Costas Markides - How Technologies of the Social Era Are Changing the Way We Do Business

The New Future: How the Technologies of the Social era are Changing the Way we do

Business

Professor Costas Markides London Business School

A Simple Exercise:

• In sixty seconds: Add all the numbers from 1 to 100 and tell me the sum total (without using a formula)…

An Amazing Transformation:

• How you tried to solve this problem…

• (in particular, how many of you did not even try to solve it!)

An Amazing Transformation:

• How you tried to solve this problem…

• Compared to how people used to solve this problem in the early 1990s (when I first started using it…)

An Amazing Transformation:• How you tried to solve this

problem…

• Compared to how people used to solve this problem in the early 1990s when I first started using it…

• Compared to how typical teenagers do it today…

The First Change:

• The new technologies are changing your employees as people: how they think, how they behave, how they work, what motivates them, what their values are…

Your Employees Are Now:

• Less attentive

• More Informed

• Less Loyal

• More Connected

• Less Patient

• More Demanding

For Example: Research by Professor Gary Small, UCLA

1)Surfing the internet can physically rewire our neural pathways

2)Just 5 hours of exposure to the net is enough to change the structure of our brain.

3)The internet is altering our brains:Cursory readingHurried and distracted thinkingSuperficial learningAttention span reduced to seconds

More Connected: Facebook

• 845 million monthly active users

• 2.7 billion Likes and Comments every day.

• 250 million photos uploaded every day.

• 100 billion friendships

More Informed:

• 72% of Europeans take their mobile phones or iPads to bed!

• The last thing they see before falling asleep and the first thing they check when they wake up is news…

More Informed Workaholics:

• 93% of executives take their blackberries on vacation.

• 47% tell their partners that they left it at home

• (data provided by RIM)

Global Citizens:

• Get to learn what is happening around the world fast…

• More likely to engage in a “cause” far away from home.

• Have become more sensitive to other cultures…

More Culture Sensitive:

Informed Choices:

• Not only do we get the necessary information on the Internet…

• But increasingly “word of mouth” from anybody around the world is becoming our source of information.

Less patient: The “Now” Era

• Instant Messaging

• Instant Feedback

• Instant Gratification

• Instant Information

Decentralised Workaholics:

• When do you stop work?

A New Employee

• I could go on here…

• But the key point is: You are now dealing with employees (and customers) that are fundamentally different from us or our parents.

Your Employees Are Now:

• Less attentive

• More Informed

• Less Loyal

• More Connected

• Less Patient

• More Demanding

What is the Implication #1?

• Generation X managers trying to manage Generation Y employees…

• It’s as if they come from Mars!

Are we out of our depth?

What is the Implication #2?

• How do you “control” such a decentralised, informed and demanding workforce?

The Wrong Thing to Do:

• You cannot “control” the new employee…[for example, how do you know if they are working or are

“wasting time” on Facebook?]

• And you certainly cannot “control” them with rules and regulations.

The Only Way Forward:

• Strong shared values that act as the parameters within which people can operate with autonomy.

• Think of what you do with your children…

But Note:

• They are strong because you actively “sold” these values to them and won their emotional commitment.

• Move your values from the wall to people’s hearts.

The Second Change:

• Not only are the new technologies changing our employees as people, but they are also changing how they work.

The Hierarchy is Dead:

• Decentralised: Work from home, at the airport, at Starbucks…

For Example:

• In 2009, it was estimated that over 50 million US workers (40% of the working population) worked from home at least part of the time.

• The forecast is that this number will jump to more than 75% by 2020.

The Hierarchy is Dead:

• Decentralised: Work from home, at the airport, at Starbucks…

• Virtual Teams, Geographically-dispersed giving rise to the Network Organisation…

The Hierarchy is Dead:• Decentralised: Work from home,

at the airport, at Starbucks…

• Virtual Teams, Geographically-dispersed giving rise to the Network Organisation…

• From employees to Co-Creators: working with outsiders (non-employees) on common projects

Some Examples:

• Singularity University

• TEDx

• McAfee

What are the Implications?

• How do you keep them all focused and motivated?

• How do you avoid chaos?

• How do you promote innovation?

Innovation: Physical proximity is important

• Study by Isaac Kohane at Harvard Medical School.

• He analyzed 35,000 peer-reviewed papers mapping the precise location of co-authors.

• He related the quality of the research (by counting the number of subsequent citations) to how close the co-authors’ offices were.

What he found

• When co-authors were closer together, their papers tended to be of significantly higher quality.

• The best research was consistently produced when scientists were working within ten metres of each other.

• The least cited papers tended to emerge from collaborators who were a kilometre or more apart

Physical proximity is important

• If you want people to work together effectively, these findings reinforce the need to create architectures that support frequent, physical, spontaneous interactions.

A Couple of Examples:

• Steve Jobs at Pixar: a central atrium (with the only set of bathrooms in the entire building)

• Building 20 at MIT: More innovations coming out from this building in 1942-45 than in the previous 100 years.

Even More:

• With employees working anywhere and/or with outsiders in a decentralised, dispersed and virtual way, how do you avoid chaos?


• Strong shared purpose that unites and galvanizes disparate people towards the common goal.

For Example:• Facebook: Give People the

power to share and make the world more open and connected.

• Apple: We will change the way people think of computers (or music or TV or news…)

But Note:

• It is “strong” because you actively sold this purpose or vision to them and won their emotional commitment.

HOW TO WIN EMOTIONAL COMMITMENT

I KNOW

I UNDERSTAND

YES, I THINK I CAN

I WILL

The Third Change

• The new technologies are changing how we interact with customers.

For Example:

• Customised Products

Shared platform 25%

Shared parts 15%

Design 5%

Marketing

Shared platform 30% Kontakt Support Salg

Shared parts 30% Memberoffers

Design 15% Banks

Marketing

SystemBanks – B2E

DJØF

EsF Bank

Politibanken

DTS-Bank

SPOR-Banken

IDA Bank

DFL-Banken

DADL

Gl

OfficersBanken

CS banken

DM

PoKoBank

Ældre Sagen

Safu-Bank

For Example:


• Customised Marketing

For Example: KLM

For Example:


• Customised Marketing

• Customised Promotions

For Example: Target • Store Loyalty card

• Online purchases

• Coupon redemptions

• Email click-thru

• Online browse behavior

• Online cookie

• InfiniGraph (that “listens” to shoppers’ online conversations on message boards and internet forums)

• Rapleaf (that sells info on shoppers’ political leanings, reading habits, charitable giving, what they like…)

• Analyse your photos and statements on Facebook, Linkedin, etc…

And then What?

• Centralise and Analyse all this data per customer

• Develop “customized” product offerings; delivered in a “customized” way.

• Tricky part: how do you offer something specific to a customer without them knowing you are “spying” on them?

Not All Positive:

• Here are three examples of how our changing relationship with customers is affecting HR…

For Example: United

For Example: Comcast

• Every single interaction with a customer has the potential to be either a global PR disaster or a PR triumph for us.

• How do we ensure that every employee (not just Marketing people) deliver excellent customer service, anytime, anywhere, all the time?

The Question Is:


• Customer-centric behaviors have to be institutionalised in the culture of the organisation…

The Fourth Change

• The new technologies are changing the internal processes of the organisation.

For Example:

• From internal R&D to Open Innovation…

Open Innovation

• P&G: Connect and Develop strategy

• Developing software at Netflix that can predict what movies a customer is likely to enjoy.

• Streamlining the R&D process at Roche

An Example of Open Innovation:

Changing Our Processes:


• From centralised financing to Crowdfunding…

An Example of Crowdfunding:




• From fixed pricing to dynamic pricing…

Dynamic Pricing at Amazon




• From fixed pricing to dynamic pricing…

• From top-down strategy to democratic strategy…

Lots of Changes!

• I do not want to give the impression that the new technologies will change everything!

• Some things will stay the same…

What Will Stay the Same?

It’s a new World

• Not everything will change…

• But hopefully I have challenged you enough to start thinking about the many things that YOU need to change in your companies.