Business catalyst. Keynote speaker. Expert advisor.
In nature, few complex systems are organised through hierarchies. We need to develop businesses that are living, adaptive, “collectively conscious” organisations. In an extract from my new book “Business Recoded: Have the courage to create a better future”, I explore the future of organisations.
Qingdao is the home of Haier, the world’s leading home appliances business. Over the years, the company’s CEO Zhang Ruimin has become an innovator not only of washing machines and refrigerators, but of organisations and entrepreneurship too.
Once a devotee of the “six sigma” approach, Zhang has developed his own management ideology: rendanheyi. By dividing a company up into micro-enterprises on an open platform and dismantling the traditional “empire” management system, rendanheyi creates “zero distance” between employee and the needs of the customer.
At the heart of rendanheyi is the cultivation of entrepreneurship – by removing the costly level of middle management (Zhang famously eliminated the positions of 10,000 employees), you encourage innovation, flexibility and risk-taking.
The quantum mechanics of business
On meeting, we quickly found a common background, having both studied physics, and specifically quantum mechanics. I was curious about how he had embraced the ideas of physical science into his vision of how Haier should work as an organisation. We quickly got into a passionate, and somewhat technical discussion about atomic structure and wave theory. Whilst I’m not sure atomic physics would be many business people’s ideal topic, I was intrigued.
“When I first studied physics, I was amazed by the perpetual motion of subatomic particles. Electrons and protons coexist in a dynamic equilibrium, created by their equal and opposite charges. This sustains a continual existence, it enables atoms to come together in many different formats as molecules, each with their own unique properties, and within these atomic structures is huge amounts of energy”.
The application to business becomes clear, and also much of the founding ideas behind why and how he has developed his rendanheyi model of entrepreneurial businesses.
“Applying this idea from physics to business” he says “small teams of people with different backgrounds, skills, and ideas, can co-exist incredibly effectively. It is the ability to create small diverse teams where ideas and actions are equally dynamic, that enables a business to sustain over time. They become self-organising and mutually enabling. Ideas, innovation and implementation are continuous. And they can easily link with other teams, like atoms coming together as molecules, for collaborative projects and to create new solutions.”
As a result, he challenges the old supremacy of shareholders in the value equation, putting a premium on employees, and the value created by them and for them. However, at the same time, he recognises the need to empower employees to be more customer intimate. As a result, the rate of growth has risen from 8% to 30% in recent years.
“People are not a means to an end, but an end in themselves. We took away all of our middle management. Now things are working much better. Zero signature, zero approval. Now we have only one supervisor, which is the customer.”
Haier’s evolution has been rapid and relentless, as Zhang has driven the company from an old refrigerator factory – where indiscipline and poor quality was so rife that he took to shock tactics, taking a sledge hammer to some of the products to demonstrate that such mediocrity was no longer acceptable – to a pioneer of digital tech.
In the 1990s, Haier focused on the Chinese market, building a portfolio of high-quality standardised products. The 2000s was about internationalisation, reaching across the world, and then adding more localisation and customisation. The 2010s have been all about digitalisation, embracing the power of automation and data, to the point where Haier is now one of the world’s leading producers of “smart” products, embedded with Internet of Things, IoT, and connected intelligently.
However, the implications are profound. Today, Haier is not motivated by seeking to create the best product. With a brand purpose that seeks to make people’s lives better, it looks beyond products to services, to how it can do more to help people live in their everyday lives, with a focus on the intelligent home.
“In a digital world of globalization, connectivity and personalization, there is no such thing as a perfect product. People will buy scenarios, or concepts, where the products might be free and act as enablers for services. Haier’s products embrace IoT to ensure that they connect with other devices, with other partners in our ecosystems, and with people and their homes. In the future, maybe the product will be free, and people will pay for services – from food delivery, to home entertainment, security or maintenance.”
Organisations as living organisms
The way we manage organisations seems increasingly out of date.
Most employees are disengaged. Too often work is associated with dread and drudgery, rather than passion or purpose.
Leaders complain that their organisations are too slow, siloed and bureaucratic for today’s world. Behind the façade and bravado, many business leaders are deeply frustrated by the endless power games and politics of corporate life.
Frédéric Laloux offers an alternative. In his book “Reinventing Organizations” he uses the metaphor of an organisation as a living system, with radically streamlined structures that facilitate active involvement and self-management.
He envisions a new organisational model, which is self-managed, built around a “wholeness” approach to life and work, and guided by an “evolutionary purpose”.
Wholeness means that people strive to be themselves, rather than putting on a mask when they go to work. This, he argues can only be achieved when they let go of the idea of “work-life balance” which encourages a compromise. By aligning personal and organisational purpose and passions, you have less stress, and contribute more.
Evolutionary purpose means that meaning and direction of the business is not defined from above but drawn from what feels right amongst people. It might be articulated in a manifesto which defines the actions most admired, the new projects that receive the most interest. And it is constantly evolving, as both the culture inside, and world outside, evolve too.
Laloux describes humanity as evolving in stages. Inspired by the philosopher Ken Wilber, he describes five stages of human consciousness, with associated colours, and proposes that organizations evolve according to these same stages. They are:
Impulsive (red): Characterised by establishing and enforcing authority through power, eg mafia, street gangs. For business, this is reflected in the functional boundaries, and top down authority.
Conformist (amber): The group shapes its own beliefs and value. Self-discipline, shame and guilt, are used to enforce them, eg military, religion. For business this means replicable processes, and defined organizations.
Achievement (orange): The world is seen as a machine, seeking scientifically to predict, control and deliver, eg banking, MBA programs. For business this means Innovation, analytics and metrics, and accountability
Pluralistic (green): Characterised by a sense of inclusion, to treat all people as equal, more like a family, eg non-profits. For business this means a values-driven culture, empowerment and shared value.
Evolutionary (teal): The world is seen as neither fixed nor machine, but a place where everyone is called by an inner purpose to contribute, eg holocracy. For business this means self-management and wholeness.
Most organisations today are “orange”, still driven by analysis and metrics, driving profitability and growth. Examples of “green” organisations include Apple, Ben & Jerry’s, Starbucks.
Examples of “teal” organisations in the USA include:
Favi – French brass foundry within the car industry
We-Q – created a team diagnostic survey tool that facilitates transformational conversations in the direction of the key teal breakthroughs
The end of hierarchy
What replaces the old hierarchies of organisations?
Henry Ford built his organisation for stability, efficiency and standardisation. Clearly defined processes and controls ensured that it worked like a machine, no space for deviance or change. Some decades later, Kaori Ishikawa went further to systemise the approach with total quality management, seen as the secret of Japan’s industrial success in the late 20th century. Efficiency was the goal, not creativity.
However, today’s world requires a different approach. Business needs to be fast and adaptive to a world of change. Technology has transformed the roles of people inside organisations, automating processes, adding intelligent systems, and digital interfaces. The value of organisations lies in its ideas, reputation and reach. Organisations embrace the connectedness of the outside world, technology enabling knowledge sharing, fast decision making, and collaborative working.
Flat organisations became fast and agile, putting customers at their heart. Yet this is all structural, and did not in itself create difference. In a world where businesses could essentially do anything, they have become more purposeful, and also more distinctive in their character and beliefs.
Expert teams don’t need the old controls. Empowered and enabled, they become more self-managing, and teams collectively work together towards a higher purpose and strategic framework that guides but doesn’t prescribe. As a result, the business develops a human-like consciousness. It resembles a complex adaptive system, where there is a wholeness built on multiple non-linear connections, combining progress with agility.
Buurtzorg, like Haier, is a great example of self-managing teams. The Dutch healthcare business provides home support to elderly people. It recognised that local teams, which acted largely autonomously had a much great commitment to their work, than if they were managed centrally using standard efficiency metrics.
Haufe Group is an innovative media and software business in Freiburg, in the heart of Germany’s Black Forest. As an organisation they have long put people first, sharing in the development of strategy, and the rewards of success. When it came to appointing a new CEO, the company realised that this couldn’t just be imposed on such a democratic structure, and so now holds elections to find who amongst peers will be the leader.
If, as Peter Drucker said, “the purpose of an organisation is to enable ordinary human beings to do extraordinary things” then organisations must evolve to make this possible.
Interview with Peter Fisk on the future of organisations, and the ability to embrace new talent that drives diversity and creativity within traditional organisations. The article appears in the September 2021 edition of Fast Company magazine:
Fast Company: Is seeking out such swashbuckling, rule-breaking oddballs a sound strategy for upping the innovative IQ of an organization whose leaders don’t naturally think like innovators? Why or why not?
Organisations thrive in a world of uncertain yet relentless change on their “cognitive diversity” … much more than a agile mindset, this is the willingness to embrace ambiguity rather than wait for certainty, to embrace extreme insights and ideas over mainstream averages, and to resolve paradoxes with new creative fusions.
Innovation lies in “extreme teams” who have both the stretching challenge, and pyschological safety, to challenge conventions, and to embrace boldness. These become the new powerhouses of organisations, which have replaced formal hierarchies with self-organising organic networks, focusing on customers and opportunities, rather than organised for efficiency and continuity.
A great example is Haier, the Qingdao-based world’s leading home appliances business. In my new book “Business Recoded” Haier’s CEO Zhang Ruimin describes his “rendanheyi” approach to organisations, an organisation of 1000 extreme teams, each essentially a micro-business of no more than 100 people, but each with the support of corporate resources and branded ecosystem.
The same approach to “extreme teaming” – the ability to bring together a juxtaposition of talents, skills, perspectives and experiences – demonstrates the real power of “diversity” in its broader sense, in organisations today. Google’s Project Aristotle recognised these qualities in its search for a perfect team, as did design company IDEO in recruiting eclectic teams of scientists, engineers, artists, and business people in its design teams.
Over the last decade as hierarchical organisations have stagnated, they have sought to embrace an entrepreneurial culture, perhaps through design thinking, corporate venturing, or seeking to follow Eric Ries’ start-up bible. Instead they should play to their strengths, using their scale to embrace much greater cognitive diversity – and ultimately portfolio of projects, innovations, and businesses – in a do what start-ups could only dream of doing!
Fast Company: In our experience, Rare Breed individuals don’t want to work in environments that are dull, repressive, or where they feel they cannot be themselves. They also are more likely to be outside the mainstream in terms of racial and ethnic identity, gender identity, appearance, social interaction, and even hygiene. How can leaders evolve their cultures to be more enticing to such “fringe” people without chasing away the more conservative employees who also play vital roles in keeping things running?
Microsoft’s incredible value-creating rebirth under Satya Nadella will be written about in time, as the model of how large organisations finally reinvented themselves for a post-hierarchical age. Nadella really only used two tools to drive a cultural transformation – inspiring purpose (an empowering focus on what customers do, not the products themselves) and a growth mindset (to experiment, to break rules, to reject the old corporate model).
Today’s most enlightened organisations are becoming “platforms for talent” – creating the space, support and stories for individuals to unlock their full potential. That requires a radical shift in thinking. Of leadership understanding. Of strategic agility. And patience. It goes far beyond Google’s boot-legging or Lego’s creative play. It’s when organisations learn to play jazz, not to follow the classical score – to unlock their humanity, and human potential.
Of course, many organisations are not ready for that, or don’t have the capacity to cope with such chaos – smaller companies seek to retain single-minded focus, finance or pharma have their regulatory excuses – but ultimately they need to embrace such approaches. The Pfizer vaccine emerged out of an ecosystem of partners, most notably Biontech, who were prepared to go to extremes and pursue what seemed like crazy ideas.
The speed of transformation in so many markets around the world, requires this mental as well as physical agility, achieved by cognitive diversity – look at Jio in India, Grab in Singapore, or even more traditional organisations like Siemens in Germany, and Fujifilm in Japan. It is supported by an ambidextrous strategy – to deliver today, whilst creating tomorrow.
This requires dual transformation that builds a customer-centric portfolio of solutions for today, and a portfolio of innovative business ideas for tomorrow. “Fringe” people were only so-named when the organisations only focused on today, on the mainstream, on the core. Now there is more space, and more need. Jobs shift from function roles to projects, stability gives way to speed, crazy ideas and being different is the new human advantage.
Fast Company: Presumably, there are some people like this hidden in the headcount of any large company, afraid to show their true colors. Since it’s much easier to find and develop game changing talent in-house than to try to recruit it elsewhere, how can leaders spot and develop the people who “think around corners” who are already on their payroll?
Eliud Kipchoge is the world’s greatest marathon runner, the first man to break two hours, the double Olympic champion. 6 years ago, a fading track athlete, and having passed his 30th birthday, he was considering retiring. Instead he stepped up distance and took on the marathon. He knew he needed to change. He started doing yoga, he moved out of his nice home into a training camp, and he sought to learn everything from other sports like cycling.
He knew he needed to find something different to perform at a level nobody had done before. In the same way, organisations increasingly recognise that success in the post-Covid 2020s won’t be achieved go getting “back to normal” but by embracing difference. This is a mindset. It needs leaders with a “future mindset”, with curiosity and courage, who seek to find new directions. A mindset, that then becomes a culture in everyone.
Organisations of the future are not about status achieved through years of service, depth of expertise, or even historic performance. They bring together young and old, eclectic skills and attitudes, oddballs and misfits. To do so, they will need multiple contracting formats, and multiple working formats. This will be the great legacy of Covid-19’s disruption to the old ways of working, themselves a hangover from the industrial revolution.
At GM, Mary Barra used her acquisition of AI-driving system Cruise to symbolise and galvanise a rebirth of a bankrupt giant. Jim Snabe has done the same over the last few two years at Maersk, turning the world’s largest container shipping company, into a futuristic blockchain-based logistics network. These organisations thrive on transformational projects – forget functional roles, forget job descriptions, even forget old notions of employment.
I started my new book by saying “the next 10 years will see more change than the last 250 years”. We have already recognise the transformational impact of shifting markets, data-driven tech, and new agendas. But it’s organisations that will make the change happen – the new ecosystems of talent, led with a future mindset, fusing together as extreme teams, and the courage to create a different, better future.
We all need “more female” attributes to seize the opportunities of today’s rapidly changing business world.
Making sense of relentless change and complexity requires us to rise above the data points and short-term priorities, to see a bigger picture – to make sense of a new emerging world. That requires intuition more than logic (intuition is more forwards looking, whilst logic tends to look back).
To add value beyond machines and AI, we need to unlock our humanity, our creativity. That requires us to be more empathetic, to make new connections. Ideas, design, relationships are most valued in today’s business world.
And to solve the big problems of our world, we need to be more thoughtful – to find more responsible, caring and creative, intuitive and inspiring solutions.
You could say “the future is female”
It’s not just about getting to a level playing field in diversity and inclusion, which matters … but even more, its about taking those attributes, those qualities, which are typically “more female” and to embrace them … both for men and women.
We could go into a biological and neurological discussion at this point, but I think the point is clear. Women therefore can have an advantage, whilst for men it might require some unlearning.
The future is not like the future used to be. Being a leader of the future, is not achieved by following the traits of the past success. It’s time to look forwards, together, with a positive mindset, to embrace the opportunities of an incredible new world.
So here are 10 incredible female business leaders, stepping up to disrupt and reinvent our world and our lives:
Kathy Hannun was at Google X when she became obsessed with geothermal energy for home heating and cooling. It drastically cuts the eco footprint compared with diesel or propane-powered furnaces — but a system typically cost $80,000 or more to install in a private house. Hannun cofounded Dandelion in 2017 to bring down the expense. Already, the company’s innovative equipment means that homeowners can either pay $18,500 up front and recoup the costs over about five years or put no money down and pay $135 a month, less than most diesel heating bills. So far Dandelion has raised $23.5 million and is growing 20 percent month over month; its waitlist is in the thousands. “My goal is to make this the mainstream option,” says Hannun. “And advance the way society heats and cools indoor spaces.”
Cristina Junqueira was working at a traditional bank in Brazil, and in 2013 she scored the largest bonus of her career. She quit immediately. Junqueira realized she wanted to change people’s lives, not just make money. Within months, she helped launch Nubank, a Brazilian fintech company that aims to make banking accessible to everyone via tools like low-interest credit cards, high-interest savings accounts, and an app-based credit system. In the early days, it was all hands on deck for Nubank’s tiny team. “You would call our customer service line and it would ring on my cellphone,” Junqueira says. But today, she’s having the impact she hoped for: Her company is valued at $10 billion, recently announced plans to move into Mexico and Argentina, and is exploring new products like personal loans, investment products, and accounts for small and medium-size businesses.
Payal Kadakia, Founder and executive chairman of ClassPass
Back in 2010, Payal Kadakia gave herself two weeks to come up with a viable business idea — time enough, she thought, to know whether she was cut out to be an entrepreneur. It worked. That experiment evolved into ClassPass, the subscription-based service that now helps users in 2,500-plus cities in more than 20 countries discover and book exercise classes. This year, Kadakia expanded into corporate wellness with a service that gives employees access to classes with 22,000 studio partners; clients include Google, Facebook, and Morgan Stanley. But the company, which has raised $255 million, is approaching the milestone of 100 million class reservations, a figure that keeps the founder motivated. “Our ultimate success metric is when someone goes to class,” Kadakia says.
Sometimes a founding story is so good, you just want to bottle it. And these sisters did. Andrea McBride was 12 and living with her foster mom in New Zealand when the phone rang. “Hey, Andrea; it’s your dad,” a man said. He told her he had terminal stomach cancer and she had a big sister named Robin (left) on the opposite side of the world. Andrea set out to find her. It took a few years, but she did. Andrea was 16 and Robin was 25 when the two first met, in New York’s LaGuardia airport. “When I got off the plane,” says Robin, who’d been brought up by her mom in California, “she was standing at the end of the jetway. I thought I was seeing my own reflection.” In 2005, the sisters ended up in California concocting a plan to squeeze into the very male, very white, very old-school wine industry. First they became importers, then distributors, and in 2009 they produced their first vintage. Many followed, including a Black Girl Magic collection, from New Zealand and California. Today the McBride Sisters Wine Collection sells 80,000 cases a year, landing it in the top 3 percent of wineries by size. But the sisters want to see more women there. On March 8, International Women’s Day, they debuted She Can — a New Zealand sauvignon blanc and a California rosé in cans — along with a fund to advance the careers of women in the wine industry. “It’s better than when we started,” says Robin. Andrea finishes the sentence: “But there’s still a lot more work to be done.”
Minted, which transformed over 11 years from selling stationery to being a massive marketplace for indie artists, inked a big deal this summer: Samsung and Method will now license work from Minted’s community, giving newfound exposure to independent designers. “We’re a source for companies that understand the value of one-of-a-kind design but may not have the scale or merchandising bandwidth to develop it internally,” says founder and CEO Mariam Naficy. And Minted doesn’t just have scale; it has crowd buy-in. Back when the company focused solely on greeting cards and wedding invitations, Naficy devised a crowdsourcing model for up-voting the art potential shoppers liked best. Fast-forward to today, and that means big brands can tap into a decade of data on design that inspires both fandom and sales—Naficy even says that by now, Minted can predict which designs will ultimately become best-sellers.
Neha Narkhede, Cofounder and chief product officer of Confluent
Next time you swipe a credit card or call a Lyft, thank Neha Narkhede, who is building what she calls a “central nervous system” for companies’ data. It started while she was working as an engineer at LinkedIn, where she helped create Apache Kafka, an open-source software system that processes the deluge of data flowing through the platform — clicks, messages, and news-feed updates — and makes it available to users in real time. “We said, ‘This is not just a LinkedIn problem; this is part of a broader trend that’s happening in the world where businesses are going to become more digital,’ ” Narkhede says. So she and two colleagues left to start Confluent, a software system that turbocharges Apache Kafka’s capabilities for startups, financial institutions, and Fortune 500 companies. Confluent enables its customers to process trillions of event streams every day, integrating data across apps and platforms and making all that information available centrally to analyze in real time. The service has quickly become an integral tool for businesses looking to leverage their digital footprint, and it shows in Confluent’s growth: The company recently raised $125 million in Series D funding, catapulting it to unicorn status with a $2.5 billion valuation. Next year, Confluent will focus on international business while increasing its 800-person workforce. “The market is as big as what the relational database market will be,” Narkhede says. “That’s on the order of tens of billions of dollars—that’s what we’re looking at in terms of total market potential.”
Canva, the Australia-based graphic design platform, was created in 2013 to help anyone, anywhere — with any level of design knowledge — create and publish beautiful, professional materials. Six years later, CEO Melanie Perkins and her cofounders have made strides. Canva has raised more than $140 million, is valued at $2.5 billion, and has 15 million active monthly users around the globe. “We’re now in 100 languages, and a goal for the year ahead is to bring access to every single market,” Perkins says. “We’ve done less than 1 percent of what we think is possible — we’ve got .56 percent of the world’s population on the platform, but we want to empower the entire world.”
As she designed her first jewelry collection out of her home in 2002, Kendra Scott never dreamed it would become a $1 billion brand. But today, her eponymous company has a unicorn valuation, 100 stores, and shows no signs of slowing down — though Scott’s main focus is about more than baubles. Of the Austin-based brand’s 2,000 employees, more than 90 percent are women, many of whom are mothers. Nursing rooms are commonplace at HQ and distribution centers, Kendra Scott Kids provides a children’s playroom, and once a year Camp Kendra invites in employees’ kids for a day of activities, in which office employees become camp counselors. “If we can support our staff, these women, at this very special time in their lives, we’ll have an employee who is incredibly loyal to our brand,” says Scott. “We believe in their future.” In September, that support expanded beyond the walls of Scott’s company, when she announced the Kendra Scott Women’s Entrepreneurial Leadership Program in partnership with the University of Texas. The programming will feature speaker series and courses on everything from building a business to advocating for equal pay and will be available to University of Texas students. “We want women to be able to access this information,” Scott says.
A biological engineer who can synthesize bacteria to smell like bananas, Reshma Shetty never intended to be an entrepreneur. But as a graduate student at MIT, she became passionate about designing biology-based products the way an architect designs a house. To make her vision a reality, in 2008 she cofounded Ginkgo Bioworks. Eleven years later, Shetty and her 250-person team are known for cutting-edge biotech and valued at $1.4 billion. Ginkgo’s work has spanned various industries, from healthcare to agriculture, with products like synthetic probiotics that reduce gastrointestinal problems in soldiers and (in progress with Synlogic) medicines that program the body’s cells to treat complex diseases. Earlier this year, Ginkgo spun out a separate company called Motif Ingredients to engineer sustainable alternative proteins that taste like the real thing. “Although we’re going after these radically different markets,” says Shetty, “the common thread is biology.”
Drybar founder Alli Webb has a new company, Squeeze, that aims to do for massages what she did for blowouts: Make the experience easy and affordable. The chain launched in March; customers book appointments via an app and can select from a menu of treatments and preferences, from pressure type to areas to avoid. But unlike Drybar (which has 130 locations and 4,000 employees), Squeeze will scale as a franchise, and Webb’s team is creating a two-year blueprint for its future partners, detailing how to greet customers and market locally. “We love the idea of enabling other people to become entrepreneurs themselves,” Webb says.
What are the successful traits?
Fortune Magazine recently asked a range of female leaders about the personality trait they credit for helping launching them into their leadership positions of today:
Ginni Rometty, Chairman, President, and CEO, IBM … “Be curious. A constant thirst to learn has served me well my entire career, especially in the tech industry. We’ve always hired for curiosity at IBM. We receive 7,000 job applications a day, and our managers and HR teams are geared to look for people who are curious and committed to constantly advancing what they know.”
Gail Boudreaux, President and CEO, Anthem … “My strong focus on leadership has been a large part of my success to date. I believe the ability to build and inspire teams is critical and that individuals and organizations can accomplish extraordinary results when they leverage the power of their collective strength working together.”
Julie Sweet, CEO, Accenture … “Openness: starting with my decision to learn Chinese and live in Taiwan and China in 1987 and 1988, before it was commonplace. I have often pursued paths that were not well-trodden. It has helped me become a continuous learner and to understand that it is often from unexpected sources and places that you learn the most.”
Judith McKenna, President and CEO, Walmart International … “It must be somewhere between curiosity and always focusing on people. Both are really important, and I really believe that if we always keep our associates, our people, at the heart of everything we do, and build out strong teams, then we’ll continue to make our business successful.”
Amy Hood, EVP and CFO, Microsoft … “I’m pretty gritty. I can work through most things and come out on the other side feeling like I’ve learned a good lesson and I’ll get better.”
Leanne Caret, President and CEO, Defense, Space & Security, and EVP, Boeing … “I love being authentic and letting people see the real me. That hopefully creates an environment where we are all in it together.”
Jennifer Taubert, EVP, Worldwide Chairman, Pharmaceuticals, Johnson & Johnson … “I think two qualities have been critical in my career: optimism and perseverance. Optimism because I believe in stretching and redefining the boundaries of what’s possible. Perseverance because, with determination, you can overcome any obstacle to do the right thing for patients. ”
Michele Buck, President and CEO, Hershey … “Being a great listener has long been one of my hallmark leadership qualities. I find immense value in seeking diverse perspectives when I’m making an important business decision. I want to hear from people who are deep in the organization, closest to the work, as well as those outside the decision domain who may see things a bit differently. As a leader, it’s important to set direction and impart your knowledge to others; but, you have to balance that with listening to the expertise and point of views of those around you. Intentional listening, and the learning associated with that, has undoubtedly been key to my success. One of the most important lessons I’ve learned is to weigh the perspectives of those around me with my north star. Then, I listen to my gut, which to me isn’t just natural instinct, it’s been built through years of experience, successes, failures, and everything in between.”
Mary Dillon, CEO, Ulta Beauty … “Curiosity and empathy. I told my children as they were growing up to always ask other people about themselves, to be curious to learn about others and to respect their journey. At Ulta Beauty, this is the way we do business. We have a deep curiosity about our guests and their needs, and we treat associates with the respect they deserve. We believe these values are helping us win customer loyalty.”
Marillyn Hewson, Chairman, President, and CEO, Lockheed Martin … “A focus on effective communication—and it all starts with the ability to really listen. Listening to your customers leads to a customer-focused vision. And listening to those you lead creates a climate of understanding and trust. By focusing on consistent and effective communication, leaders can also more quickly identify those times when it is critical to step forward and reach out directly to customers, shareholders, or employees. Simply put, effective communication is the engine for effective leadership and effective decision making at every level.”
We live in a time of incredible change. Dramatic, pervasive, and relentless. More change in the next 10 years than the last 250 years. The challenges are numerous, the opportunities are greater. Incredible technologies transforming our lives and work, expectant consumers and disruptive competitors, power shifts economically and culturally, climate crisis and social distrust. The 2020s will be a decade of transformation.
The 2020s will be a decade of transformation. It will be a decade of shifting power. Whilst we used to think of power as hard and hierarchical, new power is soft and social. I call it “Meta Power” because it goes beyond our traditional sources of power, and boundaries of control. In particular it goes beyond nations, beyond the power nodes and codes of the past.
Megatrends and Metapower
Meta power is not about having the largest army, it is about having the best story. It harnesses the new structures of our society, and is achieved through inspiration and influence. It comes from the voice of people who are loved and respected. It is the emotion stirred through culture and sport. It is the actions that positively contribute to a better society, healthier and happier. It is less tangible and less structural, more human and collaborative. It is a pull not a push, a carrot not a stick.
Thunberg is more respected than Trump, U2 has more influence than the UN, Messi is more followed than Macron. Leaders realise that social media is more effective than press releases, nations realise that culture is more potent than politics, media realise that people love stories of real people beyond celebrity. The best brands win through word of mouth rather than advertising, music and movies are promoted through immersive experiences.
Think of the power of social media in driving the Arab Spring, which no nation was able to influence or contain. Think about reality television which immerse people in trivial yet everyday lives. Think about the most memorable Olympic stories: Jesse Owens as he underminded Hitler in Berlin, Eric “the Eel” Moussambani who have never swum in a pool before Sydney, or Sarah Attar, who ran in London in a headscarf, and inspired the liberation of women in Saudi Arabia.
We are only starting to appreciate the seismic nature of change in our world, technologically and socially, and how it is changing the very concepts of power.
We are all familiar with how the smartphone has transformed the way we live, how we shop and connect, how we work and learn, how we vote and identify ourselves. The rising economies of Asia, its new brands and new middle class, transform business, but also the power behind movies, fashion, and sports. Jurassic Park to Harvey Nichols, Volvo Cars to Weetabix. We might be concerned about Huawei, we should probably be more concerned about TikTok, and its disruptive impact on our children. Indeed, artificial intelligence will be the most powerful transformative force of all, with its applications from genetic recoding to self-learning machines.
Take a look at three megatrends shaping our decade ahead, and the consequences for power, be it for nations, and also for entities that exist beyond or across nations:
Cities and tribes are the new the power nodes
Rapid urbanisation is redefining our world, the nature of markets and nations. 1.5 million more people live in cities every week. By 2025, Asia will be home to 33 of the world’s 49 megacities, of over 10 million people. In fact China expects to have 200 cities with a population of over one million people by 2025. To tackle overcrowding in Beijing, China is building a new city – Xiongan New Area – from scratch 100km southwest of the capital. Delhi will replace Tokyo as the world’s largest city, whilst all 10 of the world’s fastest growing cities will be in India, with the port of Surat growing fastest of all.
Economic growth is driving the rise of a new global middle class, 3.2 billion people today, growing across Asia to 5.3 billion by 2030, the world’s fastest growing market. At the same time, people have migrated across the world. Nations are increasingly heterogeneous, multi-cultural and diverse. Over 350 million people live in a different country from their birth, a number that will triple in 10 years. Diasporas and tribes, driven by culture or religion, a love of hip hop or running will spread across the world, dispersed but connected.
“Meta power” lies in the new communities of cities, and the global tribes of the future.
Social issues are the new power drivers
Environmental threats are intensifying, challenging our desire for industrialisation and progress, demanding a new balance between short- and long-term impacts. As individuals and brands embrace more resource-efficient behaviours, from bike-sharing to material recycling, social and environmental issues have become critical drivers of decision making. 66% of consumers, including 73% of millennials, say they will pay more for environmentally-friendly products.
Last year Formula 1 pledged to become carbon-neutral by 2030, and to make all grand prix sustainable by 2025. For a sport that produces 225,000 tonnes of CO2 each session, and transports 10 teams to 21 races around the globe, this is a huge commitment, and demonstrates the shift in society’s priorities. In a world under threat, people seek positive solutions, authenticity and hope, more human and sustainable solutions. Economic inequality is at an all-time high, whilst trust in all types of institutions is at an all-time low.
“Meta power” lies in stories of humanity, and improved lives and social progress.
Technology platforms are the new power brokers
Connective technology means that by 2020 there will be 7 times as many connected devices as people on the planet. The power of networks, formal and informal, grows exponentially, as we can see from the rise of new platform-based companies – Alibaba to Amazon, Airbnb to Netflix. They thrive as exchanges, fuelled by immense amounts of data. 90% of all data on the planet was created in the last 2 years. Intelligence accelerates growth, through personal relevance and precision influence. These businesses realise that they don’t need to be big to be powerful, instead they are smart and collaborative. Maybe this is a model for the future of nation power.
AI accelerates the data trend, from driverless cars to smart homes, personalised medicines to brain-linked controls. 90% of stock market trading is now done by algorithm. Look too at the addictive power of participation through technology – 2.2 billion people now participate in eSports, more than any other social activity, whilst games like Fortnite drive youth culture and aspiration.
“Meta power” lies in the hyper-connectedness and intelligence achieved through technologies, augmenting and fusing with the real world.
Welcome to a new power generation
“Hard power” succeeded in a world of borders and controls. It is aggressive and coercive, imposed through physical size and strength. “Soft power” is more effective in a world of connections and cooperation. It is more engaging and influential, independent of physicality. Meta power goes further, it harness the new structures and dynamics of a changing world.
We have reached a tipping point. The notion of power has changed, and its effectiveness.
Nations are wasting huge amounts of public money on traditional forms of hard power such as military interventions and economic sanctions, increasingly ineffective in today’s world. Instead they should refocus investments into activities that have a positive influence on other nations, communities and individuals.
Soft power activities, such as more cultural and sporting investment, more humanitarian and environmental support, deliver a better return on their investments, enabling nations to influence their stakeholders and build positive national reputations with enlightened influence.
Meta power goes beyond nations, but can be embraced by them.
In a world of blurred boundaries and multicultural tribes, power lies in the new stories of society – the sports teams we love, the influencers we follow, the movies we watch, the people who reflect our aspirations. This new power transcends nationalism, it embraces globalism, but in relevant ways. It gives individual people the freedom to choose how they are influenced.
Perhaps the most potent source of power in today’s world is change itself. Embrace the changing world, its new structures and codes, and become more powerful. Neglect it, and your power will rapidly diminish.
Change is power, because it is the story of the future, which any one of us can write, and shape to our advantage.
The Global Soft Power Index 2020 is the world’s most comprehensive soft power study, developed by Brand Finance, surveying opinions of over 50,000 people in more than 85 countries.
It specifically explores the ranking of nations, built on a new model of six power drivers. It seeks to understand the relative standing of countries by publics around the world, how effectively they build this new power, and what they can do to better more effective.
The Global Soft Power Summit 2020 will explore what does foreign policy success look like? Is soft power at the heart of diplomacy? Are we witnessing a shift in global soft and hard power dynamics? What are the key drivers of soft power? Is hard power making a resurgence?
Peter Fisk, global thought leader on strategy and innovation, explores the changing nature of power. He will look forwards to the future, making sense of the megatrends driving society and business, to understand where is power heading, and how can it be built and deployed for the future.
Other speakers include:
Ban Ki-Moon, 8th Secretary-General, United Nations
Sebastian Coe, President, World Athletics
Sir Ciarán Devane, CEO, British Council
Dr Yu Jie, Asia-Pacific Programme, Chatham House
David Haigh, CEO, Brand Finance
Mishal Husain. International Broadcaster
There are two summits, in London and Oxford. Free tickets by email firstname.lastname@example.org … Details below:
The future of food is about authenticity, wellness and relevance – traceability of supply chains, natural and organic ingredients, convenient and well designed packaging, and fantastic, inspiring taste
The UN estimates that by 2050 global food production will have to increase by close to 70% if we want to feed the world. This poses a real conundrum: How do we feed all those people healthy diets, in ways that don’t harm the planet?
In some cases, innovators in this space are doing what was once science fiction. The outcome of these new technologies has profound implications for the human diet, the changing climate, and the global economy.
Here are some most recent examples:
DNA Sushi … London-based conveyor belt sushi restaurant YO! Sushi collaborated with DNAfit to help diners choose dishes based on their DNA.
Smart food … Nestlé XiaoAI, an AI family nutrition assistant, is a smart speaker equipped with nutrition and health knowledge answering questions on custom recipes, music, and nutrition
Upcycled Beer … Kellogg’s teamed up with UK brewery Seven Brothers to convert its rejected Corn Flakes, Rice Krispies, and Coco Pops breakfast cereals into beer.
Mood Tea … Marley Mellow Mood Peach Raspberry Relaxation Tea from the US features mood-enhancing botanicals, which are said to calm the soul and ease the mind.
Genetic Dining … Vita Mojo was the first foodservice chain to give customers nutritional guidance based on their genetics, providing a great conversation as well as healthy eating
Sea Farms … Floating Farm is a dairy farm in Rotterdam, Netherlands, that showcases how food production can become less vulnerable to climate change
Indoor Farms … Bowery Parsley is grown in indoor automated vertical farms in New York City, NY promoting itself as “grown locally (in the city!) with no pesticides”
Edible Fashion … Modern Meadow in New Jersey grows animal-free leather in their labs, indeed recent fashion shows have been full of aubergine and mushroom-based fabrics.
Better Bling … New York City- based Couple is the first company to exclusively sell lab-grown diamond rings as an ethical alternative to real diamonds, and a lot cheaper too!
Splash out on dinner at Heston Blumenthal’s Fat Duck restaurant, and you might find an iPod accompanies your seafood risotto. Sounds of the sea enhance the perceived freshness and flavours, and can also affect our sense of sweetness and saltiness.
Caterpillars, already popular in Africa, contain 28mg of protein per 100g, more than minced beef, and add 35mg of iron too. If you’re in search of a calcium boost, try grasshoppers.
Rising food prices, the growing population and environmental concerns make food one of the big debates for governments, and interest areas for investors. Meat production takes up huge amounts of land, consume water, diverts crops from humans, and adds to carbon emissions.
Insects, perhaps rebranding as micro-protein, could become a staple of our diets – low cost, requiring little space or water. With 1500 edible species, we could soon be tucking into nutrititous crickets and grasshoppers, ground into burgers. Wasps are a delicacy in Japan.
If you still want meat, your next steak could be sourced from a test-tube. Strips of muscle tissue using stem cells taken from cows, a little like calamari to look at, are grown in a lab, and then shaped to expectation, similar to existing meat substitutes such as Quorn. Of course you could just become vegetarian, and still get a balanced diet.
Another source of improved eating, is sensory-engineering. Scientists have shown that look and smell affect how we taste. Condiment Junkie, a sonic-branding company is exploring how certain frequencies can compensate for sugar in foods, thereby improving health, as well as enhancing the whole cooking and eating experience.
However the most significant source of future food is likely to come from algae. 145 species of green, red, and brown seaweed is already eaten in huge quantities across Asia, often as a delicacy. Ground into other foods, its strong flavour can dramatically reduce the amount of salt used, for example in bread or prepared meals. Algae farming, for food as well as energy, could become the world’s largest crop industry by 2030.
However it is not just the food content that could radically change. It is also about embracing technology to deliver more personalised service and added value experiences. A great example comes from Singularity Sushi, which uses DNA analysis to ultra-personalise food, and 3D printing to produce objects of incredible beauty.
Here are 20 case studies of companies who are shaking up the world of food and drink in profound and enlightened ways, riding the consumer trends, embracing digital technologies, with incredible new experiences and profitable new business models:
% Arabica – Asian minimalism, African coffee roastery, and Arabic meeting place
Zespri – Redefining the Chinese gooseberry as the Kiwi fruit
In the past few years, food waste has been a particular sustainable action point for consumers and companies. Companies are finding new ways to reuse food waste. The Kellogg Company worked with UK- based Seven Bro7hers Brewery in 2019 to create beer made from non-standard cereal pieces. Meadow Mushrooms in New Zealand has created a container that is made from the organic waste from its mushroom stalks.
In France, Danone committed to solely using ingredients from regenerative agriculture by 2025. Unilever has a Sustainable Living Plan with three wide-reaching corporate social responsibility goals. Danone, Nestlė, Firmenich, International Flavors & Fragrances, and Sodexo are among more than 80 companies that are part of the We Mean Business climate change coalition. Ecommerce giant Amazon has founded its own Climate Pledge that commits to meeting the goals of the Paris Agreement by 2040.
In the next 10 years, consumers will be able to use easily accessible and affordable customised biological tests, data collection, and analysis to learn what makes their bodies one of a kind. The results will help consumers better understand how to address every aspect of their health, including brain and emotional health. While respecting consumer privacy, food, drink, and foodservice companies will have opportunities to develop personalised recipes, custom diet plans, and individualised products.
Consumers are learning more about the natural connections in their bodies as more research discovers how the systems in our bodies work together. In particular, improved understanding of the research into the microbiome has taught more consumers about the importance of maintaining a healthy gut/brain axis, or the connection that links the brain, digestive system, and emotions.
Today’s business world is no longer stable and predictable. It cannot simply evolve from the past and extrapolate into the future. Yet too managers hope that their old models will continue to work. They seek to replicate the success formula of the past, to continuously enhance and improve the status quo, and trust that their luck will continue into the future. We call this a fixed mindset. Instead they need to break free, with a growth mindset.
“The best way to predict the future is to create it” said Abraham Lincoln.
Markets are more crowded than ever before. Competition is intense, from across geographies and sectors, whilst customer aspirations are constantly fueled by new innovations and possibilities. Innovation is continuous and essential. Yet too much innovation is just improvement, keeping pace, not getting ahead. It is quickly imitated or redundant, the advantage is lost, and investment is squandered.
“This is the age of disruption … which is not simply about disruptive technologies, but dramatically changing how people think and behave” says Sebastian Thrun of Udacity.
New business models
New business models are the most effective way to transform organisations, to innovate the whole way in which the business works. Inspired by a new generation of businesses – Airbnb to Uber, Dollar Shave Club to Netflix – we see dramatically new business models in every market, through collaborative platforms, data analytics and personal recommendations, or subscription-based payments.
Airbnb makes money by helping you to make money out of your spare room, connecting host and guest, then taking a small fee from each. Nespresso makes great coffee, selling discounted machines, and then getting you to sign up to an everlasting and incredibly profitable direct revenue steam of coffee pods.
What if your business started leasing rather than selling, became part of the sharing economy? What if you simply facilitated an exchange between buyers and sellers and took a cut? How about moving to a subscription model, or a freemium model, or a referral model, or an advertising model?
We used to just think a business simply made things, and sold them. Now its much more complicated. Or rather, there are many more innovative ways to achieve success …
The term “Business Model” is over used and under defined. Business models explain how organisations work – how do they create value for customers, and in doing so how they create value for all other stakeholders. They can map the current business, or explore options for the future.
The approach originates from mapping “value networks” in the 1990s, understanding the systems across business and its partners through which value (both financial and non-financial) is created and exchanged – by who, how and for whom. I remember working with Pugh Roberts to create a multi-million dollar dynamic model for Mastercard which showed varying any one driver – such as interest rates, or branding – affected everything else. And thereby being able to test new ideas and optimise the model.
Business models represent the dynamic system through which a business creates and captures value, and how this can changed or optimised. They are a configuration of the building blocks of business, and their creative reconfiguration can be a significant innovation.
Business models became fundamental to business strategy, driven by them but often driving them. Hambrick and Fredrickson’s Strategy Diamond is all about aligning the organisation, achieving an economic logic between strategic choices. They help to align the business, matching the right strategies for outside and inside, using the proposition as the fulcrum, and profitability as the measure of success.
Business models can often appear very mechanical, lacking emotion and easy to imitate. In 2001 Patrick Staehler, in particular seeking to explain the new breed of digital businesses, created a business model “map” driven by the value proposition, enabled by the value architecture, creating economic value and sustained by cultural values. The last point here is most interesting, in that it captured the distinctive personality of a business, its leadership styles and ways of doing business. This is much harder to copy, and also sustains the other aspects.
Alex Osterwalder’s subsequent Business Model Canvas emerged as the most common template on which to map a business model. He popularised the approach so much so that his supersized canvas now features in workshops throughout the world, always with an array of multi coloured sticky notes as teams debate the best combination of solutions for each box. Whilst the canvas lacks the sophistication of value driver analysis and dynamic modelling, it is about testing hypothesise in each aspect, and how they could work together, and that respect works as a thinking model.
Business models have become a practical tool for rethinking the whole business, seeing the connections and then innovating the business. In fact they offer a great platform to facilitate new strategy and innovation thinking. That’s why we’ve created the Business Innovation Program, which combines design thinking, new business models and strategic implementation – a great way to engage your team, to think about new ways to grow, and to create the future, practically.
We explore at least 50 different business model templates which could transform your business. We start with the customer, to explore emergent needs and behaviours, shaping better propositions and solutions, then exploring how to deliver them commercially, and as engaging customer experiences.
0900 – 1030: CHANGING WORLD
Making sense of today’s world, the challenge and opportunity of relentless change
The future isn’t like it used to be, so we can’t keep doing what we used to do
100 companies changing the world right now. What can you learn from them?
Start with a future mindset, jump ahead, look forwards not backwards
Going beyond limits, how will you be the change, how will you achieve more?
Growth strategies – innovation beyond products, technology, and creativity
1100 – 1230: INNOVATIVE BUSINESSES
Starting from the future back – create the future you want, then work backwards
Working from the outside in – rethinking solutions through customer eyes
10 types of innovation – products and services to business models and experiences
Ecosystems, from make or buy, to partner and connect, platforms and communities
Innovation multipliers – accelerate ideas further and faster to accelerate growth
Creating a growth factory – portfolios, self-tuning and the invincible company
1230 – 1400: STRATEGIC INNOVATION
Business models – emergence of business models, 50 models to adapt and apply
Linking business models to strategy, business plans and organisation design
Rethinking your business model – what is it, and not – and different ways to define it
Mapping existing business model – simplifying how your business actually works
Innovating new business models – rethinking how your business could work better
Developing a business model portfolio – creating the invincible business
1530 – 1700: NEW BUSINESS MODELS
Innovation in your sector – how are others innovating, what are the new models?
Rethinking products and services – what would deliver the proposition better?
Rethinking channels and brands – how to build more inspiring connections?
Rethinking revenues and pricing – exploring alternative ways to make money?
Rethinking assets and resources – how to use what you have better?
Rethinking activities and partners – what do to do yourself, and by others?
1700 – 1830: DESIGNING YOUR FUTURE BUSINESS
Your products and services – what would deliver your proposition better?
Your channels and brands – how to build more inspiring connections?
Your revenues and pricing – exploring alternative ways to make money?
Your assets and resources – how could you use what you have better?
Your activities and partners – what do you need to do yourself?
How would you change Endesa’s business model? Where will you start?
Ørsted has transformed itself in a decade from being a fossil fuel-based energy company into being a world leader in green energy and sustainable practices.
Henrik Poulsen, CEO of Ørsted says “As the global leader in offshore wind, we’ve substantially grown our business while significantly reducing our carbon emissions. We have reduced our carbon emissions by 86%, and by 2025, we’ll be carbon neutral in our energy generation and operations. We also have a target of achieving a carbon neutral footprint by 2040.”
“Green energy is now cheaper than black energy. This is a real turning point, because green energy has become the economic choice. This gives the world a unique opportunity to take real action against climate change and create a world that runs entirely on green energy.” says Poulsen
Transforming an energy company the size of Ørsted has not been easy, but it was necessary. We made the decision to change our business based on the realisation that fossil fuels were neither environmentally nor financially sustainable. Our key drivers for combating climate change are:
Phase out coal
Our business was initially based on fossil fuels, and we were one of the most coal-intensive energy companies in Europe. But we dismantled our fossil fuel business and now focus entirely on renewables. We’ll completely phase out the use of coal by 2023 and generate nearly 100% green energy by 2025.
Offshore wind energy
We develop offshore wind, onshore wind, solar energy and storage solutions, and are the global leader in offshore wind. Through innovation and large-scale deployment of offshore wind technology, we’ve helped bring down the cost of offshore wind. Today, it’s cheaper than newly built coal- and gas-fired power plants in most parts of the world. It’s a game changer that has lifted the offshore wind industry from a niche to a global and rapidly growing industry with the potential to deliver green energy to hundreds of millions of people.
“While we’re proud and grateful to be ranked the most sustainable company in the world in 2020, we’re also painfully aware that the world must speed up green action to stay below the 1.5°C limit for global warming outlined in the Paris Agreement on climate change.
Countries and businesses must take active, ambitious steps to reduce their emissions and help the environment – and they must act now. We believe that our transformation is proof that change is possible. Join us in creating a world that runs entirely on green energy: https://go.orsted.com/Act-now”
Here is an extract from this year’s report, telling the Ørsted story:
A decade ago, offshore wind power was one of the costliest forms of electricity generation in the world, and even its leading exponent was dominated by fossil fuels – right down to its name.
DONG (Danish Oil and Natural Gas) may have opened what was then the world’s largest offshore wind farm in 2009, but the company was also widely acknowledged – and considered itself – as one of the best developers of coal-fired power plants. Since then, it has undergone one of the business world’s most radical transformations and got itself a new name, Ørsted – after the Danish physicist Hans Christian Ørsted, who discovered electromagnetism in 1820.
“In the past 10 years, we have transformed from a company that had fossil fuels at the core of its business to being essentially a pure-play renewable energy company,” says CEO Henrik Poulsen. “If you look at the transformation of the company, it has been dramatic.”
Asked why he thinks Ørsted topped the Global 100 ranking, he suggests that it could be “the sheer scale of the transformation and the speed – the fact that we have done all this within a decade.” “All this” is having reduced its CO2 emissions by more than 80% since 2006 and earning the title of the most sustainable company on the planet.
The company, which produced 85% of its energy a decade ago from fossil fuels and 15% from renewable energy, has reversed that proportion and has a target to “essentially become carbon neutral” by 2025.
“That was important in terms of being a purpose-driven company,” Poulsen adds, “but it is just as important that we managed to do this while demonstrating good shareholder-value creation and strong return on capital employed. Our return on capital is 300 to 400 basis points higher than the European average. Since Ørsted joined the stock market through the world’s second-biggest initial public offering of 2016, the company’s value has more than doubled to $US 40 billion.
“Running the company just for profit doesn’t make sense, but running it just for a bigger purpose is also not sustainable in the long term. Doing good and doing well must go together.”
The transformation has not been an easy one. “Over the past eight or nine years, we have been gradually disassembling the very core of the company and using the cash from that to accelerate the build-out of our leadership position in offshore wind. It has been a dramatic change. Some people have left when we divested, and others have been part of a huge growth journey.”
While the journey has been challenging at an operational level, the company was at least confident it was heading in the right direction. “We were helped by the underlying trends in society. We need to fundamentally change the global energy system from black to green energy. What we saw as an opportunity is now really required,” Poulsen says.
At the same time, the company can justifiably claim to have played a key role in turning offshore wind from an expensive, unviable but interesting technology to a central part of the mainstream energy mix. “Even five years ago, it was no more than a niche. Now it’s a significant part of the future green-energy system. It’s a transformation not just for our company, but a significant contributor to the broader green energy transformation.”
The industry has developed faster than even those involved thought possible, Poulsen points out. In 2013, the industry set a target of reducing costs for offshore wind by 35 to 40% by 2020, but that was achieved in 2016. “We thought 35 to 40% was an ambitious target, but costs fell much faster than we expected. When we set out to change a decade ago, we thought the transformation to green energy would be complete by 2040. But we will reach that 2040 target 20 years earlier than we originally envisioned.”
Given the scale and speed of its transition, Ørsted has become a poster child for the transition to a low-carbon economy, something that Poulsen embraces. “I hope we can be an inspiration to others, yes. Both in terms of the radical nature of our transition and the speed.”
“When you look at the challenge we face as a global community – to halve our emissions by 2030 even though we have not yet had a single year in which emissions have fallen – it’s clear that all companies must become more ambitious with their timeline for action,” he says. “Companies setting a 2050 target for emissions reductions need to reconsider whether they can do it faster and go further. What we have shown is that you can be much more radical than you might think.”
How will you drive future strategy, innovation and change? How will you reinvent your business models, brands and experiences to embrace rapidly changing needs, behaviours and aspirations of consumers?
As digital experiences drive a hunger for humanity, as sustainability becomes purposeful and mainstream, and as relevance and meaning are in demand everywhere, what are the real drivers of consumers, and their evolving value equations in 2020?
Here are some of the most interesting 2020 trend reports just published:
Back in 2008 Tesla launched its Roadster, a $100k electric supercar. In 2016 Adidas partnered with Parley for the Oceans to produce a limited-edition line of sneakers made from recycled ocean plastic; only 50 pairs are made. Also in 2016, NYC’s Momofuku Nishi became the first restaurant in the world to offer the Impossible Burger.
Fast-forward to 2019, and Tesla’s Model 3 is a mainstream favourite, the third best-selling car in the UK. Adidas made 11 million pairs of ocean plastic sneakers in 2019. And Impossible Burger is available at over 7,000 Burger King outlets across the USA, demonstrating that plant-based alternatives can taste even better than the ‘real’ thing.
With a little help from some of my trend watching friends, below is a compilation of some of the most interesting innovations of the last 12 months, collectively demonstrating the fusion and application of the many diverse consumer trends:
The automotive industry is facing its most profound change in 100 years. Autonomous vehicles, new models of ownership, connected ecosystems and more:
Volvo: Remember when faster was better? When driving was freedom? Volvo’s driver-facing sensors will soon detect and even prevent intoxicated or distracted driving. A divisive but bold statement of brand intent. More
Tencent: Apple and Amazon aren’t the only tech auto shows in town. Thanks to a partnership with 19 automakers, WeChat (with its 1 billion users!) is now accessible to Chinese drivers. Digital superpowers, freed from the screen. More
Toyota: The Tokyo 2020 Olympics will see the Japanese manufacturer showcase its new vehicles. 90% are electric and athletes will be ferried around by an autonomous shuttle. More
Busbot: Getting around an Australian retirement village is much easier. Limited rollouts avoid many of the challenges of full open-road autonomy, while also bringing affordable mobility to groups who are currently under-served. More
Consumers want it all. Personalization. Intimate connection with trusted influencers. Activism. Empowerment. Scientific breakthroughs. All-natural, eco-friendly products. New technologies.
L’Oreal: This act of self-disruption from an industry giant ticks so many trend boxes, mixing D2C, personalization, live chat and the gig economy: More
Sephora: The French brand looked to escape influencer fraud and fatigue by creating its #SephoraSquad, a year-long partnership with 24 diverse micro-influencers. More
Shiseido: The company’s new office in Hangzhou (next to Alibaba’s HQ) will enable the beauty brand to access data and accelerate development of products better suited to local tastes. More
Rohto: The Japanese brand’s sunscreen’s selfie-friendly reverse print packaging taps into a very modern customer pain point. Maybe not the most profound innovation, but lots of empathy: More
As personal technology reaches a plateau in terms of raw power and basic form, consumers will seek devices with very different benefits: environmental, inclusive, and empowering.
Arçelik: A washing machine with a filter to stop microplastic pollution? And they gave away the technology as an open source solution. More
Zappos: Inspired by an employee, the US shoe brand partnered with Not Impossible Labs to create a portable ‘sonic localizer’ system to help a visually impaired skateboarder. More
Sony: This crowdfunded wearable air conditioning device might seem slightly crazy, but if it gets warm (!) reviews from spectators at the Tokyo Olympics it might just be the next big thing to hit warming streets around the globe. More
Vice: Q is an artificially-synthesised, ‘genderless’ virtual assistant designed to challenge existing stereotypes perpetuated by existing offerings such as Alexa. More
Conalep: Mexico’s National Institute of Technical Education is now offering courses in drone piloting, in order to help create future-proofed job opportunities. More
2019 felt like a watershed moment when fashionistas woke up to the need to drastically reduce their environmental impact. New materials, business models, data, technologies and most importantly new consumer expectations:
Vollebak: This t-shirt is made from sustainably-certified wood pulp, printed with ink made from algae, and will decompose in 12 weeks if composted. More
thredUP: The fashion resale website launched its Resale-as-a-Service platform to other retailers. Will this platform play be the trigger that propels the recommerce trend firmly into the mainstream? More
Nike: The Nike Fit app enables customers to measure their feet using augmented reality. It’s been a hell of a wait, but finally we’re seeing AR being used in ways that are actually…useful?! More
Google x Stella McCartney: The British eco-pioneer is deploying Google Cloud’s data analytics to give its designers a more detailed view into the impact of materials in its supply chain. Big data, meet sustainable fashion. More
Unspun: The Hong-Kong based startup makes custom-made jeans for people based on a 20-second Fit3D body scan. Perfect fit combined with zero inventory (and so zero waste!). More
Fintech disruption is still big, but where previously long-serving incumbents struggled to compete, 2019 saw their decade-long drive to embrace both digital and cultural transformation start bearing fruit. Customers are increasingly able to enjoy convenient, practical, and empathetic customer experiences:
Alice: This app connects to users’ bank accounts and simplifies deducting allowable taxable expenses. Elite employee benefits to lower-paid and poorly-served hourly wage earners. More
Barclays: The UK bank enables customers to block certain spending categories, such as gambling, alcohol. Fintech-style self-disruption and true customer-centricity from an incumbent. More
RHB: This Malaysian bank addressed both a younger generation and inter-generational family dynamics through its Chinese New Year campaign championing a professional esports gamer. More
Free Trial Surfing: This clever app enables people to sign up to free trials with ‘burner’ card details so they don’t need to remember to cancel them to avoid charges. More
Mastercard: Customers will soon be able to display their chosen names on their payment cards, regardless of their birth gender. A ‘small’ but very relevant step on the road to inclusion and acceptance. More
Food and drink
This is one of the most dynamic sectors, with relatively low costs of innovation and high expectations of consumers. New ingredients, new channels, sustainable sourcing and the circular economy, and more.
Nestlé: The confectionery giant’s new 70% dark chocolate product contains no refined sugar. Instead it is sweetened with previously-discarded cacao pulp. More
Lettuce: This Austin-based startup installs low maintenance grow beds in members’ homes, matching owners with willing local gardeners and collecting surplus produce for its zero-waste, hyperlocal subscription meal kits. More
Solar Foods: The Finnish startup will soon launch Solein, a high protein wheat flour-like powder made from CO2 extracted from the air and combined with water, nutrients, and vitamins. More
Returnr: The Australian startup makes it easier to avoid single-use food packaging by enabling customers to ‘rent’ reusable stainless steel bowls and outsource cleaning to the restaurant. More
Perennial: This vitamin-enriched plant-based milk supports the brain health and bone strength of its 50 year old and over audience. More
The consumerisation of healthcare — behaviorally, technologically, culturally — remains the biggest industry trend. People still want world-class ‘traditional’ reactive medical care in an emergency. But innovations that empower people to engage with their health in new ways will bring huge benefits to both individuals and over-stretched healthcare systems.
Seed: The D2C probiotics company launched an Instagram Stories-based ‘certification’ to train influencers in the science behind its products and FTC regulations. More
University of Washington: Researchers launched an app that can detect fluid behind the eardrum using a paper funnel attached to a standard smartphone. More
AXA Insurance: Hong Kong-based patients with social anxiety can access a six-week therapy program. The twist? The sessions are delivered in virtual reality. More
Life Kitchen: Medical treatment is just a small slice of healthcare. This cooking school for cancer patients offers those going through chemotherapy an experience filled with empathy and humanity. More
United State of Women: The Womanikin is a breast attachment for CPR mannequins, designed so that first aid givers can get familiar with giving chest compressions to female bodies. More
Who wants a domestic life that is safer, more sustainable, healthier and more socially connected?. Here are five innovations that give a glimpse of what domestic bliss:
IKEA: Growing awareness is making air pollution the next frontier for wellness. IKEA’s pollution-fighting curtains will push the issue even further into the mainstream. More
Kartell: The furniture brand partnered with software firm Autodesk and designer Philippe Starck to create the world’s first AI-designed chair. More
Wutopia Lab: This Chinese design studio created Blue Heart a ‘shared living room’ for residents in ultra-dense housing. New ‘third place’ opportunities. More
Student.com & Sheffcare: This initiative pairs up students with residents of an elderly care home, because loneliness — like most trends — doesn’t discriminate by demographic. More
Sonny: Will this crowdfunded portable bidet — with its sleek, Apple-esque design — bring bidets to the US market? Perhaps not, but it does signal that every item in the home is ripe for an eco-upgrade. More
What starts out in the luxury sector quickly ripples out into the mass-market. High-end aspirations become mainstream expectations. Here are five early warning signals to have on your radar:
Omega: All-natural as the ultimate luxury? The world’s first synthetic ‘spider silk’ watch strap turns that assumption on its head. More
Dapper Labs: Luxury is about scarcity. Which excludes all things digital. Or it did, until the auction of the world’s first piece of blockchain-based ‘digital haute couture’ gave us a glimpse of a new era of digital luxuries. More
Prada: Prada’s launch of its Diversity and Inclusion Advisory Council is a step in the right direction for an industry that’s taken far too many wrong ones. More
Shangri-La: The luxury hotel chain opened a restaurant in Singapore’s Changi airport, showcasing a key part of its offering to a new audience. Which adjacent lanes could you move into? More
BMW: Second hand doesn’t mean second-class. BMW embraced this trend by recycling clips from old ads to promote its pre-owned vehicle offering. More
People now spend near-insane amounts of their daily lives immersed in media. Frivolous yet meaningful; mindless yet self-improving:
Mattel: The maker of Barbie released a line of gender inclusive dolls. Each doll comes with both ‘masculine’ and ‘feminine’ hair and outfits which children are able to combine in various ways. More
BASE Hologram: An Evening With Whitney will see the late singer ‘perform’ a holographic tour in 2020. Another signal that, increasingly, there’s no such thing as impossible. More
ckbk: This Spotify-like subscription service disaggregates cookbooks into their component recipes. Which new business models could you import from adjacent sectors? More
Warner Music: The entertainment giant signed a distribution deal for algorithmically-generated music. Another day, another (creative) job being done by a machine. More
Blizzard: To celebrate the re-release (after 15 years!) of World of Warcraft Classic, the studio helped players find members of their original in-game ‘guilds’. More
The line between businesses and nonprofits is increasingly blurred, thanks to the purpose ‘trend’. And working together can create challenges for nonprofits, but it also drives big ambitions, big budgets and big opportunities on offer, too:
Amber Alerts: Selected Dutch ATMs will show pictures of missing children and encourage citizens to sign up to mobile alerts. Omnichannel relevance meets brand purpose. More
Donate Life: Californian police issued motorists pulled over for minor traffic violations with a ‘Second Chance’ warning ticket. But only if they were registered organ donors. More
McDonald’s: The fast food chain turned to aging nonprofit AARP to help recruit 250,000 new workers in the US, shattering many long-held demographic assumptions in the process. More
Lesswalk: This Singapore-based nonprofit is giving 10,000 bicycles — bought and recycled from failed bike-sharing startups ofo and oBike — to children living in rural Myanmar. More
Lego: Its new Braille Bricks help visually impaired children (and their families and friends) learn braille while playing. Inclusive design at its best. More
Retailers get obsessed about digital and physical, omni-channel concepts. Consumers just want best-in-class choice, convenience and meaningful experiences.
Hanwha Galleria: The exterior walls of this South Korean mall literally change colour in response to the air pollution: green when low, red when high, showing the power of data and sustainability. More
Starbucks: The coffee chain continues to raise the bar when it comes to employee benefits, which now include various elements covering mental health. Culture drives your brand. More
7-Eleven: Not at home but still want — no, need! — some food or drinks delivered? 7Now Pins are delivery locations in public places, such as parks and malls. On-demand expectations. More
Taobao: The farmers’ market gets a digital makeover. 1,000 rural farmers are now livestreaming to Chinese urbanites hungry for compelling provenance stories about the food they buy. More
Walmart: Smart retailers will find creative ways to celebrate the customer-facing benefits of new technology, as Walmart’s Intelligent Retail Lab did. More
If ‘mobile’ in the last decade has been primarily about smartphones, in the 2020s it will be about new ways to move physical atoms (i.e. people and goods) around more efficiently, cheaply and cleanly.
Optimus Ride: Moving (crawling?!) at 15 mph, a one-mile distance limit, two human safety supervisors…the Optimus Ride shuttles are no joyride. 16,000+ monthly riders now love autonomous vehicles. More
SBS Transit: Grass roofs are moving from the hippest of eco-dwellings…to buses! Ten buses in Singapore were equipped with living roofs in an eco-conscious, air conditioning cost-cutting move. More
Cyclo: This packable bike helmet makes it convenient for consumers to put safety first. And it’s made from recycled ocean plastic. No wonder it exceeded its Indiegogo funding goal in five days. More
Clear Channel: Stockholm’s Emotional Art Gallery’s algorithm scanned social media and local data to estimate commuters’ emotions, while digital subway billboards displayed real-time art More
Bird: The scooter company is raising the eco-bar by extending its carbon offset beyond the impact of an individual ride, and including delivery and charging. More
The travel industry is about dreams and identity, but also faces an epic tension between rhetoric and reality, especially when it comes to purpose and authenticity.
KLM: Reminiscent of Patagonia’s ‘Don’t Buy this Jacket Campaign’, the Dutch airline asked its passengers to consider if they really needed to fly, or whether they could take a train or meet via video conference. More
Marriott: Brands touting ‘positive impact’ will look especially hollow if their own establishments play host to human suffering. Marriott trained half a million employees to spot trafficking at its hotels. More
Faroe Islands: The island nation closed to tourists for a weekend, while selected ‘voluntourists’ worked to conserve and restore popular locations. More
Sidekick: Choice saturation. Fake reviews. This South Korean platform lets travelers text a local for real-time recommendations. More
The Moxy: The New York hotel tapped into the popular YouTube phenomenon to give guests a ‘drug-free mental massage’ via free, in-room, celebrity-performed ASMR videos. More
40 years ago, my father in law, who had grown up in the countryside north of Hong Kong, just over the border into mainland China, went back to the village of his birth. I remember him telling stories of a simple life, playing in the rice fields, and faded photographs of him riding water buffalo as a young boy.
Having moved to Europe he wanted to retain some presence in the small place. He bought some land, and built a small block of apartments which he hoped might grow in value and some day be a good pension for him and his family.
Over the past 30 years, the fishing village of Shenzhen has been reborn as a futuristic metropolis bursting with factories. It is the heartland of China’s tech revolution, dubbed the Silicon Valley of hardware. Now it is a boom town, the likes of which the world has never seen before.
In 1979, the Chinese government turned it into an experiment to grow capitalism in a test tube, designating it as the country’s first Special Economic Zone. The city is driven by an influx of workers from the countryside who make everything from real iPhones to fake Chanel bags. Shenzhen — and the surrounding Pearl River Delta — has become known as the world’s factory floor.
If you own a smartphone or computer, odds are parts of it came from here. It is now a megacity of over 12 million people. It has also become an incubator for cutting-edge design, a bastion of next-gen urbanism, and a leading cultural capital. Welcome to Shenzhen, the manifestation of China’s economic miracle.
To see why Shenzhen is called a rule-breaking tech hub, wander the endless wholesale kiosks of Huaqiangbei’s malls, where tech entrepreneurs, hackers, and makers gather. You will find every electronic component and gadget imaginable, laid out like so many spices in a bazaar.
This is ground zero for the production of shanzhai — “pirated” goods that are often less knockoffs than remixes, like an Apple Watch that runs on Android, has a removable battery, and is a quarter of the price. Naturally, the West frowns on shanzhai, but experts like David Li, a Taiwanese technologist and cofounder of Shenzhen Open Innovation Lab, argue that these bootlegs drive innovation. Hoverboards, he points out, evolved in the wilds of shanzhai production to become a global hit.
Meanwhile, the Chinese government is using Shenzhen as a showcase for its move from “Made in China” to “Designed in China” — a program to rebrand the country as a place that can invent, not just copy and mass-produce.
Another draw is Shenzhen’s distance from the capital. As the old Chinese saying goes: “The mountains are high and the emperor is far away.” Though the government engineered Shenzhen, its location in the Pearl River Delta, more than 1,300 miles from Beijing, gives it a more relaxed atmosphere. “Freedom is a really big word, but there is a sense of Shenzhen being more open in every way,” says Jason Hilgefort, an American architect and educator who leads the local urbanism academy Future+.
Schenzen is also home to some of China’s leading companies including the world’s leading electric car business BYD, and world’s leading drone maker DJI. And then add Huawei and Tencent.
Chinese tech infrastructure giant Huawei was founded in Schenzen in 1987 by Ren Zhengfei, a former engineer in the People’s Liberation Army. At the time of its establishment, Huawei focused on manufacturing phone switches, but has since expanded its business tremendously. It is the largest telecommunications equipment manufacturer in the world and the second largest smartphone manufacturer after Samsung.
Tencent is another leading business from Schenzen. QQ is a social media platform owned by Tencent with 850 million monthly users. WeChat even has 963 million monthly users. Tencent does not stop at these platforms. Their services include music, web portals, e-commerce, mobile games, internet services, payment systems, smartphones, and multiplayer online games All these services are among the world’s biggest and most successful in their respective categories.
We lease cars. We rent designer dresses. When the lease is up, we return it and get another.
Could a similar leasing model work for furniture? IKEA, the world’s largest furniture retailer, is launching a subscription model where people can lease everything from office chairs to kitchen cabinets. Imagine you’re ready to redecorate your office or update your kitchen. Instead of going through the rigmarole (and expense) of buying all new and getting rid of the old, you just return everything and pick out something else. It’s the same as leasing a car or a piece of designer clothing. Once returned, it gets cleaned up, refurbished, and goes back into rotation for someone else to rent.
IKEA will pilot the program in Switzerland starting as soon as this month. There’s no word yet how much subscriptions will cost or exactly which Ikea products will be eligible. If the subscription model goes well, Ikea may launch the program globally. The company will start by leasing office furniture like desks and chairs to businesses. Kitchen cabinets are also a possibility. Because of the way Ikea’s cabinets are designed, all you’d have to do is swap out the doors for a completely different look.
“Instead of throwing those away, we refurbish them a little and we could sell them, prolonging the lifecycle of the products,” Torbjorn Loof, chief executive of Inter IKEA, told The Financial Times.
Time to innovate your business model
“The failure of any business reflects at root the failure to innovate, failure to recognise change, and the inability to respond to change adequately or appropriately” says Langdon Morris in his great new book Business Model Warfare.
“Business model innovation is perhaps the most important form of innovation, because it’s available to any company of any size, anywhere in the world. All it takes is insight, and the willingness to listen well and try something new.”
Here’s a short extract:
Today, as we see that yet another massive wave of new technology is about to crash across the global marketplace — what with artificial intelligence, blockchains, machine learning, self-driving cars, robots, quantum computing, etc., etc., all arriving immanently, — we must therefore anticipate that every existing business model of every existing business is thoroughly and utterly subject to disruption. This is a stark warning about the need to innovate.
Wouldn’t it be so incredibly helpful if there were a formula to explain all this, to simplify it and make it useful in practice? And indeed there is, a simple, three element framework:
Outside: The company provides experiences to customers through the delivery of products and services. The current quality of those experiences is today’s reality; making them transformatively better is the vision.
Inside: The factors inside the organization make this delivery possible. These can be many and varied, including the product or service itself, the supply chain, the operations, and technology. These are the means.
The Bridge: And then the way that a company communicates this value proposition to customers through marketing and branding, which are the messages and means through which the company communicates. This is the story.
This formula for business model innovation immediately gives us three essential questions to ask about our own business model, and how to improve it:
What’s the best possible experience that our customer can have? (Vision)
How can we organize ourselves to deliver that? (Means)
What’s the best brand identity to represent it? (Story)
We also observe that the most successful business model innovators tend to focus obsessively on oneparticular aspect of their business means, and develop it innovatively and far beyond what’s been done before. That is, they push it to the edge, the absolute limit of possibility, and in so doing create an entirely new capability that they then leverage to define or enable an exceptionally better value proposition for their customers. (See the illustration at right.)
Let’s look again at some of the companies we’ve already been discussing to see how this applies: where did they push it?
Amazon: The company’s determination to leverage its core technology into every aspect of the customer relationship.
Apple: Obsession with the user interface design created an ease of use that is the basis for nearly everything else that Apple has accomplished.
Google: Obsession with creating user traffic on its platforms has driven two decades of growth.
Southwest Airlines: Obsession with reducing operating costs enabled an entirely new business model and created three decades of exceptional growth and success.
Walmart: Obsession with supply chain optimization is the foundation of its global retailing empire.
The word “obsession” shows up in each one for good reason, and in fact in each of these examples it’s a dual obsession. On the inside, it’s the obsession to optimize some aspect of operations; on the outside, it’s the obsession to optimize the customer’s experience.
Getting there may not be easy, though. Southwest Airlines had to endure a near-death experience during its startup stage before a core element of its eventually-successful business model became clear; it took Google years to figure out how to make money; Amazon and Uber are still losing money; and Apple was moribund as late as 1997, and it was only in about 2005 that its many decades of persistence began to pay off.
How does this work in practice? Business model innovators often begin with these questions simultaneously at the forefront of their thoughts:
The first is simply, What would make the customer’s experience better? Answering this question well requires a detailed understanding of the tacit dimensions of the user experience.
The second is, How can we achieve that? This is the means.
The third question then focuses the compelling story, the critical importance of branding.
Yes, the table is of course a simplification (and possibly an over-simplification), but isn’t it interesting anyway? Do you agree with all the labels I’ve chosen? Perhaps not. But it does convey some important ideas that you need to think about with respect to your own business model:
Can you articulate what your business model is about clearly and concisely?
Does it tell a story that matters to your customers?
Can you deliver on the promise?
Notice that nowhere on the chart is the story or the experience actually the technology itself. Thus, it becomes clear that the importance of new technologies is that they’re the means through which new and better experiences are delivered, but they should rarely be the focus.
Mediocre marketers sell technology. But people buy the hole, not the drill, so skilled marketers sell the hole.
That is, the best business model innovators figure out how to deploy new technologies in order to create better experiences for their customers, while the non-innovators push technology without considering what it means for their business model, or how their business model should be designed to create optimal experiences.
If you look at the up-and-down history of retailers like Best Buy, this is one of the key lessons. They originally designed their stores as temples for people to come and worship technology, which immediately got them commoditized, and soon squeezed by Amazon and Walmart. To turn the business around they had to make it experiential and thus interesting, which they did by turning the stores into brand bazaars, collections of interesting shops in one big box. To complete the turnaround they’re now developing the new brand identity, an essential element of all business models.
Fashion retailers are under pressure. Many physical retailers, such as H&M and Zara have seen their sales decimated by the growth of online competitors like Asos and Zalando, who themselves are struggling to reach the expectations of investors. The fast fashion retail models pioneered by the likes of Inditex, has now created a new normal in terms of consumer expectations and behaviours that are difficult to meet.
Innovation has largely not kept pace with consumer behaviour, in a world of mobile-centric millennial consumers, where their aspirations are global, their choice is diverse, their influence is communal, and their patience is zero. Amazon has launched many private labels, H&M tried celebrity-designed ranges, Uniqlo invested in vending machines, Nike went for vast indoor experiences, Supreme became the ultra-hyped drop brand, and Depop is the new normal for reselling and vintage hunting.
Of all the trends influencing retail, personalisation – in the forms of customised products, personalised service, local engagement, personal shoppers and predicted curation – is perhaps the biggest trend for fashion retailers right now. In order to achieve that some retailers are using technologies such as AI and 3d printing, some are using expert staff and local kiosking, some are using data to build more sophisticated interplay between different channels.
Here are some of the most recent examples of fashion retail innovations:
Alibaba’s FashionAI with Guess
Alibaba’s New Retail concept seeks to rethink the entire retail experience, physical and digital, enabled by next generation technologies. This week the Chinese tech giant launched its first “FashionAI” concept store enabled by artificial intelligence. The Hong Kong store showcases Guess apparel through innovations such as smart mirrors, which display product information on a nearby screen when shoppers are touching or picking up a garment. The smart mirror also makes mix-and-match recommendations and points to where the suggested items can be found in the store. It also uses machine learning to computer vision to “learn” from consumers, designers and fashion aficionados within the e-commerce giant’s ecosystem. These insights include images of more than 500,000 outfits put together by stylists on its Taobao platform.
Adidas Berlin travel pass
Berlin transit authority BVG’s unusual collaboration with Adidas Originals – limited edition sneakers with a built-in BVG season travel pass. As such the wearer (as long as they are wearing the pair of sneakers at the time) will get free travel around the entire city on trams, buses, ferries and subways for the year. Although the shoes were quite highly priced at €180, the value of the annual travel pass is €728 which means they offer the owner a significant saving. Limited to 500 pairs, the shoes continue the BVG link in their design by mimicking the seat upholstery design used on the company’s train seats.
Amazon Echo Look gets stylish
Amazon Echo Look’s screen and camera functionality is being put to good use by fashion publications Vogue and GQ. Customers can use the device’s AI stylist to get style suggestions from the magazines by uploading photos from their smartphone. The magazines will also host weekly content on the Echo Look app’s home screen with the ability for customers to click through and buy items. Although Amazon says Vogue and GQ don’t get a cut from any purchases made, it’s the sort of collaboration that you could add such an element to.
Columbia Sportswear’s Azure cloud
Columbia Sportswear has collaborated with Microsoft to offer a better customer experience. The company uses Microsoft’s Dynamics 365 and Azure cloud services to get insights into how customers respond to products – regardless of the channel used. This then helps Columbia Sportswear to personalise the experience. The technology is also used to improve merchandise management by offering better reporting and analysis.
H&M’s Afound discount marketplace
H&M is extending to discount fashion with its new marketplace Afound. Significantly, H&M will allow other fashion labels to be sold on Afound. And of course H&M will use it sell its own unsold inventory. The marketplace will be accessible online and through a physical store in Sweden. The aim is to present a mix of brands at different price points. Similarly, Inditex’s remainder products are sold through a separate brand Lefties in which own brand labels are changed from Zara or Mango to Lefties.
LVMH 24sevres multi-brand store
LVMH’s first ecommerce project is 24servres.com, which is a digital realisation of the Le Bon Marche store in Paris. The idea is to extend the physical experience to customers all around the world, including recreating the store’s famous window displays. LVMH also believes that its curated experience is what sets it apart with the brand taking an editorial approach to merchandising the site’s inventory.
Miquela, the digital influencer
Miquela Sousa is a 19 year old LA-based model and influencer. So far, so normal. But Sousa is actually a computer-generated figure – and no-one knows who is actually behind her. Still, she has more than 899,000 Instagram followers and fills her feed with images of outfits from brands such as Chanel, Supreme and Vans.
Net a Porter’s intelligent shopper
Luxury online retailer Net a Porter has invested £442 million in technology and personalisation. A robot selects clothes for customers based on their future plans, for example a planned vacation. The system uses AI to offer the personalised service. Net a Porter has also developed another tool that uses AI to put together outfits based on other items a customer has selected.
Nike’s superfast customisation
The Nike By You studio in New York lets customers customise a pair of trainers in less than 90 minutes. Known as the Nike Makers’ Experience, the process involves a series of graphic options and patterns, plus colour and size options, to create a design that’s unique to the customer. The experience uses a special model of trainer, the Nike Presto X, which was specifically created for it. Currently the Nike Makers’ Experience is invitation only.
Nordstrom’s local advisory stores
US department store Nordstrom’s new retail model is very different to its existing store proposition. The new concept deconstructs the department store into smaller, targeted spaces. The first of these is Nordstrom Local, which is a clothing store that stocks no clothes. Instead the small space has a stylish suite and dressing room with personal stylists ordering in products for customers to try. If they want to buy anything it will be shipped to their home. The space also offers alterations and tailoring.
Orchard Mile’s personalised ‘shopping street’
It’s been a slow process but more and more luxury brands are online, whether via their own initiatives or platforms like Net-a-Porter and Farfetch. One company changing how customers shop for these brands is Orchard Mile which lets customers create their own ‘shopping street’. The customer pick their favourite brands to populate the street, They can then click on them and go to a customised website featuring the designer’s entire collection. The goal is to make the experience akin to walking into the brand’s shop.
Start Today’s ZOZOsuit
The US subsidiary of Japanese fashion brand Start Today is aiming to change the way we buy online with its new at-home measurement device. The ZOZOsuit is an enhanced suit that uses sensor technology to capture 15,000 measurements from all over the wearer’s body. The data is then sent by bluetooth to the accompanying ZOZO app. Customers can then shop Start Today’s products and get recommendations on what will fit based on their exact measurements.
Stitch Fix intelligent box
Stitch Fix is using artificial intelligence to take the effort out of finding new clothes. Rather than the customer going from store-to-store browsing, the company uses a mix of human personal styling and AI to find and send products directly to customers. It uses customer data to find the products it thinks the individual will like. The AI is constantly learning based on what the customer returns and keeps, which means its recommendation get better and more personalised over time.
Tie Bar’s data-gathering stores
Menswear brand The Tie Bar started as an online store, but has since moved into physical retail. Notably the company started with pop–up stores, but found they were turning a profit so converted them into permanent stores. However they don’t operate in isolation. The Tie Bar uses the stores to improve its online offering by testing out new products and uses learnings from customers’ in-store stylist sessions to improve its online equivalent. The Tie Bar also uses online data about where its customers live and what they buy to decide where to open new stores.
Untuckit’s RFID merchandise
Casual men’s apparel retailer Untuckit is piloting the use of RFID in its Fifth Avenue store. The company will use the tech to track inventory and see which items are selling best. They can then use this to optimise inventory in real-time. Just as importantly the RFID will show which sizes and styles have low demand enabling Untuckit to remove or improve them. The store can also track staff and shoppers around the store to better understand journeys.
Viktor & Rolf and Zalando’s recycled collection
Zalando has linked up with fashion designers Viktor & Rolf to create a collection focused around using recycled materials to make handcrafted garments. Called RE:CYCLE, the new collection consists of 17 pieces of womenswear. The materials come from Zalando’s overstock fabrics, while Viktor & Rolf manage the design. The collection is deliberately priced to be accessible with the idea being that it’s a viable alternative to a customer’s usual purchases.
Wardrobe’s direct-to-consumer luxury
Wardrobe.nyc is a luxury direct-to-consumer fashion label from designers Josh Goot and Christine Centenera. The brand sells clothes as ‘wardrobes’ with customers having the choice or four or eight seasonal essentials costing £1,104 and £2,208 respectively. Catering for both men and women it’s an interesting look at where luxury fashion could go in the future by offering high quality products, curated into capsule wardrobes at a lower price.
Zara self-service kiosks
With click-and-collect a well-established part of the retail mix some brands are looking at ways to improve the process. Zara is one of these. It’s testing self-service ‘pickup towers’ in-store which can hold up to 4,000 packages. Customers can use them to retrieve their online orders by scanning a barcode on their phone. The machine then locates and retrieves the package in just a few seconds. Given that most retailers’ click-and-collect services requires customers to queue up at a desk or till to get their items, this technology is a win-win. It makes the process faster for customers and frees up staff to do more important tasks.