The *buzz word* of this year’s event was “Provocateurs”, focusing on “Provoking Action, Provoking Innovation, Provoking Results and Provoking Change”. The series was extremely well curated and I’ll do my best to summarise a few of the important themes.
The speakers came from extremely diverse backgrounds, Entrepreneurs, Academics, former Government Officials, to name a few, but if I had to pick three major themes, it was the following:
1. The rate of Technological change is revolutionizing the world
2. We MUST embrace Innovation and Change
3. Failures are good! (when you learn from them)
There was one other point that a few people remarked on, and it was the fact that although we read in the news about multiple wars in flight or about to break out, it is arguably the most peaceful time in recorded history.
The conference started with Sir Ken Robinson, a strong proponent for change in the education system, and in 2006 gave a TED talk titled “How schools kill creativity” (amongst a few others). Talking about imagination, creativity and innovation, he highlighted the fact that while people divide individuals into the creatives and the “nots”. The fact however is that we are all born creative and we all possess the ability to be creative. Creativity isn’t about being an artist or painter, it is about how we approach and live our everyday lives. Creativity is brought out by the environment we are surrounded by and the stimulants that each of us need to be creative (which is different from person to person). Our responsibility as leaders and individuals is to create an environment and conditions under which people are able to be creative and creating a culture where everyone has ideas (and contributes them).
Your competitors, as Rita McGrath a Professor at Columbia Business School put it, are not just those on your own industry, but companies in the same arena. The iPhone above being a clear example of this, where Apple was in the Consumer Electronics arena, but never before part of the mobile phone industry; and don’t forget how they revolutionized personal music space with the iPod. There were three key points Rita McGrath highlighted in her talk:
1. Continuous Reconfiguration: being able to make incremental changes continuously
2. Healthy Disengagement: know when to stop being in a business when it’s not a system, application or product of the future
3. Deft resource allocation: ask someone outside your group to make decisions on resource allocation within your group
The first two you’ve likely seen mentioned a few times before (although in my opinion is still lacking in most institutions), but the third is an interesting and certainly a difficult concept to implement. What is essentially being suggested is that you are not responsible for your own teams resourcing. While the idea may sound alien and absurd to some, the example she used makes it clear as to why we need to do this.
“Imagine you are Mr. Sony Walkman, and you’re right at the height of your business success. You own the space of portable music playing. Then one day you invite R&D to show you what’s in store for the future, and they tell you there’ll be no batteries, songs are going to fly through the air and end up on people’s mobile phones, and basically your product won’t be [relevant].”
It is unlikely that the head of the Walkman division would decide to cut their investment on the Walkman and drop everything to work on this new technology when his business is at its peak. Someone outside the group on the other hand, would be less biased and more likely to be able to make the right decision. This isn’t the first such example; even the original Apple Macintosh was born from the research done by people working hard at Xerox PARC in Palo Alto California. Just that Steve Jobs realised its potential and transformed it into what was the first personal computer with a Mouse based Graphical User Interface – Xerox launched a computer many years later, which was much more expensive and ended in failure.
In a hyper competitive world with new startups around every corner, adaptability is paramount. It is not always about making revolutionary changes, but also being able to make continuous incremental changes that result in a revolutionary product or service. We tend to get caught up in the process and bureaucracy involved in managing large systems, where making a simple one line change, even if we believe should have only a small impact, ends up taking multiple weeks or even months to implement. People completely loose the commercial focus and start to become part of a system that they are comfortable following. Calculated risk, in my opinion, is something we must take in order to progress, both in our personal lives as well as at work.
This brings us to a related topic on failures. Right from our childhoods we are taught about right and wrong, how making mistakes is bad. In his TED talk from 2007 Sir Ken Robinson talks at length on this topic and about how schools kill creativity by breeding conformity. Mistakes are how we learn, and how we become better at what we do. But we tend to hide our mistakes and failures because we fear them. At status meetings we have a tendency to mark projects as green, when in reality they should be amber or even red, or we find ways to explain why the delays are not delays, or how applications are “released” (the sub text being, released but not usable by clients, yet). If everyone who truly had an issue raised their hand before things got out of control, we would collectively be able to solve the issues we face in a much more productive and effective manner. This is the point Linda Hill highlights in her talk, the importance of “Collective Genius” – nobody has the answers to everything, but collectively we can overcome any challenge. It is about surrounding yourself and knowing the right people to bring to the table and not about having all the answers yourself.
The next speaker was Philippe Starck, a designer whose work covers a range or areas from product to interior design. He has even designed Yacht’s for the likes of Steve Jobs and Russian Billionaires. He too had spoken at a TED Conference where he highlighted the same message that he did today, i.e. “to design with purpose”. His products and ideas while infamous for their unique design, he says, stems from the underlying principle or trying to serve the purpose it was built for in the best way possible (while also being a conversation starter) – his Yacht’s he claims are more streamlined than traditional designs, making it easier to move through the water. He believes that products should be designed to be functional and also their appearance should not conceal their true purpose – if it’s a slow electric car make it look like one. Function stems not just from the immediate purpose of what an object may be used for, but also how it effects the environment around you. One of his most famous products is the “Salif lemon squeezer” (pictured below), the purpose of this device is to allow people to squeeze lemon (of course), but also to be able to take an otherwise mundane task and make it into a conversation starter.
What does Starck have to offer at a Business forum? Perhaps nothing, or arguably is as relevant as any other business leader. His success stems not from operational excellence or good networking but instead from the sheer creativity, innovation and originality of his designs and products. His benchmark is not the last best juicer on the market, instead it’s what he imagines the best product to be. This allows you to design and build without boundaries, to set goals much higher and achieve things you may have otherwise thought impossible. Today’s world of Finance and Technology in large Corporations is almost in the stone-age in certain areas compared to what we use in our personal lives. At home we have some of the latest laptops/desktops, iPhones, iPads (or Androids if that’s your preference). If you want to host your own website or use cloud services, you can start for free and very easily get terabytes of storage for < $30 a month; not to mention instant allocation of storage or server space if you wanted it. And this is the current state of the retail space, it’s live, it’s used actively and it’s only getting cheaper and better. At work we have slow bureaucratic processes for first getting approval (yes I know this is needed as a safeguard against abuse) and once approved, it takes weeks or even months of chasing people to provision the hardware. There may be an argument to be made for the fact that process is needed to ensure controls and reduce wastage, but has anyone looked into the cost of introducing the process in the first place? The cost of unhappiness and displeasure caused by constantly having to follow up and spend time on functions that are not core to your areas?
If we can’t do something efficiently, have we considered using firms that specialize in these areas? Going back to Philippe Starck, he designs and that’s what he does well, but he does not own every part of the process, the actual development and engineering is a collaboration with various parties. Alessi is one of the biggest brands he designs for, but he only designs, he doesn’t own other parts of the process, which allows him to focus his energy and time on what he does best.
The next speaker, Peter Diamandis, is the co-founder of the X-Prize, a prize of $10 million dollars for the most breakthrough innovations (the Virgin Galactic Spacecraft was a result of this competition). In his talk, he emphasizes the positives in the world, despite all the wars, poverty and other conflicts we might see today. The economist cover page story he referred to tells us of how in the past 20 years we taken a 1 billion people out of poverty. A strong believer in crowd sourcing solutions (the X-Prize being the best example), he reiterates some of the points I’ve already highlighted, about how competition today comes from the exponential growth of startups and not just large corporations. One very interesting statistic he had was that in the next 10 years 40% of the S&P 500 companies will no longer exist (too big, too slow and not able to adapt to the exponential growth).
To be relevant in the market 10 years from now we need revolutionary change. Competition can come from anywhere and smaller more nimble firms are able to setup an entire IT infrastructure at a fraction of the cost to large corporations. There are many differences of course; especially the fact that they don’t have legacy systems to be concerned with. If you have any doubts about what Technology is allowing businesses to do today, let’s take a look at some recent successes.
1. Uber – Founded in 2009, current estimated valuation $35-40 billion (source: Business Insider)
2. WhatsApp – Founded in 2009, sold to Facebook for $16 billion (source: CNBC)
3. Facebook – Founded in 2004, current Market Cap ~$216 billion (IPO’d in 2012)
4. Tesla Motors – Founded in 2003, current Market Cap ~$31 billion
5. Simple (banking) – Founded in 2009, sold to BBVA of Spain for ~117 million (source: Business Inside)
6. Personal Capital (personal finance) – Founded in 2009, total funding/investments to date ~$52.3 million (source: Tech Crunch)
Technology has enabled the disruption of a variety of industries, ranging from Transportation to Social Media to Banking. The above list is by no means exhaustive, to name a few others, dropbox, AirBnB, Instagram, Youtube, etc. have changed the way we share files, book accommodation and share videos. If large corporates are unable to adapt and be more agile in the way they build systems (and become more cost effective), the startups of today are going to be formidable opponents that are able to not just reach much quicker to market needs but also produce better quality products. As Peter Diamandis put it, Exponential growth is disrupting the way we live and do business today.
A key point to note is that the Technologies used to produce these disruptive products are available to almost everyone who wants it. It is not about accessibility anymore but instead about the mindset we have when approaching problems or building products. Startups do this with less money and fewer resources, corporates need to take a page from this book and think about how best to achieve more with less.
Malcolm Gladwell, was the next speaker on stage, he is a journalist for the New Yorker and has also authored numerous books including, David and Goliath: Underdogs, Misfits, and the Art of Battling Giants and The Tipping Point to name a few. Gladwell’s talk centered around the story of Malcolm McLean, an entrepreneur that revolutionized the shipping industry. Starting his career by founding a Trucking Company, he grew this business to one of the largest in the United States. McLean later sold his very successful business to take over a shipping company, which allowed him to move into the transatlantic freight business. With no experience at all in shipping, he was able to breakdown the process into its core elements and identify points of inefficiency. The biggest problem he saw was the shipping containers used, which he redesign into something that revolutionized the industry and is the core of what is still used today.
There are three qualities that Gladwell highlighted as key to being successful in running a business:
Disagreeability was what he emphasized on the most. It is a quality that allows you to not care or worry about what other people may think of what you are doing. It allows you to be independent and try new ideas without concern for the consequences. It’s important to not confuse disagreeability with arrogance. Disagreeability lets you take action and act without concern of how others perceive you, while arrogance makes you think you are always right. Disagreeability is a characteristic that allows you to think outside the box and question rather than just follow the norms of an existing process. McLean questioned the shipping process, Jobs remade the music industry and Henry Ford developed the modern day assembly line production – all people with strong elements of disagreeability.
Our next speaker was Kip Tindell, founder of The Container Store, Tindell speaks of “Conscious Capitalism”. In his speech he talks about how in today’s world we essentially work in a cut throat environment where there is no room for compromise on salaries or bonuses and the only way to be able to compensate for losses is to lay off employees. At the Container Store however, he talks about how they have built an organization or rather a family of trust with an Employee First Culture. All the way from their vendors to the employees who work at the firm. He claims to have never had to lay off a single employee to help offset losses, and instead has been able to achieve this through various means, including Senior Management taking pay cuts as well as negotiating lines of credit with vendors who were willing to differ payments primarily based on the strong relationships and trust they have built.
In today’s capitalist world and especially in America this almost seems unheard of. Kip Tindell however, has managed to build a billion dollar Retail store selling Containers! His retail store employees he claims also earns about double the typical salary.
Linda Rottenberg was the next guest on stage. CEO and Co-Founder of Endeavor, a company setup to identify, mentor and fund “high-impact” Entrepreneurs, Rottenberg talks about her experiences and tips for running any business successfully. Breaking down her talk into a few succinct points, here’s what she had to say:
- The riskier option is to do nothing: Change in today’s environment is inevitable, and standing still while everything around you moves is a very risky place to be. Markets change, environments change and the even the goals of your business change. You need to adapt in order to survive or your business or product is bound for failure
- Biggest obstacles to change are physiological, not financial or structural: Often we make arguments for changes being too expensive, complex and unnecessary. The root of most of these arguments however stem from a single point, your own personal physiological resistance to change. Keeping things the way they are gives us a false sense of security, breaking away from this is the key to being able to adapt to the continually changing environment and succeed
- Best ideas die in the brains not the conference room: More often than not, we are afraid to speak up, afraid that our ideas aren’t good enough or that it’s not our place to speak. The fact is that most people have great ideas and the reason we don’t see or hear of them is for the simple reason that they don’t speak up. As leaders we need to speak up ourselves and also instill a culture where idea generation is a key part of any discussion and people are not afraid of repercussions (because there really are none!).
- Stop planning and start doing – “Proof points not powerpoints“: Especially at larger organizations we have the tendency to over engineer and over plan. Analysis paralysis, planning paralysis, are all a reality and we very often fall into this trap. While there is always room for a certain amount of planning, it is often much more productive to have early prototypes of what you are trying to build.
- Must encourage failure: This is a point that multiple speakers during the event highlighted. We must allow people to fail, if they always chose the safe option we would never build anything game changing and at some point, undoubtedly, fall far behind the competition. Right from our childhood we are taught that failure and getting things wrong is bad, in fact our education system is built on the premise of penalising failure and rewards success. This mind-set is something we need to battle in order to be able to build truly great products.
- Meaning matters more than money: The core of what we do should be driven not by monetary gain, but by the meaning of the product or service we provide. It may be difficult to make this distinction sometimes, especially for those who may work in the Financial Services Industry, however, even for such organisations the idea is not farfetched. Profits are a by-product of any successful business, and not be the primary focus.
Claudio Fernandez-Araoz is known to be an expert on Talent and Leadership, and also the next speaker at the World Business Forum. The key message that he had on hiring and retaining talent was that potential is much more important than experience. Where a person is right now in their life or career matters much less than where they have the potential to be. High potential employees have the ability to pick up the necessary skills to achieve goals they set out for themselves, making it less important what skills they may already hold today. Claudio further highlighted the importance of the environment and talent you surround yourself with. Having the best talent around you and leading them successfully, inherently breeds a culture of curiosity, high potential and growth.
During his time in Argentina he ended up living at a horse ranch where he started learning how to ride. During his travels while passing through a bar, he came across a group of volunteers from America who were headed to a village to donate shoes to children in need. The following morning, feeling very proud of what he had done, he told his host at the ranch about his experience. Rather than congratulating or thanking Blake, the man asked, “but what will they do once they grow out of it? You have given them access to something that isn’t sustainable”. This really bothered Blake a lot and got him thinking. During the past few weeks Blake had also come across a shoemaker who made the “Alpargata”, a style of shoes regularly worn by Argentinians. He came up with a plan about how he would sell these shoes in America, and for every one he sold he would donate one to a person need in Argentina. He discussed the idea with his host, who offered to help him negotiate a deal with one of the local shoemakers.
Having extended his trip to Argentina he finally returned back to the US with a bag of 250 Alpargata shoes. His first sales were to his sister’s friends at a dinner party at their house. First only shown the shoes and later told about the story and philosophy behind them, only got them more excited. He then setup a website to sell the products and also found a retail store to place his shoes, where they also placed a board outside advertising the “one for one” philosophy. His first success came when a fashion writer at the LA Times wrote a half page cover article about TOMS (shared only with the opening of The Da Vinci Code). Still working out of his house with only interns, the business instantly took off. His online orders were completely sold out, and new orders were lining up from the likes of Nordstrom (a popular fashion store in the US). From then on it was a whirl wind of success, an article in Vogue only further accelerated the company’s growth.
A few months after he started TOMS, Blake along with his family and other volunteers went back to Argentina to keep his promise of “one for one”. At a village in Argentina, they started to place shoes on the feet of every child who patiently waited in line. The story of one mother and her two children was particularly touching, after they placed shoes on her children’s feet, she broke out into tears. Blake’s host from the ranch, who was also with them, translated what she was saying. Both her children were so enthusiastic to go to school and study, but only one of them were able to attend at a time, the reason, the school did not allow children in without shoes and they only had one pair between them (not to mention that they were completely the wrong size). So the boys had to take turns to attend school. This only further fuelled Blake’s passion and philosophy of “one for one”. Giving shoes was not only giving children footwear to protect their feet, but also improved their chances at a better education.
No company is ever without critics and TOMS was no exception. Blake’s advice is to invite your critics in, understand the merits of their arguments and address them head on if they are in fact valid (and if they’re not you’ll likely put them to rest). One point that many critics had was that there wasn’t any real employment being generated and this could create more problems rather than solutions. Blake’s solution, TOMS now plans to setup manufacturing facilities in all of the countries that they donate to. TOMS has also further expanded into other areas, they now sell coffee and eyewear as well, all with the same philosophy. For eyewear sold, they sponsor eye operations for people in countries with dire needs, providing sight to those who otherwise had little hope.
Blake’s message is simple, do good and everything else will follow. TOMS based on a recent investment from Bain Capital values the company at $625 million (source: forbes, reuters).
A difficult act to follow, our next speaker Linda Hill talks about the “Collective Genius”. She focuses on the importance of not having all the answers ourselves and instead harnessing the collective genius that we have in our organisations and teams. The collective genius is concept that emphasised how in today’s world it’s no longer about being the innovator alone and more about encouraging and inspiring the people around you to collectively innovate and work towards solutions.
There are three key parts to this process:
- Creative Abrasion: The process of generating ideas
- Creative Agility: Running experiments on the ideas, collecting data and using this as a process of discovery oriented learning. Experiments are not to be mistaken with pilot versions of the products, but rather proof of concepts of what we want to build
- Creative Resolution: A decision making process of being able to combine ideas (even opposing ideas), to come to the best solution or product
By decentralising the process of innovation, problem solving and even decision making to a large extent, the role of leaders and managers is to facilitate collaboration and ensure that the ideas of every individual is given equal importance. With creative agility it is important to allow for multiple ideas to be prototyped. While the initial cost of doing this may seem prohibitive, the long term benefits could be exponentially high. This allows us to make mistakes early on and are either able to decide against them or identify early wins and have the ability to build a minimum viable product (MVP) quicker than you initial thought possible. Most important of all is that you also learn from failed version of your products with relatively low cost and before it’s launched into a wider market.
Linda Hill closing remarks were to “Invert the pyramid. Unleash the power of the many and let loose the strong hold of the few to promote innovation”
Daniel Gilbert, a professor of psychology from Harvard University, spoke about the biases we have in decision making. He started with a very simple formula:
Most likely outcome of any decision = odds you will get what you want X value of getting what you want
Our biggest challenge and where we most often go wrong, is in calculating the odds of getting what you want. Referred to as an optimism bias, we seem to inherently be over optimistic, likely because of our need or want for the desired outcome. It is cultural, in our upbringing, and almost part of our DNA – humans inherently “hope for the best”.
The other challenge we often face is in valuing the cost of uncertainty. Human also have an uncertainty bias. We tend to be willing to pay more to avoid any uncertainty if we had the choice.
To help overcome obstacles of a value proposition you should evaluate what else you could do with the money. If you were to spend $10,000 on a car, what else could you do with that money? Making this comparison will help you understanding the true value of $10,000 and ultimately make a more informed and educated decision.
The mistake we often make is the relative comparison on the discount or savings on a purchase or decision. If you could save $300 on a $1,000 purchase by traveling an extra 10 miles, you are more likely to make the trip as compared to saving $300 on a $30,000 purchase. In reality both options leave you with the same amount of extra cash on your wallet, but because of the way our mind works in relatives, we do not make this connection.
While a lot of decision making sometimes feels intuitive, examples posed by Gilbert makes you rethink the way we approach our decisions because of our biases. As he puts it, “[we are] sailing new seas in a very old vessel, and we need a shiny new compass”.
Simon Sinek, born in Wimbledon but lived around the world including Johannesburg, Hong Kong and now settled in New Jersey, talks about the physiological aspects of leadership. Also having spoken at a TED conference – his talk titled “How Great Leaders Inspire Action”, has had over 20 million views to date (the third most of any TED talk, with number one being the Sir Ken Robinson talk mentioned above) – Sinek touches on how great leaders build a circle of trust and make people feel safe. It is about building a community where employees would be willing to sacrifice everything for their company.
The corporate world we work in today, in many ways, is quite contrary to this. People work for the money they make, employee turnover is high and the idea of a lifelong employer is almost urban myth. This is a culture that works both ways with employers making employees expendable as well as the other way around. Especially in large organisations, when it comes down to making cost reductions, management has a mandate which is executed by its officers, without necessarily enough thought about the individual or human element. A culture of backstabbing is common place and is the manner in which many people progress they’re careers and are rewarded for it; quite contrary to a place like the “military where people are rewarded for sacrificing their lives, whereas businesses reward people who sacrifice others”.
Sinek clarifies that it’s not the people that create this unhealthy culture, but instead the environment that they are placed in that leads to them to behave in the manner they do. As leaders, we set the tone and the environment that cause people to behave the way they do. The culture of bonuses and pay is purely performance based on project deliveries; the rush it produces when you receive these incentives is caused by the release of Dopamine. This could be likened to that of an addict getting a rush when they take drugs. And the constant reinforcement of this culture only makes us more addicted to it, not to mention the fact that Dopamine only produces a sense of temporary happiness.
What we need to build is a stronger human connection between the people we work with. Building a sense of trust, belonging, friendship and camaraderie. Complimenting those who have done well, not in an email but in person. Even with the advent of technology and email, there are certain core human interactions and senses that can only be triggered through physical interaction. Mentioning a person’s name with a physical audience present has a much stronger impact than writing an email about it. Running a business, team or project of any form is about working with the people you trust. Through selfless acts of generosity, we feel a sense of pride that not only makes us feel better, but also has a positive effect on those witnessing the act. Building a successful business and team isn’t about the numbers, it’s about the human interaction and emotion. It’s about sacrificing the numbers for the people and not the people for the numbers – “to be the leader you wish you had”.
Garry Kasparov, as most of us probably know was for many years the reigning chess grandmaster. Born and raised in Russia, today he’s settled down in the US, away from likely persecution in Russia after becoming a political activist. Kasparov talks about how each person is different and that understanding how to tackle any challenge is about understanding our DNA and how we function. The “tips” and guidance from others are merely suggestions and not a recipe for success.
Entrepreneurship in the US has been on a decline since the 1970s, even though recent numbers suggest a rebound. According to Kasparov, this is because people have become more risk averse, favouring incremental change instead of revolutionary ones with a higher risk-reward ratio. People spend more time securing patents and protecting them rather than innovating further. We have more processing power on our iPhones than they did to send a spaceship to the moon. With globalisation and the technology we have access to today, we should be doing more and solving bigger problems.
Technology and globalisation has certainly changed the world we live in. With significant development in certain countries while others continue to lag behind. His most stark example was the fact that today we have lines of people waiting for iPhone’s outside stores in the US as there used to be in Russia for food. Perhaps the change is a positive one, but it is a significant cultural change in the way we live our lives today. Kasparov wasn’t necessarily offering solutions or suggestions to the state of the world, but more to highlight the state of affairs and asking us to observe and be more conscious of the culture and society we are a part of.
While technological innovation has brought us the iPhone, he believes that this shouldn’t be at the expense of larger initiatives like the Apollo Space Missions. We need more exponential change, more leaders who are risk takers not risk averse. As highlighted by Kasparov and many other speakers at the conference before him, the only way to guarantee failure is to stand still. Quoting James Cook, a British Explorer, Kasparov also believe that “Ambition leads me not only farther than any other man has been before me, but as far as I think it possible for man to go”.
The last speaker of the conference was Ben Bernanke, former chairman of the US Federal Reserve. He spoke mostly about the financial crisis and some time was spent on Q&A, there isn’t much that I’d like to mention regarding his talk, but one point has definitely stuck with me, when asked about Technology and how it has changed finance, his response was that “the last useful Technological innovation in finance was the ATM”. Perhaps an exaggeration, but it certainly makes us pause for a moment to take think about what revolutionary change there has been in Finance that has changed the lives of everyday people.