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See the Important Shifts Happening
Traditional business education was formed in the Industrial Age. The Industrial Age was an era of stability and narrow problems. Historic numbers would indicate the future, and organisations were packed in neatly separated functions that worked next to each other. Like a predictable set of Lego blocks. Back then, the key challenge was to find reliable processes to scale these stable businesses, that were protected by economic moats.
Accordingly, traditional business education treats business like a step-by-step enterprise, focused more on replicable tools and formulas to build those scalable businesses.
Since the Industrial Age business reality has changed.
Today, we operate in an era of rapid change and wicked problems. The emergence of new technologies, the shift of consumer habits, the shake up of the basis of competition, transforming business models and declining boundaries between business functions require decision makers to constantly review, re-launch or reposition their products and businesses.
This means that the future performance of any business is influenced by a variety of drivers. As a result, business decisions do not come in nice packages anymore and the Lego blocks are not visible at first sight.
Putting this puzzle together has moved business thinking from being a science to being an art.
“A leader must see the external opportunities and the internal capabilities and culture – all of the connections among them – and respond to them before they become obvious parts of the conventional wisdom. It’s an art form, not a science.” Satya Nadella
The development of businesses cannot be routinised through tools and checklists anymore. Instead, understanding & perspective has become crucial.
“Anxiety is the result of trying to do today’s job with yesterday’s tools” Marshal McLuhan
Throughout history, conformists rarely have create unique products and businesses. Yet in this new environment, more than ever before, repeatable recipes don’t provide a formula to stand out.
This is why we cater to those who want to go beyond a formulaic, static approach and who are aware that there are no silver bullets. We cater to those who instead venture into the unknown where the next step is not pre-defined and where they cannot get away with checklists. They enter an area where they need a deep understanding and original thinking, with the ability to weave together different strands of a business.
After all, this is where success lies in today’s world.
In today’s interconnected environment, a real edge emerges from a wider perspective and from a deeper understanding of the various connections within a business. Or, in other words, from being able to connect the right dots.
“Creativity is just connecting things. … they were able to connect experiences they’ve had and synthesize new things. And the reason they were able to do that was that they’ve had more experiences or they have thought more about their experiences than other people. Unfortunately, that’s too rare a commodity. A lot of people in our industry haven’t had very diverse experiences. So they don’t have enough dots to connect, and they end up with very linear solutions without a broad perspective on the problem. The broader one’s understanding of the human experience, the better design we will have. ” Steve Jobs
Our aim is to provide business leaders with the right dots to connect, helping them get to the real problems, ask the right questions and tackle the right opportunities.
We do this by educating about the full architecture of the business and its market environment. We help readers weave together different strand and see the connections between various parts of the business.
One of our focus areas is to help leaders bridge the fundamental gap between the product and the business. For founders and growth companies that means properly aligning the product with business requirements and market reality. For larger companies, strategists and investors that means understanding how the different silos of the business lead to an integrated whole, understanding what drives success, what insights and activities to focus on and what metrics to track.
Our core aim is to provide them a deep understanding of the logic of the business, helping our readers quickly see how the pieces fit together, helping them ask the right questions, know what to focus on and deal with situations that don’t fit the classic recipe book.
This is the deep understanding and wide perspective that helps them see the whole situation, evoking fresh insights that enabling them to rise to the front of the pack.
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The Website of The Friend is not really important.
He communicates with you mostly through Facebook, through his email newsletter, through YouTube and more.
The friend has gone through the same that you have been through. May you haven’t been through it yet, but he will point out your problems to which he has a simple non-fail solution.
If you listen carefully, you will come to see that the friend never sells anything to you. What he does is, he “shares” with you. Fine, you have to pay for it, but it’s more about the sharing of his experiences than about the transaction.
The friend is an expert. Whereas the Facilitator gets his social proof through the brand names of his blue chip clients, the friend’s social proof is built on his social media following and his media appearances. Mostly he is also an expert because he will show you exactly the things that he did to achieve his success.
I never got to understand why the friend, if he is as successful as he is still needs to work and sell you things. But may be he enjoys it, because he is a friend.
The advice is always done in a way that you basically can’t fail. It could be like this.
That’s it! You are one step closer to achieving your goals. Instead of a pen you could also use a pencil, but through long testing, the friend has found out that the pen creates more accountability and is easier to read.
Next, we are offered a free webinar.
This webinar will take an hour of our time, of which the first 15 minutes are spent listing the names of people who joined the webinar, even though the webinar is recorded.
Then the Facilitator tells us why he came to be so successful, and he let’s us in on the secret that for the the content, which we are receiving right now, customers usually have to pay $ 5.000. Then, in the last fifteen minutes, he finally provides us with that content, which consists of a slide with four magic bullet points.
We are done and can move on with our life.
The Facilitator is all about social proof. You will see his homepage decorated like a homecoming queen with the logos of blue chip companies that he has helped.
The Facilitator usually has pictures with happy people. This illustrates that they are fun to work with, and who wouldn’t want this.
The exception are strategy and digitalitsation consultants, because they sell to the CEO, and if the CEO wants to have fun he watches Stephen Colbert.
The Blog will show you all the trending topics and methodologies of the time. Whenever a new trend emerges, the facilitator will be on it. His clients demand cutting edge thinking. Whether it it has any meaningful impact or not, at least they can say they use the latest methodology, which in turn helps them keep their jobs.
With the facilitator, it can be hard to tell the good ones, the value creators, from the attention creators. One hint can be found in the references though. The value creators not only list the names of their big customers, but they will be able to showcase products they have actually built. In addition, Glassdoor can provide highly interesting insights as to whether they are able practice what they preach within their own organisation.
Since there are little objective standards to measure the quality of the Facilitator/Consultant – except from # of successful product launches, which we rarely see – Customer Testimonials are critical to building further trust.
What got us really excited is that they taught us that we need to put people at the centre of what we do. It really helped us see the world through new eyes.
The whole process was a surprisingly expressive experience that formed a sustainable basis for our identity. The novelty really came from what was inside of us, helping us become better version of ourselves.
Change can come from you. To design the conditions to thrive and collaborate they forced us to communicate quickly with one another and project the meaning of something.
Meaningful change always starts small and with a shared purpose. Once you identify your superpowers, this can help push your ideas forward. They helped us understand that the world needs our greatness,
The background image has nothing to do at all with the product, but the marketing agency thought its a safe thing to do and won’t get them fired.
The pilot text here is all about them and little about the actual customer.
But this is really not bad intention. They mean well. It’s just that they are so occupied reporting to all their stakeholders, and explaining the internet to some 75 year old board member, that nobody literally has the time to figure out what the customer actually needs.
This could be for example about community. You can’t go wrong with that. Basically everything that builds social proof comes here.
Now it’s time to show that they are entrepreneurial. It could be a tagline, such as “Be Bold”, or just the statement that they are entrepreneurs. After all they don’t wear suits and have bean bags in the office, so they come pretty close to that.
This should be about “Experience”. Experience is good because it doesn’t require that anything has been achieved, yet it sounds very positive.
Here is the place to mention security or safety, to take away any doubts of customers, but also ensure that the 75 year old board member sees it.
in the 1960’s
This era was about Manufacturing and owning factories. Capital, hard assets, and processes for manufacturing were key. Small players didn’t stand a chance against the powerful incumbents
Asian suppliers enabled cheap mass production and the economic upswing enabled mass consumption. As a result, mass marketing and mass distribution became critical for business success. Success was driven by access to capital, distribution channels, brand power, efficiencies in production and cost benefits through larger scale. All of this creates strong barriers to entry.
in the 2010’s
Now technology and information start to enter the stage. New productivity tools enable companies to operate more efficiently, reducing the impact of scale. Product Development is gaining in importance as the speed of product lifecycles increases.
The Davids have taken over from the Goliaths
It has been caused by a plentitude of trends across Business, Innovation and Culture.
We as consumers not only went from shopping in a retail store to ordering online and mobile. We also shifted from buying products to obtaining the same offering as services. We started to communicate not only with websites, but also with apps and increasingly with bots. Along the way we also have switched sides, having become hotel operators, full-time content producers, curators as we host AirBnB guests, and as we record, like, share and comment on social media platforms.
As a result of technology developments and outsourcing opportunities, the physical quality of most products is at an equal level. Most hardware components have been commoditised.
Building cars has become a software task. The biggest marketing agency of today started out as a social network. It’s key asset is the data that it collects about our behaviour. We are talking about Facebook of course. Similarly, the success of our movie and music stores is now driven by their data science capabilities. If in doubt, then have look at Netflix’s recruiting site. And of course, the ‘hotel’ business AirBnB, does not operate hotels.
“Our Age of Anxiety is, in great part, the result of trying to do today’s job with yesterday’s tools and yesterday’s concepts.”
Let’s envision the Rules of Business as an Operating System which Companies need to operate.
This Operating System has been updated as we have moved from the Industrial Age into the Digital Age.
The big shifts across the Business Innovation and Culture
force us to reconsider how the Success Factors of businesses have changed
and how companies need to operate today.
What happens once an Operating System is updated on our computer? To enable the smooth operation and compatibility we also need to update the Application Software. In Business, this Application Software is our understanding of new value propositions, business models and and business structure
Yet, while most companies are aware of the overhaul of the Operating System – the transformation of the business environment – they have failed to update their Business Thinking – their Application Software – accordingly.
We have been taught that the ability to deliver quality products can form a strong economic moat for businesses. This has been the hallmark of the Industrial Age.
Today, quality has been commoditized. It has become an enabler, but not a differentiator.
Learn what The New Differentiators are and what Skill Sets companies need to deliver them.
The traditional curriculum has taught us that a company should have a sustainable competitive advantage, or as it is also called, an economic moat. There were various sources of competitive advantage. The most important one was a company’s ability to produce the highest quality products. This idea is pretty basic. A company that for some reason is able produce a better product can differentiate in the marketplace and convince customers to buy their product.
This is quite obvious for safety critical B2B products, such as automotive parts. But it similarly goes for everyday consumer products, such as a deodorant, which, in a way, can be safety critical as well.
This ability to produce highest quality products can be based on a number of skills and resources. The company may operate a well organised production facility, or high precision manufacturing plants with skilled workers and outstanding quality controls. Their production technology or their product technology may be superior. They may be able to better manage the supply chain, or they may have access to some special resources. As varied as these skills and resources are, there is a common pattern. These companies manage certain processes better than their competitors. The Industrial Age was the Golden Age for Masters of Processes.
image credits: PhotoDune, jorgosphotos
Now this was the traditional situation, as we know it since Warren Buffet coined the term economic moat. Yet, something has been happening in the recent past. Something that profoundly affects the sustainability of such competitive advantages.
To better understand what’s going on, let’s take a step back. A competitive advantage is only sustainable as long as it’s hard to replicate. In other words, it is not about being able to manufacture better products today; it’s about keeping that advantage tomorrow. It’s about having a sustainable edge.
Let’s switch perspectives to get a clearer view of whether and how quality is still a sustainable competitive advantage these days. Assumed we buy a product as consumers. How hard is it to find a quality product that fulfils our quality requirements? Tell me about a product category, where you don’t have the option of a variety of choices that perform along these requirements.
And then, how big are the differences of quality between products within a certain category? What is the difference between a BMW and a Mercedes in terms of performance and functionality? Which new TV set is the best one to buy? It’s not without a reason that the market for product reviews and comparisons is booming. Differences in quality are not easy to spot.
Just recently I was in a rush to find a new trolley. I checked out a few stores that offered the usual suspects of Samsonite, Delsey, and the likes. The more I looked the harder the choice became. How should I decide? Should I take the Samsonite just to be safe that it will last? But then, my old Delsey had lasted for years. Finally, I found one on discount. It looked nice and solid, offering at least Delsey-like quality, so I thought. It did not show the original price for some reason. But the discounted price seemed more than fair. So I thought. Probably a discount of 20-30%. Not a bad deal. Only after the purchase did I learn about the price tag. It turned out the discount had been 70%. The manufacturer was actually a sub-brand of Tumi and a Formula 1 sponsor. Of course, knowing this I am starting to like the trolley even more. But I bought it without without realising that I bought the spirit of the Formula 1. It doesn’t make me travel faster, but the functionality is not all that the price tag reflects. Oh, and yes, the handle broke after only a year.
Let’s assume for a second that we take away all brand labels. Can we still tell the quality differences between offerings? We will be able to spot the difference between a Ferrari and a Vauxhall, but can we tell the difference between a Volkswagen and an Audi? Between a Samsonite and a Delsey? Between GAP and Banana Republic? The race is getting tight.
And even if we can tell the quality difference, do we need this extra premium quality? Or does the Samsonite, Delsey or Wenger type quality fulfill our needs? How does the handmade clockwork mechanism of a Rolex improve our ability to tell the time? Would folks still buy it if it was packed inside the case of a much cheaper Swatch?
But then what are our criteria for making purchase decisions? In how many situations is it still quality? Or is it the brand or something else? Let’s face it, if we are looking to purchase a trolley, a car or a tv, then we take quality for granted.
If we look at 80’s and 90’s car commercials, we see advanced performance and technology features taking center stage.
Audi’s “Vorsprung durch Technik” possibly is one of the more prominent examples.
Just now I am looking at the US Audi website. What catches my eye are special edition cars in “eye-catching exterior colors”, and a cooperation with sustainable shoemaker TOMS, offering specially designed Audi shoes to customers. On the German website I see that is “Sportiness is calling” for the new SQ5. While all are interesting campaigns, they also indicate that “Vorsprung durch Technik” has been enhanced through “Vorsprung durch Design”.
Similarly, BMW’s video ads delight me mostly with beautiful images of the landscape that the car is driving in. Being fully absorbed by the beautiful landscape, my immediate instinct is to redirect my browser to a travel website. But then the logo and slogan at the end of the commercial bring me back to reality, reminding me that the featured car was indeed a BMW, and not an Audi or Mercedes.
If we look for the true innovations we see that they have moved from the core product to auxiliary services, such as the connected car and autonomous driving. But we will get to those services in a few minutes.
Without doubt those companies make excellent cars, which offer a superior driving experience and they keep innovating. But quality, interpreted as functioning of a product or as a product’s performance, has become an enabler, but not a differentiator for most companies today. As we will see, this means that the core skill set of the business has shifted accordingly.