Wild oats, the inside scoop and seven flavours of stupidity - LuLd #004
A regular collection of clues and hunches for innovation and strategy
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. All opinions welcome in the comments.
Hate scrolling? Here’s the list…
Where the Ice Cream Cones at Dairy Queen and Mister Softee Come From
Can Uber be profitable? It’s crazy that this is still a question…
You’ve heard of technical debt - here’s how to eliminate organisational debt
Here’s why we think they’re interesting…
How Oatly Lost Its Hold on the Oat-Milk Market
TOBY: I find this short video about Oatly really interesting, as it highlights the tensions between money (does this thing actually deliver any frickin money and work) and magic (will people absolutely love it). You can see the absolute slam dunk they made on getting the revised brand out there. This is one of those sleeper companies that needed some real marketing magic to lift a technology into a consumer product, and the magic was, well, magic. Then you can see how totally unprepared they were for the actual job of a) figuring out the impact of that marketing success, b) the prosaic skills of running a physical product business and the supply chain and c) strategically wondering what happens if we create a market we can’t support? This misalignment points to (my hunch) a lack of shared money:magic view of the future, and rather a strangely sequential approach.
There was a great podcast a few years ago on Masters of Scale, with Reid Hoffman, where he interviews Jenn Hyman, co founder of Rent the Runway, and he explores exactly this challenge, the business within the business. The customer experience is so often not where the business smarts sit, it is buried in how that is delivered. In the case of Rent the Runway this was being the world’s largest dry cleaner.
The Oatly story I reckon is the starting material for a really interesting case study or insight stimulus, and you can also get more background from the WSJ excellent podcast, accessible through whatever podcast route you prefer.
TOM: I love this piece for a few reasons: firstly, it's a slam dunk for marketing, they totally nailed it across all of the 4 Ps, in fact they were probably too successful. Yes it was magic, it did that magic thing that brilliant marketing can do - it jolted people out of a habit and got them to appraise a choice that they didn’t even know they were making. And it was super smart - right down to using the barista channel.
In fact, the marketing was so good that it grew the category - well done Oatly! In fact, I have a quibble with some of the graphs in this clip showing Oatly dipping while the competition rises. That's a dip in market share against the fast following established businesses in the category (‘big milk’?). In reality, the market for oat milk is growing rapidly, thanks to Oatly’s magic, a drop in market share is to be expected
Of course, the above doesn't really explain the tanking share price, clearly there are production and operational issues to be resolved, but might it also point to ridiculously over-inflated expectations for a market entrant into the INSANELY big US market? Maybe the real marketing bullshit happened at the IPO, in which they were backed by Jay-Z, Oprah and Natalie Portman. Perhaps the animal spirits were running a little too high for this vegan champion.
The seven varieties of stupidity
TOM: We spend far too much time aspiring to be the smartest person in the room (or better, to hang out with the smartest people), but truth is, with the right perspective you can flip the concept of smarts, and you’ll see stupidity right there on the other side.
This piece is full of gems, I love the reframe of stupidity not being the *lack* of something, but the *product* of something. Read it to recognise your own stupidity - from rules-based stupidity (the lack of curiosity that I wrote about in a previous post), to organisational stupidity that comes from too much agreement, to the neat experiment that pitted Yale grads against a rat. You can guess who won. Enlightening, humbling and amusing - this will definitely make you smarter.
TOBY: This is a humdinger of an article, not just because it is written so well, but because of the constant layers of insight it brings to the fore. It is a plea for empathy and humility, empathy to understand why others are stuck (not bad people just applying a faulty lens), humility because we probably sit in one or t’other of these buckets multiple times in a day. It touches on ego, organisation, social dynamics, culture. And it doesn’t really feel the need to tell you how to solve all of this, it just defines the nature of the problem so well, I think the answers come much more easily, and each version of stupidity hints more or less at a route out.
I may be overreading (and suffering from over thinking stupidity and ego stupidity at the same time), but it feels like you can run this question up and down the innovation stack, and look for the stupidity potential at each level. So at the individual level (ego/ ignorance) , at the organisational level (rule based) and at the market read level (over thinking/ expertise based) . This is compound stupidity, and my hunch would be that it becomes very hard to unpick.
Also when you look through the organisational debt article, this brings a lot more clarity and technicolor to what could be actually going on and why organisational debt exists.
Where the Ice Cream Cones at Dairy Queen and Mister Softee Come From
TOBY: This is the business celebration of the “just out of the limelight” super heroes. The limelight businesses tend to sit in consumer tech spaces and often have slightly flaky business models (Peleton? Robinhood??), but here is a solid, well designed business doing its thing really well and finding a perfect fit and understanding of its customers and the customers of its customers, all the while keeping the ecosystem vibrant - in this case not seeking too much of the value, so allowing others to get theirs.
This sort of comes as a counterpoint to Oatly, the business thinking here is tight all along the line. Here it isn’t the consumer focused marketing pizzazz a marketing/ design agency might have thrown up, all colourful flashy cones, flavours and a thousand variants, “ design your own cone”. Rather Joy deciphered the market through some smart channel reflection, and spotted the complexity of too much choice for consumers creating confusion, cost and complexity for the ice cream parlors. They also understood sharing the value of stability and lower cost was of huge value to their customers and this has created a low churn and difficulty for others to enter. It is solid, smart joined up thinking that keeps this business slowly taking over the market while giving consumer understated great value.
Scoops Ahoy would have loved it.
TOM: Double points for those awful cone- and cream-based puns (flaky… churn…hurhur!). But seriously, this is indeed a fantastic case study of a company that knows exactly where they sit in the value chain and what’s required from a product, commercial and ops point of view: reliability and consistency at a price that doesn’t try to gouge the customer, despite their market dominance. They’re helped by the fact that I imagine most of their customers are small ish businesses (ice creameries and restaurants) so there’s little motivation or ability for competition upwards in the value chain. That, and smart investments in technology to create those beautiful cone-making machines makes this look like any attempt at competition would barely create a (raspberry) ripple. Sorry.
Can Uber be profitable? It’s crazy that this is still a question…
TOM: It’s hard to argue with the idea that Uber has changed our world. At a conceptual level, the name alone has become a shortcut for pretty much any sharing economy platform that disrupts conventions. Uber for fast food? That would be Deliveroo. Uber for groceries - step forward Gorillas and Getir. But perhaps the greatest innovation from Uber has been its ability to survive at scale despite never turning a profit. This thread is a tight takedown of the toxic, hyperscaling, don’t-worry-about-proift-just-grow-the-userbase dynamics at play in so many big of today’s ‘exciting’ big platform plays. This gives cause to consider what the right metrics are for businesses - and what story those numbers might tell you - see Toby’s narrative and numbers recommendation in LuLd #1 for more. Is winter now coming to the world of MAUs instead of margins? An adjustment may be just what we need.
TOBY: There are a lot of Uber take downs, this has the virtue of being readable in a few minutes! In conventional numbers it clearly isn’t doing what it claimed, which the tweets highlight very effectively.
There are possibly two sides to this UBer isn’t a real business (her point) or Uber is adapting to find its sustainable model after ( a lot) of learning with someone else’s money, and I can’t figure out where things fall for Uber.
Heads is Bill Gates “greater fool” theory, and the business is being pumped to sell to someone else. That sits in the “how aligned is the VC business model with the long term profitability of businesses?”. I am not sure she is making that point, but somewhere down the line I think you have to ask in whose interest is it?
Tails is don’t hold them accountable to what they said 5-10 years ago (this might be an equivalent of a sunk cost fallacy) hold them accountable to what they believe they are doing now how strong that narrative is, and what unique assets they have to get them there, can you see a route to profitability in that? A parallel world example, and avoiding any terrible puns, Viagra was that story, designed for Cardiovascular and not working ,it turned out to be very ood for something else. Given the length of time of pharmaceutical development this would be years and millions in.
Tesla lobbies Texas to change renewable energy rules
TOBY: This has so many ways of smart written all over it, a Musk dunk. It addresses a very real concern - that strange way Texas energy is set up and the serious black outs they had last year and the dramatic swings in energy prices. ( people saw the price of wholesale energy rise from $50/ Megawatt hour to more than $9000 - crazy).
This goes some way to solving energy surges and blackouts, gives people a way of controlling and even making money, and puts Tesla centre stage as hero for the people, all the while putting the right pressure on Texas government to do something. For Tesla this is a mix of great PR, a market accelerant, a diversification of their revenue streams and a strong alignment with their mission.
From an energy market stability and a sustainable energy perspective this move to consumer generated and participating approach plus the economics for consumers could be a great acceleration to a green economy.
Business helping government helping people helping the planet, it seems like a great clean growth proposition.
TOM: To me this is another great example of what Musk does so well: grow the market, with his companies at the front of it. The Tesla mission was always so much more than just building an electric sports car - as Musk made plain in his blogpost from 2006, The Secret Tesla Motors Master Plan, (required reading for anyone interested in innovating for massive impact). In four lines:
Build sports car
Use that money to build an affordable car
Use that money to build an even more affordable car
While doing above, also provide zero emission electric power generation options
…as we can now see, we’re reaching stage four. And all the while, its driving increasing accessibility and desirability in the market for products that Musk leads in.
Love him or loathe him, you have to admire his big 10,000 ft vision alongside the canny 2 inches moves like this one. Taken together, Tesla is a great example of Toby’s point around alignment in the innovation stack. You can see from this move, the singular alignment against Musk’s vision laid out in 2006: “The overarching purpose of Tesla Motors… is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy”. Can’t argue with that.
How to eliminate organisational debt
TOM: This is a particularly boring title for an acutely observed commentary about the challenges established businesses face in trying to innovate or at least respond to change. I am seeing this more and more these days, especially as companies grapple with new realities post-covid… responding to uncertainty with more structure when learning and trust will do, leaving the business leaner and smarter to face the slings and arrows of the future. As he says, sometimes it’s so much better to 'let the culture learn' rather than accumulate 'scar tissue' of kneejerk policies in response to every problem. Great language.
TOBY: Organisational debt is definitely a big thing and really needs more reflection. It exists in the attempts to stabilise and maintain an existing way of doing things, add ons that fix emerging problems because of the gap in business: market fit. I remember working with an energy clearing market, where they spent 90% of their time coordinating between each other and 10% of the time serving the customers. A classic problem of significant debt.
I am less sure that internal local initiatives described are the solution, rather than a temporary sticking plaster. The poor fit is a systems problem, the way the whole business is designed. The problem being solved is as likely to be a symptom, so needs more than localised focus, but a better search for what's going on and why to understand where the fix is. I suspect in some cases it is something really simple, in others root and branch. Systems have a way of having counter intuitive loops in them. Part of that systems problem sits in what I learnt many years ago, which is that change is a function of rational (good idea), political (who wins/loses) and emotional (how do I feel about it). Working teams can easily focus on the first alone, and never get success because they fail to address the other areas. BTW using VUCA acronym? Ugg!
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
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