Maks Giordano, a digital strategist and creative with 25 years work experience in digital, consults companies like Lego, Lufthansa, Volkswagen, Daimler, UEFA and many others in their digital transformation and is a frequent keynote speaker for corporates and at international conferences. He has published books about usability and mobile and teaches innovation at universities as an associate professor. He is also currently a faculty member of futur/io, a new education and research institute focused on exponential technologies and how Europe might use them to create desirable futures.
Giordano held executive positions at ID Media and MetaDesign before he co-founded iconmobile in 2003, which was one of the first mobile centric agencies worldwide, a role which helped him to be nominated Entrepreneur of the Year by Ernst &Young in 2006. After selling the company to global advertising and public relations company WPP in 2007, Giordano joined German television operator ProSieben Sat.1 Digital as head of innovation, games and mobile, and a member of the management board. In 2011 he co-founded Berlin-based kreait, his current company, a innovation consultancy which works with corporates on digital transformation projects. Giordano recently spoke to The Innovator about what corporations should do to adjust to the digital age.
Q : What should corporations be doing to prepare for digital transformation ?
MG : A change of mindset is the critical first step. No matter which industry you are in, no matter how big your profit currently is ,you cannot stop or slow down the exponential change that is coming. Each industry is, however, different when it comes to how fast this change will impact their core business. It started with the music industry. Through a disruptive technology — MP3- within months, not years — the music industry saw its business model threatened and within a few short years the entire industry had to change. What used to be mainly sales of records is now multiple revenues coming from streaming, merchandise and live concerts, these are helping the industry slowly catch up the loss in physical sales. Then there was the change to the publishing industry and lately television. And now more and more industries feel the digital change in many forms, such as of changes in advertising and marketing, new demands coming from millennials, new competitors entering their market etc.
The huge problem for most industries is however, that they are doing way too well in 2018 to see the need for a mindset change. Why change when you have record profits? Take pharmaceutical companies: if you have patents worth millions or billions and you know your core products will and can not be digitized anytime soon — why invest in digital transformation, why should there be even a need for a mindset change?Why change, when in 2018 you will have record sales in cars, in football rights, in beverages, in producing electricity etc ? In their core business they are doing extremely well. But the outside world is changing dramatically, which is why everyone now refers to exponential change. It is like the Asterix (French comic book) village. In some industries your market, your core product — your village — will not be digitized immediately but outside the village the world is changing dramatically at exponential speed and therefore you will face challenges outside your core product market : how will you attract and maintain millenials as employees ? how will you market and advertise to millenials ? How will you cope with new competition entering your market ? How will you do relevant trendscouting and ensure that you will stay on top of innovation ? How will you partner with startups etc etc.
The better you are doing at the moment, the more difficult it is to see digital transformation as a threat but even if your core product is not being impacted you need to be thinking about the future and look into change now because it can have dramatic effects not in 10 to 20 years but in three or four years. Exponential change means the next three years are going to have way more impact on your business than the previous three years.
Q : Can you point to some examples ?
MG : Probably the best example for exponential change transforming an industry is with Nokia vs. the iPhone. Everyone blames [the Finnish company] for not anticipating the change that the iPhone launch brought about in 2007. Looking back 11 years it is very easy for everyone to blame bad management on the part of Nokia. But let’s put it in perspective. Who among us would have seen that coming that dramatically fast considering that management was looking at record sales in 2007? Nokia had 40 different phones on the market, better tech specs, way more experience in phone production than Apple, was number one globally and considered one of the coolest companies to work for. If someone within Nokia had said that they were going to lose to a new player with no experience in the market who launched a single phone that was more expensive nobody would have believed it in 2007. It was not the iPhone alone and its innovative user interface that did it. It was also the app store launched in 2008, it was app developers like Whatsapp or Candy Crush, it was flat rates offered by telecom operators and higher bandwidth, it was the growth of social media etc. All those factors led to the type of change where one plus one doesn’t equal two, it equals eight or sixteen. It was exponential change because those factors were a catalyst and accelerator to the others. So if you want to blame the management of Nokia you need to blame them for underestimating the speed of exponential change and an ignorance on what customers prefer : user experience over tech specs.
The automotive industry is another good example. Look at the record revenue numbers at automotive companies and their suppliers.Again, in their core product, inside their village, they have a product that will not be digitized (unlike with the record or media industry), that is of high demand and therefore yields really good numbers and profitability. But outside their village the trends are clearly towards connected cars, autonomous driving, sharing economy and electrification of the engines. On top of that, how will you advertise to millennials and Gen Z ? Do they actually want to own a car or do they simply need mobility ? And how will you provide mobility to them ? The fact that 400,000 people said they want to buy a Tesla Model 3 electrical car is significant. What if a company like Dyson or a new Chinese automotive compan actually release an affordable electric car in 2020? What happens to the automotive industry when a platform like Uber develops further, hand in hand with autonomous driving, market entries of new car manufacturers, new sharing concepts, multi-modal travel apps integrating public transportation with bike rentals and electrical scooter rentals ? Will they sell more or less cars ? Well, I would prepare for the latter. And this starts with a change of mindset.
Embrace change. Prepare for change. Instead of fighting or worse — ignoring — the likes of Google, Amazon, Facebook, Apple, Uber, AirBnB, Alibaba, Tencent etc. start your transformation. Prepare for exponential change. And yet another time — this starts with your mindset. I have experienced over and over again when top management doesn’t have the right mindset to anticipate and embrace change it doesn’t matter what you do, the company will be slowed down with potentially disasterous consequences not today, not tomorrow or next year, but in three to five years.
Q : Once companies embrace the idea of change what sort of practical steps should they take ?
MG : I would start with the right HR programs to educate and inspire top management and the entire workforce accordingly in a top-down approach. Make them digital savvy, customer-centric, risk taking intrapreneurs. Look into your processes. I would argue that almost all projects and product development can be done in agile, iterative ways. Become a more lean, a more agile company. Start to do small speedboat innovation projects. The point is to create an environment where failure is actually an option, but failure in a fail fast, fail cheap and fail often safety net. The cost of making an MVP ( minimum viable product) is so much cheaper than it was before. As a corporate you can try out a first version of an MVP and do some very focused user research around it. So instead of making management decisions based on assumptions, base your decisions on real data coming from real customers.
It is important to have a structure where you can rapidly try out things. For example, Amazon is selling lots of Alexa devices. How fast have you identified the trend ? How fast can your company develop its first Alexa skill ? Will it take a year or will it take a month or a week? It is important to move fast because then you have the data and can ask ‘What have we learned from that ? Is it relevant to our business and should we invest more in this ?’ Companies also need to have very efficient and relevant trendscouting and be very aware of developments not only in Silicon Valley but also in Asia, Israel and all over the world. They also have to make sure they have proximity to innovation and innovators in the form of startups. This can be different from company to company : maybe it makes sense to have a physical presence in Asia and Silicon Valley, maybe its a owned startup fund, maybe the company invests into other funds to get a view of what is happening in China and the U.S., maybe it joins an accelerator program with partners or creates it own. This really depends on the industry and the current set-up.
Q : All big corporates are struggling with the best way to work with startups. What do you advise ?
MG : When working with startups companies tend to forget that it is not only about financial gains but also learning about different ways to work. It is not like startups are geniuses, they just have to do things differently due to financial and other constraints. They make MVPs, they work directly with consumers, they make data-informed decisions and are extremely customer -centric. Corporates can really learn from this. I see miracles happen when corporates learn about these methods and adapt them to their needs. So instead of seeing solely the investment and possible exit, start to treat startups as partners that you could learn a lot from. Start to co-create products and services with them, help them with your strengths and treat your partner respectfully as someone who could play a vital role in your transformation process.