The Joy of Christmas, Cirque du Soleil, Toyota vs Tesla & TikTok
5th July 2020 Evolution Partners Newsletter
“Talent hits a target no one else can hit; genius hits a target no one else can see.” ― Arthur Schopenhauer
Hope you’re Thriving!
An interesting week for me this past week, helping a client discover their Core Values, working through a very busy quarterly planning workshop on Zoom and being awarded an Emeritus Coach award from Gravitas Impact. Also, I’ve been working on my next book for around a month now, which is still a very long way off, but I will keep you up to date on as it evolves.
One of the things that have been on my mind lately is that words have weight. Especially for the CEO, but really for anyone. If you think back to friends, partners or bosses you have had, you probably remember things they said. You probably remember specific sentences they said. For example, when I was much younger I had a boss and I was given the responsibility for a significant project with a newer company. Now I had never worked in this area before and had never run a project before, but I remember asking about the project completion date and he said: “We absolutely will complete it by that date”. It was the only thing he was firm about in all our conversations.
Of course, the project was delivered on time and on budget. But if you’re reflecting on things people have said to you in the past, on the specific sentences that people have said in the past that stuck with you and made you feel something, then the words you say have weight and are sticking with other people also. Wouldn’t it be unfortunate if the words said flippantly and without thought did stick, and the ones that you did want people to remember didn’t stick. Choose your words carefully.
And choosing your words carefully is a key part of the Ambassador role for leaders as detailed in this 2-minute video. In the past week Tim, one of my clients has just released this 2-minute video on LinkedIn called “Measuring the Joy of Christmas” which comes from his work on the Ambassador role. Aimed at the Core Customer, an operator of a public space, Tim outlines many of the parts of their strategy, what makes them different and finally their purpose and values. What really matters is that this wasn’t outsourced to an actor or voice over, but that Tim acted as a servant to customers (the original Latin meaning of the word Ambactus) and beyond the direct messaging of the benefit to customers this ambassador video created two important things – activating the pride in customers and staff, and demonstrating that he cares. Remember the Ambassador role is not about ego, about being more powerful and showy, in fact, it’s the opposite, it’s about serving customers and staff without doing other people’s jobs. Watch Tim’s example of an Ambassadorial video here Measuring the Joy Christmas.
In the book Made to Thrive within the Culture section, I discussed how once you consider that ego is the enemy, once you consider that being an Ambassador is about serving others you can consider that cultivating people around you is what will create the greatest results. From the book.
“In fact, any sentient and emotionally aware leader should be surprised when employees don’t act in their own interests.
In the same way that Nicolaus Copernicus demonstrated in 1543 that the Earth was not at the centre of the universe, your employees do not exist to revolve around you, and you are simply one part of a complex geocentric business model, along with your employees, revolving around the customer.”
And this week NASA released a most amazing 40-second video showing the Earth rotating while the Galaxy remains fixed. Filmed in Namibia, Africa it shows an hour compressed into a second where the camera rotates at the rate of the Earth through night and day. Apart from its obviously amazing perspective, I like it because it demonstrates the difference between our perspective as leaders and what the rest of the universe might think. Watch the video here.
As you know I along with most people involved in business planning operate in 90-day cycles, effectively building a business plan every quarter to see the business reset priorities and realign with a broader strategy.
Well for Australian readers this week is 90-days until the Government stimulus JobKeeper ends. JobKeeper is a program started by the Federal Government in March which provides $1,500 per employee per fortnight if the business revenue has dropped by 30% or more. Of course, the enormous cost of the program means any fiscally responsible Government knows it could not go on forever, but as Warren Buffett said when the tide goes out you get to see who isn’t wearing bathers. And the concern is that there might be a lot of nudity come in the second week of October. You see in April when the economy was shutting down, and people were locked down, the number of companies entering external administration was the lowest in an April since 2013 and the third lowest of all months since 2013.
The Government is propping up the economy and this will end in October, in 90 days’ time. The next plan you build, for the coming 90 days must reflect the changes in the economy that are coming with tightening cash in some business customers, perhaps slowing payments from business and increased customer risk of collapse. Remember the Chinese proverb “The best time to plant a tree was 20 years ago. The second best time is now.”
One of my favourite examples of Blue Ocean Strategy is the Cirque du Soleil case study from HBR (Watch the 2-minute HBR Blue Ocean Cirque case study video here) which explains how Cirque famously created a new profitable market by taking the best parts of the circus and the best parts of the theatre and merging them. I was literally running a workshop this week working on the case study when one of the delegates announced the Cirque du Soleil had entered chapter 11 protection laying off 3,500 employees as they’ve had zero revenues since COVID-19 forced the closure of shows. With $300m in new funding, plus a ‘stalking horse’ bid for $420m from existing backers let’s hope for a successful restart.
Speaking of strategy, and valuations, interesting news this week that Tesla overtook Toyota to become the most valuable carmaker.
Toyota shares are trading at 10 times 2022 estimated earnings.
Tesla shares are trading at 69 times 2022 estimated earnings.
Toyota sold around 30 times more cars than Tesla last year, and its revenues were 10 times higher.
Tesla has never made a profit.
To the logical, prudent commodity trader this might be seen as irrational hyperbole. The emotion of cool tech and potential ‘green’ electric cars inflating a bubble that’s not going to last very long.
But when considered through a strategy lens, it might make more sense. If you know who wrote the phrase ”Software is eating the World” and why it might make sense.
The forces that disrupted the music industry and made CDs irrelevant are driving the Tesla valuation. Tesla has logged more than 2 Billion miles on its self-driving Autopilot software in the past year, it took 4 years to reach the first 1 Billion. Compared to R&D efforts such as Waymo which logged 1.4m miles in 2019, every single Tesla collects data on every trip in every car in the world – 891,000 cars by the end of 2019. It’s not possible for another car maker or tech company to catch up to that data now.
So while some people look at the Toyota brand and think that the profitability, Toyota Lean Production System, market share or brand means it should be the most valuable car manufacturer in the world, when considering the attributes of the market for Tesla they are all second-order attributes. For Tesla the real value is the software, the huge dataset they have access to from that 2 Billion miles that can make Teslas up to 9 times safer and make insurance 20% – 30% cheaper. In the same way, the music industry was forced to negotiate with Apple and forgo a 30% margin to access the iTunes store, car manufacturers will be forced to use Tesla’s self-driving software. Tesla’s real motive isn’t creating cars that sell, it’s creating software that all car manufacturers must use.
If you look at Toyota vs Tesla valuations, it’s like looking at Ringling Brothers circus compared to Cirque du Soleil.
On the subject of data, all the ‘cool kids’ are using an app called TikTok, a video sharing social network where users create short memes often dancing to popular music which has become even more interesting during the recent pandemic lockdowns around the world. How popular? It recently reached 2 Billion downloads. But the story behind the app’s owners and their real motive around data (similar to Tesla’s real motive above) is worth understanding.
One developer has reverse-engineered TikTok to learn more about its data collection process, writing about the findings on Reddit two months ago, which was shared in the past week in this article India Has Officially Banned TikTok – Here’s Why.
The really interesting quote from the developer was:
“For what it’s worth I’ve reversed the Instagram, Facebook, Reddit, and Twitter apps. They don’t collect anywhere near the same amount of data that TikTok does, and they sure as hell aren’t outright trying to hide exactly what’s being sent like TikTok is. It’s like comparing a cup of water to the ocean — they just don’t compare.”
And also this week I came across this Forbes article quote
“Have no illusions: beneath its seemingly innocent exterior, TikTok is a public danger. If you know nothing about cybersecurity, trust the number of analysts who have been saying it for a while. Or ask the Indian Government. TikTok can’t be fixed: its problems lie in its very conception and in the culture behind it. The advice is clear: avoid it like the plague. Don’t say you weren’t warned.”
Read the article here – and ask younger family members if they’re using it!
TikTok: Beneath Its Fun Exterior Lies A Sinister Purpose.
Finally, as you may be aware there is an event coming up with Jim Collins on July 22, 11 am Australian Eastern time. This is part of a 2 event series, and last week the first event, in USA time was held and I’ve heard from friends who attended that it was a not to be missed live event, that isn’t recorded and available later. Jim walked delegates through 10 questions and asked leaders to go back to their organisations and answer the 10 questions rigorously. From the notes I saw, my favourite was a question during the Q&A session “Q. What is the one piece of advice that you would give to someone who is trying to get their Flywheel right?
A: I believe in empirical assessment. Go to your actual, practical experience and see what’s worked.”
Learn more about the Jim Collins event here.
This week on The Growth Whisperers podcast
On episode 12 of The Growth Whisperers, Kevin Lawrence and I talk about the following.
NBA leveraging technology to help get back to play
Brad and Kevin discuss how the USA National Basketball Association are starting to play again using smart, wearable technology, and how you might be able to use this approach to safely restart your business.
Dealing with COVID safety policies
The Growth Whisperers discuss how COVID policies can be executed in ways that create dramatically good and bad customer experiences.
When A players don’t grow with the business
Kevin and Brad talk about what to do when the business outgrows what once was an A player team member.
Listen to The Growth Whisperers
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