What the company of the future will look like is becoming clear. For 2020 and beyond, we will witness a shift towards a ‘Value with Purpose’ paradigm that benefits the people, not just the company. Profit and cash flow remain crucial to build a healthy and long lasting company, but successful organizations are redefining the purpose of a business in terms of improving the lives of people hugely.
What’s driving this shift? There are powerful trends working in favour of placing purpose above profit. Consumer behaviours, widely adopting a digital life style and new consumption formats more service oriented. Social pressure, showing a renewed interest in environmental, social and governance improvements. Generational change, bringing new people into the workforce with new expectations.
Does this company deserve a space in my life and in the world? Is it doing something more than maximizing total shareholder return (TSR)? Success will lie in providing relevant value not only to individual contexts, but also for the society in general. But even the most socially friendly company has to generate enough return for their shareholders and managing the trade-offs necessary for the optimal strategy is delicate. Therefore, this is nothing short of a major realignment of the fundamentals and we stand at an inflection point that it raises new definitions of business.
Essentially, business is becoming an infinite game about value; that is to say, how to improve people’s lives by solving their problems at a profit. Despite the fact that digital technology has obviously changed and will continue to change our way of doing business, humans will remain the essence of the value game. Knowing how difficult it’s to apply a one-size-fits-all approach, the Value Hacking framework takes seriously these disruptive influences and aims to rethink the role of business in society. The company of the future lies at the integration of singularity, scalability and sustainability. In other words, companies must create value games aimed at hugely improving people’s lives through singular solutions, which are also easy to scale and economically sustainable.
The company of the future is singular
Singularity: the state, fact, condition or quality of being singular; a unique, distinct, remarkable, unusual, or peculiar thing; something distinguishing a person or thing from others.
The company of the future creates singular value when solving people’s problems. The aspiration is to make a positive and tangible impact on what matters to people, gaining a greater share of their life and becoming vital in their lifestyle. The goal is an exponential impact of 10 times on people’s lives, not just a mere linear improvement of 10 percent.
To this end, nothing beats the ‘experiential ecosystem’ play. An experiential ecosystem is the ultimate strategic play to create a billion-dollar game by orchestrating a network of partners around a singular experience. Amazon’s ecosystem is building a place where people can come to find and discover anything they might want to buy. Google’s ecosystem is organizing the world’s information and making it universally accessible and useful. LinkedIn’s ecosystem is connecting the world’s professionals to make them more productive and successful. Nike’s ecosystem is bringing inspiration and innovation to every athlete in the world. Tesla’s ecosystem is accelerating the world’s transition to sustainable energy and transport.
The company of the future is scalable
Scalability: the capacity to be changed in size or scale; the attribute that describes the ability of a process, network, computer program, business or organization to grow larger and adapt to increased demands.
The company of the future scales new value games to a point where they represent a sizable business, in the shortest possible time-to-value period. Since the failure rate in the early stages of any singular innovation is insanely high, scaling means chance of success and time-to-value. So the only value-delivery model that makes sense in such a situation is quick and agile experimentation. An experimental organization becomes categorically imperative to scale a new billion-dollar value game; how else was a company like Apple able to invent something as truly singular as the first iPhone in 2007 and the App Store in 2008?
Over a few decades, Amazon scaled from an online book retailer to an digital marketplace to a cloud computing shaper to a home entertainment force. What mostly distinguishes a Value Hacker like Amazon is that it has rewired the concept of business organization by triggering at least three pivotal mutations in their DNA: Datafication (technology), Networking (people), and Apification (collaboration). A great part of Amazon’s scalability lies in (i) making data-driven technology, and especially artificial intelligence, works symbiotically with humans, (ii) structuring the organization around a neuronal networks of small, autonomous and multidisciplinary units of work that they call them ‘two-pizza teams’, and (iii) using APIs as strategic artefacts for breaking down organizational silos and making collaboration work autonomously.
The company of the future is sustainable
Sustainability: the quality of being able to continue over a period of time; the quality of causing little or no damage to the environment and therefore able to continue for a long time.
The company of the future captures value through a sustainable economic model based on activating exponential flywheels. Ever wondered how Value Hackers like Alibaba, Amazon, Apple, Google, Facebook or Microsoft grow so fast and are so cost effective? The secret behind such amazing economics is something called a ‘flywheel’. If you have a flywheel in your value game you will enjoy exponential revenue growth, low marginal costs, increasing returns to scale, and massive cash-flow generation.
Let’s think about Amazon’s flywheel. If they have growth, then they have sellers and selection. For every new seller that comes onto Amazon, they bring a wider selection of products. The wider the selection of products, the better the experience is for a customer coming on and looking for things. And the better that experience is, the more people come, and the more often they visit. And then, the more people that come and the more often they visit, the more sellers come because there’s more of a market there. And then, the wider the selection, the better the experience. And then, the more customers that come, the more frequently they visit. And then, because Amazon has so many economies of scale, its operating model benefit from lower marginal costs. Therefore, Amazon is able to connect growth with profitability and increasing returns to scale.
The incentive is clear: companies cannot thrive in a world in which people don’t. The company of the future is a Value Hacker that shapes, scales and dominates its own value game based on improving hugely the lives of people and contributing to resolve the world’s most pressing problems.
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The full-stack strategic framework to shape, scale and dominate your own billion-dollar game in the digital era