A quick video of my first visit to the Amazon Go store in San Francisco. No cash. No credit cards. No cashier. No checkout. No problem!
Jeff Gothelf, author of Sense & Respond and Lean v Agile v Design Thinking wrote this article, which I believe captures the hopelessness of corporations and pinning any hope on them to show us the way out of this mess. By way of context, G.E. was considered to be the poster child for the Lean Startup Way for Corporates – in other words how a behemoth company could in fact buck the trend to suck.
With longtime CEO Jeff Immelt out and the stock price at a historic low, new CEO John Flannery is shaping GE to return to short-term financial health as quickly as possible. In the time since the transition this reshaping of the company has manifested primarily as cost cuts across business units, amenities and innovation programs. This news has come as quite a shock to those of us in the Lean Startup and Agile communities because GE was supposed to be the poster child for innovation at scale.
The work Eric Ries did there (chronicled in his new book, The Startup Way) bringing The Lean Startup way of working to bear on a broad array of products and services served as inspiration for those of us working with other large organisations on their own transformation and innovation efforts. The Fast Works program, as it was called inside GE, was the model we all pointed to and said, “if GE can do it, so can you.” And yet, despite the investment of time, money and people, GE’s stock price didn’t reflect the kinds of wins Lean Startup was supposed to deliver.
Crisis demands a scapegoat and many were quick to blame Immelt’s firm belief in Lean Startup as the cause for his and the stock price’s demise. If it wasn’t directly responsible, then at the very least Lean Startup served as a distraction away from GE’s core competencies, the critics said. To see if they were right, let’s take a critical look at the basic philosophy behind Lean Startup.
At it’s core, Lean Startup is the business-ification (forgive that non-word) of the scientific method. Boiled down it’s simply an admission that we live in a world of continuous change and uncertainty. In light of this admission, it forces us to reframe our ideas as hypotheses and to quickly and cheaply test them using the results to justify further investments (or not) in the work. In other words, it’s a risk mitigation strategy. When framed this way, it’s hard to see how these ideas would be the direct cause of poor financial performance.
However, when framed through the lens of financial planning, Lean Startup does seem to take on a greater share of the responsibility. Why? Because the market (and hence the CFO) love predictability. They love to know how much profit your company will make next year. They love to know exactly what you’re going to make and how much it’s going to cost. And, most importantly, they love to know what the ROI will be on those products and services. Unfortunately, that’s not the world we live in anymore and Lean Startup practices make that perfectly clear. The vocabulary alone immediately sends up red flags during budget meetings — assumptions, hypotheses, experiments. None of these things sound like shipped products (or profits). Instead they sound like shipping delays, purchase delays and profit delays.
This mindset reflects a funding model that worked well in a predictable world — a world where manufacturing was the law of the land and barriers to entry were nearly insurmountable. In this world, anything not nailed down is perceived as risk to short-term profits and should be rooted out. However, this is no longer our world. We live in a software-driven world. Software allows nearly anyone to start nearly any type of business — virtual, physical, service, etc — with far smaller investments and risks. It allows the hobbyists in garages to build businesses that can compete with the biggest companies in the world. And the kicker is that this enabling technology improves at a blindingly fast pace. Things that were impossible 2 years ago, are now run-of-the-mill.
Lean Startup is not the cause of poor financial results. If anything, it’s a magnifying glass that reveals antiquated planning practices not suitable for a software-driven world. Our funding models need to change. They need to reflect two distinct but separate realities. The first is for our core businesses and the incremental improvements we can make there over relatively short periods of time. This is closer to the traditional model companies have been following for the last 100 years. Second, and more importantly, a separate funding track has to live in parallel that supports an increased level of patience for innovation efforts and the building and scaling of new businesses. 90% of startups fail. Does your organisation have the patience for 90% of its new ideas to fail? A typical VC fund return happens (if at all) in the 5-7 year range. Does your organisation have the patience to wait that long for a new business unit to return profits?
As a risk mitigation strategy, Lean Startup techniques help us sift through a series of bad ideas relatively quickly to find the ones that stand the greatest chance of driving future business growth and ROI. Funding for these efforts should be evidence-based, feeding those that demonstrate traction and starving those that don’t. If we wish to fend off smaller competitors, startups and entrepreneurs we have to start thinking and working like they do. Their agility is driven not just by their size but by their ability to adjust course as new evidence is discovered. This is unpredictable. It’s uncertain but it’s the defining characteristic of modern businesses. Those that embrace this uncertainty and fund the continuous learning efforts it demands, will win. Those that ignore it, sticking closely by the methods of the last 100 years, will find themselves perhaps succeeding in the short-term but putting their long term success at great risk
My social experiment was in danger of being kaboshed as quickly as it started. I hadn’t driven in a few weeks since my infamous first fare and I started getting alerts that I needed to get back on the road soon or lose my driver status.
My solution? I opened both my Uber driver and passenger apps, called an Uber, accepted the ride, picked myself up and drove myself around the block.
Upside: Both passenger and driver received a 5 star rating!
Downside: I lost money on the deal after my safe driver levy and uber fee had been deducted.
Should I have retired with a perfect 5-star rating? Not one and done. But two and through? Perhaps I should have gone out on top.
My Final Drive
On a beautiful summer’s day, I decided to come home a little early from Manhattan and go for a walk with my wife. The train was pulling into Southport around 4.23pm. I turned on my Uber Partner app and got a “bite.” The drive was a brisk 4 minutes away which was all good until I said, “where we heading?” and heard “New Haven” back in return. My response, “You’re kidding???!!!!!”
He said, “no why?” I responded, “…because I need to go walking with my wife!” He looked both confused and disinterested. And so there I was driving in rush hour traffic to New Haven, which was roughly an hour away.
My wife called me about 45 minutes into the ride convinced I had fallen asleep on the train. I didn’t want to have to take the call, but by this time my passenger was in on the joke and he begged me to take it – on speaker. I think he kibitzed from the back assuring my wife, my ridiculous excuse was in fact legit.
The real serendipity came from the conversation I had with my passenger as we got to know one another and realized how much we had in common. Both of us were in technology. Both of us had children in the same high school in New Haven. Both of us supported English football. Both of us drove Audi’s!
He gave me his card and we discussed meeting for a beer to discuss potentially doing business together.
We both awarded each other with 5 stars (naturally)
I had joked before this “social experiment” began that Uber could be a great way of networking and doing business development. Perhaps I should put my previous books – and especially this one - in the seatback holders for future leads. Who needs LinkedIn when you have a captive audience along for the ride. Literally!
I must say it was fun. There’s actually an addicting component to being an UberX driver: You feel unloved when nobody calls and loved when they do.
You spin the wheel every time you swipe right and wonder where you’ll be taken next (please not a New York Airport!)
You eagerly await your fare to be calculated and your rating to be awarded You wonder who you’ll meet and what conversations you might have
This is amazing, I don't know how accurate it is but, no doubt it contains some truth. Please Ladies and Gentlemen: This will make you think!
1. Auto repair shops go away. A gasoline engine has 20,000 individual parts. An electrical engine has 20. Electric cars are sold with lifetime guarantees and are only repaired by dealers. It takes only 10 minutes to remove and replace an electric engine. Faulty electric engines are not repaired in the dealership but are sent to a regional repair shop that repairs them with robots. Essentially, if your electric "Check Motor" light comes on, you simply drive up to what looks like a car wash. Your car is towed through while you have a cup of coffee and out comes your car with a new engine.
2. Gas stations go away. Parking meters are replaced by meters that dispense electricity. All companies install electrical recharging stations.
3. All major auto manufacturers have already designated 5-6 billion dollars each to start building new plants that only build electric cars.
4. Coal industries go away. Oil companies go away. Drilling for oil stops.
5. Homes produce and store more electrical energy during the day and then they use and will sell it back to the grid. The grid stores it and dispenses it to industries that are high electricity users. A baby of today will only see personal cars in museums.
1. The FUTURE is approaching faster than one can handle! In 1998, Kodak had 170,000 employees and sold 85% of all photo paper worldwide. Within just a few years, their business model disappeared and they went bankrupt. What happened to Kodak will happen in a lot of industries in the next 5-10 years and, most people won't see it coming.Did you think in 1998 that 3 years later you would never take pictures on film again? Yet digital cameras were invented in 1975. The first ones only had 10,000 pixels, but followed Moore 's law. So as with all exponential technologies, it was a disappointment for a time, before it became way superior and became mainstream in only a few short years. It will now happen again (but much faster) with Artificial Intelligence, health, autonomous and electric cars, education, 3D printing, agriculture and jobs. Welcome to the 4th Industrial Revolution. Welcome to the Exponential Age!!
2. Software will disrupt most traditional industries in the next 5-10 years.
3 Uber is just a software tool, they don't own any cars, yet they are now the biggest taxi company in the world.
4. Airbnb is now the biggest hotel company in the world, although they don't own any properties.
5. Artificial Intelligence: Computers become exponentially better in understanding the world. This year, a computer beat the best Go-player in the world, 10 years earlier than expected.
6. In the U.S., young lawyers already don't get jobs. Because of IBM's Watson, you can get legal advice (so far for more or less basic stuff) within seconds, with 90% accuracy compared with 70% accuracy when done by humans. So, if you study law, stop immediately. There will be 90% fewer lawyers in the future, only omniscient specialists will remain.
6A. Watson already helps nurses diagnosing cancer, its 4 times more accurate than human nurses.
7. Facebook now has a pattern recognition software that can recognize faces better than humans. In 2030, computers will become more intelligent than humans.
8. Autonomous cars: In 2018 the first self-driving cars will appear for the public. Around 2020, the complete industry will start to be disrupted. You don't want to own a car anymore. You will call a car with your phone, it will show up at your location and drive you to your destination. You will not need to park it you only pay for the driven distance and can be productive while driving. The very young children of today will never get a driver's license and will never own a car.
8a. It will change the cities, because we will need 90-95% fewer cars for that. We can transform former parking spaces into parks. 1.2 million people die each year in car accidents worldwide. We now have one accident every 60,000 mi (100,000 km), with autonomous driving that will drop to 1 accident in 6 million miles (10 million km). That will save a million lives worldwide each year.
8B. Most car companies will doubtless become bankrupt. Traditional car companies try the evolutionary approach and just build a better car, while tech companies (Tesla, Apple, Google) will do the revolutionary approach and build a computer on wheels.
8C. Many engineers from Volkswagen and Audi are completely terrified of Tesla
9. Insurance companies will have massive trouble because, without accidents, the insurance will become 100x cheaper. Their car insurance business model will disappear.
10. Real estate will change. Because if you can work while you commute, people will move further away to live in a more beautiful neighborhood.
11. Electric cars will become mainstream about 2020. Cities will be less noisy because all new cars will run on electricity.
12. Electricity will become incredibly cheap and clean: Solar production has been on an exponential curve for 30 years, but you can now see the burgeoning impact.
13. Last year, more solar energy was installed worldwide than fossil. Energy companies are desperately trying to limit access to the grid to prevent competition from home solar installations, but that simply cannot continue… technology will take care of that strategy.
14. With cheap electricity comes cheap and abundant water. Desalination of salt water now only needs 2kWh per cubic meter (@ 0.25 cents). We don't have scarce water in most places, we only have scarce drinking water. Imagine what will be possible if anyone can have as much clean water as he wants, for nearly no cost.
15. Health: The Tricorder X price will be announced this year. There are companies who will build a medical device (called the "Tricorder" from Star Trek) that works with your phone, which takes your retina scan, your blood sample and you breath into it. It then analyses 54 bio-markers that will identify nearly any disease. It will be cheap, so in a few years everyone on this planet will have access to world class medical analysis, nearly for free.
16. 3D printing: The price of the cheapest 3D printer came down from $18,000 to $400 within 10 years . In the same time, it became 100 times faster. All major shoe companies have already started 3D printing shoes.
17. Some spare airplane parts are already 3D printed in remote airports. The space station now has a printer that eliminates the need for the large amount of spare parts they used to have in the past.
18. At the end of this year, new smart phones will have 3D scanning possibilities. You can then 3D scan your feet and print your perfect shoe at home.
19. In China, they already 3D printed and built a complete 6-story office building. By 2027, 10% of everything that's being produced will be 3D printed.
20. Business opportunities: If you think of a niche you want to go in, first ask yourself: "In the future, do I think we will have that?" And, if the answer is yes, how can you make that happen sooner?
20A. If it doesn't work with your phone, forget the idea. Any idea designed for success in the 20th century is doomed to failure in the 21st century.
20B. Work: 70-80% of jobs will disappear in the next 20 years. There will be a lot of new jobs, but it is not clear if there will be enough new jobs in such a short time.
21. Agriculture: There will be a $100 agricultural robot in the future. Farmers in 3rd world countries can then become managers of their field instead of working all day on their fields.
22. Aeroponics will need much less water. The first Petri dish produced veal is now available and will be cheaper than cow produced veal in 2018. Right now, 30% of all agricultural surfaces is used for cows. Imagine if we don't need that space anymore.
23. There are several startups who will bring insect protein to the market shortly. It contains more protein than meat. It will be labeled as "alternative protein source" (because most people still reject the idea of eating insects).