SESSION 1: ALIBABA - SCALING FOR UNDERDOGS
The first class was about Alibaba but most importantly it was about a competition to own the chinese market, the promised e-commerce land.
In this case, we analyzed eBay´s entry to the chinese market through an acquisition and how -in a short period of time- it lost everything to Alibaba, a company that was a newcomer in the market.
How was this done? [bullet points collected from the internal Slack channel we use during the class, credits to Steven Green and Maxim Tint).
This point is interesting since this set of actions drove the above mentioned metric (willingness to pay) through actions that intimately connected with the chinese market.
Localization & usability
No listing fees
No Settlement Risk due to Alipay
Built a marketplace for the Chinese consumer and culture rather than the ‘one size fits all approach’ of Ebay to entry into another country
Adopted a start up ( handcrafted ) approach rather than creating a C2C offering through the existing Alibaba business which may have not been as successful due a lack of fit with processes & corporate culture
Key Learnings
I really enjoyed the idea of “willingness to pay” and “willingness to sell” and how understanding this metric creates actual impact for the bottom line revenue of the company.
This case was a great way to illustrate how understanding the user is key, mostly through polls, active observation or customer journey mapping. The closer you get to the customer, the better you can drive the willingness to pay metric.
Also, we analyzed the Airbnb story, in which I really liked the idea of delighting customers through unique experiences but most importantly, understanding how can companies deploy these experiences at scale, which is a tremendous challenge.
SESSION 2: CAREEM - RAISING A UNICORN
The 2nd session was the story behind Careem, the taxi ride app created in Dubai and later on, expanded to the MENA (Middle East and North Africa) market and acquired by Uber.
This lesson was about passion, meaning and a clear vision. The story of the 2 original founders (McKinsey alumni) is a tale of hard work, passion and an insane growth that was hard to control.
Key Learnings
Scaling is a verb: the process of managing growth is the key after Product Market Fit.
The 3 key stages of a company: Building, Scaling and Stabilizing. In each state, there ́s different challenges:
Building = creating value
Scaling = failure to scale
Stabilize = challenge to adaptDefining structures as the company's growth. How and when do you move from informal to formal, when and how do you prioritize the 3 P´s? (product, people and processes)
The 3 types of systems
Ordered
Complicated
Complex
Regarding Product Fit, a read an article someone shared on the class wall and I really enjoyed this bit:
You can always feel when product/market fit is not happening. The customers aren't quite getting value out of the product, word of mouth isn't spreading, usage isn't growing that fast, press reviews are kind of ‘blah,’ the sales cycle takes too long, and lots of deals never close.
And you can always feel product/market fit when it is happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You're hiring sales and customer support staff as fast as you can. Reporters are calling because they've heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house.”
Read the rest of the article, here
SESSION 3: NORSK GJENVINNING - REINVENTING CAPITALISM
Norsk Gjenvinning is a Norwich waste management company, that faced a critical time in which the new appointed CEO challenged the status quo in order to stop corruption and illegal practices not only within the company, but industry wise.
The class, dictated by professor Rebecca Henderson started with a red hot question: is social good in business bullshit? Half of the class said yes. I did.
But through the class we saw different perspectives on how companies can create social impact in order to create social good while being sustainable.
Key Learnings
There’s 4 steps that are relevant when building a socially responsible initiative:
Exploiting shared value
Building cooperation, which can create systemic change
Rewriting capital markets
Rebuilding institutions
There ́s a B Corp certification which aims to standardize what a social responsible company “looks like” and I thought it would be interesting to see what companies like Natura or Patagonia actually do to be socially conscious and profitable. Link here
SESSION 4: IDEO- BUILDING A FEARLESS COMPANY
The 4th session was all about innovation the “IDEO-way”, professor Amy Edmondson who brought up to life the IDEO story in order to understand how do you create innovation and replicate it through the years.
Key Learnings
Why is it culture important: (1) it shapes behaviors (2) is the lens through which we see the world and (3) operates unconsciously (which could be very dangerous if we have a toxic culture)
The assumptions, values and patterns of behavior creates a company’s culture. It's basically what tells people how to behave when there are no obvious rules.
Once you have a culture in place, in which there’s certain behavioral patterns, recruitment processes and a way of working we jumped into Ideo’s innovation engine, which has 5 steps.
Phase 0 = understand and observes (10 to 12 weeks)
Phase II – evaluate/refine (4 months)
Phase III – implement (detailed engineering) (3-4 months)
Phase IV – implement (manufacture) (3-4 months)
To go through this steps, IDEO has a very pragmatic and clear culture that values elements such as
“enlightened trial and error”
“The 3Rs of prototyping – rough, rapid, right!”
“Fail often to succeed sooner”
“If a picture is worth a thousand words, a prototype is worth ten thousand”
Learning to Design For Business Changed project team composition
Hired “business factors” specialists
Added client team members throughout process Developed skills and processes for navigating ideas through client organizations
Develop new methods for communicating with and integrating clients
Client team members serve as “project advocates” for Phase Zero services once ideas are handed over to client
Foster long-term relationships with client organizations to create repeat customers
Taught “innovation strategies” to client organizations
Top rated cultural attributes [source]
Strong identification with customer
Passion for and pride in product
Just like humans do, innovative companies have a contradictory and paradoxical take on things:
Cultural Contradictions of Innovation* A culture of innovation is:
chaotic & focused
playful & disciplined
values broad-thinking boundary-spanners & deep expertise
tolerates failure & promotes high standards
At the end, and in a way to summarize my favourite part of the class, I highlight the signs that the professor defined as signs of a healthy culture
Signs that a workplace is psychologically safe:
People on your team are willing to speak up when – Something goes wrong – They disagree with what’s being said – They have a half of an idea – They need help
People talk about failures and problems, not just successes
People seem to be engaged, focused on the work (the mission, the customer), interested in each other and willing to laugh together.
Does this imply a relaxation of performance standards?
SESSION 5: AMAZON- BUILDING A FEARLESS COMPANY
The next class was about the all mighty Amazon.
The discussion started with a very simple, yet powerful question, does Amazon have focus or do they have a “controlled chaos”?
At the end of the day, Amazon has (among many things):
Market Place
AWS
Prime
Kindle
One of the first conclusions for this class was very straight forward: Internet is blurring the barriers between industries. A company like Spotify is not only into music, but “sound”. That means acquiring podcasting companies and selling tickets for concerts. In a heartbeat, Spotify competes also with TicketMasters or Apple Podcast.
Under that logic, all the companies online are becoming more fluid and liquid.
Amazon has entered multiple industries and they are dominating every single one of them.
The 2nd take away was that the rules strategies are changing.
We now have network effects, in which people will start creating accounts or buying services because their peers are already there (WeChat)
We have complements or razor blade strategies: Here, you get a product at a steep discount or even free, but you continuously pay small amounts for long periods of time (the printer and its cartridges or Kindle and e-books)
Virtuous cycles: companies like Uber, Airbnb or Amazon Marketplace create a unique and fertile environment to keep us engaged and expending our money at an ongoing basis. They arrange the end to end experience, creating a flawless stream that makes us extremely satisfied with the service.
Make it cheaper or better approach: this is self explanatory and we have seen it with cars or financial services.
A company like US Foods has (1) products, (2) complements like menus, reduced waste or improved traffic for delivering and (3) a strong network of restaurants. As you can see, they approach each step and “market” with a mix of strategies and by doing so, they are sustaining their growth.
3rd takeaway is start with customer pain points and work backwards:
A gas and oil company like Mobile is solving logistics in India and by doing so - in the medium/long term - they will improve their services by doing so.
4th, redefine how you create and deliver value
Best Buy, whether they liked it or not, has become Amazon's showroom. This means people visit BestBuy to play with the products they will later on buy on Amazon. In a very smart move, they have decided to embrace this and partnered with Samsung to showcase their latest products on their stores. People can acquire them later on, on samsung.com5th Leverage existing capabilities for new business opportunities
A company like Alibaba used TaoBao (the world's biggest e-commerce website) to create “escrow accounts” ( hold funds between your buyers and sellers until they are happy) and eventually ended up with a wealth management division.
Last but not least, the 6th point was Exponential growth needs big failures
To get here, Amazon had to fail repeatedly and in many scenarios: Its Fire phone, Amazon Tickets, the Dash Button, Amazon Story Writer, Amazon Spark or Amazon Restaurants went nowhere.
But like Jeff Bezos said to the shareholders in a 2018 letter:
As a company grows, everything needs to scale, including the size of your failed experiments. If the size of your failure isn’t growing, you’re not going to be inventing at a size that can actually move the needle. Amazon will be experimenting at the right scale for a company of our size if we occasionally have multibillion dollar failures.
SESSION 6: BLITZSCALING
We’ve reached the final class, with the one and only Reid Hoffman, founder of LinkedIn.
As we have seen so far, the action window to act in the business world, is getting narrower and narrower. Even a few months of hesitation can turn your company into a follower.
Speed is essential nowadays, but explosive growth is difficult to manage and steer: “If you have 10 years to do something, how can we do it in 10 months?”
The principles behind blitzscaling are straightforward but extremely difficult to execute.
It all starts with a new business model and the following 4 elements:
Market size
Distribution
High gross margins
Network effects
Why would you fail?
Poor or no market fit
Human limitations on operational scalability
Infrastructure limitations
What helps to achieve blitzscaling?
Bits over atoms (like Jack Ma said “all I need are 2 servers”)
Platforms - like iTunes back in the day
Free or freemium model to achieve critical mass
Marketplace
Subscriptions
Digital goods
Feeds
Then we have other 2 key elements to blitzscale: Strategy innovation and Management innovation.
Blitzscaling is a strategy and set of techniques for driving and managing extremely rapid growth that prioritize speed over efficiency in an environment of uncertainty.
After 6 great weeks of learning, the course has reached its end and we got our diplomas.
The multi-cultural experience was amazing, the professors were extremely good and the chosen topics were perfectly in-sync with the podcast Masters of Scale and the overall objective of the course. A truly delightful experience.
