digital darwinism with tom goodwin exponential minds podcast

Digital Darwinism with Tom Goodwin – Exponential Minds Podcast

Nikolas invited author and researcher, and head of innovation for Zenith Media, Tom Goodwin to speak on the Exponential Minds podcast. In this episode, Tom discusses his new book, Digital Darwinism, Survival of the Fittest in the Age of Business Disruption, a collection of thoughts about change in the modern world, with the intention of sparking some interesting conversations. What follows is an edited transcript of the full discussion.

The Exponential Minds podcast is a series created by Futurist Speaker, Nikolas Badminton. The research, development, launch, and growth of new technologies is creating incredible momentum in the modern world. In the podcast, Nikolas talks with the innovators and the exponential minds that are tackling some of the biggest problems, and creating solutions that are propelling humanity to the next level.

Subscribe to Exponential Minds on iTunes here

[Nikolas Badminton] Welcome to the latest episode of Exponential Minds Podcast. Today we’ve got Tom Goodwin that’s come back to discuss his new book, Digital Darwinism, Survival of the Fittest in the Age of Business Disruption. Hi, Tom, how are you?

[Tom Goodwin] Hello, I’m good. Thanks for having me back on.

[Nikolas] Yeah, you sent across this book, and I was having a read through, and really interesting. Lots of perspectives, historically what disruption has meant and what old business models meant, and what business models can think about. But can you tell us a little bit about your motivations for writing the book, what you’re trying to achieve, but also what the book’s trying to convey?

[Tom] I’m very honest about the way that I talk about my book, in that actually it was driven not by some romantic idea that I had a book in me, but actually just ’cause I was really pissed off. I’m sort of generally quite frustrated with the level of discourse that we have in this industry. I’m quite frustrated with the kind of vague words that people throw around, like disruption, or re-imagination, or innovative. None of these things really mean anything, so increasingly over the last sort of three to five years, I’ve just felt this kinda tension build up inside me, and this need to sort of get across a point of view. Not because I think I’m right, but because I think it’s useful to get provocation out there, and it’s useful to start conversations about these issues.

[Tom] It’s useful to challenge thinking that I think has gone unchallenged so far. So I put together this book, not so much as a sort of manifesto like it sounds, but just more as a collection of thoughts about change in the modern world, with the intention of sparking some interesting conversations. So it’s designed to sort of appeal to everyone from sort of students making their way through school or university, or their way through to CEOs of large companies that might be feeling like they’re doing enough, or might be feeling that they’re confused about the world, and it’s there to sort of provide a level of guidance for them.

[Tom] This comes in as a very sort of grassroots intention from the beginning. So it’s great from a beginners perspective. It’s interesting to me that, we talk about creativity, innovation, and disruption, but I’d say 95% of the people that are out there, and not including you or I, but 95% of the people that are out there aren’t very creative or disruptive in the way that they even talk about these things. You challenge in your book a Christensen view, that ultimately he missed what real disruption is in today’s world, and he didn’t really talk about how companies disrupt from within, like Amazon and Google and whoever. Why do you think he missed what’s come to be in the world in 2018? Do you think it was an old-school thing here? Do you think that he didn’t imagine the world as it’s become?

[Tom] I mean, he’s clearly an extremely impressive academic, and at the time of his conception of the idea, he was looking back on historical data that was available to him, and I think like anyone that wants to create quite a neat and tidy theory, he looked at evidence that would support his point of view and he discounted anything that wouldn’t. And the reality is that he was thinking about disruption in a kind of pre-internet era, when the success stories of that era, or companies are extremely good at manufacturing hardware, extremely good at understanding the technological process of making. But the reality is, in the modern world we have things like the iPhone or WeWork or Tinder or Tesla or Facebook or Spotify or Twitch, any one of these new companies that’s actually accelerating like no other company has ever accelerated before, in terms of their user acquisition and growth and valuation. They all play by completely different rules, and they use completely different mechanisms to what he described. I just got slightly frustrating with the fact that this theory wasn’t particularly helpful, and it wasn’t really explaining how reality is these days. So I just wanted to put my new theory out there.

[Nikolas] And you talk about risk in it, as well, right? This is almost core to what disruption is, what’s your risk level, you sort of ask, and it seems like the most innovative companies are becoming risk averse. And even someone, in the case of Facebook, of being persecuted for having taken risks, even with our permission. So these risk levels, when people are risky, you’ve got mainstream media and government that comes in heavy-handed, drag someone like Mark Zuckerberg up in front of the Senate, and we’re just building a platform. We gave you the opportunity, you said yes. So what’s the problem?

[Tom] I think you hit the nail on the head when you talk about risk there. At the end of the day, I think we’re at a situation now where if you look at all the things that very large, somewhat legacy style companies have, and if you look at all the list of all the attributes that smaller, younger, more nimble companies have, the main thing is just an attitude towards risk, and an attitude towards innovation and growth, where large companies need to have incredible amounts of data at their disposal before they can take any decisions at all, it’s seen.

[Tom] And, the reality is that looking at historical data does an extremely bad job of presenting information which is useful for the future, most of the time. So it’s companies that are very much driven by passionate founders, who are quite eccentric and strong, who compel their workforce to take these leaps, to do things that have never been done before, to challenge convention. It’s those companies that are doing incredibly well. So the skill becomes how do we get large companies to be more comfortable with risk, how do we get them to be more happy to live in a world of ambiguity and failure. I’m not entirely sure that that’s possible.

[Tom] One of the strange conclusions that I came to as I was writing the book is I just don’t know the big companies have it within themselves to become the kind of entities which will eat their business. That for me is the most profound and lingering question from the whole book is, do these companies just have to start again, or can they innovate their way to being what they need to become?

[Nikolas] Yeah, it’s interesting. In recent years, I’ve seen a couple of examples. Up in Canada, there’s a company called TELUS, and they’re one of the largest cell phone providers, and they have this old website infrastructure. And they kept trying to reinvent and reinvent and they couldn’t do it, and a friend of mine came in, Sean, and he came in and he said, “You know what? “We’re just gonna start again.” They were like what? Yeah, we’re gonna have a team, and it’s gonna be multi-disciplinary. No, we’re not gonna have agencies onsite and whatever, but we’re gonna take the best people from the agencies and management consultancies, designers, and our internal team, and he called it a tiger team. And he built this tiger team, and they built a website without the restrictions of the old site. And suddenly, over time, they were getting huge amount of action. They moved it across all the URLs and everything, just to the new site after it went through beta. And then they realized that probably 75% of the existing site was absolute rubbish and doing nothing for their business.

[Tom] Yeah, I think if you were to visualize most modern companies and legacy companies as sort of physical constructs, they would be buildings that you wouldn’t wanna go in, ’cause they would be so held together by super glue and gorilla tape, and they’d have sort of patchworks and workaround port-a-cabins where excess people work. They would be sort of physically ugly, and they just don’t work. I look at things like airlines or car rental companies or hotels or media companies, and increasingly, and I’m not trying to be pessimistic about this, but I look at it and I do think it would be better off just to pretty much start the whole thing from scratch. A really interesting exercise would be to think about the level of change that you need, and how existential that change needs to be.

Again, the case of Telus that you’re talking about there, it’s not like they needed to recreate all their cell towers. It’s not like they needed to completely recreate their back-end infrastructure that is what the data sort of goes through, but they probably needed to sort of rethink the products they sold, they probably need to rethink they keep data, like who has access to that data. Even things like what plans and what tariffs and what products and what customer service they offer people. For me, those kind of questions are actually really, really important questions, but they’re very difficult questions for companies to ask themselves, because within it, there is a sort of tacit statement that somehow people have messed up, and that somehow people haven’t been doing their job right, and actually, it’s just a reality is that if you were to build something from scratch today, it would look very different, because we’ve got different tools at our disposal.

[Nikolas] It can sometimes be as simple as having a new HQ built and moving in. I was just down in Santa Clara, and one of my friends works for Nvidia. Now, Nvidia started off building the chip sets and the card sets for computer gaming and whatever, and now they’re thrust into this new world of AI and self-driving vehicles and whatever. Go to their new HQ. It’s huge, sort of almost brutalist, modernist architecture. Clean lines, white walls, no art on the walls. That was pretty funny. And they’re like oh, come over here. This is where we work. Why have you put cubes in your office? So the old world of working in the States was like you sit in a cube. And she goes oh yeah, no one sits there. No one sits there, everybody works in the libraries, and all these We’re almost held captive by this old-school thinking about even innovation in the world. It’s like, amazing new architecture, old way of working within. It’s kind of interesting.

[Tom] I love that it’s a perfect metaphor, but also happens to be a real-life situation of the need to kind of have innovation that’s very physical and very tangible, and very kind of viewable from the outside, but then not actually having enough commitment to it where it runs all the way through. And also this sort of idea of muscle memory. It’s amazing how many people do their jobs based on never questioning the way things are done, because they’ve always been done that way. You just see lots of sort of stupid things done. Every company needs to have an app, and they don’t really necessarily think why they need one, and it’s this obsession with sort of saying yes to every possible technique or tactic that people can use, because that means that they can kinda blame someone later on because they weren’t the person to say no to things. Like you said before, I think it all comes down to sort of risk, and it all comes down to the degree to which you’re happy to sort of make a declarative statement, even if it means taking a risk at the same time.

[Nikolas] It’s interesting, as well. There’s another sort of note that I made as I was reading through the book, and the thought which was like, the CEO, if you’re in a public company, has to go quarter to quarter talking about profit and growth and vision and whatever, and that short-termism is almost like killing ambition in the new world. The average age of a company in the S&P 500 is about 15 years now, and it’s getting shorter. They’re thinking one quarter maybe 18 months out, but if you look at Tesla or whatever, Tesla and Elon Musk is looking to 2025, 2030, right? And people are taking his catty charisma and hyperbole in the leadership context as being a really positive thing, but when someone in a more traditional industry tries that, they get absolutely skewered in the markets.

[Tom] Always talking about the idea that you can’t judge quarter to quarter. But the reality is that most companies don’t have that luxury, because they are publicly listed, and they are mainly, they’re sort of a safeguard over shareholders’ wealth more than anything else. So I think it’s an extremely difficult situation. I work with some retailers where they’re being asked to deliver profit growth, revenue growth, quarter on quarter, at the same time that they’re up against companies that actually don’t have to make any money whatsoever, and as long as the kinda losses lead to user acquisition, everyone’s happy. So it’s massively unfair. But that is the reality of the world. So I think the solution for me probably lies in this idea of, I think like you said before, with the construction of the new headquarters that you move into, you probably need to sort of run your business and manage the profitability, but at the same time create a separate entity which is going to be judged more like those other startups, and get to a place where you’re able to sort of play both games at the same time, I think.

[Nikolas] Yeah, and the impatience of people as well. I mean, I was just chatting. In the past couple of weeks, I’ve managed to chat with one automotive association and one very large luxury car manufacturer in China, and the automotive industry is gonna be absolutely and fundamentally ripped apart. By electric vehicles, self-driving vehicles, on-demand vehicles, ownership disappearing. Nobody knows what luxury looks like. Maybe luxury is gonna be being able to afford the special licenses for driving combustion-engine vehicles in 2065. I don’t know. You stand there and you tell them, and the head of this company in China, he looked at me and goes, “So you’re saying “that the aftermath to the self-driving cars “and electric vehicles is almost going to disappear?” I said, about 60 to 70% of revenues that you make from that could potentially disappear by 2030, 2035. He goes, “What can we do?” I said this: The future isn’t convenient, right? I think Ford is a really interesting company, and I’d like to know what you think, in terms of re-imagining who they are. They stopped selling cars and they started selling Ford, and now they’ve just turned around, they said that they’re gonna stop making cars. They’re gonna start just making hybrid versions of F-150s and Mustangs, and they’re gonna have electric vehicles, self-driving fleets, and on-demand vehicle fleets. I mean, that’s wild in an industry like that, right?

[Tom] It’s absolutely wild, and it was totally unexpected. I think when the press release went out, lots of people were clicking on it just to make sure it was actually hosted on Ford’s website. Not some kind of phishing attempt or something. It’s very, very impressive to see. It’s a kind of horrible analogy, but I think for many people, change is a bit like sort of tooth decay, and I think some people like to sort of polish their way out of it. Some people wanna have a filling. Some people wanna have kinda root canal, and some people just realize that they need to sort of take the whole tooth out and have a sort of fake tooth.

It’s almost like the people that do the most, but not quite enough, are the people that are probably the most screwed. So the people that have a deep root canal that doesn’t quite get all of the rot out actually have the kind of pain and the inconvenience of all of the surgery without any of the benefit. While the people that sort of polished teeth, they’re sort of maybe in denial about the whole thing. I think this, for me, from Ford is a good example of a company really understanding that putting a USB player in a power-charging mat in a car is not gonna be enough.

The creating a car for sort of millennials that look all trendy is not gonna be enough. They actually need to have a very, very, very sort of significant, sort of existential question about the very purpose that these companies serve. And again, rather than sort of starting out with your core competency of we’re good at doing this and let’s carry on doing it, it’s actually looking at how the world’s going to change, and how they can apply that core competency in a totally different way, because it may just be that they become licenses of the designs, or it may be that they own all the cars themselves and become people that kinda rent out access to them. No-one wants to ask these questions, because they’re too sort of awkward, and they’re too challenging, and people would sort of rather go back to kind of discuss much more small details than enormous depth, because they feel sort of more comfortable in that area.

[Nikolas] It almost feels like Ford’s been watching Elon Musk and all of the chances he’s been taking. ‘Cause literally, I think the decision that they’ve just made is betting 75% of their business on red. Literally like, this has to be the future, and I think they’re absolutely right. I mean, when we think about disruption, we think about industries, we think about huge players. A big player can redefine an entire industry and all other players have the follow them. And even small players that are willing to sort of have the strength. Tesla’s got a bigger market cap than Ford. And what was it? I was looking at this the other day, Volkswagen makes more cars than Tesla in three days than Tesla makes in a year. And Volkswagen’s something like eighth or ninth, in terms of market cap in the world.

[Tom] Yeah, I mean it’s an amazingly clear viewpoint into which the degree to which stock market value is based on confidence in the future.

Today. I mean, Tesla’s amazing in that it’s either going to be one of the greatest success stories the world has ever known, and fill business textbooks, and whatever textbooks to come for the next few centuries, or it’s gonna be this catastrophic failure of a company that sort of promised far too much, and was actually sort of built from far too little. I think at the moment I’m very much in two minds about it, but as a demonstration of the value of bold thinking, and as a signal to how fast things can change, and how companies that don’t actually know anything about a particular sector, how they can flourish because they don’t know that much. I think it’s absolutely fascinating.

[Nikolas] You sort of said, chapter 11, a final focus on people, right? It’s like, we’ve gotta come back to people. People talk about technology and the shiny things, but we forget that the creative problem solving, empathetic, connective things that we are as human beings, in society as a whole are the people that has to use with the companies provide, you know? What do you mean when we’re talking about that final focus on people, and how important is the role of empathy in technology in the scheme of things?

[Tom] I think empathy is probably the most under-valued attribute in the entire world right now. The reality is that if you’re highly empathetic, not only can you figure out how best to serve and delight people today, but it’s also a very strong tool when it comes to predicting a future. If you were highly empathetic, you’d realize that Segways in their current form are never gonna take off.

The curved TVs wouldn’t work, ’cause people like things that look nice in their living room. The 3D TVs weren’t gonna work, because people feel stupid putting things on their faces. Empathy really is our guide to the current and to the future, and it helps us sort of reorient businesses. It kinda frustrates me slightly when we talk about tech companies, ’cause I don’t think Uber’s a tech company or WeWork’s a tech company, or even Facebook.

The companies that know modern behaviors and they know modern consumer expectations, and they know how technology can become a toolkit in delighting people by orienting themselves around people. So you can get off a plane in Shanghai and order an Uber, and there’s no complications to do with language or currencies, it just works. Whereas I think companies from a bygone era, they very much focused on their own processes. They’re effectively factories to make something, and at the end of it, the consumer was just this sort of sucker that would end up buying the thing. But they were kind of irrelevant for most of the process. And I think that really has to change. I think things like better analytical software, I think things like artificial intelligence. We’re gonna have this whole toolkit available to us, which will be exciting, but it all has to be used in respect and in service of people.

[Nikolas] When you come back and you’re saying one might argue that this is most important time in civilization to be human, but is the future of disruption companies that actually teach us to be more human?

[Tom] I think so. Oh, we’re going into a huge area here about sort of humanity and robotics and stuff like that. I think we’re at a very interesting time with technology. I think there’s this sort of decision we have to make collectively, which is how much technology do we want in our lives, and what is it to be human? And I think the more that we see people like Google the other day having phone calls that were automated by robots, or the more that we see chatbots dealing with people as if they’re not worthy of human attention, the more we may have to realize that we may need to sort of re-consider these boundaries, and reconsider what technology and progress looks like. Because to some extent, living an ultra-efficient life or high profitability and creation of extra leisure time by using technology, to come extent, if we end up feeling less human, then what was the point? Living is an inherently inefficient thing to do. Become quite philosophical and just think actually, it’s not really about stripping out inefficiencies. It’s more about feeling alive and feeling a sense of meaning and purpose for life.

[Nikolas] Thomas Frey says one of the largest companies that is ever gonna exist in the future doesn’t exist today, but it’s gonna be about education and preparing humans for this world that’s sort of careering towards them, right? Excuse the pun, but it’s like we’ve got this, I always talk about humanity and technology. I always talk about humans needing significance, and certainty, and variety, connection, and love, and growth ,and contribution, the things that we’ve had for thousands of years that we’ll have going forward. Is there something that people are missing in business? If you’re gonna say, if you’re the CEO of a company and you’re sat there and you’re watching your business being eaten by new competitors, and say you’re a business with a heritage, and you’ve got a good standing from a brand perspective. What would be the one pc of advice you’d give to them to start their thinking in a new direction.

[Tom] I mean, it’s actually the question that’s on the first page of my book, which is annoying and provocative, and appears unhelpful, but it’s quite profound. And that’s just, how would you set up your company if you were to set it up today? If you kind of put to one side all of the things that you’ve learned, and all the things you know don’t work, and all the technology that you’ve invested in, and all the competitors that worry you. If you kinda put that to one side, sort of look out the window and get all romantic and philosophical, and just think, how would you company look like? How would you make money from people? Who would you serve? What would the role in people’s lives be? If you sort of start from that point of the role, and the value and how you exchange that, and then you sort of work backwards from that, you may end up realizing that you need to be in a very different business to where you are, and they need to structure very differently. You need to employ different types of people, you need to outsource different parts of the process to different companies. But there’s something that people don’t like to do. It’s probably a good thing to do on day one of a holiday, so you have a few days to recover afterwards.

[Nikolas] Really this comes back to the idea of Digital Darwinism, survival of the fittest, and this is it. Our children are gonna put us out of business. I don’t actually think that’s a terrible world to be in.

[Tom] The analogy I used in the book was the Peloton in the Tour de France, where I actually think to some extent companies have their moment at the front, and they lead and they sort of pave the way for something that’s slightly better and got a bit more energy behind. And the skill is making sure that all of your company is the peloton. So how do you have this sort of thrusting dynamic of companies that just continually reinvent themselves, versus companies that lose out to other people.

[Nikolas] It’s really interesting. I grew up in the southwest of England, and there’s a company called Westland Helicopters near where I grew up, and it’s been bought out and I think it’s called Leonardo now. It was bought up Agusta. They started off making lawn mowers, and I think that it’s almost like they realized at one point that you can only sell so many lawn mowers. It was much more lucrative to actually turn the idea of making blades into something that’s more practical, from the perspective of saving lives or going to war, I guess. And to me, that’s the kind of thing that hits home.

There is reinvention all around us, Netflix for example. Blockbuster didn’t do what Netflix did, but if Blockbuster had, Blockbuster would probably have won out, because Blockbuster had the absolute dominance in the market, right? It’s funny. Survival of the fittest, Digital Darwinism. Tom, I’d like to say thank you very much. I wish you lots of luck with selling tons of the book and chatting to more people about provocative thoughts that you put in there. Do come back and I’d love to have a chat with you in the future about, I don’t know, I don’t know yet. We can work that out.

[Tom] We’ll figure it out. It’s very nice to be back on your show, so thank you very much for having me.

[Nikolas] Okay, thanks, Tom.


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digital darwinism with tom goodwin exponential minds podcast

Digital Darwinism with Tom Goodwin – Exponential Minds Podcast

Nikolas invited author and researcher, and head of innovation for Zenith Media, Tom Goodwin to speak on the Exponential Minds podcast. In this episode, Tom discusses his new book, Digital Darwinism, Survival of the Fittest in the Age of Business Disruption, a collection of thoughts about change in the modern world, with the intention of sparking some interesting conversations. What follows is an edited transcript of the full discussion.

The Exponential Minds podcast is a series created by Futurist Speaker, Nikolas Badminton. The research, development, launch, and growth of new technologies is creating incredible momentum in the modern world. In the podcast, Nikolas talks with the innovators and the exponential minds that are tackling some of the biggest problems, and creating solutions that are propelling humanity to the next level.

Subscribe to Exponential Minds on iTunes here

[Nikolas Badminton] Welcome to the latest episode of Exponential Minds Podcast. Today we’ve got Tom Goodwin that’s come back to discuss his new book, Digital Darwinism, Survival of the Fittest in the Age of Business Disruption. Hi, Tom, how are you?

[Tom Goodwin] Hello, I’m good. Thanks for having me back on.

[Nikolas] Yeah, you sent across this book, and I was having a read through, and really interesting. Lots of perspectives, historically what disruption has meant and what old business models meant, and what business models can think about. But can you tell us a little bit about your motivations for writing the book, what you’re trying to achieve, but also what the book’s trying to convey?

[Tom] I’m very honest about the way that I talk about my book, in that actually it was driven not by some romantic idea that I had a book in me, but actually just ’cause I was really pissed off. I’m sort of generally quite frustrated with the level of discourse that we have in this industry. I’m quite frustrated with the kind of vague words that people throw around, like disruption, or re-imagination, or innovative. None of these things really mean anything, so increasingly over the last sort of three to five years, I’ve just felt this kinda tension build up inside me, and this need to sort of get across a point of view. Not because I think I’m right, but because I think it’s useful to get provocation out there, and it’s useful to start conversations about these issues.

[Tom] It’s useful to challenge thinking that I think has gone unchallenged so far. So I put together this book, not so much as a sort of manifesto like it sounds, but just more as a collection of thoughts about change in the modern world, with the intention of sparking some interesting conversations. So it’s designed to sort of appeal to everyone from sort of students making their way through school or university, or their way through to CEOs of large companies that might be feeling like they’re doing enough, or might be feeling that they’re confused about the world, and it’s there to sort of provide a level of guidance for them.

[Tom] This comes in as a very sort of grassroots intention from the beginning. So it’s great from a beginners perspective. It’s interesting to me that, we talk about creativity, innovation, and disruption, but I’d say 95% of the people that are out there, and not including you or I, but 95% of the people that are out there aren’t very creative or disruptive in the way that they even talk about these things. You challenge in your book a Christensen view, that ultimately he missed what real disruption is in today’s world, and he didn’t really talk about how companies disrupt from within, like Amazon and Google and whoever. Why do you think he missed what’s come to be in the world in 2018? Do you think it was an old-school thing here? Do you think that he didn’t imagine the world as it’s become?

[Tom] I mean, he’s clearly an extremely impressive academic, and at the time of his conception of the idea, he was looking back on historical data that was available to him, and I think like anyone that wants to create quite a neat and tidy theory, he looked at evidence that would support his point of view and he discounted anything that wouldn’t. And the reality is that he was thinking about disruption in a kind of pre-internet era, when the success stories of that era, or companies are extremely good at manufacturing hardware, extremely good at understanding the technological process of making. But the reality is, in the modern world we have things like the iPhone or WeWork or Tinder or Tesla or Facebook or Spotify or Twitch, any one of these new companies that’s actually accelerating like no other company has ever accelerated before, in terms of their user acquisition and growth and valuation. They all play by completely different rules, and they use completely different mechanisms to what he described. I just got slightly frustrating with the fact that this theory wasn’t particularly helpful, and it wasn’t really explaining how reality is these days. So I just wanted to put my new theory out there.

[Nikolas] And you talk about risk in it, as well, right? This is almost core to what disruption is, what’s your risk level, you sort of ask, and it seems like the most innovative companies are becoming risk averse. And even someone, in the case of Facebook, of being persecuted for having taken risks, even with our permission. So these risk levels, when people are risky, you’ve got mainstream media and government that comes in heavy-handed, drag someone like Mark Zuckerberg up in front of the Senate, and we’re just building a platform. We gave you the opportunity, you said yes. So what’s the problem?

[Tom] I think you hit the nail on the head when you talk about risk there. At the end of the day, I think we’re at a situation now where if you look at all the things that very large, somewhat legacy style companies have, and if you look at all the list of all the attributes that smaller, younger, more nimble companies have, the main thing is just an attitude towards risk, and an attitude towards innovation and growth, where large companies need to have incredible amounts of data at their disposal before they can take any decisions at all, it’s seen.

[Tom] And, the reality is that looking at historical data does an extremely bad job of presenting information which is useful for the future, most of the time. So it’s companies that are very much driven by passionate founders, who are quite eccentric and strong, who compel their workforce to take these leaps, to do things that have never been done before, to challenge convention. It’s those companies that are doing incredibly well. So the skill becomes how do we get large companies to be more comfortable with risk, how do we get them to be more happy to live in a world of ambiguity and failure. I’m not entirely sure that that’s possible.

[Tom] One of the strange conclusions that I came to as I was writing the book is I just don’t know the big companies have it within themselves to become the kind of entities which will eat their business. That for me is the most profound and lingering question from the whole book is, do these companies just have to start again, or can they innovate their way to being what they need to become?

[Nikolas] Yeah, it’s interesting. In recent years, I’ve seen a couple of examples. Up in Canada, there’s a company called TELUS, and they’re one of the largest cell phone providers, and they have this old website infrastructure. And they kept trying to reinvent and reinvent and they couldn’t do it, and a friend of mine came in, Sean, and he came in and he said, “You know what? “We’re just gonna start again.” They were like what? Yeah, we’re gonna have a team, and it’s gonna be multi-disciplinary. No, we’re not gonna have agencies onsite and whatever, but we’re gonna take the best people from the agencies and management consultancies, designers, and our internal team, and he called it a tiger team. And he built this tiger team, and they built a website without the restrictions of the old site. And suddenly, over time, they were getting huge amount of action. They moved it across all the URLs and everything, just to the new site after it went through beta. And then they realized that probably 75% of the existing site was absolute rubbish and doing nothing for their business.

[Tom] Yeah, I think if you were to visualize most modern companies and legacy companies as sort of physical constructs, they would be buildings that you wouldn’t wanna go in, ’cause they would be so held together by super glue and gorilla tape, and they’d have sort of patchworks and workaround port-a-cabins where excess people work. They would be sort of physically ugly, and they just don’t work. I look at things like airlines or car rental companies or hotels or media companies, and increasingly, and I’m not trying to be pessimistic about this, but I look at it and I do think it would be better off just to pretty much start the whole thing from scratch. A really interesting exercise would be to think about the level of change that you need, and how existential that change needs to be.

Again, the case of Telus that you’re talking about there, it’s not like they needed to recreate all their cell towers. It’s not like they needed to completely recreate their back-end infrastructure that is what the data sort of goes through, but they probably needed to sort of rethink the products they sold, they probably need to rethink they keep data, like who has access to that data. Even things like what plans and what tariffs and what products and what customer service they offer people. For me, those kind of questions are actually really, really important questions, but they’re very difficult questions for companies to ask themselves, because within it, there is a sort of tacit statement that somehow people have messed up, and that somehow people haven’t been doing their job right, and actually, it’s just a reality is that if you were to build something from scratch today, it would look very different, because we’ve got different tools at our disposal.

[Nikolas] It can sometimes be as simple as having a new HQ built and moving in. I was just down in Santa Clara, and one of my friends works for Nvidia. Now, Nvidia started off building the chip sets and the card sets for computer gaming and whatever, and now they’re thrust into this new world of AI and self-driving vehicles and whatever. Go to their new HQ. It’s huge, sort of almost brutalist, modernist architecture. Clean lines, white walls, no art on the walls. That was pretty funny. And they’re like oh, come over here. This is where we work. Why have you put cubes in your office? So the old world of working in the States was like you sit in a cube. And she goes oh yeah, no one sits there. No one sits there, everybody works in the libraries, and all these We’re almost held captive by this old-school thinking about even innovation in the world. It’s like, amazing new architecture, old way of working within. It’s kind of interesting.

[Tom] I love that it’s a perfect metaphor, but also happens to be a real-life situation of the need to kind of have innovation that’s very physical and very tangible, and very kind of viewable from the outside, but then not actually having enough commitment to it where it runs all the way through. And also this sort of idea of muscle memory. It’s amazing how many people do their jobs based on never questioning the way things are done, because they’ve always been done that way. You just see lots of sort of stupid things done. Every company needs to have an app, and they don’t really necessarily think why they need one, and it’s this obsession with sort of saying yes to every possible technique or tactic that people can use, because that means that they can kinda blame someone later on because they weren’t the person to say no to things. Like you said before, I think it all comes down to sort of risk, and it all comes down to the degree to which you’re happy to sort of make a declarative statement, even if it means taking a risk at the same time.

[Nikolas] It’s interesting, as well. There’s another sort of note that I made as I was reading through the book, and the thought which was like, the CEO, if you’re in a public company, has to go quarter to quarter talking about profit and growth and vision and whatever, and that short-termism is almost like killing ambition in the new world. The average age of a company in the S&P 500 is about 15 years now, and it’s getting shorter. They’re thinking one quarter maybe 18 months out, but if you look at Tesla or whatever, Tesla and Elon Musk is looking to 2025, 2030, right? And people are taking his catty charisma and hyperbole in the leadership context as being a really positive thing, but when someone in a more traditional industry tries that, they get absolutely skewered in the markets.

[Tom] Always talking about the idea that you can’t judge quarter to quarter. But the reality is that most companies don’t have that luxury, because they are publicly listed, and they are mainly, they’re sort of a safeguard over shareholders’ wealth more than anything else. So I think it’s an extremely difficult situation. I work with some retailers where they’re being asked to deliver profit growth, revenue growth, quarter on quarter, at the same time that they’re up against companies that actually don’t have to make any money whatsoever, and as long as the kinda losses lead to user acquisition, everyone’s happy. So it’s massively unfair. But that is the reality of the world. So I think the solution for me probably lies in this idea of, I think like you said before, with the construction of the new headquarters that you move into, you probably need to sort of run your business and manage the profitability, but at the same time create a separate entity which is going to be judged more like those other startups, and get to a place where you’re able to sort of play both games at the same time, I think.

[Nikolas] Yeah, and the impatience of people as well. I mean, I was just chatting. In the past couple of weeks, I’ve managed to chat with one automotive association and one very large luxury car manufacturer in China, and the automotive industry is gonna be absolutely and fundamentally ripped apart. By electric vehicles, self-driving vehicles, on-demand vehicles, ownership disappearing. Nobody knows what luxury looks like. Maybe luxury is gonna be being able to afford the special licenses for driving combustion-engine vehicles in 2065. I don’t know. You stand there and you tell them, and the head of this company in China, he looked at me and goes, “So you’re saying “that the aftermath to the self-driving cars “and electric vehicles is almost going to disappear?” I said, about 60 to 70% of revenues that you make from that could potentially disappear by 2030, 2035. He goes, “What can we do?” I said this: The future isn’t convenient, right? I think Ford is a really interesting company, and I’d like to know what you think, in terms of re-imagining who they are. They stopped selling cars and they started selling Ford, and now they’ve just turned around, they said that they’re gonna stop making cars. They’re gonna start just making hybrid versions of F-150s and Mustangs, and they’re gonna have electric vehicles, self-driving fleets, and on-demand vehicle fleets. I mean, that’s wild in an industry like that, right?

[Tom] It’s absolutely wild, and it was totally unexpected. I think when the press release went out, lots of people were clicking on it just to make sure it was actually hosted on Ford’s website. Not some kind of phishing attempt or something. It’s very, very impressive to see. It’s a kind of horrible analogy, but I think for many people, change is a bit like sort of tooth decay, and I think some people like to sort of polish their way out of it. Some people wanna have a filling. Some people wanna have kinda root canal, and some people just realize that they need to sort of take the whole tooth out and have a sort of fake tooth.

It’s almost like the people that do the most, but not quite enough, are the people that are probably the most screwed. So the people that have a deep root canal that doesn’t quite get all of the rot out actually have the kind of pain and the inconvenience of all of the surgery without any of the benefit. While the people that sort of polished teeth, they’re sort of maybe in denial about the whole thing. I think this, for me, from Ford is a good example of a company really understanding that putting a USB player in a power-charging mat in a car is not gonna be enough.

The creating a car for sort of millennials that look all trendy is not gonna be enough. They actually need to have a very, very, very sort of significant, sort of existential question about the very purpose that these companies serve. And again, rather than sort of starting out with your core competency of we’re good at doing this and let’s carry on doing it, it’s actually looking at how the world’s going to change, and how they can apply that core competency in a totally different way, because it may just be that they become licenses of the designs, or it may be that they own all the cars themselves and become people that kinda rent out access to them. No-one wants to ask these questions, because they’re too sort of awkward, and they’re too challenging, and people would sort of rather go back to kind of discuss much more small details than enormous depth, because they feel sort of more comfortable in that area.

[Nikolas] It almost feels like Ford’s been watching Elon Musk and all of the chances he’s been taking. ‘Cause literally, I think the decision that they’ve just made is betting 75% of their business on red. Literally like, this has to be the future, and I think they’re absolutely right. I mean, when we think about disruption, we think about industries, we think about huge players. A big player can redefine an entire industry and all other players have the follow them. And even small players that are willing to sort of have the strength. Tesla’s got a bigger market cap than Ford. And what was it? I was looking at this the other day, Volkswagen makes more cars than Tesla in three days than Tesla makes in a year. And Volkswagen’s something like eighth or ninth, in terms of market cap in the world.

[Tom] Yeah, I mean it’s an amazingly clear viewpoint into which the degree to which stock market value is based on confidence in the future.

Today. I mean, Tesla’s amazing in that it’s either going to be one of the greatest success stories the world has ever known, and fill business textbooks, and whatever textbooks to come for the next few centuries, or it’s gonna be this catastrophic failure of a company that sort of promised far too much, and was actually sort of built from far too little. I think at the moment I’m very much in two minds about it, but as a demonstration of the value of bold thinking, and as a signal to how fast things can change, and how companies that don’t actually know anything about a particular sector, how they can flourish because they don’t know that much. I think it’s absolutely fascinating.

[Nikolas] You sort of said, chapter 11, a final focus on people, right? It’s like, we’ve gotta come back to people. People talk about technology and the shiny things, but we forget that the creative problem solving, empathetic, connective things that we are as human beings, in society as a whole are the people that has to use with the companies provide, you know? What do you mean when we’re talking about that final focus on people, and how important is the role of empathy in technology in the scheme of things?

[Tom] I think empathy is probably the most under-valued attribute in the entire world right now. The reality is that if you’re highly empathetic, not only can you figure out how best to serve and delight people today, but it’s also a very strong tool when it comes to predicting a future. If you were highly empathetic, you’d realize that Segways in their current form are never gonna take off.

The curved TVs wouldn’t work, ’cause people like things that look nice in their living room. The 3D TVs weren’t gonna work, because people feel stupid putting things on their faces. Empathy really is our guide to the current and to the future, and it helps us sort of reorient businesses. It kinda frustrates me slightly when we talk about tech companies, ’cause I don’t think Uber’s a tech company or WeWork’s a tech company, or even Facebook.

The companies that know modern behaviors and they know modern consumer expectations, and they know how technology can become a toolkit in delighting people by orienting themselves around people. So you can get off a plane in Shanghai and order an Uber, and there’s no complications to do with language or currencies, it just works. Whereas I think companies from a bygone era, they very much focused on their own processes. They’re effectively factories to make something, and at the end of it, the consumer was just this sort of sucker that would end up buying the thing. But they were kind of irrelevant for most of the process. And I think that really has to change. I think things like better analytical software, I think things like artificial intelligence. We’re gonna have this whole toolkit available to us, which will be exciting, but it all has to be used in respect and in service of people.

[Nikolas] When you come back and you’re saying one might argue that this is most important time in civilization to be human, but is the future of disruption companies that actually teach us to be more human?

[Tom] I think so. Oh, we’re going into a huge area here about sort of humanity and robotics and stuff like that. I think we’re at a very interesting time with technology. I think there’s this sort of decision we have to make collectively, which is how much technology do we want in our lives, and what is it to be human? And I think the more that we see people like Google the other day having phone calls that were automated by robots, or the more that we see chatbots dealing with people as if they’re not worthy of human attention, the more we may have to realize that we may need to sort of re-consider these boundaries, and reconsider what technology and progress looks like. Because to some extent, living an ultra-efficient life or high profitability and creation of extra leisure time by using technology, to come extent, if we end up feeling less human, then what was the point? Living is an inherently inefficient thing to do. Become quite philosophical and just think actually, it’s not really about stripping out inefficiencies. It’s more about feeling alive and feeling a sense of meaning and purpose for life.

[Nikolas] Thomas Frey says one of the largest companies that is ever gonna exist in the future doesn’t exist today, but it’s gonna be about education and preparing humans for this world that’s sort of careering towards them, right? Excuse the pun, but it’s like we’ve got this, I always talk about humanity and technology. I always talk about humans needing significance, and certainty, and variety, connection, and love, and growth ,and contribution, the things that we’ve had for thousands of years that we’ll have going forward. Is there something that people are missing in business? If you’re gonna say, if you’re the CEO of a company and you’re sat there and you’re watching your business being eaten by new competitors, and say you’re a business with a heritage, and you’ve got a good standing from a brand perspective. What would be the one pc of advice you’d give to them to start their thinking in a new direction.

[Tom] I mean, it’s actually the question that’s on the first page of my book, which is annoying and provocative, and appears unhelpful, but it’s quite profound. And that’s just, how would you set up your company if you were to set it up today? If you kind of put to one side all of the things that you’ve learned, and all the things you know don’t work, and all the technology that you’ve invested in, and all the competitors that worry you. If you kinda put that to one side, sort of look out the window and get all romantic and philosophical, and just think, how would you company look like? How would you make money from people? Who would you serve? What would the role in people’s lives be? If you sort of start from that point of the role, and the value and how you exchange that, and then you sort of work backwards from that, you may end up realizing that you need to be in a very different business to where you are, and they need to structure very differently. You need to employ different types of people, you need to outsource different parts of the process to different companies. But there’s something that people don’t like to do. It’s probably a good thing to do on day one of a holiday, so you have a few days to recover afterwards.

[Nikolas] Really this comes back to the idea of Digital Darwinism, survival of the fittest, and this is it. Our children are gonna put us out of business. I don’t actually think that’s a terrible world to be in.

[Tom] The analogy I used in the book was the Peloton in the Tour de France, where I actually think to some extent companies have their moment at the front, and they lead and they sort of pave the way for something that’s slightly better and got a bit more energy behind. And the skill is making sure that all of your company is the peloton. So how do you have this sort of thrusting dynamic of companies that just continually reinvent themselves, versus companies that lose out to other people.

[Nikolas] It’s really interesting. I grew up in the southwest of England, and there’s a company called Westland Helicopters near where I grew up, and it’s been bought out and I think it’s called Leonardo now. It was bought up Agusta. They started off making lawn mowers, and I think that it’s almost like they realized at one point that you can only sell so many lawn mowers. It was much more lucrative to actually turn the idea of making blades into something that’s more practical, from the perspective of saving lives or going to war, I guess. And to me, that’s the kind of thing that hits home.

There is reinvention all around us, Netflix for example. Blockbuster didn’t do what Netflix did, but if Blockbuster had, Blockbuster would probably have won out, because Blockbuster had the absolute dominance in the market, right? It’s funny. Survival of the fittest, Digital Darwinism. Tom, I’d like to say thank you very much. I wish you lots of luck with selling tons of the book and chatting to more people about provocative thoughts that you put in there. Do come back and I’d love to have a chat with you in the future about, I don’t know, I don’t know yet. We can work that out.

[Tom] We’ll figure it out. It’s very nice to be back on your show, so thank you very much for having me.

[Nikolas] Okay, thanks, Tom.


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