Fine Margins

I harp on about the importance data, how it is the oil of the twenty-first century, but here is a quick story about just how fine the margins have become.

At the end of a winter Olympics, one national team – renowned for its skiers – won zero gold medals. Post-event the management team sat down to undertake the deepest analysis based on all the data it could muster.

They figured out that with just a 5% improvement in performance, they would have won almost every gold medal they competed in. That level of competition represents just how tough the modern world is out there – and how fine the margins are between great success and miserable failure.

Everyone has to be a technology company

ChangeAgent_oilingthewheelsofchange500pxI have been following a story of two companies and how their brands are playing in almost completely different arenas and yet for the same customer.

One, let’s call them Goliath, has decided to change the colour of their product in order to reinvigorate sales. Same basis of the product, same distribution channel, same target audience.

David, our little guy, sells a similar product but not through stores. Instead he sells it online. Customers can’t touch or handle the product, but they can follow it on Instagram and Facebook pages and be part of a community of likeminded users. David still has a minority market share, but he is growing at a handsome rate. He also has a far lower cost base and is therefore more profitable. Rather than targeting only the audiences of the stores that sell his products, David can reach millions.

Goliath knows very little about their customer as all sales are through stores and usually in baskets full of other products. David knows everything about his customers. I see only one way out for Goliath; the smarter companies are going to be the ones that go out and buy the technology and engineers needed to drive disruption.

Every company has to be a technology company: if you are at the top of your sector today and you are not a technology company, you wont be at the top of your sector for long.

Women in Learning & Leadership

I was proud to be invited to speak at the Women in Learning & Leadership (WILL) event today in Manchester. It was a great meet with some very good speakers and lots of interaction and participation – Pearson at its best!

I opened with a quote from Accenture that stated digital is the main reason half the companies have disappeared from the Fortune 500 since the year 2000, and we delved into technologies impacting the workplace, education trends we need to be cognisant of and especially the need to attract and retain the best talent.

I referenced one well-known UK businessman who said, “You have to Kill Your Business,” and whilst dramatic, I agree that you have to embrace digital transformation and do business totally differently. We lamented the demise of Nokia and a former CEO made a great comment that they didn’t do anything wrong necessarily, but somehow the industry disrupted around them. The frightening aspect of this is that the traditional graph with a 30-degree growth line is now even referred to as the “path of doom;” in other words, if you are only growing at that rate, you may not survive the disruption. Plus those that are complacent are at greatest risk.

We don’t own our ideas for very long either, according to a former Marketing Officer of McDonalds – today we own our ideas “for about an hour and a half” before somebody is snapping at our heels updating and improving what we started. A simple yet great line cited from Cisco Chairman John Chambers summed it up: “It’s no longer a question of if or when the digital revolution will happen, we are in the middle of it.”

Somebody asked about AI in education: educators and teachers must not stop the drive of AI in the classroom; it is in the real world so if we don’t introduce it into our learning, the next generation wont be ready when they go out to the workplace – we must think of the future.

I closed by using the Fox and Hedgehog story to answer a question about why Pearson VUE is so successful at what we do – we have a laser focus on what we do and we hire and develop the best people.

What if I live to 100?

UBS adThe back page of the current Fortune magazine carried this advert (right) for UBS and it is worth underlining the impact of living for longer.

If we live to 100 in future, it is more than just savings plans and investments we will need to worry about. Very few will be able to retire and live off their savings for half a century, so how will we cope? We will most likely have a career that spans 60-years and have to learn new skills as generations change; furthermore cycles and trends of work mean where we start will in no way resemble how we finish working.

So as our knowledge and skills become redundant, we will have to update just to keep up. Education needs to start thinking today how to prepare future generations for such evolution – will a once in a lifetime education be the correct solution, surely not? The traditional college/university model was invented when our education would get you your first and last job, but our kids will hop from project to project as they see fit – choosing who they work for.

Because we live in a very dynamic society where people have lots of careers, where technology moves faster than we can keep up and whatever we learn expires very quickly, we need to ask if we are no longer faithful to one company or even one profession, why should we be faithful to one type of education at one institution, and at only one point in our lives?

Is the future big or small?

FreelancersWe have just returned from a couple of weeks driving along the Californian coastline, one of my favourite holiday spots, where I noticed a change.

When I first started visiting America I remember marvelling at some of the larger department stores such as Bloomingdales, Macy’s and Nordstrom. Today, these stores look like they are stuck in time, and that is if they are there at all. I sensed more boutique businesses, smaller operators and niche products which are of course supported by mammoth online platforms like Amazon that encourage them to thrive.

How much is technology responsible for this and have the large retailers missed the trend change, or have they been hamstrung by huge properties in malls and cannot move fast enough? Online shopping and service has certainly dented any rosy future for them in their current form.

As consumers we are happy to pay for convenience as ordering online has become slicker and quicker and where product choice is unparalleled. Equally no consumer can tell how large or small an online player really is; plus, who cares as long as the product is genuine and delivered on time to our doorstep.

Combine this with the fact that 20% of people have sold something online in the past year (Pew Research), the reduction in free time most people complain of, and the increase in freelance and contract work, and it all points to a new way of living and shopping which we have taken in our stride. It is likely to gather pace, never to return.

Part of me was saddened to see the old stalwarts fading or missing, but it reminded me that we are on a treadmill of tech-led change, and if we stand still we invariably go backwards.

OODA

ZaraOODA stands for Observation, Orientation, Decision and Action.

It is a decision making model that was created by a military strategist called John Boyd, where information is sent back from the field to the decision maker to construct and modify a new theory of attack. It is especially important when you don’t know how the opposition will respond to your first wave.

Boyd said the key wasn’t about the great plan of attack, but how you learn and evolve quickly – the speed with which your strategy could adapt.

I have referenced global retailer Zara before and they have grown to become one of the largest fashion retailers in the world. At the heart of their success is their ability to manufacture and respond to the latest fashions, having product on hangers within weeks.

The vital ingredient and differentiator is how we deal with information: how we digest and put data to use, adapt to changing market and competitive demands and make technology work for us to lead our customers to change.

Like the best military pilots, sportsmen or business leaders, it is about the gift of perception and reaction, to learn to manoeuvre midstream.

Thank you to Derek Thompson, author of the great little book Hit Makers, who introduced me to OODA.

One size fits One

bootsOne of the most exciting opportunities that technology brings to the table for businesses of every size is the utilisation of data to tailor their offering to each individual customer.

Although we are told that 95% of business data in the UK still remains untapped (Forrster Research), the opportunity to serve each individual’s needs and offer a truly bespoke service is mouth-watering at the prospect. This isn’t Harvey Specter and made-to-measure suits (for fans of the brilliant legal drama Suits), but more about understanding preferences, buying-patterns and data in the aggregate to shape future sales.

I have talked before about the correlation that WalMart made in the US between thunderstorms with sales of torches and pop-tarts! No in-store manager could ever have worked out the link, but the data made it sound obvious.

For those of us in a B2B environment, the dynamic is somewhat different, but we have an additional layer to use to our advantage. We don’t need to make over-the-top sales presentations to our prospects; customers tend to know who we are, they do their own research and they can find pretty much anything they want online. Plus in many cases today they reject sales people outright.

You can tell your story online – your website, blog, videos and customer case studies all wrapped up in your social presence will do as much talking as any salesperson. But augment this by building relationships at a human level, person to person, team to team over time, patiently and with integrity, and you have a formula that is very hard to beat.

One size fits one: the one thing technology can support every business with.

Speed up or slow down?

Dubai workshopI spent a great week in the Middle East last week where we hosted a skills workshop for clients and guests – with the topics productivity, talent and technology high on the agenda.

As always, following the media and talking to locals I picked up some interesting stories, no least from an article describing the ability to “zip through the airport in 10 seconds” on its way to the region. This is great news, especially as most people have a story to tell about crowds, delays and hours standing at baggage carousels scrolling through emails on their phone waiting for their bag. But is it really that good for us?

I welcome technology making our lives easier, speeding up processes and helping avoid queues, everything faster and shorter, but does it genuinely save us time or encourage us to try and fit more in. We seem to have fallen into the habit of squeezing more into less time, allowing ourselves no time to think and more items to have to juggle and worry about.

Should we be cramming more activities into less time, or should we be doing less in order to think it through and do a better job of the task?

Does technology ultimately buy us more time, or just more pressure?

What is your moat?

moatI read an insightful interview with an executive from a major player in hotels where he discussed the future of the industry and his organisation’s “moat.”

When you think about a moat, you immediately see protection and defence, and with so much change happening around us, and accelerating in many ways, we all need to consider what it is that differentiates, but also protects, our company and service, to such a degree that we can actually visualise our place in the market for years ahead?

Today, most companies can’t.

 

You may hate gravity, but gravity doesn’t care

Let’s open with a great quote from Harvard Business School Professor Clayton Christensen:

You may hate gravity, but gravity doesn’t care. Substitute gravity with cloud computing, big data, mobility, or social.”

However you challenge and dispute it, technology-led change is happening all around us. I recognise how hard it is to adjust decades-old practices and how different these may be compared to traditional methods of marketing and communication, but it isn’t about to slow down or go back to how it used to be. The transformation is ongoing, it will lead us down its own path, and like many the job roles in future, we are not quite sure where it will end up, because a lot of it has yet to be invented.

But we must take note, and here is a quick story to make the point:

A Chinese consumer spends millions each year in Beijing and is recognised across the city for her taste in luxury goods, lifestyle and events. She flies to Europe on business, takes her morning exercise and whilst in her running gear, pops into a designer store (of which she is a top 5 customer back in Beijing). She is ignored because she is not recognised and she leaves, unhappy. This is not acceptable. Because of the customer service expectation that the likes of Amazon, Netflix and others have bestowed on us, we expect the shopping experience to be highly personalised.

Data is the new currency. People will gladly share their data but in exchange they want value (however your product or service might define it). You have to recognise every customer, regardless of where they are and when they move across the world, and provide them a unique experience utilising the new technology.

Think of the impact if you don’t.