PREFACE I am writing this foreword on 21 March 2018. I am in Miami. Outside, it is summer.
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I have begun a new version about thirty times so far. Each time I start by making a list of the people I shouldn’t forget to mention. But the list just keeps on growing. Unfortunately, that doesn’t mean the likelihood of forgetting someone gets smaller. Quite the reverse. Worse still, the length of the list is inversely proportional to the possibility that the person I forget will hold it against me. Where I am, who I am and the fact that my daily activities coincide almost exactly with that ‘who I am’ is not something I can take all the credit for. I am a dreamer. Full stop. This book is a kind of summary, a compilation of everything that has happened before. It is the product of all the people I know and all the things that have happened in my life so far. Not my choices. I have never been good at making choices. I am water, and the people around me have guided the flow. Some more profoundly than others. I make no distinction between positive and negative. Everyone and everything has played a role. I would like to thank you all. For the warmth. For the support. For the love. Dreamers need that. We have a crushing responsibility. We need to shape the world for the sake of our children and grandchildren. All of us. Including the managers of today and tomorrow. I hope they will do so with The Day After Tomorrow in mind. I hope that they can help their companies adapt to the new world in which my grandchildren will grow up. With this in mind, I dedicate this book to Line and Nout, my grandchildren.
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‘History doesn’t repeat itself, but it often rhymes.’ MARK TWAIN
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CONTENT PROLOGUE
BE ONE OR BE ZERO
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METAPHOR
FAST FORWARD SLOW ARCHITECTURE
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DISRUPTION IS NORMAL
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Faster than you think Technology rules Shark’s fin The Chicxulub meteor Genetic drift Learning to see evolution In the beginning, there was blockchain The upside down world Learning to look through the mirror Force of habit and the fallacy of ‘enough time’ Red ocean and blue ocean The car industry The TREE principle In a cloud of laughing gas The adaptive cycle The exponential curve S-curves There is more to it than Moore Exponential is not manageable Close the gap Exit the word ‘disruption’ Live long and prosper
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2 FROM SOCIETY 1.0 TO 5.0
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Everyone is a digital citizen The customer places himself centrally The familiar one-to-one One-to-∞ ∞-to-one ∞-to-∞ The new one-on-one The CIA model c2MxEi What about B2B and the public sector?
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3 THE HOOKED EMPOWERED CUSTOMER
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Connected Urban Self-centred Tribal On demand Mindful(l) Ethical Radical
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4 THINKING YOURSELF INTO THE FUTURE
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Reverse thinking Future thinking The Martian Strategy for The Day After Tomorrow The 30/3 rule The balance between fluid and frozen The circle model The pirate model
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The first one is the strategy of the perfect design. This perfect design, with thanks to your parents, allows you to overcome all problems and survive any setbacks. The shark is a good example. So is the crocodile. And the scorpion. Their design has hardly changed across millions of years, because at some point it reached a state of perfection that required no further evolution. It was perfectly adapted to meet all the challenges of its environment, no matter how hard they might be. Crocodiles can survive without water for years. Sharks can endlessly regenerate their own teeth. The scorpion can even cope with serious doses of nuclear radiation. 35 DISRUPTION IS NORMAL
The sea turtle is another species with perfect design. How do we know? Because it has survived in the hostile environment of the sea for more than a hundred million years. Even so, the sea turtle is starting to find things difficult, because the most destructive of all creatures – man – is now interfering with its habitat. Sometimes nature can make a species so perfect that it forgets there was ever such a thing as evolution. Sea turtles lay their eggs on the beach where they were born, preferably in clean sand. But clean beaches are getting hard to find. Rubbish, light pollution and human presence have all contributed to a significant fall in the number of turtle nests.17 Even more, the baby turtles need to wait until there is a full moon above the sea before hatching. Their instinct is programmed to use the moon’s light to find their way to the water. However, nowadays, so much artificial inland light pollutes the beaches, that they end up going the wrong way. Often with fatal consequences. This highlights an interesting point about perfect design: you can never really be sure that it is indeed 100% perfect. You may think you are the best version of what you can be – but are you? All you know is that this design has served you well – very well – up until now. It has allowed you not only to survive but even to flourish in your chosen environment. However, will it still do the same tomorrow? No matter how sharp and how numerous their teeth are, even sharks are finding it difficult to cope with the huge amounts of plastic pollution in our (or rather, their) oceans. Companies like Nokia and Kodak no doubt also thought that their devices were perfectly designed and would stand the test of time – and we all know what happened to them. Today, it is probably fair to say that the iPhone has a perfect design – but for how long? Of course, as a species you could always opt for the second survival strategy: being smart and learning how to adapt your behaviour. The fox’ natural biotope is being reduced systematically, but they are clever enough to extend their radius of action to a non-natural biotope: the city. Stone mar-
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tens are another good example. They have learnt to love our attics and the warm engines of our motor cars standing on our driveways. Not to mention our chicken coops and rubbish bins. And what can we say about the falcon? These birds of prey are also starting to appear in the city. The reasons are not hard to find. Cities have a plentiful supply of plump, juicy pigeons and also plenty of tall buildings from which to spot their prey.
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If all else fails, there is always option number three: increase your rate of reproduction, by increasing both the speed of the cycle and the number of offspring per litter. The more of you there are, the more chance that some of you will survive. At the same time, genetic drift will ensure that over time your species becomes more suited to survival. Rats use very little energy to produce large numbers of little rats. Elephants use a huge amount of effort to produce relatively few baby elephants. Man will never be able to exterminate rats entirely, no matter how hard he tries, but he is almost certain to hunt elephants to extinction. There is, however, a fourth and final way to maximize your chances of survival: make use of the self-sustaining power of your network. Learn to swim in shoals. Or hunt in packs. Or fly in swarms. Sardines do so, as do wolves. And so do starlings. Or you can live in a colony, like termites and ants. Intelligence and innovation are generated by the combined power of the network, not by the efforts of individuals. With this option, survival of the species overrides the interests of the individual. Which makes sense: without the school, swarm or colony, the individual’s chances of survival are zero anyway.
Genetic drift The story of the dinosaurs teaches us a lot. First: shit happens – and usually when you least expect it. So it’s a good idea to take account of the possibility of exceptional hiccups that might have an impact on your survival chances. Second: being big is not always an advantage. As a big company, you are inclined to spend time and money simply on maintaining your size. However, size inherently means complexity, whereas the lines of communication in smaller firms are shorter, so that these firms are often more alert and can react faster. Third: to survive, you need to be able to change your DNA (your values, habits and business model) with adequate speed, so that you can produce better future generations in shorter iterations.
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In a cloud of laughing gas
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If your programme has a good title, why change it? That is probably what the people at the BBC think. Horizon is that kind of programme. It has been running under the same title for more than 50 years. Two thousand one hundred episodes of cutting-edge scientific investigation. One of the first black-and-white episodes, dating from 1964, explored ‘The Knowledge Explosion’.31 In a piece to camera, sci-fi legend Arthur C. Clarke talks about the development of the transistor and the geo-stationary communication satellite that will put us in instant contact with our friends no matter where they live on the planet, even if we do not know exactly where they are at any given moment: ‘It will be possible in that age, perhaps only fifty years from now, for a man to conduct his business from Tahiti or Bali, just as well as he could from London. I am perfectly serious when I suggest one day we may have surgeons in Edinburgh operating on patients in New Zealand.’ Arthur C. Clarke was also responsible, together with Stanley Kubrick, for writing the scenario for one of the most iconic and visionary science fiction films of all time: 2001: A Space Odyssey. This film released in 1968, but four years earlier (probably in September 1964 according to YouTube, where you can watch the fragment) he was less sanguine about people’s response to such a vision: ‘Trying to predict the future is a discouraging and hazardous occupation, because the prophet invariably falls between two stools. If his prediction sounds at all reasonable, you can be quite sure that in 20 or at most 50 years, the progress of science and technology has made him seem ridiculously conservative. On the other hand, if by some miracle a prophet exactly describes the future as it was going to take place, his prediction would seem so absurd, so farfetched, that everybody would laugh him to scorn. This is proven to be true in the past, and it will undoubtedly be true even more so in the century to come.’ On 9 January 2007, Steve Jobs unveiled the first iPhone with the words: ‘Well, today, we are introducing three revolutionary products of this class. The first one is a widescreen iPod with touch controls. The second is a revolutionary mobile phone. And the third is a breakthrough Internet communications device.’32 This speech by Jobs is compulsory viewing for every manager and can be viewed in its entirety on YouTube. It is also worth checking out a second YouTube film made just a few days later. Steve Ballmer, who was then the CEO at Microsoft, is sitting in a film studio. A journalist asks Ballmer what he thought when Jobs pulled his new toy out of his magician’s hat. Ballmer replied condescendingly: ‘500 dollars? Fully subsidized, with
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‘NEW THINGS ARE OFTEN a plan? I would say that is the most expensive phone in the world! And it does not appeal to business customers, JUDGED ON THE BASIS OF OLD FRAMES OF because it does not have a keyboard, which makes it not a very good e-mail machine. Now, it may sell very well or REFERENCE. THERE IS A GERMAN WORD FOR THIS: not, you know. But we have our strategy; we’ve got great HINEININTERPRETIEREN.’ Windows mobile devices in the market today. You can get a Motorola Q phone now for 99 dollars. It’s a very capable machine. It’ll do music, it’ll do internet. It’ll do email, it’ll do instant messaging. I kind of looked at that and I said, well, I like our strategy, I like it a lot.’ 59 DISRUPTION IS NORMAL
New things are often laughed out of court on the basis judgements made using an old frame of reference. There is a German word for this: hineininterpretieren. It means something like ‘reinterpretation’ – but a reinterpretation based on prejudice. The new innovation will ‘obviously’ not be successful, because traditional KPIs place the emphasis elsewhere. This is what Steve Ballmer was doing in that TV interview: interpreting the iPhone from his own frame of reference and subjecting it to existing KPI norms: a good phone and texting machine that also offers internet and music, but oh so expensive! This analysis is hardly surprising: Microsoft’s KPIs were designed to justify and extend the life of their own business model. Outdated KPIs are ideal for rationalizing the fear of the ‘IF PEOPLE IN YOUR new. Laughing at smart but unfamiliar ideas is one of COMPANY STARTING the best ways to kill off innovation. People use laughter LAUGHING AT NEW as an antidote to stress and anxiety. So do not get taken COMPETITORS, IT IS in by the laughter of others. If people in your company TIME TO START RINGING start laughing at new competitors, that is the time to start THE ALARM BELL.’ ringing the alarm bell. In 2016, Ballmer admitted that it was a big mistake not moving into the handheld device business earlier. Above all, he wished he had cottoned on to the way Apple planned to make their business model work, through the subsidies of mobile providers: ‘I wish I would have thought about the model of subsidizing phones through the operators,’ he told Bloomberg.33 Ballmer should have known better. His own boss, Bill Gates, had been on the receiving end of the same kind of prejudice. When Bill Gates provided ‘Big Blue’ IBM with the DOS operating systems for PCs – for a ridiculous one-off fee of 80,000 dollars – he was smart enough to hold on to the copyright.34 Why? Because he was convinced that ‘soon everyone will have a PC in their home’. Of course, no-one believed him. At the time, the captains of industry could not envisage such a thing. A PC in every home? What
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FACEBOOK’S LITTLE RED BOOK
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‘Things that do not stay relevant do not even get the luxury of leaving ruins. They disappear’
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2 FROM SOCIETY 1.0 TO 5.0
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CUSTOMERS
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COMPANIES
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knows the kind of cakes my family loves on a Sunday afternoon. And when I go to collect them, we chat about other things of common interest. The communication between us is like the communication in any good relationship: from person to person. Sometimes one person is the sender and the other the receiver. Sometimes these roles are reversed. As people, we transmit digital data (language) and analogue data (body language). Our conversation partner picks up these signals (through his senses), interprets them using his processing software (patterns of thinking) and other internal information (knowledge, memories, convictions, experiences), before formulating an answer that he then transmits back to us. This is the way good old customer 1.0 interaction used to work. Based on a constant exchange of digital and analogue information, a conversation was developed that allowed a relationship of trust and confidence to be built up.
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The disadvantage of 1.0 one-to-one interaction was the limitations imposed by time and space. The conversation partners needed to be in physical contact with each other. Together, at the same time and in the same place. Often a pre-determined place – like a market. On market day, the stallholders came to town and set up the stalls in the market square. And the customer came to the same market square on the same day to see what was on offer. If you were interested in apples and pears, you would enter into negotiation with the fruit seller on a one-to-one basis. The audience of the different stallholders was limited to the people who came to that particular market on that particular day. And once the market was finished, they had to go in search of a different audience on another day in another town. Yet for all these limitations, we can still conclude that the market was the scene of real one-to-one communication.
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One-to-∞ CUSTOMERS
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If you only have a select ‘club’ of customers, it is easy to fit one-to-one discussions with each of them into your agenda. If, however, you work in a large consumer market, it is much more difficult. Fortunately, new means of mass communication eventually offered a number of interesting possibilities to the large-scale ‘stallholders’ of the late 19th and early 20th centuries. It was now possible to run promotional campaigns on radio and television, to place advertisements in mass circulation newspapers and magazines, to have billboards plastered with 20-metre square posters, or to have cars driven around town festooned with smaller versions of the same. Mass media technology transformed the marketing world and also the media world. This was the era of the ‘influenced customer’ and interaction 2.0. The customer relationship was now dictated by one-to-many marketing. The company or the brand dominated all customer communication, which was purely one-way and focused on messages that were no longer aimed at individuals but on consumers as a mass group. In essence, the companies told people what to do. All that was measured in terms of the public’s response was the resulting sales figures. It was a system that required little imagination and a lot of advertising.44 Thanks to this mass communication model, companies were able to free themselves from the restrictions of time and space in their communication with their customers. They were now at liberty to send messages as often as they liked and were no longer required to interact with customers at a specific place and time. You picked your medium and your message, sent it off and hoped for the best. To give chance a helping hand, you repeated the message regularly, supplementing this with market research and other
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4 THINKING YOURSELF INTO THE FUTURE
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Reverse thinking
Organization
Customer
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If your relationship with the customer is the most important thing, you must place the customer in the centre of your business model with all the love you can muster. Every thought, every action and every process must begin with the customer. The key to success is customer experience. Nothing else matters. Processes and solutions are no longer the most important dynamic in your organization: from now on, the customer’s wants, needs and emotions are paramount. For many companies, this means a huge transformation. Because all those processes and solutions now need to be redesigned with all those wants, needs and emotions in mind. If you want to build a relationship with a customer as ‘IF YOUR RELATIONSHIP a friend, the only thing you can measure to determine WITH THE CUSTOMER IS your level of success is the extent to which you are THE MOST IMPORTANT able to facilitate that relationship. In other words, you THING, YOU MUST BUILD measure: ‘Is my friend happy with what I offer?’ Your UP YOUR ENTIRE BUSINESS entire business model must be built around the needs, MODEL AROUND THE NEEDS desires and expectations of your customer. You must OF THAT CUSTOMER.’ dare to break rules and conventions. You must be prepared to question everything you do. If you have a process, what is its purpose? Is it better for the customer? Is it better for our company? And if it is only better for us, why are we doing it at all?
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Do not try to earn money Start with a daft business idea. Launch it in a saturated market. Reallocate resources and roles. It all sounds very different, does it not? However, not as different as my next suggestion will sound to dyed-in-the-wool managers of the old school: do not try to earn money from your early customers.
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When you are building your new upside down reality, it is important not to regard your first group of customers as a cash cow. You should not be aiming to make a quick killing. Your ROI can wait. The focus at the start must be on changing consumer behaviour, and on nothing else. And the way to do this is by offering an excellent customer experience. It is these first users who persuade their friends to also make the step to the new world. And one by one they do it, creating in the process the most efficient and cheapest sales and marketing machine you could ever imagine. Airbnb, Uber and Instagram never employ expensive marketing campaigns to attract their customers. It is the customers themselves who spontaneously take on the marketing role and share their experiences with their network. It is us, the ordinary consumers, who marshal the forces and unleash the disruption that turns the world upside down.
It is also typical of these disruptive brands that they offer a platform that connects people and creates experiences. In fact, they are not so much a brand as a technology. And that technology is geared (successfully) to encourage interaction and communication. There is no website about the brand. The brand is a platform for sharing experiences. Sometimes these brands do not even need an infrastructure, because this is also provided by the customer and shared on the platform. Airbnb does not own hotels and Uber does not own taxis (or at least not many). Another good example is Instacart, the Uber of food delivery. If you have a bit of spare time, you can become a delivery man for the shopping of people who live near you. Instacart needs no warehouses, no lorries and no drivers, because Instacart has invented something completely new. Its services are made up entirely from things it ‘finds’. Instacart matches shopping demand to shopping supply. It works with existing supermarkets and willing shoppers, ‘IT IS US, THE ORDINARY who use their own cars and smartphones.60 The lesson CONSUMERS, WHO from Instacart? You do not always need to break your MARSHAL THE FORCES head to invent or acquire new hardware. It is sometimes AND UNLEASH THE enough to connect existing hardware owners/suppliers DISRUPTION THAT TURNS via software, so that together you can satisfy a customer THE WORLD UPSIDE DOWN.’ need to your mutual advantage.
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It is facts such as these – that today’s customers are involved in the business model to a high degree and even take on a role in sales and marketing; that people are even prepared to ‘lend’ brands their hard infrastructure – which explains why the new models are so strong at conquering large groups of consumers.
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However, perhaps the best example of all is Tesla. On March 31st 2016, the brand launched its Model 3 at an event in Los Angeles, many months before the car was ready to go into production. For a thousand dollars, customers had the option to already reserve a Model 3. They had no opportunity to see the car in a show room or take it for a test drive. There was no fixed date of delivery and even the final end price was far from certain. The company took out no advertising of any kind to promote the car or to clarify the uncertainties. Even so, within hours of the press launch Tesla had received more than 100,000 pre-orders for the Model 3. By April 7th, just a week after the launch, this figure had risen to 325,000.61 The estimated sales value in just one week’s time? Fourteen billion dollars.62 Entirely without classic marketing. At the time of writing, the expected delivery period for the Model 3 is between 12 and 18 months... It goes without saying that Tesla thought carefully about its communication, but in its implementation threw all the traditional practices of the car sector out the door. Social media did the rest. In other words, us. The reservation website for the Model 3 is a cross between a crowd-funding platform and the opening of a door to a dream. If you would be interested to read a more cynical view of the entire mechanism – how customers return time after time to the same product and even provide brands with marketing, sales and hardware – you might like to take a look at the book Hooked by Nir Eyal. Investors, he claims, like to work with companies who stimulate the behaviour of customers in a particular direction, so that they can create user habits. And he is right, of course. If a brand succeeds in doing this, it can quickly conquer the world. Moreover, it can do it without the use of any (or only minimal) traditional resources. Conquering the world with zero marketing budget! If you can crack that code, you will be untouchable. The traditional players will be trailing in your wake.
Let people do new things Gaudí built his first model of his basilica by hanging it upside down from the ceiling, shaping the contours he wanted with weights attached to little
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‘Sometimes people remember what you say. Sometimes people remember what you do. But they always remember how you make them feel.’ MAYA ANGELOU, POET AND AUTHOR
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