The Value Creators Podcast Episode #49. Erik Schön On Self Management Amidst Change

October 18, 2024/0 Comments/in The Value Creators Podcast /by Hunter Hastings

Has the pace and volume of change increased in the modern age? Is dealing with change more of a problem for businesses today than in the past? What is the recommended way to manage change?

Erik Schön is a student of ancient philosophy, and he reminds us that the challenges raised by change are ancient, not modern. And the ancients had good ways to deal with them. In this episode of the Value Creators podcast, Erik Schön discusses the genesis of his book, The Art Of Change, the latest of a trilogy of works that include The Art of Strategy and The Art of Leadership. Erik distills highly relevant ancient wisdom, particularly from texts like The I Ching and Lao Tzu’s Tao Te Ching. He builds a modern business application from these classic ideas based on his extensive experience in leadership and strategy.

Resources:

Connect with Hunter Hastings on LinkedIn

The Value Creators on Substack

Connect with Erik Schön on LinkedIn

Get Schön’s book on Amazon: THE ART OF CHANGE: Patterns for Success.

Yokoso Press

Show Notes:

Knowledge Capsule

Erik Schön’s trilogy includes:

The Art of Strategy (inspired by Sun Tzu’s The Art of War)
The Art of Leadership (inspired by Lao Tzu’s Tao Te Ching)
The Art of Change (inspired by the I Ching)

The sub-title of The Art Of Change is “Patterns For Success”.

Patterns emerge from complex adaptive systems; they are not always predictable but form as individuals interact with their environment.
“The Art of Change” book presents these patterns as 64 chapters, offering timeless insights that guide users based on specific challenges or goals.
Each chapter contains six questions aimed at prompting reflection and offering multiple perspectives for addressing current challenges, such as teamwork.

Using Patterns to Address Teamwork

Six guiding questions for teamwork include aligning collaboration approaches, matching skills with needs, and fostering feedback, integrity, and support.
These questions are designed to deepen understanding and provide actionable insights for collaborative effectiveness.

The Concept of Art in Change, Strategy, and Leadership

Viewing leadership and change as an art emphasizes balance between structure and creativity, blending practical wisdom with structured approaches.
The term “art” contrasts with rigid, formulaic methods and encourages adaptive, context-sensitive responses.

Erik’s aim in The Art Of Change is to offer a practitioner’s perspective, using first principles from ancient times to address modern leadership, strategy, and change.

Are we experiencing an increasing rate and amplitude of change in today’s world? It’s a concern that has persisted throughout history. Erik argues that change has always been a part of human existence and draws parallels to ancient times in China, emphasizing that despite turbulent conditions, people found ways to thrive.

They did so with the right mindset that prepared them for a full range of changes. Erik introduces the idea of balancing expectations with surprises in order to maintain flexibility in decision-making. He advises minimizing expectations to avoid being caught off guard and to stay present in the moment.

Erik Schön explores the concept of balance through the lenses of integrity, flexibility, purpose, capability, competition, collaboration, and harmony, drawing insights from the I Ching.

Integrity and Flexibility: Schön describes integrity as a combination of heart, mind, and gut feelings, and walking a straight path while maintaining flexibility in different contexts. The balance between integrity and flexibility is crucial, as one must adapt while remaining true to oneself.
Purpose: Schön explains that purpose, represented in I Ching, can be both individual and collective. It involves guiding one’s life and actions (or a group’s) like directing a river to prevent flooding, signifying the importance of having direction in fulfilling personal and organizational goals.
Capabilities and Competition: Capabilities refer to the ability to meet stakeholders’ needs. Rather than focusing on competition as winning, Schön advocates for a perspective of collective success, emphasizing collaboration to achieve shared purposes. This view aligns with I Ching’s principles, which stress teamwork as essential for survival and thriving.
Harmony: Harmony is likened to music, where individual elements (or team members) come together to create a coherent whole without losing their distinct qualities. Schön uses a culinary metaphor to illustrate this, where diverse ingredients enhance each other’s flavors, underscoring the value of coordination and diversity within unity.

Eric encourages embracing both practical strategies and the artistic elements of change for personal and organizational development.

Understanding Change and the Role of Mindset:

Schön advocates for a mindset that expects both the expected and the surprising elements of change, as this balance prepares leaders to adapt flexibly.
He uses the concept of approaching situations without rigid expectations, which helps reduce surprises and enables practitioners to remain adaptable and in the present moment.
By staying present, individuals can better navigate change, manage expectations, and avoid being overwhelmed by unexpected challenges.

Perseverance and Balance in the Face of Change:

Perseverance is illustrated through mythical stories such as the carp, symbolizing persistence by overcoming challenges to transform into a dragon, the ultimate shapeshifter.
Schön highlights the importance of balancing action with patience, drawing from I Ching‘s principle of “timely balance” to decide when to act or wait.
This balance—knowing when to push forward and when to observe and adapt—enables leaders to remain resilient and responsive to the dynamics of change.

Balancing Patience and Action

Embracing both patience and action simultaneously allows for adaptable and mindful decision-making.
Achieving a mindset that can “hold two thoughts at once” is key to navigating complex situations.

Integrity in Yijing Philosophy

In Yijing, integrity is depicted as “walking straight, following your heart and mind,” symbolizing alignment between one’s gut, emotions, and intellect.
The Chinese character for integrity combines symbols representing heart, mind, and action, conveying a comprehensive approach to personal alignment.

Flexibility as Complementary to Integrity

Flexibility involves staying open to possibilities and adapting to each moment while maintaining one’s core integrity.
True balance is found by discerning when to uphold integrity and when to adapt, avoiding over-flexibility that can compromise values.

Continuous Journey of Balance

The balance between flexibility and integrity is a journey rather than a fixed destination, continually influenced by context.
Erik describes this adaptability as the “art of being human,” a practice of responding thoughtfully to the people and situations of each moment.

Purpose in I Ching and Business

I Ching views purpose as both a personal direction and a guiding force for teams or organizations, similar to the concept of the Tao (The Way).
The Chinese character for purpose is illustrated by a moving foot and head, symbolizing purposeful direction in life or leadership in teams, and even society.
Purpose in I Ching is also metaphorically represented by guiding a river to prevent flooding, highlighting purpose as a force that shapes and controls the flow of actions.

Ancient Principles in Modern Context

Terms like purpose, integrity, and flexibility, though perceived as “soft” concepts, are vital operating principles, as seen in organizations like the US Marines.
These principles bridge ancient wisdom with present-day needs, reminding that humanity’s fundamental values have remained consistent across time.

Capabilities and Competition in I Ching

I Ching emphasizes building capabilities to meet stakeholder needs, aligning with business goals to serve customers and colleagues effectively.
Competition is reframed as a path to success, achieved by fulfilling one’s purpose alongside stakeholders rather than purely defeating competitors.
Collaboration takes precedence in the I Ching philosophy, emphasizing teamwork as essential for achieving shared goals, mirroring societal reliance on cooperation for survival in historical agricultural communities.

The Concept of Harmony

Harmony is illustrated with musical and culinary metaphors, where diverse elements (like notes or ingredients) complement each other without losing individual qualities.
The Chinese character for harmony combines rice and mouth, symbolizing the blend of unique contributions into a cohesive whole, promoting unity of purpose.
Harmony is key in team settings, encouraging diversity in roles (e.g., team members with different skills in a sports team) while aiming for alignment and coherence.

Direction and Persistence

Direction is a central theme in I Ching, encouraging individuals and organizations to maintain their path and purpose, even when obstacles arise.
Persistence, reinforced by a clear direction, allows flexibility to adapt while staying true to core values, fostering long-term balance and integrity.

Direction and Purpose in Leadership

Emphasizing a clear direction and a purposeful “north star” helps guide organizations and teams toward meaningful goals.
The purpose may evolve, but the consistent movement toward it creates learning opportunities and prevents stagnation.
Even without a precise destination, moving towards purpose allows teams to adapt and adjust direction as needed.

Patterns for Change and Success

Patterns emerge from complex adaptive systems; they are not always predictable but form as individuals interact with their environment.
“The Art of Change” book presents these patterns as 64 chapters, offering timeless insights that guide users based on specific challenges or goals.
Each chapter contains six questions aimed at prompting reflection and offering multiple perspectives for addressing current challenges, such as teamwork.

Using Patterns to Address Teamwork

Six guiding questions for teamwork include aligning collaboration approaches, matching skills with needs, and fostering feedback, integrity, and support.
These questions are designed to deepen understanding and provide actionable insights for collaborative effectiveness.

The Concept of Art in Change, Strategy, and Leadership

Viewing leadership and change as an art emphasizes balance between structure and creativity, blending practical wisdom with structured approaches.
The term “art” contrasts with rigid, formulaic methods and encourages adaptive, context-sensitive responses.

The Value Creators Episode #48. New Access to Capital for Entrepreneurs with Brian Hollins

October 1, 2024/0 Comments/in The Value Creators Podcast /by Hunter Hastings

Brian Hollins is the founder and managing partner at Collide Capital, the Founder and CEO of Takeoff Institute, and aFounding Board Member at BLCKVC. He’s devoted his career to addressing and solving the challenges entrepreneurs face in accessing capital when they’re not plugged in to elite VC networks and funding sources. Brian shares insights from his venture, Collide Capital, which provides investment, coaching, and support to entrepreneurs lacking access to traditional networks.

The conversation highlights the importance of community, mentoring and education in empowering these entrepreneurs. Brian also discusses his involvement with the Takeoff Institute, which aims to develop future leaders. The episode underscores the critical role for entrepreneurship in value creation. Entrepreneurs develop better products and services and contribute to meaningful experiences for customers. Institutional support, such as venture capital, is essential.

Yet, only some have access to these resources, particularly those from disadvantaged backgrounds who may not be plugged into the institutional environment of university incubators and venture capital pools.

Key Challenges Discussed:

Lack of access to networks: Many aspiring entrepreneurs from underprivileged backgrounds may feel disconnected from the networks facilitating access to funding and mentorship.
Intimidation by networking: Networking can be intimidating, but it is not an insurmountable barrier. With the right coaching and support, disadvantaged entrepreneurs can find their way into these networks.

Brian’s journey serves as an inspiring example of how one can create value not only through business success but also by uplifting others and fostering a culture of entrepreneurship.

https://youtu.be/323Rsw9kQ0s

Resources:

Connect with Hunter Hastings on LinkedIn

Connect with Brian Hollins on LinkedIn

collidecap.com

Knowledge Capsule:

Entrepreneurship as Value Creation

Entrepreneurship creates value by providing better products and services for customers while also offering fulfillment and potential wealth for entrepreneurs.
Early-stage startups require investment since costs can outweigh revenues initially, and many entrepreneurs lack access to institutional venture capital.
Not all entrepreneurs have access to institutional funding sources like venture capital, especially those not part of exclusive networks like university incubators.

BLCKVC Initiative

BLCKVC is an organization aimed at helping people of color access the venture capital ecosystem, guiding them through the fundraising process, and fostering inclusion.
Minority founders face challenges in accessing venture capital. Institutions traditionally overlook minority founders,, but with proven success, capital flows to diverse ecosystems will increase, promoting diversification in investment portfolios.

Networking Challenges for Entrepreneurs

Many entrepreneurs feel disadvantaged because they are not part of established venture capital networks.
Brian acknowledges this is a real challenge but believes it can be overcome.
Venture capital firms tend to rely on pattern recognition, favoring entrepreneurs and business models that fit past successful archetypes, often making it harder for those outside traditional networks.

Introduction to Collide Capital and Its Focus:

Collide Capital is a venture capital firm focused on providing investment opportunities to entrepreneurs who historically lacked access to such resources.
The firm emphasizes identifying and supporting underrepresented founders and entrepreneurs.

Barriers for Entrepreneurs:

The common barriers entrepreneurs face, particularly those from marginalized or underrepresented groups include a lack of access to networks, mentorship, financial resources, and knowledge about scaling businesses.
Businesses can now generate substantial revenue with fewer resources and less bureaucracy by automating processes, reducing overhead, and leveraging technology.

Impact of Mentorship and Coaching on Entrepreneurship:

The role of mentorship, support, and coaching in the success of businesses, particularly startups.
The importance of guidance, beyond just financial investment, in helping entrepreneurs navigate challenges, avoid common pitfalls, and grow their ventures sustainably.

Deinstitutionalization of Finance Through Technology

Fintech, blockchain, and other technological innovations can potentially reduce the need for traditional financial institutions.
In this vision, financing could become decentralized, with direct access to capital through apps, lowering entry barriers for entrepreneurs.
Technology, especially the internet and online platforms, provides access to information and opportunities that were previously unavailable.
This democratization allows people from diverse backgrounds to gain knowledge and build businesses that would have otherwise been out of reach.

Entrepreneurial AI as a Thought Experiment

This concept envisions AI handling the operational aspects of entrepreneurship, from supply chain management to fundraising. Although it’s speculative, this thought experiment explores the possibility of AI supporting entrepreneurs in scaling their businesses with fewer resources.
While AI can assist in various tasks, it still requires human guidance. Entrepreneurs need to have experience or knowledge to instruct AI effectively, suggesting that AI alone cannot replace the expertise needed to scale a business successfully.

Takeoff Institute and Building Black Leaders of Tomorrow

The Takeoff Institute is an initiative that provides black undergraduates with training, mentorship, and exposure to professional environments.
The program aims to equip them with essential skills like cold emailing, managing up, and technical expertise, helping them break into elite roles in finance, consulting, and other industries.
It also addresses the lack of diversity in high-level corporate positions by connecting students with successful black professionals.

Show Notes:

0:00 | Intro
1:05 | Differential Access
4:53 | Disadvantaged Entrepreneurs: How do they Get Started?
7:14 | Is Networking a Baseless Fear?
10:01 | Unique Business Models from Lived Experience
12:10 | Less Algorithmic, More Empathetic Approach
13:49 | Fund Zero: Collide Capital’s Stoy
15:28 | What is a Scout Check?
18:01| Collide Capital Investment’s Success Stories
21:45 | Better Entrepreneurial Culture: Raising the Community
24:40 | Education’s Role in Entrepreneurship
28:21 | Fellowship Language
28:58 | Future Access to Investment
32:00 | Technology’s Role in Entrepreneurship: Can Finance Become Less Institutionalized through Apps?
34:55 | AI as an Entrepreneur’s Operating System
38:00 | One-Person Billion-Dollar Company: Building Bigger Businesses with Fewer Resources
39:30 | Wrap-Up: Building Leaders through the Takeoff Institute

The Value Creators Podcast Episode #47. End-user Innovation From The Middle of The Supply Chain

September 17, 2024/0 Comments/in The Value Creators Podcast /by Hunter Hastings

John Willenborg’s business, Owl Vans, specializes in adventure vans designed for outdoor enthusiasts who seek to connect with nature. These vans provide essential comforts and accessories while encouraging maximum high-value outdoor time. The market for adventure vans has expanded rapidly, with Owl Vans leading in aftermarket accessories. John highlights the importance of scalability and being a generalist to succeed in entrepreneurship.

John’s approach emphasizes the importance of strategic marketing, careful expansion, strong partner relationships, and diligent financial management in building and scaling a successful business.

Resources:

Connect with Hunter Hastings on LinkedIn

Connect with John Willenborg on LinkedIn

Knowledge Capsule:

Purpose and Features of Owl Vans

Owl Vans serve as transportation to remote, beautiful locations for activities like biking, kayaking, and swimming.

They are different from traditional RVs as they encourage minimal time spent inside the van.
Vans, particularly Sprinter vans, are built with features like queen-size beds, HVAC, showers, and toilets, and are designed for off-grid adventures.

Sprinter Vans and Their Popularity:

Sprinter vans became popular in the US about 10 years ago because of their height, allowing users to stand inside.
They range in price from $150,000 to $300,000.
They are narrow, which makes them versatile and easy to park in neighborhoods.

Customer Base and Market Insights:

The vans have attracted a significant number of female customers due to their drivability and safety features.
The adventure van market has grown significantly, with an estimated value between $1 billion and $1.5 billion.
Owl Vans is the largest aftermarket accessory manufacturer for Sprinter vans globally.

Manufacturing and Business Strategy:

Owl Vans focuses on creating products for the exterior of the vans, avoiding custom builds to ensure scalability.
John emphasizes the importance of being a generalist as an entrepreneur, learning various skills to manage different aspects of the business effectively.

Niche Marketing and Expansion

Focus on a specific market segment to build a strong, loyal customer base. For example, targeting wiener dog owners directly rather than through broader pet stores.
When entering niche communities, contribute valuable content and engage genuinely rather than just promoting products. This fosters trust and credibility.
Once established in a niche, consider adjacent markets. Transitioning from a niche-focused brand requires careful planning to avoid losing the original customer base. A flexible and somewhat neutral brand name, like “Owl,” allows for broader expansion without being tied to a specific niche.

Managing Growth and Services

Adding a service component can enhance customer satisfaction and generate additional revenue. For instance, offering installation and maintenance services can complement the sale of products and improve customer experience.
Diversify business operations to balance economic fluctuations. For example, if van sales slow down, shift focus to service or off-road product

Partnerships and Supplier Management

Good partnerships are crucial, especially for startups. Collaborating with experts and suppliers can help scale operations without significant initial investment.
Regularly review and manage supplier relationships. Maintain quality control and have redundancy to mitigate risks like supplier price increases or equipment failures. Having multiple suppliers and in-house production options provides flexibility and cost control.

Financial Management

Effective cash flow management is vital. Unlike software, physical goods involve higher incremental costs with scale, so understanding these dynamics is key to managing finances.
Expect initial financial challenges and plan for them. Managing working capital effectively during the startup phase and scaling operations while keeping an eye on costs is crucial for long-term success.

Show notes:

The Value Creators Podcast Episode #46. Digital Enablement: Customer-Led Business, Subjective Value, and Empathy with David Kramer

August 28, 2024/0 Comments/in The Value Creators Podcast /by Hunter Hastings

Digital enablement and AI are revolutionizing how companies operate and reshaping the economy.

At the core of this transformation remains a fundamental principle: the customer is the boss. In this new era, empathy becomes crucial as businesses strive to meet subjective values and deliver hyper-personalized experiences. Consumers demand instant access, precise responses, seamless order fulfillment, and transparency, while resisting intrusive tracking and data monetization.

David Kramer, Founder & Chief Product Officer at Cooperative Computing, joins Hunter Hastings to highlight how AI can enhance creativity while balancing automation and human touch. In this discussion, Kramer shares insights on the digital enablement movement, emphasizing that AI should complement human creativity rather than replace it.

He underscores the need for maintaining a brand’s unique voice amidst the risk of generic content. As AI advances, businesses must adapt, using it to innovate while preserving the essential human element that resonates deeply with audiences. This approach aligns with the shift towards hyper-personalization, where understanding and delivering what each individual wants becomes the new standard, as exemplified by companies like Nike, which serves diverse customer needs with tailored, transparent experiences.

Resources:

Connect with Hunter Hastings on LinkedIn

Cooperative Computing

Connect with David Kramer on LinkedIn

Digital Enablement by Cooperative Computing PDF

Show Notes:

0:00 | Intro: Vision of the Digitally Enabled Firm
01:57 | 5 Key Business Functions: Branding and Marketing
03:15 | Second Key: Sales and Commerce
03:56 | Digitally Enabled Organization: Third and Fourth Key
04:48 | Fifth Key for a Digitally Enabled Organization: Service Delivery Management
07:13 | Human Role: Coding OR Evolving Decisions?
13:13 | Are We Still Customer-Centric?
20:33 | Transition Away From Control
25:01 | Customer in this New Digital Environment
29:39 | Demand for Transparency and Responsiveness
35:34 | Managing Accelerating Digital Change Speed: The Art of Possible
40:47 | Stephen Hawking: Cosmology Depends on the Questions You Ask
45:38 | Is Competition Still Relevant, and Can Large Firms Adapt?
53:52 | Wrap-Up

Knowledge Capsule:

Digital enablement will change the way companies are run, and even change the structure of the economy. But one principle that remains the same, and becomes even more fundamentally important: the customer is the boss, subjective value is the goal, and empathy is the key capability. The customer is the driver of the digitized firm and its business model. The number one capability for the digitally enabled firm is empathy.

The governing factor is what consumers feel is appropriate to meet their needs and desires. They want instant access, fast and accurate personal request response, order completion and delivery, and complete transparency. They don’t want the uneasy feeling of being tracked and surveilled. They don’t want the diversion and interruption caused by sites selling consumer data to third parties to be monetized as digital advertising.

This consumer-led environment will require hyper-personalization: understanding and delivering what each individual wants.

It’s the opposite of mass marketing. Think about a company like Nike. It serves hundreds of millions of consumers. Its business is driven by what those customers want, when they want it, and how they want it. Nike’s customers range from the very best performance athletes who want unrestricted performance at the cutting edge of technology, to sedentary elders who appreciate comfort and stability. How can Nike serve all these customers with equal transparency? Via digitally enabled hyper-personalization. Every individual gets the experience they want when they want it, and how they want it.

The digitally enabled firm

The digitally enabled firm uses digitization (including AI) to know its customers deeply (i.e., through data), fully understand its customers and their individual experiential needs (through deductive analytics), and meet those needs better than anyone in the world (through commercial engagement, operations and fulfillment, service delivery, continuous improvement, and innovation).

For customers in general, whether B2C or B2B, their experiential requirements are going to extend towards instant access and response that is both rapid and accurate. To become an effective consumerized or customer-led company, the digitally enabled firm reviews its capacity in 5 core functions.

1. Branding and Marketing

This is the primary function of the customer-led company simply because the first requirement is to accurately identify, deeply understand, listen to, reach, message, and persuade customers of the firm’s value proposition. Without branding and marketing, there’s no flow of information (and no flow of cash since marketing induces willingness to pay). Branding and marketing incorporate the firm’s value proposition into customers’ daily thought culture, aligning with and complementing their mindset and their perspectives, and shaping the firm’s hyper-personalization capability. This marketing capacity is becoming hyper-automated since it is fueled by digital information flow, instantaneously processed for insights and driving the rapid reaction to generate the high-response relationship the customer seeks and, ultimately, the capacity to anticipate customer desires.

2. Sales and Commerce

Conventional commerce, including e-commerce, will go away as digital assistants become the power behind purchasing and daily life choices. They become dominant sales and commerce engines, to the digitally enabled firm’s advantage in the case where they interact well with customers and integrate into customers’ own systems and lifestyles. The result will be memorable on-demand buying and delivery experiences and frictionless repeat purchases.

3. Order Fulfillment and Operations

Real-time operational data and analytics will enable risk and error avoidance, predictive planning, and the scalable infrastructure required for frictionless operation. Fulfillment and operations provide the means to keep promises and meet expectations, two vitally important commitments in the consumer-led relationship.

4. Customer Engagement

The customer’s experience-in-use is the critical key to value creation, and the digitally-enabled firm will be integrated into this experience, thereby opening up the opportunity for continuous addition of new and supplemental value and ever-strengthening sticky relationships. Continuing engagement after a purchase and after a usage experience is important. Some brands are creating digital online spaces and experiences where customers can participate and engage, such as Gucci’s Vault on Discord. Even when they are not buying or consuming, customers can be digitally engaged with their brands.

5. Service Delivery Management

Process automation ensures delivery excellence and consistency, and customer transparency generates confidence and trust across all channels. Digital integration enables continuous improvement of processes whenever feedback indicates an opportunity. Digitally enabled firms exhibit excellent governance of the service experience.

How do we manage digital organizations of this kind, where decision-making must be near-instant and the accuracy of a millisecond decision is so critical? It’s futile and dangerous to rely on traditional management styles. Leadership and governance will exist, but they’ll change considerably. One result will be the digital CEO, connected to all aspects of all decision-making processes, governing in millisecond transaction times.

The advantage for humans

The thing that humans do very well, better than any AI, and in all likelihood for a long period of time, is understand people through an emotional perspective. And this is where the engine of branding and marketing and all economic activity actually exists. Humans will continue to keep control of their own consumerism in order to grow economic activity so that we enjoy the world that we live in. The human is not only in the loop, but the core of the loop in this regard.

Digital machinery and digital processes can understand feedback loops very well. It can read the clicks and the purchase data and generate the appropriate signals for analysts, but it can never understand the emotional attachment between economic activity and consumer needs. Consider a purchaser buying a red shirt from a shopping site. The AI can record the purchase, align the data with other historical data to generate a pattern, and perhaps draw a pattern recognition inference. Perhaps there’s a trend or a tendency. Perhaps there is a comparison to be made with other shoppers, yielding more inferences. But if the purchaser loves red shirts because his or her grandma bought them a red beanie hat for their 8th birthday and they’ve loved that shade of red ever since because they loved their grandma – AI can’t empathically diagnose that motivation, and probably won’t ever be able to.

But AI can make the purchase frictionless, the delivery faster and more accurate, and monitor the customer experience and perhaps enhance it in the future, perhaps generating loyalty and relationship stickiness. AI can become self-teaching and self-learning by structuring data and organizing it and running feedback loops. But it doesn’t know what to do with the emotional components of human engagements.

It may be possible to develop triggered models – data models or simulation models that can create signals from the states of emotional and empathic input that come from humans and human interaction, and it will get better at fine-tuning the signals and the models. It is already possible to detect temperature changes (blushing), eye movement, body language and other signals of emotional change.

The direct connection to the customer

The most exciting part of all this is the direct connection of the business model to the customer. Whether in the recording of online purchase data and digital behavior, or the monitoring of eye movements, the connection is direct and the end user directs the flow. AI (what Kramer calls digital sapiens, working alongside homo sapiens) enters the customer’s system and the customer’s life cycle and becomes part of that customer’s life, and part of the customer’s culture. AI makes data-driven decisions, and the data is customer data.

How do firms make the transition?

The first transition step is to conduct a digitization discovery: what is the capacity of the firm to digitize across four dimensions?

1. Digitizing organizational structure – eliminating hierarchy, planning, and command-and-control and substituting digital implementation of job functions wherever appropriate.

2. Methods, procedures and routines – where they have emerged and proven useful, can they be digitized for continuity and consistency? And can we change them digitally when it becomes clear we need to work differently?

3. Systems and technology – how well are IT systems facilitating people, processes and change?

4. Key performance indicators – what are the signals of success and how well are they measured, monitored and distributed for action? The key here is not KPI’s as control mechanisms (which is how they are traditionally used) but as feedback loops: building up an understanding of the current state and the patterns of its dynamics through data, analytics, and the response environment.

A current state of these dimensions is established through discovery, from which a delta is derived: what is required to improve and accelerate:

* To grow revenue.

* To become more operationally efficient.

* To continuously improve the performance of the firm through digitization and data-driven decision-making.

* To develop the cultural identity that best facilitates the collaboration of digital sapiens and home sapiens. There will be a different way of working and different forms of collaboration, and the cultural identity of the firm will be highly relevant to the nature of the adoption of these new ways.

The new customer experience

In the world of e-commerce and digital advertising that has evolved recently, the customer experience has often been undesirable, in that customers are surveilled and tracked by cookies and other software devices, and are urged into transactions by “interrupt and annoy” messages that are unwanted frictions in online engagement. This is evidence of a failure of empathy.

But the new AI approach is to prioritize an understanding of how the customer prefers to interact. After profitability (which is the mandatory gateway – business can’t proceed if it is not profitable), the quality of the customer’s experience in the response environment will be the number one attribute of business operations. Understanding the needs of the individual customer and interacting with those needs in the way that the individual customer likes best is the goal of the digitized capability that we call hyper-personalization.

Digital assistants will become more closely attached to and associated with individuals and will sense our feelings – whether that’s frustration with a process or delight with an experience. Businesses are building the tools for empathic diagnosis, empathic response and instant and dynamic updating. They’ll become highly effective at hyper-personalization.

This is the realization of the dynamic of customers bringing innovation and desirable experiences into being. Through the responsiveness environment, customers will figure out how to generate a desired experience and achieve it through the adaptive dynamics of the digital assistant.

An example of this principle in action is 3D printing, which is the capacity for an individual to self-manufacture. The implementation of individual consumer desire (“I want what I want when I want it and how I want it”) is made materially operational, whether in the form of 3-D printed buildings, machines, or clothes, or food.

Speed of change and the art of possible.

The acceleration of the rate of speed of change has been identified as a challenge for firms, but in the new customer-led digital age, the acceleration is in the hands of the customer. When what customers want is more and more attainable, they will learn to ask systems for what they want and the system will understand enough of what’s available from all potential sources to recommend and bring it to that customer. The system will assemble sub-components into a solution. For example, if a customer wants a mirror with a digital camera in it and an audio source of weather information, powered by DC because they live in Denmark, and that particular configuration is not currently offered, a digital assistant will specify it from available parts and build a personalized sku, deliverable two days from now at a specific price. That’s the art of possible: not what exists now, but what it is possible to assemble quickly.

Asking the right questions

The future lies in getting better at prompting: asking the AI the right questions: Can I do this now? What is possible? The questioner dreams it up, and the system assembles the dream. Then, the organization implements the assembled solution in the firm’s environment and in the marketplace.

Copilot is a good early example of what’s possible – a tool that observes and takes information and comes back to you to say, ‘here are the activities at which the firm is not efficient that could be done much more efficiently.” For example, the AI detects that people are keying-in invoices, and the process could be automated. It provides the art of possible. It could do the same for customers and customer interactions.

Constructing the firm for the new environment

Today’s construct of the firm is:

The empathetic component – how do we create valued experiences for the customer?

The technical component – what do we need from a technical perspective to meet customer expectations?

The financial component – how do we operate profitably and efficiently?

Ask these questions of an AI and, ultimately, the AI will respond with a highly accurate recommendation of what company or brand to build. It has the universe of knowledge at its fingertips, with all customer and buyer data to reveal preferences and trends and desires. The best entrepreneurs will be the ones asking the right questions, while the operation of that business can be left more and more to the AI and the digitized firm. The AI will build a digital CEO that can develop a market analysis and a business plan, perhaps raise capital against that plan, sign up the initial customers, design the products and aesthetics, and the customer experience. Over time, the digital sapiens species footprint will expand, and the homo sapiens species footprint become more specialized and focused. Competition will boil down to building specialized digital CEO’s. The software might be open source and free, and the data proprietary, so the added value is in designing better digital CEO’s from better data sets.

How? By asking better questions. McKinsey, for example, has decades of data and intelligence about good decision-making and what’s associated with it. That could be the input data for building a digital CEO. WPP has data about great marketing campaigns and great marketing agencies and could create great marketing CEO’s. Digital doctors will out-perform non-digital doctors because of the mass of data around medical history, practice, research and so on.

Management will become less and less relevant because digital sapiens can do more and more of it. Entrepreneurship – creatively asking the right questions and imagining the future in a better way than others – will become more and more relevant.

The Value Creators Podcast Episode #45 – Embrace the Hyper-Entrepreneurial Era: Creating Innovations to Serve Customers’ Needs (Working On Purpose Podcast Repost)

August 14, 2024/0 Comments/in The Value Creators Podcast /by Hunter Hastings

This episode is a repost from The Working On Purpose Podcast

Capitalism comes in for criticism, despite the fact that this economic system has resulted in substantially increasing global per capita income over the centuries, spurring economic growth and progress.

Critics often criticize a kind of Aberrant Capitalism, one that is dominated in their minds by corporations, whose behavior is not always meritorious.

But from the earliest times, it was Customer Capitalism, not corporate capitalism, that was the driver of individual prosperity and thriving. Companies such as Wedgwood & Bentley of Wedgwood China fame (founded 1759) set the original precedents by prioritizing customer needs and innovation, laying the foundation for contemporary business practices. The advent of these corporations facilitated large-scale entrepreneurship, promoting innovation and efficient responses to customer demands.

Entropy has set into the capitalist system since the founding days, and there is some corporate behavior that needs reform. Dr. Alise Cortez is attentive to these concerns. We discussed the prospects for a revival of customer capitalism

Resources:

Connect with Hunter Hastings on LinkedIn

Connect with Dr. Alise Cortez on LinkedIn

The Value Creators Website

Hunter Hasting’s Blog

Dr. Alise Cortez’s websites:

Gusto-Now.com & AliseCortez.com

Show Notes:

Knowledge Capsule

Historical Role of Capitalism

Capitalism has been instrumental in significantly improving global per capita income over the past centuries, driving economic growth and development.
Companies like the Wedgwood Company set examples by focusing on customer needs and innovation, paving the way for modern business practices.
The introduction of these corporations enabled large-scale entrepreneurship, fostering innovation and effective response to customer demands.

The Golden Age of Capitalism

This era was marked by leaders who prioritized innovation and customer satisfaction, driving significant advancements in various sectors.
Businesses aim to create substantial value for customers, leading to societal progress and improved quality of life.

Transition to Managerialism

Post-World War I, the shift from entrepreneurial leadership to managerialism led to a bureaucratic approach, emphasizing efficiency and cost control over innovation.
This change resulted in slower decision-making processes and hindered communication within organizations, affecting their agility and responsiveness.

Financialization of the Economy

The latter half of the 20th century saw a focus on short-term financial gains, often at the expense of long-term customer satisfaction and innovation.
This shift negatively impacted customer-centric business models, reducing the emphasis on meeting customer needs.

Corporate-Government Entanglement

Companies increasingly diverted resources to influence government policies, prioritizing government contracts and compliance over genuine customer engagement.
Large corporations shaped regulations to favor their interests, often disadvantaging smaller, innovative companies.

Customer Sovereignty and Digital Technologies

There is hope for a resurgence of customer-focused business models, emphasizing long-term customer value and well-being over short-term financial gains.
Digital technologies enable direct customer feedback, allowing businesses to adapt quickly to customer needs and preferences.

Flat Organizational Structures

Flat structures improve decision-making speed and communication within organizations, allowing for more dynamic and responsive leadership.
Leadership is based on expertise rather than rigid titles, fostering a more flexible and effective organizational environment.

Cross-Functional Teams

Teams are formed based on project needs, promoting collaboration and adaptability, and eliminating traditional job descriptions.
This approach encourages a culture of mutual agreement and flexibility among team members.

Long-Term Value Creation

A focus on long-term value creation supports sustainable growth and innovation, moving away from the short-sightedness of quarterly earnings.
Investors are encouraged to support companies with a long-term vision rather than demanding immediate returns.

Role of Artificial Intelligence

AI can replace middle management, providing real-time insights into employee actions and improving operational efficiency.
AI and humans can work together in a collaborative environment to achieve corporate goals more effectively.

Empathy as a Trainable Skill

Empathy is crucial for understanding customer motivations and delivering genuine value, and it can be developed as a trainable skill.
Developing empathy improves customer relationships and enhances business success.

First Principles Over Rigid Rules

A principles-based approach fosters innovation and adaptability within organizations, proving more effective than rigid rules.
Emphasizing first principles helps organizations thrive in dynamic and changing environments.

Reviving Customer Capitalism and Purpose-Driven Work

Businesses are encouraged to prioritize customer value and well-being, fostering a more meaningful impact on society.
Embracing flat structures, cross-functional teams, and long-term value creation is essential for future business success.
These elements are crucial for understanding customer needs and driving innovation in the evolving landscape of capitalism.

All future jobs will be value creation jobs.

August 11, 2024/0 Comments/in Articles, migrate /by Hunter Hastings

The management revolution (a term coined by the primary historian of 20th-century management, Alfred D. Chandler) generated a lot of bureaucracy or, as London School of Economics professor David Graeber puts it, “Bullshit Jobs.” These jobs tend to be located primarily in the bureaucratic cores of the corporation: HR, finance and accounting, and legal/compliance. According to Graeber, these jobs are unfulfilling for the individuals doing them, yet deliberately designed that way by management to implement approved methods and procedures.. Those jobs are not there to create value, but to exercise control.

Graeber estimates that, in some firms, like banks, the proportion of jobs that can be classified this way is as high as 75%, and that 40% is a reasonable estimate of the average proportion.

There’s a good chance these jobs will be gradually eliminated in the future.

The problem of bureaucracy arose directly from the practice of management. In the early phases of corporate capitalism, firms were entrepreneurial rather than bureaucratic. Founding entrepreneurs drove expansion through leadership. Divisions and functions were run by mini-entrepreneurs, responding to market signals more than to bosses. Of course, they needed bookkeeping and support systems, but these were operational rather than bureaucratic.

Eventually, scale and new complexity required new forms of organization. More managers were hired. Eventually, managers took over, as the entrepreneurs exited. The 20th century was the century of management – but, as economist Ludwig von Mises pointed out, the capitalist system, properly understood, is an entrepreneurial system, not a managerial system. So capitalism itself – the system of creating value for customers and reaping the entrepreneurial rewards conferred by market approval – became distorted to shift the balance of outcomes to favor the managers and investors.

That’s where bureaucracy and bullshit jobs came in. Managers sought control: over the uncertainties and unpredictable outcomes that are typical of entrepreneurship; over the variability in consumer preferences; and over the short-term financial results of the business, because the financial markets’ demand for reliable consistency became predominant. Control was thought to come from processes, procedures and methods, documented in the bureaucracy and implemented through the authority of the hierarchy, limiting individual autonomy to adherence to tightly written job descriptions and rules of conducting business. Plans were developed at the top and executed through orders and instructions at the base of the pyramid. This philosophy was enshrined as business administration, and masters’ degrees were awarded for it.

This phase of business is coming to a close. There are many reasons why, and we can focus on two of them.

New value creation business models: the digital business models of the new era are characterized by direct connection to customers. Every time a user enters a search term, or a consumer purchases on a shopping site, or a corporate employee works on Slack or Salesforce, the behavior and the content are directly and immediately captured by the data engine. Insights about actions and preferences can be generated through pattern recognition in the feedback loop, and any improvement or enhancement that the end user requires can be provided as a digital response. It’s user-guided continuous improvement. The customer is back in direct charge. When we say that customers are the ultimate value creators, this is what we mean. By their actions and statements of preference, they bring new improvements and, therefore, new value propositions into being. If they are dissatisfied, they communicate it, and perhaps look elsewhere for greater value. The customer is genuinely the boss. There’s no need for business administration – it’s superseded by direct connection to the customer without intermediation.
The bullshit jobs can be automated: The advances in software headlined by business process automation and supplemented by machine learning and AI will gradually eliminate bureaucracy. Standard practices, sequential processes, form-filling, performance measurement, reporting, monitoring, authorization, accounting, budget management, and more will be performed by software rather than by managers.

So what does that leave? The most important jobs of all: value creation. Highly automated, digitally-enabled firms will require the customer insight, entrepreneurial judgment, design creativity, and empathic responsiveness that value creators bring. Value creators bring the characteristics and behaviors that are critical to business success.

They constantly keep value in mind: how can customers’ needs be better satisfied in a world of constant change and aggressive competition?
They demonstrate the entrepreneurial mindset, favoring action and experimentation rather than cautious calculation.
They recognize empathy as a core business tool for creative entrepreneurship, and they refine their empathic diagnosis by carefully assessing the customer experience from the customer’s perspective.
They collaborate harmoniously without competing for titles or recognition; they make great team members.
They pursue continuous innovation, never stopping, never complacent.
They can design innovations through a process of working backwards from the customer experience.
They understand marketing as building trust through relationships, and not as a mechanical process of lead generation and conversion.
They are masters of subjective calculation: estimating the value of future assets based on future customer satisfaction.
They appreciate that tacit knowledge accumulation rather than data is the source of advantage for a firm, and they error-correct their knowledge by constantly questioning and challenging.
They are not constrained by conventional organizational design and structure, recognizing flow as the mindset that transcends both.

The Value Creators online business course aims to elucidate and teach these principles through the lens of entrepreneurialism rather than business administration.