Corporate Culture In An Age Of Unicorns and Disruptors

UBER CEO Culture Disruption

 

Poor, poor Travis Kalanick, CEO of UBER.

The last time I witnessed a senior executive combust so quickly and so publicly it was Jeff Skilling.

And, remember, Skilling was being ousted for the largest bankruptcy in US history, the loss of billions in investor dollars and over 20,000 employees losing their jobs, and their life savings, in the process.

Am I sickened by the revelations of rampant sexism and a broken “culture” at UBER?

Absolutely.

I’ve two daughters and I would be livid if they had to contend with a workplace like the one we’re all reading about.

Am I saddened by the trail of questionable, debatable and borderline-illegal activities that UBER have conducted over the past few years while blazing a trail as THE anti-establishment, trustbusting, anti-regulation transportation company?

100%

But here’s what I’m NOT.

Surprised.

I’m not surprised in the least actually.

We have created the environment in which being a “Disruptor” is the most sought-after accolade any CEO can aspire to. Musk, Thiel, Zuckerberg, Chesky – these are all household names.

The same “Celebrity CEO” Cult that’s immortalized ironic quips like Skilling’s one about Enron “We’re the good guys. We’re on the side of angels” and Kalanick’s “We have to bring out the truth about how dark and dangerous and evil the taxi side is”

We’ve brazenly created an entirely new categorization of business – Unicorns – that, as the name suggests, are a mythical bunch of companies with a valuation over a billion dollars and no performance history to validate that amount. How crazy is it that? Vaunted business publication Forbes actually publishes an annual Unicorn List that, guess who tops in 2016? You got it – UBER.

Amusingly, while Kalanick and UBER were being villified in the media, the same group of reporters were breathlessly reporting on the upcoming Snap Inc IPO and a valuation that was bouncing between $25 and $30 billion before finally settling closer to $20 billion.

$20 billion.

For a company that warns they may never be profitable, is hemorrhaging users, acknowledges their core customers aren’t brand loyal and, in their own prospectus, goes so far as saying ““We face significant competition in almost every aspect of our business both domestically and internationally”

Its hard not to agree with L2’s Scott Galloway who contends Snap will ultimately be a social media loser.

I think we’re glorifying the wrong thing people.

I seriously question why aren’t we celebrating business leaders who are creating deep, meaningful, fulfilling cultures AND disrupting established businesses?

We’ve grown accustomed to technology being the yardstick by which we evaluate, and anoint, business disruptors.

I’d contend that an organization’s Culture is potentially just as powerful a disruptor as any digitally-driven business transformation.

Culture as a Force of Disruption

Here are three examples where Culture, not technology, was the disruptive force.

Zappos : A Billion Dollar Culture

In 2009 Jeff Bezos, a man with quite the reputation as a disruptor himself, paid $1.2 billion dollars for another online retailer. Not because there was anything unique in the way that Tony Hsieh sold shoes, not because the Las Vegas organization had some whizzbang technology Bezos needed. No, it was because of the fanatical customer service culture that Zappos had created and nurtured. A customer service culture that drove unparalleled levels of customer loyalty.

Jeff Bezos has made no bones about why Zappos was worth that amount of money

Zappos has a customer obsession which is so easy for me to admire. It is the starting point for Zappos. It is the place where Zappos begins and ends. And that is a very key factor for me. I get all weak-kneed when I see a customer-obsessed company, and Zappos certainly is that.

Zappos also has a totally unique culture. I’ve seen a lot of companies, and I have never seen a company with a culture like Zappos’. And I think that kind of unique culture is a very significant asset.”

Like all good “Disruptors” Zappos continues to innovate and refine their core product – their culture – with bold experiments in Holocracy, a culture ethos intended to flatten operating hierarchy and accelerate decision-making. And they’re not above making money from teaching other executives how to build a world-class culture either. Smart business extension if you ask me.

NETFLIX : From Unknown David to Culture Goliath

If you want to talk celebrated “Disruptor” you’d be hard-pressed not to consider Netflix as a quintessential example. Let’s be honest from toppling Blockbuster to becoming the defacto original content creation studio with massive global hits like “House of Cards” “Orange is the new Black” and others, to pushing regulation on Net Neutrality, Netflix is one of the original technology Disruptors. And one, which in the words of CEO and Founder Reed Hastings, owes a tremendous amount of their success to a unique and cogent corporate culture.

 

In direct contrast to UBER, there are no hall passes for high performers”. There is, however, a well-documented and much admired primer on the Netflix Culture eloquently titled “Freedom and Responsibility” which, if you haven’t downloaded and studied, I would strongly encourage you to.

There is something truly elegant about the very first slide in that deck

“We Seek Excellence. Our culture focuses on helping us achieve excellence”

Patagonia : Winning At Retail By Not Selling Stuff

Few, if any, retail manufacturer would get away with literally telling customers not to buy their stuff and still seeing their brand and business grow exponentially. But Patagonia has. The retail sector is full of “win at all costs” cultures where organizations and employees are in figurative battle to eke out another sliver of margin and turnover rates are high and employee engagement is low. Patagonia seems to escape all of that. And their culture is regularly praised as the reason they enjoy sustained growth, while many of their competitors are struggling, and “freakishly” low employee turnover while others in the sector face perpetual churn.

Let’s be honest, how many organizations in such a grueling category as Retail would be ballsy enough to talk about an anti-growth strategy?

Ultimately, there is no single path to success for any start-up. No disruptive silver bullet.

Often the opportunity does lie in a clever application of new technology to serve customers more efficiently, effectively and profitably than before.

But technology alone isn’t enough as UBER is discovering and Snap Inc investors may be poised to learn in the months ahead. You need something more compelling to attract people to your organization – and to get them to stay. That, my friends, is your Culture.

So, I’ve just one request for all you wanna-be Disruptors and Unicorns out there.

If you genuinely want to go and create something unique and valuable, why not create a world-class culture.

Now, that would be truly mythical.

 

Can Banking Culture Adapt To Today’s Business Transformation?

 

“What business are you really in? Are you in the railroad business or transportation business?”

Harvard Business School professor Theodore Levitt’s classic line from “Marketing Myopia” is as profound today as it was in the late 1950’s when he first published it. His question elegantly forces business leaders to think more broadly about exactly who are the customers they serve, what are the services needed to earn and retain those customers and what type of organizational competency is required to succeed. All three responses would obviously be manifestly different if you answered “railroads” or “transportation”

Levitt’s missive takes on a new dimension when asked against the backdrop of today’s hyper-competitive business environment. Technology has created the perception (or illusion) that the critical choice today is not “railroad or transportation” but rather “analog or digital”

And while the “analog or digital” question may be somewhat rhetorical in 2017, the implications for large mature categories could not be more profound.

What happens to Insurance when we “share” rather than “own” goods?

What happens to Automotive when humans no longer drive?

What happens to Banking when the very definition of “money” is evolving with bitcoin and blockchain?

These are meaty and critical questions to tackle.

And, of course, leaders in all these mature categories are furiously constructing new big, bold strategies to ensure they remain relevant in this new world.

New strategies that are fluid, agile, lean, responsive, frictionless, customer-centric, service-design constructed and digitally-centered.

New strategies that inevitably run headlong into established Cultures that are seldom any of those things.

In fact, if you subscribe to Drucker’s often quoted opinion that “Culture Eats Strategy For Breakfast”, then you could argue that Culture is potentially the largest Achilles Heel in any transformation exercise.

Celebrated culture academic Edgar Schein eloquently argues that Culture is more than just “how we do things around here” but rather a set of sharedvalues and behaviours that become codified and reinforced by an organization’s success. Stands to reason. Conversely if your organization acts and behaves in a way that loses business, you adapt it or you die. If your organization acts and behaves in a way that causes that business to thrive, then you reinforce and reward the behaviours that drove the success. Over time, those shared and reinforced behaviours become your Culture.

Few could argue that banks here in Canada (my homeland) haven’t a proud history of success. By almost any yardstick, they have been incredibly successful.

Canadian banks are a significant contributor to our economy, they are also one of the largest employers across the country too (employing over 350,000 Canadians in 2015) and, internationally, our rather conservative regulatory banking environment is routinely lauded as one of the soundest globally. In fact, despite being so tied to the US economy, the impact of the 2008 crash was less significant on most Canadians because of our sound banking regulations.

And it is these historical successes that have built and nurtured Canadian banking culture today. And the associated values that underpin them.

Values like trust, teamwork and collaboration, accountability, customer relationships, integrity are all listed on the various Canadian banking websites. But you might argue these are category values — I would hardly trust my money and my mortgage to a bank that didn’t exhibit these. TD Bank is the one organization whose values seem to be more dynamic, more purposeful and, importantly, articulated in a way that could directly drive employee behaviour. (Disclosure — I am a client of both TD and CIBC)

So how will business transformation impact these cultures? How might these values need to be refined?

And where are the inevitable pressure points between Strategy and Culture?

Open versus Proprietary

Bank structures and systems are still (largely?) proprietary in nature. An imposing artifact of safety, security and strength as thick and foreboding as a vault door. And entirely appropriate when you wanted to build and project a system where you built, owned and managed everything for your clients. It was your systems, your know-how, your way. That’s not how customers and clients operate today. They want to seamlessly switch and move between their portfolio of financial services and providers — not your portfolio exclusively. They aren’t looking to be shoehorned into one provider, rather they want to use a variety of best-in-class solutions. When your clients expect open API’s and the ability to move seamlessly, your people can’t be operating with a rigid adherence to your process. Nor can your people continue to be rewarded for upselling and cross-selling inferior services just because you want to own the “whole” customer. Look at the hot water Wells Fargo got into when cross-selling was embedded in their culture.

Uncertain versus Certain

Perhaps a generational observation but a long and lucrative career in Banking was historically something coveted and something that Banks actively promoted or dangled in their recruitment efforts. Many banking cultures grew out of the certainty of a long and fruitful career. Being considered a “lifer” was an accolade. That certainty no longer exists. Since 2008 Banks have been reducing headcount at an increasing rate and if you read this sobering tale about life after Wall Street those reductions in headcount have gone deeper and deeper.

People versus Pixels

Banks used to be people-first, now they’re pixel-first. Well-staffed branches with rows of smiling and attentive staff have been systematically replaced by apps, robo-calls and online banking. And why wouldn’t they be? What exactly is a branch these days and why do we need them? What purpose does it serve and to which customers (remember my earlier Levitt?). If the services of my bank branch are conveniently located on the device in my pocket, why do I ever need to go into a physical location? And, as CEO of a publicly traded company with hungry shareholders, why do I need expensive physical real estate and warm human beings to staff them?

What about beyond the branch? What impact will automation, AI and machine learning have on a slew of other banking roles currently delivered by well-paid employees? Do I need brokers, financial advisors and wealth managers when risk tolerances and investment recommendations can be crunched via big data and delivered with an algorithm? If these transformation changes are inevitable (and profitable) how does your culture continue to motivate and reward the employees currently in those roles? Roles that actively being seized up for redundancies and obsolescence.

In my eyes the most significant cultural impact may be in the internal perception of Power.

Banking institutions have centuries of power bred into their cultures. Powerful organizations breed poise, surety and confidence in their people. And that naturally becomes embedded in their cultures. Of course, in the extreme, that can lead to arrogance and impunity too. But power and confidence are typically a self-perpetuating reality.

On the other hand, organizations in transition or in moments of great change can quickly lose any sense of confidence. The three horseman of an organizational apocalypse — Fear, Uncertainty and Doubt — can quickly gallop through an organization and decimate a once-powerful company. If confidence underpins their culture, what happens when that confidence is shaken?

The leadership task for a bank’s C-suite then is increasingly how to model and project a confidence to their employees — not just their customers, clients, regulators and shareholders — that their culture is as responsive as their strategy.

That is no small feat.

This employee quote from 2015 makes my point more eloquently:

“It feels like a different culture,” said one of them. “The bank has described the culture in the past as a caring performance culture and people are a little worried on the caring part because it seems to be a little more businesslike.”

We all know that public trust in institutions is diminishing. Could there be anything more dangerous for your culture than when trust in your institution diminishes amongst your employees?

What say you Dear Reader?

Am I overstating the cultural impact on Banking transformation? Are Banks already addressing these cultural changes head-on? Which ones and how?

While there is certainly no shortage of incubators and start-up style initiatives by Canadian banks, as an observer, these feel like skunkworks outside the larger organization. I’m intrigued because I genuinely believe this will be one of the most intriguing challenges business leaders will face in the years ahead.

Please leave your own comments, opinions and observations below.

Preparing For The Coming “Age Of The Robots”

 

Its quite amazing to recollect but eighteen years ago I sat in a darkened movie theatre, warm popcorn in my lap, and fidgeted like a giddy teenager watching Canadian acting legend Keanu Reeves (truth!) kick the proverbial ass of Agent Smith in a little movie called “The Matrix”. That little movie, and the two sequels that followed, became part of my pop culture references and made the Wachowski brothers and Keanu very very “bankable”

At the time I remember thinking what a creative but dystopian view of the “battle” between man and machine and what dark Science Fiction recesses did that spring from.

These days I don’t believe we’re in the dystopian future manifest in the movie.

But I also no longer consider The Matrix a fanciful fiction either.

Here are perhaps a few bitter (red or blue?) pills to swallow from my recent LinkedIn and Facebook newsfeed.

A human-free “Burger ATM” that McDonalds is testing in Boston.

A robot barista that, according to WIRED, makes a pretty decent latte. Howard Schultz might disagree but the WIRED editorial staff were certainly quite impressed.

The delightfully acerbic Scott Galloway reminded me that Amazon know employs (or deploys) enough robots to fill Madison Square Gardens twice. In some locations, they out-number humans.

Canadian marketing legend (and friend) Mitch Joel eloquently opined about the impact of “High Frequency Marketing” and the impact of automation on the creativity business.

BusinessInsider told a miserable story about the “plight” of UBER drivers forced to sleep in parking lots because they were unable to make ends meet with the organizations consistent desire to “costs out of the system.” Reading that article made me want to #deleteUber even before their NYC airport debacle.

And perhaps in a cruel example of the recency effect, The Wall Street Journal penned this extensive “behind the scenes” piece encouragingly titled “The End of Employees” this week.

Now, before you think I’m hot-jacking some end of the world, Chicken Little, post-apocalypse channel on Netflix, rest assured my social media echo chamber was filled with as many cat videos, Darwin Award contenders and President Donald Trump memes as it ever was. Though I will freely admit President Donald Trump was perhaps “trending” more – if that’s even possible.

These stories are no longer outliers and while we may still not yet have flying cars, we aren’t very far from a driverless car world.

This isn’t news either.

Ironically Aldous Huxley and the amazing Nicholas Carr have written about this “future” for ages.

To me, the fact that this future is so fungible and within reach is the part I’m reeling from. And, despite what my daughters might say, I consider myself quite well-informed.

So, the question looming large in my mind is how do we respond or react to this?

Being an ostrich or, alternatively, Chicken Little isn’t going to cut it.

Hoping Government will sort it is equally amusing, particularly when you consider how poorly Governments (and Business, NGO’s and the Media) scored in Edelman’s most recent Global Trust Barometer.

Here are a few things that I think WE ALL need to reconsider – because, heaven knows, I don’t have the answers.

HOW WE EDUCATE – I absolutely adore Canada (remember Keanu) but I do worry that our Education isn’t progressively and proactively teaching our kids genuine skills for this new world. I absolutely understand that a unionized and free education system has some systemic challenges to change but Education has to be one of the most pressing areas to review and address. I readily admit the struggle is “So what should we teach them then Hilton?”

WHAT WE REWARD – There is no denying the entrepreneurial spirit of Silicon Valley and similar places across the globe has made my 1st World life very cushy. I’m jacking free wifi, drinking a 1% latte bought with my mobile phone, in a comfortable Toronto Starbucks so I can’t moan too much. BUT, our obsession with 90-day analyst calls, social media unicorn IPO’s and “disruptions” like Airbnb and UBER, reinforces a short-term capitalistic, winner-takes-all imperative that is dangerous. If we reward and exalt organizations that see human beings as a disposable asset that merely inflates their OPEX, rather than someone’s Mom, Dad, Son, Wife, Friend, then we can’t be surprised when they “right-size”, “down-size”, “near-source” and “out-source” and “offshore”

HOW WE TAX – Yes, get the pitchforks and torches out because this (wooly-headed Liberal) is going there. Look up from reading this post, look around the room you’re currently in, consider what happens when 50%, 75% or 100% of the people in that room don’t pay tax because they have no taxable income. Look further afield, consider how your government will pay for those pesky “externalities” like roads, bridges, healthcare, the military and yes, even those big big big walls. Yes, that’s taxes not pixies and tooth-fairies that pay for that. While we’re on the subject, does anyone believe that tax dodging and tax avoidance by large corporations and 1-percenters can continue to be passively persecuted?

HOW WE PAY – In Europe the conversation about a Universal Living Wage has taken on some increased shape. But it certainly is not without its detractors and dodgers. The notion of allowing every person to earn enough to “live” isn’t an insane idea. I’m no Economics wizard but allowing people to retain a roof over the heads and, importantly, retain their dignity and pride has to be an objective worth determining. If you don’t believe that much of the anger and frustration we’re seeing spilling on to our TV screens each night isn’t directly related to folks whose dignity and pride has been eroded, then I don’t think you understand humans very much.

HOW WE TALK (TO EACH OTHER) – You’re likely reading this courtesy of Mr Zuckberg or Mr Weiner (Thanks guys) but if you’re swimming in those waters it’s likely a heady churn of indignation, outrage and venting. This delightful article was a stark reminder that none of that indignation helps your mental state. It certainly hasn’t helped mine in recent weeks. I freely admit that answers to the problems facing us – and I’m talking about more than Agent Smith and his armies – are not easy to solve but if you believe they’ll be addressed by shouting, vilifying, ostracizing and marginalizing then you’re part of the problem, not part of the solution.

I didn’t start this post intending to write a Jerry MacQuire “manifesto” but these are uncertain times. Times that call for composure, compassion and constructive discourse. From all of us.

Which path are you going to take?

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In an alternate universe I am a successful futurist and Nobel Peace Prize recipient. And occasional swimsuit model. In THIS life, I get much of my futurist braincandy from way way smarter people like Rohit Talwar, Dean Bubley, Nikolas Badminton, Dan Pontefract, Tom Asacker amongst others. If the future intrigues you, then I strongly encourage you to seek them out and pay attention to the stuff they write about. I guarantee you it’ll kick you in the cranium.

Purpose Begins (And Ends) With Principles

 

Say what you want about the Scots but they have a pretty binary worldview on many things. Growing up with a Scottish mother meant I would get unvarnished and unapologetic missives on a daily basis.

Paraphrasing slightly but her two favourites revolved around two basic opinions:

“Talk Is Cheap” and “You’re known by the company you keep”

Like many parents (including me) she was trying to instill in her wayward son a set of principles or values that she hoped would provide a barometer for my future decisions.

Importantly these were her principles and she certainly wasn’t telling me they had to be mine. In her words – and her deeds – she was providing me a role model.

Principles are as important for organizations as they are for individuals.

Events in the United States over the past week have brought into sharp focus the principles of individuals – and organizations – across the political spectrum.

My intent here isn’t to debate the folly or wisdom of the Executive Orders. Rather to point out that it is in the most difficult times, the most contentious times, the most emotional times that the true mettle of an individual or organization is judged.

And, if you believe Simon Sinek’s view that people buy why you do something not what you do, it is at times like these that organizations show the true mettle of their Purpose.

Not surprisingly Starbucks CEO Howard Schultz has been one of the most vocal business leaders to speak up. In an eloquent, and much praised, open letter entitled “Living Our Values in Uncertain Times” Schultz outlined not only his opinion, but the actions his organization are taking across North America.

Ride-sharing poster-child UBER have received the opposite reaction for their reaction to recent events. By joining an economic advisory board convened by President Trump, CEO Travis Kalanick was arguably stating what his principles were. In fairness, let’s not forget that Tesla CEO Elon Musk is also a member of the same advisory. But it was the action of suspending surge pricing in New York to break a taxi driver boycott that many saw as a flagrant attempt to profit from an emotional situation. For an organization already under fire in Bloomberg magazine for the supposed exploitation of their drivers, this hasn’t been a banner week. Not surprisingly the hashtag #deleteUBER has begun trending.

Principles and Purpose are not a Popularity contest

Let me be very clear on this point.

Just like no brand can be built for everyone, your organization’s Purpose cannot become a popularity contest open to the inherently fickle and forgetful whims of the market.

Your Purpose is yours and only you can write it, build it, nurture it and own it.

Critically, if you’re prepared to nurture it, you must be prepared to defend it – especially when it flies in the face of popular opinion.

In June 2012 Chick-A-Fil COO Dan Cathy spoke out about same-sex marriage and incurred a media storm that raged for the better part of three years. While I may personally find that stance objectionable and ignorant, it was – and remains – the perspective of the organization. Amidst all the calls for boycotts from mayors, LGBT support groups and private citizens, Chick-A-Fil actually saw sales grow 12% in 2012. Evidently a sector of the market actually aligned themselves to the opinion of Mr Cathy.

In 2014 Ben&Jerrys took on, not only the biotech and food industry, but their own parent company Unilever over mandatory GMO labeling on their food. While Ben&Jerry’s has been famously outspoken over the years about subjects like same-sex marriage, gender equality, legalized marijuna and fair trade, taking a stance against one’s parent company gives you a sense for how critically important they believe sticking to their Purpose is.

As a leader you determine what your organization stands for or against. You define the principles that matter to you. As a business leader, it’s your right and obligation to define your organization’s Purpose.

Similarly, as a potential customer it is my right and obligation to support or boycott organizations whose Purpose I align or object to.

Advertising doyen Bill Bernbach said it best when he quipped “I have come to the conclusion that a principle isn’t a principle until it costs you money.” To my mind, he could just as easily have been talking about Purpose.

Ultimately, if you’re unwilling and unable to stick to your Purpose when the going gets tough, I question whether you’re genuinely a Purpose-driven organization.

And, in uncertain times like these, is there no more important obligation than knowing what your Purpose is?

Amazon & Sears – A Cautionary Tale of Two Cultures

‘He would find a hole in the data and then explode’

“I would see people practically combust.”

“There are so many people running for the door not just because the ship is sinking, but because the captain of the ship is screaming at them, blaming it on them, and telling them it’s their fault” 

“The joke in the office was that when it came to work/life balance, work came first, life came second, and trying to find the balance came last.”

“You learn how to diplomatically throw people under the bus”

You might be excused for thinking these quotations stem from some terrifying, corporate Ayn Rand winner-takes-all hell-hole where fear, intimidation and bullying ruled the day.

Ironically these quotations come from employees of two of the most famous retailers on the planet.

And despite the (alarming) similarity in the quotations, one is in stratospheric ascent while the other is, by all accounts, about to become a sad footnote in the retail history books.

Of course, I’m talking about Amazon and Sears

No prize for guessing which stock ticker belongs to Amazon and which belongs to Sears. Case in point, Amazon CEO Jeff Bezos is purported to have made over a billion dollars in one day from all the Alexa hoopla at CES in January this year. Not too shabby for a place where employees practically combust.

 

To further highlight the dichotomy, many consider Amazon to be on an enviable track to become a trillion dollar company and it’s certainly rolling out a rapid-fire slew of innovations (Dash, Alexa) and PR-worthy concepts (GO, Blue Origin). Also, in the type of folklore usually reserved for Silicon Valley start-ups not billion dollar companies, it hasn’t shied away from “failing fast” (Fire) either. Conversely, at Sears, sales are down 37% since early 2013, its debt load has spiked to over $1.6 billion, and the company is losing well over $1 billion annually**

So on the surface you could read these employee comments and conclude both organizations have toxic cultures.

But if the cultures are equally “toxic”, how is one organization a leader while the other is undoubtedly a laggard?

Perhaps the issue is that we’re using the culture term haphazardly. And, perhaps, we’re not acknowledging some key nuances and learning between Amazon and Sears.

For example when we discuss Culture, we often point to phenomenon like remote working, open plan offices, bring your pet to work environments, sushi Fridays and a proliferation of foosball tables as reflective of an open and progressive culture, add in employee engagement surveys and you’re really rocking, but Culture is more nuanced and complex than this. The good folks over at Culture University talk about the differences between “climate” and “culture” and, you guessed it, all those attributes above aren’t culture cues, they’re measures of organizational climate. Just because management insists on trust falls at the annual picnic, doesn’t mean you working in a trusting culture.

Jeff Bezos - Amazon's Culture Champion and Culture Carrier

 

Cultures where the founder still walks the halls (Amazon) operate with an entirely different dynamic than one’s where the founders passed away decades earlier. When the guy whose name is figuratively on the door still presides over who gets blessed and who gets banished, there is little incentive to change the way things are gonna get done. Less than zero if the organization has a history of success. Look at how people describe the vaunted culture of innovation at Apple under Founder Steve Jobs versus under CEO Tim Cook – and that’s only in the space of five years!

Then there’s the issue – as I did myself at the start of this post – of evaluating and labeling a culture “good”, “bad”, “progressive” or “toxic” without evaluating it against the fundamental business criteria that matters – Is the Culture accelerating or impeding the execution of the organization’s strategy?

Does Culture Impact In-Store. Definitely!

 

After all, as acclaimed Culture expert Edgar Schein points out, “The purpose of a company is not to create a nice workplace culture but to function in the economy, to provide goods and services” There is no debate that cultures that tolerate employee abuse or engage in unethical behavior have no place in a civilized society but equally, I would argue, a culture of civility where strategy execution grinds to a halt because of consensus building and bureaucracy is equally bad. Peter Drucker was never more insightful, nor eloquent, than his famous quip “Culture Eats Strategy for Breakfast”

Perhaps the final word is best left to Jeff Bezos who, in trying to counter the scathing New York Times article, had this to say in defense of the Amazon culture:

“The reason cultures are so stable in time is because people self-select. Someone energized by competitive zeal may select and be happy in one culture, while someone who loves to pioneer and invent may choose another. The world, thankfully, is full of many high-performing, highly distinctive corporate cultures. We never claim that our approach is the right one — just that it’s ours — and over the last two decades, we’ve collected a large group of like-minded people. Folks who find our approach energizing and meaningful.”

What are your views on the difference between Amazon and Sears?

How significant, or insignificant, is the Cultural aspect in the success of one and the failure of the other? Is it appropriate to use the “toxic” word in describing both?

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If you want to read deeper into the articles that spurred this post, the Amazon examples sprang from a New York Times expose in August 2015, **The Sears examples from a story covered by Business Insider in January 2017

The Dangerous Dichotomy of Disruption

 

Last week I posed a question on LinkedIn asking my connections to list what they considered the genuine disruptions of the past decade.

In a week filled with the frothy tsunami of CES updates and trend reports AND the 10-year anniversary of the release of the iPhone, I received a spirited number of responses.

Some were obvious – the iPhone, NetFlix, UBER, Tesla.

Some not-so obvious – Donald Trump and the 2016 Election “hacks”

As a Strategist, some common threads particularly struck me:

More examples were business model changes – UBER, airbnb, NetFlix, Amazon AWS, Free WiFi – than actual products. Clay Christensen would be proud.

Many were organizations that weren’t on our collective radar five years ago. A profound indication of the speed of transformation we’re facing.

In many ways I share the exuberance of a world where archaic systems are re-evaluated and transformed – have you tried securing a mortgage recently? – and where imagination, chutzpah and a liberal sprinkling of “hell yeah let’s do this” triumphs.

But as business journalists and the folks on Sand Hill Road work hard to create a disruption idolatry, are there not some dichotomies to consider too?

Change is hard, messy and often unfair in who gets promoted and who gets punished.

 

Kudos to Amazon for perpetually pushing the envelope in terms of retail concepts and I adore the smarts behind the Amazon GO store. But what about the classic blue collar retail jobs lost? For many teenagers, immigrants and seniors a retail job (or flipping burgers at McDonalds) was their first rung on the ladder to earning a living wage, genuine responsibility and boosting their self-confidence. Automated everything obliterates those opportunities.

At a macro level, as long term and sustained job security becomes more fantasy than fact, what impact on the mental well-being of our citizens? The stress of perpetually being “on the job hunt” is a relatively new phenomenon but in the “gig” economy it will become a reality for many.

Canada’s CBC penned a delightful article commending the ingenuity of several local entrepreneurs who are “uberizing” (yes that is a real phrase) their sectors. But the article carried a darker message too. One that could be rightly filed under “The Law Of Unintended Consequences”

“There is uncertainty about who will the cover the cost of health care, employment insurance, Old Age Security and other social services since many of these programs are traditionally paid for by employers and employees.”

In similar fashion, though with a more liberal dose of British humour, The Guardian newspaper asked if democracy can survive in a world where information, misinformation and blatant disinformation is so rife. This is not the place to belabor the rise of “false news” and its impact on the US elections but it does beg the question – do algorithms and machine learning aid or hinder our ability to make informed and judicious choices? Can and should we trust machines to filter, edit and promote what we see, what we read, what we believe to be true? Perhaps its ok when I’m trying to buy a backyard BBQ and can’t decide between Green Egg or Broil King, but should algorithms help decide on the veracity and integrity of my country’s leader?

And then there’s the old rub of income inequality and the classic 1% syndrome. Or, more accurately the 1% that holds 48% of the worlds’ wealth. Personally I’m more likely to use this delightful collection of essays as my compass than the next Naomi Klein rant but disruption has created a level of income – and opportunity – inequality that would make a 16th Century Pope blush. To give you a more tangible example, the Alexa euphoria at CES as been directly attributed to a $1.3 BILLION rise in Jeff Bezos’ net worth in one day!

To be clear I’ve no beef against disruption per se. I’m a NetFlix, UBER and airbnb fiend like many of you. In a house with a wife and two daughters, I adore (and will pay a premium for) anything that will listen and follow my commands without question or an expectation of more pocket money.

The issue is that I’m not seeing as much excitement, noise and enthusiasm for disruptions in the areas that alleviate, versus exacerbate, the issues I’ve outlined above. And, Dear Reader, I’m very open to you taking off the blindfold and showing me differently. Blockchain and micro-financing are great examples. Coursera and open online universities are also a step in the right direction too. Are there others?

It’s the broader societal issues of (re)education, mental well-being, income equality – the areas traditionally in the realm of government – that need equal attention. Are there as many VC’s open to funding THOSE Disruptors? Do we have enough schools promoting students to solve THOSE problems versus automating drone deliveries of beer during Hockey Night in Canada?

To borrow directly from the brilliant Roy Amara and his immutable law

“We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run”

What is the long term effect of all this Disruption? Do we dare ignore it?

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Again, I’m not trying to paint a Chicken Little dystopian POV here. I genuinely adore technology and much of what its brought us. I’m genuinely interested in your perspective and opinion Dear Reader. I see us actively idolizing those whose disruptions have a commercial versus societal benefit. Is my view incorrect? How can we balance the scales so our disruptions positively impact us all.

What is the real Character of your Brand?

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The flames can be seen from outer space.

80,000 people have been displaced and over 1,600 homes and businesses totally destroyed.

The Canadian city of Fort McMurray is currently facing a fire of such savagery and intensity that the Province of Alberta has declared a state of emergency as residents evacuate the area en masse.

Government and Red Cross assistance has been swift and there is no doubt the skill of those organizations will help immensely.

But help has also come as swiftly from several brands.

Albertan-based airline WestJet has committed numerous airplanes to assist in the evacuation of Albertans trapped by the flames. Social media accounts speak of WestJet planes lined up to assist in the evacuation and returning filled with relief supplies for the beleaguered city.

Accommodation provider AirBnB has activated their Albertan network to help those fleeing the fire. Not surprisingly hosts and the AirBnB organization are stepping up to assist. The company has waived their standard booking fees and many hosts are offering their homes for free.

National brewer Labatts immediately repurposed their beer production lines to can water that was then shipped to the devastated area to assist firefighters and fleeing residents. This marks the fourth time their Albertan operations have canned water to assist in Disaster Relief in the Prairie provinces.

Of course many other organizations are electing to send money straight to the Canadian Red Cross. Not surprisingly, they deem the Red Cross to be the organization best equipped, and with the most experience, to put these funds to good use.

Cynics might argue that the actions of WestJet, Labatts and AirBnB aren’t all that surprising. That those organizations weren’t doing anything particularly novel or far removed from their day-to-day activity. After all how hard is it to waive booking fees, repurpose automated production lines or fill planes already going to a destination?

Here’s where I disagree with the cynics.

All acted with little or no fanfare. No newsflash. No corporate chest beating or soapboxing. No massive social media campaign.

They saw a situation where they could make a difference and they went ahead and did it.

Quietly. With character. And with class.

Sadly that type of character isn’t practiced by all brands in times of adversity.

The recent death of music legend Prince highlighted just how many brands see opportunity in tragedy. Or are so anxious for the social media cocaine of Likes and Retweets that they’ll jump on every opportunity to be part of a Trending situation on Facebook and Twitter.

And while I’m taking shots at organizations who seem to have lost their character compass entirely, dare I mention the current slew of automotive brands mired in regulatory and legal battles over their corporate actions?

Mitsubishi Motors recently admitted to fudging the fuel economy ratings of their cars. Okay so that’s illegal in almost every country on the planet. More egregious though is they admitted they’ve been lying about their fuel economy since 2002.

German manufacturer VW has also been through the ringer for their tampering with emissions on their diesel vehicles. Tampering that has lead them to accrue about $8 billion dollars to pay the inevitable fine that US lawmakers will slap them with.

That’s bad enough but, what stupefies me more is the recent decision at VW HQ to honor annual bonuses to the executive board that were at the helm when the emission scandal broke. In fairness, VW executives agreed to take a 30% cut in their bonuses after the scandal. Why that cut wasn’t 100% suggests that the organization is either tone deaf or has its head buried in the sand.

Here’s the thing…

As a marketing and brand consultant I’ve sat in numerous boardrooms and focus group settings agonizing over what words and phrases define a particular business or brand. I’ve suffered countless paper cuts leafing through dictionaries and Thesaurus’ trying to eloquently find a word that exists somewhere between “Empower” and “Enlighten”. I’ve written creative briefs that have tried portray brands as “affable, approachable and fun…but not frivolous”

It is all bull.

The true character of any (wo)man, and certainly any brand, is how you act.

Not what you say. 

As my friend and fellow Strategist Jay Chaney quips “Do, then Say”

My simple ask?

Next time you’re playing word associations at a brand management off-site, forget the Thesaurus and ask your colleagues and executives instead, how your brand would act in a time of intense pressure or real adversity.

That, my friends, will be the more authentic articulation of your brand character.

The real question then, is what do you intend to do about it?

$50Billion Disappointments & Runaway CEO Expectations

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For the record I’m not angling to become some latter-day Naomi Klein but I would hate to be Tim Cook today.

His organization delivers $50 billion in revenue and remains the world’s most valuable company by many accounts, yet Apple stock is hammered on the heels of a disappointing quarter. $47 billion (about 8%) of stock market value is lost in after hours trading.

Close your eyes for a moment and try reconcile the phrases “$50 billion” and “Disappointing”

I can imagine there’s a legion of CEO’s who would give any appendage to similarly disappoint their employees, board and shareholders.

Analysts, or should I say “Chicken Little’s in Expensive Suits”, opine such sage soundbytes as There’s no question that Apple’s best days are behind it”

Perhaps it would be better if they channeled their inner Shakespeare “I come to bury Ceasar, not to praise him”

There’s no doubt Apple has reached a scale and market prominence that the YOY returns they posted a decade ago are now almost impossible. And no-one debates that the incremental refinements in their most recent products are enough to generate significant sales in a market close to saturation.

But neither can we debate that Apple sits on enough cash, and employs some of the brightest business and design minds on the planet, to be a legitimate and genuine success in the years ahead. Wearables, TV, Automotive, Healthcare are all categories that Apple can (and could) expand into to drive new growth.

What troubles me more is the short-term and short-sighted perspective of many of the supposed business experts and opinion leaders that hold forth on this topic.

The obsessive fixation on the 90-day call.

The underlying hope, wish, wet dream, presumption that YOY growth is not only attainable but somehow expected.

Equally troubling, I believe, is the behavior that this kind of shortsightedness creates.

Consider this rogues gallery and ask yourself what signals did the stock market, and us as profit-motivated individual shareholders, plant in the minds of these CEO’s.

VW have set aside 8bn pounds or $11billion to buy back 500,000 diesel cars fitted with defective emissions equipment sold in the United States. Ironic in a week when Presidents, Prime Ministers head to Paris to ratify a Climate Control Agreement.

Mitsubishi Motors have acknowledged lying about the fuel economy numbers since 2002. This deepening scandal has halved their market value in less than 2 weeks. But here’s the kicker for me – Since 2002!!! That has to get this week’s “Corporate WTF Award” for sure.

Former Enron CEO Jeff Skilling has a few years left languishing in prison for his role in one of the largest and most public corporate fraud cases in US history. His sentence has been reduced by 10 years after he agreed to pay $40 million in restitution. Ironically the judge in the case said Skilling had enough money to keep the court tied up in an appeal process for years. That’s scant comfort to the millions of folks who lost their pensions and savings when Enron imploded.

And what about poor BP CEO Tony Hayward lamenting that he “just wanted his life back” while his Deepwater Horizon oil platform was leaking 4.9 million barrels into the Gulf of Mexico? Despite the record-breaking fines levied against the organization and the huge cost in litigation, the findings of an independent report and a White House Commission ultimately held BP and its partners culpable for a series of cost-cutting decisions and an insufficient safety system. Ever wonder what motivated those cost-cutting decisions? And while you’re pondering that, consider that the same scathing White House report highlighted that that this behavior was so systemic that another spill was highly likely, perhaps even inevitable.

These sadly aren’t isolated cases.

Union Carbide and Bhopal? General Motors and defective ignition switches? Nestle and Baby Formula in Africa? Coca-Cola and groundwater in India? Toyota and defective brake pads?

These are some of the most lauded and celebrated companies in the world.

Companies filled with smart, insightful and, I daresay, morally-driven and ethically-minded folks.

Again, I’m not angling to become some latter-day Naomi Klein. 

I genuinely believe that Corporations have more reach, more power and more impact on society than Governments. I genuinely hold out more faith in Corporations to create a better future for mankind than any meeting of the United Nations.

I just wonder what responsibility we have for motivating a profit-and-growth-at-all-costs mentality in the ranks of business people today.

I just wonder why a simple search for business ethics courses only returns 6 million results while a search for business growth courses returns 357 million.

I just wonder how any budding CEO juggles doing the right thing (as amorphously defined as that is) with a consumer group born in a world of universal access to information and suckled on a steady diet of instant gratification.

Perhaps there’s a certain irony that Tim Cook and a slew of his Apple products have been a significant contributor to that expectation of instant gratification.

Is that ironic or just disappointing?

What say you Dear Reader? Have we run amok with our expectations of CEO’s? Do we incent dangerous behaviours with our short-sighted and near-term business focus?

Can You Create An Immortal Brand?

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Nothing quite like sitting through 151 minutes of DC Comics-inspired testosterone to set your mind spinning about brands and businesses.

Not the obvious elements like how fans flocked to this movie despite the panning it got from critics. The power of social media and Influencers versus the establishment?

Nor the discussion on licensing power, brand portfolio management and brand extension strategy. DC inserted at least 4 cues for spin-offs in the movie and an inevitable sequel.

Nope it was something a little more existential.

The question of whether a brand or business could actually be immortal.

Your mind would wander too after watching Ben Affleck debate whether Superman is actually a God for 151 minutes>

Seriously we’ve all sat through meetings discussing new product features with a reverence bordering on idolatry.

“Stop the presses, we’ve just added a 15th flavor variant for gluten-free, adventure-seeking Buddhist Millennials.” 

And there is absolutely nothing wrong with being passionate about your brand. Passion and dedication go a long way.

But is that enough to sustain your business and your brand? And for how long?

Particularly as the tenure of brands seem to be declining at such a precipitous rate. You’ve likely seen this chart in your LinkedIn feed and it does paint a rather stark picture. In 1958, the tenure of a S&P 500 business was 61 years, today its less than 20.

Does make you wonder if our children will be saying “UBER who?” and “Tell me about that brand you called Tesla Dad” I still reel from the reality that Nokia is now just a line item in the Microsoft stable.

Of course there are brands that seem to weather the storm. That appear more impervious to the buttressing of consumer schizophrenia and the roller-coaster of market fluctuations.

Apple turned 40 this week and would probably be the one most referenced. Remember this is a brand that a decade or so ago was seen as a bit player, not the powerhouse it is today. Worryingly, recent headlines suggest Apple is now boringand that the recent encryption saga was merely an artful PR ruse to deflect attention from lagging relevance and innovation. If that’s true, you have to wonder how much runway Apple still has. (No doubt that last line will evoke a torrent of ridicule from the Fanboy section)

And these guys? The brand still ranks in the Top 3 Interbrand businesses and is estimated to be worth an incredible $78 billion. However, a decade ago they were the undisputed #1 (Ironically other top 10 contenders included Microsoft, Intel, Nokia and Marlboro). Formerly exalted as genius marketers, most mainstream conversations about Coca-Cola today focus on child obesity, diabetes and serving sizes and a general “meh” about their recent global advertising. Is there any disputing that the fizz is out of the bottle?

So is brand immortality feasible or do all businesses have an Achilles Heel?

And, is there any way for a brand to ward off the power of Paris’ arrow?

Perhaps one way to look at this is to consider if the threat is external or internal? 

Of course, the answer isn’t going to be binary but one approach is to determine if the threat coming from movements in the market or a stagnation internally?

Well there’s certainly no shortage of potential solutions and planning methodologies for discerning the size and velocity of external threats. Scenario Planning is definitely one and certainly provides some robustness – but its expensive, time-consuming and organizations need to commit versus flirt with it. Including the wonderful PESTLE in your activities is another way forward. Even the exercise of asking Theodore Levitt’s (immortal) question “What Business Are You Really In?” does force a very valuable introspection.

Are there others?

What if the issues are internal?

Here’s three avenues that I’d consider.

Purpose

No shock here but I’m a huge proponent of Purpose as a way of aligning resources internally and aspiring to a larger rationale for your organization. Begs the question – Does your organization have a larger rationale for its existence? Is it a Purpose that puts people before profit? When, like Patagonia, your stated purpose is “To make the best product with the least environmental impact and the most social value possible” – its easier to imagine an organization constantly striving to do better. An organization committed to something beyond the 90-day analyst call to orient their people behind.

Culture

Increasingly organizations are waking up to the reality that their people, and the culture they’ve created, is an area of significant competitive advantage – or can be the Achilles Heel mentioned earlier. This goes far beyond employees who are merely “engaged” but is about building an environment where employees can be “unleashed”. An environment where your people are genuine advocates for the direction and Purpose of your company – but are also set up for success. Importantly this isn’t just about cultural artifacts like trust falls and foosball tables (as critical as those are) but about defining a Culture that aligns to your Strategy and then nurturing that. Can you say for certain that you have a good grasp on your Culture? Can you say definitively that “unleashing” your currentCulture will accelerate the success of your Strategy?

Organizational Design

Another topic of increased popularity amongst business leaders globally. Do we actually have the systems and processes that will allow our Culture to deliver our Strategy? Is our Innovation pipeline blocked with great ideas that we just can’t seem to get out of the building? Do we prevent our well-intentioned Customer Representatives from genuinely being “customer-centric” because we’ve added unnecessary and superfluous layers of oversight? Are our Centers of Excellence operating more like distant islands divorced from the business, than core drivers of it? Ultimately, you may have a brilliant Strategy and a vibrant Culture but without an Organizational Design that can marry the two, failure is inevitable.

In the end perhaps there is no way to create a truly immortal brand – just as there is no way for anyone other than a Son of Krypton to be immortal.

But that shouldn’t stop us trying. 

Businesses today are well positioned to be the real saviours of this planet. Just ask Tony Stark and Bruce Wayne.  Certainly better than many other institutions, like governments. Perhaps a good place for them to start is with a desire for immortality.

And a well-defined posture of benevolence.

What say you?

As always, I’d love your feedback. Is an Immortal Brand feasible – or even desired? Should that be what business leaders set out to create? Or should we continue to let businesses evolve and then die?

Stop Being More Digital, Start Being More Human

Any questions regarding this image please contact Joanna Capitano. +1 (310) 314-2805

These days I read the word digital more than almost any other word in the dictionary. That includes pronouns.

Perhaps ironically, I’m going to add a few more instances as I pen this post. 

There’s an overwhelming desire to bring digital and digital thinking to the forefront of every conversation. Digital something or other has become the almost ubiquitous job title for everyone – or everything – in the business arena. If you don’t have it somewhere in your job description, it signals your Luddite credentials as openly as carrying a paper diary or a Blackberry.

There’s memes like this that pop up in LinkedIn 5 times daily.

And we’ve all seen Tom Goodwin’s excellent (often poorly plagiarized) slide that deftly highlights the real impacts of tech on business and business models.

Conversely there are UK ad agencies so keen to not pigeon-hole themselves as digital, they’ve taken to calling themselves interactive.

This shouldn’t surprise anyone.

The term digital marketing has seen almost exponential growth in the past four years. (Thanks GoogleTrends)

 

 

 

 

 

I suppose if we’d tried to determine the percentage of times Steam was used during the height of the Industrial Revolution I’m sure we’d have seen a similar phenomenon. Unlikely anyone then was calling themselves a Steam Ninja or Steam Guru though.

Yet in the midst of all the debates of “Is Digital a channel, a medium, an attitude, a philosophy blah blah blah” I remain perplexed at how much still seems to be about the bright shiny object and not the “why I should care” part.

The features, not the benefits.

The tool, not the task it is intended to accomplish.

And when confronted with a question like “why should we build this piece of tech?” the answer, often delivered with shrug, is typically “why not?”

Don’t get me wrong, I adore the tech industry. The brains it attracts. The bold advances it makes possible.  But somewhere in all this coveting of code, many seem to have lost the plot and the ability to suitably answer, “to what end are we doing this?”

They’ve forgotten the human side of the equation.

The humans that have grown so tired and pissed off at the constant barrage of digital advertising on every screen that they’re routinely installing ad-blocking software just to rid themselves of that irritation. The entire promise of digital – and phrases like “digital body language” – was that we wouldn’t be subjected to stuff we didn’t care about anymore. Digital promised the ultimate “personalization” of content and offers. And the eradication of junk.

Disappointingly digital is capable of that personalization but there remain cowboys who steadfastly ignore that opportunity. If its any consolation, the ANA reckons programmatic ad fraud will cost advertisers $7.2billion in costs for ads never even be seen by a human.

What about the Utopia offered by that pinnacle of digital thinking, aka social media? 

An inter-connected world where, separated by less than six degrees from all our other human brethren, we’d live in peace and tolerance? Well, sadly, it would seem that the pesky algorithms that are the backbone of many of our digital lives (Amazon, FB, Expedia and this site of course) do a better job of making our worlds, networks and opinions smaller, not bigger. Algorithms serve many purposes but exacerbating our confirmation bias can’t be one of them. Reducing our worldview can’t be expanding our humanity can it?

What about those humans terrified at what happens to all that personal data we’re hoovering up – ostensibly to help deliver more of those customized marketing programs. Personal data that we’re unable to keep safe and secure. Personal data that collected for one reason is then sold on to spammers subjecting us to invasive and unwarranted marketing. Pew Research recently released a pretty dismal (and scathing) report into the fears of Americans about privacy and security. It makes for alarming reading particularly because it seems that Joe Public just doesn’t trust corporations and the government to treat their data appropriately. Put another way, to treat them humanely.

Of course, I’m not just talking about the humans we blithely call customers and consumers.

I’m talking about those other humans too.

The ones we call colleagues and co-workers.

We (rightly) obsess about UX, abandoned shopping carts, click-paths, gamification, frictionless-not-sticky interactions for the customer. All critical components to deliver “meaningful and resonant” digital experiences. And build that bank of eyeballs and dollars.

But what of our human colleagues and co-workers?

The ones we’re putting under increased pressure and scrutiny to respond to customers at the speed of the internet? Do they have the necessary information – and authority – to respond cogently and effectively? Is our organization’s culture and design genuinely optimized for this scenario?

The one’s we’re asking to work in entirely new, and often untested, ways. Avant-garde companies like Zappos are going all out on Holocracy and a flatter more collaborative environment, but these new environments are harder in practice to execute than they are in theory. Certainly the rash of recent departures at Zappos suggest that it takes a tremendous amount of patience and dexterity to change how people work together in this new world.

And, how about those colleagues and co-workers increasingly seeing the specter of automation and the genuinely terrifying idea that a robot may be taking their jobs away? How are we humanely training and growing their abilities to address this? If you want a very real sense of how automation might take your job, then I’d encourage you to visit this BBC website.

In short, in this new digitally-driven business environment, are we just as quick to adapt our cultures and organizations internally as we are to address the needs of our external customers?

Ultimately, I wonder how hard it will be to live up to the promise and potential of this Fourth Industrial Revolution if we conveniently forget our basic humanity.

As always, I’d love your thoughts and opinions guys. Is this merely a period of growing pains or are we in danger of forgetting our humanity as we chase the allure of a digital everything future?