Mind Crunches #6: Extreme Makeover: The Business Model Edition
Alternatively: Buckle up, it is going to be a bumpy ride!
Friends, welcome to the 6th issue of the Synapses Fest newsletter!
I would never imagine opening my newsletter with a quote from Lenin but I think it perfectly describes the theme of today’s newsletter, so why not?
“There are decades where nothing happens; and there are weeks where decades happen.”
If you prefer a scientific, rather than a political, reference let’s remember what the definition of paradigm shift is. A paradigm shift, a concept identified by the American physicist and philosopher Thomas Kuhn, is a fundamental change in the basic concepts and experimental practices of a scientific discipline. Paradigm shifts arise when the dominant paradigm under which normal science operates is rendered incompatible with new phenomena, facilitating the adoption of a new theory or paradigm.
If you prefer a business reference, then I will quote Satya Nadella who famously said "We've seen two years' worth of digital transformation in two months" referring to how COVID accelerated the business transformation and digital maturity of many organizations across the world.
No matter what the reference is, the truth is that the past months a rare combination of deciding factors and “grey swans”, from pandemics to racial injustice and from human behaviors to societal issues, have created a foundation upon which new structural themes emerge pushing organization to change if they want to stay relevant in the near future.
In my previous newsletter, I commented on the symbiotic relationship between technology and societal structures. In today’s newsletter, I will list a number of new phenomena, as per Kuhn, that have surfaced which I consider to be the catalysts and accelerants of some really exciting business models, moves and strategies we witness.
EMERGING THEMES
Asynchronous Work
The rise of remote work will mean a majority of the 255m desk jobs globally are remote by 2029. Asynchronous work will prevail as people will avoid going to the office which works as a “distraction factory”. The platform that will empower remote teams thrive and successfully digitize non-verbal cues that humans developed after thousands of years of evolution will be the winner. Microsoft Teams is doing a great job on that. The brilliant Ben Thompson wrote about the differences in the business models of Slack and Teams. Ben Evans commented on what comes after Zoom.
Delivery as a Service
People will reduce the time they spend on commuting. Families will slash cost of living using only one car. However, we will still buy stuff and spend money online and we will increasingly want these things to be delivered at our doorstep. Amazon Prime is already doing same-day delivery. Walmart announced it will launch Walmart + that will cost $98 a year and include same-day delivery of groceries, fuel discounts, and other perks. Uber acquired Postmates. Why delivering only your food with Uber Eats when it can deliver pretty much anything? Long story short, the next killer business model at the “physical goods” universe will be Delivery as a Service, the same way that we see the Retail as a Service gaining traction with retailers adopting the Amazon Go and Kroger frictionless shopping technologies.
Social Purpose-Driven Capitalism
We all know the story behind the different values and beliefs that Millennials and Gen-Zs express. The latest surveys show that they express resolve and a vision to build a better future. Organizations which take bold steps towards diversity, social purpose and inclusivity have stronger financial performance and trusted by consumers. My favorite example of a start-up paving the way is Lemonade. Lemonade digitally transformed the insurance industry and integrated “social impact” to its business model and UX. They take a flat fee and the remaining money, after paying claims, is given to charities the customers choose. A few weeks ago, Lemonade became 2020’s best IPO debut.
Charter Cities
Cities will change forever. Many will move to smaller cities, have a lower cost of living & higher quality of life which means that regions will jump in a competitive race to innovate, build good schools and fast internet. Other cities are strategically choosing to become retreat destinations that cater to remote teams getaways and digital nomads. This means that the concept of charter cities will gain popularity - which is a good thing. Charter cities are new city developments granted a special jurisdiction and broad governing authority to make their economic environments more competitive and to jumpstart economic growth where previously it remained elusive. This is a great report on how to build “Radical Charter Cities”.
Output Focus
Time will be replaced as the main KPI for judging performance by productivity and output. Great workers will be the ones who deliver what they promise consistently. Advancement decisions will be decided by capability rather than who you drink beer with after work. This is where opportunities arise for startups and insurgents. The winners will build something no one else can measure.
New Housing Architectures
People working from home already identified that one of the problems they face is the lack of a “home office”, a space where they can focus and have a virtual meeting without distractions. Most of houses have not been built around the concept of WFH. The next years, the home office will skyrocket in popularity. Reports show there will be an explosion of people purchasing standalone units at their backyards for distraction avoidance. At the same time, affordable housing is one of our society’s greatest challenges. Keep an eye on some brilliant housing startups like this. Or follow Kanye West’s dream to build shelters for homeless people. (by the way round structures don’t seem so smart)
Pseydonymous Economy
Most people will be soon working from home and their identities will be structured around their professional email, virtual collaboration platform ID, social media username, avatar or even their VR persona. On top of that, we witness an increasing hesitation from people to use their real names on social media fearing they will be “cancelled” because of an old tweet/status update or because they shared a debatable view on a sensitive topic (Twitter is already working on a subscription platform). People will separate their earning name, their speaking name and their real name. It is possible people will treat their real names like social security numbers: only for official documents. This is a very interesting speech on the pseudonymous economy. And here is a long post on alternative futures for social media.
Health & Well-Being
The latest studies show that the lack of commute will give workers 25 extra days a year to do other things and athleisure will definitely be one of them. Gyms and fitness studios are largely closed and people will be very hesitant to re-visit small spaces where others are sweating and breathing out. Streaming fitness classes (Peloton) was already a trend that will now skyrocket but this is the narrow view. The winner will be the company that will build an experiential platform with great content where members will be able to interact, share tips, choose between different fitness experiences. Lululemon seems to be getting it after its latest acquisition of Mirror, a home-fitness startup. Prediction -> the next acquisition in the industry will be of Calm or Headspace which are offering meditation classes via a mobile app.
No Code
What you build will become more important than how you build it. Similar to cloud, no code is not a category itself, but rather a shift in how users interface with software tools. In the same way that PCs democratized software usage, APIs democratized software connectivity and the cloud democratized the purchase and deployment of software, no code will usher in the next wave of enterprise innovation by democratizing technical skill sets. The average enterprise tech stack has never been more complex and IT leaders are hesitant to take new strategic projects. This will soon be past. Microsoft acquiring Softomotive and integrating its platform to PowerApps might turn out to be a game-changer.
QUICK MIND CRUNCHES
Scientists make precise gene edits to mitochondrial DNA for first time. This is huge and exciting news. Gene editing on steroids!
South Korean government is delivering messages to Seoul residents using drones. This is so 2020!
A personal thread summarizing my thoughts on the profession of marketing.
Apparently, it is a difficult and challenging job to be the social media manager of the Ufizi Gallery. How -meta can your Tik Tok videos be?
If you are into evolutionary science or you just like cool videos and facts about the amazing planet Earth, I have found Steve Stewart-Williams’ Twitter account to be both insightful and entertaining. (also highly recommending his books)
We often read about the students’ experience at the virtual classrooms but we rarely think of how teachers and professors have adapted to this new reality. This is a great post from Stefan Thomke, HBS Professor, about his teaching experience in the new HBS Live Online Classroom (LOC).
Recommended Book: Entangled Life: How Fungi Make Our Worlds, Change Our Minds & Shape Our Futures - Merlin Sheldrake is a genius. He has dedicated his life studying fungi and his book captures decades of research presenting why fungi can provide a key to understanding the planet on which we live, and the ways we think, feel, and behave. Life changing!
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