The Weirdness of Tech, Storytelling and Putin

The story you tell yourself determines your future.

Right now, horrible war crimes are being committed because of the story that Vladimir Putin has told himself. In his mind, he is a tzar who will reunify the old USSR, and will consequently go down in history as a great, powerful man. Though the validity of his story is questionable, we can be sure that the story he has told himself is the motivation behind the actions he has taken. Ultimately, it will define his future.

Stories are important. They are far more powerful than the truth. If we take a story to be true, then we’ll find ways to justify it, define it, and eventually act it out. As our minds think, eventually we become.

Now, let’s take the story of Elon Musk. No doubt – he is a genius, though he does act irrationally at times. He has certainly changed the world through electrifying transport and putting satellites into orbit. Musk has also made several stupid comments, accumulated US$40 million in fines for securities fraud and left in his wake a long list of broken promises, including putting 1 million robotaxis on the road by 2020. Today, he still can’t scale up to more than 750,000 cars a year, and there are exactly zero robotaxis on the road three years later. His promise of a Hyperloop is equally foolish when you realise he has basically rehashed an inferior version of a train.

But the Cult of Musk is stronger than the truth. Say a single negative word about him in any social forum, and his acolytes will attack you like a pack of wild dogs, accusing you of being a Luddite and not getting it. It doesn’t matter what the truth is. Musk’s story galvanises his fans with a real sense of religiosity. Recently I commented on a TikTok video featuring Musk proclaiming degrees are worthless and that you can learn anything without it. I agree – in many cases this is true. However, I made the mistake of posting a comment that I prefer my doctors to have medical degrees. I had 43 comments rain down on me that varied from accusing me of jealousy to claiming the entire medical industry is a scam. You should try it – click here and make a comment about an Elon tweet that doesn’t support his views, and you’ll see what I mean. There’s also a chance you’re reading this and thinking, ‘I thought Samma was into tech…. wow, I’m surprised’. Let me reiterate. I’m into science, humans flourishing and pointing out our foibles along the way. Storytelling is a powerful force that, like any technology, can be used to emancipate or fool people.

What’s most interesting is that it isn’t just individuals who can buy into a fantasy. We can have collective hallucinations. As I write this, the market value of Tesla is greater than the combined market value of the ten next biggest car companies. While Tesla had an early lead in EVs and autonomous vehicles, it’s now clear they have very little, if any, advantage. This is the financial value of story. I often say that Tesla is the world’s first trillion dollar story. If I had the choice to own either Tesla, or the ten next biggest companies that includes Ford, Toyota, GM, Daimler, BMW, Honda, and Volkswagen, I know what I’d choose. Without a question, it would be the ten auto manufacturers that collectively produce more than 50 million cars a year. The share market – which is meant to be a rational means of capital allocation – says Elon’s 705k annual production and ‘story’ is worth more.

Thought for the day: The story is always more profitable than the truth.

Now to you. What story do you tell yourself? The story of your capability, where you are going, and why you belong there? I tell my clients this all the time – they believe what you believe. The market looks to your story – the one you tell yourself first. By inference, this will the same story you are telling them, and often they put a value on that story.

Stories are what humanity buys into, simply because anything physical in nature starts as an idea or blueprint first. From building a house to putting a man on the moon. Our trajectory depends on our personal stories more than we give them credit for.

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Keep Thinking,

Steve.

The Biggest Tech Trend for 2020

The biggest tech trend in 2020 won’t be a new widget or a shiny piece of glass. It will be one of the oldest technologies from civilised society: governance.

One of our species’ oldest and most important technologies is language itself. Our ability to write and document knowledge is what puts us on top of the food chain. Part of the documentation process is the rules, regulations and boundaries we use to govern the market place. 2020 will be the year we remember for how we ‘civilised’ the technology we all love so much.

In the past 20 years we have metaphorically discovered fire. The internet has become a tool which is so vital for mere economic participation, that no one dared asked if we should be careful about its consequences. But this fire has got a little out of control recently. While we want its heat, we need to make sure we don’t all get burned in the long run. Fire can keep our houses warm, cook our food and power a combustion engine, but it can also burn down a city if we don’t build in thoughtful safeguards.

Finally activists and governments are starting to take notice. Next year we’ll see actions which will make the GDPR look like child’s play. We can expect a number of market changing actions to commence. Things like antitrust action, algorithmic regulation, digital advertising standards, tax on data holdings, bans on data surveillance, outlawing of facial recognition and social media content standards, to name a few. Ironically, this will be a huge challenge for the disrupters themselves, as they have built entire business models around this largely unregulated territory. When it comes to tech, the ‘EPA’ is about to arrive to take a good close look at how they’ve been polluting our society with their data economy externalities.

So will there be any big tech shifts in 2020? Of course, they’ll keep coming thick and fast: digital twins, mesh architecture, hyper automation, human augmentation,  bio-tech interfaces, and autonomous things. But next year, the big issue will be the management of the political, social and economic consequences of the exponential technology in businesses.

Good news:

Tommy McCubbin and I have developed a new session we call 2020 Vision.

A year in review – A year in preview.

In this session, we review 2019 and preview 2020 by looking at what happened, what it means and what’s next. Many of the insights will surprise even the most agile of technology observers. The entire thing is presented in GIFs – yep, you read that right. It’s a fun session to end the year with your team, and sew the seeds of the thinking needed to thrive in 2020. We only have 6 slots available and I expect them to be gone by Monday.

If your team is up for it, hit me back with reply email and get ready to have your mind blown.

Steve.

Disruption and The Shampoo Strategy

Business success is built on what I like to call a Shampoo Strategy. We find a formula, a business model that works, and then we rinse and repeat. It’s the way all wealth is created in the modern economy. We discover a process, service or product which has perpetual demand and we continue to deliver this to the same people again and again and again. The only problem is when to change the formula?

Shampoo Strategies are the type of business outcome any profit centric capitalist should be aiming for. We turn something from an idea into a system which makes money with very few changes to inputs. It’s essentially when we’ve cracked it. Ironically, the Shampoo Strategy is exactly where disruption comes from.

We develop a system which becomes its own thing. It operates on a kind of auto pilot and is highly profitable. Costs continue to go down while margins go up, and we end up serving the system, and losing track of why it worked in the first place. The reason it worked is usually because the formula, the customer and the business model all overlapped in a way that suited the market. But as markets evolve, yesterday’s formula may become less effective, sometimes seemingly overnight. But when we look hard, the signs of deceptive disruption are always there long before that ‘overnight‘ moment.

So what should we do to understand if our formula is about to stop working? Well, it’s rarely one thing on its own, but the way a few things interact. I break them into 3 parts.

The Technology: Questions to ask here include: How the problem gets solved and how can tech change that, reduce costs, or change the method of delivery?

The Business Model: Are people still prepared to pay for what we deliver? Can they serve that need more economically elsewhere? Can we increase our margin or reduce our price with a new emerging technology?

Demand: Is demand for what we do solid, shifting or waning. How can we shift with it? Is the solution just shifting? e.g. digitization of news. Or is the market in perpetual decline? e.g. coal fired power plants.

Finally, how do these three things interact to create a new formula for tomorrow’s rinse and repeat?

The one thing to remember with the Shampoo Strategy is that they never work forever, but new formulas can always be invented. And new formulas only ever get invented by those paying attention to the market, more than they pay attention to what they make or sell.

The Secret Innovation Budget

Research & Development and Marketing traditionally lived in different worlds. R&D for innovation purpose happened in secret, in the lab, while Marketing was mostly just advertising. The advertising itself? Well, that was generally about convincing people to buy what the company could already make. It was rarely about the future and what the brand might become. Smart companies however, have merged these two disciplines. It’s a ‘trick’ any firm big enough to have a marketing budget might want to embrace. Yes, the marketing budget should really be an innovation fund, and vice versa.

In times of great change we idolise the new. The wonder created by what was once the realm of science fiction, are todays most shareable artefacts online. Cool stuff we see for the first time like an Amazon drone delivery, a Google driverless car, or an Uber air taxi get viewed millions of times, voluntarily, without media expense. These companies are telling the market, we are inventing the future. If you’re a large corporation today, and you’re not inventing the future, during such a revolutionary time, then you just might be inventing your own demise.

But here’s a few questions worth asking:

  • When was the last time you had something delivered via drone?
  • When was the last time you took a ride in a driverless vehicle?
  • When did you last hover above traffic in your air taxi?

If you’re like most people, you haven’t, yet. That’s not to say that these things aren’t on the way – they certainly are, but in truth these companies have purposely talked up the technology many years before any of them were actually functional, let alone a commercial reality. This is where the trick part comes in. The time lag between the concept phase and the reality of these innovations being in market is a great brand building exercise for the firms smart enough to do it. Cleverly, their R&D has become their advertising. They’ve earned free global media attention and further ensconced themselves as innovators.

The perception this creates in the market isn’t just nice to have. It can also have a massive economic impact on the firms financially. Just compare the unit sales, price earnings ratios and valuations of firms serving the same set of customers:

Automobiles:

  • Tesla makes 245k cars per year, and has a PE ratio of infinity (no dividends yet), and a market cap of $48 billion.
  • Ford makes a 7.9m cars per year (one per 4 seconds) and has a PE ratio of 9.3x, and a market cap of $34 billion.

The market has clearly voted on how it values innovation.

So could an old world industrial company use innovation as a brand communication tool? Could they be seen as on the cutting edge of technology and reap the valuation benefits? Of course.

But it requires some shifts in attitude.

It requires the firm to set lofty goals in their innovation efforts, it can’t be incremental. They also need the courage to share these innovation dreams with the market and own them publicly. It also requires the vision to shift investment from traditional marketing and advertising budgets into innovation arenas and moonshot product developments. All of which can not only become an exponential product improvement, but be an effective form of advertising in the interim. But mostly, it will send a strong message and provide a new confidence to the firms customers, employees and investors that they have a chance at inventing the future too.

What data doesn’t understand

It’s true data, and our new found ability to sift through large volumes of it, has come with many benefits: fraud detection, genomics, natural language processing to name a few. But, data doesn’t get humanity. It’s just a reflector, not the director. As a tool it has certain biasses built into it. One of which is its ability to take the wide, and make it narrow. It’s also great at finding correlation between the disparate. You know data what it isn’t good at? Detecting boredom.

We humans are weird beings and right at the point when data might tell us something is heading a certain way, we about face, and go in the exact opposite direction, often quicker than anyone expects. Probably because we love variety, nuance and something a little different.

It turns out that computers don’t actually understand – they calculate. The word computer itself used to be a job title of people who literally added things up. The large majority of algorithms we employ calculate the probability of something. That probability calculation will be based on the stack of code it feeds from. And the larger that stack, the deeper and more hidden the bias will be inside it. What this means for us, is that when we change our mind, on a whim, ‘the system’ won’t see it coming.

The stimulus we get as humans comes from the real and messy world we we live in. So much of which still sits outside of the data economy, even with all the tracking we do these days. So what does this mean for us? It means that unexpected change is inevitable, and the data wont tells us it’s coming. We need to look for it ourselves and measure it from personal human experience. Variety is one of the great human desires, and just when something is peaking in popularity, we decide to leave the building for no real reason other than the fact we are human.

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This will change your perception of brand loyalty forever

Loyal dog

Brand loyalty is a strange thing, it seems like it is a bit back to front to me. Powerful and large corporations expect you to be loyal to them. But ‘we’ are the one’s who feed them with our money. If a dog should be loyal to it’s owner – those that feed it – then surely brands should be loyal to us?

Here’s another error companies make when it comes to loyalty. They are loyal to marketing methods, social forums and their infrastructure. If there is anything a brand should have total disloyalty to it’s the methods in which they go to market. They are just tools. And tools should always be replaced when a better method arrives. Especially when the objective is serving others.

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Is this the worst product innovation ever?

Wetsuit business suit

If the Quiksilver bedding wasn’t enough, Quiksilver have done it again and introduced possibly the worst, most ill conceived product in surfing history.

The Wetsuit Suit. Yes you read that right, a wetsuit designed in the shape of a business suit. I can only hope that this is some kinda hoax – and even if it is, it surely isn’t worth the effort and ridicule?

The first question that comes to mind is why? Did someone not get the memo that the water is a place we escape the corporate grind.

The second question that comes to mind is why? It would simply never perform as well as a skin hugging wetsuit designed specifically for surfing, or a fitted Hugo Boss.

The third question that comes to mind is why? It takes all of 5 minutes to change out of a wetsuit…. but that’s right, Joey Corporate Surfer must too important to waste even 5 minutes.

The fourth question also happens to be why?  I imagine it will be super comfortable wearing a wetsuit as the salt dries and itches your skin and you’ve got sand up your bum during a power meeting with your boss in your Quiksilver work wetsuit….

Why, why, why? It is incomprehensible. Maybe the Private Equity firm Oaktree Capital  Management who took over the company this year knows why? They’d want to, or the $600 they invested to take the company out of bankruptcy (it still has $300m debt) might be kinda hard to recoup.

This folly was best summarised by Surfer Magazine:

Don’t you just wish you never had to change in and out of that stinky old wetsuit of yours? Well consider your prayers answered! Presenting the oh-so-literal wet suit by Quiksilver. Because how many times have you wished you could just live in one outfit for the entire day? And seriously, who wouldn’t want a soggy crotch while sitting though a budget meeting? Well, logistics aside, this is happening. Quiksilver Japan is apparently onto a market that the majority of us had no idea existed – which consists of businessmen who wish they could just go straight from the water to the conference room all while looking like colossal tools? Sure!

With all the incredulity aside, it shows a company who doesn’t know their customers at all. A company out of touch with why they originally succeeded. A company which is focused on the wrong side of where work society and technology is taking us.

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