Shopify, Spotify, Atlassian pulse survey, Joe Rogan, Ferrari, Burning boats & Hedgehog concept
24th May 2020 Evolution Partners Newsletter
“All progress depends on the unreasonable man” – George Bernard Shaw
Hope you’re Thriving!
It’s one week until winter here and it’s starting to get colder, leaves have started falling and winter storms are starting up. But hey, it’s going to be 27c today!
It’s said that people talk about the weather when there isn’t anything meaningful to talk about, but today there is quite a bit.
Looking at this chart from USC Dornsife, on April 1st, 27% of Americans said they had worn a mask or other face-covering in the last 7 days.
Today, it’s up to 83%.
So wearing masks wasn’t cool before, but is acceptable now. You know what was cool?
Joe Rogan the number 1 podcaster in the world signed a $100m deal with Spotify for exclusivity, and Spotify shares increased by 20% or $4.7 Billion in the subsequent days. Rogan keeps complete editorial control and advertising royalties, the deal is for exclusivity, with only clips rather than complete shows appearing on places like YouTube where he has over 2.2 Billion views. Great for you Joe.
But what is really interesting is what the deal signifies for podcasting and internet platforms. It’s a continuation of the trend toward a less open internet where closed platforms compete with each other for exclusivity and attention backed by wealthy owners willing to make enormous losses in order to achieve those goals. But let’s not get lost in the concept. They spent $100m and got $4.7B in immediate valuation increase. It’s so sensible that it’s almost nonsensical.
Let’s move from Spotify to Shopify, don’t mix them up because Shopify is even more interesting.
One thing the pandemic has done is to accelerate the rate of technology adoption and usage such as Zoom, or the local store that has increased its technology spend.
And companies like Shopify, who owns a subscription service for companies to create a website which sells, ships and manages products has been a huge beneficiary in this spend with their stock price rising from $346 on March 20 to $825 on Friday (not a typo!).
Of course, the key to this is ‘e-commerce as a percentage of retail sales’, which for the US has gone from 5.6% ten years ago, to 16% in 2019 and 27% in April.
Based on this graph, this week Tobias Lutke, CEO of Shopify said we’re now living in 2030 – an interesting concept to think about from different angles — what he said — “Everyone now has a 2020 quality software in a basically 2030 world, so everyone’s software just got 10 years worse, given the requirements and the needs by the customers”.
Lutke has ‘dropped everything’ at Shopify and accelerated projects to try and meet these requirements, but within this environment the age-old adage holds firm – the opportunity lies where you meet the customer needs better than others.
Meeting that customer need better than others forms a key part of a strategy, and in my book Made to Thrive I discussed the importance of Intangible Assets and how from 1975 to 2015 this has changed from 17% to 87% of the total S&P market value, and why developing a strategy that ultimately creates a unique and valuable position in the market, generally by creating difficult to measure intangibles is so important for leaders to work on today — that’s a key part of the strategy role. This interesting infographic from Raconteur digs deeper into intangible values and why they are a crucial driver of company value. There’s also a high-resolution image here.
On January 21 2020, well before the pandemic arrived in Italy, Ferrari executives asked themselves “Let’s assume that such a virus arrives here in Maranello. What should we do now, to avoid devastation and survive as a company?” and they built a plan which led to them closing the factory on March 16, days before the Italian Government imposed a national lockdown. On that same day, they launched a project to prepare for reopening to keep employees and suppliers safe. That plan consisted of three stages in three different areas, Core Activities, Employee’s care and Stakeholders value.
From that plan, Ferrari built a theme and poster to help everyone understand what the plan was, and where they currently were in the progression of the plan. The theme was called ‘Back on Track’ as a nod to the companies love of racing and is a great example of how to get teams focussed on one single number or priority. Read the full Harvard Business School story here.
In the coming weeks, Atlassian, who have confirmed their offices won’t open until at least the end of the year, are releasing the tools they have built to help their people adapt during the pandemic. The first, an employee pulse survey is now available to download, and use regularly with your teams. Tami Rosen, Atlassian’s Chief People Officer writes about the survey in this company blog “I cannot overstate the importance of proactively asking employees how they’re doing and what’s holding them back. That’s how you know you’re responding in the right ways at the right time. That’s what it means to be employee-driven in your response strategy. It’s the difference between declaring a company-wide day off on an arbitrary date and giving employees permission to take an extra day off on a day of their choosing”. It’s a great example of aligning your employees needs with the actions you need to take, and getting a regular pulse on how you are performing moving through the crisis.
And finally, from the box outside the box…
In 1519 Captain Hernán Cortés landed in Veracruz, Mexico with hopes of claiming the land for the Spanish crown and defeating the ruling Aztecs. Unfortunately for Cortés, his expedition contained some folk who were perhaps a little more loyal to the Spanish crown than they were loyal to him, and they were considering borrowing a ship from his fleet and heading back to Spain, which seemed like a viable option to them. Of course, Cortés wanted to gain the fame and glory of conquering the mainland and beating the Aztecs, so he didn’t agree with the idea that they should exercise their option to return to Spain, but instead believed that they should join him to fight the Aztecs.
So he burned all the ships so that no one could return to Spain.
Here’s the lesson. Retreat is easy when you have the option.
It might have been a good idea to keep a ship or two from the fleet in order to get back to Spain, to have a safety net just in case. But by keeping that option, it means that people are not completely committed.
Today, some people have the option of retreat. Of a safety net. Or they think that they have.
Burning the boats often seems like the worst thing to do. It’s really scary. It takes courage and determination that is perhaps illogical.
But sometimes, it is the best option, and real success comes from that courage.
I was talking with a CEO this week whose business has been majorly affected by the pandemic and has pivoted to an online model, generating sales and effectively saving the business. But, inside the idea of going back to the way things were was lingering, and they weren’t really embracing the challenges and opportunities the new business model provided. They were in essence, holding their breath and waiting until things resumed. And so we discussed the concept of burning the boats. Of being all-in on the new model and being the best at it. Of thinking about the hedgehog concept and burning the boats.
As you look around, what are the boats that you need to burn?
This week on The Growth Whisperers podcast
On episode 6 of The Growth Whisperers, Kevin and I talk about the following.
Elon Musk factory reopening
Kevin & Brad talk about Elon Musk reopening the Tesla factory and asking authorities to only arrest him for doing so, as well as his recent comments that more people should make things.
Efficient vs effective leadership
The Growth Whisperers discuss the difference between effective and efficient leadership, and why leaders need to focus on their effectiveness right now. They also discuss why learning new skills is so important for leaders to maintain effectiveness.
Virtual vs face to face meetings
Brad & Kevin share experiences with virtual meetings and ask the degree to which virtual strategic planning meetings will become commonplace in the future.
Listen to The Growth Whisperers
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