Tagged: business

Zipcar – idealism and the realpolitik of scaling a business

Very interesting article about Zipcar’s turnaround strategy on Inc. Worth reading for the insights on growing a business by the numbers, but also the story of a company founded on strong ideals, that had to change leadership to get beyond being a good concept with laudable values.

Zipcar was one a pioneer in what some now call “collaborative consumption”, started by a pair of idealists who wanted to cut carbon emissions through car sharing.

Now Zipcar is fulfilling the dream of the founders to the tune of US$100 million dollars a year. The cost to them – only one member of the original team still works with the company, and itsn’t either of them. The hard-nosed, metrics-focused CEO who took over the company when it was making a a loss, took up the challenge from one of the board members to “turn a political movement into a business”. He succeeded.

The article emphasises the things the founders got right (a lot, especially branding and positioning). But they couldn’t turn it into a profitable, fast-growing company. Scaling Zipcar required someone with more of an operational view of how the world works.

Sometimes activists make good entrepreneurs. They get things started, they have same will to power and vision that drives good entrepreneurs. To truly scale sometimes takes the business equivalent of engineers, though – business-first people.

Music business in flux (still)

When the web touches an industry it disrupts and then absorbs it, to paraphrase Kevin Kelly. One of the first it touched, disrupted and absorbed was the music industry, so it is interesting to return to it from time to time to find out how it has adapted.

A recent In Business podcast did just this.

  • Musicians are diversifying their activities, according to Moby. They need to know how to write, promote, score movies and build live followings to stand the best chance of success.
  • Brighton-and-Buenos Aires act Yossarian say that building an audience is no easier than before, but you can now look to global markets for your audience (and band mates).
  • Billy Bragg talked about how the direct relationship with fans means not relying on the music press as an intermediary, but even when you own the means of production it is still a struggle to make a living.
  • Thom Yorke was cited on his antipathy toward Spotify – painting it as a battle for the future of the music industry, the “last fart of a dying corpse”, I think he said.

All in all, not a lot I hadn’t heard before. But twenty years into the Great Disruption in that industry, the most useful insight for other industries – other than don’t sue your own customers – is that things have not settled down.

There’s optimism that there is a future for the music industry. Well, more that there are futures for the music industry – there is no consensus about what shape it will take. And the waves of disruption, like powerful aftershocks following the main seismic event of the web’s arrival, continue to be felt.

: : Bonus link: There’s more from the podcast in this BBC article

More disruption, please

Large companies can innovate, but to do so they must consciously remain open to new actors or counterintuitively disrupt existing relationships to force the formation of new ones.
Neil Perkin

More disruptive innovation, please. That’s what I’m hearing increasingly both in clearly, passionately argued commentaries on blogs and in meetings and conversations with clients and peers.

The rising waters of the Great Disruption of the web, the connected world, is closing in on people, institutions and business models that thought they could get away with a bit of incremental innovation. Some digital this and innovation that, a tinker with the business plan and a Chief Blah Officer to show action and determination.

The smartest people I’m talking to these days are the ones pressing hardest for radical change. Backing their insight with investment, determination and open, can-do strategies. Increasingly, you want them to be the only people you are talking to, otherwise you’ll down with the listing vessels of the incrementalists. There’s no time left for half-measures and dippings of the metaphorical toes.

This isn’t a client-side thing – it’s an everyone, everywhere thing. Agencies should shudder when they are described by CEOs as “obstructionists”.

Throw caution aside. Embrace complexity and uncertainty. Dive in, or atrophy into irrelevance.

There’s more to say on this, I know. I’ll get round to saying it soon.

Things I learned from Ed Catmull

 

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A few months ago I heard Ed Catmull, president of Walt Disney Animation Studios and Pixar, give a talk about leading creative organisations.

Apart from his obvious experience and track record of success, what was clear was that he had thought very deeply about some crucial questions about leadership.

These are some notes about what he said and thoughts that he provoked. To be clear – they are not direct quotes – they are my recollections and thoughts based on my notes of his talk (what I learned rather than what I heard).

Be prepared for near death experiences on projects. All Pixar movies “suck” at first. They are radically altered again and again until they work. Every Pixar film except one – Toy Story 3 – has  gone through a phase of intense crisis during its development.

Most people want to avoid the “near death” part of the creative experience, but it is very often essential in order to get to something really good. (This reminded me once again of the valley of creative despair that is the liminal state.)

A leader’s job is to maintain a balance of power. In a studio – just like an agency – there are business functions like finance, production, creative, marketing, technology etc. Organisations fail when one of these functions “wins” and dominates the others with its agenda.

For instance, in studios where production wins, films are produced on time and on budget, but creatives become demoralised and produce lower quality work and talent leaves. A CEO or President needs to make sure that no part of the organisation becomes dominant and skews resources with its particular agenda.

Business books are curiously free of content. Very often business books state obvious truths and avoid more difficult questions.

Smart people make stupid decisions. This is a puzzle that more business books could do with taking on – rather than succumbing to narrative bias, or focusing on successes. There should be more books about failure, more conversations about why we do stupid things.

Leaders can’t see the things that are going wrong. When an organisation is bound for failure What are the forces that I can’t see, is the question a leader needs to constantly ask themselves. People will be behaving badly at times – but they will never do it in front of you.

You need to make the information flow separate from the organisational structure. This reminded me of Churchill, who set up the Office for National Statistics so he could hear what was really going on – rather than allowing each department to gather data and report in their own way, influenced by their various agendas.

You need people to be candid, not just honest. Politeness, respect, embarrassment, fear, blinkered-visions/solipsism, and other things can stop people from being candid. His job as CEO is to spot those things and stop them. Often leaders will prevent candour with their presence in a room, unless they build trust and make it clear what behaviours are acceptable.

Protect new ideas. New ideas are vulnerable, delicate things. If they are good ideas they need to be protected, allowed to develop in a safe space. Success at Pixar and other creative companies is about creating safe spaces for creatives and ideas to flourish.

We are always operating in a fuzzy space. We have to be comfortable doing that. Again, invoking the liminal state for me, Dr Catmull talked about the need for creative leaders and creatives to work in and with uncertainty. We cannot deliver genius on schedule, we need to be comfortable with that. We do not know what the final iteration of the story will look like, we have to be comfortable with that. We don’t know what the technology or media landscape will look like more than about six months from now, but we have to make plans for the next six years – and know they may look as different in the final version as Up looked from the first idea for that story (a castle floating in the clouds full of people at war with the people on the ground, apparently)…

Business model prisoners

While most companies become prisoners of their business models, one way to deal with this is to have a strong strategy that means you know when shift to new models and products when the time is right. 

Broadstuff’s “All you need to know about Apple in 3 easy steps” suggests that the Cupertino giant may have this kind of strategic fortitude, with the consequence that financial markets get huffy because it means quarter-on-quarter performance is not the first priority. 

look at Apple over 35 years and you will see that they:

1. Are typically a very early entrant, integrating a variety of existing systems in a hitherto poorly served early adopter sector with promise, to create an easy-to-use product.

2. Use great design to create a demand for a high margin product. In recent years they have also become “cuter” at doing software as well as hardware after being caught out by the MS-DOS ecosystem

3. As that market matures, retreat to the highest profit quartile. Follow the money, not the volume.

So great has been Apple’s performance in recent years that the markets have created their own expectations bubble about performance. 

Build-to-run

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Like Alan Patrick of Broadstuff, I’m a fan of Techmeme, the technology news aggregator that tells you at a glance what the hot tech/web industry stories are. 

In a post about its slow-but-steady growth, Alan talks about get-rich-quick start ups which go for growth at almost any cost and compares them with those – like Techmeme – that take their time: 

There is also a difference in motivation between a “build-to-run” entrepreneur and a “build-to-sell” one, I liken it to the difference between an artist who creates what is true to them, vs one who creates what will sell, now. Big studios love commercial art, but there is another whole market for “indie” art, which is often highly influential over time, and it doesn’t always require starving in a garret. 

It’s not necessarily about the integrity of the business, or the users, or a “get rich slow” mentality. Techmem’s founder, Gabe Rivera, quoted on Bloomberg says: 

I don’t want to deal with the obligations attached to raising money, and I still want to be able to take a nap after lunch.

Now that’s a man who has his priorities in order… 

Lazy narratives and how to be wrong

Apple-bashing is a game a lot of people these days.

John Gruber at Daring Fireball is challenging the emerging narrative of the company’s inevitable decline after the death of Steve Jobs. 

Apple was far from perfect under Steve Jobs. But in hindsight, critics and skeptics of the company now see fit to deem his reign flawless or nearly so. Here’s a guy on Yahoo Finance telling Henry Blodget that “Steve Jobs wasn’t wrong about anything ever.”

What you want is to be (1) right more often than wrong; (2) willing to recognize when you are wrong; and (3) able and willing to correct whatever is wrong. If you expect perfection, to be right all the time, you’re going to fail on all three of those — you will be wrong sometimes, that’s just human nature; you’ll be less willing or unwilling to recognize when you’re wrong because you’ve talked yourself into expecting perfection; and you won’t fix what’s wrong because you’ll have convinced yourself you weren’t wrong in the first place. The only way to come close to being right all the time is to be willing to change your mind and recognize mistakes — it’s never going to happen that you’re right all the time in the first place.

There’s some wisdom for us all in that…

Networks Thinking: Adapting for Complexity

These are the notes, slides and suggested further reading for the lecture I’m giving today at Warwick Business School as part of its Complexity, Management & Network Thinking business module entitled Networks Thinking: Adapting for Complexity.

Introduction

Networks became a focus for me about seven years ago, as I began to look at the effect that social networks and the web were having on the industries I was working in, marketing communications and media. The more I learned about networks, the more it seemed to me that they were incredibly important in re-thinking how our business worked – the business of attracting attention, essentially – and that they were important both as the cause and context of disruption we were experiencing (and would continue to experience for some years to come).

When it came to media and marketing, channels were being replaced (displaced, disrupted) by networks as the dominant model. The implications were profound for industries that had been built on building big channels, for big audiences with big advertisements and big budgets attached.

At iCrossing, the digital agency which gave me a home and let me develop a social media and content practice, we started re-designing the whole process of brand communications, from research through to measurement, with three principles

  1. Understand your networks
  2. Be useful to your networks
  3. Be present in your networks

It became clear very quickly, that once you started to adapt your customer communications to the new reality of networks, you started to look at the rest of the business very differently and that the impact of networks, the need to adapt to the age of networks, was going to be felt throughout the organisation. Networks were disrupting the existing media and communications models so much that soon politics, commerce, culture and society as a whole would begin to feel its effects.

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Networks are a model for managing complexity

Some of the topics and themes addressed in the talk include…

  • Embracing complexity
  • Scales from individual, to team, to division to team…
  • Understand networks (& then your networks)
  • Develop organisational and personal networks literacy
  • Networks thinking: design for networks
  • Beginning to lay down principles
  • As well as understanding… your networks… principles…
  • Presence first, process second: more important to be in play and prepared…

Sources cited

Recommended reading (some already cited as sources):

Recommended blogs