Amazon, Disagree and commit, Bitcoin, Read the right books & Pivoting cinemas
3rd May 2020 Evolution Partners Newsletter
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” Charles Darwin
Hope you’re Thriving!
Well here in Perth kids went back to school last week which felt like a meaningful milestone in the recovery. At times, I find that when I have a moment to reflect, I find that the entire COVID situation is a little surreal. I mean to think that we are living so very different from just a couple of months ago can make you stop and think is this really happening?
There has been so much change in such a short period of time that in fact, I’d say most people have undergone some form of significant change to their life, and as Darwin said in the quote above, it’s those who are best at adapting, that are often doing the best.
For example, Amazon whose stock is up an amazing 30% in the past month is spending all $4 billion of it’s forecast Q2 operating profit on COVID-related expenses.
Says CEO Jeff Bezos on the last earnings call “Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe”. That’s around 5% of Amazon revenues being spent to adapt, survive and be successful in the new environment. How are they spending $4 billion in one quarter?
From the article;
“Amazon, has procured 100 million face masks to be worn by “all associates, drivers, and support staff in our operations network.” It has purchased more than 1,000 thermal cameras and 31,000 thermometers, which are being used to conduct mandatory daily temperature checks for employees and support staff throughout its operations sites and Whole Foods Market stores. And it has assembled a team including research scientists, program managers, procurement specialists and software engineers to build incremental testing capacity.”
If Amazon is providing an example of an adapting company if you were to spend 5% of revenues on adapting in the next quarter, would it help you to survive and thrive?
Of course, many businesses have had revenues drop by more than 30% which means that their primary focus is on business continuity, and many might not have the money to spend 5% on adapting. In Australia though, this 30% drop means that they would qualify for the JobKeeper payment, a Government stimulus that is paid for employees, through employers to keep them in a job at around $1,500 per fortnight. But with only 55% of businesses who have expressed interest actually signing up due to confusing rules and continuous change to eligibility, especially around redundancy payments and the ability to make commercial decisions when receiving the stimulus, the importance of adapting in the right way, can’t be underestimated.
As a quick reminder here is the best list of Australian stimulus available from SMB investment firm Arowana.
Through this change, one of the biggest decisions is around people. Perhaps you’ve spent years building a great culture with A players and the spend on payroll is unsustainable into the future. It’s an awful predicament and I found this HBR article insightful. From the article “This is a time people will long remember, and reputations will be won and lost. When your leadership is considered, you will be remembered just as much for how you make, communicate, and act on these choices as for the choices themselves. Be honest, be open, have the courage to reset your business and you will not just survive, but thrive.” On this week’s podcast, we’re talking about ‘disagree and commit’ in leadership teams (see below for this), but in next weeks podcast, Kevin and I are talking about how to improve the percentage of A players in your team during the COVID crisis.
Also on culture, an in-depth interview I did with Authority Magazine was released this week talking about the true cost of bad culture, and what leaders can do to build a great, enduring culture. From the article “…Imagine a picture of two hamburgers. On the left is the plump perfect hamburger we often see in an advert. It’s got bright green lettuce, dark red tomato and is perfectly constructed with little water droplets on the salad. On the right is the hamburger we actually receive in-store. It’s flat, has some strange grey stuff on it and looks nothing like the one in the advert. Well, that’s what so many leaders do to people they employ. The job advert looks beautiful, but what employees actually receive is completely different.” Check out the article here.
Something that has increased in value more in the past month than Amazon shares is Bitcoin (32%) and before you skip this part I’m not an investor and not even a fan, but, in 9 days there will be a significant milestone for Bitcoin where the value of a mined bitcoin will halve from 12.5 to 6.25 coins. For those who have invested in buying the expensive computers to mine the bitcoins that means their return will also halve thereby likely driving up the value — as originally intended with a total capacity of 21 million coins. Previous halvings (in 2012 and 2016) were each followed by a significant price growth of bitcoin, so it will be interesting what will happen this time given the unprecedented macro situation.
On the subject of technology, Kevin Kelly, co-founder of Wired magazine turned 68 this week and shared a fascinating blog with 68 bits of unsolicited advice.
Here are three of my favourites;
• A worthy goal for a year is to learn enough about a subject so that you can’t believe how ignorant you were a year earlier.
• Experience is overrated. When hiring, hire for aptitude, train for skills. Most really amazing or great things are done by people doing them for the first time.
• You can obsess about serving your customers/audience/clients, or you can obsess about beating the competition. Both work, but of the two, obsessing about your customers will take you further.
What I really found interesting was the very last one;
• The universe is conspiring behind your back to make you a success. This will be much easier to do if you embrace this pronoia.
I’m not embarrassed to say I wondered what the word ‘pronoia’ means?
“Pronoia is a neologism coined to describe a state of mind that is the opposite of paranoia. Whereas a person suffering from paranoia feels that persons or entities are conspiring against them, a person experiencing pronoia feels that the world around them conspires to do them good.”
It really makes that last statement a lot more deep and meaningful. How can you embrace the concept that the universe is conspiring to make you a success?
One way is to read. To read the right books.
I went back this week and reviewed one of my favourite posts from Tim Urban called The Tail End. In the post, Tim says the following “I read about five books a year, so even though it feels like I’ll read an endless number of books in the future, I actually have to choose only 300 of all the books out there to read and accept that I’ll sign off for eternity without knowing what goes on in all the rest.”
Now Tim reads more than the average person, so if you’re currently 45 years old and reading the average 4 books per year a leader does, and plan to retire at 65 you will read 80 books in the remainder of your career. Now you can either let those simply catch your eye, or you can curate a list. Many people will simply wait until one sounds interesting, but if you think that you only have 80 (or so) books out of all the books out there to read in order to make your effort count for the most, and grow your wisdom the most, which 80 books should you choose, and in what order?
This week on The Growth Whisperers podcast
On episode 3 of The Growth Whisperers, Kevin Lawrence and I talk about the following.
- Disagree and commit
To create a high performing leadership team one of the most important principles is to disagree and commit. Leaders must enter healthy, vigorous debate and be prepared to individually disagree with the decision, but commit to its successful execution. Brad and Kevin talk about how they use disagree and commit with leadership teams
- Pivoting cinemas
In the coronavirus pandemic, one of the most difficult business models to adapt due to social distancing is cinemas. The Growth Whisperers talk about two examples of cinemas pivoting to generate new revenue.
Listen to The Growth Whisperers
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