I’d been thinking about this subject a lot again recently after reading that a couple more corporate innovation labs had been closed down (you can guess who set them up). These labs almost never work because they’re innovation theatre; a showy way for the organisation’s leadership to tell the world (read: shareholders and vocal investors) that they are committed to investing in new ideas.

Of course, they’re often doing nothing of the sort. They’re feathering their own nests.

Leaders fall into two camps: those primarily concerned with furthering their own interests via the success of their companies; and those with convictions born of a broader purpose for their organisation or the betterment of the lives of the people they represent, whether that’s a company full of people and its customers or an entire nation.

The good ones take intelligent risks. They trust their instincts and those of smart people around them. They back those people. They push hard to do hard things. They back big ideas and take bold decisions. They realise that it’s their job to provide air cover for the people taking those big ideas forward.

The weak ones bring in a ‘big name’ to provide documented air-cover for their own arses if it all goes wrong. They’re the same people who spin up a lab, with no real commitment to taking any risks to support the efforts of the people working in it.

If you’re a leader and you need to protect yourself with endless external validation before you act, you are not a leader. You’re a manager, most likely the caretaker of something that someone else built.

Let’s be clear. You cannot prove a big idea in advance. And it’s not a bold decision if it can all be pre-rationalised by a team of ex-accountants and MBAs. If there’s enough hard data available to build a water-tight business case, your ‘innovation’ will be built on – at best – extrapolations of historic data, i.e. the past. Our lives are, instead, full of products and services where there was no identifiable need before they arrived, and often counter-indicating data.

There’s an expression I’ve used and loved for many years: ‘You can’t find the future in a spreadsheet, but it does need to look really good in one when you get there.’ It says it all I think.

Visionary leaders understand this intuitively. The bigger the idea, the harder it is to pre-rationalise. So, instead of spending millions to protect your own behind, save them and invest in creating a better future for everyone else.

For years, most of the 'big four' (although there are probably about ten now) have anchored their entire business plan on 'land and expand' strategies. Basically, get in the door, flood the place with consultants and build a drug-like dependency on them by limiting the client organisation's ability to develop its own capabilities, often by using bafflingly-complicated and pointless 'models' that do nothing except drive that dependency even higher.

Now, I run a consultancy, and, like all consultancies, we want more work from our clients. Duh. The difference is that we want more work from them to help with new things, not to become a dependency. As Mariana says of her own academic unit's work: “the main difference is that our goal is to make that government entity independent . . . We don’t want that second contract.”

Consultancies and consultants get a bad name because of the practices of those that don't think like this. We've long designed 'offboarding' into our engagements for this reason: our role, and that of any external expert, is to bring 'unusual' skills to the mix – i.e. expertise to help with something that is beyond the organisation's normal activities, from a new perspective on future strategy to new ideas or experiences that can be leveraged from other sectors.

The big 'four' aren't consultancies any more, they're outsourcing factories whose business model is built on scale and volume not incisive interventions. It's the equivalent of a knee surgeon who only wants to sell you walking assistance for the rest of your life. Or who recommends operating on all of your joints while they're there.

It's so frustrating to read pieces like this because external experts are vital contributors to business success, health, wellbeing... you name it. We need to recognise that real expert consultancies won't take on work they don't have expertise in. And we do the minimum necessary to achieve the client's end goals, not the maximum possible to achieve our own, at the ultimate expense of the client – in every sense.

Oh come on, we’re not an energy company. We’re still free as a bird, we can now do this with less aggro, and all of our stuff is now in one place. Whoop.

This month, we give you our take on why the demise of unicorns is a really good thing, how to think differently about market indicators and what you offer, and why you can’t wish your way to success.

Let’s crack on then.

Dragons are eating Unicorns

What’s going on? 

In 2021, 537 unicorns emerged. This year unicorns will be in much shorter supply, but dragons are now all the rage, so they won’t be missed. Having a company valued at $1 billion or more was the dreamy-eyed goal of many VCs and the stimulant-fuelled, bleary-eyed power play for tech startup founders. Now, not so much. It turns out that sometimes, only sometimes mind, some of those people would cut corners and do irresponsible things to get to that unicorn status. We’re shocked.

In this Fast Company piece, Maëlle Gavet sets out why investors are now looking for businesses that are, well, proper businesses. Explaining how the pursuit of unicorn valuations in the tech world has led companies to de-prioritise business fundamentals, shovelling mountains of investors’ cash into buying ‘customers’ at the expense of creating a sustainable business.

Why is this important? 

Finally. Finally, finally, finally. The nonsense that was scale-at-all-costs, figure-it-out-later thinking is dying, in favour of a focus on creating real businesses. Don’t ask us why calling a real business a ‘dragon’ was a good idea but hey. FWIW, we’d have gone with stallions.

The ‘out’ for many investors until now was a public IPO, but with markets in a mess, the chances of getting that big payday is next to nil. So, it’s back to business 101: create something that can make money and can build a growing, sustainable market position. Maybe even a somewhat defensible one (good luck with that).

Getting out of the “it’ll be worth MILLIONS! BILLIONS!” mindset that even corporate innovators got into is a very important phase in the innovation economy. It’s reckoned that one in four startups return the capital invested in them. Most of those are sold to another company. Only a very small % become viable long-term businesses. Perhaps, now that we’re in the age of the dragons (perhaps not this one), everyone will focus on building businesses, not myths.

Follow our simple golden rule. Users just use you. Customers pay you what you’re worth.

Read Maëlle Gavet’s article here

The economic forecast: Lipstick up; pants down

What’s going on? 

Consumer behaviour during an economic downturn can be somewhat – unpredictable. This glorious piece from The Department (extracted from their podcast) walks us through a history of some of the most reliable indicators for economic health and stability. And they might surprise you.

Some of you may have heard of the Lipstick Index: basically a predictor of economic health based on lipstick sales. In the 2001 and 2008 recessions, lipstick flew off the shelves – the theory being that (mainly) women purchased more of something relatively inexpensive that could make them feel good about themselves. Conversely, a downturn in men’s pants (we know how many types of wrong that sounds) is rooted in the fact that men think of them as ‘invisible’ – so in tough times, men will replace them last, by which point they resemble fishing nets. You get the idea. 

So, given that most trends are not worth the electricity it costs to display them, might there be other, more lateral indicators like these that can be used to provide insight into the state of things, and how people feel about it?

Why is this important?

Well, lipstick sales are up 48% YoY apparently – so there’s definitely a crunch. And we can’t walk down the road now without thinking about the whole ‘not replacing the pants’ thing. So that’s ruined the daily dog walks.

But more seriously, it’s worth thinking hard about both what indicators can give your business clues about market conditions, and what you might do with your product or proposition to align with how buying customers feel about life. Look in unexpected places, and be prepared to think laterally about what each might mean. And don’t assume that what many might consider an unnecessary ‘nice to have’ like lipstick will sell less well when things get tough. It’s actually the ‘nice to have’ that makes it attractive.

Here’s one that you can all pay attention to:

One of the first observations on the Necktie Index is that (in general) - the more senior officers of the company wear neckties, and the more meetings they attend, the more trouble the company is in.

Beware the tie. You’re welcome.

Listen to the The Department podcast here

The Meta Kool-Aid is tasting a bit off

What's going on?

Big tech is in meltdown. Ok, it’s not, but it makes for better headlines. The layoffs across the sector have been widely publicised, with many tens of thousands of employees of Amazon, Google, Meta et al being ‘let go’ (don’t you love that expression?).

In this NYT piece, journalist Mike Isaac lays out some of the pressures facing Meta, who are absorbing a $4.2Bn restructuring charge as a result of their 11,000 layoff restructure (the share price soared on this announcement: what a world we live in).

The Zuck has been investing gazzilions in the metaverse but the core advertising business has struggled, not least because Apple disabled one of the key ways that Meta tracked you across the internet so that it could exploit that data without you knowing to promote terrible things to you. And breathe.

Along with many of those lofty peers, the cuts reflect two things: hiring too many people based on assumptions about the market, and a business model that is fragile, despite its scale. With the inspiring management theme for 2023 – the ‘Year of Efficiency’ – tattooed on his exec team, the article cites: “Mr. Zuckerberg and others admitted they had been too quick to estimate that a largely digital life was the new reality for many”. ‘Too deluded to estimate’ would have been more accurate, surely?

Why is this important?

Ok, ok, Meta-hating aside, there’s a ton to unpack here that should matter to everyone else. Let’s focus on two.

First, the business model. Meta’s vast investments in the metaverse (can we call it the metafarce yet? Too soon?) have been funded by its advertising business, which is in turn built on its ability to stalk you across the internet and show you ads and content that make Meta money. In one simple privacy-focused move, Apple cost that model $Billions. The economic downturn has cost it even more $Billions. And based on lipstick sales, that’s only going in one direction.

Two billion users use Meta’s services but only a tiny % of those are paying customers (generally businesses). It’s basically a one-trick pony. So when the fan gets hit there are few levers you can pull to do anything about it – except cut costs and hope you can keep investing in virtual sofas at the same rate. Interestingly, the only major tech company that hasn’t announced swingeing cuts (to date) is, yes, Apple, who only have a very, very tiny % of users: almost 100% of their customer base paid and/or pays them directly, in real money, and they’re super-loyal – so that position is very defensible. Hmmm, maybe there’s something in those dragons after all, eh?

The second is even more critical for everyone else. In a joyous ironic twist, they believed their own hype at the expense of reality. Of course we’re not all ready to live ‘largely digital lives’. And of course there will eventually be a virtual world of some kind. But between now and a large enough ‘many’ of us inhabiting it regularly to make it pay, there’s a yawning canyon.

Everyone should think about how to create new customer behaviours, but we’d caution against centring the ambition in changing the entirety of human existence. Maybe Meta have enough money to make it a reality, and maybe not, but we’re betting that no-one reading this is willing to burn cash for fun. Please, keep your futurestate within reach.

Read The New York Times article here

Thanks for joining us this month. We’re off to create the Futureverse. Anyone want to buy an ad in next month’s edition? Only $4Bn. Anyone?

Let’s start with the root causes

As the business world, and most tech companies in particular, aggressively adopted both Lean and Agile methodologies, design was tied into processes that emerged from manufacturing and software development respectively. Processes developed from, and optimised for, laudable goals like production efficiency, predictability and fault eradication.

Both made important contributions to the development of modern digital product disciplines and are, in their own right, key to how many modern businesses operate. Above all, in the context of digital products, they solved ‘the waterfall problem’ where nothing ever got delivered until it was past its sell-by date. Their impact, on many levels, has been extremely positive.

They’re also turning design into an increasingly systematised and standardised process. And that is sucking much of the real potential out of what design should contribute. Note that I’m not talking about ‘design thinking’ here – which is for non-designers – I’m talking about the role of the designer and professional design disciplines.

This has been rumbling for a while…

Back in 2001, Jesse James Garrett co-founded Adaptive Path, perhaps the first ‘proper’ UX agency. Twenty years later, he penned an article for Fast Company (’UX design is more successful than ever, but its leaders are losing hope. Here’s why’) that addressed the growing concern among UX leaders that everything had ‘gone wrong’.

He said: “What got lost along the way was a view of UX as something deeper and more significant than a step in the software delivery pipeline” and then goes on to “The same things that make agile a great fit for scaling engineering work—regular sprint tempos; clearly articulated outcomes to be produced; breaking down the complex, unfolding experience of users into concrete elements that can be tied to code—are the very things that make it a terrible fit for foundational UX work. The holism necessary to do foundational UX is antithetical to the assembly-line chunks of user behavior agile requires.”

While design is clearly a much broader family of disciplines than UX, I agree with the principle completely: you can’t break design into little snippets of thinking time and expect anything other than patterned, predictable results to emerge.

Last year I read a brilliant, passionate essay from a UX designer at Microsoft lamenting the demise of the ‘real’ designer (The Vanishing Designer). My favourite quote: “Visionary designers have lost their conceptual integrity to an industrial complex optimized for consensus, predictability, and short-term business gain.”

He argues, completely inarguably I believe, that design has become systematised and standardised, at the expense of what design can really accomplish.

“…efficiency is realized by a chain of standardization. The design output has been standardized to interface with engineering. The design process has been standardized to supply design output. The designer’s skillset has been standardized to follow the design process.”

I could feel my stomach tightening when I read that. Design, a discipline that has enriched our existence from the earliest days, is being neutered for the illusion of progress and the reality of predictability.

“The Silicon Valley giants, testifying with their runaway success, claimed to have “solved” design as an engineering problem. The solution substituted the human essence of design — intuition, ingenuity— with the tangibles, measurable, and deliverables.

Companies say they are “design-driven”, but designers are actually driven by dashboards filled with metrics like CSAT, NPS, CES, DAU, MAU.”

This is painfully recognisable to any designers today who were either around before the dominance of these production-oriented processes or are waking up frustrated with their ability to do anything that isn’t already on the roadmap and isn’t found in one of the frameworks their company has adopted.

We’re increasingly sacrificing the potential of something brilliant for the predictability of something systematic

It’s not an either-or. Companies who want to be more than ‘another one’ must do both.

I trained as an architect originally, so I spent my formative years reading books about architects and designers who were prepared to shape a bold vision and fight to realise it. As a result, the world is full of incredible landmarks born of a designer’s vision. These, of course, sit alongside swathes of mediocre, cookie-cutter buildings and mundane monstrosities.

Those landmark pieces of architecture did not come from a few days thinking then some ‘build fast, fail fast’ construction.

Many years ago, I had a studio next door to the late Zaha Hadid for a year or two. She was a designer with a vision and she and her team members fought tooth-and-nail to bring that vision to life. None of them were the product of a quick bit of thinking.

Can you imagine something as beautiful this emerging from a five-day design sprint?

This is as the Heydar Aliyev Centre. One of a portfolio of incredible architectural masterpieces that have emerged from just this one practice – and there are many practices who many would argue have produced even greater impacts on the world. Do you think they wrote a high-level spec on the whiteboard, ran a quick design sprint, then started building – figuring it out as they went, deciding what to design every few days based on what the client decided was the optimal balance of functional ambition and achievability?

No, they explored the problem, shaped a vision for how this beautiful building would sit in the world around it, and developed a version of that vision into the final building. And they didn’t do it using a standardised architecture framework that an architectural Google or Facebook had published.

You don’t get a Guggenheim Museum, or a Sydney Opera House, or a Pompidou Centre, or even a house like Falling Water like this. They, and thousands more incredible landmarks are the product of a design process that strives for individuality and distinctiveness: a specific response to a specific location to achieve a specific purpose in as unique a way as possible.

In the digital domain, we’re increasingly forcing designers to design like this:

It’s frustrating because, unlike more mature design disciplines, digital design has progressively slipped into a single, small-steps-forward mode – which would be fine if it were paired with a second ‘big-leaps-ahead’ mode. But it very rarely is.

Progress is eating potential

Obviously, I picked on architecture, but I could as easily point at the best physical product designers, from piece of Eames furniture to a candy-coloured iMac, a Ford Fiesta or a Ferrari, or iconic graphic design from designers like Peter Saville or Saul Bass.

The argument goes that because software development is complex, the best way to achieve a great result is to break everything down into smaller and smaller problems to solve, making progress against each in small, contained increments with a tangible success mapped against each.

That may be true for software (not a subject for today) but it is not the case for design, at least at formative stages.

Great design emerges from messy, lateral, creative thinking; from taking risks, exploring improbable directions. But most importantly, the greatest impact a real designer can have is a holistic vision of the end result, turning functional objectives into something greater; into something new and original.

We need to factor this in to digital product design to a far greater degree than many companies do today. Endless design compromises are made to make engineering easier or to support a more predictable process, breeding out so much of the originality and brilliance that might otherwise have emerged.

Following the path of least resistance

You can’t always start small and test and learn your way to the end result. I call that ‘following the path of least resistance’. Think of it like walking through a forest with a group of people: you adjust your course as you go, following the easiest route ahead – probably a path that others have been down already. Some of your group give you suggestions as you go: “that field of wild flowers was amazing – let’s find more of those”. So you go that way to keep the group happy.

Bit by bit you make great progress, enjoy the walk and everyone’s happy.

Meanwhile, another group sent up a drone to explore what might lay ahead and, after a tricky trek through some dense forest, they’re now sitting looking at the most remarkable waterfall; hidden away in an unexpected location, it’s something they’ll never forget. They followed the path of maximum potential; a path they would never have found unless they proactively looked for what might be out there before setting off.

Designers have increasingly been required to be part of the first group, doing the best work they can in small increments to support a team who set out early and are intent on making progress based on how hard the terrain is, what they see and hear nearby, or from the feedback of the people walking with them.

Somehow, some of those designers (by fighting hard) get decent products out, and all credit to them for achieving what is an incredibly tough job at times. But imagine what those same designers could do with more freedom and license; if they didn’t have to design to a dashboard or a backlog, and didn’t have to design for short-term buildability or a 2% increase in the customer satisfaction score.

We don’t need to kill Agile or rip up the engineering rule book. We simply need to restore some balance to give designers the ability to create the digital version of those incredible landmarks.

There’s a huge amount of untapped potential out there; bigger ideas that might be harder to get to but which can steer products in a bolder direction.

Car companies know all this already

Perhaps the easiest parallel to end this with is back where this all started: in the automotive industry.

Car companies have done exactly this near/far thinking for decades – with concept cars. I used to get frustrated when we designed a high-concept new service and it never got fully implemented. Then we learned a lot about how concept cars are used: they’re never built in full but they have a profound impact on everything the company does. They’re a test-bed for new concepts and, crucially, they ensure the production-line vehicle ranges evolve coherently into something that will excite tomorrow’s customer, rather than just fixing faults and refining a few features based on current customer feedback.

Remember, Lean’s origins are in car manufacturing (it was born of the Toyota Production System and became known as ‘lean manufacturing’). The same company creates bold future concept cars, as do all of its peers.

We need more digital concept car equivalents; give more license to designers to create bigger, bolder, holistic concepts that can really change the game. They’ll pull you proactively towards a bigger future, and will counter the reactive pressures you get from all the nearby ‘urgent’ influences.

You don’t need to realise them exactly in their conceived form to achieve something remarkable. If you’ve never seen them, take a look at Jørn Utzon’s original designs for the Sydney Opera House and compare that with what is now considered a wonder of the modern world. I’d say his vision did its job – although Jørn may have disagreed.

It’s time to re-ignite the big thinking that designers do so well and release them from the shackles of solving tickets on a backlog. The outcome will be unpredictable, and that’s exactly the point.

Me, I’m always looking for that waterfall. I’d love to see you all there. Bring wine.

There are lots of conversations starting up again here about helping people to ‘monetise’ their service. And when I hear what some have been advised to do, and how, unsurprisingly, it didn’t work, it makes me want to rant, at least a little.

This is, without doubt, a year where business models are ripe for rethinking – as they always are when leaner times hit the world. But finding new ways to charge customers for what you offer doesn’t mean it’s as simple as charging in a new way.

Right now, especially in media and content, there are ‘experts’ who are peddling their ‘we made subscriptions work, you can too’ wares to anyone who needs to get away from ads as their sole revenue source. Similar things are happening in other sectors. The ‘you can be like…’ train has left the station once again.

My advice is to shut the door in their face.

Rethinking a business model is not the same as bolting on a new way to charge and expecting all to be well. Every business needs a different formula – even compared to a close peer – and no business model change will work without thinking holistically about the entire value proposition and service experience. Customers (i.e. all of us and everyone else) aren’t stupid: the same old proposition with a bit of a haircut will not successfully support a shift in the commercial terms of trade you want with us.

It’s an insult, and your customers won’t take it lying down.

My favourite customer insult, ‘pay us to take away the ads’ is already raising its ugly head again. This translates as ‘what we normally give you is shit - pay us to make it less so’. That’s not a business model; that’s an apology that you couldn’t think of something good enough in the first place. I’ve met two startups in the last week alone who’ve been ‘advised’ to adopt this approach. Both have infinitely more commercial potential than this crude model would achieve – but they’ll need to make a few changes elsewhere to make it work.

If you want to reinvent your commercial relationship with the people that pay your wages – and many businesses need to do that urgently – you need to reset the promise you make them and how you fulfil it. That doesn’t mean you have to rip everything up and start again. It does mean focusing on creating a different kind of value (which isn’t always higher, and isn’t always more expensive) which you substantiate with a series of changes in the overall value proposition, product and service experience.

Those changes will be specific to you and your offer. If they’re not, they’re wrong. You are unlikely to put on a random person’s clothes which both fit perfectly and make you look better, so don’t expect to ‘adopt’ someone else’s business model under the guise of an easy route to monetisation.

And breathe…

A lot of people talk about helping companies change – I’m pretty sure we’ve done that ourselves at some point.

But change is actually a negative in most cases. “I really need to change”. “This has to change.” “We need a change programme.” And so on. Change is often interchangeable (sorry) with ‘stopping’ or ‘giving up’ something.

Typically, people and companies change away from something: their current state is broken or making them unhappy and the emotional reaction is the need to change it.

The positive version is ‘become’ because it sets a future target to achieve. I remember a friend saying that she’d given up smoking when, after many failed attempts, she set her mind on becoming a non-smoker, instead of ‘giving up’ smoking. That future version of herself gave her something positive to aim towards, while giving up felt like losing something.

The same applies to companies. Every so-called transformation programme will fail if there is not a clear end goal to aim for. If you can’t shape that vision of what the company needs to become – and I’m sorry but ‘digitising our business’ is not a vision of anything – you’re in the same mode as when you try to give up smoking or ‘stop eating so much’.

So forget about changing and start focusing on becoming.

There’s a good chance that by envisioning what you can become, many of those things you feel need to change will simply become irrelevant to your futurestate business and you can spend your money on creating the future, not leaving the past.

What defines you as a company? Why do you exist?

Every business exists for a reason and aims to achieve something. Strong businesses have a very clear understanding of what those things are, what type of company they want to be, and where they should focus their activities. In a modern strategy, these are communicated via a series of ‘core components’ that articulate the company’s direction and provide guide rails for deciding how best to get there. Purpose, vision, values and principles underpin the behaviour of every modern business.

In this article I’m going to focus on purpose. We've written about the importance of purpose for many years here at WF but I want to focus this piece on the more practical aspects of how you actually articulate your purpose.

The value of a clear purpose

A brief recap. At the very core of every organisation is its purpose: its ‘why?’ It’s a short expression that defines at the most profound level why the company exists. A well-written purpose statement is, arguably, the most powerful strategic asset a modern organisation has. Every action the company takes should be aligned with, and measured against, achieving its purpose and while it may need to be rewritten periodically to reflect the times the company is operating in, the underlying meaning should be a constant (unless the company profoundly changes direction, of course).

Anyone who has followed Microsoft’s fortunes will know that Satya Nadella, Microsoft’s CEO, has done an extraordinary job of rediscovering Microsoft’s mojo after years of short-sighted business leadership under Steve Bullmer. At an event I attended recently he was asked how he’d got Microsoft back to something close to its best in his tenure so far, and his response was priceless:

“I’ve really just focused on Bill and Paul’s original vision for Microsoft, its original purpose as a company, which is to make tools that help every company become a great technology company. I ask whether every decision we make is aligned with that, and if it’s not, we don’t do it”.

This is a perfect example of how powerful purpose can be, and how important it is as a guiding light for the organisation. It’s particularly important for established companies – many of whom have vacuous mission statements on the wall that mean nothing – to be able to articulate their purpose clearly.

Interestingly, I find Satya’s more informal framing of Microsoft’s purpose to be stronger than its official one, which is ‘to empower every person and every organization on the planet to achieve more.’

Articulating your purpose

It’s important to remember that your purpose is why your company, specifically, exists. That’s a decision that, as owners or leaders of an organisation, you get to make. It is not determined by the market, nor is it determined by customers. They play a huge role in how you achieve your purpose, but they can’t (or certainly shouldn’t) tell you why you exist. Purpose is a choice you make when you form a company, or when you need to change one.

In a successful digital business, some things need to be driven inside-out, and many others outside-in.

Purpose is the most important of the inside-out components.

I work with many companies who need to re-articulate their purpose, and a surprising number who need to define it for the first time. Most don’t have a written purpose that articulates why they really exist: some are too broad, some too narrow, and some are just completely meaningless.

A good purpose statement does a number of things:

• It sets a ‘centre of gravity’ for the entire organisation and ensures that everyone working there knows why they come to work

• It defines where the company should should focus its activities – its operational domain or competitive arena – and where it shouldn’t

• It gives the company an infinite role in the world – an ongoing reason to strive, not a finite objective to be met

I’d argue that all of the powerhouse companies of the digital economy will be built from a strong purpose because it’s critical to know where your organisation has licence to operate and innovate, but it’s also of ever-growing importance to the people that work there that they’re contributing to something meaningful. Something they believe in.

Countless books have been written on this subject. Simon Sinek’s series is probably the best so if you’ve not read them (or watched his original TED talk, ‘How great leaders inspire action’) it’s a worthwhile investment. Understanding the importance of purpose is an essential modern business skill.

What does a strong purpose look like, and why?

Capturing purpose effectively takes honest thinking and careful execution, but when you get it right, the simple statement you end up with can be transformative.

My key principle is that you should start by looking as far along your value chain as you can to reach the ultimate recipient of what you do. This helps to avoid mixing up the ‘why?’ with the ‘how?’ or the ‘what?’

Equally, it’s important that your purpose is directional but not constraining: it’s there to offer guide rails not to act as a straight jacket. It should articulate your domain in a way that makes it clear where you operate without prescribing how.

Which?, the UK consumer rights organisation, defines its purpose as:

‘To make consumers as powerful as the organisations they deal with in their daily life’.

This is a great example because, on the one hand, it defines what type of organisation Which? is, while offering huge opportunities for how it might achieve its purpose. On the one hand it can do product testing to ensure that manufacturer claims are true, empowering consumers to see through the marketing hype and make informed choices. Equally it can campaign against unfair practices in banking. It can lobby government, offer legal support for consumers, operate utility price comparison and switching services, and much more.

It defines the domain that Which? can reasonably operate within, but is broad enough that it could reasonably expect to have a role in society for as far into the future as anyone can imagine.

When making decisions about where to invest its resources, the Which? team can always ask whether an initiative is aligned with its purpose, which is all about empowering consumers. Sometimes they’ll do that by campaigning for companies to change their practices, but only with a view to achieving their purpose. Improving the daily lives of consumers is ultimately the reason Which? exists, so that’s where the organisation’s purpose is centred.

It’s a purpose that you can easily imagine being used by the organisation’s leadership to instil a sense of common purpose in the entire team, and if the organisation lives up to its purpose, it’s not hard to imagine people wanting to work there because they believe in that purpose.

Let’s look at a very different type of company. IKEA, a Swedish-born global icon, says its purpose is ‘To create a better everyday life for the many people’ (albeit a translation from the Swedish original).

This shares many of the same characteristics as the Which? example above, but the key here is in ‘the many’. Again, tons of scope for IKEA to explore ways to realise its purpose, but it’s pretty clear that this is not a company that is going into the luxury goods market anytime soon.

Walk around an IKEA and you’ll see small room sets — the rooms found in the everyday lives of many people. Everything they sell is cleverly designed to achieve as accessible a price point as possible, making it relevant to as many as possible, and everything they create is intended to have a role to play in everyday life.

Increasingly, IKEA is developing smart devices and technology-enriched services to supplement its traditional furnishing and homewares, and that aligns perfectly with its purpose.

Now you could argue that IKEA’s purpose (accepting some lost-in-translation nuance) is a bit wooly or generic, and I would probably agree, but IKEA knows exactly what it means and they act accordingly. That’s another important aspect of a company’s purpose: it’s not a marketing message. Its role is primarily an internal one; a central unifying cause that everyone in the organisation can unite behind and act against. It’s not a secret, but it’s important to remember that it’s not a message: it is, for all intents and purposes, the unchanging, core truth at the heart of the organisation.

There are many ways to articulate a company’s purpose, but what’s key is that your statement is identifiably you.

Lego’s is ‘Lego exists to inspire and develop the builders of tomorrow’. Apple’s original version is believed to be ‘Apple is dedicated to the empowerment of man — to making personal computing accessible to each and every individual so as to help change the way we think, work, learn, and communicate.’ Harley Davidson’s is ‘we fulfil dreams through the experience of motorcycling’. Nike’s is ‘to bring inspiration and innovation to every athlete* in the world. *If you have a body, you’re an athlete’. Thomson Reuters is ‘we provide professionals with the intelligence, technology and human expertise they need to find trusted answers.’

Some are written better than others, but each aligns with the organisation it represents.

What to avoid

When I said that IKEA’s might be a bit fluffy earlier, it’s because it lacks enough specificity. Your purpose needs to have clear enough ‘edges’ to it that it doesn’t just give you license to do anything. Equally, it shouldn’t describe a behavioural aspiration, for the same reasons.

‘To always excel’ or ‘to strive for excellence in everything we do’ or even ‘to always be better’ are not purposes. Even so, they’re all real examples that I’ve come across. Imagine that probably-urban-myth NASA story from many years ago where as part of a branding exercise a janitor was asked what he did at NASA. “I help put people into space”, he said. If it’s even halfway true, that was an organisation with a clear purpose.

Imagine if he’d said “I help us to strive for excellence in everything we do.”

None of the companies whose statements these were could possibly use them to achieve the type of transformation that Satya Nadella has achieved at Microsoft, because you can measure both anything and nothing against them.

Generally, avoid articulating your purpose around superlatives like ‘best’, ‘most’ or ‘exceptional’ and stay away from empty business statements like ‘operational excellence’ or ‘success’. Sure, you might get away with ‘we exist to deliver an amazing experience to our customers’ if you’re a company that creates magic shows for children, but even here I’d be inclined to form it more explicitly: ‘we exist to create live experiences that amaze children’.

I find it hard to see how 'to strive for excellence in everything we do' would help its original owner – a financial services company – to identify where it should invest its resources, or where it has licence to innovate in the products and services it offers to its customers.

For the most part stay away from this type of language, and make your purpose more, well, purposeful.

Purpose is the foundation for everything else

If you want to build a strong business that is always fit for tomorrow, start by articulating your organisation’s purpose in a meaningful way: it should make you excited to be part of it. It’s fine to re-examine and tweak it periodically (read: after several years) as you evolve, although you shouldn’t need to change its meaning unless you really are fundamentally changing the company.

In our company we started with ‘we exist to help established organisations thrive in the digital age’. It holds as true now as it did 20 years ago. What we offer and how we do it has evolved constantly, but why we do it remains largely the same.

A strong, meaningful purpose is an essential foundation of any modern business. Capturing the true essence of why your company exists really can have a profound effect on how you think about the future and the opportunities it holds. And it’s not just important to guide your decisions: a growing number of people put purpose at the top of their criteria for whether to join a company or not. It’s worth every bit of time and effort to get it right.

Here are some quick tips; four basic questions you can use to assess whether yours are in good shape or not.

1. The most important, over-arching, golden rule that you must always use as your benchmark question: “could what we have apply to anyone?” Things like ‘to always strive for excellence’ is not a vision, it’s a lame value and a pointless purpose. I’ve seen it used as all of these. It’s generic, unusable and, of course, it could apply to anyone. Be clear and be as specific to you as possible. If it could apply to anyone, bin it.

2. Can you make clear decisions against what you have? You can only ask “does this help us achieve our vision?” if your vision is tangible and well defined. “Does this initiative help us be the best of the best?” isn’t going to get you very far. “Will this help us achieve our goal of making 100% of our cars 80% recyclable by 2030?” will. Dates, numbers and specifics are particularly important with any form of vision statement… or it’s just a wish.

3. Does your purpose define a clear, but infinite ‘domain’? A good example is ‘we exist to eradicate poverty-driven hunger by pioneering advances in agricultural science’ while a bad example is ‘we exist to eradicate hunger’. You can invest within a well-defined domain to achieve the former, while with the latter you might be tempted to try to eradicate traffic jams or meetings that run over lunch (also a worthy pursuit).

4. Are your principles actionable and measurable? Strategic, service, experience… wherever you use guiding principles (and you do, right?) they need to be objective, independently actionable and a robust set of overall guard-rails when added together. ‘Only build what we can’t buy’ or ‘we only launch what we can measure’ both work well individually – and, as part of a set, lead to the right outcomes. Try that with ‘we always deliver’ or ‘we never under-deliver’ (both, again, real examples).

If I’m honest, I love pulling these stacks together – because when they’re well-crafted, they can put an entire company on the right footing for years to come. When they’re good they’re incredibly valuable, but when they’re poor they can do a lot of damage.

Believe me, it’s really worth getting them right.

Of course, at the end of every year all sorts of people tell us what the next year’s big trends will be. Now we’re allergic to trends (they’re usually a scent trail that leads off a cliff) but we thought we’d give you our take on the few genuinely interesting things that popped up.

Let’s do this.

Harnessing a radical shift in the rights of a river

What’s going on?

LinkedIn editors asked their community of ‘top voices’ and ‘creators’ to share what they believe will define the year ahead. That becomes LinkedIn’s “Big Ideas 2023: 20 bold predictions for the year ahead”.

The report largely tells everyone what they already knew. Hybrid working’s a big deal. Menopause is big business. The economy’s screwed. Retail’s going to get physical again. Seaweed is the answer to everything. You get the idea.

Is anything interesting?

Yes, actually. There’s a fabulous insight from Dr Erin O'Donnell from the University of Melbourne about how “more nations will give animals, trees and rivers the rights of people”. We love this. Partly because it’s about time a river could sue humans for messing it up, but mainly because it’s the kind of change that drives bold new thinking. Also, dogs being able to sue fireworks manufacturers would bring one of our team immense satisfaction.

This reallocation of rights from humans to the parts of nature that actually deserve them will force a radical rethink for how many organisations operate, and you know what? The end result will almost certainly be a better business. So why not try applying some radical ‘what if this fundamental change were forced on us?’ scenarios to your current business or product and see where it leads you? Try 'what if [e.g. insurance] was made illegal?' as a starter for ten.

Oh, and you’d better start preparing for the day when your data lake can take you to court for polluting it with so much s***.

Wet hot AI anyone?

What’s going on?

You can’t talk 2023 trends without talking about generative AI. In this great WIRED piece (it’s from his newsletter actually), godly tech journo Steven Levy discusses how much Google have held back their generative model AI tech due to ethical concerns, and how ChatGPT (that’s a Generative Pre-trained Transformer for those who don’t keep up) has just jumped in and become the most amazing thing that most people have ever experienced.

Google’s researchers have been holding back their tech because, while the capabilities of these generative models are phenomenal, there’s no way to be sure (yet) that what they’re putting out isn’t dangerous or damaging. But this is now a horse that’s bolted and 2023 is going to be the start of ‘a wet hot AI summer’ where everyone scrambles to take advantage of this technology.

Why is it important?

You’ll just have to believe us when we say that ChatGPT didn’t write this. But it could have made a decent stab at it (ok, it would have been better). The implications are profound for anything, and we mean anything, that involves content generation.

Steven Levy captures it nicely: “The cost of churning out generic copy will go to zero. By the end of the decade, AI video-generation systems may well dominate TikTok and other apps. They may not be anywhere as good as the innovative creations of talented human beings, but the robots will quantitatively dominate.”

The content industries are about to get another kick up the rear – or perhaps a kick in the teeth might be more accurate. For what it’s worth, we think that this tech will quickly liberate a whole generation of people who are great thinkers but not great writers. Who knows, most business documents might even become readable without nausea. While the metaverse is pretending to be important already, generative AI actually is. It’s that rarest of things; a trend we actually want to follow.

You'll be into ruffles, fringes, origami and quilling by next year

What’s going on?

Now let’s have a little fun. Generated from their own usage data, Pinterest’s trends report is a little different from the ‘war/recession/the great reflection’ kind of trends. As a result, you’ll find it full of unexpected things that lie ahead for you and your 2023 vibe.

It’s full of colours, fashions, hairstyles, lifestyle and life-living ‘trends’ that we can expect to see a lot more of in 2023. They include such gems as ‘the free-spirited fluidity of fringe’ and Gen X ‘pampering their porches’. And in case you’re wondering, they have a pretty high success rate at calling these things.

Why is it important?

Well, let’s be honest, most of it isn’t. But in aggregate it is. Surface trends like the ones in this report are highly short-term-reliable as they’re based on real usage data, reflecting what people are actually pinning into and searching for on Pinterest. Growing numbers of people pinning perfect pics of pixie-cuts (try saying that after a wine or two) means we’ll see more of them strutting our streets, and more of you will be tempted to do the same as a result. You’ve got to get that mop on-trend right?

In many ways though, this type of insight is far more useful than the big sweeping ones – largely because if you aren’t already thinking about what impact those will have you’re in serious trouble. Think of them as something you should stand back from, to look for patterns that might lead to ideas for something new. It’s more like reading tea-leaves: let your brain interpret an unusual set of stimulus and you’ll likely create somewhere unexpected.

Right, must go, we have to go and re-brand all of our furniture as ‘hipstoric’ and get it on eBay.

Back in January 2020 we ran a series of futurestate workshops, based on one of our favourite formats; designing the company that put yours out of business.

The time horizon was three years. In a series of full-day workshops the teams designed the ‘future’ customer experience for ‘X’ - the company that had replaced them in market.

It was different in so many ways from how that company behaved at the time.

That work led to a major transformation and product innovation programme which has been running ever since. They’ve progressively become a version of the company they imagined and have left behind most of what was holding them back – retaining only what makes them distinctive. And they've done it despite the massive disruption of a global pandemic to contend with.

That three year futurestate vision felt a long way off to the people in those workshops. It allowed them to free up their thinking and focus their efforts on what was strategically important for the business they need to become.

Their competitors have been improving ever since of course, but they’re still miles ahead of them in both how they think and how they can execute new propositions – because they were brave enough to design what comes next and make it happen with a lot of hard work.

Imagine where they’d be now – 'in the future' – if they’d waited.

Making the future can start in a day. It can start to become real in weeks. For some, it may take years to fully realise. It doesn’t matter how big the challenge ahead is: the sooner you can see what that alternative future can be like, the sooner you can start to make it happen.

As we prepare for the latest incarnation of these workshops, I always look forward to seeing how exciting it is for people to design what they can become.

It's going to be fun envisioning 2026. And it'll be even more fun to make it happen now.

I challenged myself to read a whole batch of trend reports over the Xmas break, from the big research and investment companies to more unusual sources like Pinterest.

In summary, they were either:

1. Obvious and/or too generalised, or

2. Interesting, but superficial.

The big ones always feel more like horoscopes or taro readings, and this year was no exception. They’re full of big, sweeping statements, charts and positioning quadrants that I guess you could use in a deck to back up your plans for the year ahead.

The niche ones turned up some wonderful insights (who knew that sci-fi is an emerging clothing trend?) that may actually be actionable to some people (my silver trousers, due today, notwithstanding). Things like colour trends for the fashion industry are useful, although I still wonder how many of the people for whom the report is written didn’t already know this.

Irrespective of the source, be wary of trends in any form. Because there’s one thing they all, unavoidably, have in common: everyone else can read them too.

Whether inferred from data or observed and interpreted, if you follow trends you’ll end up in the same place as everyone else who’s read the report.

In the same way as most would enjoy an uncrowded beach rather than one heaving with toasting bodies so close you can smell them, companies should look to position themselves and their services in places that aren’t crowded with others.

To create space around you, you have to find a new, uncrowded location. To do that you need to buck the trends and be prepared to do something unexpected and imaginative.

And you won’t find any of that in a trend report.

Both sides of this equation are working hard to realise ecosystem opportunities. Big companies are becoming more open (and open-minded), and the startups they are looking to work with are becoming more focused on plugging in to them easily.

Progress is definitely being made in developing new tools and processes to onboard new partners (to speed up delivery to customers). The mechanics of making an ecosystem work are getting better and better, and plenty of time is being invested in mapping available 3rd party partnerships, technologies, channels, and the integrations they require.

This mapping provides a clear view of partnership opportunities, but it tends to be very reactive (’come and pitch to us’) and, therefore, unpredictable.

Ecosystems are always rich with tempting opportunities, and can lead to a focus on easy wins instead of future-focused opportunities: big leaps that create the most value for tomorrow’s customers.

In my experience, a key component of ensuring that ecosystems are harnessed to their maximum potential lies in how they are envisioned and articulated.

This article outlines a technique that enables a more proactive approach to identifying partnership opportunities – by visualising a futurestate experience that will need them.

Mapping the components of your ecosystem

Ecosystem maps allow businesses to see how all their tools, platforms and services are connected across the business. When we create them, we’ll often include collaborators, regulators, suppliers, competitors and anyone else that has an influence on the business at hand.

They can help to streamline processes and better understand connected data-flows across and between business ‘units‘, and can identify where the company’s resources are being well, or poorly, used. Updated regularly, ecosystem maps help the business take stock operationally.

Mapping is a useful exercise, as part of the current state mapping, but it’s a pretty abstract representation. As part of a futurestate design programme we will use these to map what’s there but we recognised a long time ago that they were not useful as a storytelling device nor as a way to make proactive investments in what the future business can become.

The traditional approach: drawing connections between the customers, partners, internal and external tools, systems and services

Imagining what your ecosystem will make possible

A very different way to approach this is to visualise a futurestate ecosystem - in the context of a future customer’s experience. It’s a less structured view than a customer journey map as it can jump in and out of an ecosystem of supporting services and expose services that don’t exist yet – be they explicit to the customer or as integrated capabilities.

It presents a holistic view of the entire service experience; whether it is built and provided by you or a partner is irrelevant at this point in time. It just focuses on what is needed to achieve an optimal future experience. By focusing on what capabilities are needed, not who is providing them, it is not constrained by what’s known now.

That difference is really important because it makes it a tool to use to identify and source partners and technologies that align with a long-term vision, and helps to avoid ‘shiny thing‘ syndrome when the next cool startup walks in the door. Having a clear vision doesn’t preclude serendipity: it just helps you make better judgements.

In some recent work in the travel sector, this approach exposed the need for new capabilities in single payment, multi-vendor ordering and fulfilment. These did not exist in the business, nor in any of its current partners and it was not on the roadmap. A short research and analysis exercise later, several potential full-service partners were identified, alongside a range of technologies that would enable the company to do it themselves. Each option can now be assessed against the futurestate experience which demanded capabilities that none of the partners or platforms currently had – but one had in active development. This would never have been discovered without identifying the need, then asking.

We map the services delivered, the value created, information or data required, used or shared, supporting services and systems required, the devices used and the channels communicated through.

Envisioning the futurestate ecosystem in the form of its end results immediately opens up a range of benefits that more traditional approaches cannot achieve. Here are a few.

A tangible vision drives better, faster ecosystem development

Ecosystems demand that the whole team fully understands the strategy and what they’re all aiming to achieve. There are a lot more moving parts than in traditional business operations and there are many more points at which a misunderstanding can lead to an expensive failure. We use this approach to visualising the ecosystem as a way to tell the ‘ecosystem story’ in a way that everyone on the team can really understand. It visualises what the target future looks like - and what everyone is driving towards.

This eliminates many of the ambiguities that will exist across a diverse team, and therefore drives better identification of appropriate partners and faster development of a robust ecosystem as a whole. Common understanding and aligned vision is arguably more important in a growing ecosystem than in any traditional business context, and being able to ‘see’ what you’re all aiming for is the best method we’ve ever found for achieving that.

Focusing on the outcome provides perspective

When you can see the value of the outcome, it’s easier to understand its relative value to the overall proposition and it’s therefore easier to be balanced about how to achieve it. In each case where capability is lacking you need to decide whether to partner, buy, build, license, integrate, create a joint venture or any other commercial and operational permutation.

It won’t make sense to bring some services into the fold because you’re uncertain of the value or impact of that aspect of your future proposition. Others will be identifiably core. Some services will already be offered while others might be in development but currently invisible (like my travel example earlier).

Many of those who you already partner with – like a payment service provider, or a fulfilment network – may stay the same as today. It may become clear that a partner currently useful for a small part is going to become vital for something much larger soon, so an acquisition or exclusive contract might be a good idea.

In every case you can make a better judgement of how much to invest or how tightly tied to a partner you should become if you can step back to keep the whole picture in perspective.

Looking ahead helps get a head start on data or compliance challenges

Once you can see how your future experience might shape up, you can start to ‘follow’ data around the journey, highlighting areas where moving data to an external partner’s systems might prove challenging, or you might see an opportunity for new forms of data packaging to enable a radical change in how to move data around. It’s like using a topographic map to see where floods might occur. Just ask yourself as you move around ‘where’s that data coming from?’. It’s the simplest of sense-checks but it often shows up a major issue (or opportunity).

You can also see where you might take advantage of technologies like AI and ML to manipulate data or automate a process that’s clearly going to be repetitive. This might flag the need for a new type of capability (or partner) in its own right.

Finally, ecosystems can be a compliance minefield, so visualising them in a realistic, more scenario-driven way can highlight where legal or regulatory issues might lie, and it’ll make it much easier for compliance teams to understand what those challenges might be. Given how tricky some of these issues can be to overcome, the sooner you identify them, the sooner you can start the conversations needed with an industry regulator, for example.

New distribution opportunities can appear unexpectedly – if you let them

One of the things I find most interesting is how this type of visualisation can help people spot new ways to get their service to customers, not just ways to make it happen.

Sometimes partners can instead become channels, or both. It might be that integrating what you do into what someone else does wasn’t the aim of the exercise, but screams out to be done once you see how it might play out. Keeping the futurestate concept clean of how it should be realised allows you to think very openly about what it might all mean. You do have to be open-minded though, and people often find that harder than they think.

Right now, for example, we see far more opportunities to embed ‘big’ services into ‘small’ services than vice-versa, and also far more reluctance to do so. Think in terms of ‘how can we be most valuable to the customer?’ not ‘how can we own the customer?’ and you’ll be on the right path: I’ve often found myself designing a new service concept only to recommend that it would best serve the customer if it were integrated into something that they already use.

Particularly where large corporates are bringing small startups into their domain, it’s worth thinking about who that startup is targeting, and why? It might just be that one of those elusive new marketplaces that have been such a struggle to break into will fall into your lap, just not in the way you expected. And that’s ok: ecosystems are, and should be, multi-directional.

A few tips

I’m usually creating this type of visualisation as part of a broader futurestate design programme, but we also create them as projects in their own right. Here are a few tips if you’re tackling this yourself.

1. Keep it focused on customer experiences or interactions and away from the ‘entities’ that provide them. It’s about what it will enable and how it will do it, not who will do it. (It’s fine to identify what activities, services, functions your organisation currently provides or where existing partnerships or integrations lie, but make them an overlay or small annotations only.)

2. Create one for each key audience, as there are often huge signals in the places where they overlap or intersect. A company offering B2B and B2C services should visualise both future customer experiences, for example.

3. Base them on ideas, anecdotes and broad research, never on what you do today. It’s about what you can be, not what you are. Look and think well beyond your peer group.

4. Involve a good range of different brains. Go broad in your team, bring unusual groups together and encourage really open, free-form thinking. We often run workshops involving 15 or 20 people and by the end of them there are more new ideas for the future than you’d believe.

5. As we say for all of our futurestate work, think without current constraints, but no rocket shoes. If it’s being done somewhere, assume you can do it too.

6. Choose your end format carefully. We’ve created them as posters, narrated videos and interactive experiences: if you’re all in the office, posters are a much underrated way to keep things front-and-centre. Equally if you’re mainly remote, they’re not much use at all and a distributable or online format will work best.

Is it right for you?

This is a technique that we developed as part of our futurestate design work, but quickly found to be incredibly valuable for organisations who are building, or who are part of, growing ecosystems. If you’re already involved in, or considering how to, harness the opportunities that a rich ecosystem strategy can deliver, this approach can be incredibly valuable.

It’s not, of course, a silver bullet. You still have to do the thinking and the hard work to imagine what the futurestate can be. However, if you start that work with a clear view of this type of output, you’re forced to think about many of the right things.

In my experience, this approach has so many advantages that it’s worth considering for any business that needs to understand and capitalise on its role in a broader business ecosystem.

On the one hand, businesses think they’re a great idea: it’s regular, predictable income. On the other, consumers are getting twitchy: those regular, predictable outgoings keep adding up. Let’s dig a little deeper to see how to lose a ton of money with them and without them – and why banks might, for once, be a force for good.

Mickey’s burning Disney Dollars

What’s going on?

Disney+ has been the poster-child of consumer subscription businesses over the last few years, out-pacing Netflix to hit 235 million subscribers. That’s an impressive number. The problem is, the quarterly losses from its streaming businesses, of which Disney+ represents the mouse’s share (sorry), hit $1.5Bn. That’s a scary number. It’s so big it almost offset all the profits from the rest of the business. Gulp.

235 million is a lot of subscribers. If anyone should know about making an entertainment business work, it’s Disney. But it turns out a subscription-based entertainment business is a little tougher. So tough in fact that they’ve retired the CEO (they dropped a big anvil on him apparently, but he’s fine) and un-retired their iconic former leader, Bob Iger, to sort it all out.

Good luck Bob. We loved your autobiography, btw.

Why is it important?

Well, despite what many (naive fools) would suggest, subscriptions are not easy money. Far from it. Disney has shown that making a subscription business work is tough. But the two big takeaways for everyone here are that if you want to be this kind of big, it’ll cost you big, and whether you want to scale fast or slow, you need to be prepared for a long haul.

Read more here

Alexa’s burning Amazon

What’s going on?

“Alexa, what’s a business model?” Eight years into Alexa’s existence and the device is on pace to lead Amazon’s “Worldwide Digital” unit to a $10Bn loss this year. Yep, that's right. $10 billion. Suddenly the profligate Mouse looks like the cautious uncle.

Amazon isn’t shy about owning up to these losses. The strategy, after all, has been to get these products into a customers home as a gateway for shopping. The thing is, that hasn’t been, ahem, terribly popular. In this Arstechnica article, the conclusion is that just about every plan to monetise Alexa has failed – with one Amazon employee quoted saying that it has been “a colossal failure of imagination" and "a wasted opportunity”. Well that’s awkward.

Why is it important?

Recent estimates suggest the annual smart home market will generate over $170Bn by 2025. Is it just a case of waiting until more volume is there?

We say that’s a big fat no. Alexa isn’t a product, it’s a platform, and while recent history tells us that platform businesses take a long time to build scale, Amazon has the scale thing nailed. What it needs is a business model. It needs subscriptions and it needs them bad.

For better or for worse Amazon has spent the last 10 years creating all of the ingredients of a great subscription business. Its users have even built more than 100,000 ‘skills’. With some smart thinking on Amazon’s part, and a very sensible pricing strategy, there are a lot of people who would subscribe to enhanced smart home services. The average UK home has 25 connected devices already and that number is set to double in a year. That is an incredible market to be the leader in.

Maybe it’s time for Alexa to ask someone else for the answer.

Read the Arstechnica article here

It’s VRPs to the rescue! Wait, what?

What’s going on?

Great news. Banks are getting into the subscription business. To be fair, any account with a fee attached already is a subscription, but we’ll park that for now. Because we want to talk about VRPs.

As most will know, open banking is how we now connect our bank accounts to other digital services. It lets us share our banking data and allows third parties to build additional services around it. It’s enabled some of our favourite services, like Chip, to connect to your bank through secure APIs to make AI-powered savings based on what you spend.

Now, a mechanism called VRPs (Variable Recurring Payments) is enabling consumers to pay all their loss-making subscription providers by connecting their bank accounts. Exciting eh? Well it’s more exciting than it sounds as it might give consumers more control of those pesky outgoings and encourage providers to make more customer-friendly features, like taking a break for a few months, easier, which in turn might help them keep more of those customers as customers.

Why is it important?

VRPs bring a little secure open-banking kudos to the world of subscriptions, so it may help some providers build new, innovative recurring payment-based services that consumers feel confident about signing up to because they’re ‘blessed’ by their bank. But for us, the big impact will come from the degree of visibility and control it will give consumers.

One of the reasons consumers are wary of subscription businesses is the ‘sign up and forget’ nature of them, and the ‘sorry, all lines are busy, forever’ cancellation mechanisms so many still think are a good idea. As soon as they’re all lined up nicely in your bank account (as some banks already do in a less tech-sexy way) and you can see what they add up to, you’re much more likely to switch off the ones you can do without – and VRPs make that easier too.

It’s that rarest of things: a banking win-win. You’re welcome.

Read Sifted's take here

Confessions over, let’s get on with the show.

Ticketmaster’s dynamic reputation

What’s going on

The ticketing industry’s already fragile reputation took another hit earlier this month as Ticketmaster announced the use of dynamic ticket pricing for some of the UK’s biggest upcoming tours. This led to some, let’s call them ‘pricey’ Harry Styles tickets and some very upset fans.

The crushing blow of missing out on an evening with Harry aside, we find this particularly interesting as a behavioural challenge. Dynamic pricing as a strategy itself isn’t new to consumers: it's widely used in services from Virgin Atlantic to Uber. Seats selling fast for that flight? Increase the price. High demand for drivers? Pay more to buy a ride home. It’s a mechanism that has been around for a long time – creating value from scarcity and helping service providers ensure quality whilst managing demand. It’s also, of course, the fundamental business model of ticket touts.

What does this mean?

If you only consider your goal to be maximising income, dynamic pricing is a logical strategy. Ticketmaster, the artists, the venues and the myriad parties taking their percentage all make more if tickets are in demand and can sell for more. And, according to Ticketmaster, it helps to push touts out of touting.

However, while this is obviously a win for income, it can also be extremely short-termist and those effects can be hard to track. As with all equivalent concepts, you can’t simply pick and apply without considering the context the strategy will exist in, nor what its long-term impacts might be. Concepts like Taylor Swift's ‘slow-ticketing’ mechanism (basically, price high first, then drop if demand is slow) is a great example of how artists can build on the concept of dynamic pricing but it got a lot of fan backlash. If fans can’t experience their favourite acts live, they may end up not being fans at all.

Dynamic pricing is an example of a strategy that can be game-changing, but it’s also a great example of one that can have unintended consequences. When you try something new on something old, tread carefully and don’t forget to think long-term.

NYC’s bike lane bounty

What’s going on?

A bill that would allow New Yorkers to collect bounties for reporting bike-lane blockers is the latest attempt by a major US city to make roads safer for pedestrians and cyclists while encouraging residents to leave their cars at home and seek out alternative forms of transportation. The proposed bill is a carbon copy of NYC’s 2020 clean-air program that allows people to report commercial vehicles that are parked and idling for more than three minutes. Those who report infractions by submitting a video can collect 25 percent of the fine collected by the city. Easy $$$, right? 

There’s no doubt the program has been a success. There were 12,267 reports in 2021, up 35% from 2019. Roughly 92% of those reports resulted in tickets, netting the city $2.3 million and $724,293 for the civilians who reported violations, according to the Department of Environmental Protection.

Why it’s important

Social enforcement schemes can be powerful, but can again have unexpected consequences. The NYC program has given rise to a particular breed of urban ‘bounty hunters’ – people who hunt down idling trucks and shoot videos to make money, raising concerns about the wider social impact of having New Yorkers report each other, and the obvious opportunities for abuse. It raises some big social questions: incentivising part of a community to hit other members in the pocket as a way of bringing about positive change might end up doing the opposite.

We think this is going to be a massive issue for digital platforms and communities in the coming years. As Elon does what Elon wants to Twitter and ever-more-vitamin-D-deprived-people inhabit the metaverse, it’s hard not to imagine this type of peer-to-peer policing being seen as the solution to upholding community standards. We can’t wait for Zuckerberg’s meta-truck to get its first fine.

Read Bloomberg's original report here

Google doubles down on being smart

What’s going on?

Google is revamping it’s Google Home app, launching new products and setting out a new vision for the smart home. Apple is doing the same. Coincidence? No, it’s all about Matter: the first industry-wide smart home connectivity standard. It aims to address many consumer pain points – interoperability being number one, swiftly followed by complicated setup, confusing integrations and poor reliability. Matter should mean that different devices and ecosystems will play nicely - regardless of which manufacturer made them.

So, if you want to use Siri to ask Alexa if she knows anyone who can get you a dynamically priced Harry Styles ticket, then turn down your lights and switch on the fan while you listen to his new album on a Google smart speaker, you’ll be set.

Why it’s important

This story is significant in two ways. The first is an undeniable masterclass in grabbing an opportunity, setting a vision and executing a strategy to achieve it. Many could have responded to Matter by simply retrofitting devices and in-app services with the ability to meet the new standards. Google, with their smart home purpose to be ‘at the centre of a helpful home’, instead decided to rethink their vision and restructure their offering to achieve it.

The second is what Matter will mean for connected technologies in the home. The opportunity for new and innovative services Matter creates in smart home ecosystems is not one we’ve seen before. What sets Matter apart from other ‘tech standards’ is the breadth of its membership (more than 550 tech companies), the willingness to adopt and merge disparate technologies, and the fact that it is an open source project. That it was started over a dinner by Apple, Google and Amazon employees doesn’t hurt either.

Sometimes, playing nicely with your competitors is the smart thing to do. Make the broad infrastructure simpler and more consumers will use it, making the market bigger for everyone. Compete where you can differentiate, not where everyone is the same. So go book that dinner, using the smart assistant of your choice, naturally.

See Google's 'Reimagining the future' announcement here

On this month's agenda is an example of why operating in accordance with your purpose matters most in turbulent times, why some really bold futurestate thinking is needed if we’re going to make the transition to EVs without turning the lights off everywhere else, and the importance of partnerships being able to see and agree on the long road ahead.

Let’s get on with it then.

The Purposeful Octopus

What’s going on?

As the global energy crisis deepens, few in the industry are remaining untouched by widespread criticism. Here in the UK, there is an increasing sense of unease over the scale of emergency measures being put in place, the risk for households and businesses and the lack of flexibility being shown by the companies that are relied on to provide energy, especially to those most in need. You only need to add the backdrop of a warming planet and you’ve got all the ingredients needed for a full-blown crisis for every business involved.

This brings us to Octopus Energy. Seemingly, doing quite well for itself. After becoming the fifth biggest energy supplier in the UK earlier this year they are sitting pretty at the top of Trustpilot’s consumer ratings with a score of 4.8. That’s better than its closest big five rival EDF who sit at 4.2 and substantially better than Eon, Scottish Power and British Gas who sit on scores of 3.5, 3.4 and 3.3 respectively. Remember, these are all companies that offer exactly the same core products (gas and electricity) that consumers largely take for granted, in a highly regulated market.

Why its important

While there is no magic tonic for businesses in the midst of a crisis there are a number of tools that the most resilient (and successful) regularly lean on to navigate the overwhelming pressures they face. Octopus are clearly leveraging the value of a clear purpose.

We’ve long written about the value of a clear purpose being one of the most powerful strategic assets for a company and Octopus has shown us that they are no exception.

Every action Octopus has taken during the energy crisis has been aligned with – and measured against – its purpose. Giving customers the ability to use energy when it’s cheapest or healthiest for the grid, charge their EV’s based on when they are most likely to use it, running trials to explore how customers can engage with energy in new ways or simply helping customers switch from gas to electric. Every scheme or initiative is aligned with their purpose.

While Octopus isn’t the cheapest supplier, it consistently outperforms its major competitors… some of that is down to great operational management, but we believe it’s a great example of why and how a clear purpose can help businesses perform better day-to-day.

You can read more about Octopus Energy's rise to the top on WIRED

Sunset for overnight charging?

What’s going on?

Staying on the energy theme, research has found that the growth in electric car ownership could overwhelm power grids if most drivers continue charging primarily at home overnight. The findings come from computer models analysing EV driver charging behaviours and how they impact peak net electricity demand.

It makes for uncomfortable reading – peak net electricity demand at night may make cheap overnight energy more expensive for consumers because peak demand will shift from washing machines and kettles during the day to EVs (and many other devices) at night. Consumers relying on ‘intelligent’ charging patterns for their EV based on when they are most likely to use it may end up out of pocket. The report does suggest, unsurprisingly, that daytime charging opportunities could help solve the problem and help reduce costs. But no matter how you cut it, energy companies need to adapt.

Why its important

A few months ago, we wrote about Netflix’s in-house content distribution network – Open Connect – and how they realised that they could steal a march on their competitors by taking ownership of this critical network component themselves. They built their own bespoke CDN (content delivery network) to host their content… close to where their users are. Recent economic headwinds aside, this has been a massive part of Netflix’s success to date. 

There’s an obvious parallel here. Energy companies need to rethink, away from a traditional centralised system, towards a more adaptable localised infrastructure. It’s not about cables, it’s about what goes down them, how much is available at any given time, and how much it costs to deliver it.

This has the smell of an inflexion point, with the global drive (sorry) to adoption of EVs the factor that could really tip things over. Forward-thinking is needed by the bucketload, lateral thinking even more so. Oh, and whoever’s writing those smart charging algorithms might need to start shipping some firmware upgrades before they switch all the lights off.

Read more about the report on New Scientist

Your virtual GP will see you… never.

What’s going on?

Babylon Health rapidly grew into one of England’s biggest GP practices by taking advantage of structural changes to the NHS that allowed people to register at a doctor’s office outside of the usual catchment area. The remote GP service was able to register thousands of people – almost ten times more patients than the practice it took over from. Unfortunately, it ended up sparking a £22-million shortfall in the budget of the West London health authority where it was ‘based’. 

Earlier this month Babylon Health cancelled its last hospital contract with the NHS, eight years early. It’s the sort of dine-and-dash conclusion we are all too familiar with when it comes to the NHS and health tech start-ups. Babylon wouldn’t flex its model enough to work better for the NHS, and the NHS wouldn’t grant it opportunities for greater scale unless it became structurally NHS-friendly. As a result, Babylon has walked away to focus on private and US growth where, of course, everyone pays for their healthcare and margins can be meaty.

Why its important

Public/private partnerships are critical to delivering innovation in public services, as robust ecosystems are for commercial organisations. Babylon walking away from the NHS shows that this type of partnership can be nigh-on impossible to make work if the parties aren’t aligned on a vision and long-term goals from the very start. Babylon’s business model is geared towards growing both its per-customer revenues and its company value, not optimising its service for low-margin public health contracts.

Aside from re-emphasising the point we made last month – that healthcare needs a bigger, bolder futurestate vision – this is a great example of why in any kind of partnership it’s critical to invest the effort needed to build, visualise and align behind a shared vision from the outset. Realising a bold ambition is not about water-tight contracts, it’s about deep alignment on key goals – and nothing is better at making that happen than a vision that everyone can see.

Read WIRED's report on Babylons exit from the NHS here

Successfully making high-performance shoes with a radical reduction in CO2 manufacturing footprint contrasts with the minimal progress AI has made in its promised transformation of healthcare. Meanwhile, companies worldwide are investing an eye-watering amount of money (we don’t get to use ‘trillions’ very often here) in transformation capabilities – without doing much transforming as a result. Enjoy.

Why everyone should be aiming for the moon

What’s going on?

In 2020, FutureCraft Footprint, a collaboration between Adidas and Allbirds, set out to create a high-performance running shoe with the lowest carbon footprint in the industry. Their moonshot was to develop a product that was lower than 2kg of CO2 per pair. For context on the scale of that technological challenge, performance shoes on the market, at the time, ranged from 8kg to 12kg of CO2 per pair.

They achieved (so far) a performance shoe that generates 2.94kg CO2 per pair, and the results of their technology and process experiments are being used in all kinds of departments across each business to drive product quality, performance and continually align their overall sustainability goals.

Why it matters

What’s powerful about this project is that the teams didn’t approach this challenge with the goal of using a certain technology or process. In fact, there’s hardly a mention of the technology involved. Instead, the focus is on two teams, from two different (and technically competing) companies, collaborating to achieve a single ‘unachievable’ goal – by focusing on the simple question of “where can we reduce?”

This is a brilliant example of the mindset digital businesses need today – setting radical goals, then giving teams the licence to experiment with technology, collaborate with competitors, bring in new brains, and employ resources and data to achieve a remarkable goal. Ultimately a slew of technologies realised the end product, but it was two companies and their respective teams thinking and behaving differently that made it possible. They asked the right questions and answered them in the right way.

You can listed or read more on the Rebellious Optimists Podcast

AI is underwhelming

What’s going on?

Ok, perhaps not underwhelming, more under-achieving… for what it promised to deliver for healthcare at least. For the past five years, AI funding in healthcare has exploded, including more than $13bn invested in AI-focused healthtech startups since the beginning of 2021 alone. Despite the influx of cash, the promised revolution has not materialised.

Ironically, it’s less the complexities of the human body that are the challenge: it’s the complexities of the healthcare industry that are inhibiting progress most – including fragmented, incompatible infrastructure and a complex regulatory landscape. You can’t just throw a tumour-spotting algorithm at any technology setup and get good results (whereas a radiologist, whose obsolescence was famously predicted by 2021, you can).

Then there’s the tricky issue of the humans at the end of the process. Understanding how an algorithm predicted the weather doesn’t often matter to anyone. Understanding how it decided you have cancer does. In one scenario you potentially get wet, in the other the impact might be life-changing. AI and ML still have huge potential to impact healthcare, but it might be in different ways than we expected and it will definitely take a lot longer than planned.

Why it matters

In theory, AI could improve areas of healthcare by analysing data to improve diagnoses quality and speed, target cures and make clinicians’ jobs easier. In reality, AI was put forward as the solution before all the right questions had been asked. It hasn’t been used to achieve a bold vision for healthcare or a radical goal for the healthcare system. Instead it has all-too-often been applied to improve or fix small parts of the system in a fragmented way

Compared to the 2kg CO2 moonshot above, there’s no equivalent vision to align efforts and resources here. Healthcare needs a bigger, bolder futurestate vision before any major gains are going to be made, and all of the humans that it’s ultimately for need to be taken on the journey. ‘We’re going to replace radiologists with AI’ was never going to play well with anyone who didn’t have a grudge against radiologists. ‘How can we use AI to make healthcare better?’ sounds like a good question to ask, but it isn’t: it narrows how people think from the outset.

The rule here is simple: don’t ask a leading question if you want an interesting answer.

Read more on AI's struggles with healthcare on Politico

Transforming a business? Think marshmallows

What’s going on?

This is a great piece by Forbes that highlights one of the big failings of transformation programmes: the, uh, actual transformation part.

Research indicates that as digital transformation initiatives continue to increase, there are growing gaps between technology capabilities purchased and tangible business outcomes realised. Simply put, leaders are driving the introduction of new capabilities but not focusing on realising the benefits of them, and as a result, to reference the iconic study from the 70s, they’re choosing instant gratification with one marshmallow now, over a bigger payoff of a handful of marshmallows if they wait a while.

There’s a growing gap between the theoretical capabilities that a ‘transforming’ company now has, and its ability to realise gains from them, and that means that a large percentage of the forecast $2.8Tn (yes, trillion) transformation spend predicted by 2025 will be on unrealised potential.

Why it matters

Whatever the exact number, it’s clear that a lot of money is being spent introducing capabilities without giving them the time and attention they need to deliver their intended outcomes. Many of these capabilities are in the form of new technology platforms, services and applications which are being implemented but not exploited.

This is a very expensive illustration of why digital transformation is about far more than technology. Simply throwing a fancy new platform at an existing process will likely not deliver anything transformative at all. Throwing it in and then not doubling-down on making it really count is even worse. Focus on the real transformation you’re trying to achieve and why you need to do it – like radically reimagining how you offer access to your services so you can provide a different level of value to tomorrow’s customer – before investing in the capabilities you need to make it real.

And when you do invest, focus on getting the payoff you deserve via a combination of focus and perseverance. Who wants one marshmallow when you can have the whole bag?

Read the original Forbes article here

This month we take a look at the promise and reality of smart cities, why catching up to everyone else might kill you, and why losing what makes you special in pursuit of what the markets say makes you special is a well-greased slope.

Smart people want not-so-smart cities

What’s going on?

In October 2017, Sidewalk Labs, the urban innovation arm of Alphabet set out a plan for Quayside; a big idea, with flashy new tech. A vision for a smart city. Fast-forward to 2022 and the very same city has, instead, rejected this vision of a smart city and launched a new project – one that promotes the notion that an urban neighbourhood can be a hybrid of the natural and the manmade.

So, what happened? 

Sidewalk’s vision for a smart city ladled on everything we’ve come to think of in a smart city: sensors, data, connectivity… it should have been smart city nirvana. Instead, a two-and-a-half-year struggle ensued. The Toronto locals, unimpressed with a seeming lack of seriousness about those pesky privacy concerns that Google keep tripping over,  ultimately forced Sidewalk to pull the plug.

Why it matters

It turns out that ‘smart cities’ aren’t so smart after all. It’s a concept that embodies an idealistic future and overlooks the importance of basic human needs. With their emphasis on the optimisation of everything, smart cities as conceived so far  seem designed to eradicate the very thing that makes cities wonderful.

We like to think of these situations as a reminder. A future born out of fiction can be tempting but, without taking the right steps to achieve it, it’s fundamentally a step too far – or in completely the wrong direction. Yes, leaders have to be brave when deciding where to take their businesses – or cities – but they should do so with an approach that defines a futurestate that everyone actually wants.

Read on at MIT Technology Review

That new coat of paint smell might kill you

What’s going on?

It’s taken 18 months but the Amazon design team can finally see the finish line as they start to roll out a completely overhauled experience for Amazon Prime Video. Amazon, naturally, is terribly excited about it and will laud it as a new generation of Prime Video experience. But the reality is that this is a pure catchup play: increasingly, if you take away the logos and labels, you’d be hard pressed to tell these services apart.

Why it matters

Too often, businesses of all kinds look to their competitors for their benchmark, and more critically, their inspiration for what to do next. This is actually very unlike Amazon, whose Bezossian-quotes that Amazon must ‘invent on the customer’s behalf’ is a particular favourite of ours.

When it comes to the design of a consumer platform, there are plenty of reasons that bringing your product up to scratch is a smart decision – as long as you recognise that this is what you’re doing, and you don’t see it as the ultimate goal. When there isn’t much differentiation in your sector a below-par experience can certainly have a substantively negative impact on your product. But be equally wary of what happens when sectors homogenise on design and features: inevitably, there’s a race to the (pricing) bottom ahead as it becomes harder and harder for consumers to choose between service A or B.

See a full breakdown of the redesign on The Verge

Uber races to 421st… out of 435

What’s going on?

A new consumer-sentiment study of 435 brands, using more than 1.4 billion keywords on various social media channels to measure consumers’ emotional connection with known-name brands across 19 industries found that Uber ranked near the bottom, at a lowly 421st. There’s plenty of reasons why the score may now be so low: falling foul of privacy laws, payment disputes with workers and, safety disputes with customers to name a few.

This is a business that feels a long way behind the common perception of it from just a few years ago: Uber has gone from a cool, edgy service that fought the system to do something great for consumers to grubby and exploitative.

Why it matters

We’ll say it again, unapologetically, that why and how you achieve something are at least as important as what you’re trying to achieve in the first place. No matter where you are on a digital transformation or scale-up journey, if you forget what made you special in the first place, or you sacrifice your values in the relentless pursuit of growth, there’s an inevitable storm ahead.

While Uber’s questionable internal shenanigans are well documented, every company has a similar challenge: how not to lose its essence as it transforms and grows. No-one is invulnerable, no matter how meteoric a rise they’ve had, or how long they’ve been around. Keep both eyes on what makes you special or you may end up being 422nd.

Read the full breakdown at Fast Company

An interlude to mention that our CEO’s book, Futurestate Design is starting a lot of conversations, including an interview with Mark on Business Leader’s podcast. Oh, and did we mention that we’re now offering a range of stand-alone futurestate design workshops? More on that below.

Now read on for an edition that covers a lack of cars, a fear of commitment and the benefits of multilingualism. Happy Tuesday.

Lend me your keys?

What’s going on?

The likes of Hertz, Europcar and Avis are having trouble building their fleets back up to pre-pandemic levels after their sell-offs saw them lose more than 30% of their vehicles. The car rental industry is arguing that because of global supply chain issues, chip shortages and price inflation they are struggling to meet consumer demand like they used to.

It’s not going to get easier, either. Because of this, ahem, ‘unprecedented’ demand, car manufacturers no longer have back-logged stocks of cars they are willing to sell at a discount. Getting your hands on a brand new car is harder than ever, leaving the car rental industry with an interesting dilemma.

Why it matters

Regular readers will know that we’re big on inventing what comes next before someone else does. Where an industry sees no brand new cars, we see the 40 million cars already on the road in the UK, many of which are not used very often. This is exactly where a handful of start-ups are beginning to grow – in the cracks of conventional thinking – by creating car-sharing platforms akin to an airbnb model.

This isn’t a win or lose battle for the industry, this is healthy innovation.The mainstay companies shouldn’t shy away from the opportunity, they should embrace it, leveraging their infrastructure to create a new generation of car rental services, both traditional and peer-to-peer. Build for future-consumer behaviours, don’t build for short-term constraints.

Read on at WIRED

Le cerveau bilingue

What’s going on?

Ok, so. We know this isn’t exactly ‘this month in business’; it’s an article originally published in 2008 covering new research into the neurobiology of bilingualism that’s becoming powerfully relevant again. Basically, research showed that being fluent in two languages, particularly from early childhood, enhances a person’s ability to concentrate (it might also protect against age-related cognitive decline). The more diverse the brain’s tools are, the better we can think.

Why it matters

You only need to look as far as Matthew Syed and his book ‘Rebel Ideas’ to understand the power cognitive diversity can have in the creative problem solving process. Cognitive diversity isn’t simply about having different people in the room; it’s about each of those people having as diverse a range of perspectives, ideas and experiences that they can apply to a problem.

Matthew Syed himself is part of a board of advisors for English football that includes educational theorist Michael Barber, serial entrepreneur Manoj Bedale, cycling coach Dave Brailsford and Sandhurst’s first female commander Lucy Giles. Not a football ‘expert’ in sight.

Cognitive diversity isn’t a guaranteed route to easy answers: it’s a route to different answers and connections that otherwise would not have been made. Sometimes those will lead you in unexpected directions and generate real breakthroughs. And that’s got to be worth your time in any language.

Read a summary of the research here

Our relationship with subscriptions is changing

What’s going on?

You might be asking yourself why we’re writing about the changing nature of subscription services again. Well, we can see that there’s a tipping point looming and it needs to be front of mind for every business. A recent survey has found that a third of UK consumers would cancel their Netflix subscription if it became ad-funded (i.e. cheaper or free)... at a time when Netflix is laying off staff en-masse because the credit crunch is causing consumers to cancel their premium subscriptions at an alarming rate. A story of growth has rapidly become, somewhat alarmingly, a story of decline.

Why it matters

Change begets change. The problem with subscriptions isn’t subscriptions. It’s a combination of commitment and inflexibility. Economic downturns often start with downward pressures on consumer spending, then ripple through the economy as business customers inevitably ask similar questions about spending as consumers. One-dimensional business models, which subscription businesses often become, give very little room to adapt and if you wait until things start going down hill, it may, as Netflix customers are telling them about that low-cost ad-supported version, be too late to react.

Read the original on Campaign Asia

Rather than despair, it’s important to be strategic, active and to lead abundantly. To give your teams the reassurance they need to get out of survival mode and into problem solving mode.

More than that, though, we don’t only want to solve today’s problems, we also want to innovate for tomorrow’s opportunities.

This month’s articles are doubling down on how crucial it is to invest in the future, also asking ‘what if…?’ as we try to define next steps. Easy.

Or it can be made easier — be reassured — by reading Futurestate Design: How to Step Out of the Past to Create a Business Fit For the Future, written by our CEO, Mark Wilson, and out now! Published only last week, in fact. 

Just a few things our network is saying about the book…

‘Absolutely love this book’

‘This is big’

’I read a lot and occasionally pick up a few real nuggets of insight. This book is full-to-the-brim with them. What a great read.’

Now to business as (not-so-)usual…

Renewing subscriptions

What’s going on?

Following consultation, the government is changing its Reforming Competition and Consumer Policy legislation, which includes significant tweaks to subscription rules.

Legislation aims to: improve the overall consumer experience of pre-contract information (so they’ll better understand what they’re signing up for); ensure reminders are sent before any auto-renewals and notifications of introductory offers and free trials coming to an end; and provide consumers an easy exit from any contracts to which they’ve signed up.

Why it matters

Subscriptions have proliferated over the last decade, and aren’t going anywhere. Whether that’s publications, new heads for your razor, or veg boxes, the convenience is obvious.

It’s been equally convenient for businesses to improve their conversion rates with low-cost or free trials that auto-renew, landing the consumer with sometimes unwanted monthly or — even more frustratingly — annual subscription payments.

‘Try before you buy’ is inviting, both rhetorically and practically. In terms of spinning up new subscription models to improve business outcomes, however, the new legislation will really test the mettle of languishing subs brands. Those that rely on returns from the on-the-fence consumer, too busy to unsubscribe, will definitely — and perhaps should — suffer. Time to make your proposition watertight, and to invest in future business planning.

Read the article in full on PPA

A front of precipitation… and innovation

What’s going on?

The Lemonade Foundation (the non-profit from Lemonade Insurance) are soon to launch  a Decentralised Autonomous Organisation, or DAO,  that’ll provide weather insurance to over 300 million farmers across Africa next year. Or, specifically, parametric insurance, which pays out based on the magnitude of the event, not the magnitude of losses incurred.

The farmers will be able to make claims through their smartphones and receive them in crypto- or local currencies.

Real-time weather data will provide immediate climate insurance to one of the industries most at risk from climate change.

Why it matters

Blockchain is revolutionising not only the insurance model here, but also the lives of its end users, simplifying the claims and claims approval process in a way that allows farmers to receive the support they need, as soon as they need it, following climate events.

When you consider mapping business- and user journeys, really think about when and where the need is and how you map value and transactions. Can you turn it on its head, as The Lemonade Foundation has with their parametric model? (‘What if…?’ continues to be the most powerful question in any business leader’s arsenal).

Equally, ask yourself how the blockchain could enable you to do things differently. Even if a DAO isn’t your next move, you’ll have come up with some smart ideas in the process, we’ll bet.

Read the original on The Globe and Mail

‘Outta my way...friend’

What’s going on?

This spring, yellow cabs will appear as an option when booking on the Uber app in New York. The partnership will allow taxi drivers to calculate fares before arrival and refuse trips.

Previous tensions between the two are no laughing matter, leading to the bankruptcy of 1,000 of the city’s cab drivers, 6 suicides, regulatory furore and Uber’s prices soaring due to lack of availability.

Why it matters

The tech platform has already partnered with taxi companies in other countries and it’s planning on world domination, looking to partner with every taxi company in the world.

Who are your biggest competitors? Which are your most frustrating external stakeholders? You may be shrewd, as Uber is, to consider these guys your biggest opportunity because by coming together as an alliance could increase the market for everyone. It’s not a bad media play either.

Read the original on The Verge

There are both words of warning and clear opportunities in this week’s edition of The Wrap. As always, expect a liberal dose of healthy recommendations and seeds of inspiration to help your business keep doing… business.

Onwards!

How much can your business learn from the MoD? Let me count the ways…

What’s going on?

Our hearts are all aflutter. The Ministry of Defence has put together an SME action plan, looking to rope in the expertise, agility and diversity of the nation’s entrepreneurs in regards to MoD procurement contracts.

Why it matters

The MoD recognises the changing landscape of the world they exist in. If it continues to implement traditional strategies in a world of non-traditional threats, then it’s more than just its business model that could suffer.

Good news! It’s spotted the wealth of opportunities beyond its usual ecosystem. By embracing these solutions, or providers, it brings multi-disciplinary teams and new thinkers into the fold, with a united goal. The possibilities are huge.

Do you have a consortium of providers whose expertise can be leveraged to achieve exponential innovation, or are your provider relationships simply ‘good’? How can you better enlist them to a shared purpose?

A business version of The A-Team. An easy sell-in, surely

Read the plan in full at GOV.UK

Same challenge, different cut

What’s going on?

Canada, on the other hand, is trying to expedite a growth plan for the future, but is lagging behind. It’s not for lack of trying. The recommendations in various lofty reports (with ‘10,000 foot-high language’) aren’t quite connecting to public policy, and investment in innovation has segmented into more regional endeavours without the hoped-for results.

Why it matters

The recommendations for the country, set out in this article — 10,000 foot-high language-free — are pointedly relevant to future business strategy more generally.

By taking the time to really consider the value of resources; by asking yourself, what untapped advantages can we double down on?; and — of course — by undergoing a bold digital transformation, you can become a major player in any field.

It’s definitely worth a read, but if there’s one quote we’d like to leave you with, it’s this, from John Baker, CEO of D2L Corp.,

“If we’re not building it then we’ll be buying it… The pace of digital transformation is unprecedented. We have to capture it or we jeopardize our future. Because, in a blink of an eye, it’s over.”

John, we couldn’t put it better ourselves (though we try to, often enough).

Read the original on The Globe and Mail

And a different cut again…

What’s going on?

The US is in a similar fix to Canada, but this time it’s in terms of how not to fall behind on electric vehicle (EV) industry, sales and infrastructure.

Significant underinvestment in the past (notably, Trump’s four years in office stalled already lagging investment into EVs) has meant that current intentions to perform in the EV market are seriously, seriously lagging.

Why it matters

Inherited problems aside, the US has two hefty nuts to crack when it comes to making up lost ground here.

Firstly,  addressing consumer behaviours can be key to succeeding in certain markets.

Charge points in the States are often clustered and improved access is essential. Why not break out of the ‘gas station’ infrastructure of yore, and support people’s lifestyles with charging points in places like grocery store car parks and, of course, at fast food outlets? EVs are a growing market in Europe, where there is less range anxiety… Combat that and the US can start to allay consumers’ fears.

By challenging legacy models (that, granted, used to work), you can usher in fresh approaches that can reset expectations and define new behaviours.

And, secondly: know what you’re not.

General Motors know what they do well, and what they don’t. This gives them the advantage that they can spot partnership opportunities (if you can’t beat them, they say…) without going to ground trying to compete with businesses who are leagues ahead.

In this case, knowing that they have little experience in the manufacture of electric motors, they’ve partnered with a Chinese company to create an entry-level EV.

Don’t be afraid to break free of bound-up thinking: it doesn’t matter if it’s another company, in another country, in another market, you can still deliver products you may not otherwise be able to, to consumers you can’t usually reach.

Read the original on Wired