Leadership in a Post-Capitalist (???) World

On Wednesday night I gave the opening address at Leadership Victoria on this topic. The audience was a group of 60 leaders across a range of organisations in Victoria. The question focused around some articles from Steve Denning, Jeremy Rifkin, and Paul Mason (see links at the end of this post). My purpose was to frame the rest of the discussion for the night, and highlight some possibilities about key leadership skills for the future.

As the background articles are now 2-3 years old it is an ideal time look at what has happened in the interim. The thrust of Paul Mason’s writing was that new tools were in the early stages of ushering in a new economic system. These changes included collaborative production, reducing information scarcity, and automation of work . Steven Denning was more circumspect about what was happening. While in broad agreement with some of the principles Paul was espousing, he had differing views on their effects and implications. Denning believed that it was a new era of capitalism rather than post capitalism. Jeremy Rifkin examined the implications of areas of the economy where the marginal cost of production is almost zero. In doing so he was more in agreement with Denning than Mason, while arguing that the collaborative commons was having a significant effect.

To clearly show my biases before I argued my proposition I put up the following quote from Amory Lovins:

 

“The markets make a good servant, but a bad master, and a worse religion”

 

because while it would appear I am arguing for hyper-competition, the outcomes need to be focused on how the system benefits the general population in our societies.

 

The Proposition

 I began my presentation, as is my wont, by arguing against the proposition of the title of the session. My view is that we are not entering a post capitalist world, but rather a real capitalist world. The technologies discussed in the articles are changing the way the world works. In doing so they are moving us towards real capitalism rather than the monopoly seeking, and rent seeking behaviours of the past. For the purposes of this discussion I defined real capitalism as:

“hyper-competition within the boundaries of a socio-regulatory system that steers the benefits to the general population rather than the few”

The reality is that true competition is hard, and so companies try to position themselves in protected positions . I have just been reading Kerry O’brien’s book on Paul Keating. In the chapter which deals with privatisation, Keating describes the Qantas and TAA privatisation process.  Peter Abeles who was part owner and CEO of Ansett Transport Industries but also a good friend of Prime Minister Bob Hawke was deeply involved. According to Keating the privatisation discussions were frequently attended by Peter Abeles who was interested in keeping a cosy duopoly. Keating states that this was because although Abeles thought they could compete with a restructured and privatised government airline, it was better if they did not have to.

This was the main purpose of strategic frameworks such as Porter’s Five Forces: position yourself where you had a strong position relative to suppliers, existing competitors, customers, and new entrants. True competition, where there is a relentless focus on the customer, continual innovation, and where new entrants can appear from anywhere is a highly uncomfortable environment. Therefore, companies and people have to have true competition forced upon them. This is fair enough, you would be stupid to force additional competition upon yourself (in the short term). This is partly the role of government and society in terms of the rules and norms that govern how things should work. The new tools and capabilities that the articles described are contributing additional forces.

Part of the arguments of the authors of the background articles was that increasing connectivity, improved collaboration tools, and wider access to information was increasing the capacity of the smaller players to compete with the bigger players. My proposition is that is true, but that but power is again accruing to the larger players. The combination is creating a world of hyper-competition. Let’s look at what some of the evidence says:

In 2011 I presented to a number of tourism conferences about Airbnb. At that stage it had been running for 3 years. I was continually surprised at the lack of knowledge about it in the tourism industry. The promise of Airbnb is that individuals can gain value from their existing assets, increasing the power of the individual. Putting aside some of the more outrageous events in rented out properties Airbnb has mostly delivered on that promise.

Yet, in these sorts of large platform business models power naturally moves back to the centre. Once there are enough buyers and sellers on the platform, it is hard for others to compete with the model because of network effects. The sellers are in hyper-competition with all the other sellers, hence it is a good example of a hypercompetitive world. It is a large market with transparent pricing.

In the more egregious cases of platform models we are seeing big problems. Uber stands out as a major example. Uber has serious internal problems which I think stem from excessive power issues. There are also lots of stories of low paid drivers, and conflicts about their status as employees or contractors. There is definitely a power imbalance with power accruing to the centre of the network.

 

Now lets look at the music industry which really should be a poster child for the sorts of changes the authors were describing. We have seen increased capacity to create and distribute music from musicians to their audiences. We have also seen marginal costs approaching zero with the creation of digital media. So what has happened? The following pictures from Digital Music News via Vox show some of the changes:

music sales 1998 from Vox

 

music sales 2013 from Vox

Digital technologies have transformed the way music is sold and consumed. Now streaming services have changed that again, as shown by the following graphic from Business Insider

streaming music from business insider and statista

all of this has resulted in the following revenue changes (via Benedict Evans)

global music recorded revenues from IFPI Benedict Evans

Buried in all this is the fact that Spotify is dominating the market for streaming services, with Apple a strong but distant second. Spotify’s revenue, according to Billboard is now over US$3 billion but it also lost US$581 million on those revenues.  So again we are seeing power accruing to the big players and many complaints from artists.

 

Hunter S Thompson once said:

“The music business is a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free, and good men die like dogs. There’s also a negative side.”

I am not sure much has changed.

 

We are also seeing other examples of power accruing to the big organisations:

 

  • From 2001 to 2011 Walmart grew from 1.15million employees to 2.2 million employees.

 

  • Amazon is showing huge growth, and is now sending shudders through the retail food industry with its acquisition Whole Foods.

 

 

 

So my basic proposition is that:

  • The tools and changes described by the authors are not taking us into a Post Capitalist world. They are taking us into a true capitalist world. hyper-competitive world.

 

  • While small organisations and individuals now tools that make them more productive, and more able to connect to everyone else, power is still accruing to the large players.

 

  • The combination of those changes mean a changed way of doing things but only inside a world of hyper-competition.

 

So within my view of the world what are some key skills that people need to be leaders? I have chose four skills, that is by no means comprehensive:

Situational awareness

In a world where there are many more interconnected and moving parts, then we need better strategic understanding. What I mean by situational awareness is a detailed understanding of the various components of your sector or industry . It also encompasses a clear eyed view of where those components may be changing. Two of the models that we use for thinking about these things are Carlota Perez’s work on Technological Revolutions and Financial Capital, and Simon Wardley’s work on mapping.

Perez’s view is that there are clearly identifiable 50-60 year cycles of technological, financial and social change. Thinking about where we are in the current cycle can help us understand more about what strategic decisions we should be taking. These cycles run from technological revolution to a financial bubble, to collapse, to a golden age and then to political collapse. The five that she identifies are The Age of the Industrial Revolution, The Age of Steam and Railways, The Age of Steel and Electricity, The Age of Oil and Mass Production, and The Information Age.

Simon Wardley takes a more granular view while stil looking at cycles and movement. Simon posits that all technologies and practices move from their original genesis, then to custom built, then to product, and finally to utility or commodity. While this is a gross oversimplification of his work, understanding where each part of your value chain is is located within a map of this framework, and where it may be headed allows you to better understand where significant change may occur. He is writing a book on the subject and all the chapters are on Medium. I highly recommend you go read them.

 

 

Scepticism

I mean scepticism in its best possible meaning: questioning assumptions and evidence. This skill is vital when thinking about models. This is because all models are incomplete and inadequate representations of the real world . They are more useful when viewed with a sceptical eye. I can best express this in the statement:

Strong Views Weakly Held

For example if we look at Carlota Perez’s work it is clear that the cycles she has described are social constructs. Each occurred under a different set of political, technological and social  systems. It is also clear that 4 or 5 cycles, even if taken as true, are not a clear body of evidence of some sort of immutable laws in human society over time. So use models, think deeply about them but always with a sceptical eye.

 

The capacity to deal with uncertainty

The reality of the modern world is high levels of uncertainty. In my work I experience clients seeking to find certainty in the midst of uncertainty. An example is people trying to create scenarios in spreadsheets with probabilities attached to them. These sorts of reductionist approaches reduce the capacity of organisations and individuals to take effective action. They create an inherent disconnect between the organisations’ strategy and the real world they operate in.

While the scepticism I have described above is to some extent focused on making sure that we don’t take models as gospel, the capacity to deal with uncertainty is somewhat different.

The critical leadership skill here is the balance between acknowledging and working with uncertainty, while instilling confidence, purpose, and direction in the people around you. Different people have different needs in this regard. Some people want to dive into the uncertainty. Others just want to get on with the job. In a previous session with a Leadership Victoria year group there was vigorous debate on this issue. The room split down the middle. Half the room believed that it was their job to deal with the uncertainty. The other half believed that exploring the uncertainty with their staff was a critical responsibility.

 

The capacity to coach and stimulate networks

Networks and collaboration are a reality now in many organisations. The day of the strong visionary leader is ending, and the ability to lead and stimulate networks is critical. This applies both inside organisations and in collaborations between organisations.

 

 

I finished my presentation by analysing my relative strengths in those skills. I am pretty good at the situational awareness, and scepticism skills. I am less able in the dealing with uncertainty area, although better at work than in my private life. I am poor to average in network leadership skills. My main reason for that assessment is that the world has changed enormously in the last fifteen years. In that time I have been focusedon foresight and situational awareness when working with clients. It is a long time since I led an organisation on a day to day basis and network leadership skills in particular need deep and continual practice. The same applies to situational awareness and scepticism but I have been practicing those.

 

Paul Higgins

 

Background reading links for the participants:

The end of capitalism has begun

The End of the Capitalist Era, and What Comes Next

Is Capitalism Ending?

 

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My Favourite Applications

I was asked yesterday to do some guest lectures on the influence and future of web technologies to Digital Media, Education and Creative Arts university students. In some ways I  find that a bit daunting because they will have grown up with the web. It got me thinking about what to talk about and I guess a perspective from an old fogey who has lived through the changes is worthwhile. One of the things I get asked a lot after keynotes and workshops is what applications do I use and why?  I am getting a new laptop delivered today (maybe my last one ever because of tablet developments) and it got me focused on what were the first applications I would load on to it to get me going and to coordinate with my other devices and work colleagues. So here are my top web based cross platform technologies (after of course basics like a Chrome Web Browser)- in order of importance.

1/ Evernote

If I had to pick one application it would be Evernote as it has become the core of what I do.

We use it to store all of our environmental scanning material which then feeds into client work, keynote presentation preparation. For example we generally have a 3-6 month lead time for presentations so on top of our core scanning notebook I collect  cross links to the notes in our system under specific presentation titles to go back to once we start to put together a narrative

I use it to track project notes because I can record it on my desktop, my iPad and my android phone.

I use it for check-lists for travel for the same reason

The web clipper allows me to clip interesting articles and reports for about 30 minutes in the morning which then syncs effortlessly so I can read them on my iPad when travelling

I photograph workshop worksheets and maps and share those with clients afterwards.

The system allows export of all the data so we can keep offline back ups and get our stuff out any time that we want to.

Bets of all it is free although we pay for the premium version

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I pray every day that they stay as a stand alone business and do not get taken over by Microsoft especially.

2/ Drop Box

For those not familiar with it Drop Box allows you to place a folder on your hard drive and anything that is saved in there is synchronised to the cloud and then synchronised to any device you have the application loaded on to.

I use drop box to:

Share a folder with my farm manager so I can see his reports and back up database files any time that I want to from wherever I am

Share a folder with Kim our office manager so I can see all our scanned documents (which is most things) at any time

Keep all the images that we use for presentations so I can access them from any device for preparation.

Save a copy of keynotes before I travel to present (I am paranoid about not having a presentation work so I save one on the hard drive, one on a USB stick, a separate portable version on a different USB stick which I put in a separate bag, upload one to Prezi (see below), and download one from Prezi to my iPad)

Share client documents for workshops and project work

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3/ Kindle 

I no longer buy any non fiction books it printed version (I still like a printed book for fiction reading in bed and on planes and one of the people that prompted this post told me the other day he buys eBooks and prints them!!!)

The convenience of being able to carry so many books with me that I have notes in and being able to access that on desktop, iPad and smartphone is fantastic for me ( I mainly use the iPad). The convenience of having a book delivered to me 1 minute after making a  decision to buy it, and to have access to a much wider range of publications than I ever could locally is great.

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4/ ABC iView

This is more an entertainment one and local to Australia than a work one but we use it a lot. I rarely watch TV when it is on these days, preferring to time shift my viewing habits. iView works seamlessly and we use it a lot on the iPad either stand alone or plugged into the TV. It allows you to create a watch list and to watch programs and remembers where you were if you only watch part of a show. That is useful because I am often up well before Jo and Miles and watch a bit on my iPad while having breakfast.Image

5/ TweetDeck

I use TweetDeck more on my computer than I do on my iPad because I am not that keen on the iPad app and find it hard to integrate my overall workflow with it on the iPad.

I use Tweetdeck to organise my Twitter stuff and have several columns set up inside it than I find useful:

A Follow column which is for all the people I follow. This is too large a group to look at all the time but I try and dip into “the stream” 2-3 times a day for serendipity.

A mentions column to track where I am being mentioned and re-tweeted

A direct message column which is set up with a pop up notice so I can respond to people

A “my perspectives list” which is a core group of people I follow assiduously on a daily basis for scanning and information purposes If you want to see this – it is a public list at https://twitter.com/#!/futuristpaul/my-perspectives-list)

A scheduled updates list because we tend to queue tweets to get a spread over different parts of peopel’s day in different parts of the world and to manage workflow on our side.

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6/ Skype

Which we use all the time for internal communication and for travel, both on the laptop and on the iPadImage

7/ Prezi and Prezi Viewer

We use Prezi for all our presentations and I love using the Prezi Viewer application on my iPad because I present without notes and like to do multiple run through and rehearse presentations. Having it in a format the looks just like my presentation on my iPad allows me to rehearse multiple times on planes and taxis and hotel rooms and get the flow down pat. I usually give it one more run through just before going on.Image

8/ Carbonite

Carbonite is an on-line back up system. Like most people I am variable when it comes to making back ups and also wanted an offsite solution so that if we had a fire or a burglary we would be able to recover all our important data. It is a set and forget system that works in the background and backs up all the files that you designate and can be accessed from other devices. Image

9/ Got to Meeting

We use Go to meeting all the time for on-line internal collaboration meetings, for practice run through of presentations and for draft presentation checks with clients that want them prior to workshops or keynotes

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So there you go and it certainly demonstrates how integrated web services are to how we work these days.

I would be interested in any suggestions from others on their favourite applications that I should try.

Paul Higgins

Car Sharing about to Explode?

I wrote a post back in May on

The Mental Shift in the Collaboration Economy and Why it Matters to Everyone

The post is about how collaboration and sharing is taking off and specifically mentioned car sharing as a key example.

On Tuesday GigaOm had a notice up that GM was partnering with Relay Rides to allow users of OnStar to rent their cars out via a mobile app:

GM opens up OnStar with peer-to-peer car sharing service

This is the implementation of an announcement from back in October.

This is a big deal because it is about building services on top of existing installed technologies rather than people having to pay for new technologies.

It is also a big deal because OnStar has an installed user base of 6 million people which immediately gives the idea scale.

Our cars are one of our most expensive capital and operating budget items. In a time of financial uncertainty and risk a method which safely allows us to offset that cost by lending our car to a trusted social network may take off in a big way.

If that is the case then car makers better look out because they can throw out all their projections on future car sales.

The Mental Shift in the Collaboration Economy and Why it Matters to Everyone

I am a strong believer in the increasing strength of the collaboration economy where we share things and resources rather than own them or use commercial options.

On a personal basis we no longer have a second car. I use Flexicar here in Australia to get a car when I need it. This reduces our costs of car ownership, reduces the resources we use, and reduces the parking pressure on crowded streets in our neighbourhood. In addition I have used airbnnb quite a bit for travel, staying in other people’s homes and apartments at a lower cost but also for an improved experience.

There are two points that are interesting to me about how this might change the nature of how we make decisions and act together.

The first is that in the car sharing example it changes the decision point on costs. You no longer have the big decision to make on a major capital expenditure, but the main thing is that the cost gets transferred from a distant, annualised cost and is applied to the decision to do something at the time of making it. For example I am doing gym rehab for a broken leg and dislocated ankle that I suffered last year by being hit by a car while triathlon training. Previously I went to a YMCA gym around the corner but as that is closed for refurbishment I have to drive to another YMCA gym. Our first car is mostly unavailable during the week as my partner has to use it to get to work. Therefore every time I go to the gym in the share car it costs me $19.90 including petrol. Whilst previously I would just jump in the car and go, now I think about the cost every time I make a decision to go or not. Previously I was happy to have the second car sitting around most of the time at a cost of about $200 a week. Now I baulk at spending 10% of that to go to the gym. I still go because it is important to my health but moving the cost to the point of making that decision really makes me think about the value. The arrangement has certainly got me walking, cycling, and using public transport more which is a great thing.

The reason I am writing this post is that it got me thinking about the nature of decision making and value. If the collaboration economy grows it means more and more decisions are made at the point where we decide if they are valuable or not. That combined with increasing transparency and social media recommendation systems mean real value becomes even more important.

The second aspect of the collaboration economy is a longer term one. Systems like GetAround which supply technology for your car so you can rent it out to your social network are building user groups based on social interactions. As numbers grow these groups are going to become more powerful in our economy and move beyond just car sharing. They will put relentless pressure on prices for all sorts of things including tyres, petrol and insurance. Beyond that why will they stop at motor vehicle related products? For instance they provide a massive group that can decide to support a charity and make a huge difference to the mission of that charity. Due to their social nature they are likely to vote on what to support so true value and results will become far more important in the not for profit sector. I see these sorts of groups as the next generation beyond the current group buying sites like Living Social and Groupon. The key differences will be that they will be driven by the user base and their social nature rather than the core company. Therefore value and purpose will be more important to them. This will be a fundamental shift.

I would be interested in what people think. Meanwhile I am off to rehab in my share car

Paul Higgins