Kaihan Krippendorff takes a look at the history of the music industry to demonstrate how Spotify excels at delivering customers what they want when they want it.
In 2006, a pair of Swedish entrepreneurs banded together to fight an ongoing problem: Piracy in the music industry was costing artists, retailers, and record companies billions of dollars in lost sales. Customers who had previously gone to CD or record stores to purchase music were now evading legislation to download songs for free, instantly into their music libraries from services such as Napster.
When Napster unexpectedly shut down in 2002, Kazaa, another controversial service, sprung up in its place. Swedish entrepreneur Daniel Ek saw an opportunity to combat illegal online activity through another means: delighting customers.
“I realized that you can never legislate away from piracy,” he said in a 2010 interview. “Laws can definitely help, but it doesn’t take away the problem. The only way to solve the problem was to create a service that was better than piracy and at the same time compensates the music industry. That gave us Spotify.”
He joined forces with fellow entrepreneur Martin Lorentzon to create what is now the most popular music streaming platform in the world. How did they do it? By delivering what the listener wants to hear, when and where they want it—and sometimes before they even realize exactly what it is they want.
THE EVOLUTION OF MUSIC THROUGH A PROXIMITY LENS
An industry-wide trend is underway. Company strategies and customer desires are shortening the distance between when people decide they need something and how long it takes for them to get it. My friend and writing partner, Rob Wolcott, offers the following definition: “Technology is driving the production and provision of products and services ever closer to the moment of demand.”
Many of us have benefited from the somewhat creepy omniscience of Amazon’s anticipatory shipping—the retailer predicts products we might want and delivers them to a nearby warehouse before we’ve even placed an order. But the research Rob and I have done shows that this extends far beyond retail; proximity is the future across all industries, and it’s been in the works for years. In order to pinpoint where Spotify seized the opportunity to capitalize on proximity, let’s take a brief look at the history of music purchasing.
Key points include:
- The changing technology
- Napster and file-sharing
- Applying proximity to your business model
Read the full article, WHAT SPOTIFY CAN TEACH US ABOUT PROXIMITY, on Kaihan.net.
A Dark Sky experience led Kaihan Krippendorff to ruminate on how to disrupt your industry.
It’s 6:30 a.m. at the Dark Sky RV resort in Utah. I’m sitting out by the gas firepit and everyone else is asleep. The sun is rising, but it’s not one of those sudden appearances that I often see in the Northeast. Instead, the sky is wide open above the vast horizon, and it begins to change colors over the short desert vegetation and red rocks. The rising sun gives a far longer preview of its arrival. It’s bright enough to be nearly daylight now and yet the sun has still not officially peeked over the horizon.
Now, our family is not an obvious RV family. When I tell our friends how often we have journeyed across land in these houses on wheels, complete with nighttime BBQs after arriving late to the site and impromptu stops at unplanned points of interests, I’m often met with wide eyes and expressions of disbelief. But we continue to realize the value of forced family time in close quarters and pushing out of our comfort zone to explore unfamiliar territory.
The other day, we toured the tiny motel strip at Page, Arizona, a road lined with extremely compact motels made for construction workers while they were building a nearby dam half a century ago. Last year, we stopped by the graves of the Gypsy King and Queen in Mississippi.
But the issue has always been where to sleep when the sun went down. Our days of exploration and delightful surprise too often lead to evenings of predictability and frustration. You see, although the RV camping industry in the US is an important slice of the US economy, employing nearly 23,000 people with an average salary of US $30,628 per year, the experience of spending the night at an RV camp leaves much room for improvement.
Key points include:
- Reform the strategy
Prioritize the pain points
Rethink each pain point
Read the full post, Disrupting Your Industry: Lessons From An Rv Park, on Kaihan.net.
Kaihan Krippendorff identifies how the concept of a flywheel can be applied to business.
Most evenings, when I’m not traveling, I make time to get in at least half an hour on my Peloton bike. It helps to wind down at the end of the day. I’ll turn on a show (lately I’ve been slowly savoring this season’s episodes of The Handmaid’s Tale and waiting in anticipation for season 2 of Ted Lasso) and pedal to break a sweat. As my legs push the pedals around, the wheels spin faster and faster until I need to add resistance to slow myself down.
In the physical world, we who have studied physics are familiar with the coefficient of friction—the amount of force it takes for you to push one object against another. When the object is in motion, like the wheels on my bike, that coefficient goes down. Once I’ve gathered momentum, I don’t need to work as hard to go fast.
A flywheel takes this a step further, by accelerating a large rotor to very high speeds and maintaining the energy in the system as rotational kinetic energy. It takes a great amount of effort to start turning the flywheel, but once it’s in motion it builds momentum to keep picking up speed.
In the world of data, the concept of a flywheel is being used to increase customer centricity and satisfaction. My recent podcast guest, Ash Fontana, and the insurance company Lemonade Inc. show us how.
THE DATA FLYWHEEL
Any company that has at least dabbled in data analytics or artificial intelligence (AI) knows that it takes time to get started. In order for big data and AI to provide their desired benefits, a company must build a reservoir of customer information. This process can take years and can cause many companies to give up before realizing the effects.
Key points include:
- The AI flywheel
- Lemonade’s flywheel for customer centricity
- How to identify AI opportunities
Read the full article, THE CORE CONCEPT THAT IS DELIGHTING CUSTOMERS, on Kaihan.net.
Kaihan Krippendorff identifies the importance of proxemics between product and consumer/user as a key component of growth for businesses.
Shuffling through the crowds of Fourth of July weekend shoppers, I spied my prize. The farm stand’s rows were bursting with color—juicy strawberries, rich blueberries, and robust peaches. “Over here,” I called out to my kids to join me. We carefully selected handfuls from the overflowing baskets. Fresh berries would make a perfect addition to our family’s dessert that night.
When I approached the shop owner to pay, I had a brief moment of panic.
“Is it cash only?” I asked her.
“Nope,” she replied, revealing the white square hooked onto her phone. “We take credit cards now.” I breathed a sigh of relief as I handed her my card to swipe through the reader. She smiled and bagged our fruits, and I followed my kids on to the next stand.
TODAY’S CUSTOMERS WANT PROXIMITY
It would be difficult to stroll through a small-town market or other pop-up shop without seeing a Square reader. These recognizable contraptions, which now include contactless payments for cards, Apple Pay, and Google Pay, easily connect to mobile devices and empower small- and medium-sized business owners to accept credit and debit card payments on the spot.
No longer do merchants have to turn down sales because the buyer doesn’t have cash on hand. Square is a leader in digital payments, and its onsite and digital point-of-sale systems are part of a bigger trend that’s helping people purchase the goods and services they want exactly when and where they want them.
Today’s technologies have a human mission. Our mortal desires have always demanded instant gratification. Wants and needs arise, and we are driven to satisfy them as quickly as we can. The underlying concept, coined by my friend Rob Wolcott, is proximity—products and services produced and provided ever closer to the moment of demand in time and space. Square represents a proximity technology; it allows a business owner to cheaply and quickly set up a point-of-sale system on the spot at a weekend pop-up event.
If shoppers prefer to stay home, they can order from a small business online and receive their shipment in just a few days. It’s no surprise that the COVID-19 pandemic accelerated this trend. We’ve come to expect Amazon packages in mere hours. Food deliveries arrive within an hour at our doors. Our doctors and educators enter our homes through video cameras.
Enabled by technologies such as artificial intelligence, 3D printing, virtual reality, Internet of Things (IoT), self-driving cars, and 5G connectivity, proximity is occurring at an accelerated pace, and it’s going to continue to transform nearly all aspects of our lives.
Key points include:
- Customer demand
- Investor returns
- Three steps to benefit from proximity
Read the full article, How “Proximity” Technologies Are Bridging The Gap Between Demand And Delivery, on Kaihan.net.
With global demand for food reaching peak levels, and climate change and diminishing farmland impacting food production, Kaihan Krippendorff’s article on the future of agriculture addresses both the issues and possible solutions.
Earlier this year, I met up with a friend for lunch at a restaurant out on the water. As I twirled fettuccine noodles and chunks of New England lobster around my fork, I couldn’t help but appreciate the connections that I’ve been able to form over shared meals.
Food is an integral part of my life—a means to explore new cities, a tool to bond with friends and family members, and a method to connect to the medley of cultures that make up my ancestry. As much as I try not to, it can be too easy to take these meals for granted, forgetting that 9% of the world, over 690 million people, do not have secure access to food and frequently go to bed hungry.
The friend I shared lunch with is an analyst who invests in small public corporations. He was particularly excited to tell me about one company, Raven Industries, that is taking on national and global challenges in food production, population growth, and agricultural sustainability with a mission to improve our world.
GLOBAL CHALLENGES IN FOOD PRODUCTION
The global demand for food is reaching peak levels. The world’s population is growing; it is predicted to reach 9.8 billion by 2050. At the same time, available farmland is diminishing. Our farmers are pressed to feed the world with fewer and fewer resources. According to Forbes, farms around the world will need to increase global food production by 70% in the next 40 years to keep pace with population growth. To meet the demands for global food supply, farmers and companies in the agriculture sector are turning to technology-driven solutions.
Key points include:
- Global challenges in food production
- Shifting consumer food preferences
- How companies are preparing for future challenges
Read the full article, The Future of Agriculture: Smart and Sustainable Food Solutions, on Kaihan.net.
Kaihan Krippendorff addresses corporate responsibility and climate change and why the energy industry is adding environmental practices to business growth strategies.
Our planet is facing an uncertain future. The impact of climate change has reached a point of crisis, and it is up to the organizations of today, and to all of us, to take action.
This week our guest on the Outthinkers podcast, Michael Raynor, author of The Strategy Paradox and co-author of The Innovator’s Solution, emphasized the immediate need for companies to incorporate the climate crisis into their strategy. Also this week, our network of chief strategy officers, leaders from $1B+ companies all over the country, was joined by Chris Marquis, Professor in Sustainable Global Enterprise at the Cornell SC Johnson College of Business and author of Better Business: How the B Corp Movement is Remaking Capitalism. Chris’ work focuses on how organizations are turning ESG (Environmental, Social, and Corporate Governance) practices into a powerful differentiator and competitive advantage.
Today, we’ll focus on the E of ESG — the environment — and how three trends in the energy industry are leading the way toward a more hopeful future.
THE URGENCY OF THE CLIMATE CRISIS
In this week’s podcast episode, among his reflections on strategy, Michael shared that the climate emergency is the only thing that matters.
“It’s not something to incorporate into what we do. It’s something to constrain and override pretty much everything we do,” he said.
Michael is a managing director with Deloitte LLP, where he is part of the team working on developing and implementing Deloitte’s two-track response to the global climate crisis. The first track focuses on reducing and eventually eliminating the firm’s carbon emissions, while the second track comprises a portfolio of efforts designed to mobilize larger ecosystems of organizations — commercial enterprises, NGOs, governments, etc. — to generate an impact on the scale of the problem.
Key points include:
- Heightened focus on renewable energy sources
- Green regulation and incentivization
- Decline in production and use of fossil fuels
Read the full article, How ESG Practices are Updating the Energy Industry, on Kaihan.net.
Kaihan Krippendorff provides insight into the rising valuations of tech stocks and attributed the rise of cryptocurrencies, and NFTs (non-fungible tokens).
It’s been a while since Saturday Night Live was a staple of Monday morning conversation, but this week as our team gathered around the Zoom screen to join our check-in call, the sketch comedy show was top of mind. I can’t imagine many missed it, or at least the news surrounding it, but last weekend’s episode featured special guest Elon Musk.
In his opening monologue, Musk commendably revealed for the first time his Asperger’s diagnosis, while poking fun at his unbelievable track record of innovation: “I reinvented electric cars and I’m sending people to Mars on a rocket ship. Did you think I was also going to be a chill, normal dude?” Musk joked about Dogecoin, a cryptocurrency which, along with NFTs (non-fungible tokens) and other blockchain-based value exchange systems, has taken over headlines recently.
Musk’s statements during the show around Dogecoin’s validity sent it into a downward spiral, while his follow-up statements that SpaceX would accept it as legitimate payment for a mission to the moon sent the cryptocurrency skyrocketing. At the same, his decision to halt acceptance of bitcoin for Tesla payments based on environmental factors caused the digital tokens to plummet.
These volatile reactions to Musk’s statements, brought about primarily by posts on Twitter and reactions in social networks, echo GameStop’s stock surge earlier this year. They demonstrate the power of communities, virtual and in-person, to self-organize around a common cause, whether it’s a well-loved retail videogame chain or a parody cryptocurrency that began as a meme.
All jokes aside, those who have been following the news this year around the valuation of cryptocurrencies and NFTs combined with blockchain technologies will recognize broader implications for how we conduct business and exchange goods in the future of our society.
Key points include:
- Volatile reactions to stock trading
- Power from coordination of resources or services
- The convergence of two strategic trends
Read the full article, Elon Musk, Dogecoin, And NFTs: Coordinating Without An Official Coordinator, on Kaihan.net.
A crisis often kickstarts innovation in technology and shifts in culture. As working from home options become a more normal structure, how will this impact performance and growth? Kaihan Krippendorff takes a look at the company culture of Netflix to explore the impact of no rules rules.
When we think about culture and responsibility in the workplace, companies generally fall into one of two categories. Some seek to monitor their employees and keep them in a structured order by implementing rules and policies for every interaction. This is more common and tends to happen as companies scale and become more established. The result is a thick handbook and a set of employees who don’t need to think as much about what to do, because the thinking has been done for them.
The alternative seems more chaotic: companies that have very few procedures and regulations in place. This is most often seen in startups or businesses with few employees. Employees are given the freedom to make their own decisions, which often inspires creativity and innovation. This freedom usually lasts until the business begins to grow, and limitations are imposed. Controls seem necessary; a few wrong budgeting decisions might have a major impact on a growing business.
So as business scales, how do we give employees the freedom to make decisions while keeping chaos in check?
NETFLIX: CREATING A CULTURE OF FREEDOM AT SCALE
Lucky for us, Netflix CEO Reed Hastings experienced both scenarios, and he and Erin Meyer, a bestselling author and international culture expert, have written the book on innovative culture in the workplace. Last week, I was fortunate to attend Erin’s Thinkers50 and Insight to Impact webinar: No Rules Rules (replay available here).
In the webinar, Erin described Reed’s experience launching his first business, a software troubleshooting company. At first, there were no rules. But as the business began to grow, Reed started implementing more policies. He found that the new restrictions drove his most creative employees out of the company.
Key points include:
- Creating a culture of freedom at scale
- Culture is about reconciling dilemmas
- Three steps to employee freedom
Read the full article, No Rules Rules At Netflix: Rethinking Culture As We Return To Work, on Kaihan.net.
Kaihan Krippendorff shares a post that explains why the trend toward platform and digital requires an entirely new mindset around how you serve your customers.
Last week’s trend piece focused on Community Coordination — companies that create a platform for users to communicate and coordinate are better prepared for a future where consumers are using these platforms to connect quickly and make their voices heard. This trend toward coordinating the uncoordinated has been growing for many years and pervades across industries.
Historically in business, power came from control or ownership of assets and building economies of scale. In the new paradigm, power comes from coordination. Today’s outthinkers are able to build power without ownership.
But this takes more than a change in your business model. The trend toward platform and digital requires an entirely new mindset around how you serve your customers.
BHARAT ANAND AND THE SPOKE-TO-SPOKE MODEL
During monthly conversations with our network of top Chief Strategy Officers, many of them have expressed similar concerns related to developing platform business models and harnessing the power of connections between users. We invited Bharat Anand — author of The Content Trap and expert in digital strategy, media and entertainment strategy, corporate strategy, and organizational change — to speak to the group. Based on his research of the disruption of print media over the past 25 years, he explained the trend toward platform mindset using a hub-and-spoke model.
Most people believe that the decline in print media over the years was caused by the advent of the internet. However, Bharat’s research shows that the impact of the internet on print was no greater than that of radio or TV. Circulation per household was decreasing before the internet was invented. Circulation revenue has remained stable, while display advertising revenue has dropped, and classified advertising revenue (which fosters connections between readers) has almost completely disappeared.
Key points include:
- Learning to coordinate the uncoordinated
- Platform models driven by the pandemic
- Rave mobile safety harnesses coordination to do good
Read the full article, Spoke-to-spoke: A Mindset Shift To Digital & Platform Models, on Kaihan.net.
Kaihan Krippendorff shares a post that draws attention to current societal shifts and the role that today’s technological innovations play in this post-modern world.
In two of our previous trend pieces, The Future of Work and Future Organizational Models, we reviewed how traditional systems of hierarchy are being dismantled in the workplace. But this trend extends far outside the office. It’s touching all aspects of how we form communities within society and how and why we gather in groups.
Stay-at-home policies enforced by COVID-19 have made us exponentially more digital and connected than ever before. Platforms that gather communities and foster connections, in-person or virtually and increasingly without an official “leader”, are uprooting outdated traditions and creating necessary cultural reform.
REVISITING GAMESTOP: THE POWER OF THE PEOPLE
This week, GameStop released its fourth-quarter earnings report that was, compared with all the hype surrounding the company this year, quite anti-climactic. However, in spite of lackluster results, what happened in January 2021 continues to shake Wall Street to its core. A slew of day traders, left hanging out at home in their slippers, fueled by new trading platforms with low barriers to entry, were able to unite via Reddit to “stick it to the man”, rocking the establishment and upsetting hedge funds’ best-laid plans.
My earlier examination of why the GameStop situation occurred explores what can happen when communities, connected by technology, band together to take on unjust systems. The Atlantic sums up the series of events in a sentence: “The GameStop saga is a ludicrous stock mania born of pandemic boredom and FOMO, piggybacking off of a clever Reddit revenge plot, which targeted hedge funds, who made a reckless bet on a struggling retailer — and it’s going to end with lots of people losing incredible amounts of money.”
But was it only boredom that fueled the uprising? Investor and former White House Communications Director Anthony Scaramucci called GME a “French Revolution of finance” challenging the established order and rattling the bars of tradition.
Across categories, we are seeing companies harness this power of technology to “coordinate the uncoordinated”. Like Turo allows car rentals between individuals and Airbnb enables the same for home rentals, consumers, tired of getting the short end of the stick, are losing faith in the “middle men” and restructuring industries to counter disenfranchisement and take back their power.”
Key points include:
- Mass mistrust: insurrection at the capitol
- Looking ahead: gen z’s affinity for gathering
- Lemonade: how companies can leverage community coordination
Read the full article, Community Coordination: How Digital Connectivity Will Power Revolutions Of The Future, on Kaihan.net.
As civilizations and organizations grow larger, so does bureaucracy, often indicating a slow demise in communication and operations. Kaihan Krippendorff takes a look at a business trend and new organizational model that may indicate a more agile future.
As we reenter the post-Covid workplace, many companies are facing a period of reorganization and restructuring. Our research has forecasted and proven that organizations of the future will need to adopt agile approaches and embrace open, networked structures instead of outdated, top-down hierarchies.
Strategy will become a company-wide conversation, rather than a quarterly report, and employees will be seen as a critical source of creative, innovative advantage. Organizations who learn to establish a culture that inspires continual innovation will be the ones to succeed in the long-term.
GARY HAMEL’S HUMANOCRACY
This transformation of culture is easier said than done, especially after a year of chaos like the one we just endured. When so much of the world is left in the hands of fate and more employees are working remotely out of their own homes, it can be tempting for organizations to grasp for increased controls and regulations. However, employees being left responsible for making their own choices about when and how to work may be precisely the opportunity that leadership needs to realize that they can.
Gary Hamel warned us about the need to reform organizational models. In the near future — and in many cases in the present — bureaucracy will be pushed aside and humans will move to the center of organizations. Many members of our network of chief strategy officers have expressed concern about the struggle to shift to agile development, to bring Scrum and Lean models outside of IT and into all aspects of the organization. Gary suggests that, although these models are correct in methodology — they provide the foundation for speed, flexibility, teamwork, and innovation — they will fail if we do not consider the humans inside of them.
Gary explains that there is no shortage of human creativity: every day 50,000 hours of content appear on YouTube, 3 million blogs are published on WordPress, 40 million photos are posted on Instagram, and 1,300 new apps show up on Google Play. Speed, production, and creativity are everywhere, but our existing organizational models struggle to harness the power of the humans working for them.
Key points include:
- Controlling “controlitis”
- The Haiar case
- The in-ovate model
Read the full article, Bidding Goodbye To Bureaucracy: Future Organizational Models, on Kaihan.net.
Kaihan Krippendorff shares an article that identifies how to take better control of your subconscious to become aware of valuable information.
We have heard the adages like “work on your business, not in it” and “come up to see the forest for the trees.” At McKinsey they urged us to continually take the “top management perspective” by zooming up to look at the business overall before jumping into the details.
But we know Bill Gates used to lock himself in a cabin for a week every year just to read and think during his “Think Weeks”. My friend Tony Crabbe, an organizational psychologist, has written two outstanding books with practical advice for clearing out the busy to give you time to think. Cal Newport goes deep into the need for us to clear space for “deep work” in his book.
Dan Brown, author of The Da Vinci Code, gets up to write at 4 a.m. 365 days a year. Stephen King clears his calendar to write 2,000 words every day before he allows himself to engage with the outside world. Great athletes envision the game before they get on the field (indeed, my friend and former roommate who served as captain of the US national rugby team told me he would spend hours envisioning every moment of the game before a match).
In other words, maybe the old adage should be reversed to “don’t just do something … sit there!
Key points include:
- Identifying what you want
- Instructing your mind
- Structuring your thinking process
Read the full article, Activating The Subconscious Power Of Strategy, on Kaihan.net.