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Business Pundits Love to Say These 4 Untrue Things

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Business Pundits Love to Say These 4 Untrue Things

GUEST POST from Greg Satell

Go to just about any business conference and you will see a pundit on stage. He or she will show some company that failed and explain the silly mistakes that they made, then follow-up with a few basic rules to help you avoid those pitfalls and become super successful. You leave feeling confident, because it all seems so simple and easy.

Yet look a little closer and the illusion falls away. Very few of these pundits have ever run a successful business. At the same time, many of the executives that are shown to be so silly today, were hailed as visionaries of their time, often by the same pundits that ridicule them now. Some went on to great success later on.

The truth is that managing a successful enterprise is a very hard and complex thing to do well. It can’t be boiled down to a few simple rules. For every great enterprise that does things one way, you will find one that’s equally successful that goes about things very differently. So to succeed in the long term, we often need to ignore the myths pundits love to repeat.

1. You Need To Move Fast And Break Things

When the iPhone came out in 2007, Microsoft CEO Steve Ballmer dismissed it, saying, “There’s no chance that the iPhone is going to get any significant market share. No chance.” The tech giant recognized the switch too slowly and largely missed out on the mobile market. Microsoft, it seemed, was a dinosaur, soon to become extinct.

Yet actually the opposite happened. Over the next 10 years, the company grew revenues at the impressive annual rate of better than 10% and maintained margins of nearly 30%. Those are very strong numbers. How can a company miss such an enormous opportunity and still survive, much less thrive?

They key to understanding Microsoft’s business isn’t what it missed, but what it was patiently building. While the world was obsessed with mobile, it was developing its servers and tools division, which eventually became the core of its cloud business that is now growing at stellar rates. That’s why Microsoft is once again vying to be the world’s most valuable company.

While agility can be an important asset for developing applications based on technology that is well understood, it is not a great strategy for developing technology that is truly new and different. To do that, you need to explore, discover and invent from scratch. That takes time and patience.

2. Innovation Is About Ideas

There is nothing that pundits and self-styled gurus like to talk about more than the power of ideas. They put up a picture of someone famous, like Albert Einstein, Mahatma Gandhi, Martin Luther King Jr. or, most enthusiastically, Steve Jobs, and revel the audience with a fascinating story about how their ideas changed the world.

The implication is that you can change the world too if only you could find the right idea. So they suggest all manner of exercises, from brainstorming techniques to meditation and mindfulness, designed to get your creative energy flowing so that you can generate more ideas and rise to greatness, just like those fabulous and famous people.

Yet that’s not how innovation happens. Consider Einstein. He didn’t start with an idea, but with a problem. More specifically, he wanted to know what would happen if you shined a lantern while traveling at light speed. It took him ten years to solve that problem with his theory of special relativity. It took him another ten to solve his next problem and arrive at general relativity.

The truth is that if you want to make a real impact, you don’t start with an idea, but by identifying a meaningful problem to be solved. Revolutions don’t begin with a slogan, they begin with a cause.

3. Lowering Costs Will Make You More Competitive

Not all pundits are pie-in-the-sky dreamers. Some are hard-nosed realists and they will tell you that the key to success is focusing on the bottom line. That means a relentless drive toward efficiency and driving down costs so that you can increase margins and achieve a sustainable competitive advantage.

Yet as MIT Professor Zeynep Ton, explains in The Good Jobs Strategy, that’s often not the case, even in the notoriously stingy retail industry, she points to companies like Costco, Trader Joe’s and Spain’s Mercadona as examples of how you can get better results by investing in training and retaining employees to better serve your customers.

The problem with a relentless drive to cut costs and drive efficiency is you often end up impeding the interoperability and exploration it takes to create value. That’s the efficiency paradox. The more we try to optimize operations, the less we are able to identify improvements, react to changes and discover new possibilities.

This is becoming even more important in the age of automation, where it is all too easy to replace employees with robots and algorithms. The truth is that racing to the bottom of the cost curve will almost guarantee that you will become a commodity business. Value never disappears, it just moves to a new place. To compete for the long term, you need to identify value at a higher level, develop new business models and redesign work.

4. Companies That Fail Weren’t Paying Attention

The one thing that you can almost guarantee at any conference is that at least one of the fancy pants gurus will tell a story about a great big company, usually Blockbuster, Kodak or Xerox, that was run by eminently silly people. Because these dull executives were asleep at the wheel, they failed to notice the change swirling around them and drove their enterprises into the ground.

The problem is that these stories are almost never true. Make no mistake, it takes talent, intelligence and ambition to run a significant enterprise. So whenever anybody tells you that there was a simple fix to a complex problem, you should raise your B.S. antenna. You’re probably being sold a fairy tale.

Reality is never simple or clear cut. Executives need to make tough decisions with incomplete information, often in a complex time frame. So rather than looking for easy answers, you would do yourself a much greater service by trying to uncover why smart, diligent leaders with good intentions so often get it wrong and learning from them.

Most of all, you need to internalize the fact that success or failure never boil down to a single decision or event. Even the best of us have bad moments and sometimes the least deserving get lucky. The best you can do is to keep moving forward, continue to learn and, most of the time, ignoring the pundits.

— Article courtesy of the Digital Tonto blog and previously appeared on Inc.com
— Image credit: Dall-E on Bing

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Competing Successfully in an Ecosystem World

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Competing Successfully in an Ecosystem World

GUEST POST from Greg Satell

In 1980, a young Harvard Business School professor named Michael Porter published Competitive Strategy, which drove thinking on the subject for the next 30 years. In essence, he argued that you build sustainable competitive advantage by maximizing bargaining power throughout a value chain.

Yet more recently, that kind of single firm level analysis has been called into question and leaders have learned to look more broadly at ecosystems. In fact, a recent report by Accenture Strategy found that because business models are being constantly disrupted, ecosystems have become a “cornerstone” of future growth.”

While value chains are strictly defined by “primary activities” such as “inbound logistics” and “support activities” like technology, ecosystems have mostly been a nebulous term. Clearly that’s not good enough. If we are going to compete in an ecosystem-driven world, we need to understand how they function and how we can leverage them to drive a business forward.

What Is An Ecosystem?

Ecosystem is a term that gets thrown around quite a bit, but people never seem to define what one is. All too often, it alludes to some indescribable ether that surrounds an enterprise. When you can’t define how an action would impact a customer or partner, you simply invoke “the ecosystem” and that’s supposed to make it all make sense.

Yet it’s important that we define terms that have meaning, because if we don’t they just become a catchall for things that we can’t describe. That’s a problem. As Wittgenstein pointed out long ago, if we can’t define something we don’t really understand it and if we don’t understand something we can’t hope to manage it very well.

Ecosystems are best understood as networks of networks and that tells us a lot. In fact, there is a whole science of networks to guide us. What’s most important about networks is that they are driven by links not nodes, so the most important network activity is connection. Networks are dynamic, always evolving, not static.

That’s where focusing on value chains runs into problems. Maximizing bargaining power within a value chain almost compels us to see things as a static, “winner take all” type of challenge in which you play one partner off against another. When you see things as an ecosystem, however, there is clear value in investing in connections and building up the nodes around you to improve your position.

It Is Ecosystems, Not Inventions That Drive The Future

We tend to think of history as a series of “great men” driving events. So electricity conjures up visions of Edison and his light bulb and automobiles remind us of Henry Ford creating the Model T. Yet the truth is that the impact from those inventions didn’t come till decades after those men brought those inventions to life.

In both cases, it was secondary inventions that drove the impact. Electricity allowed businesses to redesign factories to optimize workflow and drive productivity. Home appliances replaced backbreaking work and freed up energy for other tasks. Roads and gas stations revolutionized product distribution and led to the modern retail industry.

Computers followed a similar path. Digital technology had been around for decades when IBM launched the PC in 1981, yet it wouldn’t be till the late 90s that we first started to see an impact on productivity. The truth is that computers don’t do much by themselves. Applications need to be designed and people need to figure out how to put them to good use.

Notice that it’s impossible to point to any one thing that tipped the scale, because what drove impact was an ecosystem of connections between partners, suppliers and customers who needed to learn how to collaborate effectively. That has far less to do with technology than it does with forging meaningful human relationships and it takes time.

Power Today Lies In The Center Of Ecosystems, Rather Than At The Top Of Hierarchies

Traditionally we’ve seen the world as driven by hierarchies. Kings and queens ruled the world through aristocracies that carried out their orders. Corporate CEO’s outlined strategies that underlings would have to execute. Discipline was enforced through a system of punishments and rewards.

In a hierarchy driven world, you progress by climbing your way to the top. So you do your best to drive the performance of those under you to impress those above you. Success is determined by how high you rise. You learn to put great emphasis on signals that you have made it, such as the title on your business card and the size and location of your office.

In an ecosystem driven world, however, power does not lie at the top of hierarchies, but emanates from the center of networks. So an office on the executive floor may, in fact, diminish your ability to shape events if it leads to disconnection. At the same time, being seen as approachable, rather than high status, may enhance your power.

Here’s where Porter’s ideas about value chains can get you into trouble. If you are constantly trying to maximize your bargaining power, you are likely to weaken connections and find yourself at the periphery, rather than at the center, of networks. In an ecosystem driven world, displaying your power can often serve to undermine it.

You Move To The Center By Connecting Out

As I explain in my book Cascades, the best way move to the center of networks is by connecting out. At first, that may seem counterintuitive because it seems simpler to identify a central hub and connect in. Yet those nodes, by definition, already have a lot of links and your connection is less likely to be meaningful.

Once you understand that networks are dynamic and evolving, it becomes clear that a better strategy is to identify emergent nodes and connect to them early on. As the network grows, the center shifts and you are more likely to improve your position. In an ecosystem world, the best strategy is to widen and deepen connections throughout the network.

AnnaLee Saxenian gives an apt description of how this works in Regional Advantage, where she tells the story of how Boston’s “Technology Highway” lost relevance and Silicon Valley moved to the center of the technology universe. The Boston-based companies saw things in terms of value chains and focused on vertical integration to maximize their bargaining power. The Silicon Valley upstarts, on the other hand, saw an ecosystem and thrived on connection.

Today, of course, technology has exponentially increased our ability to make connections. However, what is crucial to understand is that relationships are essentially a very human activity. You don’t build them through gadgets or algorithms, but my investing your most valuable resource — yourself.

— Article courtesy of the Digital Tonto blog and an earlier version appeared on Inc.com
— Image credit: Pixabay

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Sometimes You Should Collaborate Instead of Compete

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Sometimes You Should Collaborate Instead of Compete

GUEST POST from Greg Satell

Boeing and Airbus are arch-rivals, competing vigorously over decades for supremacy in the global aviation market, much like DowDupont and BASF do in chemicals. Yet all of these companies, along with many others, collaborate at places like the Composites Institute (IACMI). They do this not out of any altruism, of course, but self-interest.

It is at places like the Composites Institute that profit-driven companies can explore the future with top notch scientists from places like Oak Ridge National Laboratory, Michigan State University and Purdue as well as dozens of smaller companies active in the space. To not participate would be to risk being cut out of important developments.

This type of activity is not entirely new. In the 80s, semiconductor firms, along with the Department of Defense, created SEMATECH to regain competitiveness against foreign competition, while still fighting it out in the marketplace. The truth is that sometimes you need to collaborate and sometimes you have to compete. Here’s how to know the difference.

The Value Chain and Competitive Advantage

In Michael Porter’s landmark book, Competitive Advantage, the Harvard professor argued that the key to long-term success was to dominate the value chain by maximizing bargaining power among suppliers, customers, new market entrants and substitute goods. The goal was to create a sustainable competitive advantage your rivals couldn’t hope to match.

Porter’s ideas dominated thinking in corporate strategy for decades, yet they had a fatal flaw that wasn’t always obvious. Thinking in terms of value chains is viable when technology is relatively static, but when the marketplace is rapidly evolving it can get you locked out of important ecosystems and greatly diminish your ability to compete.

To understand why, consider open-source software. When Linux first rose to prominence, Microsoft CEO Steve Ballmer called it a cancer. Yet more recently, its current CEO announced that the company loves Linux. That didn’t happen out of any sort of newfound benevolence, but because it recognized that it couldn’t continue to shut itself out and compete.

To thrive in an ecosystem driven world, you must constantly widen and deepen connections. Instead of always looking to maximize bargaining power, you need to look for opportunities to co-create with customers and suppliers, to integrate your products and services with potential substitutes and to form partnerships with new market entrants.

A New Era Of Innovation

The philosopher Martin Heidegger argued that technological advancement is a process of revealing and building. Scientists reveal new phenomena through exploration and experiment and then later engineers figure out how to channel these phenomena to some specific use. For example, the advancements in theoretical physics revealed in the 1920s and 30s were channeled into transistors and microchips later on.

Eventually, the new technology and its implications are understood well enough to support broad adoption and a transformational period ensues. The need for revealing lessens greatly and value shifts towards building rapidly for use. We have seen much of this in the last 30 years as the digital revolution has shifted its emphasis toward skills like rapid prototyping and iteration.

Yet every technology eventually hits theoretical limits and that’s where we are now with respect to digital technology. The fact is that atoms are only so small and the speed of light is only so fast. So that limits how many transistors can fit on a silicon wafer and how fast we can compute by zipping electrons through them. Make no mistake, the future will not be digital.

So we need to embark on a new cycle of revealing and building in areas like quantum computing, synthetic biology and materials science. These things cannot be rapidly prototyped because we simply don’t understand them well enough yet. We need to explore them to reveal and, eventually, to begin building in earnest once again.

Emerging Platforms For Collaboration

Now we can understand why Boeing and Airbus are happy to join organizations like the Composite Institute. Both need to explore and neither can go it alone. They need partners, like research universities, government labs and other firms to help them uncover new things. As open source enthusiasts are fond of saying, “with enough eyeballs, all bugs are shallow.”

Yet the Composites Institute is just one node in the network of Manufacturing Institutes set up under the Obama Administration to support this type of collaboration. In areas ranging from advanced fabrics and biofabrication to additive manufacturing and wide-gap semiconductors, firms large and small are working with scientists to uncover new principles.

To understand how different this is from earlier eras, consider the case of IBM. When it developed the PC, it did so largely in secret with a skunk works the company set up in Florida. With quantum computing, however, it has built up an expansive network of collaborators, including labs, customers and startups.

They don’t do this out of any newfound altruism, but because it significantly speeds up the exploration process. As George Crabtree, Director of JCESR, a consortium of national labs, research universities and private firms developing advanced battery technology, put it to me. “Usually discovery propagates at the speed of publication, but here, we can operate within the time frame of the next coffee break.”

Innovation Is Never A Single Event

All too often, we view innovation as the work of a single genius who, in a moment of sudden epiphany, conjures up an idea that changes the world. In reality, things never work like that. Innovation is never a single event, but a process of discovery, engineering and transformation, which usually takes about 30 years to create a significant impact.

It’s important to note, however, that in no way means it takes 30 years to develop an innovative product. Far from it, in fact. What it means is that the next big thing is usually already about 29 years old! The truth is that the next big thing always starts out looking like nothing at all. That’s why it is crucial to invest in exploration to reveal it.

As we have seen, exploration is best done in numbers. Businesses today, such as in the semiconductor industry, that rely on the principles of quantum mechanics revealed in the 1920s and 30s were in no way harmed by the fact that those discoveries were published openly and taught in universities. In fact, they greatly benefitted from it.

Yet the products built on those principles are highly proprietary and the secrets behind the design of those products are closely guarded. That’s the key to navigating collaboration and competition. You collaborate to reveal, but compete to develop and build. To build a great enterprise, you need to learn to do both zealously.

— Article courtesy of the Digital Tonto blog and previously appeared on Inc.com
— Image credit: Unsplash

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Aligning Your Culture for Digital Transformation

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Aligning Your Culture for Digital Transformation

GUEST POST from Geoffrey A. Moore

A quote you often hear is, “Culture eats strategy for lunch,” typically attributed to Peter Drucker (whether correctly or not). Regardless, it puts a spotlight on the power of culture to resist even the most compelling strategic narratives. These days it’s hard to come up with a more compelling narrative than digital transformation. But it can definitely find itself at odds with culture, so what chance could it possibly have?

In my work with successful companies, two cultures show up over and over again. One is a competition culture, where teams get up every morning driven to be the best. The other is a collaboration culture, where teams strive to be the best for others. Both cultures can create great companies, and, if you play your cards right, each can be enlisted as an ally of change. You just have to get it aligned properly.

To do so, you need to use your culture to focus people on a driving force of change that is outside of your company:

  • In the case of a competition culture, this would be a competitor using disruptive technology to steal your market share. Think Google for Microsoft, Lyft for Uber, Nvidia for Intel, or Arista for Cisco. Transform or they win! That’s the sort of thing that galvanizes change in a competition culture.
  • In the case of a collaboration culture, the driving force is fear of letting your customer down as the world shifts to a new platform. Think of Salesforce championing machine learning, Docusign championing systems of agreement, or Proofpoint championing people-centric security. These are changes that could put your customers’ franchises at risk. No customer left behind! That’s the battle cry that brings a collaboration culture to attention.

The key point here is that, regardless of whether you have a competition or a collaboration culture, the force for change must be external, not internal. Either culture, internally focused, simply will not transform. Instead, everyone will spend all their time listening to radio station WIIFM—What’s in it for me? And what they will learn is that there are not a lot of good songs playing. Transformation requires sacrifice. We are going to have to step back before we step forward.

People are willing to sacrifice for the right cause outside the company, but not inside. So, when you are leading a transformation, be sure to keep people’s attention focused on a North Star that transcends their individual issues, not on the career compass they are holding in their hand.

That’s what I think. What do you think?

Image Credit: Pexels

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What is Killing Capitalism in America?

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What is Killing Capitalism in America?

GUEST POST from Greg Satell

There’s no doubt that capitalism in America is in bad shape. Higher market share concentration in industry is leading to higher profits for corporate giants, but also to higher prices and lower wages along with decreased innovation and productivity growth as well as a long-term decline in entrepreneurship.

You would think that the rise of progressive politicians like Bernie Sanders and Alexandria Ocasio-Cortez would be responsible for the decline in the power of capitalism and the demise of free markets. However, a new book by NYU finance professor Thomas Philippon, titled The Great Reversal, argues exactly the opposite.

In fact, he shows through meticulous research how capitalists themselves are killing capitalism. Through the charade of “pro-business” policies, industry leaders have been increasing regulation and limiting competition over the past 20 years. We need to right the ship and return to an embrace of free markets, entrepreneurship and innovation.

A Rise in Rent Seeking and Regulatory Capture

The goal of every business is to defy markets. Any firm at the mercy of supply and demand will find itself unable to make an economic profit—that is profit over and above its cost of capital. In other words, unless a firm can beat Adam’s Smith’s invisible hand, investors would essentially be better off putting their money in the bank.

That leaves entrepreneurs and managers with two viable strategies. The first is innovation. Firms can create new and better products that produce new value. The second, rent seeking, is associated with activities like lobbying and regulatory capture, which seeks to earn a profit without creating added value. In fact, rent seeking often makes industries less competitive.

There is abundant evidence that over the last 20 years, American firms have shifted from an innovation mindset to one that focuses more on rent seeking. First and foremost, has been the marked increase in lobbying expenditures, which since 1998 have more than doubled. Firms invest money for a reason, they expect a return.

It seems like they are getting their money’s worth. Corporate tax rates in the US have steadily decreased and are now among the lowest in the developed world. Occupational licensing, often the result of lobbying by trade associations, has increased fivefold since the 1950s. Innovative firms such as Tesla face legislation that seeks to protect incumbent businesses. These restrictions have coincided with a decrease in the establishment of new firms.

Perhaps most importantly, the increasingly lax regulatory environment has resulted in a boom in mergers and acquisitions, which led to increased market power among fewer firms and increased barriers to entry for new market entrants.

The Decline of Competitive Markets

To understand how markets have died in the US, you only have to look at the airline industry. After years of mergers just four airlines control roughly two thirds of the market. Yet even that understates the problem. On individual routes, there are often only one or two competitors. We’ve all experienced the results: increasingly higher prices and worse service.

Airlines are far from an isolated case. Consider the cable industry, where consolidation has resulted in broadband prices that are almost 50% higher than in Europe. For mobile phone service, Americans are being charged more than twice what our European friends are. Across a wide swath of industries, increasing concentration is leading to lower competition.

Yet the problem is more than just Americans getting ripped off by corporations who are able to charge us more and give us less. Fat and happy industries tend to underinvest and become less competitive over time, enjoying short-term profits but putting the economic well-being of the country in serious jeopardy.

Again, there is evidence that this is exactly what’s happening. There is abundant data showing that American corporations are underinvesting, even while they have been reporting strong profits to investors.

Entrepreneurial Headwinds

With protected markets and healthy profits, recent decades have been great for incumbent businesses, but not so great for those who want to start new ones. In fact, entrepreneurship in America recently hit a 40-year low and a recent report by the Brookings Institution found that business dynamism in general has been declining since the 80s.

It’s not hard to see why. A recent study found that about half of all college students struggle with food insecurity even as tuition has risen from an average of $15,160 in 1988 to $34,740 in 2018. Not surprisingly, student debt is exploding. It has nearly tripled in the last decade. In fact student debt has become so onerous that it now takes about 20 years to pay off four years for college and even more for those who pursue a graduate degree.

So even the bright young people who don’t starve are often condemned to decades of what is essentially indentured servitude. That’s no way to run an entrepreneurial economy. In fact, a study done by the Federal Reserve Bank of Philadelphia found that student debt has a measurable negative impact on new business creation.

Another obstacle for entrepreneurs is our healthcare system which represents a huge economic burden. Consider that in the US healthcare expenditures account for roughly 18% of GDP. Most OECD countries spend roughly half that. Anyone who wants to start a business first needs to figure out where their health insurance will come from. Is it any wonder that entrepreneurship is declining in America?

Pro-Business Policies Are Often Anti-Market

The truth is that no business leader wants a free market. In fact, most of our efforts go toward tipping the playing field in our favor. Often, we do that in positive ways, such as building a trusted brand or innovating new products. Yet the incentives, if not the motivations, for rent seeking behavior are exactly the same.

For far too long pro-business lobbies have run rampant over our democracy. The Supreme Court’s Citizens United decision, which led to essentially unrestricted political donations, has made a bad situation worse. Members of Congress now spend roughly 30 hours a week “dialing for dollars” rather than tending to the nation’s business.

And we pay the price in higher prices, stagnant wages and worse service. Where we should be investing in the future, creating better infrastructure, schools and a cleaner healthier environment, instead we are spending it on tax breaks for businesses, even though research has shown that these incentives don’t promote economic growth.

It’s time to claim capitalism back for ourselves and promote free markets, entrepreneurship, innovation and public well-being. That’s how you build competitive markets and a healthy society.

— Article courtesy of the Digital Tonto blog
— Image credit: Pexels

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Think Like a Tech Company or Go Out of Business

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Think Like a Tech Company or Go Out of Business

by Braden Kelley and Linda Bernardi

Even in 2014, there are business sectors who feel they are not ‘tech companies’. News flash: Whether you are a consumer products company, an insurance company, a hotel, or a pharmaceutical company, your business is a technology business. Why?

Technology is the link between any business and its customers. To say technology is not core to your business strategy, means you think customers are not the key to your business success. So, your business is a technology business whether you want it to be or not.

Today technology is how you market and sell your products, make your business more efficient, and most importantly, how you stay connected to your customers. Some companies mistake the importance of technology to mean that they need to open a twitter account and monitor social media, put in an ERP and CRM system, and revamp their web site. But the importance of technology in today’s business environment is more than that.

ERP and CRM are common tools, a requirement to remain competitive, and while social media and the internet are important to sales and marketing success, they are becoming yesterday’s news as customers develop deeper connections to their mobile devices. If you aren’t on their devices and interacting in a meaningful way with them there in real-time, you won’t stay connected to them in the long run.

Let’s look at the impact on a few different industries whose members tend not to see themselves as technology companies:

1. Fortune 100 consumer product goods (CPG) companies
2. Hotel Chains
3. Big Box Retailers

1. Fortune 100 CPG companies typically manufacture large quantities of consistent products and have visually pleasing (static) web pages for consumers. But they don’t use technology well enough to detect what the market wants before it knows it, often fail to personalize or customize products to customer needs, and usually lack the online networks that could help connect other customer product needs together into new potential product ideas that the company could co-create with their customers. Often connection means post mortem analytics on data collected in the past, or, analyzing previous customer interactions with static web pages. Creating authentic customer connections requires online and mobile technology these companies usually don’t possess. I don’t mean apps (which often are pretty much the same as a website), but new physical/online/mobile engagement models that inspire customers to stay connected to the company (and each other) in a dynamic, evolving community. Rethinking is needed here. The customer is not just a buyer but an influencer. If CPG companies want to sell that next bottle of $300 facial cream, they better consider delighting, and not just marketing to, their customer base.

2. AirBnB has proven to be a major disruptive force in the hotel and hospitality business, grabbing a massive foothold in a market that the Homeaway.com member companies created and should have dominated. Resistance to AirBnB is massive and lawsuits are abundant, but for a moment let’s go beyond the hype and explore the angst of traditional hotels. AirBnB created a highly connected, effective community of property owners and property renters. This bi-directional ecosystem can only thrive if they are both happy and satisfied. To experience what they’ve created, first go to a traditional hotel website (pictures of room, building, lobby) and then go to AirBnB and browse the hundreds of customer experiences their property owners offer. On the hotel site you’ll see they’ve created the mechanics of paying to rent a hotel room, while on AirBnB you’ll see that they’ve created both an ecosystem and an experience.

3. Big box retailers have done a poor job of seeing themselves as technology companies capable of fending off challenges from online-only retailers. Target made the mistake of seeing themselves as a retailer, not a technology business, and so they outsourced their ecommerce to Amazon in the beginning, only to regret doing so because Amazon was able to learn which 20% of their inventory drove 80% of their profits, and when.

Meanwhile, Costco and Walmart, despite being two of the most successful retailers in the world, have struggled to find success online because they can’t get beyond their brick and mortar heritage to see themselves as a technology business with an integrated online/offline ecosystem. Seriously, it is 2014, do we still need to get our Costco circulars in the mail? Nothing has changed about Costco’s interaction with its customers. Walmart exacerbated the disconnection between the two sides of their business by creating a separate online division and exiling it to Silicon Valley. Costco sells different products online than offline. The results of both of these approaches have been far from stellar.

Build a Common Language of Innovation on your team

Technology Lowers Barriers to Entry

In the history of the world, it has never been easier to start and scale a business to a global footprint, not in a matter of decades or years, but in months. And it is not just the other companies in your industry and technology-driven startups that you have to worry about if you choose not to view yourself as a technology company and move as fast as they do. You have to worry about competition from established technology players like Google and Amazon too, because one day they (or people that used to work for them) might decide that your market is attractive enough to enter and come disrupt your industry. For example, Amazon has become a book publisher and a financial services company.

Technology Enables Experiences

Technology enables the creation of customer experiences. I am going to choose my insurance company based on my experience. At the end of the day if all prices are comparable, then how the businesses you interact with make you feel, and the connections you’ve built with them will matter more. Without an emphasis on using technology to make your business a social business, you will find your company displaced by others that do. You must lead your industry in identifying opportunities to use technology to get closer to your customers. The future of business will be all about delighting customers and making their experience more personal.

Technology is not just a tool, but central to everything you do in today’s always on, always connected digital age.

Here are ten ways that technology can help you become a more social business:

  1. Building Connections
  2. Developing Networks
  3. Global Sensing and Prediction
  4. Sharing Recommendations
  5. Creating Experiences
  6. Personalization
  7. Customization
  8. Co-Creation
  9. Crowdsourcing
  10. Open Innovation

To give you an example of what things will look like in the future, the forward thinking health insurance company will leverage the mobile device for virtual ID cards, drug interaction warnings, personal triage, mobile care, wellness, cost sharing calculations, FSA/HSA administration, diagnostics, and more.

Conclusion

In conclusion, no matter what business you are in, it is very dangerous not to see technology as a competitive differentiator and a core driver of your business. Instead, you must constantly look at how you can become more of a technology company in order to enable deeper customer connections and more meaningful experiences. Today if you don’t connect with, understand, delight and start predicting your customer’s needs/wants, you may not thrive in your industry and your competition and new entrants who do embrace technology will replace you.

This article is brought to you by Linda Bernardi and Braden Kelley. Collectively, we have over 30 years of experience working with large, global multi-disciplinary enterprises. We write this with care and passion as we want your enterprises to succeed. We would love to hear your thoughts.

Guest Collaborator:

Linda BernardiLinda Bernardi is a Technology Strategist, Investor, and Founder & CEO at StraTerra Partners, The Bernardi Leadership Institute and a Strategic Advisor at Cloudant Inc. She is also the Author of Provoke, Why the Global Culture of Disruption is the Only Hope for Innovation. Learn more here about Linda’s work on disrupting large enterprise analytics.

Please note the following licensing terms for Stikkee Situations cartoons:

1. BLOGS – Link back to https://bradenkelley.com/category/stikkees/ and you can embed them for free
2. PRESENTATIONS, please send $25 to me on PayPal by clicking the button 3. NEWSLETTERS & WEB SITES, please send me $50 on PayPal by clicking the button
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Innovation Culture Battle Royale

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Innovation Culture Battle Royale

Earlier this month I wrote an innovation culture white paper for Planview titled “Five Ways to Make Your Innovation Culture Smell Better” that is getting a great response after my appearance as a keynote speaker at the Pipeline 2014 conference where I spoke on the same topic.

Then recently Jim Brown published a white paper with Planview titled “Creating the Environment to Innovate: How Industry Leaders Put People, Processes and Technology in Place to Drive Innovation” and now Planview wants to know which one people like better…

So I need your vote!

Click this link to go to a web page where you can not only download both white papers, but also cast your votes for mine! 🙂

You might even win a $100 gift card!

Please vote for Braden Kelley now!


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