Expert interview with Jonas Ridderstrale
Europe’s number 1 management thinker
Part 1
Posted on December 4, 2007 - Filed Under CSA - Celebrity Speakers, Expert Interviews |
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1. You are ranked as number 9 among management thinkers of the world and number 1 in Europe together with your co-author Kjell A. Nordström. What do you bring in the world of management thinking to be ranked on the first place in Europe?
Beauty is in the eye of the beholder. There are many great European management thinkers – from Charles Handy to Fons Trompenhaars. I think I’ve been successful, because the ideas that I present are solid enough to stand the test of time, but also because my books and gigs provide people not only with intellectual content. In all probability, that stuff is necessary but not sufficient if you want to make it in my industry. I also give people hope, confidence and optimism. Boosting the psychological capital of people is at least as important as adding to their intellectual capital.
2. In world’s economy Europe’s role as a producer is diminishing nowadays and production is moving to Asia. Based on your experiences how could Europe compete? Is there a challenge we are facing with the management skills in Europe or it is just a new era when China, India are getting bigger roles?
In our deregulated world, there are two basic options. Either you design a strategy that’s as fit as the great white shark – well adapted to a world of markets, or you focus on being sexy like the peacock with his amazing tail – attractive to people with more or less endless choice. Most people are familiar with Charles Darwin’s idea of survival of the fittest. As an effect of the deregulated business life and our journey into an info jungle where markets rule and reign also organizations must adapt. Right now, they are outsourcing and off-shoring to become the fittest business on the block.
Just farming out stuff won’t do the trick, however. Being fit requires that you find and exploit a market imperfection. For economists (and politicians) perfect markets are those where marginal cost equals marginal revenue and companies make just enough money to stay in business. In a perfect market, profits don’t exist. It’s therefore the duty of executives to pursue imperfections.
Dell created a transactional advantage with its direct to the customer business model, eliminating several parts of the traditional value chain. eBay has designed its Internet platform, where you can sell and buy just about everything, in such a way that relationships and reputation evolve and result in mutual trust. Finally, there are those companies, mainly professional service firms such as Ernst & Young or Accenture, which focus their attention on creating and defending a talent monopoly.
But also Darwin later came to realize there’s another way. The trick lies in shifting perspective from a survival-oriented to a courtship-based view of success. Consider the peacock’s tail? From a fitness perspective, this “psychedelic feather duster” actually provides a competitive disadvantage. He can’t run. He can’t fly. So, why did the peacock end up with such a ridiculous costume?
In order to understand his look, we must consider the peahen, because in nature as in life and in business it’s always the “customer” who takes the ultimate decision; go – no go. With the tail, the peacock is actually telling the female that he is so incredibly fit that he can afford to carry around this awkward adornment and still be alive and have a good life. He has a credible handicap. This is survival of the sexiest. The guy is attractive as hell.
Since we’ve deregulated life and moved into a split society in which at least some people now have more or less endless choice, being good is often no longer enough. Today, in the business world we find an abundance of firms that supply a surplus of products and services with similar quality, price and performance. For Generation Choice – sameness sucks. So, corporations must attract the attention of people by appealing to their feelings.
In business, credible handicaps largely fall into two separate categories: ethics and aesthetics. If you refuse to bribe and cheat, you’ll be handicapped. Corporate social responsibility costs = handicap. Also corporations that spend a lot of money on being environmentally friendly develop a handicap – a cost disadvantage. Is this handicap credible? Increasingly so, I believe, after the UN report on our climate and Al Gore’s documentary An Inconvenient Truth. No wonder that the percentage of global venture capital that’s invested in so called clean technology is up from 1 per cent in 2000 to 14 per cent in 2006. But ethics isn’t for everyone, everywhere. All handicaps are subjective, and their exchange rates vary over time and space. As a supplier you also need to be authentic. Transparency works both ways.
As for aesthetical handicaps, consider BMW. We’ve been told that the company employs close to 30 highly trained engineers who work only on the sound of the door, and almost half as many who focus on the smell of the car. Look at the cost structure of that company. BMW shouldn’t exist – not in one of the most competitive industries in the world; not when it spends an enormous amount of time and money on completely “meaningless” things such as design and branding. Yet, it does. In a perfectly normal and rational world we would all be driving Toyota Corollas. We don’t. BMW is hugely successful – not despite the handicap but thanks to it. The company knows how to profit from the peacock principle.
end of part 1 of this interview
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