the new future | 2014 global leadership summit

The New Future: How the Technologies

of the Social era are Changing the Way

we do Business

Professor Costas Markides

London Business School

Lots of Changes:

• The technologies of the social era are changing our employees as people.

• They are also changing how our employees work.

• They are also changing our customers as people and how they shop.

• They are changing how we can market to them.

• They are changing the internal processes of the organisation.

• They are changing the nature of competitive advantage

• They are allowing the emergence of several new business models

• And so on…

The First Change:

The new technologies are changing our

employees as people: how they think, how

they behave, how they work, what

motivates them, what their values are…

Your Employees Are Now:

• Less attentive

• More Informed

• Less Loyal

• More Connected

• Less Patient

• More Demanding

The Evidence:

Allow me to substantiate some of these

claims…

For Example: Research by Professor Gary

Small, UCLA 1. Surfing the internet can physically rewire our neural pathways

2. Just 5 hours of exposure to the net is enough to change the structure of

our brain.

3. The internet is altering our brains:

• Cursory reading

• Hurried and distracted thinking

• Superficial learning

• Attention span reduced to seconds

Less “Loyal”:

1. Survey done at London Business School on

young executives (avg. age 30).

2. Q: How long do you anticipate staying with your

current employer?

The Results #1:

• 37% expect to stay for less than 2

years…

The Results #2:

• 90% of them intend to stay with their

current employer for no more than 5

years.

Similar Results from the USA:

• The US Department of Labor estimated

that today’s learners (that is 18-year

olds) will have 10-14 jobs…

Less Loyal:

• The US Department of Labor estimates

that today’s learners will have 10-14 jobs

by the age of 38.

There is no question:

• Talent is now “less loyal”, more mobile, less

constrained and more willing to “jump ship”

• The Elephant (= our parents) versus the fleas (=

Generation Y)

Despite This:

• People keep asking the wrong (20th

century) question: “How can I attract the

best talent to my organisation?”

It’s the Wrong Question:

• The key is not “how to attract the best talent”?

• The key is “how do I retain the best

talent?”

Therefore:

• How do you retain the best talent?

• Sumantra Ghoshal: “tear up this

envelope”

It Gets Worse:

• Today’s employees are not only “less loyal”.

• They are also more connected, more informed, more

mobile, more global, more “out of control”…

More Connected:

• Which thing in your life can you not live

without?

More Connected:

• I cannot imagine life without:

• My current partner: 43%

More Connected:

• I cannot imagine life without:

• My current partner: 43%

• A car: 64%

More Connected:

• I cannot imagine life without:

• My current partner: 43%

• A car: 64%

• The Internet: 84%

More Connected:

• I cannot imagine life without:

• My current partner: 43%

• A car: 64%

• The Internet: 84%

• My mobile phone: 97%

More Connected: Nomophobia

• 53% of people in Britain suffer from

nomophobia

What is Nomophobia?

• Nomophobia: The fear of being out of

phone range…

More Informed:

• It’s been estimated that one week’s worth

of NY Times contains more information

than you got in your entire lifetime in the

18th century.

More Informed:

• In 2006, there were 2.7 billion searches

on Google every month.

More Informed:

• In 2006, there were 2.7 billion searches

on Google every month.

• In 2012, the number was 31 billion (every

month)

More Global Citizens: • Get to learn what is happening around the world

fast…

• More likely to engage in a “cause” far away from

home.

• Have become more sensitive to other cultures…

Less patient: The “Now” Era

• Instant Messaging

• Instant Feedback

• Instant Gratification

• Instant Information

A New Employee

• I could go on here…

• But the key point is: You are now dealing with

employees (and customers) that are

fundamentally different from us or our

parents.

Therefore, to Repeat:

• Change #1: The new technologies are changing

your employees as people: how they think, how

they behave, how they work, what motivates

them, what their values are…

Your Employees Are Now: • Less attentive

• More Informed

• Less Loyal

• More Connected

• Less Patient

• More Demanding

The Second Change:

• Not only are the new technologies

changing our employees as people, but

they are also changing how they work.

Decentralised Workaholics:

• When do you stop work?

Work All the Time:

• 72% of Europeans take their mobile phones or iPads

to bed!

• The last thing they see before falling asleep and the

first thing they check when they wake up is news…

More Informed Workaholics:

• 93% of executives take their blackberries

on vacation.

• (data provided by RIM)

Interestingly:

• 93% of executives take their blackberries on

vacation.

• 47% tell their partners that they left it at

home.

The Hierarchy is Dead:

• Decentralised: Work from home, at the

airport, at Starbucks…

For Example:

• In 2009, it was estimated that over 50 million US workers

(40% of the working population) worked from home at least

part of the time.

• The forecast is that this number will jump to more than 75%

by 2020.

The Hierarchy is Dead: • Decentralised: Work from home, at the airport, at

Starbucks…

• Virtual Teams, Geographically-dispersed giving rise

to the Network Organisation…

The Hierarchy is Dead:

• Decentralised: Work from home, at the airport, at Starbucks…

• Virtual Teams, Geographically-dispersed giving rise to the Network

Organisation…

• From employees to Co-Creators: working with outsiders (non-

employees) on common projects

The Implications:

• We now have to deal with people who have

different expectations, behave differently

and work in decentralised and networked

environments…

Two Questions:

• How do we motivate these people?

• How do we “control” these people?

Possible Answers?

• I don’t pretend to have all the answers but I

know one thing for sure…

How to Motivate Gen Y:

• Increasingly, we will have to rely less and less on

money to motivate people and more on

“emotional” rewards:

• A motivating sense of purpose

• A unique and special culture

For Example:

• According to research at Princeton University,

more than 85% of young people claim that the

No. 1 thing they look for in their job is…

What is it they want?

• Meaning and a sense of purpose.

• Why am I working here?

Therefore:

• Organisations will have to rely more and more on a

strong and shared Sense of Purpose to attract and

galvanize the best people to the organisation.

For Example: • Facebook: Give People the power to share and make

the world more open and connected.

• Apple: We will change the way people think of

computers (or music or TV or news…)

But Please Note:

• It is “strong” because you actively sold this

purpose or vision to them and won their

emotional commitment.

Similarly:

• The same thing applies to the question:

“How do we control these people?”

The Wrong Thing to Do:

• You cannot “control” the new employee…[for example, how do

you know if they are working or are “wasting time” on

Facebook?]

• And you certainly cannot “control” them with rules and

regulations.

How Then?

• Exactly how you “control” your children…

• Strong shared values as the “control” mechanism

(rather than rules and regulations).

But Note:

• They are strong because you actively “sold” these

values to them and won their emotional

commitment.

• Move your values from the wall to people’s hearts.

A Key Question in all of this:

• Do we have the right people for this?

• Gen X leaders trying to manage Gen Y

employees using “emotional” benefits?!

The Third Change: • The same changes are affecting our customers.

• They too are becoming less attentive, more

demanding, less loyal, more connected, more

informed.

• As a result…

As a result:

• Not only are the new technologies changing our

consumers as people, but they are also changing

how they shop, how they buy and what they expect

from you and your products.

For Example:

• Digital Natives: More and more online

shopping (which is killing the high-street).

Online Shopping

• Companies have of course noticed this trend

towards online shopping.

• They have therefore tried to make the online

shopping experience easier—further fuelling its

growth.

Technology: Online Product Presentation—

Today’s Must-Have Standard Options

Technology: Online Product Presentation –

Today’s Must-Have Standard Options

Technology: Online Product Presentation

Trends – Interactivity

Sub

title

Technology: Online Payment Trends

The Result

Sub

title

The Result: A New Organisation Needed

Yesterday’s Functions Today’s Functions

• Sales Manager • eCommerce Manager

• Field people • Social Media Manager

• Trade Marketing Manager • Content Manager

• Promotion Manager • Web Designer

• POS Manager • Online Promotion Manager

• SEO & SEM Specialist

Not only online but mobile as well:

1. More and more online shopping (which is

killing the high-street).

2. More and more mobile shopping

Are you a Mobile Shopper?

• Percent of people who have done mobile shopping

on smart phone or tablet (USA, 2012)

Yes: 79 %

No: 21%

Sub

title

Web Traffic for a German Online Retailer

Jan- Feb 2013 Jan – Feb 2014 %

PC 4.1 m 3.6m -13%

Tablet 0.7 1.2 +71%

Smartphone 0.7 1.6 +130%

Tablet and

Smartphone as a %

of total

25% 44%

Digital, Online and Fully Informed

• More and more online shopping (which is killing the

high-street).

• More and more mobile shopping

• Much more informed consumers

A Helping Hand • (US smartphone owners who have used their device

to find a better price while shopping in store)

• 2009: 15%

• 2010: 40%

• 2011: 59%

Where do Consumers search first?

Q2 2009 Q2 2012

Amazon 13% 30%

Google 24% 18%

More Informed and more Agile:

• More and more online shopping (which is killing the

high-street).

• More and more mobile shopping

• Much more informed consumers

• Using technology to aid shopping

Search One Way, Buy Another (Oct 2011)

• Search on the PC and then buy in the store: 57%

• Search in store, buy online: 38%

• Search on Mobile, buy on the pc: 26%

• Search on Mobile, buy in store: 24%

Reliant on Word of Mouth: • More and more online shopping (which is killing the high-street).

• More and more mobile shopping

• Much more informed consumers

• Using technology to aid shopping

• More reliant on social media and recommendations from

strangers

Sub

title

How do You Buy Now?

Generation X Generation Y

I rely on recommendations from friends and

family 66% 49%

I rely on reviews by strangers and chatter

on social media 62% 79%

More Demanding, Less Forgiving: 1. More and more online shopping (which is killing the high-

street).

2. More and more mobile shopping

3. Much more informed consumers

4. Using technology to aid shopping

5. More reliant on social media

6. More vocal

The Implication: • Every single interaction with a customer has the potential to be

either a global PR disaster or a PR triumph for us.

• How do we ensure that every employee (not just Marketing

people) deliver excellent customer service, anytime, anywhere,

all the time?

The Only Way Forward:

• Customer-centric behaviors have to be

institutionalised in the culture of the

organisation…

The Fourth Change:

• Not only are the new technologies changing

our customers as people, and how they shop

but they are also changing how we market to

them.

For Example:

• Increasing Customisation…

Technology: Online Buying Options –

Customization Becoming Standard

For Example:

• Customised Products

• Customised Marketing

For Example:

• Customised Products

• Customised Marketing

• Customised Promotions

For Example:

• Customised Products

• Customised Marketing

• Customised Promotions

• Using technology to fit the customers’ new needs.

Obviously:

• The more things companies do to “wow”

customers, the more we change their

expectations of what is normal!

The Fifth Change

• The new technologies are changing the

internal processes of the organisation.

For Example:

• From internal R&D to Open Innovation…

Changing Our Processes:

• From internal R&D to Open Innovation…

• From centralised financing to Crowdfunding…

Changing Our Processes:

• From internal R&D to Open Innovation…

• From centralised financing to Crowdfunding…

• From fixed pricing to dynamic pricing…

Changing Our Processes:

• From internal R&D to Open Innovation…

• From centralised financing to Crowdfunding…

• From fixed pricing to dynamic pricing…

• From top-down strategy to democratic strategy…

The Sixth Change

• The new technologies are making

competitive advantages less sustainable

(and more easily imitated).

Implying That:

• Continuous innovation is the only source

of advantage.

• Easier said than done!

An academic study on creativity by

Professor George Land

• Who has the ability to think in a creative way?

• Anybody who scores 10/10 is called a genius in

creativity

How Creative?

• 3-5 year old kids:

How Creative?

• 3-5 year old kids: 98% score as genius

How Creative?

• 3-5 year old kids: 98% score as genius

• 8-10 year olds: 32%

How Creative?

• 3-5 year old kids: 98% score as genius

• 8-10 year olds: 32%

• 13-15 year olds: 10%

How Creative?

• 3-5 year old kids: 98% score as genius

• 8-10 year olds: 32%

• 13-15 year olds: 10%

• 2,000 adults 25+ year old: 2%

Implying:

• Continuous innovation is the only source of

advantage.

• But only those companies that find ways to

“unleash” the “imprisoned” creativity of their people

will succeed.

Lots of Changes!

• I do not want to give the impression that the

new technologies will change everything!

• Some things will stay the same…

It’s a new World

• Not everything will change…

• But hopefully I have challenged you enough to

start thinking about the many things that YOU

need to change in your organisations.

In Particular:

• Shared Purpose

• Strong Shared Values

• Strong Culture

• [not to mention recruitment, performance

measurement, motivation, etc, etc]

And Of Course:

Good Luck!