Tech markets and corporate strategy — evolving over time
The Changing Nature of Strategy: Reflections on Thirty Years — Excellent read from James Allen, looking back at his career in strategy spanning three decades (I was introduced to this post earlier in the year by a p e r t u r e reader Radu Magdin from Smartlink Communications). The post debunks the myth that strategy is dead (a myth that re-surfaces every few years), and goes on to point out a few important shifts, such as: strategy pivoting from a function predicated on predicting the future to one of fast adaptation and finding repeatability; sustainable competitive advantage not being about scale anymore (but rather scale and speed); and, the need for large companies to embrace conflict, such as micro-battles, as a key part of successful organizational design. In addition, companies have forgotten that the goal of strategy is to bring growth by building new businesses — therefore, it seems that scaling-communities have been ignored at the detriment of innovation- and execution-communities.
The Evolution of M&A and Corporate Strategy — this podcast contains strategy career lessons from Stephanie Cohen, Chief Strategy Officer at Goldman Sachs. Among many topics, she discusses bottom-up vs top-down, innovation-led tensions and conflicts, Fintech, the importance of narratives and positioning.
Consumer vs. enterprise tech IPOs in the last ten years — short tweet from James Wang analyzing the performance of tech IPOs over the last ten years. Enterprise tech IPOs are 6x more prolific, while in the consumer tech FAANG is sucking out the oxygen.
A new era for enterprise IT — There is plenty of opportunity left in the enterprise IT space, writes Aaron Levie, of Box. The shift to SaaS has increased market sizes, by freeing them from the hands of a few vertically integrated, monolithic vendors, to the benefit of best-of-breed platforms — which are not only cloud-native, but API-native, enabling a shift which Aaron calls from IT stacks to cloud ecosystems.
Markets Are 10X Bigger Than Ever — Echoing Aaron, Elad Gil also writes about the fact that software markets and businesses are 10X bigger than they were 10–15 years ago. Hence, we can expect even more $1 to $10 billion software companies than before, growing (faster than ever) and also emerging from outside existing tech clusters.
Pre-announcing as a Strategy — Particularly for the enterprise software market, pre-announcing a product can have stronger strategic value than most people think,writes Steven Sinofsky. First of all, enterprise tech is (still) complex — despite the move to SaaS which certainly simplifies things — so the rules of customer excitement don’t really apply, on the contrary, it can have negative returns (since corporate customers use the pre-announcement to weigh alternatives, test for suitability etc). Sometimes pre-announcing is a required strategy, due to the way the company operates: enabling and nurturing third-party, indirect channels; cater to customers’ strategic planning processes; signalling expanded view and new initiatives.
Incumbent fintech, scale-ups are coming
Three Ways Startups Are Coming for Established Fintech Companies — I enjoyed this video with Alex Rampell discussing three strategies fintech scale-ups are taking to disrupt the existing financial services infrastructure. In broad lines, they are 1/ winning the most profitable customers; 2/ generating new data sources; 3/ acting as agent of customer behaviour change (turning them from unprofitable into profitable ones). In response, incumbents could, or should, do a mix of the following: a) segment customers and launch sub-brands; b) re-route turned-down customers to partner scale-ups; c) invest or buy.
What’s at stake?
Outgrowing Advertising: Multimodal Business Models — The reason I’m sharing this superb article from Connie Chan in this section is that there are many things at stake with improving (or replacing) the current financial services infrastructure in the Western World (e.g. financial inclusion), but another one that most people oversee is that, in the West, because of the legacy fintech infrastructure, a lot of consumer tech business models are being trapped into either advertising (or more recently subscriptions). China, on the other hand, having leapfrogged retail banking altogether (straight into AliPay and WeChat) — is creating incredibly interesting business models based on micro-payments. This is a theme we have touched upon in Episode #1 of oura p e r t u r e | Podcast, shared at the beginning of the digest.
Does the best talent sit inside organizations anymore?
Building Ecosystem-Organizations — Simone Cicero, whom I discovered via a p e r t u r e subscriber Ron Kersic, writes a lot about how the concept of the organization and the role of the employee is changing. In this post from a few months back, he explores the era of boundary-less organizations, such as Haier Group. I particularly liked this quote: “In Haier’s model, employees are connected in a labor market where employees with the right skills gravitate to the right organizational positions at the right time and where instead of offering its employees jobs, the company offers everyone a continuing series of opportunities to find jobs, considering the contributions they have already made”. Always a pleasure to read!
The End of Loyalty? — Laetitia Vitaud has published yet another magnificent articlelooking at the role of companies in the age of rising freelancing. Before, companies would hire employees to minimize the transaction costs of doing business as well as foster loyalty which increased productivity. But as Laetitia writes, this concept has now been turned on its head. To quote: “Today’s loyalty no longer depends on being an employee. In fact employees may feel stuck in their company and resentful, while contract workers may feel very loyal to a client company whose purpose they fully embrace.”
The rise of the Growth Platform — Both Laetitia’s and Simone’s vision is shared by my colleague Ben Robinson, in his latest article shared at the beginning of the digest.
The Irresistible Future of Organizing — More than twenty years later, we have the technology, and possibly the will, to realize Margaret Weathley’s vision of transforming companies from organizations constructed as machines, to self-organizing and self-renewing networks. This article from 1996 is a gem. We are entering a new era.
Changing the world takes time.
Strong and Weak Technologies — But new eras are built with strong forms of technology. Chris Dixon identifies a historical pattern: technologies usually arrive in pairs, a strong form and a weak form — and shares interesting examples. While weak forms of a technology can be successful, it is strong technologies that end up defining new eras — but they require more time and effort. Because weak technologies adapt to the world as it currently exists. While strong technologies adapt the world to themselves.
It’s Ecosystems, Not Inventions That Truly Change the World — Even more, writes Greg Satell, it is not the technological inventions, but the ecosystems they spawn that usually shape the future, and hence the decades to come. If strong technologies adapt the world to themselves, then it takes roughly thirty years for the secondary business models spawned by ecosystems to fully realize themselves into the society. Greg’s advice is, irrespective of working with strong or weak technologies, it is critical to figure out how you are going to connect.
My name is Dan Colceriu, head of research at Pangea, and I hope you enjoyed this read.
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