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Book review: Transforming legacy organizations

August 19, 2019

When startups reach their unicorn status in a rapid pace and volume it puts incumbents in an uneasy position. The fastest startup to reach one billion dollar status might be Uptake who reached it in 236 days from its initial funding.

For established companies to survive in future they need to overcome innovation barriers. The easiest way to innovate is to optimise the existing, and therefore improve the past.

The second tier is to prepare for the future by augmenting innovation. Here the challenge is to mix the future to the existing structures and chores of the organisation.

The most radical and genuine form of transformation is inventing the future by mutating innovation. Amazon is good at this. They create and enter new markets amebae-like as they go along.

You have reached your end of the improvement line when marketing becomes the most significant thing about your product. Like Pine & Gilmore stated 20 years ago: “Marketing is the price you pay for being unremarkable.”

Roadblocks for innovation can be divided into three categories of immune systems: individual, organisation and society. The lack of general willingness to change is one aspect to consider but no individual is a match for a systemic resistance.

It is only a very few people who are actual innovators or first movers. This has been estimated to be around 2,5 % of people. The scope of the hill to overcome becomes evident also when considered that in most of the Western countries over 90% of companies are SMEs.

Their lack of resources, innovation power and awareness to change are among the biggest challenges for a long-term transformation. Just keeping up keeps their plates full. For majority the status quo and stability are more comfortable than the forthcoming changes and possibilities.

When considering what makes customers tick one way to look at the issue is dividing it into four parts where everyone wants to be better: Do, Look, Feel and Be. Some of these may be stronger for a particular product or service but for all it’s at least good not to be on the negative side of any of the four aspects.

Be and Feel are intrinsic but differ where Feel is reactive to the external stimuli and Be is proactive in nature focusing on values and morality. Similarly Do is proactive and extrinsic focusing on results, competences and skills where as Look is about social status, and as such reactive and extrinsic.

Millennials prefer to work for companies with a deeper meaning yet many organisations do not have distinctive transformational driver beyond being “industry leader” or within top x of a defined category.

How do you innovate outside of your category or industry if your company is defined to be the leader in the stated category?

Book review: Thank you for disrupting

August 15, 2019

Some individuals have a large impact on society and Thank you for disrupting is about their big ideas and underlying thinking.

Disruption is a well defined term now but many decades ago when it was introduced by Jean-Marie Dru that was not the case. The business culture was still wowed by continuous improvement methodology, and disruption had a negative connotation.

Lee Clow was Steve Job’s dedicated advertising partner and a friend from the very beginning of Apple. He was behind the famous 1984 “Think different” ad as well as the 66 “Mac versus PC” commercials.

According to Clow ideas accelerate change: they rule the world. He is not a believer of good ads but big ideas. Brands should associate themselves with powerful ideas that state what the brand stands for.  A big idea works as a source of inspiration but also as a filter. They focus and provide consistency to the digitally disperse and fragmented marketing space.

Previously advertising was about producing creative messages to the audience. Now it’s about strong stories that create audiences from scattered media: users want to share the message to each other. Only the strong ideas and stories survive.

And they also have the best results. According to McKinsey the more creative the campaign the higher the likelihood that the featured product will sell. Creatively awarded campaigns seem to ensure also better returns with a less risk.

One of the leading trails between different persons from Steve Jobs, Lee Clow and Bernard Arnault (of LVMH) to Oprah Winfrey is their dedication to pay careful attention to detail. They are very involved with every aspect of the brand experience and how it is presented in the everyday mundane business aspects. Everything represents the brand and therefore it’s important.

Herb Kelleher is a legend in the airline industry. His Southwest Airlines broke the assumption that low cost equals low quality. Southwest puts its employees first and hires on attitude vs. skills. With a right company culture it has achieved revenues of over 35 billion and it has never laid off a single employee since its foundation in 1971. The staff is also the best compensated in the industry. Kelleher has stated his vision and strategy simply as low cost, superior service and people first.

Leading entrepreneurs consider their organisation to be in a continuous state of flux. A decentralised decision-making combined with a strong vision can drive a large number of people in a coordinated but yet agile fashion towards ambitious business goals. Organisations become vulnerable to disruption the moment they start to protect their turf and focus on incremental improvements.

Great companies create markets instead of focus on gaining market share. They keep their attention on business models and not just on products.

Big ideas and strong values move people.

Book review: Total rethink

August 13, 2019

Entrepreneurs disrupt the status quo! David McCourt embraces entrepreneurial revolution that results beneficial change for the majority and disrupts the status quo for the incumbent players.

Technology allows for everyone to become new revolutionaries yet few realises and acts upon this realisation. As in history, it’s very likely that the biggest innovators come from the have-nots that have very little to lose and a higher tolerance for risk taking.

Historically this was the case with European immigrants coming to America and escaping dire conditions back at home. This time it’s the 5 billion people who are not as well off as the 2.5 billion enjoying the best lifestyle the planet has to offer.

McCourt describes his story coming from a large family and finding his way into entrepreneurial adventures from early age up to this day. During those years he have managed to be part of the cable television as well as fiber optics industry disruption and providing cheaper services for consumers at the expense of the oligopolistic competitors.

The book is full of colourful stories and mission impossibles where McCourt jumps to the water first and figures out later how to swim. This results him to learn quickly and unearth large opportunities that have enabled him to publicly list and sell many companies.

Berkshire Hathaway’s board member Walter Scott is McCourt’s mentor and he shares some of his wisdom and philosophies. For example, “never mistake a fad for a trend” and “take care of your people and your equipment”. The latter means that you can ruin your capex investment by not having the right people taking care of your equipment.

McCourt is a big believer in fair and honest relationships where business is made for the long term and this is reflected in the partnership deals as well.

As a curiosity McCourt mentions that he managed to raise $6.1 billion for his RCN Corp making that the world record for a start-up funding into any single project. He also managed to raise $1.65 billion from a single individual (i.e. Paul Allen).

Tellingly New York magazine ranked Allen’s investment the “best deal of the millennium” and the “worst deal of the millennium” in the same issue. The dot com bubble crashed capital markets and resulted Allen to take a deep hair cut in his investment.

One of the persisting messages of the book is how to provide solutions and value for the less connected and powerful (and quoted in the book):

”Those capable of channeling the power of the crowd must turn their energies to something more fundamental: redesigning society’s systems and structures to meaningfully include and empower more people. The greatest test for the conductors of new power will be their willingness to engage with the challenges of the least powerful”

The future is all about cooperation, win-win solutions, peer-to-peer and crowdsourcing. Corporations, nations and incumbent structures have too much to lose and therefore they are most of the time unable to renew adequately leading them to be disrupted and replaced. Entrepreneurs the world is yours!

Book reviews: Blockchain, Ethereum and Cryptocurrency Investing for dummies

August 9, 2019

Sometimes it’s good to go back to basics. Crypto field is getting too large to follow it all by any single person. In the early years it was easy to have an overview of the most significant ventures but those days are long gone. There’s simply too much happening.

Blockchain for dummies (2nd edition) is a good intro for the basics and general overview. It explains the essential structures and concepts in an easily digestible format. Bitcoin, Ethereum, Waves, Factom and EOS are used as special cases that each have their own chapter.

The book works as a hands-on guide that allows you to actually do things as well. Some of the examples are simple and easy for everyone to follow and others require a bit more prior IT knowledge.

Industry impacts section provides examples in various industries and recent developments that are emerging within private and public sector initiatives.

If your main concern is to understand the basics of Blockchain this is the book for you.

Ethereum for dummies focuses purely on the Ethereum and its ecosystem. You can even build your own simple smart contract following the step-by-step instructions and screen captures.

The detailed format of actually doing concrete exercises helps to keep the narrative in enough detailed level to provide useful information. Sometimes the devil is in the details and this may be missed in more theoretical treatments.

Cryptocurrency Investing for dummies dedicates almost half of the book to explaining the Blockchain concepts and how to acquire some tokens in your wallet. The other half is divided between regular trading and hedging strategies and giving some considerations for acting in a volatile new environment. If you expect to find some good analysis and evaluation of different cryptocurrencies or practical insights how to find the ones to trade out of thousands of cryptos this book may not be for you. Maybe that’s why the title says investing and not trading.

Overall I liked the Blockchain for dummies the most but each book has their own audience and niche. I’m too biased to give them a fair treatment since my days of discovering the wonders of Blockchain and cryptos for the first time are way behind me. The last time I had some more profound excitement of the field may have been when helping Tim Swanson to write his book in 2013-2014.