Disruptive Marketing

Disruptive Marketing

In the traditional approach to marketing, companies develop products or services and then implement strategies to help attract new customers to their business.

In this article…

  • What is disruptive marketing?
  • Who employs disruptive marketing?
  • How is a disruptive marketing plan developed and employed?
  • What career titles work with disruptive marketing strategies?
  • How can a marketing school help you succeed in a company that uses this type of marketing strategy?

But times have changed. Today’s consumers drive a market, not just a business. Therefore, companies must tap into a market’s mood and provide what consumers want. This is where disruptive marketing takes its cue.

What is disruptive marketing?

In truth, disruption is more a business model than a marketing approach. Most companies still tend to market through traditional means, which provide plenty of opportunities for rival companies to disrupt current messages. However, consumers have become stubbornly resilient to shifting messages, thanks to an increasingly crowded market. To combat this, a company’s product or service must innovate and and pay attention to consumers, delivering exactly what the market wants.

Apple created a prime example of the latter approach when it introduced a truly innovative product through its online music store. When iTunes first launched, average music consumers wanted to purchase the songs they were hearing on the radio without necessarily buying an entire album from those artists. Singles were no longer available on compact disc, and the government was regulating online file-sharing sites such as Napster. By introducing a brand-new approach, iTunes delivered on the consumers’ desire to purchase one song by an artist, as well as their desire to avoid owning hours of music they weren’t going to listen to.

Companies attempting to employ disruptive marketing need to be prepared to change their business model, their outbound product or service, and the message they send to consumers. Depending on the size of the company, this can be a risky venture. However, maintaining the same business model over time can be even riskier. Just ask Kodak, which in less than 20 years went from the fourth most valuable brand worldwide to bankruptcy. Why? Because they weren’t prepared for customers to stop buying film and switch to digital photography. The market had been disrupted, and Kodak failed to adjust.

A disruptive company has one of two goals: design its product or service to match the demand of an emerging market, or re-shape an existing product or service to meet the demand of customers unsatisfied by the current offering. From this starting point, a marketing team designs an advertising campaign with disruptive messages that either challenge the conventional thinking in an existing market or speak to a new one.

Two Types of Market Disruption

  • New-Market Disruption – targets customers who have needs that have been unserved by existing companies. Apple’s iTunes application is one such example.
  • Low-End Disruption – targets consumers who don’t need all the features valued by customers at the high end of the market. For example, the personal computer disrupted the mainframe market and took over the computer market; this, in turn, is now becoming the case with laptop computers. Initially, laptops didn’t have the computing power of a PC, but appealed to consumers who wanted minimal computing “on the go.” Over time, innovations have made laptops more powerful; and thus, they’ve taken an even large market share from PCs.

Who employs disruptive marketing?

Given the rapidly changing face of business – and the technology supporting it – every company should at least prepare to use disruptive marketing. The most prominent industry currently employing market disruption is the technology industry. Computers, phones, the web, or any electronic device or service can be shipped as a minimally viable product, and then be updated regularly while already in the possession of its customers.

A broader target for disruption marketers, however, is any product or service that historically had only been accessible to consumers with either a lot of money or a lot of skill. One such example is Turbo Tax. The company was able to mediate a service that usually required the expertise of a highly qualified individual—the accountant or “tax guy.” Turbo Tax offered a comparable degree of service at home, with the option of segmenting a customer’s time, and it was cheaper.

The key in finding a company likely to use disruptive marketing is to see who is targeting emerging markets and/or making a product or service more accessible to customers in an existing market.

A Case of Market Disruption

When Apple introduced the iPad to the world, tech companies scrambled to catch up. Many manufacturers entering the tablet market used the Android operating system to run software on their devices. However, since they were trying to deliver a product similar to the iPad, with similar features and with a similar price, the Android tablet market couldn’t match the success of the iPad. Meanwhile, Amazon was quietly developing the Kindle Fire. It didn’t have the same features, interface, or capabilities as an iPad—but it also didn’t have the same price. In a prime example of low-end market disruption, Amazon found consumers who didn’t want all the great features of the iPad, but wanted the basic features at a baseline price. Prior to the fourth quarter of 2011, the Kindle Fire wasn’t even available. By the end of the first quarter of 2012, it had grabbed more than half of the Android tablet market.

How is a disruptive marketing plan developed and employed?

Any business that’s serious about causing market disruption must be willing to shift or even completely change its infrastructure. Successful disruptive marketing requires a long-term commitment, and likely a fundamental shift in a company’s business model.

The first step in launching a disruptive marketing campaign is obtaining internal buy-in from top to bottom. Whether a company is simply trying to change the message about its brand or is completely redesigning the product, everyone must commit themselves to the change in brand perception.

Next, the marketing team will need to collect all the current data about the target or emerging market. Determining spending patterns and the profiles of existing customers is important, but the disruptive marketing team must discover more—such as why a customer purchased a particular product or service. In order to do this, the team will need to use qualitative research methods, such as physical observation, interviews, and surveys. All this data mining is used to unearth the parameters of a market, profile it, determine its mood, then speak to it.

Once the market has been determined, it’s time for the marketing and design teams to develop a strategy that will use effective media channels in the market. This will almost inevitably include developing an online presence. The design team must develop content, create a social-media presence with a unique sales position, and write a substantial amount of copy (often via blogging).

Before launching the campaign, executives must set consistent brand guidelines and marketing messages. Once these are established, it’s time to execute the plan. And as the plan unfolds, the marketing team will continue to collect and interpret data revealing the effectiveness of the strategy, and adjust the approach as needed.

What career titles work with disruptive marketing strategies?

Brand Manager

What do they do?

Think of this position as the brain of the disruptive marketing strategy. Brand managers handle all internal and external messages, guidelines, and developments in a disruptive strategy. In this crucial role, brand managers:

  • help organize and interpret data collected by market researchers, to determine either new markets or messages and improvements that will disrupt current targeted markets.
  • lead the marketing team in designing creative and highly interactive content for consumers, and push it directly to customers through social media so it beats out other market messages.
  • ensure that marketing team’s brand message is representative of the company’s mission.
  • manage each marketing project from start to finish, reporting progress of a campaign back to the company’s executives, and then help determine the company’s next steps.
  • facilitate a company’s public contact with its executives through interviews, networking events, and speechwriting.
Education and experience

A bachelor’s degree in public relations, marketing or communications is required for consideration as a brand manager. Courses in business administration, public speaking, and creative and technical writing will also be helpful. Although it’s beneficial to have a master’s degree in a marketing-related field, experience and a proven track record are more important.

Future brand managers can enter the field in a variety of positions: public relations specialists, advertising agents, sales managers, etc. Anywhere from five to 10 years of experience is needed. Another item that helps a resume stand out is the certification offered by the Public Relations Society of America. This can be earned based on years of experience and passing an exam.

Market Research Analyst

What do they do?

In the realm of disruptive marketing, a research analyst must have a perceptive eye, able to notice trends in data that competing market researchers miss. Often in a disruptive marketing campaign, there is useful information about a particular market in plain sight that no one has noticed. With their creative approach, these market researchers can make that crucial “catch.”

Instead of a numbers-only approach, analysts in this field need hands-on market interaction. Market research analysts involved with disruptive marketing:

  • research current market trends, consumer spending habits, and consumer perception of a brand’s delivery, mining the data for undiscovered patterns.
  • host face-to-face interviews or focus groups to determine what customers want when buying a product or service.
  • use research to create a profile and recognize the boundaries of a target market for an employer or client through determining what the customer in this market wants from a product or service.
  • generate and visualize reports on all relevant data before, during and after disruptive marketing campaigns and publish them in an executive’s desired format.
Education and experience

The disruptive market research analyst will need at least a bachelor’s degree in market research or a related field, such as statistics, math, or computer science. However, since these researchers will be interacting directly with customers, courses in communication and public speaking are a must. Other degrees or classes to consider include business administration, behavioral science, or public relations. An advanced degree in one of the above areas is often a requirement for management, or for positions that perform more specialized research.

Entering this field through a sales position proves an excellent starting point. In a sales position one gets the experience of interacting directly with customers, discovering what makes them say yes to one product while turning down another. Also, any position requiring analysis, report writing, or data collection will give an applicant useful experience.

Advertising Director

What do they do?

These are the people who present the first images and impressions of a brand to the market. In a disruptive marketing campaign the game is changed even further, requiring directors to make real-time decisions, rapidly scaling winning ideas up and abandoning ideas that don’t work. Directors collect data at a rapid pace, enabling advertisers to change their message or approach while a campaign unfolds, instead of waiting for batch results. More specifically, directors:

  • lead and oversee the team that develops an advertising campaign.
  • work hand-in-hand with the finance department to prepare a manageable budget and cost estimates for an advertising campaign—which usually is noticeably larger for a disruptive marketing campaign.
  • lead a team in web development, generating interactive content, overseeing SEO copy writing and working closely with social media that aims to connect directly with customers.
  • develop a product road map that communicates the company’s unique assets, and create an image or message with a disruptive feature that attracts new and existing customers.
  • define, measure, and disseminate metrics for the product or service, and adjust accordingly.
Education and experience

As with the positions above, the only baseline requirement educationally is a bachelor’s degree, preferably in advertising, marketing or journalism. Other relevant areas of course study may include consumer behavior, market research, sales, communication methods and visual arts (specifically, graphic arts). Marketing students will need experience before attaining the role of director. A job as an advertising sales agent is a good place to start. After at least five years of experience at this level, agents may be eligible for the lead role of director.

What type of salary should I expect?

Brand Managers
Median Pay: $43,500
Top Earners: $76,910
Market Research Analysts
Median Pay: $60,570
Top Earners: $111,440
Advertising Directors
Median Pay: $80,630
Top Earners: $163,430
Source: U.S. Bureau of Labor Statistics, 2012

How can a marketing school help you succeed in a company that uses this type of marketing strategy?

Since disruptive marketing is a more specialized field of study, there will be few, if any, schools that offer lower level courses for this concept. Instead, schools offering a bachelor’s degree in marketing or business administration will maintain a broad view of the field of marketing. Undergraduate schools offer the widest understanding of marketing and business administration, and thus lay a foundation to fully grasp the concept of disruptive marketing.

The skills needed to be successful in this field have a lot in common with all marketing degrees. Excellent communication skills, for report writing and making presentations involving a marketing plan, are integral in disruptive marketing. Classes that develop these abilities don’t simply lecture about communication, but give students real-world models and routine practice in engaging these skills.

Student will become familiar with both quantitative and qualitative research procedures, and draw accurate conclusions about the results to develop a viable disruptive marketing plan. Most schools with marketing programs offer courses that survey broad applications of research and analysis, as well as more focused applications for those students interested in a career in marketing analytics.

For the student who intends on working with disruptive marketing, certain ancillary courses are recommended. Behavioral science courses are beneficial for the disruptive marketer. It’s also wise to take one or more courses in graphic design, in order to learn how to visualize a brand.

If you’re simply fascinated by the concept of disruptive marketing and all its qualities, then perhaps the best option for you is an advanced degree in marketing. Moving on to a master’s degree allows students to focus their area of study; students can work toward a master’s thesis on the subject of disruptive marketing techniques and their effectiveness. And if you’re looking to become an expert in the field, there’s always the option of continuing to a Ph.D.

There are many ways to positively disrupt your career path. So start looking into the marketing schools that can help you to do that.

Original article from marketing-schools.org can be found here

Corporate Venturing

When the genomics revolution was transforming the pharmaceutical industry, Eli Lilly realized that its survival might hinge on its ability to catch up with this disruption. So in 2001 the company launched a corporate venture-capital fund in order to engage with cutting-edge biotech firms when they were just start-ups. By 2013, Lilly Ventures had been involved in more than 30 such collaborations, many of which gave its parent company valuable insights into the science of developing drugs by analyzing biological data.

A corporate VC fund like Lilly Ventures can move faster, more flexibly, and more cheaply than traditional R&D to help a firm respond to changes in technologies and business models. In some cases, such a fund can even help stimulate demand for a company’s own products. At the same time, of course, its investments may earn attractive returns—an added benefit for a tool that helps capture ideas that may ultimately shape an organization’s destiny.

For decades, large companies have been wary of corporate venturing. Some have seen their venture initiatives fail outright, and many more have given up too quickly: The median life span of corporate venturing programs has traditionally hovered around one year. Even firms with successful funds have sometimes struggled to make use of the knowledge gained from start-up investments. To be sure, running successful corporate VC programs isn’t easy: Companies’ processes and rules can make them slow-footed and unfocused. But as disappointment with R&D results grows, there are indications that corporate venturing may be gaining ground—and respect.

Companies hoping to acquire knowledge and agility from corporate venturing can benefit from following six steps, including aligning goals, providing the right incentives, and creating systems to transfer knowledge. I’ll go through these steps one by one, showing how firms can establish venture funds that are as savvy and nimble as the best private VCs. But first, let’s consider the potential benefits of corporate venturing.

The Case for Venturing

In the past, corporate interest in creating venture funds tended to wax and wane in sync with the general VC climate. Waves of corporate venture activity—in the late 1960s, the mid-1980s, and the late 1990s—corresponded with booms in VC investments and venture-backed IPOs. But now we’re seeing a corporate-venturing surge even during lackluster days for traditional venture capital.

In the first half of 2011, when independent funds were struggling to raise capital in the wake of the global financial crisis, more than 11% of the VC dollars invested came from corporate venture funds, a level not seen since the dot-com bubble. This new activity may indicate that as research functions face severe pressure to rein in costs and produce results, companies are looking for alternative means to learn and innovate. Companies as diverse as Google, BMW, and General Mills are complementing traditional R&D by joining with other investors to put money into promising start-ups. The logic is indeed compelling.

A faster response.

By providing both an inside look at new technological fields and a path to possible ownership or use of new ideas, corporate venturing can allow a firm to respond quickly to market transformations. Lilly Ventures was just one of several corporate venture initiatives in the 1990s and 2000s that helped pharmaceutical companies catch up with the rapid advances in bioscience that were threatening to render their chemistry-based expertise irrelevant. In a study of 71 venture initiatives by biopharmaceutical firms from 1985 to 2005, Hyunsung Daniel Kang and Vikram K. Nanda of Georgia Tech found that companies that made financially successful investments also experienced greater success in drug development.

It’s likely that developing capabilities such as this on their own would have taken Lilly and other pharma companies far longer and been far more expensive. Given the time and resources needed to update research facilities and recruit scientists with the right expertise, the growth of knowledge in internal laboratories can be painfully slow.

A better view of threats.

A venture fund can serve as an intelligence-gathering initiative, helping a company protect itself from emerging competitive threats. During the 1980s, for example, when integrated-circuit makers were searching for alternatives to silicon (the basis of the dominant chip technology), the silicon-chip specialist Analog Devices created a venture program to invest in competing technologies. Its goal was to gather strategic information at relatively low cost.

Analog’s portfolio didn’t do very well. Just one of its 13 companies went public, and only after so many financing rounds that Analog’s stake was heavily diluted. But the reason for the lackluster performance was significant: Making chips out of anything other than silicon turned out to be stubbornly difficult and expensive. Once this reality hit the markets, makers of silicon chips saw their valuations spike; Analog’s increased sevenfold from 1979 to 1985. But the corporate venturing program had provided insurance: If the alternatives had been viable, Analog would have been covered.

Traditional R&D doesn’t do a good job of sniffing out competitive threats. More and more, corporate R&D units tend to focus on a narrow range of projects, thus potentially neglecting disruptive advances that occur outside the company. Plenty of executives in companies with robust R&D functions lie awake wondering whether their firms are about to be blindsided by technologies they’ve never heard of.

Easier disengagement.

Another benefit of venturing, one that’s closely related to accelerating the company’s response to change and threats, is that it gives executives a faster way to disengage from investments that seem to be going nowhere. As is well-known, many companies find it difficult to abandon the not-quite-good-enough innovations that sometimes come out of internal labs. These projects can linger in product development for years, resisting termination (despite much talk about R&D portfolio management). Nokia’s insistence on developing its phones using the Symbian operating system, even as its competitive position went into free fall, is a classic illustration.

The arm’s-length relationship between companies and their venture funds offers advantages in this regard: The best funds tend to be quicker on the trigger than their corporate parents. Even if a corporation is unwilling to terminate an unpromising initiative, the presence of co-investors may force the decision.

A bigger bang.

By combining its own capital with that of other VCs, a corporate venture can magnify the impact of its investments. This is particularly beneficial when technological uncertainty is high.

A dramatic example is the iFund, supported by Apple and launched in 2008 by the venerable VC firm Kleiner Perkins Caufield & Byers on the day when outside developers were first allowed to begin working on apps for the iPhone. The $100 million fund—which subsequently doubled in size—invested in companies developing games and tools. In this way, Apple rapidly built a critical mass of applications for its new phone while spending very little. (The contrast with Apple’s rival Nokia, which eschewed such an approach when promoting its Symbian system, is striking.) Given the success of the iFund, it is not surprising that similar efforts have been launched by, among others, Research in Motion (to encourage the development of third-party applications for the BlackBerry) and Facebook (which teamed with Kleiner, Amazon, Zynga, and other tech luminaries to establish the sFund, devoted to promoting companies that work with social media sites).

Increased demand.

The iFund also serves as an example of a different kind of leveraging: By encouraging the development of technologies that rely on the parent corporation’s platform, venture investments can help increase demand for the corporation’s own products. Intel Capital took this approach in late 1998, when it established a fund that would help speed the entry of Intel’s next-generation semiconductor chip into the market. Fund managers invested in many software and hardware makers (often Intel competitors) whose products capitalized on the new chip’s power. Those investments accelerated the chip’s adoption by several months, according to Intel.

Intel Capital also played a role in seeding companies developing wireless internet products around the 802.11 network standards, which had been championed by Intel: In the five months before the 2003 introduction of the wireless-enabled Centrino chip set, the fund revealed its intention to invest $150 million in Cometa Networks and other companies that were promoting the adoption of Wi-Fi networks. The rapid uptake in Intel’s wireless products in subsequent years reflects the company’s success in using corporate venturing to create an ecosystem of wireless players.

Higher returns.

Finally, there’s the purely financial aspect of venturing. For independent VCs, making money for the limited partners is the primary if not the sole object. For corporate venture funds, gaining strategic benefits is usually the main goal; profits from venturing typically aren’t significant enough to matter to the parent company’s bottom line. Still, profits are always nice to have.

Companies bring a lot of value to the start-ups they fund, in the form of reputation, skills, and, of course, resources—from research scientists to sophisticated laboratories to armies of salespeople. They also change the way outside investors view the young firms’ prospects. Private and public equity investors often anticipate that a corporation-backed start-up will ultimately be bought by the company that invested in it—and at an attractive valuation, reflecting the strategic benefits the start-up can offer its new owner.

Thus it’s perhaps not surprising, as Thomas J. Chemmanur, of Boston College, and Elena Loutskina, of the University of Virginia’s Darden School of Business, have shown, that start-ups backed by corporations are more likely than typical VC-backed firms to attract the attention of high-quality market players—from investment banks to equity analysts to institutional investors—when they go public. During their first three years as public companies, the researchers found, firms backed by corporate venture funds show better stock price performance, on average, than those backed by traditional venture groups.

Making It Work

Despite corporate venturing’s compelling logic, venture funds sometimes run into trouble. Billions of dollars have gone down the drain as corporations have struggled to deploy their venture capital groups effectively. Most of the problems are rooted in incompatibilities between two mind-sets: that of the risk-loving, sometimes ruthless venture capitalist, and that of the process-bound corporate executive. If companies aren’t careful, their venture capitalists can become ensnared in the agendas of myriad corporate stakeholders or demotivated by inadequate or poorly designed financial incentives. And the parent company can miss out on valuable knowledge. These six steps can help companies avoid the pitfalls.

Align goals with corporate objectives.

Alignment of goals across the venture fund, the start-ups, and the parent company enables a corporate venture group to draw on the parent’s expertise. Without that alignment, corporate venturers are less likely to make good investment decisions and attract high-caliber entrepreneurs—and useful knowledge is less likely to flow from the start-ups to the corporate parent.

In a study of financial returns from more than 30,000 investments in entrepreneurial firms, Paul A. Gompers, of Harvard Business School, and I found that corporate venture funds are more successful if the stated focus of the corporate parent and the business of the portfolio firm overlap. In comparison with start-ups that aren’t linked with the company’s goals, well-aligned start-ups are less likely to be terminated and more likely to go public, produce higher numbers of patents within four years of going public, and have better stock price performance.

Streamline approvals.

A venture fund’s goals should be not only aligned with the parent company’s but also few in number. A streamlined approval process can help. In many companies, various internal constituencies must approve these funds’ goals—a situation that can lead to absurd results. When IBM abandoned its Fireworks Partners after two years, the fund’s initial proposed investments were still tied up in internal review with numerous divisional vice presidents. Delays like this not only drive corporate venture professionals crazy but also signal to external investors and start-ups that the fund is ineffective.

A tortuous approval process inevitably burdens the fund with too many goals. To please R&D, the fund might aim to gain knowledge about emerging technologies. To please the business development group, it might look for start-ups that could become acquisition targets. To satisfy the CFO, it might aim for a certain threshold of financial returns. Managers’ energies are spread too thin, and the fund wanders from goal to goal with no clear objective.

This problem contributed to the spectacular failure of Exxon Enterprises’ venture-capital effort. The program began in 1964 with a mandate to exploit technologies in Exxon’s corporate laboratories. It then shifted to making minority investments in industries from advanced materials to air-pollution control to medical devices. It later changed course again, focusing on computing systems for office use. Before the initiative was abandoned, in 1985, the computing-systems investments alone had generated an estimated $2 billion in losses.

A complicated corporate decision process can also lead to ineffective investing patterns. If getting approval is arduous, investments are made only when top executives are fired up and motivated to act quickly—usually because the media are hyping a particular technology or market segment. But these are usually the worst times to invest, with valuations high and probable returns low. A streamlined approval process allows a venture fund to act quickly on promising but unheralded investments, thus enabling a contrarian approach that might lead to the identification of neglected opportunities.

Provide powerful incentives.

Corporate venture professionals often expect the level of compensation and the incentives that independent VCs enjoy. But corporate leaders are typically troubled by the disparity between what venture managers expect to earn and the compensation of executives with comparable seniority in other parts of the company. And they prefer to provide incentives that are tied to the performance of the company, not of particular investments. “We can’t have people in separate rowboats,” General Electric’s Jack Welch once said, in reference to a venture team’s incentives. “We don’t want anybody in our company going to a meeting with a different interest from everybody else.”

Start-ups that are aligned with the parent company’s goals are more likely to go public and have better stock price performance.

But treating venture investors like other managers can lead to a loss of talent and motivation on venture teams, and a lack of focus on long-term corporate goals. Corporations that fail to provide adequate incentives face a steady stream of defections once junior investors master the venture process. After too many board meetings for which the corporate investor parks his Fiesta next to the independent venture capitalist’s Ferrari, the temptation to go elsewhere becomes overwhelming. The corporation, having borne the cost of training the investor, doesn’t reap the benefit of his or her expertise. GE itself paid the price: In 1998 and 1999, GE Equity lost 18 investors, a number of whom went on to leading VC firms.

Eli Lilly’s venture initiative was at first an organic part of the company—its venture capitalists were corporate employees without any profit share. After a slew of defections, Lilly analyzed compensation levels and found that only the most junior staffers at Lilly Ventures were being rewarded at anything like a market level. Still, the company’s senior management and HR professionals resisted changing the pay scheme. It wasn’t until 2009 that Lilly’s management agreed to turn the venture group into a freestanding organization.

After a slew of defections, Lilly discovered that only the most junior staffers at Lilly Ventures were being compensated at anything like a market level.

For recruitment and retention, compensation levels in a corporate venture initiative should match those offered by independent venture groups. At the same time, pay should be linked to corporate goals as well as start-ups’ long-term performance.

In a study of corporate venture funds, Gary Dushnitsky, of London Business School, and Zur Shapira, of New York University, found that those that closely linked pay to demonstrated investment success (often, both financial and strategic returns to the corporate parent) were more likely than others to make successful investments and to invest in earlier-stage companies—evidence that they were nimbler and more aggressive.

Indeed, many of the programs with the greatest stability—in terms of both management team and mission—have been characterized by high-powered incentives. An example is GlaxoSmithKline’s SR One, which operated under a single head, Peter Sears, from 1985 to 1999. During most of that period, the corporate VCs received 15% of the profits they generated and bonuses, based on less tangible benefits to the corporation, that could represent as much as 5% of the fund’s capital gains. This approach kept venture investors sensitive to both their financial objectives and the parent company’s strategic needs.

Create an experimental, failure-tolerant mind-set.

Risk aversion can be a serious problem for a corporate venture-capital fund. Sometimes that attitude stems from the corporate parent’s culture. When a venturing team boasts that no firms in its portfolio have been shuttered, corporate executives may interpret the announcement as a sign of success. But given the nature of the entrepreneurial process, and the fact that a significant fraction of independent venture investors’ transactions end in failure, the perfect record may be a signal that the team is playing it too safe, investing in companies with an eye to avoiding failure.

Well-structured incentives can help: They can focus corporate venturers on maximizing investment success, whether strategic or financial, and minimize their worries about getting their knuckles rapped for shuttering investments or selling start-ups at a loss.

Stick to your commitments.

While it’s important to terminate moribund projects, it’s also important not to walk away from promising ones. A low level of corporate commitment to good projects can be highly damaging to a fund and its investments. Sometimes merely a change in top personnel can prompt a company to rethink its commitment to venturing in general and to various investments in particular. In some organizations, it’s a ritual for new executives to discard their predecessors’ projects.

But if a parent company is seen as a fickle investor, professionals will be wary of joining its venture unit, entrepreneurs will be reluctant to accept its funds, and independent VCs will be hesitant to join in, setting off a death spiral.

To attract high-caliber outside investors to their venturing efforts, companies should adopt the attitude of independent VCs: As long as a start-up is healthy, commitments are binding. If a limited partner contributes even a small amount of the total capital promised at the time of closing, there is an expectation that the total amount promised will be provided. Even during the depths of the financial crisis, it was rare for investors to walk away from those commitments.

Harvest valuable information.

Knowledge doesn’t automatically flow from start-ups to the large organizations that have invested in them—at least not in a timely manner. The barriers to knowledge transfer are many: The corporate venturing and business development groups may be located far from the firm’s central operations. Everyone is busy with day-to-day tasks. There’s a cultural gap between the young MBAs who dominate most venture teams and the firm’s senior executives. And, of course, the fledgling technologies being developed by portfolio companies may not seem applicable within the corporation. But a failure to give the corporate parent access to the knowledge generated in its investments defeats a large part of the intelligence-gathering logic of corporate venturing.

Companies cannot leave knowledge spillovers to chance. Nor can they simply put an operating manager on the board of each portfolio firm to be the parent company’s eyes and ears, as GE and others have done. A manager running a 2,000-person refrigerator assembly plant is unlikely to have much time to worry about a 10-person start-up that doesn’t seem to be working on problems of immediate relevance to the corporation.

One of the most successful methods I’ve seen for transferring knowledge from start-ups to corporate parents is the creation of linked units dedicated to this task. This was the approach taken by the U.S. Central Intelligence Agency’s venture-capital program, In-Q-Tel. Founded in 1999 to acquire novel technologies, the fund primarily made equity investments in young firms, many of which had developed products for the private sector—for instance, technologies for detecting card counters in casinos. It was difficult for people in these young companies to identify who in the intelligence community might be interested in their technologies, and it was hard for intelligence professionals to imagine how consumer-oriented technologies might be adapted to their needs—to see, for example, how software for identifying MIT students at the Caesars Palace blackjack tables could be used to identify Al Qaeda members. Moreover, communication between the start-ups’ executives and the Agency’s product developers was severely constrained by limits on sharing classified information.

To address this challenge, In-Q-Tel adopted a two-part structure: A Silicon Valley–based venture team closely mirrors a traditional group, in which general partners and associates scout deals, perform due diligence, prepare term sheets, and shepherd portfolio companies. A technology team in Arlington, Virginia, focuses on assessing new technologies, testing the appropriateness of portfolio firms’ offerings for the Agency, and interacting with intelligence officials. Unlike the venture team, which tends to be dominated by former entrepreneurs and new MBAs, the technology team consists largely of seasoned executives with experience in intelligence. The two units share information in a way that allows In-Q-Tel to learn what’s going on in Silicon Valley without divulging sensitive information to portfolio firms.

In-Q-Tel’s situation highlights an essential lesson: If corporate venturing programs are to succeed, corporations need to invest as much in learning from their start-ups as they do in making and overseeing deals.To people with little experience of company-backed investments in start-ups, it may seem contradictory to juxtapose the words “corporate” and “venture”—the one with its connotations of administrative complexity, the other with its aura of big ideas and big paydays. The apparent incongruity is probably one reason why corporate venture funds sometimes don’t get the respect they deserve within the VC community. Robert Ackerman, of Allegis Capital, once wrote disparagingly that when corporate fund managers arrive to make investment deals, “four guys get out of the car with their corporate tee shirts and singing the company song,” while the independent investors around the table see these naive fellows’ employers as “the dinosaurs we’re trying to kill, the market opportunity we’re trying to capture.”

But the data show that well-managed corporate venture funds can hold their own with independent VC firms, and even outperform them. For companies that have found traditional in-house research unequal to the task of generating valuable insights into next-generation technologies or the movements of the market, the creation of a venture fund might well prove to be what executives are always looking for—the breakthrough idea that changes everything.

This article was taken from HBR.org.  Click here to read the original version.

14 Leadership Trends That Will Shape Organizations In 2018

There’s no “right” way to be a leader. Everyone who steps into a management or executive role has a different style of motivating and guiding people, and effective leadership means finding the way that works best for both you and your team.

Good leaders also know when it’s time to adjust their approach, and are able to adapt to the ever-changing demands of the workforce. We asked 14 members of Forbes Coaches Council to share their insights on the biggest and most influential leadership and management trends of 2018.

1.Encouraging All Team Members To Be Brand Ambassadors

Leaders are starting to recognize that every employee is an opportunity to provide the market insights into the culture, quality and standards of the organization. By leveraging social media, particularly LinkedIn, every employee can become an ambassador. Those messages can be hugely amplified by the employees. It’s effectively free PR but more powerful, because it’s authentic and believable. –Tyron GiulianiSelling Made Social

2.Investing In Human Capital Development

Leaders and companies will recognize the long-term benefit of focusing on human capital development. Taking a vested interest in helping employees thrive in all areas of their lives (not just work), will create more engagement, productivity and overall happier employees. – MJ ImpastatoH2H Systems

3.Increasing Emphasis On Empathetic Leadership

Value-driven Gen Y and Gen Z talent will continue to leave command-and-control cultures for collaborative workplaces. The value of leadership empathy will be sky-high in 2018. The ability to understand, relate to and be sensitive to employees, colleagues and communities will be paramount. We will see an even greater emphasis on listening, relating and coaching to drive effective leadership. – Loren MargolisTraining & Leadership Success LLC

4.Focusing On Individual Growth

With so much focus on diversity and inclusion, we may have overlooked the value and power of separation. I say 2018 will be the year of individual growth. The steady stream of dramatic events in 2017 have forced us all to ask some tough questions about life, and I think many will turn to their employers for help and support in clarifying one’s purpose and how to actualize one’s full potential. – Derrick Bass, Jr.Clarity Provoked

5.Leading By Actions And Examples

Leaders have long gotten away with vocally supporting policies and procedures, but their actions say otherwise. That tide will turn. With so much light being shed on unacceptable behavior in all workplaces, leaders will begin to understand they need to not only hold their teams accountable for proper behavior, but hold themselves accountable as well. – Lesha ReeseLesha Reese, LLC

6.Turning Organizations Into A Truly Customer-Centric Business

While leaders have been discussing being “customer-centered” or “customer-focused” for a while, in 2018 it’s time to walk the talk. With robust customer feedback mechanisms and reporting, there is simply no excuse for not adapting to what customers really want today. Customers are no longer loyal to a brand, they’re loyal to experiences that work for them. Talking is not enough. It’s time to act. – Jeannie Walters360Connext

7.Embracing ‘Work-Life Blend’

Industry leaders, such as Apple and Amazon, are recognizing how working from home helps acquire and retain top talent. But this is just one part of the equation. In 2018, companies will recognize that work-life blend is key. They won’t just opt for bean bag chairs and ping pong tables, but create jobs and schedules that allow staff to better blend their work and lives to reduce burnout and increase output. – Kyle ElliottKyle Elliott Consulting

8.Paying Attention To Internal Factors That Are In Their Control

To make better decisions, we crave certainty. However, smart leaders I work with are recognizing nothing’s certain in the outside world. In 2018, the winners will be those who redirect their attention to what’s happening inside their organizations, getting clear on who they want to be and what success looks like. Focusing first on what’s in their control will help them make decisions that matter. – Darcy EikenbergRed Cape Revolution

9.Taking Workplace Sexual Harassment More Seriously

The end of 2017 saw a rise in the #MeToo movement. I believe that more employers will be less tolerant of sexual harassment in the workplace and will work to deal with claims more seriously to set the tone for their organization. – LaKesha WomackWomack Consulting Group

10.Taking A Stand On Social And Political Issues

Last year was a watershed year for leaders articulating a point of view on sociopolitical issues such as DACA, diversity and inclusion, immigration and refugees. Remaining quiet or staying out of the fray is no longer an option. In 2018, we will see a big emphasis on C-suite leaders developing their ability to be ambassadors for the values of their companies. New recruits will demand to know. – Shoma ChatterjeeghSMART

11.Proactively Elevating And Retaining Women Leaders

It may come as no surprise, but one of the major leadership/management issues for 2018 will likely involve proactive efforts to elevate or retain women leaders. Another likely trend will be developing new, creative strategies for retaining skilled staff. Low unemployment and a lack of skilled workers is expected to continue to be a challenge for businesses in 2018. – Rick GibbsInsperity

12.Implementing Agile Talent

With the rise in freelancers and remote work, companies will be moving more towards the implementation of policies and procedures to work with agile talent. Organizations will need to train their managers to effectively onboard and utilize the agile talent to complete projects more efficiently while maintaining a strong organizational culture. – Manpreet DhillonVeza

13.Having An Objective Outsider

Many companies are great at in-house training and coaching, and there is great value in working in the same environment as your coach or mentor. However, it’s oftentimes difficult to be objective when you are seeing the same people every day. Your perception gets clouded and it becomes hard to be impartial around team challenges or feedback. Having an independent outsider helps all gain clarity. – Frances McIntoshIntentional Coaching LLC

14.Promoting Continuous Education

As the business landscape persistently grows in competitive intensity, every organizational member must be smarter. Therefore, continuous learning will be at the forefront of management’s agenda to gain and sustain a competitive advantage. Learning will not be confined to formal training performed within the business. Learning will extend to a growing number of online micro-learning platforms. – Steven MaranvilleMaranville Enterprises–The Venture Creation Corporation


This article was taken from Forbes.com.  Click here to read the original version.

How The World’s Top Executives Are Approaching The Fourth Industrial Revolution

The Fourth Industrial Revolution—which is characterized by the marriage of physical and advanced digital technologies such as analytics, artificial intelligence and the internet of things—affects most aspects of life today. Economists are analyzing its impact on society, attempting to forecast whether it will bring about more income inequality or create more opportunities. Scientists are interested in pioneering new capabilities from the collaboration of humans and machines in this new environment. Visionaries describe a brave new world, while also warning of the risks associated with some new technologies. And government agencies are figuring out how best to regulate this new world.

Making that leap from familiar terrain to true innovation can prove challenging

Government and business leaders are at the forefront of influencing how Industry 4.0 impacts the world. They are ushering in the new era by introducing advanced technologies in their organizations, thus affecting how we work and live. What do they think will be the impact of Industry 4.0? How will it affect their organizations and workforces? What are the challenges, and what are the opportunities? These questions are explored in a new global research report from Deloitte and Forbes Insights, “The Fourth Industrial Revolution Is Here—Are You Ready?” The research draws on a survey of 1,600 business and public-sector leaders globally, as well as multiple one-on-one interviews.

Social Issues And The Corporate Agenda

The general consensus seems to be that the future is bright. When asked to choose the more likely scenario for the Industry 4.0 society—one bleak or one promising more stability and equality—87% chose the latter.

The executives surveyed believe public and private businesses will be the most influential entities in shaping Industry 4.0 societies. Seventy-four percent say public companies will play a big role. Private organizations come in second at 67%, followed by government agencies and regulators at 45%.

But at the same time, executives are less confident about the roles they or their organizations can play in influencing society in an Industry 4.0 era. Less than a quarter believe their organizations hold significant influence over key societal factors such as education, sustainability and social mobility.

Executives’ Outlook For The Industry 4.0 Society

Deloitte’s report reveals that executives are still grappling with many outstanding strategic issues with respect to Industry 4.0. Their mindset is one of hope mixed with ambiguity—they understand the need to think broadly about all stakeholders and the impact technology will have across organizations and society; but, at the same time, they feel constrained by financial and operational demands, as well as change-management challenges. Only one-third of the executives surveyed are highly confident they can act as stewards for their organizations during this time of change. Further, just 14% are highly confident their organizations are ready to fully harness the changes associated with Industry 4.0. Executives acknowledge they may not be ready for the new era, but this lack of confidence has not compelled them to alter their current strategies. Many executives continue to focus on traditional, near-term business operations (i.e., developing business products and increasing productivity) instead of focusing on longer-term opportunities in areas such as talent, mitigating cyber risk, and competitive disruption to spur innovation and create new value for their direct and indirect stakeholders.

The Workforce Of The Future

Given numerous business priorities, global executives appear to be focused on human capital the least. Despite the clear impact Industry 4.0 will have on workforces in every industry and geography, many executives do not express urgency when it comes to tackling the challenges of the future of the workforce. Talent and human resources are at the very bottom of their strategic discussions, and only 22% of respondents believe that the uncertain impact of Industry 4.0 on their workforces will have a significant effect on their organizations. Incongruously, the vast majority of executives still believe they are doing all they can to prepare their workforces for Industry 4.0. At the same time, only a quarter of the executives surveyed expressed high confidence that they have the right workforce composition and skill sets needed for the future. The fact is, many jobs and required skills will change dramatically, though it may be too early to indicate how or to what degree. That said, two fundamental drivers that executives need to consider when trying to anticipate the changes are technology (e.g., robotics and cognitive/AI) and the changing workforce (i.e., gig economy, crowdsourcing, etc.).

The Role Of Technology

The shift to Industry 4.0 entails the ability to adopt and integrate digital and physical technologies to improve operations, become more productive, grow and innovate. This can represent a profound change for any organization. Executives understand this and say their current technology investments are strongly driven by technologies that can support new business models—which, they say, will have one of the greatest impacts on their organizations over the next five years. However, very few executives say they have a strong business case for investing in advanced technology. When asked what the hindrances are, executives most often pointed to a lack of internal alignment, a lack of collaboration with external partners and a focus on the short term.

Original article from Forbes can be found here

7 Steps for Establishing the Right Business Model

Most technical entrepreneurs focus hard on building an innovative product, but forget that an elegant solution doesn’t automatically translate into a successful business. Businesses require an equally elegant business model, with the right price, messaging and delivery channel to the right target customers to keep the dream alive and growing.

Defining the right business model requires the same diligence as designing the right product, but the approach and skills required are different. That’s why investors acknowledge that two co-founders are often better than one — with one focusing on the technical solution, and the other focusing on defining and building the business model. These two jobs need to be done in parallel.

This dual-leadership approach would have avoided the frustration I felt in a startup a few years ago where beta customers loved our software solution as a free prototype, but we couldn’t sell one in the first few months for a price that seemed reasonable for all our work and innovation. The founder had simply not done the work to validate a price and customer segment.

In the investment community, this work is called proving the business model. It starts with validating a business opportunity (a large customer segment willing to pay money to solve a real problem), in much the same way as your proof of concept or prototype validates your technical solution. Here are seven steps I recommend for establishing the right business model:

1. Size the value of your solution in the target segment.

Customers often complain that existing approaches are not intuitive or integrated, but old solutions may be familiar and locked in. Estimate your costs, including a 50 percent gross margin, as a lower bound on a price. Products too expensive for the market won’t succeed, and prices too low will leave you exposed. Match with competitor prices and market demographics.

2. Confirm that your product or service solves the problem.

Once you have a prototype or alpha version, expose it to real customers to see if you get the same excitement and delight that you feel. Look for feedback on how to make it a better fit. If it doesn’t relieve the pain, or doesn’t work, no business model will save you.

3. Test your channel and support strategy.

Now is the time to pitch the entire business model to a group of customers or a specially selected focus group. This is not just a product pitch, but must include all elements of your pricing, marketing, distribution and maintenance. Here again is your chance to make pivots for almost no cost.

4. Talk to industry experts and investors.

A small advisory board of outside people with experience in your domain can give you the unbiased feedback you need, as well as connections for setting up distribution and sales channels. It’s also valuable to talk to potential investors for their views, even if you are bootstrapping the effort.

5. Plan and execute a pilot or local rollout.

Good traction on a limited rollout is great validation of a business model. It allows you to test costs, quality and pricing in a few stores or a single city, with minimum jeopardy and maximum speed for recovery and corrections. Save your viral campaign and major inventory buildup for later.

6. Focus on collecting customer references.

Give extra attention to those first few customers, and ask for publishable testimonials and word-of-mouth support in return. If you can’t get their support, even with your personal efforts, take it as a red flag that the business will probably not scale at the rate you projected.

7. Target national trade shows and industry association groups.

You need positive visibility, credibility and feedback from these organizations as a final validation of your business model, as well as your product model, in the context of major competitors. This may also be a great source for leads as a key part of that final rollout and scale-up effort.

Your business model can be a better sustainable competitive advantage than your product features, or it can be your biggest risk exposure. Too many of the business plans I see are heavy on competitive product features, but light on business model details and innovations.

If you or someone on your team hasn’t spent at least the same effort on the business model as on the product service, you are only half prepared for the real world of business today. It’s hard to win by doing half the job, especially if that is the easier half.

This article was taken from Entrepreneur.com.  Click here to read the original version.

Six Keys to Building New Markets by Unleashing Disruptive Innovation

Managers know they need growth to survive—but innovation isn’t easy. In this Harvard Management Update article, HBS professor Clayton Christensen and co-authors detail the six keys to creating new-growth businesses.

Managers today have a problem. They know their companies must grow. But growth is hard, especially given today’s economic environment where investment capital is difficult to come by and firms are reluctant to take risks. Managers know innovation is the ticket to successful growth. But they just can’t seem to get innovation right.

When companies keep improving their existing products and services to meet their best customers’ needs, they eventually run into the “innovator’s dilemma.” By doing everything right, they create opportunities for new companies to take their markets away. Established companies historically have struggled when trying to create new markets. Success seems fleeting and unpredictable.

Recent research indicates these problems are systemic. Most companies that are started fail. Of those that succeed, most cannot sustain robust growth for more than a few years. Companies need a way to unlock the process of innovation and create innovation-driven growth businesses again and again. How can managers increase the probability that their decisions will lead to success? Now more than ever, managers need robust theories—statements of what causes what, why, and in what situation—to guide their decision making around innovation.

Managers typically grow impatient when we tell them this. “Theory?” they say. “That sounds like theoretical. That sounds like impractical.” But theory is eminently practical. Managers are the world’s most voracious consumers of theory. Every plan a manager makes, every action a manager takes, is based on some implicit understanding of what causes what and why.

The problem is, managers all too frequently use a one-size-fits-all theory. But the ground beneath them inevitably shifts. Strategies that worked so wonderfully in the past no longer suffice.

Drawing on the work of a number of thoughtful researchers as well as our own work, we are exploring a set of theories that can help managers respond to the ever-changing circumstances in which they find themselves. Specifically, these six lessons will help managers make the right decisions to successfully build new-growth businesses.

1. Disruptive innovations spur growth.

Companies have two basic options when they seek to build new-growth businesses. They can try to take an existing market from an entrenched competitor with sustaining innovations. Or they can try to take on a competitor with disruptive innovations that either create new markets or take root among an incumbent’s worst customers. Our research overwhelmingly suggests that companies should seek out growth based on disruption.

Sustaining innovations, whether they involve incremental refinements or radical breakthroughs, improve the performance of established products and services along the dimensions that mainstream customers in major markets historically have valued. Examples: a microprocessor that enables personal computers to operate faster and a battery that lets laptop computers operate longer.


Companies march along a performance trajectory by introducing successive sustaining innovations—first to remain competitive in the short term. But, as noted in The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Harvard Business School Press, 1997), firms innovate faster than our lives change to adopt those innovations, creating opportunities for disruptive innovations. Although sustaining innovations move firms along the traditional performance trajectory, disruptive ones establish an entirely new performance trajectory.

Disruptive innovations often initially result in worse performance compared with established products and services in mainstream markets. But disruptive innovations have other benefits. They are often cheaper, simpler, smaller, and more convenient to use.

Consider the small off-road motorcycles introduced by Honda in the 1960s, Apple’s first personal computer, and Intuit’s QuickBooks accounting software. These innovations all initially underperformed the mainstream offerings. But they brought a different value proposition to a new market context that did not need all of the raw performance offered by the incumbent. They all created massive growth; to flip Joseph Schumpeter’s famous phrase, creative destruction, on its head, this is creative creation. After taking root in a simple, undemanding application, disruptive innovations inexorably get better until they change the game, relegating previously dominant firms to the sidelines in often stunning fashion.

Incumbents almost always win battles of sustaining innovations. Their superior resources and well-honed processes are almost insurmountable strengths. Incumbents, however, almost always lose battles where the attacker has a legitimate disruptive innovation. To create a new-growth business, companies—established incumbents and start-ups alike—must be on the right side of the disruptive process by launching their own disruptive attacks.

2. Disruptive businesses either create new markets or take the low end of an established market.

There are two distinct types of disruptive innovations. The first type creates a new market by targeting nonconsumers, the second competes in the low end of an established market.

In a new-market disruption, attackers take root in a new “plane” of competition or a new context of use outside of an existing market. Consumers historically locked out of a market because they lacked the skills or wealth welcome a relatively simple product that allows them to get done what they had always wanted to get done. These markets typically start out small and ill defined. They don’t meet the growth needs of large companies. And the incumbent feels no pain at first. Because it creates new consumption, the disruptor’s growth doesn’t affect the incumbent’s core business. But as the innovation improves, it begins to pull customers away from the incumbent. And the incumbent doesn’t have the ability to play in this new game.


Transistors were a disruptive innovation. Mainstream suppliers of tabletop radios, which were made with vacuum tubes, couldn’t figure out how to use transistors because they couldn’t initially handle the power requirements of these components. Then in 1955, Sony introduced the pocket radio. It was a static-laced product with horrible fidelity. But it enabled teenagers to do something that they couldn’t before—listen to rock’n’roll out of their parents’ earshot. Had Sony targeted consumers in established markets, the pocket radio would have bombed. But for teenagers, the alternative to a Sony pocket radio was no radio at all. By competing against nonconsumption, Sony set a very low technical hurdle for itself: The product just had to be better than nothing in order to find delighted consumers.

The second type of disruptive innovation takes root among an incumbent’s worst customers. These low-end disruptions do not create new markets, but they can create new growth. The disruption of integrated steel mills by steel minimills demonstrates how low-end disruptors harness what we call asymmetries of motivation.

Minimills first took hold in the steel industry in the mid-1960s. They were very efficient. They had a 20 percent cost advantage over integrated mills. But the quality of the steel they produced was inferior. The rebar market at the bottom rung of the industry (rebar is small steel bars made from scrap and used to create reinforced concrete) was the only market that would accept the minimills’ steel.

As the minimills entered the rebar market, the integrated mills were happy to exit it. Their gross margins in the rebar business were a mere 7 percent, and rebar accounted for only 4 percent of the industry’s tonnage. So the integrated mills decided to focus on higher-profit steel products. The minimills made boatloads of money until they finally drove the last of the integrated mills out of the market—and then the price of rebar dropped 20 percent, because rebar had essentially become a commodity market. The minimills’ reward for victory was that none of them could make money.

To make attractive money again, the minimills had to figure out how to make better-quality steel in larger shapes—not only angle iron but also thicker bars and rods. Profit margins in this market tier were 12 percent, almost double those of the rebar market; the overall market was also twice as large. So the minimills invested in equipment to make the larger pieces and worked to improve the quality and consistency of their steel. As the minimills began making inroads with better and bigger steel, the integrated mills were happy to exit this market tier to concentrate on more profitable products. When the last integrated mill left the market, the price of angle iron collapsed. Once again, the minimills had to move up to the next tier of the industry in order to survive. And so on.

At each stage of the minimills’ climb up-market, an asymmetry of motivation was at work. For the minimills, the need to enter a more profitable market provided the motivation to solve the technological hurdles preventing them from producing higher-quality steel. The integrated mills were happy to leave these markets because the lower tiers in their product mix were always less profitable than products targeting higher-end customers. Eventually, of course, the integrated mills ran out of markets to flee to.

3. Disruptive opportunities require a separate business-planning process.

All innovative ideas start out as half-baked propositions. They then go through a shaping process as they wind their way through the organization to reach senior management. When firms have a single process for all the various forms of innovation, what comes out the other end of the process looks like what has been approved in the past, and it all looks like sustaining innovations.

Consider IBM’s efforts to introduce voice-recognition software. Early iterations of IBM’s ViaVoice software package featured IBM’s “ideal” customer on the front: an administrative assistant sitting in front of her computer, speaking into a headset. It is easy to see why IBM targeted such customers. They constituted a large, obvious market, well aligned with IBM’s needs and capabilities. But think about IBM’s value proposition to this woman. She types 80 words a minute and almost never makes a mistake. IBM was telling her, “Why don’t you change your behavior and use a system that gives you lower accuracy and slower speeds. We promise future releases will get better.” The only way to attract great typists would be for voice recognition to be faster and more accurate than typing. This is a very high technical hurdle.

Where has voice-recognition technology begun to take off? Kids love the ability to tell their animated toys to “stop” or “go.” “Press or say one” menu commands are another obvious application. In these contexts, people are delighted with a crummy voice-recognition product. Another good market for the technology may be all those executives you see standing in airport lines, trying to punch messages into their BlackBerries. Their fingers are too big to enable accurate typing—they’d be more than happy with a voice-recognition algorithm that’s only 80% accurate.

Not surprisingly, disruptive ideas stand a small chance of ever seeing the light of day when they are evaluated with the screens and lenses a company uses to identify and shape sustaining innovations. Companies frustrated by an inability to create new growth shouldn’t conclude that they aren’t generating enough good ideas. The problem doesn’t lie in their creativity; it lies in their processes.

Only by creating a parallel process for developing and shaping disruptive ideas—one that acknowledges their distinctive features—can companies successfully launch disruption after disruption. Such a process relies more on pattern recognition than on data-driven market analysis. After all, markets that do not exist cannot be analyzed. Even when numbers are available, they are never clear.

An intuitive process can still be rigorous if managers use the right tools. For example, discovery-driven planning lets you create a plan to test assumptions; aggregate project planning helps you allocate resources between sustaining and disruptive opportunities; the “schools of experience” theory informs hiring decisions.

4. Don’t try to change your customers—help them.

Faulty market segmentation schemes help to explain the stunningly high rate of failure of new-product development. Most companies define markets in terms of product categories and demographics. We just don’t live our lives in product categories or in demographics. When companies segment markets this way they often fail to connect with their customers.

How do we live our lives? During the course of the day, problems arise, jobs we need to get done. We look around to hire products to get those jobs done. Products that successfully match the circumstances we find ourselves in end up being the real “killer applications.” They make it easier for consumers to do something they were already trying to accomplish.

Some manufacturers pushed digital cameras based on the value proposition that they made it easy to edit out the red eyes from all your images and create an online album of your best photos. Research shows, however, that 98 percent of all photos get looked at only once. Only the most conscientious of us prioritized editing images or creating albums. Where digital camera makers found success was in marketing their products to consumers who used to order double prints of their photos and mail them to relatives. The digital technology enables consumers to use the Internet to do more easily what they already wanted to do.

A business plan predicated upon asking customers to adopt new priorities and behave differently from how they have in the past is an uphill death march through knee-deep mud. Instead of designing products and services that dictate consumers’ behavior, let the tasks people are trying to get done inform your design.

5. Integrate across whatever is not good enough.

One critical decision firms face when creating an innovation-driven growth business is determining its optimal scope. Specifically, which activities need to be managed internally and which can be safely outsourced?

The answer often is driven by the fad of the day. During the 1960s, everyone thought IBM’s integration was an unassailable point of competitive advantage. Because IBM controlled such a wide swath of the industry’s value chain, it could make better products than anybody else. So companies copied IBM and tried to integrate. In the 1990s, everyone thought that Cisco’s disintegrated business model that made extensive use of outsourcing was an unassailable point of competitive advantage. So companies jumped on this new bandwagon and sought to disintegrate.

The critical question is: What are the circumstances in which my firm should be integrated and what are the circumstances in which my firm can be a specialist? Integration provides advantages whenever a product is not good enough to meet customer needs. Proprietary, interdependent architectures allow companies to run multiple experiments, pushing the frontier of what is possible. Engineers can reconfigure their systems to wring the best performance possible out of the available technology.

Think about the computer industry. In its early days, you simply couldn’t exist as a specialist provider. There were too many unpredictable interdependencies across every interface in the first mainframes. The manufacturing process depended on the design of the computer and vice versa. The design of the operating system affected the design of the logic circuitry. IBM had to be integrated across the entire value chain to produce a mainframe that came close to meeting its customers’ needs.

By contrast, the modular architectures that characterize disintegration always sacrifice raw performance. Stitching together a system with partner companies reduces the degrees of design freedom engineers have to optimize the entire system. But modular architectures have other benefits. Companies can customize their products by upgrading individual subsystems without having to redesign an entire product. They can mix and match components from best-of-breed suppliers to respond conveniently to individual customers’ needs.

But even in a modular architecture, successful companies still are integrated—just in a different place. Consider the computer industry in the 1990s. The computer’s basic performance was more than good enough. What did customers want instead? They wanted lower prices and a computer customized for their needs. Because the product’s functionality was more than good enough, companies like Dell could outsource the subsystems from which its machines were assembled. What was not good enough? The interface with the customer. By directly interacting with customers, Dell could ensure it delivered what customers wanted—convenience and customization. Value flowed to Dell and to the manufacturers of important subsystems that themselves were not good enough, like Microsoft and Intel.

In short, companies must be integrated across whatever interface drives performance along the dimension that customers value. In an industry’s early days, integration typically needs to occur across interfaces that drive raw performance—for example, design and assembly. Once a product’s basic performance is more than good enough, competition forces firms to compete on convenience or customization. In these situations, specialist firms emerge and the necessary locus of integration typically shifts to the interface with the customer.

6. Be patient for growth but impatient for profitability.

Managers inside new-growth businesses often feel tremendous pressure to quickly ramp up sales volume. But disruptive businesses can’t get big very fast. The only way to make them grow quickly is to cram them into large, obvious markets. In established markets, customers don’t care about the disruptive innovation’s strengths. They only care about its weaknesses. This is a recipe for disaster, and one reason why company-backed disruptive ventures can have a leg up. Venture capitalists have become increasingly impatient for businesses to get huge. As long as their core businesses are growing healthily, companies will find it easier to wait for the disruptive businesses to find a foothold market and slowly build commercial mass.

Managers must be patient for growth but impatient for profitability. When you are willing to put up with a lot of losses before a disruptive business turns profitable, that means you are trying to lay the foundation for a huge new business. Insisting on early profitability pushes the new disruptive business to find the markets where its unique capabilities will be uniquely valued. Forced to keep its fixed costs low, the new business can serve small customers who would not meet the needs of a high fixed cost structure.

Managers in large companies who read The Innovator’s Dilemma may have finished the book thinking they’re destined to fail, no matter what they do. We hope to shift their sentiment from despair to hope. If managers understand the theories of innovation, they have the ability to create new-growth businesses again and again.

Original article from Harvard Business School can be found here

3 Marketing Channels You Need To Master In 2018

If you’re anything like most contemporary business owners, you’re probably feeling a little overwhelmed by the sheer volume of marketing tips and tricks being thrown your way day in and day out. Who wouldn’t be? Gone are the days of coming up with a catchy jingle or creative ad campaign and smearing it across a whopping three marketing channels — television, radio, and print — you know, the Mad Men glory days. With the advent of digital marketing, there are hundreds of potential resources available to savvy entrepreneurs, but only the savviest will learn to consolidate their efforts and channel their energy into mastering these three marketing channels in the new year.

1. Content Marketing

Content marketing is one of those tricky little catch-all phrases that encompasses a wide variety of marketing tools and strategies. The Content Marketing Institute defines the terms as “a strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly defined audience — and, ultimately, to drive profitable customer action.”

While it’s true that content marketing can mean a lot of different things (everything from blogging to microsites), the most important thing to note about this marketing channel is that it works. Content marketing can generate up to 7.8 times more site traffic, heighten brand recall, boost customer engagement, and drive conversion rates. As if that weren’t enough to get you on board, content marketing can also be one of the most cost-effective marketing channels available to businesses today; in fact, content marketing can cost up to 62% less than other forms of advertising, while generating up to three times as many leads.

To master the content marketing channel, get to know your audience intimately. This will help you customize your content to suit your customers’ tastes, minimizing the time, effort, and financial investment you put into content production that misses your mark. Most entrepreneurs use at least 13 different content marketing tactics, since content marketing is most effective when distributed in various formats and across multiple platforms, so if you want to truly master the content marketing game, make sure you know exactly what each piece of content is doing to drive your business. You can’t afford to waste time and money spinning your wheels and developing content that isn’t ramping results.

2. Organic Search/SEO

Fun fact: 72% of research for a future business purchase starts on Google. If you’re new to SEO, recall that the acronym stands for “search engine optimization” and that it is the process by which businesses get traffic from the “organic” (read: free) search results on search engines, like Google. Marketing masters understand that SEO is the lifeblood of a thriving, effective marketing campaign.

SEO and content marketing go hand in hand, working in tandem to drive traffic to your business. Using SEO in the content you’re developing will dramatically improve your search rank, making it that much easier for customers to find you and all that valuable, relevant content you’ve produced for them, helping to keep your brand in your customer’s brain as they consider purchasing. Besides increasing the value of the content you’re producing, though, it’s important to remember that 80-90% of customers now check online reviews prior to making a purchase. Practically everyone uses a search engine to explore products and services before buying, so if you want them to see your business, you have to show up in the search.

SEO is another cost-effective marketing strategy that can drive serious results. To master this strategy, you’re going to have to study up. Know your keywords and incorporate them into high-quality, engaging content. It’s also of the utmost importance that you work with your tech team to ensure your website (and especially your landing page) is high-functioning, fast-loading, and delivers the kind of quality content your customers are seeking.

3. Affiliate Marketing

Yes, it’s pretty much exactly what it sounds like: affiliate marketing “involves your business working with another website or affiliate… have others place ads for your business in exchange for a percentage of the profit you make.” We most often see this marketing channel manifested in pay-per-click (PPC) or pay-per-sale (PPS) systems.

I know what you’re thinking: “Pay per click? This sounds expensive! And I want to market my business, not someone else’s!” Slow down; I hear you, and I’ve got you covered. If you’re just dipping your toes into the marketing waters and don’t have deep pockets to pay hand over fist for others to promote you, think about affiliate marketing more like a partnership. Look for businesses that can establish a mutually beneficial affiliate marketing campaign with you; they’ll promote your product on their platforms, and you can promote theirs in return. This can offset costs or even eliminate them altogether.

Better yet, affiliate marketing can leave the door open for your business to begin generating passive or residual income. If you can find a business partner or product you like and earn a piece of their profit just by incorporating their marketing into your content, why wouldn’t you want to invest? Not only could incorporating their brand into your content bring a wider audience and traffic you may not have seen otherwise, but you could make serious money in the process with almost no additional legwork. Talk about a win-win.

When it comes to becoming a marketing master, perhaps the most important thing you can do to drive results is to focus your effort on becoming an expert in one marketing channel at a time. Take the time to learn the in’s and out’s of the strategy you have chosen to engage with to maximize its potential to drive sales and grow your business. There are just too many different strategies available to try to dabble in each and every one; don’t fall victim to spreading yourself too thin, working on overdrive only to wind up limiting your results. Energize your business by honing in on the details of the marketing channel that best suits your business model.

This article was taken from Forbes.com.  Click here to read the original version.

The Rise of Specialized Marketplaces in eCommerce

While Amazon has grown to dominate eCommerce, there are a host of niche marketplaces that are thriving. Struggling retailers and distributors should seize the opportunity.

Amazon and Walmart/Jet.com are dominating headlines for their eCommerce growth. This focus is understandable given Walmart’s major acquisitions and that Amazon receives an estimated 43% of all digital sales. But is there room for other marketplaces? The answer is most definitely: Yes!

Network effects in industries with marketplaces create winner take all dynamics, which means only two platforms will naturally dominate their industry. Specialized marketplaces experience the same winner-take-all dynamics within their niche of eCommerce while being in a constant battle with the large, generalized marketplaces like Amazon and now Walmart/Jet.com.

This draws a similar parallel to traditional retailers over the past decades where big box, discount retailers like Walmart co-exist with specialized retailers for shoes, sporting equipment, clothes and so-on. We are seeing a similar dynamic with marketplaces except there is only room for one or two marketplaces in a given vertical. This means that consolidation is coming within specialized niches, and it also presents an opportunity for struggling retailers to own a marketplace business model of their own.

M&A in Retail

Retailers are getting pummeled in the equity markets and rightly so: they have failed to innovate or adjust their business model in the 21st century. Linear eCommerce efforts do not compare to the benefits consumers gain by shopping at a marketplace with third-party sellers, like Amazon offers. Marketplaces have the widest array of product inventory and catalog with the most competitive prices because third-party sellers are competing against each other at all times.

As we’ve seen with Walmart’s acquisition of Jet.com being a success and subsequent doubling-down on marketplace M&A with the Flipkart deal, it seems like retailers are left with the two options: buy a specialized marketplace or retrench and shrink your traditional retail business down to its core fundamentals. The former option is for growth. The latter option is self-preservation.

Beyond Jet.com, we’ve seen QVC acquire Zulily and Target acquire delivery marketplace Shipt. A few specialized marketplaces have also gone public or are going public, such as CarGurus.

Learnings in B2B eCommerce

B2B distribution is 2-3 times the size of B2C retail and Amazon Business is estimated to be a top 20 distributor with over $10 billion in gross merchandise volume. The same outcome of specialization is possible in B2B within the different verticals of distribution like MRO, metal, chemicals, medical supplies, building materials and many more. Amazon Business is continuing to grow at 20% month over month and is well on track to becoming the dominant generalized marketplace in B2B. However, there is still room for a number of vertical-specific marketplaces in the $6-8 trillion mega-industry called B2B Distribution.

Since the threat is more nascent in B2B (Amazon Business started a few years ago) than in retail, incumbents still have time to build their own marketplaces from scratch like Walmart tried to do in 2009 with the Walmart Marketplace. While Walmart’s initial marketplace failed, distributors today have the benefit of learning from Walmart’s mistakes in their own platform innovation efforts.

Retail’s Marketplace Opportunity

Unfortunately for retailers who have given Amazon a 24-year head start, the most likely option to become competitive in the digital arena is to buy their way out of the problem. And with M&A growing, venture capitalists will now have more ammunition to increase the exit multiples for their portfolio companies. So, the sooner retail businesses act, the better.

Looking at the landscape above, there are many potential niche marketplaces that are successfully developing in areas like fashion, craft goods, luxury goods, auto, art, consumer electronics and home goods, as well as used products of all kinds. Though there are many marketplaces above, the landscape includes only companies operating in the U.S. Looking abroad, there are many more examples of a similar trend. This holds true in Europe and even more true in Asia, where marketplaces have dominated eCommerce growth.

These marketplaces offer businesses that are more defensible approach against Amazon than traditional bricks-and-mortar retail – which, per Mary Meeker’s 2018 Internet Trends report, saw declining growth rates once again last year. With Amazon and Walmart now making big investments in Asia, retailers will need to find answers not just at home but abroad as well. Without a marketplace approach, they will continue to struggle in ecommerce, as Walmart did for nearly two decades before acquiring Jet.

For retailers looking to compete with dominant marketplaces like Amazon and now Walmart, or even just to find new growth opportunities abroad, these vertical marketplaces represent the best opportunity. By combining the strengths of their traditional retail businesses with the scale and value proposition of a marketplace, they can create growth, access to new markets and a strong moat in eCommerce.


Original article from inc.com can be found here

The Fourth Industrial Revolution: what it means, how to respond

We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before. We do not yet know just how it will unfold, but one thing is clear: the response to it must be integrated and comprehensive, involving all stakeholders of the global polity, from the public and private sectors to academia and civil society.

The First Industrial Revolution used water and steam power to mechanize production. The Second used electric power to create mass production. The Third used electronics and information technology to automate production. Now a Fourth Industrial Revolution is building on the Third, the digital revolution that has been occurring since the middle of the last century. It is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.

There are three reasons why today’s transformations represent not merely a prolongation of the Third Industrial Revolution but rather the arrival of a Fourth and distinct one: velocity, scope, and systems impact. The speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance.

The possibilities of billions of people connected by mobile devices, with unprecedented processing power, storage capacity, and access to knowledge, are unlimited. And these possibilities will be multiplied by emerging technology breakthroughs in fields such as artificial intelligence, robotics, the Internet of Things, autonomous vehicles, 3-D printing, nanotechnology, biotechnology, materials science, energy storage, and quantum computing.

Already, artificial intelligence is all around us, from self-driving cars and drones to virtual assistants and software that translate or invest. Impressive progress has been made in AI in recent years, driven by exponential increases in computing power and by the availability of vast amounts of data, from software used to discover new drugs to algorithms used to predict our cultural interests. Digital fabrication technologies, meanwhile, are interacting with the biological world on a daily basis. Engineers, designers, and architects are combining computational design, additive manufacturing, materials engineering, and synthetic biology to pioneer a symbiosis between microorganisms, our bodies, the products we consume, and even the buildings we inhabit.

Challenges and opportunities

Like the revolutions that preceded it, the Fourth Industrial Revolution has the potential to raise global income levels and improve the quality of life for populations around the world. To date, those who have gained the most from it have been consumers able to afford and access the digital world; technology has made possible new products and services that increase the efficiency and pleasure of our personal lives. Ordering a cab, booking a flight, buying a product, making a payment, listening to music, watching a film, or playing a game—any of these can now be done remotely.

In the future, technological innovation will also lead to a supply-side miracle, with long-term gains in efficiency and productivity. Transportation and communication costs will drop, logistics and global supply chains will become more effective, and the cost of trade will diminish, all of which will open new markets and drive economic growth.

At the same time, as the economists Erik Brynjolfsson and Andrew McAfee have pointed out, the revolution could yield greater inequality, particularly in its potential to disrupt labor markets. As automation substitutes for labor across the entire economy, the net displacement of workers by machines might exacerbate the gap between returns to capital and returns to labor. On the other hand, it is also possible that the displacement of workers by technology will, in aggregate, result in a net increase in safe and rewarding jobs.

We cannot foresee at this point which scenario is likely to emerge, and history suggests that the outcome is likely to be some combination of the two. However, I am convinced of one thing—that in the future, talent, more than capital, will represent the critical factor of production. This will give rise to a job market increasingly segregated into “low-skill/low-pay” and “high-skill/high-pay” segments, which in turn will lead to an increase in social tensions.

In addition to being a key economic concern, inequality represents the greatest societal concern associated with the Fourth Industrial Revolution. The largest beneficiaries of innovation tend to be the providers of intellectual and physical capital—the innovators, shareholders, and investors—which explains the rising gap in wealth between those dependent on capital versus labor. Technology is therefore one of the main reasons why incomes have stagnated, or even decreased, for a majority of the population in high-income countries: the demand for highly skilled workers has increased while the demand for workers with less education and lower skills has decreased. The result is a job market with a strong demand at the high and low ends, but a hollowing out of the middle.

This helps explain why so many workers are disillusioned and fearful that their own real incomes and those of their children will continue to stagnate. It also helps explain why middle classes around the world are increasingly experiencing a pervasive sense of dissatisfaction and unfairness. A winner-takes-all economy that offers only limited access to the middle class is a recipe for democratic malaise and dereliction.

Discontent can also be fueled by the pervasiveness of digital technologies and the dynamics of information sharing typified by social media. More than 30 percent of the global population now uses social media platforms to connect, learn, and share information. In an ideal world, these interactions would provide an opportunity for cross-cultural understanding and cohesion. However, they can also create and propagate unrealistic expectations as to what constitutes success for an individual or a group, as well as offer opportunities for extreme ideas and ideologies to spread.

The impact on business

An underlying theme in my conversations with global CEOs and senior business executives is that the acceleration of innovation and the velocity of disruption are hard to comprehend or anticipate and that these drivers constitute a source of constant surprise, even for the best connected and most well informed. Indeed, across all industries, there is clear evidence that the technologies that underpin the Fourth Industrial Revolution are having a major impact on businesses.

On the supply side, many industries are seeing the introduction of new technologies that create entirely new ways of serving existing needs and significantly disrupt existing industry value chains. Disruption is also flowing from agile, innovative competitors who, thanks to access to global digital platforms for research, development, marketing, sales, and distribution, can oust well-established incumbents faster than ever by improving the quality, speed, or price at which value is delivered.

Major shifts on the demand side are also occurring, as growing transparency, consumer engagement, and new patterns of consumer behavior (increasingly built upon access to mobile networks and data) force companies to adapt the way they design, market, and deliver products and services.

A key trend is the development of technology-enabled platforms that combine both demand and supply to disrupt existing industry structures, such as those we see within the “sharing” or “on demand” economy. These technology platforms, rendered easy to use by the smartphone, convene people, assets, and data—thus creating entirely new ways of consuming goods and services in the process. In addition, they lower the barriers for businesses and individuals to create wealth, altering the personal and professional environments of workers. These new platform businesses are rapidly multiplying into many new services, ranging from laundry to shopping, from chores to parking, from massages to travel.

On the whole, there are four main effects that the Fourth Industrial Revolution has on business—on customer expectations, on product enhancement, on collaborative innovation, and on organizational forms. Whether consumers or businesses, customers are increasingly at the epicenter of the economy, which is all about improving how customers are served. Physical products and services, moreover, can now be enhanced with digital capabilities that increase their value. New technologies make assets more durable and resilient, while data and analytics are transforming how they are maintained. A world of customer experiences, data-based services, and asset performance through analytics, meanwhile, requires new forms of collaboration, particularly given the speed at which innovation and disruption are taking place. And the emergence of global platforms and other new business models, finally, means that talent, culture, and organizational forms will have to be rethought.

Overall, the inexorable shift from simple digitization (the Third Industrial Revolution) to innovation based on combinations of technologies (the Fourth Industrial Revolution) is forcing companies to reexamine the way they do business. The bottom line, however, is the same: business leaders and senior executives need to understand their changing environment, challenge the assumptions of their operating teams, and relentlessly and continuously innovate.

The impact on government

As the physical, digital, and biological worlds continue to converge, new technologies and platforms will increasingly enable citizens to engage with governments, voice their opinions, coordinate their efforts, and even circumvent the supervision of public authorities. Simultaneously, governments will gain new technological powers to increase their control over populations, based on pervasive surveillance systems and the ability to control digital infrastructure. On the whole, however, governments will increasingly face pressure to change their current approach to public engagement and policymaking, as their central role of conducting policy diminishes owing to new sources of competition and the redistribution and decentralization of power that new technologies make possible.

Ultimately, the ability of government systems and public authorities to adapt will determine their survival. If they prove capable of embracing a world of disruptive change, subjecting their structures to the levels of transparency and efficiency that will enable them to maintain their competitive edge, they will endure. If they cannot evolve, they will face increasing trouble.

This will be particularly true in the realm of regulation. Current systems of public policy and decision-making evolved alongside the Second Industrial Revolution, when decision-makers had time to study a specific issue and develop the necessary response or appropriate regulatory framework. The whole process was designed to be linear and mechanistic, following a strict “top down” approach.

But such an approach is no longer feasible. Given the Fourth Industrial Revolution’s rapid pace of change and broad impacts, legislators and regulators are being challenged to an unprecedented degree and for the most part are proving unable to cope.

How, then, can they preserve the interest of the consumers and the public at large while continuing to support innovation and technological development? By embracing “agile” governance, just as the private sector has increasingly adopted agile responses to software development and business operations more generally. This means regulators must continuously adapt to a new, fast-changing environment, reinventing themselves so they can truly understand what it is they are regulating. To do so, governments and regulatory agencies will need to collaborate closely with business and civil society.

The Fourth Industrial Revolution will also profoundly impact the nature of national and international security, affecting both the probability and the nature of conflict. The history of warfare and international security is the history of technological innovation, and today is no exception. Modern conflicts involving states are increasingly “hybrid” in nature, combining traditional battlefield techniques with elements previously associated with nonstate actors. The distinction between war and peace, combatant and noncombatant, and even violence and nonviolence (think cyberwarfare) is becoming uncomfortably blurry.

As this process takes place and new technologies such as autonomous or biological weapons become easier to use, individuals and small groups will increasingly join states in being capable of causing mass harm. This new vulnerability will lead to new fears. But at the same time, advances in technology will create the potential to reduce the scale or impact of violence, through the development of new modes of protection, for example, or greater precision in targeting.

The impact on people

The Fourth Industrial Revolution, finally, will change not only what we do but also who we are. It will affect our identity and all the issues associated with it: our sense of privacy, our notions of ownership, our consumption patterns, the time we devote to work and leisure, and how we develop our careers, cultivate our skills, meet people, and nurture relationships. It is already changing our health and leading to a “quantified” self, and sooner than we think it may lead to human augmentation. The list is endless because it is bound only by our imagination.

I am a great enthusiast and early adopter of technology, but sometimes I wonder whether the inexorable integration of technology in our lives could diminish some of our quintessential human capacities, such as compassion and cooperation. Our relationship with our smartphones is a case in point. Constant connection may deprive us of one of life’s most important assets: the time to pause, reflect, and engage in meaningful conversation.

One of the greatest individual challenges posed by new information technologies is privacy. We instinctively understand why it is so essential, yet the tracking and sharing of information about us is a crucial part of the new connectivity. Debates about fundamental issues such as the impact on our inner lives of the loss of control over our data will only intensify in the years ahead. Similarly, the revolutions occurring in biotechnology and AI, which are redefining what it means to be human by pushing back the current thresholds of life span, health, cognition, and capabilities, will compel us to redefine our moral and ethical boundaries.

Shaping the future

Neither technology nor the disruption that comes with it is an exogenous force over which humans have no control. All of us are responsible for guiding its evolution, in the decisions we make on a daily basis as citizens, consumers, and investors. We should thus grasp the opportunity and power we have to shape the Fourth Industrial Revolution and direct it toward a future that reflects our common objectives and values.

To do this, however, we must develop a comprehensive and globally shared view of how technology is affecting our lives and reshaping our economic, social, cultural, and human environments. There has never been a time of greater promise, or one of greater potential peril. Today’s decision-makers, however, are too often trapped in traditional, linear thinking, or too absorbed by the multiple crises demanding their attention, to think strategically about the forces of disruption and innovation shaping our future.

In the end, it all comes down to people and values. We need to shape a future that works for all of us by putting people first and empowering them. In its most pessimistic, dehumanized form, the Fourth Industrial Revolution may indeed have the potential to “robotize” humanity and thus to deprive us of our heart and soul. But as a complement to the best parts of human nature—creativity, empathy, stewardship—it can also lift humanity into a new collective and moral consciousness based on a shared sense of destiny. It is incumbent on us all to make sure the latter prevails.

This article was first published in Foreign Affairs

Original article from We Forum can be found here

Are companies equipped to excel in customer experience?

According to Forbes magazine, globally it is reported that companies across different sectors lose around 62 Billion due to poor customer experience. With a statistic like this, one might think that customer service is getting worse, when in fact it is getting better. The reason behind this is that the best companies are setting the bar higher.

“Companies across different sectors lose around 62 Billion globally due to poor customer service.”

Research done globally by Ipsos has shown that expectations have become more liquid, meaning that they are increasingly influenced by a much wider body of experiences across a variety of sectors. Here it could be argued that the increasing digitization makes it easier for a customer to compare, thus it’s possible that the service provided by Amazon’s One click ordering affects the way consumers expect to deal with their bank, utility provider or local restaurant.

“Today’s customers compare Amazon’s One click to expectations from their bank, utility provider or local restaurant.”

This shift in expectations is a strong indication of a mature, well exposed, digitally savvy customer base, that is hard to please. Even harder at a time when the audience has become the medium, meaning that every experience can be broadcasted on social media to millions of people at a click of a button, forever damaging or uplifting a brand; truly transforming customer experience as the new brand image.

Managing customer experience in a digital age is a global pressing issue, and in Jordan the situation is no different.  40% of Jordanian customers’ report experiencing a negative service from their service providers and more than 20% of Jordanian customers who have had negative experiences with their service providers have discussed their negative experiences online (Jordanian customers of Automotive, Telecom, Banking, Insurance, and Travel). As a result, it is reported that a strong majority of those who had a negative experience stopped dealing with the company because of the incident.

“20% of Jordanian customers who have had negative experiences with their service providers have discussed their negative experiences online”

These figures clearly point out to an experience divide; the contrast between what consumers expect of their interactions with brands and the reality of how these transactions are often delivered. Perhaps even more worrying, our figures reveal that organizations are not even aware of many instances which do not meet customer expectations, since 34% of those who had a negative experience believe that their company was not aware of their problem, and thus did nothing to overcome it.

What can customer experience specialist do to bridge this service break? Today, an increasing focus is being devoted to the concept of “customer success”; providing a service that requires low effort and frustration from the end user. At a technology infiltrated time, it makes sense that the starting point is to re-evaluate the role of digital tools in improving the actual customer experience, mainly in terms of how customer feedback is collected and disseminated within organizations.  Additionally, companies need to rethink the customer insights they want to collect.

“Companies need to re-evaluate the role of digital tools in improving customer experience and more Importantly in active listening to the voice of customer”

For technology to be deployed to enhance customer experience, it should be initially leveraged to collect feedback around critical instances in a timely manner. Traditional studies are still invaluable as they provide an unbiased strategic view of how the different touch-points impact the overall experience. However, to provide the full picture, these programs need to be coupled with high volume and high frequency transactional flags which enable organizations to collect feedback in a timely manner after every interaction.

“Instant Transactional Flags are the most efficient way companies can address unsatisfied customers and gain back their trust”

At Ipsos, we recognize the challenges that our clients are facing, and have deployed 4 main pillars in all our deliverables to overcome them; Substance, Simplicity, Speed and Security. We deliver on the promise of substance by relying on our own research on customer experience, driven by years of global expertise and R&D, which allows us to implement the most proven metrics at the right time.

By delivering short concise surveys, that address the issues that matter most, straight to the palm (smartphone) of our clients, we ensure delivering on simplicity. We also recognize that times are fast, which is why we aim to collect and deliver results swiftly, allowing our clients to intervene with their customers in real time, with the hopes of shifting their opinions from negative to positive.

The true value lies not only in the speed, but in the engagement provided to stakeholders throughout the organization, giving them a sense of reliance and security to act based on a solid digital feedback ecosystem.

“Engagement provided to right stakeholders, provides a sense of reliance and security to act based on a solid digital feedback ecosystem”

The application of customer experience technology and feedback measurement bridges the experience gap and generates a process of innovative transformation, centered around delivering a better experience for customers rather than focused on technology for its own sake. Continuing to invest in customer experience optimization programs is essential to build brands that people trust and will choose to engage with continuously as opposed to any other substitute out there in this cluttered market.


  1. Ipsos own research, based on over 10,000 interviews across 7 industry sectors.
  2. Ipsos Omnibus 2016: a study based on 1000 Jordanians of age 15+ representative of the natural demographical distribution
  3. Watling, Callum 2017. Ipsos Mori Thinks: Great Expectation, are service expectations rising?