Work, business & professional services

The old world versus the new

There is a company in Japan called Jeeba (‘old man and old woman’ in Japanese) whose company motto is ‘of the elderly, by the elderly and for the elderly’. The company founders are all aged over sixty and the company does not hire young people.
The company is very small (US $272,000 turnover) but the bathroom fixtures company is thinking big. The elderly (people aged 60+) is the fastest growing segment of the Japanese population but companies aimed at this demographic sector are thin on the ground. Organisations run by seniors are even rarer. Most companies that think that young people won’t ‘run out’ are in for a big shock. Ageing populations, shrinking birth-rates, declining workforces and a looming pensions and healthcare crisis in countries like Japan, Germany, the US and the UK will mean that retirement will have to be reinvented, and soon. Many older people will also find themselves either going back to work or never leaving. A few examples. BMW in Germany has designed a factory to attract older workers. In Japan Mitsubishi are rehiring their own retirees and Ford says the percentage of its employees aged 50+ will increase by 100% in Europe by 2008. But it’s not all bad news. One survey says that most older people are happy to continue working and reports from Netto (a Danish supermarket) and B&Q (a British DIY retailer) say that customer satisfaction and absenteeism have gone up and down respectively since they started hiring older workers.

A global ideas department

Innovation used to be the preserve of individuals cut off from the rest of the world, tinkering away in garages, garden sheds and spare bedrooms. In business it was managed by small groups or departments – usually secretively – within large organisations.These days innovation is being transformed from a game played by the very few into a game played by almost everybody. For example, some very clever people at Apple created the iPod but it took the rest of the planet to tell Apple what to do with it. Podcasting, like text messaging, was effectively invented by the customer not the creator. Youtube.com is another example. Why wait for a small group of TV executives to make TV programs and tell you what you can watch when you can make your own program or tell the executives what to make. The obvious reason for this transformation is the Internet but there’s a more subtle explanation too. We’ll call  it ‘social altruism’ because, given a chance, ordinary people will lend their brains and time to make or improve products and even to make the world a better place to live. A good example is Wikipedia, which now has 1 million pages written entirely by unpaid amateurs. So what does this mean for innovation or indeed for the entire planet? First, R&D labs now potentially comprise of some 6.5 billion people. Second, while the value of information, knowledge or intellectual property used to be defined by how few people possessed it, it is now the other way around.

Ten waves to watch

According to McKinsey, about two thirds of organic company growth (in publicly quoted Western companies) is about being in the right markets and geographies at the right time. If you surf the right waves you win and if you don’t, you drown. So what are the big waves that companies should be riding over the next few years? First, centres of economic activity are shifting eastwards. Currently Asia (including Japan) represents about 13% of global GDP while Europe accounts for 30%. By 2025 both regions will converge. Second, consumer spending will boom in emerging markets as 1 billion new consumers walk onto the global stage. This will mean that resources will become scarcer. Oil demand is predicted to rise by 50% over the next 20 years and demand for clean water will outstrip supply. Spending within developed economies will also shift due to migration patterns. By 2015 the Hispanic economy within the US will be roughly equal to 60% of all Chinese consumer spending. Next is speed. We will increasingly work not just globally but instantly. We are forming new communities and new relationships (12% of newlyweds in 2005 initially met online). In other words, geography will be increasingly irrelevant. Jobs, especially highly-skilled jobs, will become increasingly mobile. Companies will hire globally and workers will move internationally to follow opportunities. However, while the Internet is knocking down borders it is also democratising information with the result that corporate ethics and behaviour will be brought under the spotlight. Finally, many industries will polarise between a few giant companies and a plethora of micro businesses with almost nobody in the middle, and we will see new models of ownership, production (for example, open-source) and distribution.

Don't confuse invention with innovation

According to John Hagel (ex McKinsey) and John Seeley Brown (former Chief Scientist at Xerox) companies in the West are confusing innovation with invention. Moreover, many companies define innovation purely in terms of breakthrough new products or new technology or focus their efforts entirely on R&D. New business models, processes, relationships, management techniques and delivery channels are all but forgotten, as are continuous improvement or incremental innovation. This is a pretty big generalisation (try telling the folks at Toyota that they’re not focused on continuous improvement) but they do have a point about the tyranny of the breakthrough or revolutionary innovation mindset. Moreover, the mindset of scale, efficiency, physical control and short-term value that so dominated 20th century management thinking is killing innovation in big companies in the 21st century. These days it’s all about networks that connect talent and ideas both within and, increasingly, from without the formal organisation. Barriers to entry have become permeable and customers and suppliers are now co-creators of value. So unless an organisation can respond to these changes it will be eaten alive by a faster, smarter competitor.

Technology road maps

As a Chief Technology Officer, part of your job is usually to look into the future and create a technology road map. Sometimes this is part of a risk management exercise (to prevent companies from buying into the wrong technology) but more usually it’s to ensure that various aspects of investment and infrastructure are co-ordinated. How far out you look is usually constrained by how far out the rest of the business is looking (usually 2-5 years). Further out than this and it’s usually guesswork – at least in terms of impact. So what is on the horizon technology-wise? The list of emerging technologies includes Grid Computing and Wireless (still emergent in many areas) although the dominant trend is probably away from custom-built or bespoke architecture towards an industry generic or off-the-shelf approach, possibly built using open-source.