The Future: A Large Construction Site
By Christoph Bornschein
“You’re not leaving a well-appointed house to your successor. You’re leaving a large construction site.” Janne Werning, Head of ESG Capital Markets & Stewardship at Union Investment, imparted these telling words to departing Daimler chief Dieter Zetsche.
While likely meant as a reproach, the truth behind the phrase tells a far different story. Zetsche, in his thirteen years at the top, repositioned the company early, thoroughly, and enduringly, thanks to his development of “Project Future.” This seemingly simple mantra became the aegis under which Daimler repositioned itself for the future technologically, culturally, and structurally.
It contains far reaching lessons for all of us. Zetsche correctly discerned the end of Daimler’s S-curve — that is, the point at which a business model reaches the plateau of its performance growth, when efficiency can only be optimized, and replacement by the next innovation and the next S-curve becomes imminent. However, he failed to correctly perceive which innovation and which business model will go through the roof — and when. He has this quality in common with practically all top managers across practically all industry and business sectors.
The speed of today’s digital landscape, coupled with its radical nature, makes reliable projections for the future difficult
The speed of today’s digital landscape, coupled with its radical nature, makes reliable projections for the future difficult. The concept of VUCA — short for volatility, uncertainty, complexity, ambiguity — accurately describes our current environment of entrepreneurial action. Yet, shareholders require the imperative of growth: positive projections and well-founded growth promises, which will get rewarded. Vague experiments and bets on the future won’t garner the same outcome. In the hour of VUCA, such projections and promises become requisite.
“Project Future” alone is not the answer, but it positions the company to develop flexible responses. Most importantly, it forces management to compile a valid portfolio of bets: an assortment of manifold business models, each with the most diverse level of maturity, in which new S-curves get devised along with new approaches to added-value prototypes. The Toyota Production system serves as one strong example of visionary management; through tools, philosophy, and practices, its success has resulted in adoption across vertical markets.
The term “portfolio of bets” encompasses an assortment of diverse business models, each incorporating new approaches to added value and prototypes. It creates unease by contradicting traditional corporate and leadership models. For a long time, dealing with new, maturing business models remained a matter of routine. If something worked and drove profit, you would buy into it. Now, our world has transformed into one of betting. The $44 billion that VW is investing in electromobility might seem on trend but is a gamble. Look to Toyota, who hedges its bets while talking about the future of the fuel cell, forging ahead with electromobility.
Business enterprises need entrepreneurs who develop ideas for the future, who can invest in them, build on them, and test and discard them
To make sense out of the fog requires planning against a variety of future scenarios. Business enterprises need entrepreneurs who develop ideas for the future, who can invest in them, build on them, and test and discard them. We must fundamentally revise and broaden both our management systems and manager profiles. Companies need managers who can handle not merely one S-curve and a single pace, but rather multiple ones. They need moderators with a sense of responsibility for businesses and employees who can keep the different parts of a portfolio, even the diverse staff, together — bundling them in an entrepreneurial spirit.
The answer to VUCA can’t be mere continuity, but rather proactively planning against risks and taking the appropriate steps.
There is a movement afoot: recruiting major Silicon Valley players and re-entrants for supervisory boards, advisory boards, and even boards of directors will always be well-received by the media — but this process certainly needs to be more than window dressing. Traditional industry needs enrichment through diverse perspectives; it needs new questions and criticism. In 2019, I, for one, would be rather concerned about companies that are not large construction sites.
Christoph Bornschein is Founder and CEO of TLGG Consulting.
This article was first published in Manager Magazin.
