Reverse polarity: how unstable markets can help us predict developed markets’ futures

A corporation can leverage its global network to increase its ability to sense and make-sense of what is unfolding, but this requires a change in mindset, to reverse the ‘polarity’ of the corporation, says Stephen Wyatt

The speed of change in business is accelerating and the context for most businesses is increasingly unstable. These trends are set to continue, driven by the adoption of new technologies and the new management practices of the 4th Industrial Revolution. In this environment, the ability to ‘sense and make-sense’ of the changes that are or could happen is a source of competitive advantage.

To understand how the corporation can raise its ability to ‘sense and make sense,’ let’s first consider a professional tennis player. From the position on the court and the body movements of the opposing player, the professional can anticipate where and how the ball might be travelling before it is hit, particularly when combined with an understanding of the patterns of play and the preferred strokes of the opponent. Players at the top of their game have a heightened sensitivity to the small indicators and subtleties of play of their opponents (such as the direction of their gaze or position of their head). They achieve this through relentless practice and dedicated preparation as it increases their probability of being right when reading the game and might provide a split-second more time to respond. The same is true for corporations; it is a capability that is increasingly critical to success as change accelerates and market-spaces become less stable.

Entrepreneurial leaders often have high sensitivity to the forces of change in the markets in which they participate. They are directly immersed in the marketspace and are highly motivated to spot and assess potential threats and opportunities so that they can pivot, adjust, and prosper. However, usually such companies are directly involved in only a limited number of markets and the leaders have little time to look and connect with others more broadly. In contrast, corporations with global reach are present in many markets, which may have wide diversity of dynamics and characteristics, in innovations, demand patterns, regulation and the behaviours of competitors. The challenge for the global corporation is to be sensitive to these differences. To create the competitively advantaged sensory capabilities of the ‘professional tennis player’ a corporation needs to combine the market immersion sensitivity of an entrepreneur with the multi-marketspace stimuli attained from global reach. This is increasingly possible due to advances in technologies that enable communication, data gathering & analysis and virtual team collaboration.

Sensing: outside-in

Contrary to the view from the headquarters and experience in US, Disney discovered that adults rather than children were major consumers of character merchandise in Japan. Seizing on this insight from Japan, the company sought to replicate the success by also targeting adults in other markets. Pernod-Ricard, the owners of whisky brands such as Chivas and Glenlivet spotted that in night-clubs and karaoke in Malaysia it is particularly popular to buy bottles of whisky to drink mixed with sweet green tea, they took this formula to China with great success. Making payments with a mobile phone may have started in the US, but if we want to understand how far it can go – changing how people interact with each other, the way they give gifts to each other and even how they give support to beggars and buskers – then look to China. In China if you don’t have a local phone account it is now almost impossible to ride in a taxi or eat in most outlets. As many as1.6 billion payments are estimated to be made by mobile phones in China – per day.

Looking outside of the home market, outside headquarters, research labs and think-tanks, for clues about the unfolding future requires creating a flow of insights from the peripheries of the corporation to nodes of interrogation and interpretation elsewhere. A reversal of the traditional view of the operating model of the international corporation in which insights and instructions are disseminated from the centre. The greater the differences of the contexts across the network of the firm the greater the opportunities for learning. Whereas traditional approaches excelled on similarities with the home market. With the emphasis on peering into the future, we celebrate diversity.  

Key to ensuring sensitivity across the corporation’s network is setting the understanding that everyone, everywhere has both the opportunity and duty to gather and contribute ‘intelligence’. We use a language of ‘idea-fragments’. Idea-fragments are novelties and soundbites, ‘a-ha’s and ‘interesting’ snippets of news that everyone can come across through the course of their work, reading, conversations and interactions. Idea-fragments can be about customers, competitors, regulation, technologies, offerings, or operations. It is a fragment because it is not necessarily a part of a proposal or solution or innovation. Idea-fragments cannot be judged for their value, as every idea-fragment has the same value – that is, nothing – they are however building blocks. Idea-fragments only have value when they are combined in ways that create insights and options that are acted upon.

Airbus Group, active in over thirty-five countries globally, has intentionally set out to gather idea-fragments from across the globe to give direction to the firm’s technology development. They believe their reach gives them a strong advantage of knowing what is happening around the world within their industry. They do this by deliberate investment in several key activities:

  • Share and develop ideas with a network of partners: ‘like pieces of a jigsaw being put together, we may have some pieces, they may have others; together we can come up with new solutions.’
  • Robustly pursue feedback through collaboration and intimacy with customers.
  • Float and promote new thinking and concepts externally, through initiatives such as ‘fly your ideas’, which engages universities.

Making sense

Making sense and deriving insights from data is different to amassing data, although both are essential for value creation and capture… No matter where someone is in the organisation, at a Research and Development (R&D) centre, in HQ or in a remote sales office or production site, they should be encouraged and enabled to both contribute data and to interrogate the global data-lake for insights.

A Unilever executive characterised it as the democratisation of data, as reported in a 2018 Diginomica article: ‘Everyone can and should seek to capture and contribute data, without regard or foreknowledge of how the data may be used. We call it a “data-lake”. Everyone who needs it can have access to this data-lake, interrogate the data and look for insights.’

Unilever has invested tremendous energy in accessing and analysing data. CIO Jane Moran describes the new environment in the same 2018 Diginomica article: ‘At Unilever, we have the enormous opportunity to predict the future. These [AI] tools now help remove those siloes and democratise the data. It allows us to streamline and automate the data ingestion into our environment. …We are trying to put data in the hands of our employees. This really gets us a step closer to automated and augmented decision making; to be an insights-driven organisation… The data lake actually makes it possible to put the data in the hands of the employees that need to use the data.’

Unilever is also using artificial intelligence to synthesise insights from both structured and unstructured data, from sources such as social listening, CRM and traditional marketing research. AI has helped identify new opportunities, for example a range of cereal-flavoured ice-creams under the Ben & Jerry’s brand. It was inspired after someone noted that around fifty songs featured lyrics on ‘ice-cream and breakfast’, another idea-fragment was that Dunkin Donuts was serving ice-cream for breakfast. The democratisation of data through the creation of the universal data-lake and enabling self-service analysis is transforming how Unilever does business whilst revealing new insights for action throughout the business.

Networks of dislocated experts

A powerful development for global corporations has been the evolution, often organically, of communities of interest. Individuals who reshare with one another idea-fragments on particular topics and who often collaborate, building on one another’s insights and ideas for action. An important aspect of these groups is that the individuals are not all collocated. Colocation can dull the collective sensitivity as there is a common context and a dominant ‘group-think’ can evolve. Communities of dislocated experts are an important part of reversing the flow of insight and interpretation of the corporation between the centre and the peripheries. 

IBM has designated thought leaders whose role is to contribute industry-leading insight in their topic area. These leaders publish internal and external papers as well as gleaning insight and information from IBM’s knowledge system. As one executive noted, this knowledge gathering needs to be structured in a global way: ‘It is an advantage for the thought leaders to be based in the markets which are evolving most quickly as we need to be connected to the customers that are pioneering.’

Some firms have extended beyond having networks of dislocated experts to instead dislocating the members of the leadership team. The difficulties created for coordination are more than offset by the advantages of insight from being close to key customers and markets. Schneider Electric, the global electricity distribution equipment manufacturer, originally head-quartered in France, has turnover more than $26 billion USD. However, the CEO, Jean-Pascal Tricoire, is based in Hong Kong. The corporation has adopted a decentralised management structure, with approximately equal numbers of the senior management team based in Europe, Asia and the US.

In an interview Tricoire said: ‘Corporate decisions should be made close to our customers […] we make our decisions based on the business we see on the ground […] our leaders are visible to our employees so that they are not in the ivory tower. Our senior managers have to manage transcontinental teams that have a balanced world view in decision-making while taking into account the local realities.’ [i]

As the speed of business accelerates, early insight on the emerging future can be a source of competitive advantage. A corporation can leverage its global network to increase its ability to sense and make-sense of what is unfolding. The enhanced sensory capability depends on creating a flow of data and insight from the peripheries (outside-in), a reversal of the traditional inside-out mode of the corporation. This requires a change in mindset, to reverse the ‘polarity’ of the corporation.

Stephen Wyatt is a Professor of Strategy and Leadership at University of Bath, Industrial Associate at the University of Cambridge, and has worked with more than 80 corporations globally – from Unilever to Heineken.

His new book Management and Leadership in the 4th Industrial Revolution is published by Kogan Page.

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