Month: May 2020

Facebook Commerce

Facebook have finally followed in the footsteps on their Asian competitors (e.g. WeChat) and just announced their big play to grab a slice of the accelerating global e-commerce market yesterday. And critically, provide some level of competition to the Gorilla out there (i.e. Amazon). 

Shops started rolling out on Facebook yesterday in the United States and they are set to come to Instagram this summer. With this launch coming during COVID-19, it means commerce and community can finally play nicely together and enable SMEs to better respond to any e-commerce opportunities presented by the pandemic. For many, the online and mobile channel is the only hope for survival.

According to a survey conducted by Facebook and the Small Business Roundtable, a third of SMEs have stopped operating and an additional 11 percent say they could fail within the next three months if the current situation continues.

Here are the highlights (according to Facebook directly):

  • In a live stream, CEO Mark Zuckerberg said expanded e-commerce would be important to begin rebuilding the economy while the pandemic continues. “If you can’t physically open your store or restaurant, you can still take orders online and ship them to people,” he said. “We’re seeing a lot of small businesses that never had online businesses get online for the first time.”
  • Businesses can now turn Facebook and Instagram pages into online shops. They also joined forces with Shopify, who recently released their Shop app, to allow merchants to leverage their shipping, inventory and fulfillment features. The aim is to help new shop owners and small businesses to leverage their existing audiences to compete with Amazon.
  • Shops can be found on businesses’ Facebook pages and Instagram profiles, and they can also appear in stories or be promoted in ads. Items that businesses have made available for purchase will appear within the shop, and users can either save items or place an order. (Some businesses enable users to make purchases directly on Facebook, while others will take you to the business’s website to complete the transaction.)
  • According to Facebook, Shops will improve on the standard web commerce experience by storing users’ payment credentials in a single place that they can then use on any Facebook or Instagram storefront.
  • Businesses can handle customer support issues through Messenger, Instagram, and WhatsApp. Eventually, the company plans to let you browse store catalogs and make purchases directly from the chat window. It also plans to enable shopping from live streams, allowing brands and creators to tag items from their Facebook catalogs so that they appear on the bottom of live videos.
  • The e-commerce ecosystem around this will hot up to help store owners. For example:
    • Elliot creates simple product landing pages with one-tap checkout 
    • Storr is for mobile commerce, so you can set up a store from your phone 

A few initial thoughts include the following:

  • While Shops are free to create, they could create significant new business opportunities for Facebook in advertising, payments, and other services. Businesses will be able to buy ads for their Shops, and when people use Facebook’s checkout option, it charges them a fee.
  • This shopping rollout will no doubt have big algorithm implications on Instagram and Facebook. Early reports are showing how a “shopping” tab might interact with the “activity” tab on Instagram to increase the focus on commerce for businesses and their followers. Soon I suspect you’ll see Shops appear in stories and promoted ads.
  • Facebook Shops will eventually be integrated with WhatsApp, Messenger and Instagram DMs, so you can browse store catalogs and make purchases through chats. The influencer marketing industry is set to benefit too as live streaming and shopping will be pairing up. 

Facebook has been dabbling in commerce for years. In 2016, it introduced Marketplace, a destination within the app for peer-to-peer buying and selling. Two years later, Instagram began working on a standalone shopping app, though it was later abandoned. Instead, last year, Instagram added in-app checkout.

Given the devastation caused to many traditional physical retailers by COVID-19, hopefully this announcement makes it easier for SMEs to reach existing or new markets (or better serve existing customers).

With billion+ global userbase of the Facebook ecosystem and ongoing pandemic, you would think it will be a slam dunk. That said, I don’t think Jeff Bezos will be having any sleepless nights. But it will be interesting to see how it goes in these E-Commerce Wars. 

6 Ways To Make Digital Investments More Successful

Recently I posted here about how organisations can go back to basics and understand what digital really means. In the context of today’s rapid acceleration of digital and IT investments to support remote or new ways of working – from cloud to SaaS tools to desktop VC solutions – this is critical to understand.

Another key fact to consider is that some of the most successful companies ever were started during or just after times of crisis (e.g. GE, GM, IBM, Disney, Facebook).

For leaders who can seize the ‘re-set’ opportunity this crisis provides – and start to engage with more long-term, future-focused, and exploratory strategic planning with digital at the core – this presents a potentially game-changing moment.

This presents a critical question: how should firm’s approach and organise to make digital or innovation investments and transformations successful?

Whilst there is no playbook, below I pull together a number of perspectives from some of the world’s leading management thinkers and practitioners on strategy, digital, innovation and change.

The Challenge

Digital transformation is extremely complex and requires new ways of approaching strategy. Starting big, spending a lot, and assuming you have all the information is likely to produce a full-on attack from corporate antibodies—everything from risk aversion and resentment of your project to simple resistance to change.

  1. Start Small, Think Big

Professor Rita McGrath calls this ongoing learning approach to strategy: discovery-driven planning (DDP). It was developed in the 1990s as a product innovation methodology, and it was later incorporated into the popular “lean start-up” tool kit for launching businesses in an environment of high uncertainty. At its center is a low-cost process for quickly testing assumptions about what works, obtaining new information, and minimizing risks. According to Rita:

By starting small, spending a little on an ongoing portfolio of experiments, and learning a lot, you can win early supporters and early adopters. By then moving quickly and demonstrating clear impact on financial performance indicators, you can build a case for and learn your way into a digital strategy. You can also use your digitization projects to begin an organizational transformation. As people become more comfortable with the horizontal communications and activities that digital technologies enable, they will also embrace new ways of working.

2. Soft and Hard Facts About Change

Managing change is tough, but part of the problem is that there is little agreement on what factors most influence transformation initiatives. Ask five executives to name the one factor critical for the success of these programs, and you’ll probably get five different answers.

In recent years, many change management gurus have focused on soft issues, such as culture, leadership, and motivation. Such elements are important for success, but managing these aspects alone isn’t sufficient to implement transformation projects.

According to consultants from BCG in an Harvard Business Review article entitled The Hard Side Of Change Management:

What’s missing, we believe, is a focus on the not-so-fashionable aspects of change management: the hard factors. These factors bear three distinct characteristics. First, companies are able to measure them in direct or indirect ways. Second, companies can easily communicate their importance, both within and outside organizations. Third, and perhaps most important, businesses are capable of influencing those elements quickly. Some of the hard factors that affect a transformation initiative are the time necessary to complete it, the number of people required to execute it, and the financial results that intended actions are expected to achieve. Our research shows that change projects fail to get off the ground when companies neglect the hard factors. That doesn’t mean that executives can ignore the soft elements; that would be a grave mistake. However, if companies don’t pay attention to the hard issues first, transformation programs will break down before the soft elements come into play.

3. Breaking Down the Barriers

According to a 2019 article from the partners from Innosight, a critical reason for businesses failing to get the impact they want is because they’ve failed to address a huge underlying obstacle: the day-to-day routines and rituals that stifle innovation.

Shifting+the+Culture+Iceberg

Innosight Partner Scott Anthony talks further about this below:

4. A Systematic Approach

A study by McKinsey here of leaders post-transformation has shown there are 21 best practices for organisation’s to implement to improve the chances of success.

These characteristics fall into five categories: leadership, capability building, empowering workers, upgrading tools, and communication. Specifically:

  • having the right, digital-savvy leaders in place
  • building capabilities for the workforce of the future
  • empowering people to work in new ways
  • giving day-to-day tools a digital upgrade
  • communicating frequently via traditional and digital methods

One interesting best practice was that firm’s who deploy multiple forms of technologies, tools and methods tended to have a great success rate with transformation (see below).

This might seem counterintuitive, given that a broader suite of technologies could result in more complex execution of transformation initiatives and, therefore, more opportunities to fail. But the organizations with successful transformations are likelier than others to use more sophisticated technologies, such as artificial intelligence, the Internet of Things, and advanced neural machine-learning techniques.

The full list of success tactics are below with the full article is here.

Out of 83 practices that were tested in the survey, the following are those that best explain the success of an organization’s digital transformation:

  1. Implement digital tools to make information more accessible across the organization.
  2. Engage initiative leaders (leaders of either digital or nondigital initiatives that are part of the transformation) to support the transformation.
  3. Modify standard operating procedures to include new digital technologies.
  4. Establish a clear change story (description of and case for the changes being made) for the digital transformation.
  5. Add one or more people who are familiar or very familiar with digital technologies to the top team.
  6. Leaders engaged in transformation-specific roles encourage employees to challenge old ways of working (processes and procedures).
  7. Senior managers encourage employees to challenge old ways of working (processes and procedures).
  8. Redefine individuals’ roles and responsibilities so they align with the transformation’s goals.
  9. Provide employees with opportunities to generate ideas of where digitization might support the business.
  10. Establish one or more practices related to new ways of working (such as continuous learning, open physical and virtual work environments, and role mobility).
  11. Engage employees in integrator roles (employees who translate and integrate new digital methods and processes into existing ways of working to help connect traditional and digital parts of the business) to support the transformation.
  12. Implement digital self-serve technology for employees’ and business partners’ use.
  13. Engage the leader of a program-management office or transformation office (full-time leader of the team or office dedicated to transformation-related activities) to support the transformation.
  14. Leaders in transformation-specific roles get more involved in developing the digital transformation’s initiatives than they were in past change efforts.
  15. Leaders in transformation-specific roles encourage their employees to experiment with new ideas (such as rapid prototyping and allowing employees to learn from their failures).
  16. Senior managers get more involved in digital initiatives than they were in past change efforts.
  17. Leaders in transformation-specific roles ensure collaboration between their units and others across the organization when employees are working on transformation initiatives.
  18. Senior managers ensure collaboration between their units and others across the organization.
  19. Engage technology-innovation managers (managers with specialized technical skills who lead work on digital innovations, such as development of new digital products or services) to support the transformation.
  20. Senior managers encourage their employees to experiment with new ideas.
  21. Senior managers foster a sense of urgency within their units for making the transformation’s changes.

4. Execute AND Innovate

For any followers of the work of the late Professor Clayton Christensen on Disruptive Innovation (view his HBR collection of popular articles here), this is a fundamental challenge for almost every established firm which often becomes a matter of survival during industry, business model, technology or other shifts.

According to Alex Osterwalder:

This continues to be one of the biggest challenges we see companies face: to create two parallel cultures of world-class execution and world class innovation that collaborate harmoniously.

Watch this video here to read more about how leaders can overcome this challenge.

5. Constant Learning

In a constantly evolving landscape, it is critical for leaders to keep learning and evolving their thinking and tool-sets for strategic planning, crisis management, innovation, problem solving, and other business processes.

There are lots of sources out there (including those mentioned above), but below I provide a few great ways I do this (NB I am not formally affiliated with any of these organisations):

Strategy Upskilling:

Thought Leadership

Webinars

Podcasts:

Startups

  • Techcrunch
  • Crunchbase

Summary

There are a number ways to improve the thinking and planning of the approach to digital investment strategy. This not only improves the chances of benefit realisation and achievement of strategic goals, but in the current time of crisis, can set up the firm for long-term success.

Whilst there is no playbook for leaders, these initial set of resources can help organisations to refocus current thinking and initiatives during these extraordinary times.

In summary, the themes were:

  1. Start Small, Think Big
  2. Soft and Hard Facts Of Change
  3. Break Down The Barriers
  4. Systematic Approach
  5. Execution AND Innovation
  6. Constant Learning

 

Rethinking Education and Learning

“Direct to learner” (DTL) business models and start-ups that leverage online, mobile, AI and other technologies have been an area of much focus within the ‘Edtech’ sector for over a decade.

The late Professor Clayton Christensen had made the topic one of his core areas of focus in the last decade of his life with books including Disrupting Class and The Innovator’s University. 

Companies like Coursera, Udemy, Duolingo, Quizlet, Skillshare, Codecademy, Outschool and Lambda are just a few examples. 

Just this sample reaches hundreds of millions of learners all around the world each month. Many learners use these products for free. A small percentage of learners pay. And yet this portfolio will generate close to a half a billion dollars of revenue in 2020.

Another interesting thing about this portfolio is that none of these companies have spent a lot of capital building their businesses. They have all been very capital efficient and most are cash flow positive at this point.

So, what?

  • Direct to learner businesses are obviously very attractive for consumers and investors
  • They can serve a very large number of learners very efficiently
  • They can lightly monetize and yet produce massive revenues because of their scale
  • They don’t require a huge amount of capital to build

As they are competing with a sector which broadly, looks exactly the same as it did 100 years ago (schools, universities, training), the current pandemic will massively accelerate significant structural changes in the way people and companies learn, train and educate. 

The University segment in particular is in for a massive shock. I can’t see as much change happening in junior schooling (e.g. ages 3-7) mainly as the main job that these bodies do is child-care. I’m currently parenting a 3 and 4 year old and this is the main reason why I’m sweating on schools (safely) re-opening soon. 

I’ll share further thoughts on these topics in later posts.  

 

The Future of Management

I’ve just read a great interview with management guru Charles Handy here.

Here is a great quote from that interview:

“In this disentangled world, people try to talk about agile management as a solution but management is the wrong word. It only makes sense when it is applied to things; you can manage a communication system, you can manage resources, but you can’t manage people.

Management is about making sure that people have the right ammunition to fire the Kalashnikov; leadership is about making sure they use it for the right purposes and don’t shoot their team” – Charles Handy

One core question might be this: Is there still a place for management as we knew it, and if so, what does it look like going forward? This is what most leaders, consultants, management thinkers and more are questioning at the moment.

I’m working on some perspectives so I’ll be sure to share them here soon.

 

How Airbnb Cut 25% of Its Workforce

Every day we have been witnessing examples of great leadership (or not so great). On its face, the approach to layoff 25% of Airbnb’s workforce – which until the crisis was on track for a bumper IPO – seemed like another one of those great examples.

However, the coverage has been both supportive and negative. Without going into the detail of it, my initial thoughts are that if there was ever a ‘classy’ way to do this, this was it. 

You can read the full statement from CEO Brian Cesky here and judge for yourself. 

 

What Digital Really Means

“Everyone wants to go digital. The first step is truly understanding what that means” – McKinsey

I was talking to a COO of an off-shore investment bank yesterday and he mentioned something which gave me the impression that his bank did not understand what ‘digital’ really meant. According to McKinsey:

For some executives, it’s about technology. For others, digital is a new way of engaging with customers. And for others still, it represents an entirely new way of doing business. None of these definitions is necessarily incorrect. But such diverse perspectives often trip up leadership teams because they reflect a lack of alignment and common vision about where the business needs to go. This often results in piecemeal initiatives or misguided efforts that lead to missed opportunities, sluggish performance, or false starts.

As COVID-19 continues to rapidly accelerates the shift to building more digital capabilities within organisations, it is a critical time to take a step back and reevaluate existing efforts in light of the new challenges ahead. This means properly understanding what digital means, assessment of existing efforts, aligning to future strategy, and identifying what capabilities are needed across leadership, culture, and execution.

Whilst extremely hard, now is the best time to refocus efforts toward accelerating digitisation as the case for such change is for some a matter of survival. Think about how many food and other retailers are rapidly shifting to e-commerce models requiring new skills, software, tools and mindsets.

You can read more on this from McKinsey here

 

Reimagine The Future Online Conference

This Reimagine The Future virtual conference starts today and I have signed up for it.

It is being run by Thinkers50 and Outthinker and features 24 top management experts doing 24 sessions in 24 hours including Renee Mauborgne (INSEAD and Blue Ocean Strategy), Scott Anthony (Innosight), Daniel Pink, and Hal Gregerson. Recordings of every session will be available on-demand so there’s no need to be live.

All profits are going to a range of charities involved in COVID-19 relief. You can access tickets here.

Turbocharging Legal Industry Transformation

“COVID-19 will produce a thinning of the herd and a reimagined legal industry” – Mark Cohen

Last Thursday I watched a great online webinar run by LegalGeek entitled ‘An Uncertain Decade’. Legal sector experts Mark Cohen and Richard Susskind ran the sessions. Whilst I have read various thought leadership from each expert, it was the first time I had seen either speak. Not surprisingly, they both were very impressive in both domain expertise and thoughtfulness around their points of view.

Here are some key takeaways (along with my thoughts):

  • Disruption: COVID-19 will dramatically turbocharge legal industry transformation which has been slowly accelerating since the 2008 Financial Crisis. This may not be that surprising to many outsiders, however many lawyers – including those in Generation X – still tend to be conservative when thinking about competition, new technologies, business models, and structural market changes. Transformation and disruptive models and services will continue to come from outside traditional law firms. Whilst Disruptive Innovation theories of Professor Clayton Christensen were not referenced, his work on how established firms often are disrupted by low-end entrants who move up-market over time, will provide insight as to why and how this is happening within the legal sector (click here for his articles from Harvard Business Review).
  • Innovation: Enterprise clients and consumers will continue to drive the shift away from bundled services toward a more productised, customer-centric mode of consumption at scale which leverage new technologies, business models, and regulatory changes. This has already been happening to some extent ‘around the edges’, and facilitated by ABS models in the UK (whereby retailers (e.g. Co-Op), real estate agents, insurers and other firms can compete head-on with traditional legal practices with their own legal services ventures). DoNotPay in the US was cited as a recent example of a start-up which has over 100 use cases of dispute resolution services (e.g. fight a parking ticket). A new and current use case in the US for them has been to make it easy, cheap and convenient to file unemployment and other worker claims.
  • Unbundling: The impending depression driven by COVID-19 and resultant cost pressures for clients will accelerate the shifting of lower value, high-volume work to more flexible, alternative providers (e.g. LPOs, ABS Licensed Firms, Big4, Axiom, UnitedLex etc) and digital platforms (e.g. DoNotPay). This will continue to enable these players to move further up-scale into higher-value, more complex work and jobs. This is how the Indian IT outsourcing firms managed to make significant in-roads against Accenture, IBM and others in the 2000s, and how Toyota managed to become a US car manufacturing leader with its low-cost model US market strategy. Over the coming years, the legal industry will continue to rapidly fragment beyond traditional structural boundaries to incorporate a much bigger share for alternative providers (which will grow rapidly at the expense of incumbents), but significant new markets will be created especially for those consumers (i.e. non-consumers) who historically have never able to access low-cost, convenient legal services;
  • Business Models: A next generation of technology-enabled service providers (e.g. FisherBroyles) will gain rapid scale over the next decade in the same way as FinTechs have within Retail Banking. Continued experimentation by established law firms (e.g. non-legal services diversification, in-sourcing IT, new product development etc) and further consolidation within and amongst traditional law firms and alternative services providers, vendors and legaltechs unable to re-capitalise or scale. Large traditional law firms with the foresight and capital to invest over the coming years will likely continue to struggle to properly allocate resources and organise these innovative models efficiently and effectively within the established firm.
  • Online Dispute Resolution: COVID-19 has provided an MVP to as legal systems and courts globally have had to re-think how to deliver this. According to Mark Cohen:

The inaccessibility, cost, formality, abstruse rules, and protracted processes of courts in their present guise is misaligned with life in the digital age. The urgency of modernization is unprecedented. Courts around the world have ground to a halt when demand for accessible, efficient, and widespread administration of justice is desperately needed.

  • Education: Law Schools have not really changed their content, formats or approach to skills in over 40 years. Combined with EdTech disruption, providers will be under significant pressure to change in line with industry and client demands. Traditional JD/LLB’s offered by mid-market schools in the short-term will see massive disruption and closures, whilst the degree as it stand may become a more commoditised requirement, augmented by other specialty courses run by others or industry. Clearly, now is the time for online law ‘degree’ or course models, assuming the solicitor/lawyer regulatory boards provide approval (if they haven’t already)
  • Training: Traditional insistence of a junior being trained up or supervised by a senior lawyer/partner will be turned on its head. Assuming a longer-term shift to more remote working for a large number of the workforce and demand for more multi-skilled lawyers (e.g. project management), training for juniors (and all staff) will need to be redesigned.

In a recent Forbes article here, Mark Cohen concludes the following:

The old guard will cling to the hope these are temporary changes. They will point to the recession precipitated by the 2008 global economic crisis and suggest the current one will take a similar course. This time  is different. Technology and new delivery models are far more advanced than they were in 2008. Consumers have a different mindset and a greater urgency to solve a growing list of complex challenges. The potential of technology and its ability to support new models, processes, and paradigms is already on display. The genie is out of law’s bottle, and it will not return.

Opportunities for Law (and other) Firms

Interestingly, there wasn’t too much discussion on this during the webinar. For me, Disruptive Innovation theory might provide some guidance for any progressive law firms who wish to take on the inevitable structural and business model disruptions described above. I’ll save this analysis for another post soon.

 

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