Archives for posts with tag: Great Recession

Are you treating headaches? Or broken limbs?

February 15, 2012 //

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Most companies fail because they treat headaches. Not broken limbs.

I have more than 100 apps on my iPhone. I use 10 of them regularly because they solve an important problem for me. All the other apps are nice to have and relevant but their solution lacks true urgency.

The majority of companies/brands that didn’t make it through the Great Recession or continue to struggle are companies that treat headaches. Nice to have a pill or massage to battle the head pounding. But not life-threatening. You’ll make it through another day with a headache, hard to imagine when it comes to broken limbs.

When the Great Recession started, businesses that treated minor head pressures disappeared overnight: the 100th clothing store, the 51st coffeeshop, the 11th video store. Over the next years, businesses went belly up when they treated minor headaches. In early 2012, businesses are starting to disappear that treated major headaches.

It’s part of the de-leveraging process our society is going through. We cut the fat, only invest in necessities. At this point in time, people don’t buy products or services. They buy solutions.

Be brutally honest

Are you solving a significant problem? Did you identify and quantify a real problem worth solving? If you answered at least one question with a resounding “Yes”, you will succeed.

If your answer was a whimper, a muttered “I don’t know” or a loud “Yes!” – time to start rethinking your business. We don’t know when things get really better and luxuries are affordable again. We know businesses don’t have the luxury to wait until then.

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The fascinating cultural response to the Great Recession

November 28, 2011 //

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Quick: What’s the #1 movie for the last 2 weekends? Breaking Dawn Part 1.

The Top 3 Billboard songs?  Rihanna’s “We found love.”, LMFAO’s “Sexy and I know it.” and Adele’s “Someone like you.” (With these insightful lyrics: “Sometimes it lasts in love but sometimes it hurts instead.”)

Top TV shows: Football and Dancing with the Stars.

Escapism everywhere

This shouldn’t surprise anyone. While I’m writing this, economists and pundits warn that the breakup of the Eurozone is upon us, the Arab spring turns into an apocalyptic event and even NBA players had to cave in to avert economic distress. All that on top of jobless levels stuck at 9% – in reality much, much higher – and almost 50 million Americans living in poverty.

We long for the certainties of the 50s and 60s when good jobs were everywhere, men were still men, and our world consisted of white-picket fences. (Conveniently forgetting the rampant racism and sexism. Oh well.) It started with Mad Men and extended to Pan Am and other shows glorifying good old times. TV storytellers and screenwriters instinctually feel the need of people to be removed from the grim reality. It’s everywhere: TMZ, movies, books (fantasy, vampires, zombies). Our whole culture seems to be focused on escaping.

Occupy Wall Street is the ultimate escapist movement

Just look at the grievances of the Occupy Los Angeles assembly:

“1. A moratorium on all foreclosures in the City of Los Angeles. The City of Los Angeles to divest from all major banks, and money to be removed from politics.

4. Los Angeles to be declared a sanctuary city for the undocumented, deportations to be discontinued and cooperation with immigration authorities to be ended – including the turning in of arrestees’ names to immigration authorities.

9. No cutbacks in city services or attacks on the wages, work conditions and pensions of city employees.”

Anybody with any fiscal responsibility bone in his body has to laugh at these demands. Changing the world and transforming society requires more than just enduring the hardship of occupying a small strip of land, living in a tent on a cold surface. It requires hard work, tough decisions and getting hands really, really dirty. Just demanding things and hoping for the rest is the answer of an escapist mindset. Alluring to some, ineffective for the rest of the world.

Brands have bought into the escapist mindset

As Albert Einstein famously said: “Insanity – doing the same thing over and over again and expecting different results.” Resulting in the advent of coupons, Groupon, extension of Black Friday hours and moving the yearly holiday sale for automobiles from December to November. More access, more hours, more opportunities, more consumerism.

The bitter reality is that customer behavior and mindset has changed for good. But brands still believe they live in 2005 when credit was easy, no real unemployment littered the country and we felt like we had the key to the world. People have changed. They are scared. Fearful. Anxious. And they long for real leadership.

From escapism to activism

40 years ago, the punk rock movement began in Britain when economic depression trapped the working-class youth into believing they had nothing to gain in life. Stranded, this group began a subculture of protest, the musical style typically consisting of hard fast rock, with lyrical messages varying from the political to the nihilistic. Grand Master Flash published one of the most influential Hip Hop songs (“The Message”) in 1982, at the peak of that recession.

While the Depression featured a lot of escapist culture (explosion of the exuberant jazz culture and the emergence of Superman in 1938), Steinbeck’s “The Grapes of Wrath” explored the hard times of the poor and out of work. Bing Crosby’s “Brother, can you spare a dime” was a huge hit in the 30’s and people reverted back to simpler times, like The Lone Ranger, when problems could be solved with guns and a strong whisky.

We are entering the age of strife. As I wrote before:

“We’ve entered an intermediate period of civil strife, cultism, ineffective leadership and a bureaucratic apparatus that’s only beholden to itself, funding itself despite the labor of the working. We have a bureaucracy that is removed from the people and ineffective in leading. We also a have a de facto dynasty with all these massive corporations that essentially own the government because they can buy it. That creates the basis for much of the social strife we’re going to see because we’re facing a structural problem, imminent shocks and shifts in the world system, and the nature of the global economy itself. Inherent and self-reinforcing inequalities and concentration of wealth in a society that was based on an egalitarian principle will lead to massive dislocations.”

It will never be 2005 again. This is not a recession, this is not a pothole. The current crisis, this is a fundamental dislocation. Our current institutions will not provide real solutions. They are good for band-aids, not for solving the problem ahead of us. All of us need to change the world through innovative ideas and a transformative mindset.

What brands should do

Brands need to take their head out of the escapist sand. It might work short-term, it will lead to failure in the long-term. Our future will not look like the past. The past was based on the model of industrial production; the new model will be based on a globalized, collaborative information model. It can’t be about more stuff and pure growth. It has to be about being better, kinder, lovelier and inspiring. It can’t be about targeting consumers, it has to be about collaborating with all of our stakeholders. Brands have to stop asking what this society can do for them, how they can get even better breaks. Brands have to ask what they can do for society. How they can help Contribute. Be part of a bigger cause.

Brands have to become collaboration hubs of passion, enthusiasm and openness to see the world with different eyes and change it through their collaborative ideas.

Just like the Eurozone, brands have to make a tough decision: Either adjust. Or perish.

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The age of creative capitalism

October 12, 2011 //

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The industrial age is coming to an end. It stopped being the growth engine of the economy (with the exception of 3rd world countries emerging out of the dark ages), and it’s unimaginable the industrial complex will ever get us out of the current economic mess.

The old adage of “Hard work will be rewarded” and the fading images of blue-collar workers being able to feed their families with their job are fast becoming distant memories of a time lost. You can call this recession, the Great Recession, a Depression, the Great Reset – I call it the end of the Industrial Age and Mass Production.

The 20th century was about turning people into cogs.

Mass production of standardized goods was the success formula of the Industrial Age. Mass production allowed for products to be cheap and plentiful, creating through standardized processes and tightly defined jobs that could be done by almost anyone. The gains from mass production were dramatic because they replaced an age were individuals or small communities created products: inefficient and not replicable on a massive scale.

We saw decades of dramatic growth, development and jobs. So much value was created over the last 200 years that companies were able to pay decent wages with long-term benefits, while employees just had to keep their head down and follow instructions.

The age of mass production is dying a miserable death.

The potential for growth in mass production is zero, with the exception of countries with extremely low labor costs. But, as we’ve seen repeated over and over again, those advantages tend to disappear over time when emerging countries expect higher wages and even poorer nations start the mass production cycle. In a decade, China’s low-cost manufacturing will be replaced by African countries – the process has already started. The mass production race is a race to the bottom. Ultimately, it will end up in eliminating people in the production process completely.

The old world was built on hard work, loyalty and the idea of fitting in. Now, hard working people can’t find a decent job. People that were loyal for decades are now staring at the abyss. And the old guaranteers of success (High School Diploma, college degree, etc.) are no longer the ticket to a comfortable future. Our idea of a good life was about working hard and being comfortable the rest of the time. We still have to work hard but we won’t be comfortable for a long time to come. Maybe never again.

Creative Capitalism

The nineteenth century was the age of the industrial revolution, the twentieth the age of mass production, and the twenty-first will be the age of creative capitalism.

Everyone in the developed world has now access to a computer, transforming each one of us into a factory owner. The means of production are right in front of your computer screen, allowing you to create movements, earn attention, connect labor and resources, deliver sustainable value.

Exciting? Yes!

Scary? Hell yes!

We were trained and programmed to be a cog and now we have the means to change the world right in front of us. We don’t know how to start this new economy, deliver value, solve interesting challenges, and then deliver on our promise.

Nobody knows anything.

Just look at the politicians: Tax cuts, Tax increases, less regulations, more regulations, bigger government, smaller government, no government, left ideology, right ideology – these are all answers from the past. A past that will never be our present again. The industrial age was sputtering along for years before it received a vitamin shock in the late 90’s and first decade of the 21st century. When the crash came, it came swift and the demise was rapid. We continue to prop up a system that’s been dead for a while, keeping zombie banks alive, zombie political ideas, zombie economy theories.

We have to replace the zombies of mass production with creative capitalism.

We have to be smarter. We have to use our resources better. We have to develop products that don’t harm the planet and its inhabitants and, at the same time, delight and amaze people. We have to think cross-functional, cross-divisional and cross-national – developing ideas that increase our humanity and not just the bottom line. We must come up with big ideas – ideas, that will change our daily lives, our neighborhood, our society, the whole world. Everything we do must be examined and discussed through the prism of sustainable value for the whole globe, not just a selected few.

We have to think, discuss, collaborate and execute.

In the age of creative capitalism, all of your gains will come from insights and innovative ideas into what makes products, services, processes, human interactions, structures and institutions better for us. The last 100 years were about standardization and following well-defined processes.

The age of creative capitalism has no processes. Yet. Everything you learned in school, college and through media is invalid. Out the window. Trash. We have to question everything. We have to re-imagine everything. We have to re-make everything.

We have to agree on a vision how the world should be in 100 years. More importantly, once we settled on a vision, we have to bring this vision to life and create it. 20 years ago, it would have taken an enormous amount of money to share these thoughts with anyone besides my friends in a smoky bar. Now, these words can spread to ten, ten thousand or ten million people. Anybody can access them.

You’re on your own.

No politician, no CEO, no father figure will rescue us. It’s you and nobody else. You are creating your own future, don’t expect anybody to help you with that. You are the artist, the designer, the factory owner, the manufacturer, the creator – you are whatever you want to be. You are responsible for your own success. Nobody else.

The well-trodden path of the mass production age disappeared forever during the financial crisis. It used to be easy: get a good education and a stable job – the rest will fall into place. Others will shoulder the rest of the responsibility for yourself and the rest of the world: Social Security, Medicare, Charity, Aid.

What is that weight you’re feeling on your back? It’s that immense weight of responsibility the world handed you in the last few years. All of us have to shoulder that responsibility and move forward. Let’s not try to hand it back to institutions or politicians. They don’t know what to do with it either. Shoulder that responsibility and move ahead to create a new future. We have to stop striving for comfort and strive for discomfort and discourse.

We’re all in the same boat.

This is a huge undertaking. It requires all of our brains and hearts. We need to reinvent education, institutions, societies, communities – actually, we have to reinvent the idea of capitalism. And we have to reinvent the idea of responsibility and empathy. While we create a new future, there will be many amongst us having problems to walk confidently on this new path. We can’t leave them behind or expect institutions to take care of them. We have to take care of them by helping them through these perilous times. The last thing we want is to create a future two-class society: One class that receives the best education that allows them to discover a passion to make the world a better place. And the other class too busy to barely survive. Our biggest challenge is to ensure that everybody can participate and contribute.

Let’s get on with it. Our future is brighter than we ever imagined.

…

This is the starting point of a journey. I’m happy to announce that my book “Creative Capitalism” will be published in August 2012. The vision for this book is to share a vision and roadmap for the new age of creative capitalism. Share the first executions of creative capitalism. Paint a picture of the future. Create a platform to collaborate on a bright future.

If you want to follow me on that journey and help create a brighter future, please visit my blog and follow the Twitter feed.

This blog will continue to talk about the future of marketing and advertising. I will continue to work with my current and new clients on integrating social channels into their business models.

I’m very excited about working with you to create a better future.

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Transform your business – Types of Systems (Part 2)

June 15, 2010 //

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Image: Courtesy of 28.media.tumblr

There are systems that are machines; there are systems that are organisms; and there are systems that are social systems. You would be really stupid to treat a machine as an organism. No machine has any goals of survival or growth. But, for some reason, we do treat organisms as machines. Actually, most companies continue to do so. Treating organisms as machines or social systems as machine might be somehow useful. But it doesn’t deliver the multitude of benefits when looking at a social system as a social system.

One of the unintended consequences of this thinking is the tendency to make people behave as though they were machines. Dehumanizing work has led to alienation from institutions, one of the biggest challenges for companies. The reductive doctrine just goes against anything humans believe in: Holistic medicine, the Earth as a global ecosystem, our planet as part of a bigger universe. We’re living in an age of expansion: To understand anything, we have to look at larger systems. Sure, we might never completely understand everything but our understanding increases when we look at the larger picture, reflecting on the largest systems our mind can comprehend.

But, first, let’s have a look how we got here:

From Industrial Revolution to modern corporation

The Industrial Revolution was about the mechanization of work. First thing we did is to take each task apart. Reducing work to elementary tasks. The next step was to mechanize those tasks. We separated tasks into two piles: tasks machines could do and tasks people were assigned to (because it was too complex for machines, human labor was cheaper, etc.). Once we completed the analysis, we aggregated our findings and developed a workflow of elementary tasks performed by men and machines. These are the basics of a modern factory.

In the early stages of industrialization, an enterprise was created to serve an owner. The only reason of existence for the enterprise was to provide the owner with a return on his investment. The worker was a machine: Input equals Output. As the size and complexity of organizations increased, it became less effective to manage them as though they were machines. Decentralizing control became necessary which was incompatible with a mechanistic conception of an organization.

The next step in organization structures was to separate the body (Corpus, meaning body), the operating unit, and the brain, management. This was a fairly easy way to manage an organization’s growth and increase the diversity of its outputs. The body was mindless. It had no choice. It was still a tool, a lever to be pulled.

In the 60’s, various civil movements (civil liberties, environmental, etc.) formed outside of social systems, insisting that their interests be better served by the systems that affected them. Ethics and social responsibility became cornerstones of successful corporations. The command and control management culture changed during that time, focusing more on managing interactions and enabling people to do their jobs better.

While a lot of progress was being made during that time, companies had to react to the advances in information technology and communication. The common belief was (and often is) that people would react mechanistically to information, meaning more and more information and better communication structures would increase the performance of businesses dramatically. As we all experienced during the Great Recession and the demise of various financial models, humans don’t react deterministically to the information they receive.

Shareholder Value vs Stakeholder Value

The main challenge for modern enterprises is to transform from a shareholder-centric to a stakeholder-centric point of view. It’s not enough anymore to create wealth for a limited amount of shareholders; modern enterprises are tasked to create and distribute wealth throughout society. The primary task for each modern enterprise is to provide productive employment with purpose. Companies have to develop communities of purpose focusing on a common cause, which emanates from common values, vision, and passion.

Sharing a common purpose helps companies to deal effectively with increasing information overload and intensifying conflicts. A social enterprise is capable of continuously dissolving conflict while increasing choice. This requires a new organizational concept that sees evolution as its most important objective. Evolution doesn’t always mean growth: Growth may occur without evolution and vice versa. This new organizational model needs to be based on the pillars of democracy, must be multi-dimensional (function, output and stakeholders), agile planning and an optimization system.

In Part 3, we’ll discuss what new forms of management are needed for the social enterprise based on the principles of Human Business Design.

In case you missed it, Part 1 talked about the nature of systems.

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We were put on this earth to change the world

February 11, 2010 //

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This is my daughter. Look at her. There’s this aura of infinite possibilities – she’s ready to take on the world. Nothing will stand in her way to explore this world that’s hers. We all used to be like that. We all had this fire in our eyes. Each morning we couldn’t wait to get out of bed, ready to make this world our world. We were curious. Eager. Had so many questions. Tried things out. Fell down. Tried them again.

And then life happened to us. Or better, institutions stood in our way. Pre-school. Kindergarden. Norms. Criticism. Homework. Schedules. School. Cruel teachers. Critical teachers. Grades. Norms. The system integrated us. We integrated the system into our lives. Into our thinking. And being. We graduated. When we were lucky, we traveled for a while. Found that joyful life experience again. But now it was time to join the workforce. To fit in. To accept mediocrity. Suddenly, it’s hard to get out of bed in the morning. Weekends and vacations are the only remaining highlights. We are slowly killing off everything that made us happy and curious in the first place.

Hold on, we just got a second chance.

The Great Recession is the biggest opportunity we will encounter in our lives. The Great Recession equals major hardship for many people but it also marks the end of the corporate era. If you’re corporate drone, your job will be eliminated very soon. If you try to fit in to make it in this world, you will struggle for the rest of your life. In order to succeed, you have to become an artist.

That’s the premise of Seth Godin’s newest book “Linchpin – Are you indispensable?” We have to become more human, creative and generous to be seen as unique and irreplaceable. And, most importantly, we have to ship. Meaning, we have to produce. Not spending hours on email trafficking, Twitter scanning, blog commenting. No, shipping. Producing. Doing. We can either give in to the lizard brain, the little part of your brain that is concerned with survival and is the reason for your procrastination and all your irrational fears. Or we can create our own destiny. Our own reality. And, at the same time, change the world.

Seth Godin’s Linchpin might be the most important book you’ve read in a long time. Hopefully, it will change you and your thinking. We’ve been working with major Fortune 100 corporations for years, even decades. We understand how tough it is to implement cultural change. But, it’s necessary. Actually, it’s imperative. Would you rather help your company change or see it vanish?

Seth Godin’s Linchpin and Hugh McLeod’s Evil plans (he illustrated Linchpin because he’s one) will give you the motivation and desire to change the world. We started our company with the goal to help transform businesses and change the way we work and live. Seth Godin distilled our thoughts in a neat and exciting package. Now it’s your turn to take the ball and change the world. We hope you’re ready.

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Quantity vs. Quality aka Data won't save the world

January 13, 2010 //

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Image courtesy of ‘While you weren’t listening’

My daughter is obsessed with quantity: “How long? 5 minutes? Oh, that’s such a long time.”

“How many days until I go back to school? 2 days? That’s such a long time.”

My favorite:

Me: “You can only have one.” Daughter: “But I want 2, 3, 4, 5, 6, 19!”

She’s not much different than the rest of us. If you can’t quantify it, it doesn’t exist. We get trained early on focusing on grades, sizes, personal records – give me any quantity, people will flock to it. And so they do, at their own peril. Just ask the math wizards on Wall Street who almost brought the economy to its knees with their models, derivatives and CDO’s.

Data linked with analysis doesn’t tell you the truth. It provides an assumption of the truth. Nothing more. Any Black Swan will destroy this assumption in an instant.

We see this pervasiveness and blind belief in data everywhere: Employees are resources that need to be utilized. Brands consider people targets that need to be tracked and hunted down by more and more ads.

It’s time to grow up, my daughter will one day, and learn that quality is often more important than quantity. You can’t compare 5 minutes at the dentist with a 5 minute hug of your loved one. Employees have non-quantitative strengths that are not measurable. We just know they have them. Just like products and services have non-quantitative strengths that transforms a product from a commodity into an object of desire.

Sales people are often measured by the quantity of their calls, not the quality of their interactions. Customer Service agents are being judged by the number of calls they handled, not the value they provided to customers. The list is endless.

Sure, we need to constantly improve our data sets and optimize them. But, the altar of data is not worth praying at. Leaving non-quantitative factors out is a road to nowhere. Integrating measurement into a more holistic, dare I say, human perspective should be the goal. Let’s use data and technology as a tool to better understand, innovate and change the world. Time to grow up. Who wants to be stuck in the “2,3,4,5,6,19” rut forever?

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