We are living in the midst of what historians will look back on as the Digital Revolution; an elongated period within which all aspects of society were drastically altered by the influence of digital technologies. Revolutions are spurred on through the actions of rebels; non-conformists who rise up against the established norms and seek to establish a new order.
In the world today there are some stand-out digital rebels who harness the power of technology to transform how we live, work and do business. From Elon Musk to Nikolay Storonsky, these revolutionaries are leveraging advancements in digital tech to provide consumers with new approaches to known problems. To get inside the mindset of a digital revolutionary I recommend these three long reads:
David McCourt is an Irish American entrepreneur who made his early bucks radically disrupting the cable and telecommunications industries in Boston. McCourt is a self-professed business revolutionary who suggests that business, societal and political leaders in today’s world can no longer rely on incremental improvements to work towards the future. Rather to save us from the dangers that lie ahead and to grasp the enormous opportunities that technological progress is making possible we need to act like revolutionaries.
McCourt calls out the fundamental barrier to progress inherent in established corporations. Conservative by nature, because they have a lot to protect, established corporations try to generate new profits without endangering their existing sources of income – often by simply cutting costs and shrinking their workforce rather than being bold and trying out new initiatives or creating new businesses. As companies grow they tend to become more unidimensional with top-down administration. This results in unimaginative and risk-averse behaviours that block them from responding adequately to the external socioeconomic clock (changing market conditions) which is continually accelerating.
The new giant corporations of today; Apple, Google, Facebook, Alibaba and Amazon were all started by entrepreneurs who behaved like revolutionaries. They blew up the model, destroying old ways of doing things in the process. However McCourt contends that since even these (now) major corporations can no longer afford to think like revolutionaries (they have too much to lose) they are all destined to fail in the end. No one is too big to fail as was demonstrated with the collapse of banking systems in 2008. Now the banks face massive disruption from the money lending apps in Africa and the payments startups in Europe, and the banks appear helpless to respond to these revolutionary businesses.
McCourt shares how Jeff Bezos outlined this problem precisely in 2016 in a letter to shareholders, defining the difference between “Day One” and “Day Two” for a company. Day One is when a company starts out with all the sharpness of an entrepreneurial venture. Day Two is when it starts to mature which can result in “stasis, followed by irrelevance, followed by excruciating, painful decline. Followed by death.” To prevent that, Bezos contends the company must maintain the Day One vitality forever. At Amazon it means concentrating on “defense, customer obsession, a skeptical view of proxies” – where the process or market research become the thing that drives everything – “the eager adoption of external trends and high velocity decision-making.” If you fight external trends, you are probably fighting the future.
McCourt achieved many of his own career successes because the incumbent large corporations couldn’t adapt to the changes that his start-up was introducing. Rather than looking at the emerging technologies that were changing the market landscape, these larger companies put their energies into blocking and undermining the disruptive start-ups. McCourt established ‘the first competitive phone company in the US’ linking up all of Bank of Boston’s major offices via dedicated fibre leased lines. By his own admission the incumbent New England Telephone Company was well poised to kill his startup if they had simply realised that their old network was insufficient for the changing needs of their users. The correct approach would have been for New England to invest in revamping their network – short term pain but long term gain. Instead they focused on political lobbying seeking to undermine the credibility of McCourt’s startup. Thirty years later that company has been subsumed by Verizon which is now investing billions in the infrastructure that it should have done all those years ago.
Perhaps the biggest lesson that McCourt has learned in his career is that successful revolutionaries are always adept at knowing what ‘the people on the street’ want and that revolutionaries are most successful when ‘the ruling elite’ who they wish to replace have lost touch with reality. When organisations grow too big they inevitably become ‘too bureaucratic, too lazy and too calcified’, which provides opportunities for the new, young, creative, nimble revolutionaries to move in and take over. When you are deciding where to channel your efforts, McCourt suggests that you look towards ‘new ideas, young people and start-ups. They are the giants of tomorrow. If you choose instead to go to the places where the established giants already rule, then you are investing your life in something which is inevitably in decline, even if it is not yet evident.’
Eric Ries is best known as the entrepreneur, blogger and author who popularised the Lean Startup movement, introducing concepts such as MVP and iterative development into technology startups’ daily vocabulary. For some he is seen as the father of the startup revolution. However, from the beginning Ries was clear that lean methodologies, with progressive development with well-structured customer feedback loops, could be applied to any organisation. He insisted that a startup should be properly understood as any ‘human institution designed to create a new product or service under conditions of extreme uncertainty.’ According to this broad definition, anyone — no matter their official job title — can be ‘cast unexpectedly into the waters of entrepreneurship’ if the context of their work becomes highly uncertain.
For much of his time since publishing the seminal The Lean Startup ten years ago Ries has been working with large and complex organisations helping them to adapt lean methodologies to help them better innovate for success (and survival). Like McCourt and many of Ries’s peers in Silicon Valley, he sees fundamental problems with established enterprises, believing that ‘big company’ people were fundamentally different from creative, disruptive entrepreneurs like themselves. They believed that once organisations reach a certain size, they ‘start dying slowly, from the inside’. They cease to innovate. Big companies inevitably become ‘sclerotic, bureaucratic and political’. The most creative people choose to leave.
The irony for all these entrepreneurs is that they are in fact trying to create the big companies that they scorn. However in their mind’s eye, the company they are busy building will be different. It won’t be dragged down by inane meetings and nosey middle managers. It will remain dynamic, scrappy, a perpetual startup. But how often is this ideal organisation actually what they end up creating? The challenge that Ries has grappled with and believes he has found a formula for is whether we can use Lean Startup techniques to prevent our organizations from becoming lethargic and bureaucratic as they scale. The Startup Way is something of a manifesto that combines ‘the rigor of general management with the highly iterative nature of startups’. The Startup Way revolves around 5 key principles.
- Continuous Innovation – while many business leaders are looking for silver bullet innovations, Ries suggests that long term growth requires something different. He outlines a method for finding new breakthroughs repeatedly, drawing on the creativity and talent at every level of the organisation.
- Startup as Atomic Unit of Work – for continuous cycles of innovation that fuel new sources of growth, companies need to have teams that can experiment to find them. These teams are internal startups requiring a distinct organisational and governance structure to support them.
- The Entrepreneurship Function – adding startups to an organisation requires a new management skillset that is often not present – he calls it ‘entrepreneurship’. This core discipline is as important to a modern organisation’s future growth as finance or marketing.
- The Second Founding – establishing this kind of change in an organisation is not something that should be done on the sidelines. It has the same impact as founding the company all over again and will have profound consequences for the company.
- Continuous Transformation – the transformation will not happen once, but if successful will be repeated. The modern company requires a new capability – the ability to rewrite the company’s DNA in response to new and diverse challenges.
This approach creates a challenge for the modern company – maintaining operational excellence in its core business (where the mantra of ‘Failure is Not an Option’ prevails) whilst finding room to foster innovation (where the war cry sounds more like ‘I Eat Failure for Breakfast’). For Ries a modern company is one that is disciplined at the rigorous execution of its core business – without discipline, no innovation is possible – but it also employs a complementary set of entrepreneurial management tools for dealing with situations of extreme uncertainty. This necessitates a cultural openness to failure.
As Jeff Bezos said after the failure of the Amazon Fire phone “I’ve made billions of dollars of failures at Amazon.com. Literally. None of these things are fun, but they also don’t matter. What matters is that companies that don’t continue to experiment or embrace failure eventually get in the position where the only thing they can do is make a Hail Mary bet at the end of their corporate existence.” A modern company is one that has the capacity to produce products with great reliability and quality, but also to discover what new products to produce.
Ries outlines the concept of Entrepreneurial Management; a leadership framework designed for twenty-first century management. It is not a replacement for traditional management but a discipline designed to help leaders become as rigorous in the entrepreneurial part of their management portfolio as they are in the general management part. This approach to management practice has four key elements:
- Accountability – the systems, rewards and incentives that drive employees’ behaviour and focus their attention. What are people rewarded for, promoted for, celebrated for or fired for. The accountability measures must be aligned with the long and short-term goals the company wants to achieve.
- Process – the tactics and tools that employees habitually use every day to get work done. This can include collaboration, project planning, management and coordination. The processes must be established to foster rapid experimentation, rather than hinder it.
- Culture – the shared and often unstated beliefs that determine what employees believe to be possible. Culture is ‘the organisational muscle memory about how we get things done’ that emerges after some time of putting into practice the right accountability measures and supporting processes.
- People – the ultimate corporate resource that will be attracted or repelled by the culture. A toxic or old-fashioned culture will not attract or retain innovative talent. We all know the stories of ‘organ rejection’ where high calibre entrepreneurial people that should but can’t succeed because of the culture.
New cultures come from the lived experience of seeing a new way succeed. Ries maps out a step-by-step approach to getting the startup revolution going in a company and shares insights from his work with large complex organisations such as GE and the US government about how to implement this type of transformation.
Whilst it’s not clear that Emmanuel Macron has ever met Eric Ries, there is little doubting that he understands the concepts driving forward the Silicon Valley start-up ecosystem having successfully applied them to his own revolution in French politics. Sophie Pedder, Paris Bureau Chief of The Economist, retells in some detail the unlikely rise of Macron from banker, to analyst technocrat, to government minister and ultimately President of France in 2017.
In 2014, Macron was quitting France after being overlooked for a government role and was heading to California with some colleagues to establish a digital learning start-up. He soon came back to France and within 36 months he was standing in front of the nation as President committing a €10b investment into innovation policy with these words “I want France to be a start-up nation. A nation that moves and thinks like a start-up”. Macron claims not just to want to reform France, but to transform it; into an ‘ambitious entrepreneurial economy’, which can be at the forefront of artificial intelligence, machine learning, big data and green technology while preserving France’s treasured sense of art de vivre.
Macron’s achievement was remarkable and shares many of the hallmarks of a successful technology startup. It began with a deep recognition that the current political system in France was broken. The problem. In 2015, after a bruising and failed attempt to introduce a parliamentary bill that would allow Sunday shopping, Macron declared is loss of faith in France’s self-serving party-political system; “I’ve seen from the inside the emptiness of our political system, which prevents a majority of ideas on the grounds that they undermine the political machines.” The Left/Right divide was failing France – delivering ‘a totally disappointing customer experience’ – and rather than trying to fix this with a Centrist approach he altered the conversation entirely, ignoring these traditional structures.
This was his first pivot – rather than operating within the existing fault lines – he sought to align those broadly in favour of an ‘open society with a modernist pro-European outlook’ against the ‘Eurosceptic nationalists advocating protectionism and identity politics’. He declared that the post-War Left/Right party structures were no longer able to meet the challenges of a modern France – geopolitical threats, terrorism, the digital economy, hyper-connectivity, mobility and the environment. His new ‘pro-European market-friendly majority’ would tear apart existing party allegiances with voters coming from the combination of ‘two-thirds of the Socialist Party, all of the centrists, and part of the centre-right.’ What Macron saw happening in the digital economy he sought to apply to his political ambitions – ‘disruption is throwing economic certainties sideways creating unexpected chances for sudden, dislocating change’.
One of Macron’s closest advisors, Guilluame Liegey, a former McKinsey consultant, wrote in an article in 2015 ‘If Political Parties Were Start-ups’ that tech firms could show political parties how to reinvent themselves, and that start-up tools could be used to build a new political movement. New technology made change possible, and fast changes more possible still. Liegey’s first piece of advice to Macron when he joined his team was to ‘get out of the office’; the movement needed to behave like a start-up; responding to real problems, serve ‘customers’ meaningfully, search for new talent and spend time getting to know what ‘the market’ wanted.
Liegey was appointed to head up the grass-roots participation component of the Macron ‘En Marche’ movement. His first act, before the presidential campaign was even launched, was to organise a nationwide information-gathering exercise. Volunteers, most with no previous political activity, emerged across the country to carry out door-to-door surveys to find out what people wanted from politics. The results were relayed in real time back to campaign HQ. This network of political novices would ultimately be the source of the En Marche candidates in the parliamentary elections just 12 months later. The data gathered from 25,000 respondents across the country shaped the campaign strategy – ensuring ‘product-market fit’ from the start.
Once the campaign was live the emphasis on building grass-roots supported shifted to a ‘winning blend of tailored technology and human contact’. The team built their own predictive software with models that they validate agains previous electoral data – cross-referencing prior results from 67,000 polling stations with publicly available metadata on socio-economic geographic background. French privacy laws prevented them from targeting individuals but they could target blocks of streets according to an index of propensity of voters living there could be mobilised to vote Macron.
Local En Marche committees were set up without central bureaucracy or joining fees, but with just a few simple clicks on the En Marche websites. These self-forming En March committees, in the end 4,000 in total, were filled with volunteers who knocked on voters’ doors, organised venues and managed crowds when Macron rolled into town. En Marche nationwide’s reach was essentially established through tried and tested start-up ‘growth hacking’ techniques; free membership, establishing valuable databases and crowd-sourcing finances and effort. Most powerfully of all, the marcheurs on the ground felt ownership for the growth of the campaign and success both nationally and locally.
We might happily debate whether the term ‘revolutionary’ is paying to much homage to McCourt, Ries, Macron and their kind. Some might prefer to call them simply ‘disruptors’ or ‘innovators’. Regardless, the point is that what is taking place right now in business and society is not incremental. We are seeing significant step-changes in how we live and organise ourselves driven by the most rapid advancement in technologies that the human race has ever experienced.
The revolutionary pace of change means that organisations cannot afford to maintain protectionist stances as customers’ attitudes and behaviours change at an ever-accelerating pace. Within existing organisations we require new ever-evolving attitudes to work, new management skills and practices, new organisational structures and new ways of measuring success – that both foster innovation whilst continuing to provide great product and service experiences to ‘customers’. Disrupt yourself before you are disrupted by someone else. Innovate or die. Join the revolution.