As more consumer internet IPOs head for the Indian stockmarket, we are asked by Marcellus’ clients whether our investee firms are going to be disrupted by VC funded digital cash guzzlers. At the other end of the world, Robert Siegel has written an outstanding book on the same subject – the only difference is that he has reached a very conclusion to what many investors have reached, namely: “In ‘The Brains and Brawn Company: How Leading Organizations Blend the Best of Digital and Physical’, venture capitalist and Stanford Business School lecturer Robert Siegel …He shows that, while important, digital is only part of the answer―and it’s never the only answer. The vast majority of successful leaders from both incumbents and disruptors focus as much on things like logistics, manufacturing, and distribution as they do on digital innovation. In fact, many established companies are successfully countering young upstarts in other creative ways, and many new organizations are learning from their older brethren.
Siegel shows how to create lasting profits and growth in the smartest way possible: by creating a solid partnership between digital innovation and traditional business operations―in other words, by marrying brains and brawn.”
The book is structured around several finely crafted case studies including:
- “Charles Schwab uses cutting-edge analytics to better serve millions of investors without violating its original code of values.
- Align Technology transformed orthodontia by developing creative new business models along with new products.
- Kaiser Permanente taps into the power of empathy to improve patient satisfaction while controlling costs.
- Instacart balances ownership and partnerships to balance the needs of four key constituencies.
- Target, Best Buy, and Home Depot found different ways blend the best aspects of physical retail with innovative e-commerce.
- Desktop Metal is innovating high-volume yet affordable production methods that can revolutionize manufacturing.”
In an interview centred on the book, Robert Siegel gives further colour and perspective on why the same business leaders who succeed in the old economy also have it in them to succeed in the new economy: “Whether it’s senior leaders in large organisations, disruptors or leaders in entrepreneurship – aside from being smart and ambitious, the ones who are most effective are thoughtful, human, and tend to not put on the ‘airs’ that you may expect. It creates a way for people to connect with them – it helps with customers, employees, and stakeholders. From having met and interviewed so many of these leaders – I’m always surprised at just how normal they are!….
From studying companies, we saw these patterns of physical attributes coming in for the most successful. We came-up with 5 that seemed to make a real difference.
The Spine (Logistics) – the ability to get things from A-B, and to do it well.
Hands (Craft) – making things, manufacturing – and how you are using technologies like additive manufacturing to put the factory at the customer.
Muscles – The ability to operate at scale, and locally – you may have a platform that allows you to do business globally, but you can customise locally.
Hand-Eye Coordination – the ability for companies to shape ecosystems and to drive those ecosystems to get what they want.
Stamina – the ability for businesses to survive over time…
he brain is the most complex organ that we have in our body. The brain is not just about analytics and 1’s and 0’s, but also about emotional, creative and psychological capabilities. We studied Charles Schwab – and what I found interesting was that they had great analytical capabilities, but also creativity and empathy. The 5 most important brains attributes in business are:
The Left Hemisphere – using analytics.
The Right Hemisphere – harnessing creativity.
The Amygdala – tapping the power of empathy.
The Prefrontal Cortex – managing risk.
The Inner Ear – Balancing Ownership & Partnership.”
Siegel then explains the skillset that business leaders need to acquire if they are to run a company effectively in today’s world: “Amazon is the archetype of a great brainy and brawny business because they do both so well but since every company is going to have to do those things, the skill set required of leaders will be different over the next couple of decades. In the old days, you could stay within a function, rise through that function, adding teammates to complement your skills…Today I talk about systems of leadership – and you need the ability to see the entire system.
In a world where everything is connected, there’s bits and bytes moving, and leaders need to understand what happens when functions inside a company interact. What happens when your company is interacting with others inside of its ecosystem? There’s a flow to business and leaders need to be able to see that flow.
The great leaders in this world combine digital and physical – they can operate at the intersections and display operational and innovation excellence. They need to have a product manager mindset – they need to understand customers – they need to know how products get built and how to sell things – they need to be able to run disruption, not just talk about it – they need to have a mindset of going all in at times of risk. There are times of thinking and leading where you need to be able to understand interactions and you need to be able to do multiple things at the same time.
You can’t stay in your lane anymore – you need to be good at multiple things, and understand interactions.”
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