“Speedboats are proactive, agile, look outside themselves, connected to a network, bring added value to the customer, citizen or co-worker, and never stop learning. This is in stark contrast to professionals and organizations who remain firmly anchored in the age of industry, they are the oil tankers,” I told a group of HR-directors. On the periphery of my vision, I could see one of the directors becoming more agitated by the second, wringing her napkin to virtual shreds. Finally she burst out: “But Menno, I do notice speedboats like that within my organization, but in reality most of them are in the process of leaving our company! What am I supposed to do with the huge grey mass of leftovers, who are sluggish to the end and cling to the unions and the works council in resistance?” The ensuing silence was deafening.

Menno Lanting has embarked on a journey to discover what the future holds for innovation, organizations and work. He engaged in discussions with a hundred inspiring professionals and entrepreneurs all over the world. And Lanting has succeeded in distilling many practical tips and useful insights from their cases and experiences. Now you, too, can learn the tricks of the trade from such diverse and important organizations as Airbnb, Audi, NASA, Netflix, Philips and the WWF.

‘The skill of writing is to create a context in which other people can think.’

– Edwin Schlossberg

MENNO LANTING

Oil Tankers
and
Speedboats

AGILITY AT WORK IN THE 21ST CENTURY

Business Contact Publishers
Amsterdam/Antwerp

© 2015 Menno Lanting
Business Contact Publishers
Original title Olietankers en speedboten
Translation by Martha Wagteveld-Osborn
Cover design Bart van den Tooren
E-book 358atwork, Almere

ISBN 978 90 470 0910 8

www.businesscontact.nl

This ebook was based on the first English edition, 2015, ISBN 978 90 470 0909 2.

Foreword

It was just over a year ago that I sat down to compare and contrast my ideas on work and business in our tumultuous times against the thoughts of people I am inspired by: founders and employees of cool start-ups, CEOs of well-established businesses and self-employed professionals who travel the world as free agents. I was transported the world over by this plan of mine, from the Dutch lowlands to the sophisticated and metropolitan Barcelona, Beijing, Dubai, Geneva, Hong Kong, London, New York, San Francisco and Washington.

All in all, I spoke with nearly one hundred people. With their help, I was able to structure my own ideas, and they kept providing me with new insights. This book will bring you quotes from these conversations. For instance, these words uttered by John Sculley, former president of PepsiCo and former CEO of Apple: “It is virtually impossible to explain to anyone under thirty how complicated it was, doing business in the pre-digital age. Nowadays, leadership has an increased openness and is more equally-footed in its structure. Organizations that have grasped this tend to have no walls, nor do their staff have fixed desks or offices. I no longer have an office myself; my laptop case is my office. I can work at conferences, in hotels, cafés and airports. The entire business world has changed completely.”

In San Francisco, I met with Stephen Roberts, the former CTO of US retailer Best Buy. Upon mentioning the working title for this book, Digital leadership, he urged me, from his heart: “Please do not call your book that, it is complete and utter nonsense. If you do, you turn the digital transformation into something separate, something ‘on the side’. We will then continue to regard it as such, and people will not view it as the very essence of their skill set, which it in fact is. Speed is key, as is the ability to change, to experiment, to fail and to learn. In a word, that is the core of our work and business in this century.”

Roberts is no lone wolf in this respect. Back in 1971, Daniel Callahan, philosopher of biomedical ethics, wrote presciently: “We have to do away with a false and misleading dualism, one which abstracts man on the one hand and technology on the other, as if the two were quite separate kinds of realities… Man is by nature a technological animal; to be human is to be technological. We should recognize that when we speak of technology, this is another way of speaking about man himself in one of his manifestations.”

Stephen Roberts was spot on. Digital leadership is not what matters; what you do or fail to do with digital tools, as a leader, manager, entrepreneur or professional, is not what matters. What does matter is whether you are able to adjust in order to continue contributing to your work; if you are able to take charge of the many changes in your surroundings, and the adjustments you are then required to make. To me, the word ‘leadership’ is not connected to the position you have within an organization. It is all about showing initiative, and deciding on a direction for your own life and work in a world in flux.

The term I use for those professionals and organizations who succeed at this is ‘speedboats’, whereas I refer to organizations that cling to their former course of action as ‘oil tankers’. A wonderful metaphor, though I am quick to admit that any kind of sharply defined juxtaposition in the title will inevitably conjure up images, and provoke a strong reaction. After all, an oil tanker is slow, and being slow often means you tend to lag behind, and end up being decidedly uncool, to boot. On the other hand, a speedboat brings to mind all kinds of pictures of speed, agility and dynamic movement. To be sure, in practice, things are not so black-and-white. Over the past few months, I have received messages from several people to tell me that, in fact, oil tankers are agile too, particularly if I were to account for their huge size, but that speedboats are actually quite a nuisance to fishing boats. This kind of thing really does make an author’s day. Then I received several pleas to not use oil tankers or speedboats in the title, and to opt for sailing boats instead. Were they not agile and environmentally friendly, too? Just imagine, the publisher and I had at one time contemplated a book cover with an elephant and a mouse, or with a giant and Tom Thumb. In the end then, I settled on Oil Tankers and Speedboats!

Regardless of whether you go for oil tankers, giants, sailing boats or speedboats, ‘adaptability’ is the main theme for this book: being able to transcend what you were educated for, or the career path you may have taken, the business models you had faith in, how relevant you deemed your organization, and how you thought it would remain that way for decades to come, all these things, you need to transcend and by doing so, accept that we are truly making the transition from the industrial age to the networking era.

How to use this book

I will not be handing you a manual on how to read this book. Just start at the beginning, or the end, or just leaf through the pages randomly. After all, it is up to you. If you are stuck for time, may I suggest you at least read Chapter 6? This is basically a summary of sorts of the whole book.

Researching and writing this book has been an immensely enjoyable journey for me. I hope I can share this with you, the reader. Apart from the conversations I had, I found inspiration in numerous various online and offline media, reports and articles alike. I have done my utmost, going to great lengths, to source the original citations and include them in my endnotes. However, if by chance I have overlooked anything, do let me know. Besides, I am very keen to know what effect this book has on you. Please send me any questions, comments to @mlanting or mennolanting@gmail.com.

A big thank you for your time and enjoy the read!

Menno Lanting

Introduction

In the past few years, the City of Philadelphia has managed to downsize its team of garbage collectors from 33 employees to 17. How did they pull that off? Did its citizens put out less trash? Did people start to illegally burn their waste in the backyard? Far from it. In 2009, the BigBelly Solar Company installed ‘intelligent trash compaction units’ equipped with software that enabled the company to see which bin needed to be emptied when. By using this information, it was possible to reduce the number of times that waste was collected from seventeen times a week to just three.1

The city of Barcelona uses similar technology and is hoping to find clever solutions in a variety of other fields too. Sensors are already being installed all over the conurbation to measure traffic intensity and inform drivers of their expected travel time. Forty percent of the municipal parks have automatic sprinklers and 50,000 households – mainly the elderly and less mobile – have access to an online helpdesk. In order to facilitate these developments, the city council has provided a large proportion of the data collected by the city to its citizens and businesses. They are then invited to think up new technological solutions.2 Barcelona has the ambition to save 3 billion euros over the next decade, mainly on salaries.3

Barcelona and Philadelphia have proven to be examples for other cities too. The Finnish capital Helsinki is using sensors and GPS to allow snow trucks to drive the most efficient route possible. “Most importantly, these services are aimed at making life easier for citizens. A subsequent benefit for us is that it helps us reduce physical labor,” says Kari Miskala, head of the ICT Development Team.4

Obsolete

There are more examples of similar kinds of digitization: back in 2011, McDonalds announced its resolve to replace part of the workforce with touch screens.5 Personal assistants will become partly or completely obsolete if you can use your tablet or smartphone to easily manage your calendar yourself. Should you have any difficulty in doing so, there are always digital assistants, like Google Now or Siri.6, 7 If you prefer some degree of human contact, there are thousands of ‘virtual’ English speaking assistants to wait on you, in countries like India, Kenya and Tanzania, at a fraction of the cost of a personal assistant. Jeff Bezos, founder of e-commerce company Amazon, fired all his reviewers when he discovered software was far better at doing the job, and that automatically-generated reviews led to higher sales besides.8 Amazon is by no means a loner in this: in time, highly-sophisticated algorithms are expected to take over 140 million full time jobs of knowledge workers.9

What are the implications of such change for motoring clubs – the Dutch ANWB is as good an example as any – when in the foreseeable future our cars will be able to give advance warning of a potential defect, long before it happens, so that we can just drive into the workshop long before we end up with a breakdown at the roadside? What would we then need our traditional subscription to their roadside assistance.?10 How many ANWB employees – some 5,000 in all, including more than 800 patrol staff – will become surplus to requirements?

What about taxi drivers? Pioneer Uber is not only shaking up the business model of the taxi industry, but may well undermine the very raison d’être of the profession. What if it were to start using self-driving cars in the future?11, 12

The digital era

New developments occurring in quick succession surely are a sign of the times. Google’s Chief Economist Hal Varian labels this ‘combinatorial innovation’. He states there have been times like these throughout the course of history, each with their own characteristics. The age of industry saw the mechanization of production and parts becoming interchangeable for the first time ever; easily replaceable too. In the IT/internet era computers took over calculations and we all became interconnected through our PCs.

Now we have come to the digital era, where we are able to develop new products and services courtesy of mobile technology. Digital ingredients – bits and bytes – cost next to nothing, are in infinite supply and enable a myriad of product/market combinations. Virtually everyone can access these bits and bytes, and they are invariably easy to copy and distribute.

Organizations are noticeably being affected by this digital revolution. Technological innovation in the 21st century is no longer the special reserve of larger organizations, due to almost ubiquitous access to these digital building blocks. The market for innovation is open to small and mid-sized businesses, and even to individuals. Large and often cumbersome organizations now have to deal with strong competition from start-ups.

Oil tankers and speedboats

Prior to the age of internet, innovation had a relative predictability. It was accomplished by the R&D department within the organization, according to a set pattern.13 Nowadays people – be they individuals or their networks – adopt new technology faster than organizations can keep up with them. This is giving birth to new and agile businesses, which like speedboats are able to use any angle to zip past the large established organizations-or the oil tankers.

A list of the fifty most innovative companies worldwide has very few multinationals on it.14 In fact, the bulk of them are small, though their innovative product does have a global impact. Dropbox, for instance, has a very small team that provides cloud services. Just picture GitHub, with its platform where programmers can work on projects together, or Netflix, head-butting established media with streaming video. The list is endless.

A focus on innovation does pay off, that much is crystal clear. On the stock market, innovative companies are outperforming their less innovative industry counterparts by up to 200 percent.15 Besides, of all the companies on the Fortune 500 in the year 2000, over 40 percent no longer exist.16

WhatsApp, Snapchat and the like have used their chat services to bring the huge telecom companies tumbling down. There are masses of stories about ‘traditional businesses’ being struck down by new business models. A Dutch case in point: the Free Record Shop chain went belly up through a fierce digital storm of illegal downloads and alternative suppliers like iTunes, Spotify and Google Music.17 Their classical overheads for retail shops and staff were just too expensive for them to compete with online alternatives. At their demise, their turnover was still an impressive 300 million euros, but their profits were only a scant 1.5 million euros; a mere 7 euro cents per customer. No way could that cover their overhead. “The business failed to respond quickly enough to changes in the marketplace,” observed one of the receivers. “They could clearly see it happening, but their responses were just inadequate.”18

Similarly, bookshop chains are having to close down or otherwise morph into speedboats in order to serve their customers properly, moving away from the anonymity of the huge oil tanker.19 Travel agents are increasingly irrelevant, and the same is true for any sort of intermediary, be it advisory bodies, lawyers or training agencies. The consultancy business has plummeted by some 20 percent since 2008.20 The internet has given customers quicker and easier access to new tools, concepts and models.21

The annual CEO Survey conducted by IBM shows CEOs rightly citing technology as the key external influence on their organizations.22 Consumers uniting online and rapidly taking their share of the power formerly belonging to the oil tankers are but one example. Then there are the start-ups that serve consumers with ICT tools, faster and better than before, often by providing another added value or even by meeting a different need entirely. All this may well sound self-evident, but until quite recently the impact of digital technology was not taken into account seriously in most board rooms. Consequently, employees were not given an adequate understanding of how this technology would set the world in rapid turmoil, nor of how it would affect the organization and their individual jobs.

A whole new set of rules

The world is changing: old laws and models are proving to be useless, new ones are being devised on the go. On the one hand, the world seems to be getting smaller through all the digital communication, even though all these connections also make life more complicated. The mere demise of a few companies is just the tip of the iceberg; in actual fact one era is being ushered out, as the new one comes in and takes center stage. We are gradually moving from the age of industry into the digital era, and ultimately this will affect every one of us. This inbound dynamic necessitates a new way of structuring organizations: less overhead, a real minimum of unnecessary hierarchy, more autonomy for professionals and consequently fewer managers.

Responsiveness

A staggering 87% of employees worldwide are not engaged at work. The world has a crisis of engagement, having serious and potentially long-lasting repercussions for the global economy.23

I witnessed an interesting example of this when I was visiting Dubai, in the United Arab Emirates. “As policy makers we are constantly looking ahead. The world is changing so rapidly, that we cannot afford even the briefest lapse in attention. We need to keep adapting,” says Mohammad Al Hawi, Head of Innovation in the Executive Office of the President. Until the 1960s, the Arab states, which were still separate, reaped most of their earnings from the sales of dates and pearls. Then they struck oil. An unparalleled wealth was tapped into. As it soon became clear that the oil supplies were to run out after roughly a century, a substantial chunk of the money earned in the oil industry was used to build an impressive infrastructure and a highly professional finance and tourism industry. Today oil makes up a mere 5 percent of total revenues. “In spite of our success, we are already working hard on our next move,” Al Hawi continues while I am being served with tea and dates. The next move will be an openarmed embrace of the technological and digital revolution: “In a few years, we would like to have a business atmosphere conducive to building companies like Facebook, Samsung, Google and Spotify ourselves. Currently we are investing billions to upgrade our level of education, concerning new digital technology, thus drawing creative talent the world over to us, and realizing a climate of experiment.”

One could say that things happen more quickly in an authoritarian state, but the ambition in itself is certainly one to inspire. A similar attitude could well help us take giant steps in the West, too. There does not seem to be any high level awareness of the need for change, neither in politics nor in business.

Fewer jobs

Anytime countries and regions are in trouble, businesses fold, and that means job losses. The same can be said for jobs disappearing when technology replaces people. Research has made clear that approximately half the current jobs in the United States are expected to disappear in the near future, as a result of digitization and ongoing automation.24 Whether or not Europe and the Netherlands will be similarly affected, still remains to be seen.

Technology has now brought us to the eve of an era in which robots will be used for any number of tasks, and not just for routine, heavy or filthy factory labor.25 According to Neil Jacobstein, Co-chair of the Robotics Faculty at Singularity University in the Silicon Valley, robots will relieve us of a lot of work: standard production work, to be sure, but also routine knowledge work such as checking tax returns. Physicians will have digital assistants, who are able to process far larger chunks of information than the human counterpart.26

New opportunities

However, jobs and business models are not simply disappearing into thin air, as the digital revolution is providing opportunities of its own. Plenty of them, in fact. It remains to be seen whether they will create sufficient added value to give credence to the existing structures. To put it differently, it is quite possible that we will, generally speaking, need fewer people, buildings, company cars, and so on, to reach the same or greater added value than before. At the same time, the question arises as to whether everyone will be able to seamlessly exchange one job or one business model for another. Jaron Lanier is correct in pointing out that the current middle class is very much at risk of ending up in serious trouble, if we do nothing and decide not to go with the flow.27

“We do not ‘simply’ experience another alteration of the business cycles, rather a restructuring of our economic order.”

– IAN DAVIS , MCKINSEY28

These are relevant developments for all of us, executives and employees alike. No longer are business models set in stone, nor is social relevance or decades of working for the same company. Oil tankers that have been charting the same steady course for years, and which deem it less than desirable and possibly even dangerous to change course, need to give the wheel a hefty tug. Now, the course must be altered constantly, and the very structure of organizations is characterized by change. We need to adapt to a new reality, in which our lives and work are deeply involved with technology.

Intuitive leadership

This book is intended to be read by managers, professionals and business people, who are curious as to what their roles will be in the future: people who are keen to discover what their added value will be in a more loosely-structured organization, where employees are increasingly well-equipped to organize their own work. This may sound like a paradox but such organizations certainly do need unison and direction. In other words, strong leadership. To be sure, it will have different contours than those we are accustomed to; frequently leadership will be shared, and temporary at that. This digital era, in which we reach an unsurpassed level of connecting with each other on shared topics, has in fact acquired the best ever conditions for leadership with the greatest common ground. Never before have there been so many leaders, despite not regarding themselves as such, who have started a movement of some kind. Leadership has many different faces. A person who leaves an organization and takes a gang of people with him is just as much a leader of that company as the CEO is. Leadership is a prerequisite for the steps we collectively need to take.

Why is it so hard to transition from the age of industry to the digital era? As I was writing this book, I have constantly kept this question in mind. The answer is probably that we have been taught to listen to our rational mind, instead of our intuition. Within organizations, our measure is often taken based on where we went to school or university, how many hours a week we work, what our boss thinks about a certain topic, whether or not we will have finished the quarterly report on time, our attendance at all meetings, etcetera.

The potential of the mind is infinite, and yet rather prone to limiting itself at the same time– or so neuroscience has taught us. In general, and particularly in the workplace, we are inclined to focus on our mind over anything else. We have learnt to ignore our instinct and to listen to ‘the boss’.

Being influenced by their experiences of all the possibilities of the internet, people are rapidly letting go of the habit of listening to their boss. Everywhere they look, alternatives are readily available. It is omnipresent in politics, in media and most importantly in the relationship between consumers and businesses, and citizens and government. More than ever before, people will chart their own course, without taking too much notice of now obsolete structures, or of debilitating hierarchies. Managers, professionals and business people quickly need to find a way to get swept up in this movement.

1. Stormy weather

Clouded by jetlag, I arrive at San Francisco airport. Without thinking properly, I emerge stumbling from the endless queue at customs into a battered old taxi. My thoughts are of a hot meal and then, bed. Mustering the energy to say a friendly hello to the driver is almost more than I can manage. He ignores me. I wonder about his hearing and repeat my cordial greeting, louder now. No response. In the meantime, the taxi has moved away from the airport and turned onto the highway. Interesting really, as I have yet to express where I would like to go. My jetlag catches up with me and, mildly annoyed, I ask where on earth we are heading. I can barely make out his curt answer: “To the downtown hotels, of course.” He apparently thinks that is where all tourists and business men go. He takes quite some convincing before he realizes I am in fact headed for a suburb, where I am renting an apartment. He is adamant in his disagreement. He almost growls at me as he asks me why on earth I am staying there, before making a terrifying U-turn in the middle of the highway – thank heavens there is no hard shoulder – to take the taxi in the right direction. Or has he really? I cannot help noticing on Google Maps, where I am tracking our journey, that he is taking a wild detour. When we finally reach the neighborhood, the driver actually needs to borrow my iPhone to use the same Google Maps to drop me at the end of the street. “You can walk the rest.” Dumbfounded by jetlag, I get out of the cab, only to find him lowering his creaky window and demanding a tip.

This experience cured me from ever using ‘normal’ taxis again. Even without this excessive incident, I am very rarely impressed by the quality provided by taxis and their drivers. Ever since my visit to San Francisco, I have used the Uber-app to book a cab. GPS shows me a little map with the taxis in my vicinity. In order to avoid another run-in with a driver who lacks people skills, I only pick taxis with a four or five-star rating (each passenger is able to leave a review after a ride). I then receive an invoice – which I pay with a previously registered credit card – and I can check the route chosen by the driver on a little map, to see if it is indeed the quickest. Oh, and by the way, Uber only uses black town cars. This is very helpful, as it means you often spot your ride en route, helped too by GPS on the map. The driver greets you on a first-name basis, to ensure you do not hop into the wrong car by mistake.

It is not just the traditional taxi trade in San Francisco, or any other city I visit for that matter, that I no longer do business with – hotels too are not taking as much of my cash as before either. The apartment where the cab driver from hell finally deposited me was rented through Airbnb, the online marketplace where people rent out their room, apartment or house directly. A clearly-presented website with a helpful map and plenty of search options, it displays accommodation at a far more attractive price-to-quality ratio than most hotels. An added bonus is the pleasure of meeting actual locals.

“Uber is a 3.5 billion lesson in building a world how it ought to be, instead of optimizing the world as it is.”

– AARON LEVIE, CO-FOUNDER AND CEO OF BOX

Not only is Airbnb an innovative platform, it has been thought through properly, providing people with an indispensable sense of trust. Renting out your home to someone you have never met is quite daunting, after all, and the same is true for staying with a complete stranger. An effective solution: guests write reviews of their stay and hosts write one of their own, about the guests. Deceptively simple, but the second review makes me want to be a better guest; I am gratified by leaving a place behind in such a way that the owner will give me a good review.

In transit

The taxi and hospitality industry are by no means alone in their added value being scrutinized; organizations in all kinds of industries are feeling the pressure. Current changes, often technological, are proving hard for organizations to keep up with. Newcomers like Airbnb and Uber spot opportunities and grab them. Increasing speed of innovation, and adapting strategy and thinking outside the box, these are prerequisites for organizations now. Being aware of emerging patterns and the bigger picture, correctly assessing new platforms, or better yet, setting them up for yourself. The most significant change is that consumers are longing for a whole new user experience, one more personal and faster too.

It is by no means a seamless transition. New entrants like Airbnb and Uber need to be prepared for fierce resistance from established businesses.1 They often stretch the limits of current legislation, which tends to develop at a rather slower rate than the world of change.2 Most organizations and their leaders, however, have begun to realize that business and organizing have been forever changed.

Disruptive market innovations have always been around, but there has been a seismic shift of late. In the past there was a clearly visible pattern: new parties entered the market, most likely with a cheaper alternative and gradually acquired their share of the market.3 A large organization had no less of a guarantee of succeeding, though the oil tanker would have enough time to change its course. This is down to the gradual nature of market growth on the part of the competition. Today there are more ‘Big Bang innovations’ than ever, a term coined by Larry Downes and Paul F. Nunes in Big Bang Disruption. Often these take place in the wake of a quick succession of cheap experiments. The internet is generally the distribution channel of choice, reaching large numbers of consumers rapidly and creating expeditious growth.

New innovation curve

Our high level of connectedness online enables us to discover new products and services in the blink of an eye. Boredom is always lurking while we yearn for something new, immediately. The waiting game is a bad idea for anyone in business, as is waiting to see what the competition is up to and taking your cues accordingly. You will invariably turn up late at the proverbial party. You really need to make innovation an investment priority.

“Even if you are on the right track, if you are waiting around you will inevitably be crushed to bits.”

– Actor Will Rogers

Innovation of procedures or of products, those are your options.4 The first applies to rejuvenating your business and organizational models; the latter is about radically new products or services. They often involve conquering a completely new market. This in turn calls for an entrepreneurial spirit all too often lacking in large organizations. Broadly speaking, they are particularly focused on providing efficient service to an existing market, utilizing products and services that are just ever so slightly tweaked, over and over. New businesses tend to show more of the required pioneering and risk-taking attitude.5

Run aground

Once in a while, a large organization will succeed in overtaking the disruptor and conquer the new market after all.6 This is, however, a strategy which is hard to plan and fraught with risks. If the oil tanker proves to have taken the wrong course and subsequently runs aground, this will often be irreversible. This is exactly what happened to Nokia.7 Stephen Elop – then CEO of Nokia – wrote an email to all the Nokia staff in 2011: “We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally. Nokia, our platform is burning.”8 Elop was well aware of the forces Nokia was battling. In that same memo he said: “Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, ‘the time that it takes us to polish a PowerPoint presentation.’ They are fast, they are cheap, and they are challenging us.” His words came true within no time at all. The Chinese company Xiaomi (had you ever heard of them then?) launched a new phone in 2013 and sold 100,000 units within 86 seconds.9 (Elop then ‘moved along’ to Microsoft, as part of the takeover.)

“If you are not ashamed of the first version of your product, you waited too long to launch it.”

– Reid Hoffman, founder of LinkedIn

Another giant, Shell, is by no means immune to these developments. “The world is changing at an increasing pace, and disruptive innovations are changing how we work, live, are organized and communicate,” according to Thijs Jurgens, their Vice President of Innovation. “Technology is increasingly complex. Integrating technology is an art in itself. This may well surpass the capabilities of any organization, even one of our magnitude.”10

The ability to move with a changing market is especially challenging for large companies. Disruptive innovations tend to develop in niche markets, often because end users are thinking up their own solutions for urgent problems.11 Those users are often ahead of the bunch, and hardly expecting a new product or service to work without a glitch.12 Disruptive innovation often takes established businesses by surprise, as it appears from an unexpected angle. For instance, navigation company TomTom was completely taken off guard by all manner of free navigation apps, which succeeded in significantly disrupting the business model.13

Henk Volberda, business economist and Professor of Strategic Management and Entrepreneurial Policy at the Erasmus University Rotterdam, believes that – in spite of businesses toppling over left, right and center – 11 percent of Dutch businesses do nothing whatsoever to innovate their business model, and another 21 percent make only a slight effort. A sizeable chunk, 29 percent, does actually make ‘some attempts’ at innovation. Volberda thinks it is precisely this group, which is ‘still on the fence’ so to speak, who could do with a nudge of encouragement to stimulate the competitiveness of the Dutch economy.

Martec’s Law

As these developments take on a more definite shape, we are now stumbling into real obstacles. Blogger and entrepreneur Scott Brinker refers to this as ‘Martec’s Law’.14 This refers to how technological possibilities tend to grow at an exponential rate, whereas organizations are inclined to develop at a more leisurely pace. Brinker has based the first part of this law on two other laws, or codes, of technology: 1) Moore’s Law, which makes clear that computer arithmetic doubles its speed roughly every two years, while its cost declines by only half in the same time period; and 2) Metcalfe’s Law, describing how the value of network connections increases, proportionate to the size of the network. An organization’s capacity for change, however, remains more restrained. Structures set in stone, natural resistance and vested interests all stand in the way of fast adaptation. And change fatigue, paired with cynicism are all making sure that, in fact, the willingness to change is actually declining.

Mark Frissora, former CEO of car rental firm Hertz, has this to say: “Technology is constantly challenging traditional business models, and it happens faster and faster in ways that can be difficult to see. When a new technology emerges, companies need to decide almost immediately whether to adopt it—or they could risk being destroyed by it.”15

In a leaked internal report, eminent newspaper The New York Times admits to its failure: “We noticed our readers moving en masse to social media, while we were still doing a redesign of our homepage.”16 And really, this is just the beginning, of all the changes digital technology will produce. Cisco CEO John Chambers remarks: “The most significant transition we shall experience is when we start to connect everything – and I do mean everything – in a virtual sense. This will impact countries’ productivity. Alter business models and we alter our day-to-day lives. Its impact (of connectivity) on our society will be 5 to 10 times greater than internet has had.“17

The right culture