The Siren Song of Growth

Image:  oopperabaletti.fi

Image:  oopperabaletti.fi

The roots of mermaid mythology varied.  In modern myth we tend to see mermaids as kind and benevolent to humans but not all stories go this way though. In these myths, mermaids would sing to men on ships, hypnotizing them with their beauty and song.  Those affected would rush out to sea only to be either drowned, eaten, or otherwise sent to their doom.

The idea of Growth seems hold the same powers as the magical mermaids of your. We are seduced by its siren song....

Its existence seems accepted.

Its desirability is assumed.

Its benefits implicit.

But is it?

It is undeniably true that nothing grows forever.

In fact, the trajectory of growth is something that goes like this:

Birth, Growth, Maturity, Decline

You may recognise that that is the Livecycle Curve I just described.

The only question and the only variable is ‘how long’.

So, decline and death is inevitable and inexorable.

Growth is NOT an unending upward trajectory.

So, if the END of growth is death, why are we so obsessed with growing?

When you are peeling potatoes

RotatoExpress-Potato.jpg

Peeling potatoes.

This is what people do (at McDonalds) when they are waiting for their big break.

Most of the time the big break does not come. That is because breaks don’t come to you, but you must go to it.

So the virtue to embrace is not patience, but persistence.

And the insight is that the mundane, not the heroic that precedes glorification.

Surviving the Politics in Retail

Whether you are a Church, a charity, an NGO or a Retail Business, the rules of engagement and the features of our interactions are made by humans for human and they all share common features. Organisations are organisations - that is pretty obvious.

The similarities between our Political System and the typical Retail Organisation is striking.

retailpolitics.PNG

Just kidding of course. Politicians will never rort the system.

How to position your business (practically)

OR, YOU HAVE TO BE IN IT TO WIN IT

If you use words like positioning or point-of-difference, many retail operators switch off because all they hear is ‘theory’. It is worth remembering that the process works like this: you RESEARCH what happens in PRACTICE in order to formulate a THEORY. So, in fact ‘theory’ describes what happens in practice, and in practice retailers ‘position’ themselves differently.

The problem is that it happens by default and not by design.

Below is a simple approach to design your positioning; if done right, can be difference between success and failure. I will use a furniture store as an example.

positioning.png

There are a range of competitors – from the dollar shops, to the big furniture retailers – in this category. How do you find a niche, communicate that to your customers in such a way that you have a sustainable business?

What is Positioning?

Positioning is how you want your customer to think of you. (Your ‘position’ is the space you occupy in the mind of the customer.)

Can you identify the brands based on how they have ‘positioned’ themselves?

·                The go to place for… birthday cards

·                The drink to get if you are thirsty and hungry

·                The car to buy if you like driving for sheer driving pleasure

In order to conduct a positioning exercise, we usually recommend it is done on a two-dimensional matrix, but in this example, we take a different (more user-friendly) approach.

Step 1: List all the criteria/attributes that are relevant to your sector. Be sure to concentrate on those variables that matter to consumers. (This stage is important, and should be done with real insight. If you are able to identify a variable that really matters that no one else has considered, you potentially have discovered some ‘blue ocean’.

Apple ignored ‘capacity’ and ‘size’ when it came to portable music players, and instead focused on ‘aesthetics’ with the iPod. They hit the jackpot, which was amplified when they launched iTunes to also provide ‘access to music’ instead of ‘owning music’.

Step 2: Plot your business on these variables.

Step 3: Plot competitors. (The more data-driven insights you have the better, but sometimes common sense gives an answer that is close enough to be good enough.)

Step 4: Identify the point(s) of difference.

Step 5: Claim one POD and communicate that with laser-focus.

EXAMPLE:

The following is an incomplete list of strategic positioning variables for two furniture retailers.

Whilst these are hypothetical examples, for the sake of testing yourself, which positioning path (for example) represents Harvey Norman and which would better represent Oz Design?

If you were, say, Beds-R-Us, where would you position yourself on these variables – and which one would be your POD?

 Point-of-Difference describes how you differ from your competition. The diagram above will reveal your point-of difference that you focus on. Communicate this difference with consistency over a long period of time and the message will eventually embed in the mind of the consumer.

If you succeed with that, all that it means is that you are in the ‘consideration set’ of options when a consumer makes a decision about buying your product. Your POD may not be relevant to them or may not be the most important variable when it comes to making the decision.

But if you are positioned appropriately in the mind of the customer, at least you are in the game.

And as our friends at Tatts remind us; you have to be in it to win it.

It is not what you know, it is what you assume that will kill you

equality.png

THE POWER OF ASSUMPTIONS IS AWESOME

Have you seen the meme make the rounds, and maybe you have even ‘liked’ or shared it?

It promotes an egalitarian ideal: you achieve the desired state because of a core the assumption is that you take from the have and give to the have not. Everybody gets the same thing, so it is promoted as a 'fair'.

But consider that for it to be good, we must ASSUME that:

> guy no 1 doesn’t mind to lose everything and gain nothing

> guy no 2 doesn’t mind being ignored

> neither will fight to retain the status quo

> the little guy doesn’t want to go ride his bike instead

> everyone wants to watch the baseball game equally badly

> someone who has to decide the basis on which the ‘resources’ and privileges must be dished out is willing and able and will do it fairly

> the ‘benefit’ is clear (box)

> the actual privilege is the ability to watch the game

Now, lets assume these assumptions, unrealistic as they are, actually can hold. In the real world, resources are limited – and there are actually more people lining up to watch the match than there are tall guys to sacrifice their boxes.

And, most importantly, no one mentioned that the tall guy is going bald. The injustice!

When a business model eats itself

Or, Committing Ouroboros

The emergence of platform brands has been interesting, and perhaps the defining feature of the post-millennial business models. By platform I am referring to businesses like Facebook, Uber, Spotify, Amazon etc which operate essentially as a marketplace/ platform that connects supply and demand.

The new business is a peculiar beast

One peculiar feature of these business models is that they are, quite literally, business models that eat themselves.


Mythologically, the meaning of the snake eating its own tail (Ouroboros) is strangely enough the Infinity Symbol too. These businesses may seem to last forever, but there is also a limited amount of tail to eat.

Let me explain.

Spotify

Spotify had to attract the big brand (artists) to the platform in order to gain traction. Every time the sign a big name, the number listeners climbed. Eventually they even got Taylor Swift. Now there is no reason for anyone not to listen to spotify.

But as Spotify ‘learns’ your taste in music, and the algorithm produces playlists and stations for you, the constant stream of music obliterates the artist who created it. Unlike radio, where the chatter of the DJs and other human interaction revealed something about albums, artists and other context that constitute the art of music, Spotify  turns all music into muzak. I have hundreds of songs in a playlist (that I like) that I don’t know who the artist is.

When all artists stream on Spotify, you don’t need an artists anymore, just an infinite number of variations of a genre that suits my ear.

Kickstarter

Kickstarter is a way of raising venture capital. In order to get where it is, it needed (traditional venture capital) even while crowdfunding is replacing traditional sources of capital. Eventually, VC can conceivably be replaced altogether by peer-to-peer lending. I can even imagine a time where the applications on these platforms are selected and promoted on the platform based on an algorithmic prediction of likelihood of success. And that the ‘users’ or investors, set an investment budget and allow the algorithm to decide.

Netflix

There are an infinite number of options, but instead of us immersing ourselves in the characters, reading stories about the actors in gossip magazines for the better part of the year, we binge on a series for a weekend - are briefly engaged - and then move on to the next.

I have watched 5 seasons of Suits, and I don’t know who plays the main characters. But I can remember that Corbin Bernsen and Harry Hamlin played major characters in LA Law back in the 80s. Our interest in the actor is fleeting and superficial and they are all eminently interchangeable. Except for the odd break-out series such GoT, everything is forgettable.

Netflix needed the big names to attract us, but can’t produce big names that will keep us.

Amazon/ Commerce/ Shopping Cart

Shopping sites need to stock the brand we want in order to attract us. Once we are there, like it and return, we set up our favourites to re-order. After that, we are less likely to switch brands, because we ‘set and forget’ and have little exposure to alternatives if everything is done on automatic reorder.

Amazon found its fame by signing up all the big name authors to be distributed online. The Kindl seduced them further.

As soon as every author is on Amazon, then all the readers are on Amazon, and then no individual author matters. You are fed an endless stream of authots/titles that are 'like;' the one you already like and they all blur into a genre-soup that satisfies you. Ultimately it kills your curiousity AND your taste, because by never reading something you don't like, you will forget what you like. And no consumer brand eventually will matter when Alexa orders everything.

[ASIDE: That is why social media is so dangerous in fostering groupthink - creating these echo chambers of followers/fans who all happily drink the kool-aid.]

The Brand Paradox

This means in practical terms that brands are developing a new value architecture: These platform business models are at once very hard to replace because they own the demand. This strength increases over time, because of the self-reinforcing nature of the business model. The more people use Uber, the more drivers will want to drive for Uber.

But at the same time, there is paradoxically very low barriers to entry and the business (platform) can easily be subsumed and surpassed. If a better search engine comes along, the value of Google will fall off a cliff in a matter of mere weeks. The switching cost for the consumer is as low as spending a minute to download an app.

The only barrier to entry is the critical mass of consumer demand. This is hard to win, but easy to lose.

The brand becomes a placeholder: Uber now means taxi, and nothing more.

These modern brands are different from traditional brands in many ways. Most obviously is the way in which there is separation between the product/service experience and that of the brand values. If you have a poor AirBnB experience, you won’t necessarily (not initially and not completely) condemn AirBnB, but instead would understand that it is the host that should be punished with negative brand assessment (ratings). If this happens consistently, you will start questioning the AirBnB vetting process, but there is initially some separation between brand value and the actual product or service. The same applies to say Uber or Amazon et al.

But the flipside of the platform-brands enjoying this immunity is that they are also less valuable as a brand. By that I mean that the huge valuations they enjoy is because of the (crazy) multiples of their anticipated cash flows, and not because of some inherent brand equity.  If Uber rebranded tomorrow to Zuber, it would be easily done compared to rebranding Coke.

In Summary

Let’s take Netflix as an example, but exactly the same can be said of any of the other platform brands like Uber, Amazon etc.

  • The value of Netflix is in the number of subscribers they have.

  • Because of that critical mass, there is a major barrier to entry.

  • But if you created a product that was demonstrably better, shifting the mass of customers is easy; the barriers to exit are low.

  • Netflix engenders no loyalty from the suppliers (producers, distributors, actors) because in fact Netflix destroys the brand value of the very thing it needed in the first place by virtue of becoming dominant through infinite supply.

  • The customers are not loyal to the brand of Netflix, because there is no real brand of Netflix - it has no brand and no personality, no more than a bookshelf has a personality.

  • If you see a bad movie or have bad reception, you don’t attribute it to Netflix. But neither do you think Netflix is great because you enjoyed Ozark so much.

  • When the brand is a platform, it only has utiltarian value.

For Netflix to grow, it needs to eat the thing that made Netflix great:  that is ouroboros - the snake eating its tail.

All these businesses, now so seemingly invincible, are vulnerable at the core, because neither the customer, the supplier or the partners are loyal, since they are all destroyed in the process of making the company great.

Infinity is an illusion.

Transformative Innovation in Malls - Pt 2

3. Create an ‘agile lease’

We don’t envisage that leases will disappear altogether. But what would introduce the necessary flexibility to empower retailer-driven innovation is the notion of an agile lease.

Innovation: Change the Standard Specialty Lease to an Agile Lease

This is a lease where the key commercial terms (duration, cost, usage clause etc) are contained on ONE sheet, which then can be changed by sitting down in a single meeting or phone call and counter-signed and legally take effect. If new concepts can grow and establish themselves without the constraints and costs of for instance trading hours and with the guaranteed ability to vary the usage to fine-tune the offer to see what works, their chances of success are greatly enhanced.

There are strong socio-cultural trends that suggest that the value of these legal agreements are being eroded significantly anyway. In fact, the recent Sumo Salad/ Scentre debacle points to the absolute necessity.

5 Every centre a mixed-use centre

Creating a TRUE mixed-use centre would mean incorporating many of the following uses - possibly even all of the areas below.

Innovation: Multiplicity of Use

  • Retail

  • Public Domain/ Community

  • Entertainment

  • Office

  • Residential

  • Alternative

  • Tourism

This is in essence a risk diversification strategy.

Start by adding maximum residential living to the centre. That is, to use an Aussie social convention a matter of BYO Customers. This is obviously not necessarily easy or applicable in every instance, but on the whole, most retail centres are in prime real estate locations with excellent infrastructure as well as often with community facilities.

It may require serious, long-term lobbying to overcome zoning issues, height limits and what not, but political opinion aside, I find it difficult to visualise any shopping centre that could not accommodate hundreds, maybe thousands of living units above it.

Great use of space, roads/parking etc can be expanded (possibly going underground) more easily than entirely new land to be found somewhere else. The accommodation could be for residents, holiday or even student accommodation.

Alternative use could include spaces often found in event/convention spaces. I can imagine ‘Launchpads’ = space in the shopping centre for experiences. Shop selling yoga clothes can use this space to run a yoga class once a week and promote their clothes. These are spaces to learn, explore and meet.

Ensure some spaces are large, flexible and multi-purpose. For a shopping centre to be a true marketplace it will  need to cater for a events (we lost our centre courts to kiosks).

These spaces should be  accessible AFTER hours. The idea is to work towards a mix of activities and an offer that extends the trading period of a shopping centre. In a world of shift work, remote work, permanent casual work, the gig economy, the idea of a 9-5 centre will become a quaint relic. The town square is not only applicable to large regional centres with external space to use; it can be replicated in every centre, and it starts by reclaiming the old centre court.

Placemaking is gaining traction in shopping centres. The argument for this is easy; the payoff is a bit harder. But if shopping centres are to be function as public spaces, it has consider topics such as Biophilia . An environment devoid of Nature may have a negative effect, with a potentially undesirable impact on health or quality of life. Malls have the social obligation to manage these spaces differently.

Placemaking relies on high quality common areas, a blurred line between public and private spaces, and the integration of traditional and non-traditional retail uses like local government offices, community centres, medical, childcare and education services.

It is critical that malls be about much more than stores. We see the mix of tenant/public space shifting from the current 70/30 to a significantly different split. When this happens, these expanded public spaces will need to be planned and programed over the year much like an exhibition. They will be managed more like content and media, instead of real estate.

Mckinsey suggests that malls must become like retailers, isolate and quantify the consumer touch points that are most responsible for driving satisfaction.

This means applying recent retail innovations like customer journey mapping in the mall, tracking it and using the information to improve the experience.

6. Crack the Code

Any landlord of any material significance could create a crack team of retail professionals that can scour the world and create a new concept. Landlords have capital, data that will aide insight and decision-making and  It will likely be a franchise concept, and as soon as it attains critical mass, it can be sold.

It is really Landlords adopting a BYO attitude to retail mix. Landlords should:

  • get better at judging a retail talent

  • have retail teams working on partnership with retailer

  • be willing to perhaps operate retail shops themselves

(When you are funding the retail concept through fitout contributions anyway, you might as well have more control.) Mckinsey says that malls (should) see themselves as customer-facing providers of shoppable entertainment. (For example, the Menaissance: men are taking the lead in spending.)

7. Toe-prints

I borrowed this term from Liz Holland, even though our use is a bit different. It is about exploring the multi-channel crossover opportunities.

For example, provide space for customers/patrons to:

  • see and try the products for eCommerce retailers (shared space).

  • pick online orders up

  • provide showroom spaces

These types of opportunities are designed to make the shopping mall a place where non-traditional retailers (like eCommerce merchants) can get a micro-footprint (or a toeprint as Liz calls it) in an environment before they are ready to commit to bigger, longer-term arrangements.

These examples are not an exhaustive list - you will see that it involves all four elements of the shopping centre mix to some extent, so I believe it has the potential to be TRANSFORMATIVE.

Transformative Innovation in Malls - Part 1

Why do shopping centers struggle with innovation so much?

Over the years I have made many proposals and floated many ideas with clients and with employers. I have had many bad ideas, but I have also had many ideas that were simply ahead of time.

Ideas have an extraordinary difficult path to adoption; what with politics, resources and risk to consider.

The diagram below illustrates the two types of innovation. Both are desirable, but only one is critically necessary. Implementing truly transformative innovations is harder by an order of magnitude. Simple, transitional innovations are necessary, but they don’t transform a business to make it sustainable in the long run. For instance, it is important to implement recycling programs, install charging stations for EVs, but these won’t help ensure your future. Transitional innovations are necessary, but not sufficient.

(c) 2017 ganador

(c) 2017 ganador


The problem, as it is with so many strategic insights, is how to actually, practically make it happen. I think I have solved that riddle for shopping centres. The framework below articulates the four key elements of the shopping centre’s success. The investors (representing the providers of capital), the actual bricks and mortar place, the shopping community (patrons) and the merchants that are the primary attractors.

Transformative innovation happens when you succeed in introducing a change that involves and benefits all four these elements of the shopping centre mix. When you integrate changes that to some extent combines and involves these four elements, then you get innovation that transform.

(c) 2017 ganador

(c) 2017 ganador

As an aside, for the sake of completeness and transparency, it should be pointed out that simply having an idea is a very small part of the process. The biggest challenge is the cultural shift that creates a climate that is receptive to innovative ideas and a structure that enables the execution of innovations are prerequisites. But this is not a book about change management per se, so I will stick to the knitting.

The list below are all ideas (some more than a decade old) that seems to me still have merit, and all of them integrates to a greater or lesser extent these elements of the mix.

1. A Fund for Fitout Contributions:

Retailers in the current climate (2017 and foreseeable future) rely heavily on landlord funded store development.

Innovation: Create a FITOUT FUND.

That is a separate fund (with a dedicated Fund Manager)  that takes equity but with a payback structure for the retailers, instead of providing lease incentives with no return. Instead of funding failing business models, invest in new concepts. Make it compulsory for a portion of the funds to be spent on professional advice (design, marketing, legal, financial, operational etc) that improves the risk profile of the fund.

2. Casual Incubator.

Casual Mall Leasing and later Pop-Up Retail has long been part of the shopping centre scene. Landlords saw this as revenue opportunities - occupying common area space and generating incremental income. It was largely a response to the luxury of high occupancy rates. Many in the industry saw this as an opportunity to ‘incubate’ future tenants. But for a variety of reasons that hardly ever materialised.

A few entrepreneurial types tried things like 100 Squared. Scentre recently launched an incubator at Chermside which I have not seen personally, but is possibly the type of innovation that could be transformative.

Innovation: Design & Create dedicated a Co-op Space

Much like Offices have become Co-working spaces where a bunch of rotating and fluctuating temporal concepts can trial themselves. The key to making it a sustainable option is to (a) support it with professional advice to incoming trial concepts (b) make it permanently available (c) prioritise the concepts that can scale for shopping centres and (d) allocate space based on potential (not first movers only) and (e) constant rotation to keep customers coming back anew.

The key feature of something like this would require the Landlord to NOT be cynical.

The shaded/blue areas are those services we specialise in over at www.yearone.solutions

The shaded/blue areas are those services we specialise in over at www.yearone.solutions

A real incubator must be applied the full lifecycle of new retail concepts - as per above diagram: Identify, source, screen, onboard, support, adapt, grow and iterate.

One can brainstorm various innovations once you have a specific stage of the cycle to focus on. Examples of innovations that could be applied to the various stages are:

Online Academy: Create a dedicated website for any business interested in opening in a centre to (a) learn how to do it (b) step them through actually doing it. It may even be a joint-initiative of multiple landlords, but the idea is that making a success in a shopping centre has its own unique requirements. It is not about teaching people how to retail (only) but how to do business and to ‘stress-test’ their ideas and give them an opportunity to bounce ideas off the facilitators (independently).

Retail Development Support Office: For the duration of every retail development, create a Retailer Academy/Forum for any business (comprising fewer than 3 stores) who is signed up to a deal. Offer the newbies guided, independent advice to help plan their business, design and configure it, finance it and launch it. A simple thing like navigating the recruitment process on intuition is fraught with danger and getting the wrong people on the wrong agreements at the start of the new retail business could easily be fatal (at worst) or just result in such a poor customer experience post launch that they are on struggle street to retail customer interest. (How often have you gone into a store for the first time, had a bad experience, and wrote that store/brand off never to return?

Screen for Success: We have created a subsidiary company - www.yearone.solutions to act as an external validation agency  in this space. Y1S can help de-risk new retailers and assignees though better, professional assessment and validation. This mitigates risk and secures any potential landlord investment. This intervention can also be geared to guide the retailer - through the business planning process - to help get them off to a better start, particularly those who are not familiar with the constraints of trading in a centre.

We conclude the two-part series in the next post.

PS: Drop your name in the subscription box to be notified when we publish the FULL version of THE BEAT OF THE MALL.

How AirBnB's business model is the blueprint for shopping malls

This was intially published to the #thinkdifferent newsletter. If you would like to get advance insights, well you need to be smart enough to know what to do...


Business Model Disruption in Real Estate

In many ways, this section goes to the heart of explaining HOW the business model of shopping centres will be disrupted. Rather than speculate or theorise about it, I looked at disruption in other industries and identified to key elements of disruption. There are many to choose from (Taxis, Media, Movies and even Retail). I considered all of them and I found a patterns of disruption that (a) conforms to the way we think as revealed in our dialectical cycles of system change and (b) it reveals a set of consistent principles.

It is worth noting that entrepreneurs who disrupt industries, rarely can articulate with foresight a list of dimensions that they aim to ‘disrupt’. It is a result of opportunistic thinking - simply doing the opposite of the incumbent’s strategy.

It is only with hindsight, once the disruption has occurred that we can sit back and see what actually happened, and more importantly what worked. We have had sufficient examples of effective , technology-led disruption in multiple industries to start seeing the patterns.

Like Uber, not like Tesla

I don’t consider, for instance, that Tesla is a ‘disruptor’. Their business model is at its core quite similar to the rest of the auto industry. Electric-powered cars are more disruptive than say the inflection that occurred when the industry went from normally-aspirated vehicles (with carburetors) to fuel-injected vehicles, but the nature of the disruption is relatively similar.  EV will fundamentally disrupt the oil exploration and fuel distribution business, but not so much the automobile manufacturing industry.

As will be explained below, one of the characteristics is that it is a case of winner-takes-all post disruption. With Tesla other manufactures can (have) follow suite and do it relatively quickly.

The Principles

The principles below are simply the key strategic elements of any business - brand, value, price etc. By comparing the industry sector before and after the disruption provides a powerful insight into what the future is for industries yet to be disrupted.

The criteria considered are:

  • Brand
  • Determinants of Supply
  • Nature of Supply Chain
  • Marketing Characteristics
  • Roles of the physical location (Real Estate
  • Nature of Service
  • Nature of Value
  • Range/Offer
  • Determining the Experience
  • Choice
  • Capacity
  • Scale
  • Pricing

The question is simply this: how did these criteria change in the NEW business models? Given the opportunistic nature of business evolution (go where the opportunity is); the hypothesis is that the disruption will occur in the direction of the opposite (from thesis to antithesis).The disruption that AirBnB brought to the holiday/short-term accommodation sector seems to be an appropriate case study as hotels function very much like shopping centres on many levels. What happened?

Brand

The idea of a ‘brand’ was traditionally used to identify the nature of the product; that is communicate essential features of the actual product. In the new model, the actual product can be anything anywhere - from a six star experience, to a tent on a farm. The brand is a platform that attracts people to it and is not determined or influenced by the actual product. No one associates AirBnB with a certain type of product, a certain type of experience. 

Supply and Demand

In the old model the winner was the brand that owned the supply. In the new model, the winner owns the demand (the market) and suppliers follow. There are challenges in creating these ‘marketplace’ business models initially, but once the tipping point is reached, it becomes self-fulfilling.

Marketing Characteristics

As much as traditional businesses claim and aim to be ‘market-led’, the reality is that they are very much in charge of their own destiny, deciding what the strategy, execution and so forth are.  Traditional marketing is top down, from the inside out. In the new format, the marketing becomes outside in and bottom up. Other than 'founder ego', there is no reason for AIrBnB to advertise - the participants advertise their participation as they wish.

Roles of the physical location (Real Estate)

At the dawn of commerce, the production of goods and the consumption of goods were co-located. In time, as distribution expanded, the importance of owning locations mattered a lot. Trade routes determined marketplaces. The one with the best real estate won. Hotels that opened prime locations on the ‘trade route’ of holiday destinations owned the real estate to differentiate themselves. This created high barriers to entry.

AirBnB owns no real estate and the barriers to entry come from owning the market, not owning the supply of rooms.

Nature of Service

Businesses choose to differentiate on the level of service they offer, usually adding services = adding value and adding margin. In the new model, there is typically only the essential services.

AirBnB does not facilitate insurance, does not help its suppliers to procure cheap soap. Not additional services.

Nature of Value

The value procured can range on a scale of tangible to intangible. (Pure product to pure service). In all major instances, the disruption has been in one direction - towards intangibility. (There is currently the emergence of the Internet-of-Things, which has a distinct tangibility to it; again the ‘antithesis of the thesis offered by the internet.)

I have spoken and written at length about ‘ephemeralization’ - the idea the the things we buy seem to be increasingly ephemeral - even for digital products. The storage disk becomes the Cloud and the CD becomes a ‘stream’.

Range/Offer

Consumers always wanted unlimited choice (but it must be easy to choose and be frictionless to transact) and so the ephemeralization has enabled that to the extent that consumers now have practically unlimited choice. In the old model, there are obvious constraints and limitations in the offer.

Curation: Determining the Experience

The brand owner determined the experience. In fact, the brand ‘promised’ the experience. The hotel operator determined the level of ‘stars’ of the experience. AirBnB has very little control over the quality of the offer, relying on consumer rating mechanisms to communicate the nature of the experience. (As aside: AirBnB is attempting to enforce social justice agenda by setting rules as to who the operator may or may not decline to host. This runs counter to the core premise, and it will be interesting see how it plays out.)

Capacity & Scale

In traditional business there is often a capacity constraint that limits the operational capacity. Only so many locations, only so many customers. In the new marketplace model, there are virtually no capacity constraints to limit growth. AirBnB is not even limited by the number of houses on Earth - they can keep adding ‘experiences’ or they could even colonise the moon.

Pricing

The old model of pricing was quite structured, with each member of a the supply chain carving out a margin that kept the whole system alive. Each stage of the chain was carefully and formally negotiated. In the AirBnB world pricing is variable. There is a ‘clip-the-ticket’ mentality that operators adopt - often taking a relatively small portion of the price, relying on scale to provide the returns by keeping resistance for newcomers low.

The Dialectical Meta-Pattern

The dialectical pattern always seems to emerge doesn’t it? When you carefully analyse all the changes articulated above (or summarised below) you will notice that there is a dialectical pattern. The full process is explained in THE BEAT OF THE MALL - so you will just have to stay tuned for more on that. 

The table below summarises how the traditional model of hotels compares to the business model of AIRBnB. Both industry sectors aggregate and sell rooms to visitors and derives a profit from the amount spent by the guest.

The key takeaway is quite simple, and quite self-evident: whatever the features are of a currently successful business model (the THESIS), the future lies in doing the opposite (the ANTITHESIS). Ovder ttime, these differences get SYNTHESISED. 

And then a NEW ANTHITESIS emerges.

THESE ARE THE QUESTIONS TO ASK:

What are you doing now?
What is the opposite?
Is that possibly the future?

How Marketing Makes a Mockery of Maslow

The ‘hierarchy of needs’  developed by Maslow must be one of the most misunderstood ideas around. It is, despite the fact that it is approaching 75 years since it was conceived, still a mainstay of modern MBAs. As a ‘business concept’ it has proven extraordinarily antifragile. But chances are you have never read any of Maslow’s original writings, instead on relying on blogs (oh, the irony) to learn what it is all about.

Why did it last? Why is it so useful? Why are Marketing MBAs taught about Maslow, and not SEO instead?

And if you are going to understand needs, you must understand wants - and again misconceptions are rife. So, strap in, this is going to be a long ride. But it is extraordinarily useful to know what it is and how it operates.


 

Firstly, the idea of a layered pyramid as the graphic representation is actually not the best way of visualising the way Maslow conceived the theory. There is one aspect of the various ‘drives’ that are hierarchical, yet that has come to dominate our understanding. It may even be useful to ignore the idea of the pyramid until you have a strong grasp of this subject matter.

Secondly, the hierarchy is not fixed, and in Maslow’s own words: “We have spoken so far as if this hierarchy were a fixed order but actually it is not nearly as rigid as we may have implied. It is true that most of the people with whom we have worked have seemed to have these basic needs in about the order that has been indicated. However, there have been a number of exceptions.”

The notes below are extracted verbatim from a paper by Maslow, and I add my commentary below most points to clarify some common misconceptions or highlight key insights.

The integrated wholeness of the organism must be one of the foundation stones of motivation theory.

There is more to humans and human motivation that the factors identified here. And the factors that motivate behaviour are integrated - that is they play out simultaneously or separately, but they influence each other. It is dangerous to simply assume a rigid, linear sequence.

Maslow explains it as follows: “There is a degree of relative satisfaction. -- There is a false impression that a need must be satisfied 100 per cent before the next need emerges. In actual fact, most members of our society who are normal, are partially satisfied in all their basic needs and partially unsatisfied in all their basic needs at the same time. A more realistic description of the hierarchy would be in terms of decreasing percentages of satisfaction as we go up the hierarchy of prepotency.”

Human needs arrange themselves in hierarchies of prepotency. That is to say, the appearance of one need usually rests on the prior satisfaction of another, more pre-potent need. Man is a perpetually wanting animal. Also no need or drive can be treated as if it were isolated or discrete; every drive is related to the state of satisfaction or dissatisfaction of other drives.

The hierarchy is about POTENCY, not a sequence of drives that happen in succession. Whilst there is a general tendency for lower level needs to be satisfied first, it is more important to understand that these needs are STRONGER motivators. (Marketers often think because they sell a sophisticated product, they must appeal to higher-order needs. This is simply put, just stupid.)

The hunger drive (or any other physiological drive) was rejected as a centering point or model for a definitive theory of motivation. Any drive that is somatically based and localizable was shown to be atypical rather than typical in human motivation.

Contrary to what many people believe the lowest level in the hierarchy is not what motivates us first and foremost. Human being are NOT typically motivated by pure physiological needs. (If we were, we’d be animals.)

In Maslow’s words: “Motivation theory is not synonymous with behavior theory. The motivations are only one class of determinants of behavior. While behavior is almost always motivated, it is also almost always biologically, culturally and situationally determined as well.

Such a theory should stress and center itself upon ultimate or basic goals rather than partial or superficial ones, upon ends rather than means to these ends. Such a stress would imply a more central place for unconscious than for conscious motivations.

At the most basic level, motives are NOT conscious. The root cause of our behaviour is psychological and unconscious. What we seem to be motivated by is often the ‘means’ and not the ‘end’ (or root cause).

There are usually available various cultural paths to the same goal. Therefore conscious, specific, local-cultural desires are not as fundamental in motivation theory as the more basic, unconscious goals.

Motivation is about ‘what drives you towards a goal’ and these drives can take various forms and is contingent on cultural and environmental factors. I.e. the ‘needs’ are moderated by environmental factors. To paraphrase Maslow: No claim is made that it is ultimate or universal for all cultures. The claim is made only that it is relatively more ultimate, more universal, more basic, than the superficial conscious desires from culture to culture, and makes a somewhat closer approach to common-human characteristics, Basic needs are more common-human than superficial desires or behaviors.

Any motivated behavior, either preparatory or consummatory, must be understood to be a channel through which many basic needs may be simultaneously expressed or satisfied. Typically an act has more than one motivation.

Not all behaviour can be said to be ‘motivated’; but this theory applies only to those behaviours that are. Multiple needs (motivational factors) manifest often in one behaviour. That is, it is not a simple matter of one need, one behaviour.

To paraphrase Maslow again: There are multiple motivations of behavior. These needs must be understood not to be exclusive or single determiners of certain kinds of behavior. E.g.  Eating may be partially for the sake of filling the stomach, and partially for the sake of comfort and amelioration of other needs.

Not all behavior is determined by the basic needs. We might even say that not all behavior is motivated. There are many determinants of behavior other than motives. Too often people think the ‘hierarchy’ explains motivation completely. Not only are there contingent factors (culture) there are also other internal factors (personality, attitude etc) that motivate certain behaviours.

Some behavior is highly motivated, other behavior is only weakly motivated. Some is not motivated at all (but all behavior is determined).

I.e. there is more to human behaviour than mere need expression.

There is a basic difference between expressive behavior and coping behavior (functional striving, purposive goal seeking). An expressive behavior does not try to do anything; it is simply a reflection of the personality. A stupid man behaves stupidly, not because he wants to, or tries to, or is motivated to, but simply because he is what he is.

I don’t think that need any further explanation.


So, in summary:

  • The hierarchy is not the complete explanation for human behaviour

  • The needs are interdependent

  • The needs are contingent

  • The needs are not exclusive

  • Some needs are more important than others in terms of ability to influence goal-directed behaviour

  • Not all behaviour is determined by needs.

So, what are needs exactly? Let’s rely on Kotler et al (p11, 2012) to describe the terms

  • Human needs are the basic human requirements. (Some people add ‘innate’ instead of basic. I prefer that.)

  • Needs become wants when they are directed at specific objects that might satisfy that need.

  • Demands are wants for specific products backed by an ability to pay.

It is worth noting that ORGANISATIONS don’t have needs in the same way as humans. Belatedly B2B marketers are realising that the ‘buyer’ is human after all, with all the concomitant biases and personal ‘needs.’ But the typical decision-making models that explain B2B purchasing may reference ‘general need description’ but it does not mean ‘need’ in the same way.

Organisations have requirements, not needs - despite the fact that we often colloquially refer to organisational needs. But it is lazy, wrong and confusing to do so.

See the progression in that set of definitions? Consider the table below as illustration:

What does this mean for the Marketer?

Your starting point is (usually) your product. You want to sell coffee. Ultimately you need to know what the latent demand is and what the potential demand is. Because it is only when you SUPPLY the product at a price to the market that DEMANDS that product that you generate revenue.

What are the basic human NEEDS that your coffee can appeal to?

(Note the plural.) You realise that coffee can play to a range of needs.

How are these needs typically fulfilled?

Some people want instant coffee, some want takeaway espresso, some want to make their own (for example.)

How are these wants met?

You can consider the ALTERNATIVES in the market - because this is effectively going to be your direct and indirect competition.

Does that want translate into a demand for that (type of) product?

I.e. are people spending or willing to spend MONEY on fulfilling the want?

Once you have calculated (or decided to take the risk) that there is a demand for YOUR product because it will be something people WANT as an expression of an innate (combination of) NEEDS, then you have a business.

The next step is to formulate your marketing plan by recognising who your competitors are and how to best communicate to the customer how your product is what they need - or more specifically, which one of the needs you may rely on more than others.

So, if you are an (MBA) educated marketer (or just extraordinarily intuitive) you would naturally work through this progression because it determines whether there is a (real) demand for your product based on a (real) need that the consumer has.

Marketing is defined (simply) as ‘finding out what the customer wants, and giving it to them. Now you understand why the idea of needs & wants are so fundamental to the idea of marketing.

PS: Whenever and wherever you see versions of the pyramid that has added layers or different names added, then you can rest assured it is just made-up stuff.

Like this one.


Image: https://www.professionalacademy.com

Paradigms of Truth

The biggest challenge we face when trying to discern a way forward is to distinguish between signal and noise: what is true and what is distraction. Simply scroll through your newsfeed on any social media and even through the list of articles posted on your favourite news site.

  • Retail is doomed.
  • Why retail will survive.
  • Malls are dead.
  • Long live the Mall.
  • Amazon will kill your business.
  • How to survive the coming of Amazon.
  • The economy will tank.
  • Prepare for the coming boom.

If that tells us nothing else, it should tell us this:

Things are not true because many people believe it.

It is not true because you agree with it.

Things are not true because they are written down or ‘researched’.

They are not true because we want it, because it is on the news or because a smart person says so.

Things are not true because they are complicated, nor because they are simple.

Your truth is not true because it is your truth.

Things are true because they are true.

You may think that makes truth impossible to know, but on the contrary, it is easy to know.

Truth is done, not said.

We act according to that we believe to be true. Forget what people say, write, ‘like or ‘share’.

If we want to know what true is for you (i.e. what you believe) - just look at how you act.  

If we act like Amazon is going to kill our business, then that is what we believe to be true.

If we actively seek an opportunity in every diversity, then we believe the future is bright.

If we pay our staff well, we believe in the importance of people.

If we greet our customers with a smile, we believe customer service is important.

If we complain to the landlord, we believe our problem is someone else’s fault.

If we watch our staff like hawks, we believe it is true that they are nothing but human resources.

If we open the store late, we don’t believe in discipline and consistency.

If we discount our offer as a default first step in a sale, we don’t believe your product has value.

If we say we value inclusiveness, but…

If we say we are not racist, but…

If we say we are compassionate, but…

It really doesn’t matter what we say, only what we do.

Psychologists suggest that 70% to 80% of what we do every day is habitual. Check your habits if you want to find the beliefs that are so ingrained you don’t even notice. That way lies an understanding of the truth. And once you know what you really believe to be true (and not what you have been telling yourself) then you are able to reset yourself and your business on the path that will lead to success.

The fact is, strategies and solutions (for the most part) are pretty self-evident. And if not, one can buy the expertise to solve it. The challenge we face is that we actually believe is incongruent with what we say – that is why we fail in the ‘execution’.

You can call yourself a Hawks fan, but unless you are prepared to sit and watch in the rain, you are a mere spectator.

Image: www.heraldsun.com.au

The virtue of having a closed mind

I have come to realise that I rarely change my mind. At first, I was horrified at the thought.

By that I don’t mean I never reconsider things, or never decide to do something different. I am talking about changing our mind about the things we actually believe (consciously and subconsciously) deeply.

We may change our preferences: You may decide to order pizza and then change your mind to get the Burrito instead. That is not a belief, it is preference.

We may change by learning: You may think that coffee is good for you and then you learn it is not, and you will think differently because you have learned something.

Neither of those are examples of 'changing your mind' about what you believe.

Beliefs don’t have to (only) be about transcendental ideas like God or karma. If you believe Tom Cruise is a great actor, despite the occasional shocker of a movie, then you too are highly unlikely to be persuaded otherwise.

I wonder why we so rarely change our minds, and it seems to me that our mind creates these heuristics (and biases even) for very good reason:

  • We get to navigate the world effectively despite the onslaught of information
  • We minimise decisions about things already considered and filed away, so as to allow us to consider new information and new dangers instead of the familiar (and safe) stuff
  • We know the people who want to change our minds do so for their gain, not ours, so our resistance is a natural, evolutionary response to protect our turf

We may instinctively distrust ideas and concepts that (and the people who) constantly change their minds because it signifies an inherent unreliability that is best avoided.

If you search the net about ‘changing minds’, you will find a good many quotes that suggest that changing your mind is a good thing and is a sign of a healthy perspective. Being open-minded is promoted a good thing.

The consensus seems to be with George:

Progress is impossible without change, and those who cannot change their minds cannot change anything. [George Bernard Shaw].

On the other hand there are a few contrarians:

Things don't change because people change their minds. They change because they retire or die. [Douglas Crockford].

I am with Doug.

It seems to me that we want to think of ourselves as open-minded and believe that we are capable of changing our minds. You may have spotted the irony there: we believe we are open-minded, and we are unlikely to change our minds about that. I just tried and probably failed.

But we delude ourselves, because changing our mind invites into it the chaos of the world, and most of us are not very good at coping with chaos. So we don’t change our minds about the things we believe, and the people selling us all those persuasion tricks are peddling snake oil.

That’s what I believe, and I am not going to change my mind about that.

Are you just a bit Avant Garde?

Avant-garde is originally a French term, meaning in English vanguard or advance guard (the part of an army that goes forward ahead of the rest).

The advance guard of a military operation is the cannon fodder. If you have seen the opening scene of Private Ryan on Omaha Beach, you know what avant garde means - literally.

Figuratively, the term has been appropriated for any kind of front-running, ground-breaking initiative. Tate, describes the term as follows in terms of the art scene:”It first appeared with reference to art in France in the first half of the nineteenth century, and is usually credited to the influential thinker Henri de Saint-Simon, one of the forerunners of socialism. He believed in the social power of the arts and saw artists, alongside scientists and industrialists, as the leaders of a new society.”

But avant-garde is a bit more brutal and lot more fatal than dreaming up a painting or a frock that will shock people.

In the workplace, you have the avant-garde too. These are the misfits and the rebels, the troublemakers and the dreamers. They are the ones who get excited about a dream or a project and run onto the beach. They are the ones that shot down by enemy fire.

Is that you?

Sometimes, if the idea is really good, they may survive. If the reinforcements arrive and the enemy gets overrun, the beach is made safe. Then the shif can dock and the Majors and the Generals can step on to the beach and survey the scene.

Sometimes, however, you don’t survive. Well, that is the end of that, and that is that. As they say.Cannon fodder.

But sometimes you survive. But the battle is not won. The medica carry you out, or you are lucky enough to escape. Until next time.

Is that you?

Until you get obsessed with another idea, another dream another beach to conquer. But over time, people start avoiding you, blaming you. It is almost as if they sense that you are doomed to die on a beach sooner or later and the further away they are, the better.

Avant-garde sounds compelling. The Generals will talk it up. They may even give you a posthumous medal. Because they need you. They just don’t want you. Because avant-garde is a little bit reckless and a little bit hard to manage when there is no war to fight. Then, you are just trouble.

The avant-garde don’t make good Generals. Medals don’t put food on the table. But if you really are one of us, then you can’t be any other way.

The bitter, bitter irony of it is that, whilst you believe there are beaches there are worth dying on, when people google what it means to be Avant Garde, what they get is this image.

Maybe beaches worth fighting for merely illusions. Or at best, fashionable in the moment, and nothing more.

A passionate delusion

Having been told to follow our 'passion' for so long, we have come to believe that whatever we are passionate about makes it true. It's not.

Really.

Passion motivates, but it also blinds.

The passion myth is perpetuated by people who had the benefit of significant synchronicity. Upon reflection, they attempt to rationalise it and articulate it - because it is a story worth sharing.

But human nature being what it is, we struggle to be honest with ourselves when it comes to our shortcomings. We take credit for success and blame others for failures. It is called the self-serving bias.

When we need to explain our success, but can’t, we trot out the idea that it must be passion. We have read it so many times, it has to be true. Even Richard Branson said so on LinkedIN, right?

Passion may or may not precede the hard work it took if you worked hard to achieve a success. There are plenty of people who hate their jobs but are very good at it and very successful at it. Passion may or may not have been present when you lucked into an outcome that turned to be good thing.

Being motivated, working hard or even feeling a bit good about things is not what passion is about. Here is the dictionary definition:

PASSION (noun)

1.strong and barely controllable emotion.
"a man of impetuous passion"
2. the suffering and death of Jesus.
"meditations on the Passion of Christ"
synonyms: crucifixion, pain, suffering, agony, martyrdom; rare martyrization "the Passion of Christ"

So, next time, before you claim passion as the big differentiator and the final determinant of your success, think again. As in, do you really mean ‘dying-on-the-cross’ passionate? Or do you really just mean ‘I-didn’t-mind-it-most-of the-time’?

When people claim their passion as the reason for their success, I can’t help but hear the sound of someone trying to find a reason for something they don’t understand.

If this post sounds harsh and judgmental, it is with a purpose. For you (anyone) to be successful we need to start with the truth. That is the truth about the opportunity, the truth about the market, the truth of our abilities and most importantly the truth about ourselves.

It doesn't mean we become incapacitated by the challenges ahead or that we are overcome with doubt. It does not mean we can't be optimistic about something that may seem unlikely. It does not mean we can't tackle things most people believe are impossible.

And THESE are the things that are necessary for your success. Not passion.

GO for it. Even if you don't feel passionate. It's ok - they lied about it being a prerequisite for success.

Image: WhatCulture.com

The Great Leadership Fraud

 

The ability of the human mind to delude itself astounds me.

The degree to which we ignore reality, or worse, bend it to our preferences is a debilitating feature of a wholly unnatural state.

Nowhere is it more evident than when it comes to leadership.

Everywhere, and I mean absolutely everywhere you look in the reality of the environment that surrounds us — including other human beings — we notice HIERARCHY: Man — Predator — Reptile — Plant — Dust.

And within each element there is a hierarchy. Within the animal kingdom, we have the food chain as an age-old, accepted fact. Something or someone goes at the top and you work your way down the chain. Some gemstones are worth more than others. Some things are stronger, more beautiful and more precious.

We invented sport to celebrate the ranking of hierarchy. Five stars. Gold, Silver, Bronze. Miss Universe. IQ. Chairman. Dux. (My company is named after the ‘winner’ in a bull fight.)

Yet. Yet.

We promote a faux egalitarianism. We live in a democracy, where every vote counts equally. Everyone is claimed to be ‘special’. Everyone is able. Even if everyone doesn’t win, everyone CAN win.

And most importantly, everyone can learn to be a better leader.

Seems to me that this does not conform with reality.

Leadership is an evolved trait — in response to environments. That means there is a natural scale to leadership ability. The natural status of things is challenged by leadership trainers who exploit our desire to grow with seductive but ultimately false promises.

They claim they have an ability to change your ability.

But is this possible?

Can you train a possum to be a wolf?

I am thinking this may be one of the biggest cons of our times.

When I look at the actual advice that aspiring leaders is given, it seems to me that the changes consultants and trainers promote, mostly relate to superficial, environmental and inconsequential changes you must make that creates the illusion of leadership. How you need to organise your diary. Or set an agenda. Or position your body. Or dress or diet like so.

Sometimes the advice appeals to an illusory ideal: be tough, be kind or be something — anything but acceptance of what you are now, because then I would not have an ongoing consulting gig.

Leaders emerge from their environment. For the tribe in survival mode it is the alpha figure. Under other circumstances, other leaders may emerge. That usually happens as a result of some faux rationality superimposed on the environment that happens — like being elected for having perceived skills or having made promises that appealed to the group’s self-interest.

The false belief that a leader can be made is a necessary preconception required to justify the entire leadership improvement complex. It is a myth we gladly buy, because who does not want to be more leader-like?

The reality is that the hierarchy is steep, there is only one top dog in every tribe, and aspire as much as you like, you have to kill the leader in order to take the top spot.

So we go about killing them, usually through subversion, rarely though a fair fight. The environment that leaders operate in has achieved a veneer of civilisation, designed to protect the weak and unequal.

Eventually, the weak wins: a pack of hyenas shred the once-strong lion, now disabled by convention and civility.

Maybe that is why companies fail at such an alarming rate: we refuse to acknowledge the natural order and survival that depends on having actual, strong leaders who are born to lead, and instead we have the insipid pretenders who win those positions because they made a set of rules to suit them.

(Maybe Nietzsche was right?)

When you look at the political leaders we have had (post-Howard) in Australia, I think the evidence is clearly in. People who get to the top are not necessarily suited to the top.

Sometimes I don’t even like the conclusion I come to in my own arguments, but it seems to be unavoidable outcome when you can’t change the facts of the matter. And in a time in the evolution of business and society when we need strong leaders, we need to take an honest look at who is leading the pack.

It is not so much a debate about whether leaders are born or made, it is about revealing the fraud that underpins the promise that a leader could be made.

Because humans have an innate desire to grow and improve (to better survive) we have accepted the myth of the made leader at the expense of the harmony and happiness that comes from knowing your place in the natural order.

Everybody is not a leader. Everyone can’t become a leader. The evidence is everywhere you care to look. If you were honest. If you have to question if you are a leader, and if you think you need more training to become a leader; you aren’t one. At least not a good one.

 

Img: http://www.jacoglaw.com

The Antithesis of Amazon will save Australia

In Retail, it used to be about who you knew. Over the last hundred years Retail was about a guy who knows a guy who knows a guy who knows a guy.

I want to sell something, I need to know a guy who imports stuff who knows a guy who exports stuff who knows a guy who makes stuff who knows a guy who sources stuff.

Before that, when retail happened in marketplaces, it was merely being the guy, or at worst, knowing a guy who farms stuff.

Amazon’s success can be attributed to becoming the original (farmers’ market) - they need to only know the guy who makes stuff - or at worst know the guy (affiliate) who knows a guy.

With one critical difference.

In the digital landscape, they did not need to be restricted to a physical geography for many products (like books). And then they used that advantage to enter the markets for products where geography is a factor (like food.)

I am describing the idea of the supply chain: it used to be very short. Then, in an effort to introduce variety and alternatives and to reduce some friction and inefficiencies with economies of scale, the supply chain lengthened.

It lengthened to the point where it introduced sufficient variety but also serious inefficiency.  That made it attractive for people to forsake many of those benefits for the sake of a reduction in price and cost.

Think again about how Amazon got started:

What do people who buy books want? They want to:

-       Browse/sample to see if they would like it

-       Talk to a sales associate who could recommend/inform

-       Start reading (as soon as possible)

Bookstores did all of that - at a price of say $30 per book.

Amazon offered them the following:

-       You can get recommendations, not from one individual but from many people

-       You can browse exponentially more, at any time, for as long as you want

-       You can’t start reading for a few days while you wait for delivery (pre- Kindle)

BUT you pay only $15!

People liked the trade-off. Then Amazon went directly to authors. Then they introduce digital delivery (immediate). And they did not even have to reduce the price further because even though their costs declined, there is no competition to force them to charge market rates.

Retailers of course know how important the supply chain is. The major supermarkets have been accused of abusing their market power to wring efficiencies from it. That was the lazy way. The hard way would be to re-imagine what the supply chain looks like altogether, not merely accepting what is and squeezing it harder.

So, Amazon has taught the lesson we never seem to learn: change happens dialectically. That is, you have the status quo (thesis) and then someone comes along and does the opposite (antithesis). Then over time, these two positions are synthesised into a new thesis. (Amazon buying bricks and mortar, more and more warehouses is happening.)

Amazon’s strategy (and a few others) seems to be driven by megalomaniacal founders. Ego is the secret juice, not strategy. How big must the ego be if you can convince investors to accept that “In its two decades as a public company, Amazon has had a cumulative profit of $US5.7 billion? For a company with a market value of nearly $US500 billion, this is negligible. I don’t think they have ever paid dividends as far as I can tell.

Eventually, they will increase their cost base and the supply chain will lengthen and frictions will appear. Landlords. Brokers. Transportation agencies. Suppliers once and twice removed. It is going to happen. So, Amazon also has to learn to know a guy who knows a guy...

Then someone will come along and do the opposite. Just when Spotify’s market value spikes, vinyl record sales just hit a 25-year high.

That is why I love entrepreneurs. They are so antithetical.

There is a lesson in that somewhere.

Or at least a bumper sticker.


Dennis Price: Co-Founder at WWW.YEARONE.SOLUTIONS can be reached at dennis[at]ganador.com.au

Image from: www.tutorialspoint.com