’t just grow. Nor were they simply enjoying their best ever years. They grew exponentially, and they were still in their infancy.

These companies, to use the description of Nick Vitalari are “elastic enterprises”. They take a “platform” and “ecosystem” approach to business. The platform and ecosystem provides a new kind of elasticity. Enabled by the platform they have an ability to scale like no enterprise before them.

Platforms are typically online matchmakers or technology frameworks. By far the most common type are “transaction platforms”, also known as “digital matchmakers”. Examples of transaction platforms include Amazon and Alibaba, Uber and Baidu. A second type is the “innovation platform”, which provides a common technology framework upon which others can build, such as the many independent developers who work on Microsoft’s platform, app makers for Apple, technologists with Android, content creators on Youtube, and partners who work in ARM’s ecosystem.

The Elastic Enterprise: The New Manifesto for Business Revolution by Vitalari and his colleague Haydn Shaunessy and tells that story, the story of today’s extraordinary successes in an age of turbulence and change.

For over two hundred years enterprises worked off an operating model described by Adam Smith in the 18th century. It was based on the division of labor and the gradual elimination of individual creativity. Today’s high performing platforms have moved beyond Smith’s craft-inspired model of scale. They grow in new ways.

“While other companies were laying staff off, these platforms were hiring and creating opportunity for vast ecosystems of creative people. We noticed these companies were not just good for employment opportunities; they were creating new markets as well. We are talking here about real change, along many dimensions, baked into one coherent model for how business should be done,” observed Vitalari and  Shaunessy.

Here are some other recent articles, reports and toolkits on platforms:

• EdenMcCallum on The Platform Revolution
• Platform Design Toolkit
• INSEAD on How to build a successful platform business
• MIT on Platform Strategy and Open Businesss Models
• Parker on Pipelines, Platforms and the New Rules of Strategy

Here are Vitalari’s 100 factors driving the “platform” revolution:

1. Elasticity is a strong success factor – the formula is highly scaled growth at low relative cost.
Elastic enterprises grow without incurring corresponding overhead costs. There are many reasons for that but the principle needs enshrining as a guiding principle for ambitious companies. Growth should be at low cost relative to the reward. Even in a low growth economy, we have to enshrine the principle of low cost, high scale.

2. High scale, low cost is a competitive mantra
The US will be at an extreme scale disadvantage to Chinese companies from here on in. That implies huge price disadvantage as Chinese companies amortize all business over hundreds of millions of more users. In the 1970s many Japanese companies used a base of just 130 million users to attack the American economy and claimed plenty of scalps in computer memory, TVs, white goods and more. China doesn’t need to do this. It will suppress opportunity for US and EU companies across the emerging market sphere – Africa, India, Latam, Asia.  Unless we can leverage all available assets, the geopolitics of scale will win. The elastic formula, high scale relative to cost, is a necessity.

3.  The secret is, in a low growth economy, elastic enterprises leverage third party assets to corner new opportunity.

Since Google began interacting with search engine marketers and content providers in the late 1990s, platforms have been designed around the reciprocal leveraging of assets between platform owner and ecosystem activists. Now , with overall economic growth in the west destined to be low as far ahead as we dare project, executives need to explore the question of which third party assets they can leverage.

4. Platforms allow all kinds of leverage, particularly intellectual asset leverage.
Platforms are at the heart of the new elasticity we wrote about in The Elastic Enterprise. They are the vehicle for leveraging other people’s assets. But the platform needs to offer assets, like a transaction engine, streamlined information services, friction reduction, global reach etc.

5. Elastic enterprises approach friction-free status.
Elastic enterprises do everything they can to remove business friction, from great UX design to, simple terms and conditions, to creating great logistics. The key is to be the engine that reduces friction for third parties.

6. Platforms are not two sided markets or network effects.
There are various shades of platform but their power is not captured by the idea of a two-sided market or by the idea of network effects. In many instances of platform success the main engine of growth is advocacy – many constituencies advocating the platform because of the gains it brings.

7. The platform is the main pillar of a vibrant new growth economy. 

Full stop. It used to be the factory, then the bureaucracy. The assembly line was a pillar of the economy for fifty years, then it switched to the supply chain. Today it is the platform.

8. The platform is about infinite scale.
All platforms seek scale but scale is now infinite, like Alibaba’s 120,000 transactions per second. The organisation of human economic activity now takes place a scale without precedent, scale the old enterprise could never have imagined. For that matter few of us could have imagined!

9. And infinite endpoint management.
Management used to back off propositions where the endpoint management was too vast. Or designed hierarchies to manage endpoints. At Paddy power in Ireland they manage 7 million price changes every Saturday afternoon.  Computing power and architecture coupled to mobile networks means we can price and manage any endpoint, anywhere. New endpoint management capability is the inspiration behind platform strategy.

10. The platform is often a random walk so embrace your risk takers.
To capture the benefits of an elastic economy executives need to be more opportunistic and embrace the people in their organisations who are willing to take career risk. The most iconic platforms – Google, Apple, Alibaba – relied on huge elements of chance but their leaders were adaptive, peer-like,able to read the movement of their markets, just-in-time and in tune enough with their workforce to know their calls would be implemented enthusiastically.

11.  On a random walk you need to embrace optionality
Leave behind the myth of the grand plan and create the conditions for optionality and just-in-time strategy.

12. The randomness of success requires a new learning model.
Your risk takers are the kinds of people who will always be willing to learn and always be hunting down the right information, hungry to establish a new learning model that you can grow out into the next layer of entrepreneurs in your business.

13. Think different.
So far so good – you have to trust to luck, be ready for it with options, embrace the risk takers, manoeuvre the organisation towards third party assets, learn to leverage and leverage fast in an economy where your endpoint management is infinite and your risk takers are designing a great new learning model. That’s different.

14. Disruption is not what you believe it is.
We have to rethink disruption. It is not new good enough products creating new markets that incumbents don’t see. It is many things, including bad decision making.

15. Disruption is geopolitical.
Disruption is the process whereby economic power has been gradually transferred from the US to Asia because we lack the right innovation models and in particular because we do not know how to learn fast enough. We are to blame.

16. Disruption is caused by deaf leadership.
Many successful startups come out of larger companies that just did not listen to the smart guys on the front line of the business.

17. The business community has to take responsibility for a history of bad decision making.
For as long as we perpetuate the myth that disruption starts with smart people and cheap goods, we perpetuate the myth that bad decisions, poor relationships and misguided thinking are not directly responsible for inferior corporate performance. Business is tough, competition will get more intense, and we can no longer afford excuses.

18.  The leader as peer lets interaction create change.
Change comes from interaction between peers. If you are the type of leader who closes herself off in an office with consultants you are breeding distrust among the people who will bring your future into view – the people you have hired. All change will emerge from their interaction.

19.  Change does not come from new rules.
Organisations try to make change happen by switching process models – waterfall to agile, agile to devops, NPV to real options theory. The real changes will be defined by the people who have to live with them, so let your best people design your processes.

20. The elastic enterprise is a new process model.
In the 1980s you knew if you were in manufacturing you had to grow a new supply chain. This before and after helped make change happen. Today you have to become elastic, creating growth at low unit cost using third party assets. That’s the before and after, from your current entrepreneurial bureaucracy to a platform and ecosystem, elastic model.

21. Business needs process model innovation.
Continuous improvement of what we do, as a typical way of working.

22. Embracing radical adjacency is the new management adventure.
Companies need the capability to move into new markets with new offers at speed. Often they don’t even know they are in new markets. These adjacencies are a radical departure from what went before and require a mindset shift. Epson, the printer maker, is now a leader in heads up displays, Honda is leading in airplane manufacture. Google is a leader in fibre networks. Your adjacencies are too timid if they are not radical.

23. Options options, options.
Companies have shrunk back their innovation capacity to concentrate on products with clear ROI. What they need are options but there is no way to account for an option in a firm. The accounting method that says if we don’t have options we could die is yet to be invented but dynamic CEOs will develop their optionality well ahead of market need.

24. Platforms organize what’s already there and then scale it.
In general platforms organize existing economic activity rather than creating or inventing it. They enable new entrants and scale existing economic activity. That’s why leverage is so important.

25. There are service platforms and product platforms – increasingly the customer plays a role in both.
The real breakthrough comes with the service platform. Prior to the service platform, “the platform” was an extended network of companies innovating together on a product, like a smartphone or like the WINTEL monopoly in desktop computing. Service platforms have arisen for a reason – the very poor performance of companies in the service economy.

26. The customer is the new disruption factor in platforms.
Particularly in China, customer fandom and engagement is driving huge velocity and scale in business. Whether it is drones, truck cargo or distributed manufacturing companies are responding on a weekly basis to what their customers want. The western attitude to customers as a target could be their undoing as the economy globalizes further.

27. The service platform is a highly scaled, unprecedented transaction engine.
The platform is built around a seamless transaction engine that enables all kinds of markets at scale. We’re talking of transaction engines that can complete (up to) hundreds of thousands of purchases per second.

28. The platform and ecosystem are the perfect match,  highly unequal and essential for society.
Creating good ecosystems is one of the most complex business tasks because people, third parties, other companies, have to risk their innovation energy on your platform, upfront for free. The platform is aligned with an ecosystem that is free flowing and independent in its decision making.

29. Ecosystem growth is the toughest task for platforms.
It is difficult because it can be accidental (Google’s SEO community), inadvertent (Apple’s iPhone developer ecosystem), or pure luck. The random element of ecosystem growth is the platform’s biggest challenge. But this is where independence, creativity, employment growth, revenue generation are possible.

30. The ecosystem is a shared information space not a network.
Don’t fall into the trap of believing ecosystems are full of sweetly interacting peers. They are tough places full of Darwinian competition but the upside is ecosystems create and share freely all the information necessary for a platform to flourish.

31. Ecosystems survive on terms and conditions not contracts.
The ecosystem is the twin pillar of the new economy, scaleable because there are no bilateral legal contracts. Members of ecosystems are often dependent on platform revenues, without being a bilateral partner holding a solid bankable contract. That makes it very different from innovation ecosystems where the partner model is central.

32. Ecosystems need educating.
No-one is educated to be part of an ecosystem. People learn on their feet, people make errors, errors they are told are good. Education is better.

33. The platform and ecosystem are indivisible.
The platform permits highly externalized business growth – huge scale at low unit cost, as the resources for expansion (ingenuity, innovation, product development) fall onto the ecosystem.

34. We are headed to the megaplatform
Platforms are becoming huge and broad constellations of businesses vastly more varied even than the old conglomerate. The businesses we are now breeding are so vast in reach that they are integral to whole systems. By design Alibaba is reconfiguring the way global trade is done. Platforms have to become champions of a culture’s role in this new economic system.

35. Mega-platforms require entirely new work relationships
Platforms like Alibaba reverse the power grip that IT has on organisational development. Business comes first with IT the Darwinian mass of talent where each participant is required to prove it has good solutions.

36. The West needs a new power relationship with the IT community
We are headed towards software enabled enterprises. Elastic enterprises are software enabled. But who is the conscience for how the enterprise serves our greater needs – not just wealth creation or even poverty alleviation but the well being of a society and the nurturing of its culture in the face of overwhelming economic competition.

37. Platforms broaden the social divide.
The platform is a polarizing force in society, aggregating huge amounts of wealth to the new utility and unprecedented power over resources in the ecosystem.

38. Platform disruption is horizontal.
Platform disruption collapses the walls of industry verticals and gives the platform owner scope to do business anywhere. Old ideas about vertical segments become irrelevant.

39. They force executives to dump core competency and the constraints of old theories of the firm.
For that reason the platform brings to an end the old notion of core competency. In the platform economy the most important executive skills is fluid core, an ability to continuously redefine the core, especially its underlying technology.

40. Likewise new leadership values force platforms to strip out the fake esteem of traditional management.
Platforms call for wiser leadership – really wise leaders who can show their peers that they are first among equals. These are people who do not rely on traditional social esteem systems.

41. Peer leaders will not shirk away from the risk takers.
All significant change comes from your risk takers. In industry after industry failure has arisen from not listening to them. Peers will not fear the risk taker.  That’s why they are the most important leaders.

42. Random intersections and wild cards create the unknown unknowns.
Leaders have to be ready to fancy situations where change on different timescales suddenly collide and create new economic conditions It is bad leadership not to prepare for the unknown.

43. A new information layer exists and it takes on a new significance.
Platform success relies on taking control of the information layer, the shared information space, or the advocacy power, of an ecosystem. It is no longer enough to do PR or social media. It is not enough either just to be authentic. The ecosystem has to provide advocacy on top of traditional marketing. The information layer is all the information around a product and the platform owner cannot be the sole provider, influencer or demigod.

44. Platforms will challenge Governments.
Ultimately platforms are powerful opponents of the status quo and that can mean opponents of Government and regulation. Many already organise their tax affairs to take advantage of a boundless world or negotiate their reporting conditions directly with senior officials. As they strip revenues away from Government, Government’s inability to deliver democratic services will impact the whole of society.

45. Elastic enterprises are options building machines.
They allow owners to rove around different verticals looking to play out options but that requires them to know how to evaluate and implement new options portfolios at scale.

46. Elastic enterprises need continuous active strategy rather than planning.
The days of the three or five year plan are gone. Even the 12 month plan is a luxury. Platforms give executives the bandwidth to understand the evolution of their markets and of adjacent markets and to have options that they can deploy when market conditions are most advantageous.

47. Platforms strip away geographical constraints.
That’s not just to say they are just borderless. Some of the strongest platforms exist in China and Asia and give those countries the opportunity to be global, fast, challenging the G7/G8 regulatory regime.

48. Platforms hand economic advantage to emerging economies.
Platforms seem to be very well configured for growth economies. The concept of participation is embraced by emerging market consumers (particularly in China) and by an ideological cohort of entrepreneurs eager for the next opportunity. They are being used to accelerate economic innovation and growth as well as to provide wealth accumulation as distinct from wages. They will polarize populations and regions.

49. Because scale is so important America will be challenged like never before.
In the 1980s Europe feared the scale of the US market at 350 million people. China’s 1.2 billion is four times the size with a growing middle class and a captive market in Africa (1 billion+) and growing influence in India (1 billion +) and into the Middle East and its petrol dollars.

50. The US and EU have to mobilize unemployed human assets.
We have shrinking, aging populations but vastly underutilized human assets in ghettos and inner cities. In reality we could increase the working population by bringing people back into the active workforce. It is a necessity rather than just a desirable social goal.

51. In future everybody can be an asset on a platform.
Everybody has a skill or interest or insight that can be shared at value. There is no excuse for unemployment

52. The west’s new learning model is Asia’s traditional mode of innovation.
The west is only just catching onto the idea that products need continuous improvement. This has been the Asian mantra since time immemorial. We are at a disadvantage because we are satisfied with genius rather than incremental excellence.

53. Ecosystems make the distinction between product and service platform central to management.
Ecosystems vary. There are more types of ecosystem than there are types of business platform. Some are manageable, others are not. Product platforms rely on multi-party contracts and alignment. Service platforms are Darwinian agglomerations of people having a go.

54. The service platform requires attraction skills.
How do you make your company attractive to the Darwinian horde? Service platform ecosystems are often organic and unpredictable. Management’s biggest challenge is how you manage an entity that is organic, in effect an entity, a grouping or a swarm that is not yours to manage. The answers lie in reducing business friction, create visible, credible opportunity, and having the systems to reward participants transparently.

55. The product platform is controllable.
Product platforms are governed by multilateral contracts and traditional management expectations. The ties of mutual self interest are contractual.

56. Ecosystems are increasingly the driver of the service platform.
Right from the start of the service platform the ecosystem was a dynamic force in change. At the launch of the iPhone, Apple refused to access to a third party developer ecosystem. It had to give in to pressure from the ecosystem. From the start of Google’s search monetization it had to factor in the needs of the search engine marketing community. Alibaba has always tried to service its merchant and buyer communities. Each is a lesson in how the ecosystem drives the design and progress of the platform.

57. Ecosystems are a phase change in the global economy.
A phase change happens when a substance shifts from being a solid to a fluid to a gas. It’s the same basic element but it exists in totally different forms. Ecosystems represent such a change, from passive consumers and suppliers to participants and partners of the platform, shaping and driving change, innovating freely.

58. Platforms and ecosystems drive economies of scope.
It is now possible to provide consumers and customers with endless scope because of the platform model. The best example if Alibaba’s 8 million merchants providing Chinese consumers with endless choice. Companies using the platform and ecosystem model have to aim for scope.

59. They also permit a new kind of differentiation.
Because ecosystems are participatory, they allow platform owners to greatly diversify  the final configuration of a product. At the extreme a device like the iPhone is really a collection of endless permutations of apps. We call this mass differentiation as opposed to mass customization. Customers don’t have to wait to customize a core product; they are provided with infinite choice upfront.

60. The ecosystem is now forcing change on the structure and purpose of the platform.
We see in China a new phase in the development of platforms as hardware companies open up participation in production applications through SDKs. It goes hand-in-hand with consumers seeking a bigger role in the definition of physical goods. This is a hybrid of the product and service platform and it will challenge western companies to shift away from their current linear model of design, source, sell to participate and share.

61. Ecosystems will become a force for political change.
Against that background, participation, ecosystems will become important political movements, sometimes taking aim at Government policy, where ecosystem members can play a much bigger role, sometimes taking aim at the productive environment where they are no active participants.

62. The ecosystem will change the capitalist model of production.
Capitalism is based on a design, source, organize, sell model of wealth creation leading from supply chains to distribution channels. That model is inefficient. An ecosystem model is evolving based on participation where eventually the buyer will take control.

63. The revolution of the ecosystem has yet to arrive but it is coming.
Infinite endpoint management allows the customer to become the focal point of the economy. Intermediaries like retailers have always supported the sell side of the economy, the manufacturers who want to sell.  Increasingly the technology allows for the organisation and support of the buy side, the customer. Digital, zero marginal cost economics makes it even more manageable. Already a small number of retailers are thinking how in future they may become buy-side platforms.

64. The buy-side platform and customer ecosystem will reshape profit.
The growth of the ecosystem is strongest in China, a country with a complex approach to profitability and growth. It is also embedded in collaborative economy thinking in Europe and the USA. As customers take on a more significant role, the idea of profit as the sole reward of the owner will have to change. In the case of companies like Apple, with $250 billion in its bank accounts, the platform leaks resources away from economic expansion.

65. Embrace shadow innovation and draw it into the options portfolio.
Companies are full of shadow innovation, shadow IT, workarounds, things that people do to make their work lives interesting, daring and inventive. Identify not just the risk takers but the shadow initiatives that could be drawn into an options portfolio, will open executive minds to how their businesses should function.

66. Bring back bench time.
It used to be the case that engineers in good companies had plenty of bench-time to try out new thinking,m assimilate new information, push the boundaries of what they were doing That’s why great scientists and technologists ran their own labs within corporate walls. Companies need to re-legitimate doing bench time. There’s nothing fancy or Google-like about this. Firms prosper from strong intellectual experimentation.

67. Options portfolios are the experimental reservoir of the company.
The idea of the options portfolio gives the elastic enterprise a way to account for bench-time and bench-time expenditure. The missing ingredient is the executive mind set that says working through options, whether devising marginal new ways of doing stuff or seeking the big breakthroughs, is the right way to work. The options portfolio is good legitimacy.

68. Lean and mean won’t cut it.
Where are the billion dollar business lines that began as fail fast and fail cheap projects? There is a missing ingredient in the lean movement too. Getting scaled projects is about having sufficient foresight about the stuff customers don’t know they need and nobody yet came up with a method for that other than to reduce price dramatically (usually down to zero) or create something of intrinsic beauty.

69. Adaptive leaders make the difference in an experimental business.
Here’s a story. A company makes a great new product in the payments processing place, allowing end-users to pool cash as if they had a kitty in front of them. The market reacts strangely – users like it, but ticketing companies like it more. They want to buy the software. Suddenly the company is a software producer and vendor but leaders say, we don’t know how to market software. That’s not the business we are in. This is core competency thinking acting like a roadblock. Executives are typically ill-adapted to decisions of this sort. It is not the enterprise weakness but leadership weakness that has to be overcome.

70. Create adaptive leaders and adaptive organisations will follow.
Everybody should be able to work with an adaptive leader rather than a roadblock leader. If you want options create adaptive leaders. Adaptive leaders should know how to construct portfolio choices.

71. Without portfolio choice you have no choice.
Here’s an example. A company producing automated water dosing equipment for urban green spaces looks like it has a limited set of choices. Sell direct to facilities managers or sell via hardware stores or both. But the choices are much broader: create an open platform for developers to add value to the watering system; create a marketplace where urban space owners can attract people to participate in keeping the space fresh and clean and watered; create an open hardware platform that can attract new devices into the watering supply chain; retro-design the software to fit into domestic home management systems; create apps for customer self service, and so on. Choice is abundant because anything can be managed.

72. Platforms are soft power and we need to debate it, fast.
We can already see Alibaba acting as a soft power instrument for China’s relationship with India. We know Facebook’s entry to these markets is a political necessity for the US. The fact is our political environment is increasingly platform-centric. So let’s open the debate.

73. The platform for employment.
Why don’t Governments create platforms for employment? Platforms for skills development, for reputation enhancement for the unemployed. We must integrate platform thinking into policy.

74. Where are you going to and where have you been?
Few companies ask where they are really headed to. It might be they talk of digitization or growth but it is time to change the operating model of most firms. To do that you have to ask where am I coming from and where am I headed to. In the 1980s if you were in manufacturing this was simple. You were a factory or assembler and you had to become a supply chain organizer instead. Thousands of companies made this transition because they knew where they were headed.

75. Be the platform
If you are not going to be the platform where else can you go? What, concretely, can you become?

76. Vertical industry barriers are disappearing so be ready for horizontal business.
The next source of profit will be a new franchise in a new industry. Be ready to roll radical adjacency into portfolio planning as your business vertical disintegrates.

77. Disruption needs to be in the crosshairs because it arises from intersections of economic activity.
The firms that study disruption are few and far between because they think they have it nailed down but disruption comes often begins where industry barriers break down and horizontal economic activity  floods onto a horizontal plain. Do you do good disruption analysis?

78. What limits do you put on your colleague’s ability to question your corporate assumptions?
Leaders typically inhibit the process of exploring and debunking assumptions. Few are brave enough to permit real questioning.

79. Whose problem are you really trying to solve?
Companies react to crisis by cost-cutting in other words by trying to solve their own problem. What’s the biggest most fundamental problem you can solve outside the organisation. In the next 20 years we will see 2 billion more people on a resource scarce planet, most of whom will be incentivized to migrate in a world increasingly made turbulent by resource wars, increasingly stretched by aging populations and with too little resource for retirement. There are many problems to solve.

80. In this incredible new world what can you leverage?
How will your platform allow other people to solve critical problems?

81. Are you dreaming big enough.
There is no shortage of scale opportunities as we  move towards 9 billion people in a connected world. We have to get used to dreaming of infinite solution capability.

82. Managing an older company means managing three worlds.
Change is tough because many companies have their legacy attitudes and club-like behavior, the transitional period struggles that arose when the service economy kicked in and life became more digital and connected, and their end-goal, the new type  of firm or platform they are headed towards. But managing three worlds is mandatory.

83. In the battle to manage three worlds give up old esteem systems.
Most executives fear a loss of esteem. It is easier than the loss of a company. Fight to be a peer.

84. What do you represent?
We know movement is important, to be a movement to start one, to be part of one, to enroll or encourage. But what do you represent in a world that will change more in the next 20 years than it ever has? The question could equally have been who do you represent? As we witness business scaling to an unprecedented degree what aspect of change and continuity are you going to stand up for?

85. Do you lead what you represent?
Time to stop being afraid of leading radical causes. The change coming our way needs you to lead.

86. Your thought leadership is the signal of what you are leading.
Too many leaders make their voice heard without leading the word anywhere. Your thought leadership has to actually lead people to a new and better destination.

86. What unites many people is now bigger than what divides them.
We are moving towards truly global markets. The Chinese millennial generation has more in common with its European and US counterparts than it has with previous generations of Chinese. In a 2016 study we found millennials in China on the cusp of abandoning conventional organisations like banks in favor of tech platforms.

87. Global trade will never be the same again. What are you going to do about it?
For that reason alone global trade is changing dramatically. Millennial attitudes are empowering platforms to take on a global trade role. Within 10 years 20% of global trade will be direct from maker to consumer, with all the rest disintermediated. What will be your role?

88. Anticipate the big wave.
With a global audience of much the same mindset expect change, when it happens, to come in waves that will prove very difficult to ride and require adroitness and adaptability so far unseen in the leadership of major organisations.

89. Options planning should be global.
The wave will be. All the options have to be.

90. Get a founder onto your board and learn how to chase change.
Because of the profound merging of cultures it is imperative to have on your board people with recent founder experience, the ones who have gone out and failed and come back stronger and more profoundly insightful.

91. Build diversity to shape the transition.
For the same reasons you need Asian, age and gender diversity at board level. In the Elastic Innovation Index we found senior executive diversity a key predictor of good stock price performance.

92. Change the franchise before it sinks you.
Break down the established relationships that will have you making bad decisions on behalf of partners that were relevant historically but who could now block the change because of outdated obligations.

93. Assess platform readiness.
Here is a tool for that.

94. Where are you in the three world’s migration?
Enterprise’s need to be in constant forward motion towards the World III position in the Three World’s model. Contact us for the model.

95. Model the disruption.
Here’s a tool for that too. Contact us if you cannot download it.

96. You, me and society too need to be elastic, in other words super adaptive.
Collectively we need to grow off a resource base that is bound to be small relative to the scale and scope of the threat and, as usual, the opportunity of a new superpower in the making. It will be years before China matches American military prowess. Economic prowess is a different matter. That moment already arrived. It sets new ground rules for scale. We are witnessing incredible scope in the advance of Chinese business, based on participatory platforms and incredible desire to improve. It sets up the challenge for a new generation of leaders to do much more with a lot less, to turn the stale left overs of crisis into and ambitious new project that will transform American and European society.

97. The new era works for small too.
Perhaps for the first time ever you do not have to be a corporate giant to straddle the world. Small companies have gone global and small companies are where the dynamics of growth are strongest. Platforms play to small company strengths.

98. Small leaders can be giants.
Leaders in smaller enterprises can tell us more about how to be adaptive, to be global, to be responsiveness. We need to create information spaces for their voices to be heard.

99. We need luck on the random walk.
Successful, hardworking and confident people make their own luck. Sometimes they distort reality in pursuit of luck. Facing up to a competitor with a market size that will grown to 5 to 6 times that of the US, while the US middle class is in decline, calls for a miracle but there are good places to start, like vowing to use all of society’s resources and not leave people behind.

100. This is a societal challenge.
The imbalances in western society will undo politics, democracy and prosperity if we don’t rise to the challenge of adaptation, principally the challenge of creating scale at ultra low cost. But don’t underestimate this challenge. There are few solutions that the competition cannot copy, and quickly. The search for luck, though, can begin with one mindset shift, moving from the idea that there are exceptional people out there who can save the day, who can make the difference, to the belief that there is an exceptional number of people who aspire to make life better in the West and who can pull in a enough points for the team.

We live in an incredible time – more change in the next 10 years than in the last 250 years. How do you make sure that your own thoughts and actions keep pace, and that you are ready to seize the new opportunities for yourself and your business?

Markets are relentlessly reinvented, exponential technologies disrupt and enable what we buy and how, social and political uncertainty challenge every business.

Ideas can change the world, but making sense of this change, and making new strategies happen is not easy. In fact, everything you learn’t at business school has probably changed.

That’s why, even the busiest CEO, the most qualified and experienced leader, still needs to take time out to think, to make new connections, and to explore “where next” and “how better.”

Thinkers50 ranks the world’s top business thinkers – academics, leaders, authors, consultants – based on the power of their ideas (how distinctive, relevant, useful and contagious it is). I’ve decoded all of these ideas, brought them together into themes, and made them practical for you to apply in your business.

So imagine listening to the top business gurus, reading all the best books, going to all the elite business schools, and getting the best of the best … all in one day … what could be a better use of you time?  This incredible one-day workshop is now available, exploring each of the 60 ideas – the key idea with a practical model, the thinker behind it, where and how to apply, and examples of it in action. Get in touch for “inspiration accelerator” for your top teams, your people or your clients.

Here is a summary of the best ideas, and the thinkers (ranked by Thinkers50) behind them:

The 10 best ideas about strategy

Download a summary here

• Enlightened Value … Michael Porter on shared value creation for more impact
• Finding Purpose … Simon Sinek says your Why is the purpose, cause, belief that inspires you
• Smarter Choices … Roger Martin on the cascade of choices that best shape your future
• End of Competitors … Rita McGrath explains how to be more than different
• Blue Ocean Shifts … Kim and Mauborgne, shifting to uncontested market spaces
• Disrupting the Disruptors … Scott Anthony, how incumbents beat start-ups
• Laws of Globalisation … Pankaj Ghemawat, how to win globally
• East-West Strategy … Anil Gupta, and winning on the new Silk Road
• Diaspora Markets … Nurmalya Kumar on winning in emerging markets
• Brand Tribes … Seth Godin on being relevant to customer-centric markets

Example: A+B+C = Dual Transformation … Scott Anthony explains how legacy companies can still succeed in a world where they are challenged by start-ups, by “disrupting the disruptors”. The secret is to create an model whereby you can both optimise your existing business, and create the future business, whilst leveraging your capabilities in a relevant and distinctive way to support both.

The 10 best ideas about innovation 

Download a summary here

• Disruptive Innovation … Clay Christensen on technology-driven disruption
• Business Models … Pigneur and Osterwalder’s one page canvas, and going beyond it
• Platform Models … Weiru Chan on the primacy of platform business models
• Collaborative Models … Rachel Botsman and the sharing economy
• Design Thinking … Tom Kelley on deep diving for richer insights
• Sense & Respond … Gothelf and Seiden on listening deeper to customers
• Lean Innovation … Eric Ries on the speed and experimentation of start-ups
• Frugal innovation … Navi Radjou, simple solutions from emerging markets
• Little Ideas … David Robertson on the power of small ideas with big impact
• Corporate Startup … Tendayi Viki on how established companies develop innovation ecosystems

Example: Trust is a major issue. Consumer trust in brands is at an all time low, instead people turn to others – often strangers – for advice, recommendations and reviews. Just look at the importance of trust rankings to businesses like Airbnb or eBay. Rachel Botsman has been a leading thinker on collaborative business models, and here she talks about the currency of trust, and what it means for your business.

The 10 best ideas about talent 

Download a summary here

• The 100 Year Life – Linda Gratton on why living longer means more career reinventions
• What Drives Us – Dan Pink on how to engage people with your emotional self
• Give and Take – Adam Grant talk reciprocity, the more you give, the more you can take
• Emotional Intelligence – Daniel Goldman summaries why EQ always beats IQ
• Collaborative Intelligence – Erika Dhawen on why together we are so much more
• Awesomely Simple – John Spence offers an entidote to a world of complexity
• Innovators DNA … Hal Gregorson on the new capabilities for innovation
• Multiplier Effect – Liz Wiseman explains how to make everyone smarter
• Happy Progress – Teresa Ambile on keeping people happy and motivated with small wins
• Millennial Work – Karl Moore on how to engage the new generation in the workplace

Example: Everyone is motivated in different ways. Dan Pink explores the puzzle of motivation, starting with a fact that social scientists know but most managers don’t: Traditional rewards aren’t always as effective as we think. He argues that human motivation is largely intrinsic, and that the aspects of this motivation can be divided into autonomy, mastery and purpose.

The 10 best ideas about organisations 

Download a summary here

• Corporate Rebels – Minnaar and Morree create the challenges to take you further
• Culture Mapping – Erin Meyer explores how cultures work best together at work
• Strategic Change – John Kotter on the rights steps to make change happen and stick
• Project Business – Antonio Nieto Rodriguez on creating a project culture
• Extreme Teaming – Amy Edmundsen on why teams always beat lone genius
• Creative Class – Richard Florida dreams of ideas and inspiration in work
• Micro Businesses – Zhang Ruimen leads Haier as hundreds of small businesses
• Holocratic Organisations – Brian Robertson abolishes organisation hierarchy
• Business Storytelling – Jennifer Aaker on how stories engage people more deeply
• Viral Communication – Jonah Berger on how to make ideas spread further faster

Example: Every organisation is global – whether it take the form of a multicultural team, a internationally dispersed business structure, or global clients from around the world. Understanding how different cultures work together becomes crucial, and whilst we should look beyond stereotypes, cultures are defined by values and behaviours that are very different – and often in conflict. Erin Meyer explores these challenges in her fascinating development of The Culture Map.

The 10 best ideas on leadership

Download a summary here

• Authentic Leaders – Hermina Ibarra on leaders who win by being their best selves
• Power and Influence – Jeffrey Pfeffer on asserting your impact on others
• Humble Leaders – Jim Collins takes us to level 5 leadership, a higher place to be
• Executive Presence – Sylvia Ann Hewlett explains how to have more impact
• Disrupt Yourself – Whitney Johnson applies disruption to your own self and career
• Work and Life – Stew Friedman on going beyond balance to get the best of both
• Leadership Triggers – Marshall Goldsmith on finding the trigger to great leadership
• Measuring Leaders – Dave Ulrich defines leadership capital, the measure of effectiveness
• Being a Super Boss – Syd Finkelstein surrounds himself with great talent to do better
• Grit and Perseverence – Angela Duckworth reminds us that  nothing beats hard work

Example: Why don’t we do what we know we should do? Some of our inner beliefs can trigger failure before it happens. They sabotage change by cancelling its possibility! Discover how to recognize these sabotaging beliefs and learn what you can do about them. Marshall Goldsmith explains more in his concept of Leadership Triggers, and how they can help you to become the person you want to be.

The 10 best ideas on progress 

• Creating the Future … Mark Esposito harnesses the mega trends to shape your better future
• Exponential Organisations … Salim Ismael inspires your 10x rather than 10% thinking
• Machines and Platforms … Brynoffsen and McAfee’s manifesto for the 4th industrial revolution
• Blockchain and Wikinomics … Don Tapscott harnesses the power of digital, intelligent networks
• 3D Printed Production … Richard D’Aveni explains how 3D printing changes everything
• Humans and Robots … Kate Darling explores the new roles and relationships of us and them
• Global Impact … Alexander Betts reflects on populism, refugees and why global is undemocratic
• Circular Economy … Ellen MacArther on create a net positive  impact on the world
• Social Entrepreneurship … Roger Martin on applying all the ideas for more impact
• Emotional Agility … Susan David on how to survive and thrive in a time of incredible progress.

Example: Kate Darling from MIT Media Lab explores how robots are likely to take an increasingly bigger part of our lives,  exploring people’s instinctual and emotional perception of robots. A change from robots being present behind the scenes in manufacturing spaces etc. to being present in all areas of our lives is becoming a reality, whether you like it or not. Emotional affections to human alike robots are the new evolving thing. Kate takes us on the journey of anthropomorphism and what the future holds.

How can you apply them to your business? What do they challenge and support about how you think and act today? Which ones matter most to your future, and to you as a leader?

More insights and ideas, including keynotes, workshops and consulting:

• Growth: Finding and accelerating a more profitable future
• Gamechangers: Creating innovative strategies for future growth
• Video showcase: Leading for innovation and growth and other videos

Slow down, it’s not so scary

We love exponentials

Most applied innovation happens between the revolutions

Play the long game

South Korea was recently ranked by Bloomberg as the most innovative country of 2019, with Germany in second, USA eighth and China 18th.

Bloomberg’s Innovation Index scored countries based on seven different criteria. South Korea secured its No. 1 ranking by coming in first in R&D intensity (the amount of money spent on research and development as a percentage of the country’s GDP), manufacturing value-added (also measured as a percentage of the country’s total GDP), and patent activity (the number of patents filed by and granted per every 1 million residents, as well as total grants by country as a share of the world total).

Creating the future

Most famously Samsung seeks to “inspire the world by creating the future” and recent innovations such as its folding phones continue to capture attention around the globe. Samsung has always focused on innovation, however it was only by embracing the power of design, that they were able to engage people in objects of desire, rather than products quickly imitated.

Samsung’s “the next big thing is already here” advertising theme promises to keep you ahead of the game, but is the latest Galaxy really better than the iPhone, and does the future really look Korean rather than Californian (with a bit of Chinese)? The ad’s defining moment came when your parents were seen queuing to buy an iPhone, the ultimate put-down in being cool, and Samsung’s attempt to assign Apple to history.

In Korean the word Samsung means “three stars”, where “three” represents something big, numerous and powerful, and “stars” means eternity. Samsung’s current vision is to “inspire the world, create the future”.

Visit Samsung Town, the huge business park just outside Seoul, and you will quickly feel the distinctive culture, a way of working based on five elements of innovation:

• Developing a “creative elite” in the business based around ideas and innovation, attitude and talent, rather than a hierarchy based on status and experience.
• Relentless competitiveness, tracking the patents of other brands, seeking to challenge them, outmanoeuvre them, or simply create something better
• Adopting a consistent, replicable innovation methodology across the business, which enables collaboration and rotational working.
• Maintaining focus and agility, by partnering with academia and specialist external companies rather than getting locked into specific types of fundamental research.
• Staying small whilst being big, by adopting a conglomerate organisational structure, a reflection of the traditional Korean “chaebol” model.

Samsung’s mission is to ‘lead the digital convergence revolution’. In so doing it has made a remarkable transformation from copy-cat manufacturer to become Asia’s most valuable technology company

https://www.youtube.com/watch?v=ajD2WZioOOc

Who the most disruptive innovators in South Korea?

While South Korea’s top ranking by Bloomberg is a recognition of the powers of its large enterprises like Samsung, Hyundai/Kia and LG, the country’s startups still have a ways to go before they get their time in the spotlight. At one point, Samsung accounted for 20 percent of South Korea’s GDP.

Viva Republica is often seen as the most disruptive fintech startup in South Korea. Since the 2015 launch of its simple peer-to-peer payments app Toss, banks are finally revamping their user experiences and customers have easier access to financial products. South Korea’s mobile payments have more than quadrupled in that time to $4.6 billion, according to Bank of Korea data.

The startup, funded at $76 million, hasn’t stopped there. After PayPal joined a $48 million investment in Toss in March, Toss has grown from a simple money-transfer app to a diverse consumer-finance platform generating Viva Republica’s $20 million in expected revenue in 2017. Toss thus joins Asia’s ranks of fast-growing mobile P2P payment services, reaching a $12 billion transaction volume.

6 South Korean startups have made it to the list of unicorns, with a valuation of over $1 billion:

Bluehole … a hit with shooting game “Playerunknown’s Battleground”

Coupang … online retailer,  “the Amazon of South Korea”, 70% growth rate, valued at $9 billion.

Hello Mobile … launched the world’s first 5G mobile network, and now worth $4 billion

L&P Cosmetics ... a leading producer of 120 different types of Mediheal face masks

Viva Republic … including domestic money transfer app Toss

Woowa Brothers … operates food delivery app Baedal Minjok

L&P is part of the huge K-cosmetics market, that is now looking to grow internationally. Here is an extract from a recent Korean Times article:

“A facial mask brand stands out among the millions of so-called K-cosmetics sold at drug stores and duty-free shops all over Seoul. That it is promoted by celebrities like Hyun Bin, a hallyu star, and Fei, the Chinese member of girl band missA, on television and other media makes it hard to miss.

Customers, especially Chinese tourists, swarm duty-free stores to buy Mediheal masks. Made by L&P Cosmetic through partnership with factories, the masks come in about 120 types and are priced between 2,000 won and 3,000 won. The masks, known for moisturizing and other effects, have taken off here and abroad. Exports to some 25 countries account for 55 percent to 60 percent of the company’s sales, while 70 percent of the overseas sales are attributed to the Chinese market.

Until recently, facial masks were not popular in Korea. While Japanese companies started promoting them earlier, they were considered a complementary item in Korean women’s multi-stage beauty routine.

L&P Cosmetic CEO Kwon Oh-sub said his company succeeded in carving out a niche for higher-end masks, at a time when other companies were offering them as promotional gifts or selling them cheaply at 1,000 won for pack of three or more.

“I think the facial mask is part of progress in Korean cosmetics, from the BB cream several years ago to the air cushion makeup and now the facial mask,” he said. He also credits the company’s growth to the success of such products as the N.M.F Aquaring Ampoule mask and W.H.P. White Hydrating charcoal-mineral mask. “Especially in China, where the N.M.F was known as the ‘moisture’ bomb,” he said.

Since its founding in 2009, the company has sold 790 million masks as of the end of last year. Last year, it posted 400 billion won in sales, up from7.5 billion won in 2012. Its facial mask packs are one of the bestsellers on the No. 1 Chinese online mall www.taobao.com. And as news of its plan to go public this year spreads, there is anticipation about the company’s future and stock price.

“For me, every mask sold is valuable. One consumer’s choice is everything for us,” Kwon said. The company’s soaring sales are also an affirmation of the positive outlook for the “fast cosmetics” trend, which he has been promoting.

Selling cosmetics is selling a part of Korean culture.

“Our company introduces three to four products every month. I call this ‘fast cosmetics.’ Where in the world can you find such fast cosmetics trend? This is in line with the Korean people’s nature,” he said, referring to the country’s “palli, palli” or “hurry, hurry” culture. “Also, people no longer have to take the trouble of making their own masks at home,” he said.

Kwon likened himself to the green frog in the Korean fable who disregards what others tell him. That personality trait reflects, in part, his way of doing business in the K-beauty industry.

“I like doing things others shy away from,” Kwon said. “I also do not like to do things that others do.” In 2015, he opened a flagship store in Myeongdong, downtown Seoul, when others were pulling out from the area.

The cosmetics business runs deep in his family. From 1969 through 1987, his mother ran Wang Saeng Cosmetics, which produced the country’s first hair mousse. After studying geology at the undergraduate and graduate levels at Korea University, Kwon, the second son and the youngest child of three, entered the family business.
After running two businesses — the first one of which failed and the second one which achieved modest success — Kwon founded L&P Cosmetic in 2009.

Asked whether he thought he would hit it so big with his third company, Kwon said no. But he believes his first two businesses, laid the foundation for L&P Cosmetic.

“In the early 1990s, I named my cosmetics company Kospi Club with the aim of setting the standards for the cosmetic industry,” he said, adding that it was a premature attempt at a franchise business in Korea. “I learned if that you move too quickly, you are doomed,” he said jokingly. He poured three billion won of his own money and one billion won from investors into the company, which failed around the time of the Asian financial crisis.

“I learned humility, that I have to work along with my employees, my partner companies,” he said. Up until then, he said he had never experienced failure. “I was full of pride, vanity,” Kwon said. He looked back and said he failed to take others into consideration when his business was doing well. “I don’t want to blame it on the Asian financial crisis.”

The K-cosmetics veteran sees the industry change every decade. Before the 1980s, cosmetics saleswomen visited homes to sell their products. He said LG Household and Health Care entered the market in 1983 and launched a series of shops. In the 1990s, the Koreana brand surged, and in the 2000s one-brand shops like Missha and Faceshop prevailed. Now, beauty retailers such as Olive&Young, LOHB and Watson’s are succeeding.

The cosmetics industry is here to stay, and he has some ambitious plans for his company.

This summer, around July, L&P Cosmetic plans to go public. It also has plans to enter the makeup market, expand to Japan and increase its growth in China.

He did not deny the potential negative implications of the South Korea-China conflict over the Terminal High Altitude Area Defense (THAAD) battery deployment.

His company is making step-by-step preparations to help overcome any possible challenges.

Asked about lessons he learned from his mother, he recalled how his mother, when she was running Wang Saeng in the late 1960s and 1970s, ran a “gye” (a traditional Korean private-funding club) among merchants in the Namdaemun and Dongdaemun markets. He tagged along with his mother and saw how she worked together with her affiliates. “I saw that in business, you have to work together, that you are working with people,” he said, explaining that his mother’s approach drives his company’s focus on sales and marketing. L&P Cosmetic sales staff work full time as a way to maintain its focus on sales and marketing. “You could attribute about 20 percent of a store’s sales to the staff,” Kwon said.

The CEO believes that in this day and age, companies like his cannot afford to both manufacture and market products. “We have a lot of excellent ODM, OEM companies. We all should have respective strengths, and ours is sales and marketing,” he said.

Instead of building factories, he jointly invests in manufacturers such as Kolmar and Cosmax, the top two OEMs in the country. He has no plans to build factories outside Korea.

Kwon has maintained this strategy despite the difficulty of having to doubly persuade would-be buyers how his company remains competitive without its own factories. “I want my company to be like the Nike of Korean cosmetics,” he said.

A smoker, but only at the office, Kwon likes to play cards and is into baseball and music. He spends his weekends thinking about strategy, which sometimes drains his energy. Yet he presses on. He said he came to his senses after his first business failure, after which his son asked him whether he can continue attending extra-curricular schools.

His weaknesses?

“I am quick-tempered, I must admit,” Kwon said, smiling, “but if the sales go okay, nothing is problematic,” he said.

The humility he learned from his past business failures tempers his aggressive business style, his quick-temper and his fiery personality. As the chief of a medium-sized company, he makes sure to delegate to his employees, because he believes giving his full-time employees a sense of ownership helps the company.

As the company expands, the CEO interviews candidates for executive positions himself. “I look at how that person grew up and what that person says in the job interview. You might say it is a skill of mine,” he said.

A devout Christian, he has donated 12 billion won to his alma mater, and last year, set up the religious and charitable foundation, Mediheal Foundation.

His goal? “There are still markets untapped galore, such as Southeast Asia, the U.S., Europe and others,” he said. “I hope to hear that the second son of Wang Saeng’s founder has done well.”

Marketing as a profession, and a source of new thought leadership, has become a little stagnant in recent times. Over the last 15 years since I was CEO of the world’s largest professional network of marketers, the CIM, then I don’t see much progress in marketing stepping up to lead the business.

Actually I see the opposite. The advent of big data, social networks, search optimisation, online ads, has driven marketing to become ever more tactical in its nature, short-term in its thinking, and diminished in its influence on the future direction of business, innovation and growth.

I’m tempted to step back in there. Since I wrote Marketing Genius, which became “the little black book of marketing” for many, I see a profession and business function, in need of revitalisation, reenergising and probably reinventing. At a time when markets are the most dynamic force in business, marketers and marketing should be a key driver.

Alas I have tended to focus more on leadership, strategic direction and innovation, as this is where I can make more impact. It’s still about markets, customers, brands but also about futures, innovation and growth. Which is what marketing should be about.

So I was delighted to see a new article 10 Principles of Modern Marketing by Kevin Lane Keller and Ann Lewnes recently which I thought I would extract a part of, as it hopefully gets marketers and marketing back thinking bigger, thinking future, and thinking business:

10 Principles of Modern Marketing

To be successful in the digital era, marketers should adopt the best new modern practices as well as rethink and refine classic approaches.

The marketing field has changed dramatically in recent years in direct response to the way technology has affected the wider practice of management. Technology now affects virtually every facet of how organizations design, plan, execute, and measure their marketing efforts. While every industry has changed — consumer products, financial services, durable goods, and others — the technology industry, by virtue of its fast-paced, innovative nature, tends to lead the charge when it comes to marketing transformation and has become the model for modern digital marketing efforts. Changes in the marketing of technology products are important not only for those marketers looking to hone their craft in that industry but also for marketers in other industries seeking to acquire new skills and practices.

With more than 30 years of experience each in the practice or study of technology product marketing, we set forth a set of principles that reflects both classic and new approaches. We illustrate these examples with several firsthand examples from Adobe, a technology marketing pioneer and enduring market leader, as well as other top technology companies such as Fitbit, Intel, Intuit, Red Hat, and Spotify.

Technology Is Just the First Step

Technology has changed everything. Fundamentally, it allows for new ways to create customer experiences, new mediums to connect with customers and other constituents, and trillions of data points to understand customer behavior and the impact of marketing programs and activities. Yet, with all that progress, we are still only at the tip of the iceberg in terms of the profound impact technology will have on the future of marketing.

Even though technology is becoming only more advanced and disruptive, marketers of technology products must realize that technology is only the first step. To fully realize the potential of technology, it takes transformation across people, processes, and technology. Only by recognizing all three forces will modern marketers reap the full benefits that technology can have on marketing transformation.

There is no question that technology is critical to business success for virtually all organizations today, especially for those in the business of marketing technology itself. To thrive in this new era, it is imperative that marketers embrace developments in technology and test and adopt new advancements that fit their business — whether AI, or voice, or augmented reality — before they lose a competitive edge. At the same time, mastering technology is not the only criterion for success in the modern marketing era — the right people and processes must also be put in place to properly develop, manage, and nurture the benefits of that technology.

In terms of people, today’s marketers must possess many traits. They must be curious, flexible, agile, and nimble. They must be willing to be change agents, always looking around the corner and helping to scale transformation as champions for change. The status quo for any marketing job is no longer enough — continuous development of new skills for all marketers is critical. Adobe, for example, encourages skill development in a wide variety of ways, including job rotations with new roles every few years, internal training and learning programs, in-house Q and A sessions with external customers for outside-in perspectives, and a quarterly learning and development newsletter.

The marketing organization as a whole, however, also needs people with diverse skill sets and expertise in key areas. Managers should ensure their marketing teams include members who bring creative and analytical capabilities, as well as individuals who can play newly evolved roles on a team — whether that’s someone skilled in web development, data analytics, e-commerce, or new media. Many of these jobs didn’t exist four or five years ago, and even if they did, they have changed dramatically in recent years.

Further, while these new, specialized jobs have emerged, marketers must also be able to take a broad view of marketing strategy. The dynamic cross-channel nature of marketing today requires that campaigns be integrated and connected across every channel. In short, it’s incumbent upon marketing management in all companies to train and re-skill their people, as well as bring in new talent and leadership in specialized areas.

Processes must also change for technology organizations. Today, the customer-decision process is becoming more complex and varied. As the customer journey becomes increasingly nonlinear, the organization must change to reflect that. In a more complex marketplace, internal organizational lines need to be redrawn. Silos must be broken down and cross-functional relationships established so that marketing works seamlessly across other groups in the organization such as IT, finance, sales, and product management.

Marketing can benefit from the output of these other groups and also contribute to the groups’ effectiveness and success at the same time. For example, to improve the reliability of financial forecasting, marketing can share early-warning lead indicators that have been shown to affect bottom-of-the-funnel behaviors and ultimately revenue (for example, the number of customer visits to company-controlled websites). And unlike ever before, marketing can now demonstrate its impact on the business, validating the ROI of every dollar to peer groups in the organization and becoming a strategic driver of the business.

All these changes, however, require that technology organizations operate differently. As will be developed in greater detail below, they must learn to be agile, take risks, fail fast, and apply lessons. They must also learn how to get the most out of a data-rich world by testing, optimizing, and activating.

Experience Is the New Brand

With traditional marketing, the customer-decision and company-selling process was comparatively simple with customers entering into a company’s sales and marketing funnel and making various choices along the way to becoming loyal, repeat customers. Today, although having great technology products is and always will be of paramount importance, every surrounding customer touch point online and offline — as wide-ranging as a tweet, product download, in-store purchase, the company’s social purpose, its executives’ behavior, and the corporate culture — can shape experiences that define a brand for customers.

Marketers operate at the intersection of many of these customer experiences and are uniquely positioned to help steer the future directions for brands. In doing so, marketers of technology products cannot just worship the product alone and be transactional in their customer interactions. They must create full-on, immersive experiences for customers that build strong ties to the company and the brand as a whole. Experiences are the new competitive battlefield and a means to create powerful differentiation from competitors.

With technology products, seamless product installation and operation, in particular, is absolutely critical. If customers cannot successfully use a company’s products, there will be no value realization, and they will eventually switch to products from other companies that they can more easily access and use. Beyond designing products that are as easy to use as possible, technology companies must have a wide range of support and services for customers to help them with product installation and use, employing ample training resources as well as informative forums, social channels, and websites.

Adobe, for example, takes enormous efforts to educate its customers so that customers know how they should use a product, fix any problem that arises, and deal with any special situations that occur, all as quickly and easily as possible. The company does as much of this as it can through digital, using lots of video across YouTube, Adobe.com, and every other digital channel where customers are present to help them learn and master its products.

Other companies such as Buffer, Wistia, and Mailchimp similarly put tremendous emphasis on customer education and ensuring customers have the best product experience possible. For example, Fitbit has combined sensors, wireless technology, software, and services to pioneer the connected health and fitness market. To help customers take full advantage of Fitbit and lead healthier, more active lives, the company uses social media and the support of a strong community, in addition to telephone, email, and chat customer support, to both impart and collect information about product usage.

A New Type of Customer Relationship Prevails

The reality of customer-brand relationships today is that they have evolved from single, interspersed interactions to always-on, symbiotic, and immersive relationships. Customers own the brand in many ways as much as marketers do, and it is every marketer’s responsibility to make customers an integral part of the company’s brand equation by asking for continuous feedback, listening to it, and cocreating with them. What exactly do customers want from a brand? What do they not want? Marketers don’t have to always do what customers say they should do, but if marketers don’t, they need to tell customers why.

Consider this Adobe example for managing customer expectations. When the company moved from Creative Suite software to the Creative Cloud subscription service, some customers were not happy with the switch. They were attached to their packaged software and the up-front purchasing model they had known for years, so there was, understandably, apprehension about what this change meant for them. The response in some markets where digital subscriptions were not yet the norm was particularly pronounced.

The only way to deal with this reticence to change behavior was to offer maximum transparency and provide a lot of information. This required Adobe to get really close to customers — on online forums, on social channels, and through live events — to understand their reservations and concerns. After the company internalized their feedback and understood the insights driving the apprehension, it was able to clearly articulate its response.

Specifically, Adobe ensured that the ongoing value and innovation that a subscription model offered was thoroughly communicated at every touch point. Instead of investing in one big marketing push every two years to align with a major launch, Adobe focused its marketing strategy to support a subscription model with ongoing educational and inspirational campaigns that built an ongoing customer relationship. Over time, the product value alone, supported with stronger customer relationships, helped customers become satisfied with the subscription model. While no company can please every customer every time, seeing issues through the lens of a customer and acting upon those insights is critical to establishing mutually beneficial long-term relationships.

A strong customer relationship requires that marketers deeply understand how customers think and feel, not just about their products or services but about what they are using the products or services for and how they are actually using them. It requires keen insight into customer motivations and behaviors — the problems customers are trying to solve and the goals they are trying to achieve.

A pioneer in customer-centric technology marketing, Intuit has applied its strong belief in customer empathy and its Design for Delight (D4D) design principle to create a more enjoyable user experience across its entire product portfolio. Notably, Intuit’s TurboTax tax-preparation software has become a market leader by tapping into the emotional relief from taking a dreary but unavoidable task — tax preparation — and making it as painless and pleasurable as possible. Based on keen customer insights, TurboTax is designed to be friendly, personal, and easy to use across multiple platforms to create a positive customer experience in filing taxes and maximizing tax refunds.

Connect With Customers Online and Offline

In technology, when selling fairly complex products, the company is responsible for owning customer success. The amount of data available today mandates that every brand knows its customers and caters to them at every possible touch point, but at the same time, it is still important to actually meet with customers! No dashboard alone can provide the same rich insights as an in-depth conversation with an engaged customer. Along with traditional qualitative methods like focus groups and research, Adobe has found that even though we all live in a digital-dominant world, live events are far from dead. The company sees unprecedented levels of engagement at its events around the globe and continues to outgrow every venue it selects, because it will probably always be the case that nothing beats the power of companies and their customers coming together in person to learn, get inspired, and have a little fun.

Value Creation, Communication, and Delivery Still Rule

Perceived value — especially with complex technological products — can be difficult for customers to assess. Formally, perceived value is all the different benefits gained by customers from purchasing and using a product as well as all the different costs saved. These are not just financial benefits and costs but also psychological, social, emotional, and other types of benefits and costs. Note that value creation is only necessary, but not sufficient, for marketing success. Value must also be effectively and efficiently communicated and delivered.

When marketing technology products, it’s important to find ways to simplify the explanation of product functionality and performance and the resulting benefits gained — or even costs saved — to aid customer understanding and appreciation. For example, one of the keys to the success of the Intel Inside launch was that it employed the powerful metaphor of microprocessors as the brains of a computer. Even if prospective customers didn’t know what a microprocessor actually was or did, they could still appreciate the fundamental importance of having the smartest brains.

Data and Testing Are the New Lifeblood

To be a great technology marketer in today’s digital world, it is important to build a culture of testing. It is a gift to be able to test all the time and to learn and activate quickly as a result. Adobe does this in many ways:

• From a product perspective, Adobe does active beta testing with its customers, releasing versions of its software into the market and actively engaging with customers during the beta period to solicit feedback, add new functionality, and shape product road maps.
• From a marketing mix perspective, Adobe applies state-of-the-art econometric modeling, as well as real-time attribution modeling, to test, predict, and ultimately validate the right levels and mix of media investments.
• From a marketing perspective, Adobe uses data to build more precise segmentation models based on factors such as the type of content customers create and engage most with and their stage in the customer journey to offer more personalized, relevant experiences — a valuable asset in today’s digital world.

Adobe is not alone in using data analytics to drive marketing experimentation. Amazon, Capital One, Netflix, and Pandora famously run thousands of tests to optimize their marketing efforts. To successfully activate these different insights to improve the customer experience, it is imperative to also work across the organization to integrate data and build real-time data models and decision-driving dashboards. That requires blending marketing inputs like behavioral data (for example, social, PR, web data, and media performance) with inputs from other areas (for example, sales, CRM, in-product, and finance). In today’s world, marketing simply can’t operate in a silo.

Despite all this data science, however, there is still an art to mastering marketing and managing customer relationships. Not everything can be automated, which is why robots will never be programmed to do marketing on their own. Instinct and judgment still — and always will — matter.

Creativity Remains King

Despite all the transformational technological change that has created such a data-rich world for marketers, there still also needs to be great creative in marketing. The emotional hook that marketing has always been able to create with customers absolutely remains necessary.

There’s a myth that all creatives hate data. That may have been true in the past, but many modern creatives actually like to see the impact they’re having, whether it’s looking at social-sharing metrics or larger data sets capturing online behavior. They understand that creativity can be sparked by data and that their creative output can become stronger by adapting it to market input. McKinsey & Co. has reported research showing that companies that successfully manage to integrate creativity and data report a “two-times difference in revenue growth.”1

Creativity does not have to come just from within a company either. The most successful brands today are shaped by the brand’s community of customers and partners as much as they are by the company itself. Cocreation in all forms can fuel the creative process — whether directly with customers or in collaboration with like-minded partners, bringing a benefit to both entities. Consider this Adobe example:

Adobe teamed up with the band Imagine Dragons to commemorate the 25th anniversary of its industry-leading video-editing software, Adobe Premiere Pro. It granted its community exclusive raw footage from the band’s megahit “Believer” and challenged them to recut it for the chance to win $25,000. This sort of campaign had never been done before, and although editing a video can be a difficult undertaking, the company received thousands of submissions from around the world, a testament to the power of a novel concept, a well-liked partner, and the vibrancy of a strong community.

Don’t Try to Do It Alone

In a complex and challenging marketplace, it can be difficult for technology products to go to market on their own. It helps if they can benefit, directly or indirectly, from being part of something bigger via their inclusion in a platform or as a result of collaboration with others. Platforms consist of combinations of different interrelated products and services provided by the company. The benefits created by the platform as a whole can enhance the value of any one of its individual components or products.

Collaborations — external alliances or joint ventures with third parties — can also provide value for a technology brand. Adobe’s enterprise business could not scale without its large partner ecosystem that helps customers implement and realize the most value out of complex enterprise solutions through product integration, training, consulting, and so forth. One of Adobe’s largest enterprise partnerships is with Microsoft, which brings together complementary technology, customer segments, and go-to-market strategies to achieve greater market scale. Through these synergies, customers have access to custom integrated technology solutions, teams, and expertise that enable them to deliver seamless, secure, relevant experiences to their customers, and the two companies benefit from complementary areas of market leadership.

In a complex technological world, acquisitions are also often critical to bring needed technical capabilities and expertise. Spotify’s phenomenal growth has been driven, in part, by shrewd acquisitions that allowed it to create a richer, more complete, and more integrated customer experience. The acquisitions of long-term partner Tunigo, and its technology to allow users to manage playlists moment by moment, as well as The Echo Nest, and its machine learning technology to make musical recommendations and predictions, both helped improve the Spotify customer’s listening experience and musical discovery.

Have a Bigger Purpose: Do Good

Increasingly, customers expect the companies they do business with to be doing good in the world, too. Since Adobe’s beginnings, its founders have made significant donations to causes that were critical to its mission. This emphasis on social impact is deeply embedded in the company’s culture to this day. Beyond concerted programmatic efforts to promote causes such as sustainability and diversity and inclusion within the organization, Adobe recognizes the positive impact its products can make in the world as a whole. Consider these examples of how Adobe finds ways to use its products to have greater social impact.

• After the devastation wreaked by Hurricane Harvey, Adobe teamed up with a group of students to restore victims’ family photos using Adobe products. The victims had lost every physical possession, but through the power of technology, they were able to receive restored — and treasured — family photos.
• Adobe works closely with the National Center for Missing and Exploited Children (NCMEC) to use Adobe software to do age progressions of missing children, enabling authorities and the general public to better recognize and help find them.
• Through its Project 1324 program, Adobe is beta testing a web platform that is available to young people who want to create and share their work on social issues they care about, using Adobe’s products. Participants engage in creative challenges with entities like the Sundance Institute to engage the next generation of filmmakers through activities like short-film competitions, meet-ups at the Sundance Film Festival, and live events.

Programs and activities like these serve a vital function for Adobe as well as other similarly like-minded companies. Successful technology companies, such as Apple, Microsoft, and Intel, have also invested heavily in cause marketing to support their brand through various programs.

For example, consistent with its open-source roots and belief in freedom and choice, Linux software leader Red Hat’s matching gift program allows employees to designate any eligible 501(c)(3) nonprofit, school, or house of worship for their donations, allowing maximum flexibility. Red Hat also ties in volunteer community activities for customers, partners, and employees at its annual Red Hat Summit conference; the We Are Red Hat Week annual celebration of the company’s brand, culture, and people; and other events. Red Hat also donates its holiday party budget to a different designated national nonprofit chosen by employees each year.

Brand purpose can provide the fuel for employee engagement internally as well as the glue for marketing programs externally to help emotionally connect with customers. Purpose can also be a key factor in recruiting talent. The best organizations have a brand soul and purpose that they fiercely protect, nurture, and live every day. This touchstone can be more challenging with successive leadership as founders move on from the company.

Marketing Leadership Has Changed

Finally, as would be expected from all the changes noted above, marketing leadership itself has had to change. The future chief marketing officer must also be the chief customer officer, chief experience officer, and chief growth officer. The modern CMO for a technology product organization should not cede those roles; rather, he or she should own, shape, and lead them.

• Be the chief customer officer: Be the customer’s biggest champion. No other group has the purview that the CMO does.
• Be the chief experience officer: Create meaningful experiences that foster long-lasting customer relationships.
• Be the chief growth officer: Drive business by bringing together design and intelligence in a way that only marketers can.

The CMO has to stress accountability throughout the entire marketing organization. Marketers must be willing to dig deep into the numbers to provide appropriate rationale and support for marketing decisions. At the same time, they have to take calculated risks. The reality is, in today’s challenging marketing environment, not taking risks is, in fact, taking a risk.

Marketing as a field has changed dramatically in recent years as a result of the shift toward technology and data-driven approaches across the marketing of not only technology products but also products across all types of industries. Technology marketing continues to be a driver of change for the wider practice, however, and marketers should look to the efforts of companies such as Adobe, as well as Fitbit, Intel, Intuit, Red Hat, Spotify, and others that have become proven innovators. At the same time, although it’s important to keep up with new advancements, many basic marketing principles still apply, albeit often in an updated or modified form. Marketing success for organizations in the 21st century will require adopting the best new modern practices as well as rethinking and refining classic approaches.

Europe’s CEOs are the best in the world, according to HBR’s recent list of the world’s best performing CEOs.

While companies are defined by the work of their staff, they all need a figurehead and a leader to act as the face of the business, and to shape their corporate strategy. That’s where the CEO comes in.

In the annual ranking of The Best Performing CEOs in the World, Spain’s Pablo Isla, CEO of Inditex, the fashion giant behind brands like Zara, Massimo Dutti, and Pull and Bear took home the top spot for the second consecutive year.

The ranking is created by looking at three key financial variables: The change in market capitalisation a CEO has overseen during his tenure, the country-adjusted total shareholder return, and the industry-adjusted total shareholder return. The ranking also measured what it calls ESG, or the environmental, social, and governance score. Some examples factored into ESG include how much hazardous waste a company produces (environmental) and company diversity (social).  These four variables are then combined to give a score that helps identify how well a company is performing, and as a result how the CEO is doing.

Most striking was how many European CEOs led the global ranking (7 in the global top 10), and then within  Europe how many French CEOs featured (6 of European top 10) and how many came from the automative (3 in European top 10) and luxury goods (2 of the European top 3). And most obvious, and need of change, none of them are women.

The Best European CEOs of 2018

World #1, Europe #1: Pablo Isla, Inditex, Spain

https://www.youtube.com/watch?v=RAgsf6eaJLI&t=50s

World #3, Europe #2: Bernard Arnault, LVMH, France

World #4, Europe #3: Francois-Henri Pinault, Kering, France

World #5, Europe #4: Elmar Degenhart, Continental, Germany

World #7, Europe #5: Jacques Aschenbroich, Valeo, France

World #8, Europe #6: Johan Thijs, KBC, Belgium

World #10, Europe #7: Martin Bouygues, Bouygues, France

World #13, Europe #8: Bernard Charles, Dessault Systemes, France

World #20, Europe #9: Benoit Potier, Air Liquide, France

World #21, Europe #10: Sergio Marchionne, Fiat Chrysler, Italy

https://www.youtube.com/watch?v=ZKLKx7qHM7Y

World #24, Europe #11: Florentino Perez Rodriguez, ACS, Spain

World #25, Europe #12: Lars Rasmussen, Colorplast, Denmark

What does it take to be a CEO?

LinkedIn profiled over 12,000 of its members who share the title of “CEO” at companies with over 50 employees from 20 countries. The goal was to see where and what they studied, explore their earliest jobs on record, and uncover what positions they held immediately before making the leap to CEO.

Of course whilst past career paths can be instructive, they’re not necessarily predictive of the future. Unfortunately today’s CEOs aren’t a particularly diverse bunch: fewer than 5% of Fortune 500 CEOs are women, and only three Fortune 500 CEOs are black. As diversity and inclusion becomes a higher priority for companies, leaders will come from more diverse backgrounds.

Key findings from the LinkedIn CEO analysis were:

• Computer science was the most popular field of study for CEOs. More traditionally business-oriented degrees followed computer science with economics as the second-most popular, business as the third, banking/finance fourth, and electrical engineering fifth.
• Stanford University was the most attended school among CEOs, although that might reflect a US-biased sample. INSEAD ranked eighth. 33% of the CEOs have a Master’s degree or MBA.
• Consultant was the most common first job for CEOs, learning how to tackle complex challenges across multiple businesses and work environments. Software engineer was the next most-common, followed by analyst.
• 72% of held a director-level role or higher immediately before they became a CEO for the first time. Only 20% of larger company CEOs listed themselves as being promoted internally.

 

“Hello Tomorrow” proclaims the bold advertising of Emirates. Indeed the airline has soared ahead of its global challengers in recent years, focusing on a strategy not just to compete, but to change the world of travel. Its strategic model and brand experience, have transformed what success looks like amongst its peers, and customer ratings and financial performance prove it works.

Arabic businesses and brands are on the rise. They now have the ambition and resources to be the best in the world. Al Jazeera gives the world a different view of what’s happening, Emaar astounds the world with the scale of its constructions, and Etisalat is building a global network of partners.  Jumeirah extends its hospitality to new destinations, whilst the future smart city of Neom promises to transform living in Saudi Arabia, and Savola extends its food brands in response to changing culture and taste.

I have worked extensively across the Middle East from Egypt and Lebanon to KSA and UAE in many different businesses – food and drink, telecoms and tech, retail and travel, start-ups and stock exchanges. Over the last decade I have seen a huge change in both capability and action. Projects have included developing new insights and business strategies, brand extensions and marketing communications, embedding creativity and accelerating innovation, designing new products and business models, rethinking pricing and channels, and inspiring business leaders to go further and faster.

The world keeps moving forward. Change is relentless, accelerated by technology and globalisation, with new experiences and expectations. In the last 25 years, the Arabic marketplace has changed dramatically. Local businesses face challenges from new start-ups and new competitors, new technologies and new business models. However the best  ideas to compete and innovate are already out there – banking learning from hospitality, pharma from food, airlines from gaming – and from the new entrepreneurial hubs around the world like Hyderabad, Schenzen, or even Nairobi.

“Gamechangers” are the new breed of businesses who play a different game. They don’t believe that success is achieved through heritage and scale, they imagine new possibilities through creativity and partnerships. They are uninhibited by the old conventions of business, and have little respect for the established boundaries of markets and nations. They embrace digital, fused with physical, to explore new ways of working, of engaging customers, and driving growth – embracing social networks, collaboration and customisation, franchising and syndication, advocacy and branded movements.  They win through imagination and ideas, by out-thinking the competition.

The World Expo 2020 is a fabulous opportunity to showcase for the most creative Arabic brands and businesses, the ideas and innovations of a region on the rise. Whilst it is always tempting to bias innovation towards the spectacular, particular in places like Dubai famed for the extravagance of the Burj Khalifa and Palm, it is often the humble innovations that make life better. The Middle East grew up out of sand and oil, but its growth will be sustained through more human and social innovations.

At the back of my “Gamechangers” book you will find the “Gamechangers Lab” toolkit of 16 canvases to help you get started, plus video tutorials and more tools to download online. Also online you will regular updates, “Gamechanger Profiles” stories and videos to inspire you. There are also “Gamechanger Awards” in each region to select and celebrate the most innovative companies.

Arab Innovators

Here are just a few of the Arab innovators that stand out right now:

Sheikh Mohammed Bin Faisal Bin Khalid Al Qassimi, MBF Holdings

33 year old, Sheikh Mohammed has an impressive list of achievements over the 10 years since he started out as an associate at HSBC private bank in London. In the UAE his projects and plans include a new hospital concept in Jumeirah Beach Residences – having already co-founded Al Zahra Hospital in 2003 – a school in Nad Al Hammar Gardens, a hospital in Abu Dhabi and a 74,103 sq m shopping mall in Sharjah. The strength of these projects, according to Sheikh Mohammed and MBF, is that they are evergreen – they stay relevant at any point in time. International projects include projects including the sprawling 600,000 sq m, 400-bed Al Waha Medical City teaching hospital in Madinah and an international financial centre in Istanbul. “One thing that is absolutely certain about today’s world is change, and it is important our future growth strategies adapt to the rapid change the world is undergoing every day,” he says.

Hind Hobeika, Butterfleye

Hobeika is an inventor and entrepreneur, pioneering the way swimmers train for their races. While participating in the Qatar-based reality show, Stars of Science, Hobeika invented Butterfleye – the first heart rate monitor specifically designed for swimmers. Her invention tells the swimmer when they’ve reached their target heart rate inside their goggles. She has since received major investments for Butterfleye and is on her way to changing swim practice for good. Hobeika is the winner of the 2012 MIT Enterprise Forum Arab Business Plan Competition, and her invention was tested at the 2012 London Olympics by 15 Olympic simmers from the U.S. and New Zealand.

Huda Kattan, Huda Beauty

The mastermind behind the Huda Beauty brand initially scraped a living as a makeup artist for Revlon before starting a YouTube channel and amassing millions of viewers who were quickly lured in with free makeup tips and tricks. She launched her company in 2010 and now sells a line of beauty products ranging from skin foundations to lip colours and false eyelashes. The Iraqi-American, who has 30 million followers on Instagram alone, released a reality series on on-demand viewing service Facebook Watch in June, which goes behind the scenes of her daily life to share the ‘good, bad, scary and ugly times’ of running her Dubai-based family business.

Elie Khoury, Woopra

Khoury co-founded iFusion Labs and developed Woopra in 2008,  pioneering real-time analytics and giving businesses and blogs the power to instantly turn live data into actions and results.  The site offers instant, detailed visitor data giving its over 100,000 users the ability to harness the power of their stats through tools that enable them to automatically and manually interact with individual visitors. Khoury also co-created YallaStartup, a project that seeks to support MENA tech entrepreneurs. Wamda Capital is an investor in Woopra.

Sara Al Madani, Rouge Couture 

Madani’s parents inspired her to start her own business at a young age. Following her success as a young entrepreneur and business woman, Sara was selected to inspire women in the UAE to be more active and self-confident in order to achieve business success. Recognized for her creativity and hard work, Sara is an honoured speaker in many universities, colleges and institutes. She truly believes that it is important to be an active member of the community, inspiring the younger generation and continuously sharing knowledge, experience and information.

Haitham Mattar, Ras Al Khaimah

Mattar was appointed CEO of RAKTDA in May 2015 to drive the economic growth of Ras Al Khaimah by positioning the emirate as a world-class destination for sustainable tourism across the globe. With more than 25 years of experience in global destination and hospitality management and marketing, Mattar has held senior roles with leading global brands including Marriott, InterContinental and Hilton. He has lead Ras Al Khaimah’s destination growth strategy, through capturing existing and emerging source market movements and global tourism trends. Under Mattar’s leadership, the Destination 2019 tourism strategy was launched to diversify the emirate’s tourism offerings. As a result, it is achieving continued growth in visitor numbers and netting a growing share of the global outbound tourism market.

Shaji Ul Mulk, Mulk

Mulk is one of the UAE’s richest Indians with an estimated net worth of $2.7bn, and how could he not be when he is the founder and chairman of Mulk Holdings, a global business powerhouse with diversified interests in the manufacturing of building facades, facade contracting, healthcare, plastics and sports assets. The company employs over 7,000 staff around the world, with manufacturing operations in the US, Europe, India, UAE, Oman and Ghana. The group’s flagship brand, Alubond USA, is the world’s largest metal composite brand and the first aluminium composite panel in the UAE market.

Abdulrahman Tarabzouni, Syphir 

Tarabzouni is the co-founder of Syphir which developed MailRank, an algorithm that prioritzes e-mails by assigning scores based on probabilistic analysis on a person’s social graph. The system addresses productivity problems created by lost time sifting through irrelevant e-mail. Syphir won the MIT Enterprise Forum Arab Business Plan Competition in 2009. Tarabzouni was named by Arabian Business as one of the most influential Arabs under 30 and was the first recipient of the MIT ASO Science and Technology Achievement Award. He has since led the team at Google Emerging Arabia, responsible for working across to establish, incubate, and grow Google’s core and emerging businesses while fostering the internet ecosystem in the region.