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What Is Happening with the World?
The world is constantly changing; we live in a disrupted society and industry. During the past few years we have seen more changes than any generation before – changes in the very nature and fabric of our home environment; in the way we work and play; the way we communicate with our families, our children, our employees, our colleagues and friends. Changes in the way we converse as citizens with our governments and the way we evaluate and share our views on the products and services of our preferred brands. The pace of change is faster than ever and not showing any signs of slowing down.
The mass adoption of digital innovations like artificial intelligence, robotics, and wearables, along with the democratisation of technology with accessible, affordable and adaptable products, and the evolutions in biological and energy spheres with genetically editable organisms, neuro-technical enhancement and electric cars, fosters a society and industry geared towards the fast and the furious – a world where your mobile has morphed into the remote control of your digital life.
These converging trends are dominating the discussions, their combined effect is greater than their individual impact, and we need to think deeply about the future to remain successful, happy and productive as individuals and as organisations.
Ninety per cent of start-ups launch and are gone before they can scale to the $ 1billion ‘unicorn’ status. Large companies disappear, being acquired, merged or dissolved. Half a century ago, the life expectancy of Fortune 500 companies was around seventy-five years; now it’s less than fifteen years and declining even further.
So, how do you transform your organisation from an enterprise that engages in digital to a future-proof enterprise?
This is no small challenge for companies with a long history, shareholders around the globe, thousands of employees and customers, assets worth millions, sometimes billions, and established business models. These incumbent companies often lack the agility, speed, creativity, naivety, and flexibility of the start-ups and find it difficult to reimagine parts of or their whole business. Our future holds great opportunity, but new risks at the same time.
Performing While Transforming is a balancing act
Most incumbents, established companies and individuals, struggle when challenged to respond to new entrants in their existing markets. They frequently fail to respond or respond late to new market opportunities and disruptive market creators. Their existing performing businesses are mostly profitable; they are doing well and chasing new entrants and markets can often be less profitable with higher risks.
Less profitable or unprofitable companies are also being disrupted, and it’s not being profitable that keeps companies from innovating.
Change goes against the natural impulse of a business, which is to carry on doing what works, what delivers results, keeping busy with the short-term performance. Many businesses have neither the time nor the strategic desire to transform at the same time. Some fail to recognise that what’s happening outside may affect them. Most people don’t like change and will resist.
The most disrupted industries suffer from low barriers to entry leading to more agile competition. They are populated with large, historical businesses that generate the vast majority of revenue and often profit, and these businesses are not fluid or agile enough to meet with the changing pace of technology. The size of a business was once a competitive advantage, allowing companies to compete globally and work with other large companies. Now, size is becoming a liability as businesses that once dominated the market are struggling to keep up with young, nimble and flexible start-ups, who are using digital to unlock opportunity and as their platform to grow. On the other hand, many of the start-ups are still in a pre-start-up phase: they don’t have an extensive network, lack business experience and will fail to reach profitability and scale. They are disrupting while not making money but bringing new value that customers demand. So, incumbents and start-ups alike need to find the balance between meeting increasing customer demand and long-term profitability. A perfect marriage.
“Many leaders of big organizations, I think, don’t believe that change is possible. But if you look at history, things do change, and if your business is static, you’re likely to have issues.
Larry Page, co-founder of Google
Now is the moment for organisations to re-assess their customer relationships, their talent assets, their resource allocation, their business models, their market offerings and the competitive landscape they are playing in. It is a moment where the global economic world is rebooting, powered by a new, open operating system – a new reality where incumbents need to understand the long-term implications for their business and start-ups need to create a plan for profitability and scale.
Most executives are probably aware of the bigger trends; they’re reading articles from the experts or futurologists, following the change makers, but the main challenge is how they can move their established organisation from seeing to acting while judging how radical the shift will be. Over the years they’ve probably overestimated the speed of change and underestimated the impact.
Companies are making transformational changes in how they innovate their business, how their employees work, and how they engage with customers. They need to, or are, changing from an enterprise using digital to a digital enterprise, with a digital-first open mindset. As many parts of an industry or business mature, the original value evaporates as it becomes more commoditised, and it needs to find new sources of value. This is where digital can act as the oxygen for a business; this is where digital comes into play.
Against the backdrop of these innovations and disruptions, the human element is often overlooked. We’re even shifting our understanding of what it means to be human with the rise of robots, the humanoids. It has led to disruptions in our personal and professional lives – if we want to lead others, we need to start by leading ourselves. If we want to transform our businesses, we start by transforming ourselves.
The transformation needs to happen at the personal level before it can transform business. Many of the things we do, at work or at home, are about making our lives easier. Save me time! Save me money! Make everything easier! Creating beautiful things and producing art are ways to express ourselves, enhancing a personal balance, improving business and personal health. Everybody seeks to have this ease, balance beyond their primary needs as a human being.
The impact on society of the changes we are seeing now will be much bigger than the impact on industry. We tend to underestimate the impact digital will have on the way we live, where we live and with whom we live.
When one changes, others are destined to change as a consequence. If you change as an individual, your business will also change, and hopefully for the better.
Racing out as an individual or business and investing in technology is not the answer. The change must come from within; the leadership, culture, mindset, behaviours are the drivers of balance. From these you will perform and transform. Technology alone will not set you apart in the future. You might need to become a software company, where software and technology will be in everything you do: your devices, your services, running your metrics, measuring your life. This is a Dualarity of technology and human change. We cannot have one without the other.
Leaving the problem to the next generation, waiting for the millennials to come along to fix your imbalance (assuming that by 2025 50% of the working population will be millennials) will not be a good solution.
Gareth Ellis-Williams, Head of digital at Prostate Cancer UK, says,
“Just relying on a generational shift will take a long time. We can’t wait that long.
It’s not about which generational group, X, Y or Z, that you belong to determining your mindset; it’s about infusing the right mindset and not waiting for it to appear. We need to act now. We owe it to our kids, ourselves, our society and our businesses.
How Do You Develop a Business Strategy and Culture that Makes Your Company Future-Proof and Agile for the Digital Age?
Because of my international functions at Microsoft, global and local reorganisations, intensive travel around the world, meeting so many people, I noticed 3 recurring patterns of why certain people, groups or companies sparkle, attract success and keep reinventing themselves successfully.
Note: Figure Recorded By www.jixso.com
See and Sense
Anticipation starts with knowing what is happening around you. Therefore, look at the larger picture with an open mind. Which global macro trends and forces do you spot on social, technological, economic, political, environmental, customer and other levels? What do you see happening within your company, your own and related industries? What does that mean for you, your team, your company and your industry? Start by putting together a trend advisory board with a good mix of internal and external people.
Energize and Respond
What good is it to be in the know if you do nothing with it? Get started with the trends you notice. Formulate future-oriented scenarios based on what you see and respond by adjusting your strategy in the short and long term. Also don’t forget to explain to your team why you choose a certain approach. By informing your employees transparently about why you get their trust and they are more likely to follow your plans.
Avoid the following pitfalls in your personal transformation
- Do not allow any Organizational, Technology, Product, Service, or Business model Religion in your company. You must be able to let go of your history and question everything.
- Make sure your ego is not bigger than your talent, because otherwise you will look at the world with a fixed mindset instead of an open mindset. You can only learn from each other if you put aside the egos and ask for everyone’s cooperation.
- Learn to fail successfully WITH competence. Either through a lot of experimentation you achieve a few successes, or you learn valuable lessons from your mistakes. Learning from failure is part of success.
- Go from “Yes, yes no, yes,” to “yes, we can” (Yes, we can).
- Transform yourself before you ask others to transform.
Perform and Transform (Perform while Transforming)
Many people and companies are good at transforming and / or performing. The art is to unite both skills and create a balance. Performance is more important at certain moments, and transforming at other times.
The balance between transforming and performing is a difficult one.
Think of companies such as Lego, IKEA, Amazon, Nespresso, Apple, Microsoft or Tomorrowland. They focus on (1) Performing or operational excellence in the short term and (2) Transforming or innovation excellence in the long term.
(1) Performing mainly revolves around the short term
turning more turnover, making more profit, excelling on score cards, keeping shareholders and customers satisfied, improving margins and acquiring a larger market share. Your focus is on employees, customers, profitability and society today. Everything here revolves around effectiveness, efficiency and productivity. In doing so, you mainly strive for “operational excellence”.
(2) Transforming is on the other side of the spectrum
Analysts, shareholders, customers, employees want to see your power and ability to transform. People want to believe in your future. Employees stay with a company they believe in. Shareholders evaluate the future potential when investing. As a company, do you focus on the future: what does the customer, your employee, and tomorrow’s society want? How does your company continue to make a profit in the future? Innovation in the broadest sense of the word is the key word here: innovation in your culture, organization, technology, customer relationships, business models, etc. You look at what is happening around you and deal with it creatively. No matter how strongly everything evolves, creativity distinguishes us from robots. That is why it is so important to give it enough breathing space. You do this by creating an environment that stimulates ideas and passion, entrepreneurship and creativity. Your insight helps you to respond to those things that will also benefit your services, company and customer experience in the future. In this way you strive for “innovation excellence”.
My definition of (digital) transformation: Ability to stay young, to hit refresh, to future proof and to re-imagine (iterate, innovate, disrupt) your business strategy and culture, ready for the exponential digital age, by re-balancing existing or adding new investments in products, platforms, services, processes, and business models to create sustainable value in the customer, employee and ecosystem experience, while taking care of the planet.
The trap? Making operational excellence so important that it kills all innovation and creativity in your organization, and that is just essential for transformation. It is not for nothing that creativity is the success ingredient for a clear view of the future.
I experienced this at Microsoft in 2014 when Microsoft was no longer as “cool” as the other technology giants Apple, Amazon, Facebook or Google due to an exaggerated focus on operational excellence. This changed quickly when Satya Nadella was appointed as the new CEO. He restored the balance between transformation and performance.
What are the 4 Ingredients to Make Your Company Future-Proof?
Put The Customer as the Heart of Your Company
Do not think about your customers but think like your customers. What problems do they have and what other services and products do they purchase? Observe, listen and do not be blind to the signals. How can I do co-creation with all my stakeholders such as customers, partners, suppliers? How can I innovate in my existing, adjacent and new markets?
You strive for customer satisfaction every day, but that is not enough. A satisfied customer is simply someone who is not dissatisfied. Therefore make fans of your customers earlier by betting on a flawless customer experience and “co-creation”. Because customers who are fans are also loyal.
Apple is probably the best example: due to their focus on the complete “customer journey” and product experience, they have an army of loyal fans. Steve Jobs once said “Start with the experience and then work backwards.”
Value People as The Soul of Your Company
Use an open and transforming mindset in your company. Get the best out of your people by creating a risk-friendly environment with room for innovation, dynamics and creativity. Focus on agility and speed: omit hierarchy and procedures, give confidence and work in smaller agile teams. Make your people future-oriented by constantly learning and give them confidence and autonomy. Find the entrepreneurs in your company and build “the coalition of the willing”. Ask yourself if you have a forward-looking and exponentially thinking leadership. “Don’t be a know-it-all, be a learn-it-all,” says Satya Nadella.
See the Digital as Oxygen for Your Company
Ask yourself how you deal with exponentially technological acceleration, and how you will use the developments for your own optimization, innovation and / or disruption. Data is the new gold, artificial intelligence the new electricity alongside innovations such as IoT, 3D printing, robotics and biotech.
In addition to internally driven innovation, with the external world ‘Corporate Venturing’ is a must. Your creativity is no longer limited by internal talent. Put together your own innovation or disruption team, join forces with other companies (Joint Ventures), collaborate with universities, plan innovation challenges, or launch and invest in startups.
Experiment and determine what value you can create for your customers. Bring ideas to life. Never stop looking for the next big thing. Astro Teller, Google’s “Captain of Moonshot thinking”, multiplies all thinking X10. Instead of focusing on 10% improvements, you push the boundaries and develop strategies to be 10X larger, 10X cheaper, 10X faster, …
Learn from the best and see how they have changed part of the world: Facebook and the SMS world, Netflix and the streaming and production of content, Tesla and the energy storage for electric cars, Linkedin and recruitment.
Look for what Singualirity University calls ‘Un-holy alliances’ – alliances with partners or areas that are not immediately in your playing field: Nasa and Lego looking at how to use Lego as a STEM platform, Microsoft first steps in Gaming with the Xbox, Apple and are music, Facebook and VR Oculus or 3D systems and Hershey’s to 3D printing of chocolate. Of course, learn from the failed examples such as Kodak and Theranos.
The operating principles of Jef Bezos, CEO at Amazon, as one of the most innovative world leaders are based on what he calls ‘day 1’. Day 1 is a customer-focused company with a focus on experimentation and processing external trends, which is critical of information and takes quick decisions. Day 2 is a state of inactivity. Followed by irrelevance. Followed by an unbearable, painful decline. Followed by death. And that is why, according to Bezos, it is always day 1. His obsession is to create an innovative company and culture.
However, before you use these three ingredients, you must also meet the essential starting conditions for success, namely determining your “North Star”.
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Inspire with a Clear “North Star”
Why does your company exist? What are your ambitions and in which world context do they fit? What value do you want to create for whom (your internal and external stakeholders)? What corporate culture is needed to realize it? What circumstances are needed to achieve your goals? Does the leadership that exists now help to achieve it? And what is the impact of your plans on your customers and your employees?
Note: Figure Recorded By www.jixso.com
A Business Case: Let Us Take a Look at Nespresso, the Apple of the Coffee
Setting the scene. Nespresso, part of the Nestlé Global Group based in Switzerland, is by far my favourite coffee brand. I enjoy four of them every day.
Like many industries, the coffee industry has changed over the last years. Single-cup coffee brewing is on the rise, and Nestlé holds almost 30% of the global brewing market systems. Nespresso was founded in 1987, is present in more than seventy-one countries, has annual revenue of four billion dollars, five million Facebook fans, and 3,400,000 unique online customers. Since 2012, 28 billion aluminium capsules have been sold.
What happened? Nespresso transformed coffee from a simple product to a sophisticated coffee drinking experience by enabling personalised and engaging connections, blending the physical with the digital to act as one. The company wants to deliver the perfect coffee experience, while you take your time to enjoy the moment. It has a very clear why: ‘Coffee is at the heart of all we do. Yet consumer pleasure is why we do it.’
Nespresso surrounded the coffee brand with machines, capsules, accessories and online/ offline shops. When you order capsules, they are delivered within two days to your front door. The company leverages all its digital channels to release specific content, reinforcing its brand perfectly. Hiring George Clooney for its commercial, ‘Nespresso, what else?’, filled with subtle humour was a master move.
Nespresso has created a single efficient view of its customers across all channels and systems, leveraging the power of the Cloud with its modern customer engagement platform. It handles the complete customer journey, connecting all its internal data with all its external data across every touch. According to the Digitalist Magazine, ‘It encompasses customers who engage via the website, via mobile, at an airport vending machine, or those who plan to meet George Clooney in a flagship store’. And it is into big data, personalising and enabling real insights about its customer behaviour and intentions. The coffee giant manages to create an emotional bond with its customers and nowadays everyone can serve the exclusive coffee – be it at home or at the office. Nespresso is the Apple of coffee.
As part of their sustainable efforts, they are working hard to reduce the carbon footprint of their aluminium capsules. They recycle and produce aluminium in a more responsible manner and strive for fair trade.
Outcomes. Nespresso was able to win new customers, increase sales, understand its customers in-depth, deliver a personalised customer journey and shorten innovation cycles to less than four weeks. And while the competition is not standing still, Nespresso continues to grow and break new frontiers on what an end-to-end coffee experience means.
The future. Since 2000, Nespresso has experienced an average growth of 30%, but several recent estimates show that it could slow down. The competition in coffee pads including Starbucks, Senseo or Nestlé’s cheaper internal brand Dolce Gusto, has grown since Nespresso appeared on the market in 1987. They will constantly have to reinvent themselves and continue to innovate to stay ahead and should not be blinded by any form of complacency.
Give time and space to creativity and entrepreneurship. Build innovation-friendly cultures where constant learning is highly valued.
After all, it is crucial to be ready for the world of today and tomorrow.
It is a skilful balancing act between transforming in the long term and performing in the short term.