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Book review: Range

September 26, 2019

Our world is not very kind and predictable. It is full of wicked problems and outcomes where causation may not be observable for us. This makes learning from our actions difficult. There are simply too many variables and time delays may be too long.

Yet, one of our greatest gifts is our ability to adapt to new circumstances and situations. We do not need predetermined models and patterns to interact with our surroundings.

On the other hand our tech is leapfrogging in the field of pattern recognition. Machine learning with proper data can already outperform humans in narrow specialised fields. Some sports and games are examples of kind domains where the rules are clear and the surroundings are predictable.

We are using pattern recognition in our learning. Chunking data together makes our actions faster and easier no matter whether we play golf, study languages or drive a car. An amateur can be distinguished from a master by the amount of practice. The sample size is larger, or different.

Hyper-specialisation has its dangers. When reaching into depths the field of view often narrows. It’s getting harder to see the inter-linkages and solve wicked problems that require different approaches. That’s why we see outsiders solving challenges that industry insiders consider insurmountable. 

There is a tendency to prefer quick specialisation and stick to ones trade. In a way one is required to reduce uncertainty and have the answers before actually diving in. This is prevalent in science as well as other domains like business and education.

Data points are easy to understand and measure. Quantifiability gives a sense of control and security. Common sense and reasoning are fuzzier and have less contrast. They require value judgement and range of experience to be appreciated.

Range refers to wide and broad reach. Seeing connections and similar patterns in different fields help to solve problems and excel in new areas or even in one’s own field of expertise.

Very successful individuals tend to have multiple interests and activities outside of their main focus. Darwin and Einstein are good examples but you don’t need to be a genius or polymath to reap the benefits. A curious mind finds always unsolved puzzles and areas to master.

The path to great discoveries and success is not always paved with grit and specialisation. Generalist may be slower in life to bloom but more weird and wicked their world become the better they tend to perform compared to specialist. They simply have more varied repertoire of experience and data points to match for the new circumstances.

Everybody’s path is different and specialisation is just one way to reach to your destination.

Book review: Startup Scaleup Screwup

September 1, 2019

Startups are fast learning laboratories where too many variables are at work in any given moment. The failure rate is high but success will be more favourable for those that use some systematic methods and processes along the way.

Serial entrepreneur Jurgen Appelo has put together a practical guide that gives you the latest tools and practical knowledge for a high growth venture. The book is packed with agile and lean community techniques and best practices.

You can build your business from an idea onwards by following the ten stages of growth. These stages are independent for each business model so in a larger company there can be more than just one business lifecycle simultaneously in different stages of maturity.

Initiation stage is the stating point where you have an idea that you develop further.

In Expedition stage you start to validate the hypothesis and formulate the business into an entity with bootstrap funding. Customer discovery and minimum viable product methods become relevant here in order to confirm a possible problem/solution fit.

Formation stage makes things official and it’s the time for a full time commitment for founders and initial team. Shareholder agreements, compensations and other growth structures become apparent. Vision/founder fit has been found and your team is ready to commit for the long journey.

Validation stage is the beginning for the product/market fit validation that usually takes minimum of three years. It’s the make it or break it for the next stages. Business model assumptions need to be validated and everything is geared towards proper traction.

Stabilation stage comes after the product/market fit issue has been somewhat solved. Scale too early and you may fail due to lack of traction. Scale too late and you may miss the market. Business/market fit becomes the focus and it’s more about the various business relationships around the product itself. Here the idea is fix things that did not scale before.

Acceleration stage defines your venture as a scaleup after the startup phase. Customer creation becomes the theme and it’s time to execute since things are working now after experimentation. Focus is on revenue and market share growth and trying to outsmart copycats and other competitors. As the organisation increases its size the complexity require more attention and different methods of management.

Crystallisation stage makes running the business more a “biz as usual” routine and it’s a sign of lifecycle maturity. This can take the form of an IPO or M&A trade sale for the founders.

Expansion stage is about trying to make most of the opportunity left and keeping the business model fresh with new initiatives and renewals.

Conservation stage is the cash cow moment where the end of the line is at sight.

Finish stage ends the business model and decisions need to be made about its existence.

The book is beefed up with interviews from various startup ecosystem players around the Northern Europe. These insights give a fresh and authentic touch for the multitude of ways to build and experience the startup growth.

Startup, Scaleup, Screwup is the best startup handbook I have seen for a long time.

Book review: Kellogg on Branding in a Hyper-connected World

August 25, 2019

Not all the names are the same. Some of them are brands. The difference is that only the latter have associations related to it. They can be positive, negative or mixed and they are the sum of all the things we think when hearing or seeing a brand.

Brands shape perceptions. They set expectations and give different meanings to their targets. A good quality brand sets the bar higher and may also yield more good will than a low-cost brand.

Marketing is full of lists and branding is no exception. Three challenges of branding are cash, consistency and clutter.

Cash is king in the short-term but the brand is a long-term asset. These two objectives are not always aligned and often the short-term results win at the cost of the overall brand image.

Branding down loop is an example of this where short-term financial objectives have negative consequences either by competitor actions or shifted consumer price expectations.

Consistency is a similar pitfall if the organisation does not believe in, own or understand the brand. How to ensure that every encounter with the brand is in sync through out the organisation in real-time?

Creativity and tactical excellence are ways to cut through the clutter and make the brand stand out among thousands of messages we receive every day.

Brand positioning strategy consists of four different components: a target, a frame of reference, a point of difference and a reason to believe. A brand positioning sets the brand in respect to other brands in the market. A brand purpose gives the reason why the brand exists. A brand positioning is the foundation for all brand-building activities.

Revenue growth seems to go hand-in-hand with brands that link all their activities to purpose. Strong purpose helps also in recruitment and employee engagement. It might not be a far-fetched idea to start to consider standards and reporting for a purpose audit in addition to the financial one in the future.

Pioneering has a high mortality rate. But the last 30 years of research shows that successful pioneers outsell later entrants across industries: the second entrant has in average 71 per cent and the third 58 per cent of the pioneer’s market share.

Market research shows that consumers systematically prefer pioneers, and this forces later entrants to spend more on differentiation or charge less in order to counter-balance the pioneer’s edge.

The first comer has the advantage of defining the category and benefits for the consumer. These stay over time and the positive attributes are associated with the brand the consumer learned about them first. A deeper learning curve and novelty drive concrete benefits for the pioneer. Later entrants need to adjust and respond to the pioneer’s definitions and expectations.

Fast copycatting can prevent the pioneer become an established and dominant player in the market. They also grow the fastest in the market compared to other players either earlier or later entering the market.

Brilliant strategies often stumble on implementation. Execution is a team effort across the organisation and involves many people. It’s less glamorous and therefore less credited as well as researched than strategy formulation.

The book consists of independent articles organised under different themes. The structure gives an updated overview to the topic.

The variety and quality of the content varies by the author but overall it’s a topical tome that can benefit both startup and established brand builders and managers alike as the above examples demonstrate.

Book review: The RegTech Book

August 22, 2019

FinTech has been around for ages and it is starting to shift its focus from digitalisation of money to monetisation of data in the financial sector.

After 2008, compliance has been a major issue for financial companies. Massive increase in regulation and reporting requirements have resulted in governance, risk and compliance (GRC) related costs racking up to 20-30 % of total costs in banks.

Nobody loves compliance. It’s horrible for customers and tedious for the financial institutions. If done in a wrong way it scares away existing and new customers.

Old legacy banking systems and isolated vertical data structures translate into manual labour intensive tasks and parsing of reporting data from multiple sources. This is the opportunity RegTech startups are starting to realise and materialise.

The old ways of doing things do not work anymore. Costs need to come down and productivity gains are expected. Yet, it is still early days and relatively little VC capital has been poured into the sector.

RegTech is a relatively new term that potentially can be used in respect to regulative processes in any sector, not just in the FinTech arena. Its earlier forms have been focused on streamlining compliance and reporting processes, often by means of digitalisation.

The latest trend is to start to see RegTech not just as a cost-centre but also as a means to provide business benefits and gains for the customer and revenue side of the business. Automation can provide valuable business data and improve customer experience if properly realised and understood.

Bank bashing is an easy target for politicians and public authorities since like compliance banks do not have many friends. Yet, even regulators have started to realise in some countries that they cannot just kill the financial companies with GRC without consequences to the overall economic activity and GDP growth.

Innovative companies have choices and they can move to more friendly business environments. For this reason some countries have started to introduce financial sandboxes where the full weight of regulations and compliance do not hit new ventures immediately.

UK, Singapore and Switzerland are examples of FinTech and RegTech sandboxing nations. The current $100 billion market of compliance spending is a good incentive for entrepreneurs to consider whether it’s worthwhile to enter the market despite its less than favourable appeal.