What we presume to be explained by an ever faster changing world, more unpredictable and chaotic times and waves of disruption is nothing of the sort. The internet came, it changed some fundamental physics of business and companies have spent years being very busy but doing literally nothing.
It is the vast tension between the delight of what is possible, and the reality of what is often experienced which we can feel. It’s the envy of those working in legacy companies grinding out profit and revenue growth towards insurgent startups that gain frothy valuations from rapid user growth by setting fire to large amounts of cash.
It’s the growing sense we’ve built amazing companies on the foundation of the past and we can’t iterate ourselves to relevance, but need to rethink things from scratch.
It’s to looming realisation that traditional companies have never succeeded in changing properly. It’s this tension we can feel building.
Quibi, the short form streaming platform, was a $1.7bn (£1.2bn) experiment from seasoned TV executives that imploded pathetically and suddenly, a failure widely predicted by, well, anyone who’d ever met a young person.
Boards are home to accomplished people seeking to serve for years, not to challenge management orthodoxy, provoke brilliant debate and to unleash the power of the new.
A five-minute conversation with any eight- to 28-year-old on the planet would have revealed everything Quibi was about, was utterly opposite to what mattered to it’s potential audience.
It was an idea so bad, in so many different ways, it seemed more like priceless contemporary multimedia art called ‘Are you out of your mind?’
It wasn’t just that understanding how to make and monetise great TV from 1980 to 2010 wasn’t especially helpful, it was that this, combined with the sheer arrogance of accomplished executives, was profoundly and lethally damaging.
Perhaps wise people are out of touch?
I’ve long championed the experience of the older people in marketing and advertising, and dismayed at the ignorant worshiping of the young. We need, however, to forge a path to a more informed business understanding.
Quibi has been the most painful illumination of the detachment of some in business from reality. It was akin to watching Mark Zuckerberg’s congressional hearing, where it was clear how ill-suited and ill-prepared senators were for grilling tech companies.
When Verizon buys AOL and Yahoo for billions, when Unilever buys loss making Dollar Shave Club for $1bn, or Walmart buys jet.com and ModCloth and starts losing a billion per year, you have to wonder if these companies have any idea what they are doing.
When TikTok was for sale, the charade of bloated stuffy well-capitalised companies willing to overpay for a bit of Gen Z relevance (and their consumer data) was embarrassing.
The internet has not changed everything, but it’s changed many core laws of business.
In January 2016 Netflix expanded to 130 more countries by pressing a button. I can now sell my book online to people in 149 countries thanks to a 45 min session on Shopify, I can also now target ads with advanced lookalike modelling thanks to advice from a brilliant 19-year-old.
Robinhood and Reddit can mint millionaires and obliterate hedge funds.
Clueless celebrities can create billion dollar cosmetic brands in 18 months, while Revlon, with 90 years of experience, beloved brands and incredible distribution, loses 75% of its value in the same period.
It’s never been easy to access capital nor expertise, it’s never been less necessary to own assets or retail space. National boundaries have never felt less important, regulations now define grey areas to exploit, not liminal space to avoid. Lines continue to blur, every category becomes democratised. Behaviours have never changed so fast.
Department stores don’t fail today because of hard times, they fail because there is literally no reason for them to exist any more.
People don’t buy cars because of their nought to 60 performance but because of features such as ‘Dog Mode’ a pet protection value add recently introduced by Tesla. I was once more likely to get divorced than change bank account, yet I opened a Monzo account in five minutes on the loo last year.
We’ve long assumed competitive threats would come from companies most like ours. The real competition, however, is coming from smaller, faster-growing companies, often with an entirely new approach. Asymmetric competition means Hyatt competes with Airbnb, Volkswagen competes with Uber, cigarette makers with vaping, fireworks makers with drone builders, alcoholic drinks makers with cannabis startups.
The expertise you have in growing or procuring tobacco won’t help compete with Juul. The footprint you’ve built in Taiwan, seems less relevant to competition with a platform. The journalists you’ve trained, won’t help you when Twitter monetises your content.
A focal point , the future and to the customer
The focal point of the average company at any moment in time is in the past. We look at historical sales, historical precedents, best practice from the past, balanced out by quarterly planning and with a few key projects looking, at most, one year out.
The board is the one safe place for wise experienced folk to have the power and reputational capital to forge a compelling, ambitious, imaginative future vision. And yet the average age of directors in the FTSE 150 is over 60 and has risen over the past decade.
I’m not suggesting we should idolise young people who get TikTok but to employ sensibly-minded 30- to 50-years-olds at board level. It seems to be a smart way to ensure an understanding of contemporary changes in the world, and the changing opportunities and threats.
If we assume the entire existence of companies is down to their ability to create and serve customers, it’s strange to me that only one department in any company does this, the marketing department. If boards are designed to steer the future of a company, it’s baffling that of Fortune 1000 companies, only 2.6% of them have a marketer on the board.
Boards seem to exist to represent the voice of shareholders, to focus on finance, to answer hard questions about legal issues, to digest risk, to discuss procurement and mergers and acquisitions but never to consider their customers.
Boards appear designed to reduce risk, to preserve the status quo, to manage reliable but small growth and to ignore any future potential. They seem often like a vessel to reward past service, more than to drive energy in to a complex future.
We need a genuine acceptance that the voice of outsiders is welcome, that big awkward questions deserve to be discussed openly and deeply and honestly.
They are home to accomplished people seeking to serve for years, not to challenge management orthodoxy, provoke brilliant debate and to unleash the power of the new.
Boards are recruited to find people more alike, from within a small pool of trusted people, and to embrace the comfort and ease of casual consensus.
Driving a better way
A lot of management wisdom is unquestioned dogma. A lot of best practice is just what average companies do en masse. The accepted orthodoxy and truth needs to be questioned.
How can we find a way for the best, brightest and most interesting voices to provoke debate, to ask the hard questions and to direct the energy of robust debate to create real change and an audacious vision?
How can we unleash an array of truly diverse brilliant minds, different viewpoints and experiences to propel a company to explore more interesting possibilities and to create a culture of innovation and change?
Many companies have dabbled with shadow boards, or youth advisory committees or placing a famous single digital officer on a board, but we need more than that.
We need a genuine acceptance that the voice of outsiders is welcome, that big awkward questions deserve to be discussed openly and deeply and honestly. A new way for the voices of the future, of the customer, and of those who see things differently to be not tolerated but demanded. We need a total boardroom rethink.
Tom Goodwin is the founder of All We Have Is Now, a strategy and transformation consultancy.