Strategic Reset.
The Future Does Not Fit in the Containers of the Past.Edition 266.
Strategy is “future competitive advantage”.
What will the people we sell to need in the future?
Who will we be competing with in the future?
Given these people needs and competitors what advantage will we provide?
A case can be made that every organization and every individual who has not updated their strategy in the past three years must do so with urgency because we are seeing the contours of the future shift dramatically.
1.People expect more.
It is clear that people in addition to wanting things better, faster and cheaper as they have always done, are now placing a premium on solutions, expect accessibility of everything, everywhere, every time and in every form, values ( companies and people that align with their passions and leanings) and experience ( service, impact, memorability).
Its not just BCF ( Better Cheaper Faster) but now also SAVE (Solutions, Accessibility, Value and Experience)
2. Old assumptions are less true.
Many of the assumptions that underpinned strategy have not only shifted but, in some ways, the exact opposite of what firms believed is coming true.
Here are just a few “beliefs” that now need to be queried:
a) Expanding populations: When calculating “Total addressable market” or “rate of growth” most companies factored in growing populations.
Now the exact reverse is beginning to happen. Populations have started to decline in most advanced economies at a frightening rate. Outside of 7 countries in the world, population is either flat or in decline. This year the US may have its first decline in population. It takes 2.1 children per woman to keep the population the same and the number today is 1.6 in the US with the rest being made up by immigration which is now going in to reverse. In 2025 there will be 2. 5 million fewer immigrants coming into the country versus year ago. If immigration remains curtailed population will decline by tens of millions in the next two decades. To see the future look at China ( 1.1 children per woman) or Korea ( .8 children per woman) where there is excess housing, closing down of schools and replacement of toy stores with pet stores. GDP growth is often co-related with population growth.
b) Scale is a competitive advantage: While scale still matters it matters far less than ever before (except for a few businesses like funders of Large Language Models, Data Centers, Chip Manufacturing, Pharmaceuticals and a few others where it matters even more).
The very nature of what is scale is changing with many old forms of scale being competitive disadvantages!
Scale of Distribution: With direct to consumer marketing enabled by the Internet and platforms like Shopify, widespread retail distribution is no longer as effective an advantage outside of a handful of companies like Walmart.
Scale of Communication: New media behaviors by people particularly search and social are leading to communication channels where spending power is less aa competitive edge as it was in television or print where marketers cornered key inventory at advantageous prices. Now as we enter an Answer vs a Search economy we can anticipate greater shifts.
Scale of Manufacturing: The “Everything as a service” platforms from Amazon Web Services to Foxconn allow smaller companies to gain the edges of scaled manufacturing, distribution and technology without any of the legacy disadvantages of size.
Scale of People: From IBM to Unilever to GM who have hundreds of thousands of employees and therefore have the ability to recruit and grow a range of talent and offer career advancement. Scale of people continue to be important to execute complex and large tasks but there are also new ways to re-aggregate talent. And a generation of talent wants to work in smaller and more entrepreneurial environments. The new metric is revenue per employee versus number of employees.
Today AI further reduces most of these advantages with AI accessible at $20 to $200 a month providing small firms (David) with access to knowledge, expertise, production and much more as a slingshot to compete with large firms (Goliath)
In addition to the diminishment of legacy scale which allows for new entrants, there is also a rise of new types of scale that are becoming increasingly important.
Scale of Data: Increasingly companies are realizing that collecting, refining and leveraging data is what is driving the modern fast growing and highly valued companies from Amazon to Google to Uber.
Scale of Networks: On the Internet network effects play a dominant role in creating winners. Dominant platforms such as Google, Meta, Netflix, TikTok enjoy flywheel effects of more users attracting more users and therefore marketers and businesses.
Scale of Influence: Today individuals have tens of millions of TikTok followers or leverage X to reach hundreds of millions of people with single post and tweet. Podcasts and Substack are allowing talent to unhook themselves from companies. If you look at scaled entities on social media, they are individuals and not companies.
Scale of Talent and Ideas: One of the lessons of history is that every advance in technology places a premium on superior talent. Technology is a lever and great talent can have major scale effects. AI is the ultimate lever for talent.
c) Work and Jobs are the same thing: The rise of marketplaces from Fiveer to Upwork, from Shopify to Etsy, from Uber to Amazon have allowed individuals to access opportunities and offer services and products in a scaled global way from their mobile devices. Add the acceleration of work from anywhere made possible by distributed work and now the removal of barriers to knowledge or talent (agents, free-lance, fractionalized employees) and the biggest shift which almost no company is prepared for is underway. 67 percent of Gen Z with a full time job have a side hustle or side gig with which they make money and whether they are forced back to the office or not they are preparing for next. In fact forced mandates to return to the office is increasing their urgency and reason to seize their future with the best talent who have the most options being the first to peel off.
Work can be done without filling a job.
Work and jobs are uncoupled.
Most companies are organized around jobs vs work. Most companies believe most of the work is done by full time employees at places they go to versus most of the work is done outside the organizations by a combination of different talent and agents they access.
Implications for Companies.
a) Some of greatest opportunities and threats come from outside ones category when consumer, technological and nature of work change: Uber and Tesla came from outside the automobile industry. The big winners of the next generation will be companies we have never heard of. Today Morgan Stanley is challenged by Robinhood, Adobe by Figma, many companies by Open AI. If strategy is future competitive advantage it is critical to look outside ones current competitive set.
b) Run Schizophrenic Models: If one looks at the next generation of challengers one will find many of these companies to be a) AI first, b) Talent anywhere, c) Plug and Play, d) Ultra fast.
It will be very difficult to take a company that is very successful today to reinvent itself fast enough by trying to make the changes within. Instead a company should take a significant portion of its best talent, provide them with access to all the resources of the company and ask them to create the next version of the company. This way the new unit while connected to the mother ship is not burdened by existing Client demands, processes, business models and ways of making money. And the existing business focuses and optimizes the current business model to maximize cash flow and minimize distraction to help fund tomorrow. The existing business not only learns the new methods, retains talent that may want to go to start-ups or new opportunities but also then begins to assimilate the best of the new innovations and bring back the talent they exported as they scale
Implications for Talent.
a) Prepare for a completely different landscape by 2027 : Knowledge will matter less as it can be accessed on demand for $20 a month. Experience gets less important as the ability to unlearn and learn becomes key.. Almost everything that one does that can be done better by AI will be, and if one cannot build new skills to work alongside AI one’s career regardless of level will be at risk. The possibility that a full time job will be replaced by a main job that provides cash flow and insurance ( fractionalized employee) plus a number of other gigs will be the dominant form of earning an income however scary and improbable it sounds.
b) Seize the future of your career with urgency and do not delegate it to others: Carrie Underwood asked Jesus to take the wheel but when it comes to a strategy for one’s livelihood and future we need to take the wheel. Please remember that HR works for the company that you work for and does not work for you.
Hone skills. Build a reputation. Plug into networks. Launch the side gig. Up skill. Now.
Learn to become A Company of One ( A series read by hundreds of thousands that prepares one step by step to be one’s own future navigator). By learning to operate as a company of one allows us to have a long career in a company of tens of thousands. Not doing so will make us a company of one even if we do not want to be one or are not prepared.
Learn how people are forging and preparing for the future of work via the Rethinking Work Show.
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