🐙 Vampire squids, the rebirth of retail and why strategy ain't planning - LuLd #007
Looking up, Looking down is a regular collection of clues and hunches for innovation and strategy practitioners
Looking up, Looking down is our regular drop of recommendations for reading, watching, listening and doing. Think of them as clues and hunches that we’ve bumped into - they’re not yet joined up into a fully-formed narrative but they hint at a bigger story and feel useful and interesting enough to share. Subscribers get them delivered to their inbox every two weeks.
They range from 10,000ft views of emergent change and how it affects our world, to down-at-two-inches hacks and smart reframes to learn from, to reference and to use as a way to keep your thinking fresh, refilling your wells of insight and creativity.
Like any good innovation practitioner, we’ll aim for to make it mostly relevant - though never too relevant. Have we got you thinking? Keep the conversation going in the comments.
Hate scrolling? Here’s the list…
What the leaf blower can teach us about value propositions and competitive advantage
Why larger retailers are emulating the neighborhood store strategy
We Spoke With the Last Person Standing in the Floppy Disk Business
Here’s why we think they’re interesting…
Why Planning Over Strategy?. And How to Fix the Problem | by Roger Martin
TOBY: weirdly the same framing from the most excellent Roger Martin, up there with Richard Rumelt in terms of strategy thinking. This tells the flipside of the McKinsey story above, from the business angle and how to recognise that strategy is so much more than a whole heap of analyses. I think the point on entrepreneurs as a route out is interesting, the application of gumption and an unusual reading of the runes as a way of making sense of what is going on. Never underestimate the importance of intuition and imagination to create a great strategy worth pursuing. If you like watching as well, here is the video Roger Martin refers to.
There is probably an interesting reflection on when entrepreneurs give way to mainstream management thinking and the business gets lost, this constant sense that growing up as a business means becoming orthodox, like growing up as a person means you should stop being curious.. How strange!
TOM: One of my major bugbears is the way the word ‘strategy’ gets used to signal some sort ‘cleverness’ or authority. So much so that it’s become kind of dead, something people drop into conversations to appear smart saying ‘we need a strategy’ or ‘we need to be strategic’. This film is absolutely required watching for anyone who wants to be strategic, or even use the word properly. It totally nails the point that strategy is not just a long list of stuff to do, and as Toby says, that strategy is at its heart an act of (managed) faith. Yes it requires knowledge and analysis, but it also requires imagination, creativity and bravery - and more so!
How McKinsey Destroyed the Middle Class
TOBY: A fascinating structural look at how management changed, how management consultancy drove the change and what this has meant for business. The particular belief in technocratic/ analytical thinking and the associated narrow reflections on analysis as a way to understand the world show a lopsided and dangerous impact, as the author beautifully puts it “such obliviousness may not be malevolent but it is clueless”. I am currently on a roll with the excellent thinking of Iain McGilchrist, who talks about the left hemisphere dominance and how that is impacting the world, of which this article highlights a strong example - have a listen here.
TOM: It’s interesting to note that the first management consultant were engineers - it makes sense doesn’t it? Break things down into constituent parts, identify the source of the problem, excise it, then reassemble to function more efficiently. Seductive, but not viable in so many cases, as Toby hints at. Not great at tackling *human* problems especially. Is it any surprise or coincidence then that the big consultancies are acquiring and hiring like mad from the creative industries? People and organisations that are high on empathy, high on intuition, high on curiosity, high on unpredictability. Having experienced for myself the journey or acquisition, ingestion (and subsequent indigestion) that comes from being a small creative consultancy acquired by a big management consultancy, I am sceptical of the ability of an engineering-led organisation to attract, retain and (most importantly) properly use those talents and that side of the brain. As for the reach and influence being concentrated in the likes of McKinsey, and the insidious outcomes that can sometimes result (as any South African would tell you, their motives and methods are not scrutinized nearly closely enough), I wonder whether we might be looking at a new vampire squid?
What the leaf blower can teach us about value propositions and competitive advantage
TOM: A short piece that shows how advantage and differentiation can come from unexpected places - how the painpoint of heavy, expensive batteries in turn created an opportunity for powertool companies to create lock-in (loyalty seems a stretch) for their customers
TOBY: Nice. It is a good story of an interesting blend of tech meets need - where the need is interestingly not in the product itself but the transferablity of the battery. It is interesting because it is accessible via design thinking though a different slice from the typical - down at the product face type questioning. This is definitely a “related worlds/ analog “ piece of stimulus people should use for a bit of creative stimulus.
Why larger retailers are emulating the neighbourhood store strategy
TOBY:A story of what goes around comes around. What I find interesting is the slightly dissonant juxtaposition of the use of big data to drive small stores, and not just because I used competing adjectives. There has clearly been a shift to more independent stores (love that the UK has been experiencing a growth in independent bookstores). My hunch is that the achilles heel here is that you have to be local to feel local, that the application of algorithms and data mining to chose the right products for the audience misses on the personal idyoschracries of a real local retailer and our (human) sense of fit will find this out - big data vs the real world…
TOM: A not-entirely-surprising development on a hot topic. There are some important reality checks in there too - we all love stories of disruption, seismic shift and (let’s be honest with ourselves) existential crises experienced to supposedly immortal brands. With that in mind, there’s been an orthodoxy take hold in the past 5 years or so, hastened by COVID, of the demise of the physical store. But here’s the thing: As the article points out, on a percentage level, the overwhelming majority of retail still takes place through physical retail (85%). So what’s going on? A few hunches: Hunch 1: this large-growth-off-a-low-base shift has been enough to expose the tight margins inside big physical retail - it’s quite simply very hard to run big retail operations, with all of the physical infrastructure, supply chains, staffing, restocking etc and still make money. Hunch 2: Big physical retailers thought they were in competition with Amazon because they were in the retail business, but in fact a lot of them are more in the real estate business. The dynamics of the business model are so different it’s almost nonsensical for them to realistically compare and compete with Amazon. So what’s the strategy? Listen more to customers, just do more stuff that people want (see above, for the floppy disk example). I think the challenge will be one of culture and trust. For big brands to do distributed, localised stores they will need to devolve trust and responsibility to humans on the ground, trust in their ability to make the right choices, trust in their ability to deliver the value proposition with less centralised control. And that becomes a question of culture - can these businesses build a culture that creates the necessary trust, autonomy and initiative to survive against the small high street businesses. Fascinating to see how this pans out!
We Spoke With the Last Person Standing in the Floppy Disk Business
TOM: I love stories about niche businesses (see LuLd4 for a brilliant exploration of the ice cream cone industry). This is one that’s not only charming and quirky, but has a couple of great lessons and examples any innovation and strategy practitioner, like: staying curious and awake to opportunities at the edges of your current business model and being willing to run experiments to test hunches - Tom Persky didn’t intend to become a floppy disk mogul, he started life as an accountant, started building tax software then followed his curiosity and hunches until today he owns the last business on earth (perhaps) that makes a living from floppy disks. And even then, the actual use case and value that he offers has gone through a number of different guises. Read this for the nostalgia, for the charm of Persky (sometimes businesses don’t need to be big, they just need to be right for the person in charge) and for the crazy change in value proposition for the floppy disk as a product. The most popular application these days? Conference name tags!
TOBY: The lesson Persky shares is that he just did stuff people wanted, with no grand plan or vision. Interesting to find the story in our a blog about strategy! I suppose it reminds us that sometimes stuff happens and just be ready to follow it with no intent or ambition, just the joy of the journey. Its a human lesson it feels to me, rather than a business lesson.
The rise of the worker productivity score
TOM: This piece from the NYT is really depressing, but cleverly told. Surely the darker side of 'software will eat the world' evangelism, the reduction of everything to data and numbers. Interesting how one of the byproducts of this has been to force people off analogue means of work (working things out on paper, speaking face to face), it's as though 'if it's too hard to measure, then let's just force a behaviour change' We are all poorer for it. This sums it up in a line: "Human resources, once reliant on more subjective assessments, was becoming more of an analytics business."
TOBY: Jeez Tom, who brought the happy bear? This lives in a theory x vs theory y of organisations, so a whole mindset of how people work, kinda fits Sunak’s moan on getting people back to work and Truss’ view that working class are feckless. It is also a mistaken view that process management is the same as outcomes particularly in more creative or exploratory work (an increasing part of lots of work (what's going on here). Understanding, diagnosing, conceptualizing are all reflective activities that lead to smarter outcomes. A focus on productivity assumes a) the metrics are correct (e.g. time spent is a reasonable predictor of impact), b) tomorrow looks like yesterday, c) we can quantify everything meaningful. I wouldn’t build a business on those foundations.
Dispiriting in its total soulless-ness, it's reductive view of people, and fundamentally flawed in its underlying belief of what work is and what people are. It is in the metrics space and flawed belief that we should measure things to understand them.
That’s it for this edition, thanks for reading, if you know someone who you think would enjoy it, please do us a favour and forward it.
Toby and Tom