Sometimes, you just have to let go

Wikipedia was set up 17 years ago as an experiment in collaborative knowledge-building. It’s now the world’s fifth most visited website – and the first place most people turn for information about anything.

What’s interesting about Wikipedia is that it subverts the previous norm. Instead of being curated by experts, it depends entirely on volunteers to submit and update its content.

Detractors have claimed that this makes Wikipedia unreliable. How can you trust the accuracy of information, they argue, if you don’t know the authority of the source?

They’ve got a point: there have been well-documented examples of howling errors, as well as allegations of entries being manipulated by interested parties (including the CIA and political lobbyists).

On the other hand, Wikipedia includes over 48 million separate detailed entries, written in 293 languages. In almost every case, those entries were written – and moderated – by people with a far greater knowledge of their subject than could ever be possible with traditional reference sources, such as Encyclopedia Britannica or Larousse.

No matter how good your paid researchers might be, it’s simply not economically viable to have enough of them, with diverse enough backgrounds, to be able to know that much about that much.

Wikipedia is a trade-off: you lose a bit of certainty, but you gain a massive increase in depth, variety and richness of content.

It’s the same trade-off most big businesses struggle with every day.

On the one hand, they want to ‘empower’ their employees. They know that, in many cases, those employees have a much more direct connection with customers than the people at the top of the business. They want them to use their initiative to be more agile – and their personality to inject warmth and humanity into their daily work.

They know that, if they can do that, their customers will have a much better experience and their business will be more successful.

But, on the other hand, most businesses are terrified of giving up control. They’re scared that, given too much real autonomy, their employees will make bad decisions that damage their reputation or lose them money.

And they’re right. If you give your employees a genuinely free hand, in some cases they will make bad decisions.

But, if you don’t open yourself up to that possibility, you’ll never be able to harness the incredible creative and human benefits that real empowerment can bring to your business.

Your call.

 

What’s that ticking noise…?

In 1958, the average lifespan of a business in the American S&P500 index was 61 years. Today, it’s 18 years. By 2028, it will be nearer 11.

In fact, according to a study by the Yale School of Management, it’s likely that around three-quarters of the companies in the S&P500 today will have disappeared from it altogether in ten years’ time.

No wonder CEOs are jumpy.

They know that, if they don’t keep reinventing their business, it won’t be one of the 25% that survives beyond the ten-year mark.

But they also know that, if they don’t hit their short-term targets, they probably won’t be around long enough to make the changes anyway.

With operating costs already cut to the bone, those targets are getting harder and harder to hit, which means there’s very little margin for error.

And that’s precisely where the problem comes.

When you’re looking for creative ways to reinvent your business, the surest path to failure is to play it safe. A little bit of incremental change here, an extra blade on your safety razor there. These are not the things that will save your business when a disruptive new competitor rips up the rule book and starts eating your lunch.

But, when your primary business focus is on delivering short-term results, you’re unlikely to have a culture where people embrace risk and failure.

It’s far more likely to be a culture where people stick rigidly to the processes and ideas that worked last time. A high-compliance culture, where contribution is measured only in numbers. And where nobody wants to admit that something hasn’t worked.

That’s not an environment where new ideas are likely to flourish. And, unless you can do something to change it, your business will inevitably suffocate and die – sooner rather than later, according to the Yale study.

So, what can you do? How do you take a workforce of people conditioned to be compliant process-followers and turn them into agile entrepreneurs?

Well, the bad news is that there’s no process for it. There’s no template to follow. No lever to pull.

The only way to do it is by changing the culture of your business. And the only way to do that is if you – and every other leader in the business – really wants to.

Everything else – launching a new purpose and values, polishing your employee value proposition, setting up a ‘creativity lab’ – is just a more or less interesting way of avoiding the issue.

You hear that ticking noise?

That’s time running out.

We’re all in this together (yeah, right)

It’s a funny word, collaboration.

Seventy years ago, it was the worst kind of insult. It meant you’d betrayed your country and helped the enemy. If you were identified as a collaborator in post-liberation Paris in 1945, you’d be marched through the street with your head shaved, so your neighbours could jeer at you and throw rotten fruit.

But times have changed and the word has recovered a more positive meaning. Politicians now speak proudly of ‘cross-party collaboration’, fading music stars ‘collaborate’ with edgy hip-hop producers – and big companies want to unlock a brave new world of creativity by ‘making it easy for our people to collaborate and share ideas’.

The trouble is: why would you want to?

I mean, it’s easy to see what’s in it for the company. They want their employees to be more ‘open’ and ‘giving’, to embrace the hackathon culture of hip Silicon Valley tech companies; to tap into a sparkling well of innovation and value.

But it’s a lot less easy to see what’s in it for everyone else. Employees who do collaborate often find it doesn’t benefit them – quite the reverse, in fact. They see their ideas co-opted by others and used as a stepping stone to promotions and rewards that pass them by. So why bother?

The problem is that we want collaboration, but we encourage competitiveness.

We want people to work as a team, but we reward individuals.

In its most recent annual survey, the High Pay Centre noted that, between 2016 and 2017, the average annual pay of a FTSE 100 boss rose by 11% to £3.93m. That’s roughly 145 times more than their average employee earns.

Now, as it happens, I know a few FTSE 100 bosses – and they are (mostly) smart and charismatic and capable people. Not the uncaring, out-of-touch corporate fat cats lampooned in the tabloid press.

But the point I always try to make to them is that, if you really want people to collaborate, engage and share their best ideas, you need to create an environment where they feel comfortable and appreciated for doing it.

Because, if you don’t, it won’t be long till collaboration is a dirty word again.

Loose-tight

For a period of around 20 years, from the early 70s to mid 90s, the UK was the undisputed world power in advertising. One of the great figureheads of that dominance was Steve Henry, whose London-based agency HHCL produced some of the most iconic campaigns of the time. If you lived in the UK then, you’ll remember the work they did for Britvic (You know when you’ve been Tango’d), the AA (The fourth emergency service) and Ronseal (Does exactly what it says on the tin).

One of the things that made HHCL so successful was the way they worked. As Henry explained in one of his excellent blogs: ‘You need a structure. At HHCL, we had very tight processes, because we believed in the concept of ‘loose-tight’. Tight processes meant we could explore loose – i.e. unstructured – thinking.’

The crucial point was that HHCL’s processes were designed to help produce outstanding work, rather than improve their margins by operating more efficiently.  They were all about creativity, not money.

This is in stark contrast to the model of large advertising groups, such as WPP, Omnicom and Publicis, which have grown rapidly by acquiring agencies and introducing efficiency measures – making them more profitable but, in Henry’s view, less creative and, hence, less valuable in the long term: ‘We’ve seen the ad industry become a lot more efficient – but at what cost? Nowadays, it can turn out bland, invisible work faster than at any time in history.’

It’s a familiar refrain. As advertising becomes safer, it becomes easier to ignore – and, consequently, less valuable to the brand owners who want to stand out and get people’s attention.

The underlying motivator is a fear of failure: if you have to do work twice, your profits will be damaged and your shareholders will be unhappy. Which is why nearly all advertisers and agencies now rely on focus groups to pre-test their ideas.

There are two big problems with this. The first problem is that your competitors are also testing their ideas through focus groups and getting exactly the same kind of feedback. Which means there’s a pretty good chance they’ll come up with the same ideas and solutions you do.

The second problem is that focus groups tend to be unfavourable to original thinking. It’s a truism that people feel more comfortable with things they know and understand than they do with things that are new and unfamiliar.

That same instinct for safety – the desire to avoid risk and only back dead certainties – is why most businesses are not very creative places. When looking at a problem, their first instinct is to apply a solution that worked somewhere else. Once they’ve got a solution they think won’t fail, they stop thinking and turn it into a process.

Whereas, if they carried on thinking, they might come up with a better solution.

 

Stop talking about innovation

A hundred years ago, it was a big deal when an aeroplane flew across the English Channel. Who would have believed then that we would be watching a live camera feed from the surface of Mars – and picking up data from a man-made satellite as it left our solar system?

Thirty years ago, who would have believed you could take a picture without film? Or make a phone call from the top of a mountain?

Even today, how many of us really believe you can manufacture objects in your own home with a 3D printer?

Yet it’s happening.

The pace of technological change is so fast nowadays that even visionaries like Bill Gates struggle to keep up (although he now denies making the regularly-quoted assertion that ‘640k of memory ought to be enough for anybody’). Today’s science fiction is tomorrow’s fact. And the corporate graveyards are littered with the corpses of big companies that didn’t adapt in time.

In 2009, Nokia was the world’s fifth-largest brand, worth $35bn. Two years later, it was a Microsoft footnote, swept aside by a smartphone Tsunami that it hadn’t seen coming.

In January 2008, Woolworths was one of the UK’s oldest and best-known retail names, with a swaggering Christmas advertising campaign and stores in every high street in the country. By January 2009, it had vanished.

That’s how fast fortunes turn.

An Innosight report suggests that more than 75% of the companies on today’s S&P 500 index will not be on the list 15 years from now. In most cases, this is because they will be overtaken or acquired by fleeter-footed rivals.

So it’s hardly surprising that innovation – in products, in services, in behaviour, in ways of working – is something almost every CEO regards as a priority. But recognising innovation as a priority and creating an innovative business are two very different things.

If you look around your own business (and be absolutely honest with yourself here), how much do you see that’s genuinely new?

There’s probably plenty of superficial innovation going on: an extra blade on your razor, a new flavour in your ice cream range, a one-hour delivery option.

But doesn’t it all feel a bit safe? A bit like what everyone else is doing? Where are the game-changers? Where’s the disruptive behaviour? Why do the big ideas always seem to come from somewhere else – from younger, hungrier rivals?

The depressing truth is that most companies are so scared of failure that they won’t do anything that isn’t guaranteed to succeed.

And that reluctance to make mistakes, as the Innosight research shows, is exactly why most of them won’t be here in 15 years.

 

Do no evil (no, really)

The week’s big news – how Cambridge Analytica allegedly bought profile data from Facebook and used it to influence the outcome of the US election – has offered a fascinating (if terrifying) glimpse into the world of online data analysis.

Among the many jaw-dropping revelations and tone-deaf Twitter responses, the standout moment was the interview with Alexander Nix, Cambridge Analytica’s (now suspended) CEO.

When it was put to Nix that he had been caught on camera boasting about how his business had used data to influence the election outcome, his dismissive explanation was that he had been pitching for new business, so was obviously saying whatever the client wanted to hear.

What I found interesting was that he clearly imagined this made it okay. Which got me wondering: how messed up must your organisation’s moral compass be if ‘We routinely lie to prospective clients in order to get their money’ feels like a brand positioning you’re happy with?

Perhaps I’m naïve. Nix certainly seemed to feel he was being unfairly singled out for a practice that was routine in his industry. The board of Cambridge Analytica disagreed and threw him under the bus.

No doubt, this will shortly be followed by the disappearance of what has now become a toxic brand – and the business will quietly re-emerge with a new name, a new set of corporate values and (for at least a little while) a loud determination to act in a purely ethical manner.

Will this fix the problem? Or will it just be a temporary diversion, until the new leaders realise they’re losing market share to competitors who are still being less scrupulous about the way they manage data?

That’s the problem with ethics. As soon as you start finding ‘grey areas’, where you can make compromises that boost your profits without actually breaking the law, it’s tempting for under-pressure leaders to embrace them.

Which is exactly where ‘good’ businesses go bad. If your engineers get rewarded for finding ways to mysteriously improve your emissions test performance, that’s bad (Volkswagen). If your sales people get a bonus for selling people financial insurance they don’t need, that’s bad (any bank that mis-sold PPI).

But is either of those ethically worse than avoiding tax? Or deliberately paying your suppliers 60 days later than your commercial terms said you would? (Almost every large business I’ve ever dealt with).

Very few companies are actually ‘bad’. But don’t kid yourself that having a page of values that say things like ‘integrity’ and ‘transparency’ and ‘fairness’ is going to save you from public scrutiny when you’re caught crossing an ethical line.

Culture is about every single thing you do as a business. As soon as you start turning a blind eye to (or worse, rewarding) bad behaviour, you’re in the same boat as Alexander Nix.