October 2015 – Curious about change

From scarcity to abundance

My last post focused on tolerance of ambiguity – my latest ‘card’ on the shift from scarcity to abundance – in this instance in relation to the potential impact of 3D printing on replacement human organs. And to me there is an enormous link between the two. Really since the dawn of mass commercialisation, our business models have been predicated on scarcity – even mass manufacturing serving really to highlight how appetites stimulated by scarcity and rarity (not that many Maseratis are made) can be met by cheaper mass produced models (the model T Ford being the classic). The decisions around operating models and pricing are therefore linked to how scarce I choose / have to make my offering. When I worked in research level publishing, there simply weren’t that many libraries / institutions working in some of the fields that we published – so the price of those books was geared to the tiny market size. Equally, Rolls Royce choose to create an incredibly high class product and charge accordingly in comparison with smaller and more mass market cars. Whilst the optimum decision is not necessarily easy the model is widespread and established.

But just look at how many assumptions are challenged in the business models based on abundance. Assets are owned not by the customer but by the providers / suppliers who may also be users / viewers /customers. Pricing is more transparently related to quality but is not necessarily homogeneous (think about the range of prices on Airbnb for example). Audiences are less mass market segments and more about tribes – tribes whose values may be similar within themselves, but where the values from one tribe to another may vary hugely. And abundance is opening up markets that never existed previously – how many of the artists and craftsmen on Etsy would previously have had a global market available to them?

And this requires a huge tolerance of ambiguity around business models – the recognition that pricing and marketing principles that worked well in the past will no longer be optimal necessarily in the future. Other people’s views (especially if more comfortable in the digital arena) may be as, if not more, valid. And new competition may arise not only from left field but within timeframes that we traditionally think of as project cycles at best.

In this context tolerance of ambiguity is really about the ability to question the status quo, to reassess fundamental assumptions (many of which are not even necessarily overt assumptions), to be humble enough to admit that not only does one not have all the right answers but that for some questions there are in fact multiple right answers. Because part of the problem with tolerance of ambiguity is understanding just what the phrase means . . .

Alternative futures

In my talks on megatrends I almost always finish on what I think is the key leadership skill of the future – tolerance of ambiguity. And it is beginning to dawn on me just how difficult / rare this is to find in business. This week I was talking at a global mobility conference – concerned with the ability to provide people around the globe in timely, productive and cost effective fashion. So demographics, technology, working patterns, automation etc were all discussed. But at the end of the day, my suspicion was that most people wanted to know the answer to a binary question – in the future will we or won’t we move people around the world to work?

I have every sympathy with the group tasked with achieving that today – after all international regulations, tax jurisdictions, budgets, pace of change, pressure on talent are all factors which make this hugely difficult. But when you look forward it seems to me that there is only one real answer to their question – Yes and No. Meaning that there will still be roles for which the personal, hands on, physical presence is essential, but at the same time there will be other roles which have traditionally been done in person which can be handled remotely or through an alternative route.

This is by no means a unique example – it just happens to be the one that is current to me this week. And it illustrates the business mind set – to pretty much all commercial questions there needs to be a one size fits all (and hence definitive) answer. But what is increasingly clear is that there are many alternative futures and technology is presenting us with more options all the time. At the same time, customers and users are becoming more demanding, have higher expectations and are accustomed to ever more levels of personalisation, whether in terms of product, service or experience. The one size fits all option is therefore highly unlikely to be the right way to go either from the demand or supply side. So many questions may get answered with Yes and No.

And that is where the tolerance of ambiguity comes in because so much of the corporate infrastructure is designed to create efficiency – efficiency which is predicated on economies of scale. And in the same way that the internet has created abundance (rather than scarcity) in terms of markets, it seems to me have created abundance in terms of solutions. Finding the right match for the right customer therefore goes beyond the efficient here’s the one and only solution, to the agile and adaptable – how can we have a basket of options that handle what our customers want in an efficient way? The discussion of such agility tends to move rapidly to digital enablement, technology solutions, platforms, automation etc but it seems to me that culturally agility is simply not comfortable for many people’s mind set. The possibility of providing multiple options with the same (or better) levels of efficiency as before sits in the ‘does not compute’ box.

And none of this is surprising – tolerance of ambiguity has never been high on the list of attributes for high performance historically. Decisiveness, clarity of vision and purposeful action are all much easier and comfortable to recognise and deal with. So, in amongst the rest of the issues around creating agility, how to achieve a mind set shift to tolerate ambiguity, alternative futures, or solutions which feel radically different (potentially impossible\) to history becomes a major hurdle.

Faster than fairies, faster than witches

From a railway carriage – by Robert Louis Stevenson. A poem of its time, when the railways were amazing people with their speed (faster even than the supernatural) and at the same time democratising travel. We’re living in similar times today – my latest ‘card’ on CIAO is on geolocation / GPS which is one of those innovations that like train travel begins as a marvel and rapidly becomes the norm. I was visiting Seaton Delaval over the weekend and not only used my phone to direct me there but also realised that the National Trust app was showing me details of the nearest other properties and included Belsay Hall (English Heritage not National Trust).

All very well I hear you say but what’s the point. Well it occurred to me that so much of this data (like the application of Waze to satnavs) is happening without our really recognising what’s going on. We are just becoming very used to having contextual information provided as we move around – and increasingly expecting added value data to complement the central question we may have asked or is implicit. So we ask about local restaurants and burger bars and get not only the information but also which ones friends have liked or where we went to something similar recently. And all of this is changing our behaviour in some really subtle ways.

First, we no longer need to frame the right question – we can be much more lax about the key enquiry as our devices will supplement the answer with a raft of related information. Secondly, we don’t need to remember anything – our history (and our friends history) are increasingly available to us on our devices. Thirdly, all of this is in real time, so our need to organise in advance is also reduced. All of these might sound trivial but on a large scale they change how we think, how and what we remember and how we plan our days.

And, as I suggest on the ‘card’, all of this may be fine if we are all in the same boat but what about those without smart technology. As life evolves (especially with the advent of sensors and the internet of things) there will be an implicit assumption that everyone is sharing these behaviours, and all have access to smart devices. Over time of course this may be true (especially as technology becomes automated and less user triggered) but the interim is different. You only need to look at how many older cars are still on the road to see that not everyone can or will change at the same speed.