Scott Galloway is the author of “The four”. It is a book you should all read, particularly after Corona. Combine it with “Likewar”, which is about the weaponisation of social media. Also relevant to Corona. Scott recently wrote “Post Corona: From Crisis to Opportunity”.
He starts with Aristotle. The smallest thing can create unprecedented change. Even something as small as a virus. The effects are unprecedented. I am working with PMI on their citizen development offering, which is closely linked to transformation, agility and adaptability. Sunil Prashara, the CEO of PMI, classified it as part of existential VUCA and a fundamental shock to the system.
The great acceleration
Galloway calls it the great acceleration. “Nothing can happen for decades, and then decades can happen in weeks. We registered a decade of e-commerce growth in eight weeks. Take any trend—social, business, or personal—and fast-forward ten years. The barriers of capital cost, regulation, and entrenched special interest have been immovable objects. The pandemic swept them aside in weeks.
If your firm had a weak balance sheet, it’s now untenable. If you’re in essential retail, your goods are more essential than ever. If you’re in discretionary retail, you are more discretionary than ever. In your personal life, if you were fighting with your partner, your rows are worse. Good relationships now have another ten years of history and goodwill.
All the fault lines are visible. And now we are at crossroads. Whether we are headed for a Hunger Games future or something brighter depends on which path we choose post-Corona.
His business advice:
- Cull the herd.
- Cash is king.
- The cost structure is the new blood oxygen level.
- Move. Perfection is the enemy of the good when it comes to emergency management. Speed trumps perfection. And the problem we have in society is that everyone is afraid of making a mistake.”
- Clean up the deadwood.
- Go digital and remove all friction.
- Start with a clean sheet of paper. Freed from legacy decisions, how would you change your business model, how you go to market, figure out the right size and composition of your labour force,
- Move to a variable cost structure.
What Galloway describes is Sunil Prahara´s gymnastic organisation. Ambidextrous, hyper agile, loose, adaptable, resilient, Where discipline, accountability and common purpose and a common vision are fixed. Where technology, business acumen and constant training deliver the infrastructure and platform to operate. Fully digitised with all routine is automated. Where everything is a project and where everything is variable.
Industries will change
The opportunity for disruption in an industry can be correlated to a handful of factors—a disruptability index. The key signal is a dramatic increase in price, with no accompanying increase in value or innovation. This is also known as unearned margin. Sectors that he thinks that are ripe for the picking are traditional media, higher education and healthcare.
Work has changed
The dispersal of work has arrived. The trillion-dollar question is whether tech can disperse our workforce without reducing a culture of innovation and productivity. As of June 2020, 82% of corporate leaders plan to allow remote working at least some of the time, and 47% say they intend to allow full-time remote work going forward. However, there are risks to working from home. If your big tech job can be moved to Denver, there’s a decent chance it can be moved to Bangalore. We also can’t ignore the fact that remote work will be a means of increased income inequality. 60% of jobs that pay over $100,000 can be done from home, compared to only 10% of those that pay under $40,000.
Marketing has changed
Galloway thinks that the brand age gives way to the product age. Emotion injected into a mediocre product (American cars, light beer, cheap food) was the algorithm for creating hundreds of billions in stakeholder value. The reliance on brand equity divorced from the quality of the product, its distribution, or support. With AI assisting your buying behaviour in the future, that concept will change. Shared experience will become the new search. Brian Solis wrote bout that years ago, and again COVID has accelerated that behaviour. And luxury will remain artisanship and scarcity, but that will not sustain a large gig economy of artists and artisans.
In “The four”, Galloway warns about the power of the big four. He compares social media to cigarettes. If there is any doubt that media is nicotine (addictive), but advertising is what gives us cancer (tobacco), compare and contrast the most successful media firms of the last decade: Google, Facebook, Netflix, and LinkedIn. LinkedIn is the social media platform we’re all hoping Facebook and Twitter would become. As with so much else, the pandemic has taken this trend—the increasing dominance of our lives and economy by just a few tech companies—and accelerated it ten years.
He predicts that the four will expand further. Publishing, delivery, wearables, banking, insurance and health to name a few. You should read “The big nine”, which predicts a war at a platform and AI level, where you will have a choice between Google or Apple hospitals (including where and how you some medical data). Manipulation, AI, data, banking, insurance, health and the big four are a terrifying combination.
Time to take a stand
It is time to stand up. The cancer is expressed in interference in the democratic process, fake news, radicalisation, teen depression and increasing inequality. At a macro level, we have to decide who is going to pay the price. The current modus operandi is capitalism on the way up, and socialism on the way down. Now that the crisis is upon us, this small population of rich people has found socialism, and they have their hand out. Too big to fail in the banking crisis.
Failure is necessary
Failure, and its consequences, is a necessary part of the system. Old relationships are severed, assets are freed up, and innovation demanded. A forest fire brings life as it destroys—so too, economic upheavals create light and air for innovation to flourish. We’ve let ourselves confuse corporations with the things they own and the people they employ. Corporations are simply abstractions. They feed nobody, house nobody, educate nobody. When a corporation fails, those who have risked their capital to support it lose their investment, but the workers are still capable of work, the assets remain available, and whatever need the corporation was filling remains.
Once the government gets into the business of propping up the losers, you can predict who will be first in line for the handouts: the people with the most political power—corporations and rich people. At the beginning of August, U.S. billionaires had increased their wealth a total of $637 billion.
Take government seriously
The government can be very efficient when we work together. However, in 2016, the election of a reality television star as president was the fulfilment of a long-term trend. We equate government to an entertainment product. When your house is on fire, and the wealthy guy from down the block shows up with a better hose to put out your fire, that doesn’t mean we need more rich people on the block. It means we need to fund the fire department.
Asking Pablo Escobar to fund the police
Yet in the pandemic, we look to Bill Gates to tell us what to do, as Dr Fauci has been diminished. We wait for Tim Cook to get us masks, Elon Musk to supply ventilators, and Jeff Bezos to vaccinate us, because FEMA and the CDC aren’t doing it. But predicating society on the unaccountable goodwill of billionaires is not a recipe for long-term prosperity. It’s asking Pablo Escobar to fund the police.
Looking ahead, there are two priorities that should inform our policies: restraining private power, especially that held by big tech, and empowering individuals.
Break them up
So, we break them up—not because they’re evil, not because they don’t pay their taxes, not because they destroy jobs—but because we’re capitalists, and we believe in competition and innovation. It’s not punishment. It’s overdue oxygenation of the marketplace that will unleash billions, maybe trillions, in shareholder value.
Start with people
And start with the people and work up. Don’t start with shareholders and work down. Shareholders are supposed to lose; that is how capitalism works. When you give money to poor and working-class people, you see an immediate multiplier effect in the economy. You will forgive me if I add citizen development. The ultimate enablement and upskilling tool.