A Look Around the Corner
The Difference Between an Opportunity and a Threat is the Time Horizon in Which You See It
We Occasionally Get it Right
Below are some excerpts from ‘The New Business Normal’ written in 2003/4 and published in January 2005.
Customers don’t like clutter or visible complexity. They have little time or interest in constant experimentation once their needs are met.
As a real-world example: Twitter was created a full year after the above was published.
There are countless global, cost-denominated competitors accessible through a click.
Globalization accelerated in the decade following publication.
A broadscale phenomenon of the new business normal is that organizational economic security is gone for individuals, corporations, and governments.
58% of us families now live paycheck to paycheck, even banks have gone at risk, local governments struggle to meet pension commitments, etc.
People differences in the new normal are between those who know and those who don’t know rather than between the haves and the have-nots of yesterday. Individuals need to invest in themselves. Education is expensive, but ignorance is more expensive. The offset to insecurity is knowledge.
If you’re reading this, you have access, but those that don’t are being left behind, and ignorance is accelerating for them.
Personal time is gone. It takes more time to maintain your knowledge, your skills, your networks, and your awareness of global conditions. Time loss comes with empowered and leaner organizations. In a 24/7/365 economy, time can no longer be parceled into convenient periods between personal and business. The new normal is disruptive to the social fabric of the past and is characterized by families having fewer children and mixed gender roles.
If you find yourself answering emails, texts, social media apps after ‘work hours’ or on weekends….. need we say more about this early look around the corner two decades ago?
Dual-income households are an economic necessity.
It was obviously gaining as a trend back in the late 90’s but now it is next to impossible to maintain any economic ground without it.
Economically, we are a long way from the day when people are measured and rewarded on the value their thoughts bring to humanity. Reward and recognition are taking new forms: quality of life, flex hours, remote locations, upgraded hardware, database access, flatter organizational models, etc.
While a pandemic nearly two decades later emphasized this trend, we saw it as one of those shifts that would be irreversible once it was initiated.
Low-stress family life is nonexistent.
The average work week has increased, competition for access to higher education keeps nonworking hours fully occupied, and the plethora of fast food, fast service, fast diagnosis merely reflects a response to stresses families face in the new normal. Children, by default, are in danger of becoming second-class citizens, being shuffled from activity to activity and caregiver to caregiver as parents seek economic security and quiet space.
Amoral behavior is on the rise. A sense of irresponsibility and a general lack of conscience pervade many communities. Gangs, latch-key kids, Internet cheating, and tuning in to tune out are popular methods of coping. The computer game—the be-all and end-all baby-sitter, mind sitter, thought filler, and fat builder—has replaced the community and direct human interaction.
Hopefully we will see a reverse trend and more recognition for the need to connect human to human, but we did get it right, and Tik-Tok has become the human game of games.
The base level of human existence is at a higher level of anxiety for all.
And it has only gotten higher in the intervening two decades.
Individuals are exclusive and are becoming less inclusive. In public and private places, the individual is an island and can stay that way: iPod, headsets, computer-based conversations, and home alone (the fastest growing segment of the population is single-person households). The internet connects to everyone but especially to those who hold similar tribal norms and seek anonymous relationships whether in the local neighborhood or across the globe.
The rise of tribalism, the ability to ‘radicalize’, and coordinate misinformation across the globe has only amplified over time.
Value will accrue to those organizations able to reward the whole person who comes to work and voluntarily gives over to the company his or her most precious assets: time and emotional commitment. As humans spend more of their life engaged in the process of making a living, they will demand more satisfaction from their means of livelihood.
The great buzzwords of the day reflect this early signal’s journey to maturity, e.g.,
“Purpose”, “Self-fulfillment” etc.
As more information is collated and codified in greater volumes and with greater speed, there is a risk to all employees of becoming ignorant at an accelerating pace.
While we didn’t predict the exact emergence of AI, ChatGpt3-4, et al, are making what you know a commodity at an exponential pace.
What you have created is not yours to keep. There are countless well-trained brains graduating across the globe able to copy, surmise, and surprise. Reverse engineering is no longer a black art but a well-tuned and fully supported business discipline. Governments have complicity too! Until recently, all imports into China were regulated to go through indigenous trading companies that were known sources of pirating and cloning.
The practices we outlined only gained in pervasiveness and openly accelerated with policies.
Our economy today is more conceptual than physical. Virtual factories work. Seven-by-twenty-four global enterprises exist. Everyone is connected to everyone. The networked organization of “networked organizations” is making a profit. Information technology is now a competitive advantage. Manufacturing differentiation is nearly nonexistent. The presence, attitude, and role of China have irreversibly changed the global marketplace, potentially for centuries to come.
The race is on and unlikely to end gracefully for the many who are being disrupted. New terms have come into being like ‘DAO’ (Distributed Autonomous Organization) and metaverse to describe the evolution of this early signal seen over two decades ago.
When things happen is becoming more important than how they happen.
Take a look at the chart below….an example of how ‘when’ plays such an important role; what it could become was known (Nokia called the cellphone the ‘remote control for life’ in 1996!), when it could happen and who was prepared to act on the convergences made all the difference.
The value of physical assets, from stately headquarters buildings to manufacturing facilities, which custom producers can equal or surpass, has diminished.
Post covid office occupancy only accelerated the view around the corner we saw.
Brand is probably the most important asset a company has. It is the company’s currency to open, maintain, and control markets. It is the framework under which new products are contemplated, funded, developed, and introduced into the marketplace. Brand gives pricing power. Products sourced from certain regions of the world possess inherent brand promise (e.g., Swiss watches, English leather, Italian fabrics, and German cars). In the new normal, regions must leverage the brand position given to them in the global marketplace. Going outside of the consumer mind-set requires higher market development costs with commensurate risk—expect to spend some pioneering positioning money if you’re going to market with English gourmet food, French automobiles, German lingerie, or Italian tower engineering.
Every region on the planet today is fighting to find a place in an increasingly competitive future that is sustainably unique to the assets available or migratable to that region. Regions must be willing to invest in at scale to survive with an identity and brand is even more true today.
Financial analysts will need to develop new business valuation models that measure ratios and growth rates of intangible assets. Commercial success, in the new normal, will relate more to how effectively a company leverages and grows its intangible assets than to how many buildings and machines it owns. Book value as a measure of a company’s basic worth is dead.
The statement we later found (M Boisot — editor of Forbes ASAP put it in a 1993 editorial, “As an index, book value is dead as a doornail, an artefact of the Industrial age) and found out we weren’t first! But it is interesting that it has taken until 2020 to see it in the accounting literature: https://www.valuewalk.com/book-value-intangible-assets/
The real corporate sinew of the new business normal involves the intangibles of patents, trademarks, copyright, and know-how retention. It involves creating brand recognition, proprietary software, and knowledge-management systems. It involves building “virtual” companies around the world through partnership and joint-development affiliations.
The battle taking place over AI, ChatGPT, et al, is the outgrowth of this around the corner look in 2004.
Often taken for granted by senior management is the intangible value that supply chain assets can deliver. “On time anywhere” is more than a catch phrase. In the new business normal, it is managing an important resource and part of the ante required for doing business beyond local boundaries.
Covid supply chain disruptions drove this home even though many others throughout the decades leading up to the economic impacts of the last few years were sending early signals. The next signals will likely shape into the emergence of ‘possibility networks’, flexible sources for everything, preferably close.
Cooperation is at the core of every sustainable social and interdependent society. This forward-looking axiom came about as we started to see the divergence of the populace at every social and economic level. Unfortunately, we have had this driven home as we see less and less forward progress in the interest of the common good.
The rapid development of outside communications channels through the internet. Some of these in the “news” arena are becoming so popular that news organizations see them as a potential threat. In fact, they played an essential role in the outcome of the 2004 U.S. presidential election. They are creating a new channel for information dissemination—mainly unstructured.
We think we got this too right at the time, and the trend has only gotten worse and more complicated with ‘fake’ becoming readily available and immediately distributed.
Once again, a core theme of this book is that the basis of future competition and competitive advantage will be the speed at which a company can access, collate, analyze, and apply information to a customer problem or business opportunity anywhere in the world at any time. This ability to outpace the competition in decision making, based on superior knowledge management, will greatly enlarge the gap between competitors with each successive learning cycle. Stated another way, your decision cycle time will become either your greatest asset or your fundamental weakness.
Just ask Silicon Valley Bank, or any theater of military operations in today’s economic and geopolitical world. This core understanding of competitive advantage has stood the test of time and we later adjusted it to be more of an alliteration ….so us old guys could remember it ….access, aggregate, analyze, act!
In the global economy, misplaced capacity is more of a challenge than overcapacity.
In recent memory ‘chip shortages’ are a case study in this early signal recognition.
When the concept of the world changed to round rather than flat or when China changed from a controlled economy to a market economy, the term “paradigm shift” was deserved.
To be crystal clear, we published our book 6 months before ‘The World is Flat’ by Tom Friedman.
Throughout history, those who have served humanity are given more reverence than those who commanded and controlled humanity. Witness the respect that people pay, generation after generation, when entering a place of worship, whereas the power and fear of past royal dynasties today are viewed in caricature.
One can only hope to live long enough to see the many times this unfolds in a lifetime. While not an original ‘look around the corner’ we got right, we think it bears review by any serious executive looking to build a meaningful company in the 21st century.