Non-Obvious 2019- How To Predict Trends and Win The Future

by Rohit Bhargava

  These disruptive companies have transformed entire industries, leaving in their wake countless competitors and admirers who desperately want to think, act, and be like them. It has inspired this non-obvious trend we call Innovation Envy to describe the increasing number of entrepreneurs, companies, and governments who look to others in their sector with envy, leading them to act: sometimes out of admiration, sometimes out of fearful desperation, and sometimes even both.

  Why Some Companies Envy Others

  In the 2018 book Lab Rats: How Silicon Valley Made Work Miserable for Rest of Us, former Newsweek reporter Dan Lyons shares a story of being invited to the storied Detroit offices of Ford to speak at a two-day event where the company was also hosting a hackathon. Lyons realized right away just how important it was for the legacy automaker to demonstrate that they were adjusting to the times. “Ford wants us to know that it’s in the midst of a huge transformation, and that it’s not falling behind,” he wrote. “[But] the truth is, I feel bad for these guys. I understand why they want to look hip, but holding a hackathon just makes them look scared.”[68]

  It is perhaps unsurprising that Lyons would be skeptical of this approach. A few years ago, he wrote a profoundly funny and cranky book called Disrupted about his time as a 51-year-old employee at a growing content marketing tech startup staffed almost entirely by twenty-somethings. His cutting brand of humor which likely made the book a bestseller was honed by his time as a staff writer for the hit HBO show Silicon Valley. Writing for the show likely drove him to write this new book, which offered several fascinating stories that were tempting to include in our exploration of the Innovation Envy trend. The most compelling of these was his experience at Ford.

  In the book, Lyons likens Ford’s attempts to keep up with the times to his experience at Newsweek years earlier, when the magazine’s core business was being threatened by “shitty websites like Huffington Post and Buzzfeed.” The leadership of their group at the time promised to fight back with innovation. “[Newsweek] invested loads of money into hype and marketing—like Ford, holding this hackathon—trying to create a new image for ourselves, to convince people we were ‘reinventing’ the company and carrying out a radical transformation,” Lyons recalls. “What we should have done was forget about marketing, forget about trying to get followers on Facebook, and just invest in our core business, which was journalism. We should have just kept doing what we did best.”

  By 2010, Newsweek had merged with The Daily Beast, ceased publication of its print edition, and was eventually acquired by IBT Media in 2013. In 2018, it was criticized for publishing inaccurate stories.

  But the underlying point of his story illustrates very clearly how Innovation Envy was a contributor to their demise. Out of fear, Newsweek looked at the success of its competitors and sought to copy them. It impulsively invested in innovations that ultimately proved useless.

  If you work (or have worked) in a company or industry struggling to stay relevant, Lyons’ conclusion that Newsweek should have just kept doing what it did best might seem overly simplistic. For every company that “overcorrected” trying to disrupt itself, there were more than twice as many who faded away because they were not simply not evolving, and stubbornly stuck to doing what they had always done. Inaction is not a viable alternative either–a point that we can clearly illustrate in the fortunes of a brand that was once considered unbeatable in their category.

  The Desperate Innovation of Victoria’s Secret

  For an industry leader, Victoria’s Secret has been desperately trying to update its own brand approach for quite some time. Their problem comes down to a shift in the world of fashion, where competitors are increasingly focusing on more natural looks and including bodies of all sizes in their advertising. In contrast, Victoria’s Secret is a brand best known for their over-the-top runway fashion show that one critic recently described as “porny.”[69]

  The brand has been struggling for years, and its stock was down 41 percent in 2018 alone. In late November 2018, lingerie division CEO Jan Singer stepped down amidst controversy over the brand’s tone, direction, and long decline. Citi analyst Paul Lejuez even suggested that the brand may be losing because it is out of touch with real consumers: “Women don’t want to be viewed as stereotypical sexy supermodels buying lingerie just to impress men.”[70]

  In a bid to try and change this perception, the brand took several small steps to rethink the approach to their 2018 Fashion Show. The show’s hairstylist, Anthony Turner, told People: “This is the most undone the hair has ever been. We’re playing with each girl’s own hair texture, and making them better versions of themselves.”[71]

  Laying aside the obvious irony of promoting “natural beauty” while still trying to make already beautiful models into “better versions of themselves,” the highly selective show has been trying to evolve. This year, they also made the unusually evolved casting decision to include model Winnie Harlow.

  Harlow, a former participant in America’s Top Next Model, has vitiligo, a skin condition in which the pigment cells in parts of the skin die or stop functioning, leading to loss of skin color in patches. Her inclusion was rightly praised as a positive step in the right direction for the brand. Time will tell if small moves like this and a leadership change are enough to reverse its fortune.

  Older companies like Victoria’s Secret (founded in 1977) and Newsweek (founded in 1933) are most susceptible to falling prey to our Innovation Envy trend prediction. They often look at younger industry entrants, and, envious of their rapid success, try to reinvent themselves in their image instead of remembering and focusing on what made them great in the first place. Envy and fear, therefore, become major factors in the short-sightedness that holds many companies back, and, ironically, dooms others to faster obsolescence by wasting their time, budgets, and effort on miscalibrated attempts to become innovators.

  The Lure of Incubators

  While envy can lead to unstrategic copycat thinking and confused or unnecessary innovation that misses the mark, it doesn’t always have undesirable consequences. Sometimes, observing and admiring what others are doing or how they are disrupting can be a source of inspiration and motivation. In the right situation, envy can inspire people and organizations to act more quickly and take important, necessary risks that they otherwise might not. Some places—like startup incubators—are even designed to foster this type of envy as a motivating factor.

  In my work as advisor to nearly a dozen startups over the past several years, along with advising organizations on how to set up internal innovation centers, I have seen (and come to appreciate) how incubators support entrepreneurs in growing their network, bringing out their best, and sharing it with others.

  The Camp is one such place: a secluded coworking facility in the south of France started by entrepreneur Frédéric Chevalier, who tragically died in a motorcycle accident just two months before the project opened. The unique thing about The Camp, aside from its manicured seven-hectare campus that took close to $45 million to build, is a residency program known as the Hive, which offers a six-month residency where 20 young innovators can live on-site and pursue an open-ended challenge to come up with something great.

  This latent belief in the power of serendipity is something that drives an increasing number of coworking and networking destinations around the world. The Ministry, for example, is a combination of shared workspace and members’ club in the heart of London that handpicks members based upon their profiles in order to ensure diversity of thought and experience. The Battery in San Francisco is another, similarly exclusive club and workspace.

  By bringing together entrepreneurs with different experiences, interests, and projects, incubators and coworking spaces such as The Camp, The Ministry, and The Battery allow participants to watch how others innovate and overcome challenges, inspiring them to come up with their own solutions.

  Amazon’s Embarrassing Beauty Contest

  In September of 2017, Amazon ann
ounced it was starting a search for a home for its second headquarters outside of Seattle. The new headquarters, it was promised, would house close to 50,000 employees, and likely result in an economic boom for whatever city was lucky enough to win the bid.

  What followed was an embarrassing spectacle of state politicians desperately doing whatever their could imagine to entice Amazon to consider their cities. One critic even described it as the “Amazon Hunger Games.”[72] In the end, more than 230 cities submitted bids for Amazon to consider. Many included unprecedented tax incentives worth billions of dollars, and more than one desperate city offered to change its name to “Amazon City” (or some variation thereof) if they were selected.

  In November of 2018, after a fourteen-month deliberation period, Amazon announced it would be splitting its second headquarters between two predictable and already comparatively wealthy cities: Arlington, Virginia (a close suburb of Washington, D.C.) and Long Island City, in Queens, New York. The decision drew almost unanimous criticism–even from people within the winning locations. People wondered, was such a theatrical search really required to arrive at such a safe and unsurprising choice? And was offering such costly incentives to a corporation really the best allocation of government funds? Given the recency of the announcement at the time of this publication, it is clear that the debate is only just beginning.

  The Maltese Passport Scheme

  Around the same time the Amazon search drama was unfolding, BusinessWeek published a fascinating story about another set of politicians from a tiny country in Europe who offered a bold and unprecedented incentive in a desperate ploy to attract investment from wealthy individuals. The incentive was something many felt should never be offered for sale: a European passport.[73]

  The country was Malta, a nation of less than half a million people that was formally admitted to the European Union in 2004. In the years since, Malta has driven its growth primarily by offering aggressive financial incentives to foreign investors, including an effective corporate tax rate as low as 5 percent, compared to over 20 percent for most other European countries. In 2013, the government made a brazen attempt to lure even more foreign investment by creating the Malta Individual Investor Program, a program that offered a Maltese passport to any foreigner willing to pay €650,000 and make a €150,000 investment in government bonds.

  Why did Malta and the 230 cities that bid to become Amazon’s new home feel so compelled to offer desperate enticements to lure investors and the giant retailer? One likely reason is the proliferation of link-bait-style lists that rank cities, countries, and places: ”The Best Places to Live,” or “Most Livable Cities in the World.”

  These lists drive a ton of media attention, and generate envy from city administrators and politicians who enviously watch their successful neighbors who’ve made the list attract investment and resources. Fearful of being left behind, they do whatever is necessary to position their countries and municipalities as the next hot, growing destination where everyone wants to live, investors are clamoring to spend, and businesses want to relocate.

  The more pressure cities and countries feel to emulate their successful neighbors, the more likely they are to succumb to Innovation Envy by offering short-sighted incentives like drastic tax cuts, or compromising their moral standards by doing things like selling passports—instead of following a more non-obvious path, and finding new ways to refocus upon what makes them a unique and desirable destination.

  Why It Matters

  The fear of being disrupted and becoming obsolete looms in most executives’ administrators’ minds in every industry, and drives businesses to constantly innovate. In addition, social media and the increasing transparency with which businesses operate have made it fairly easy for people, entrepreneurs, and companies to see what others are doing in real time. Just as a growing addiction to social media can create a sense of envy and a perception that everyone is living a better life than we are, this transparency is leading people and companies to experience their own envy of more successful or innovative competitors.

  Innovation Envy can manifest itself as either a positive or negative motivator. On the negative side, as companies become envious of their competitors, they scramble to innovate unnecessarily, expend tremendous resources in unfruitful innovation programs, frustrate employees or move away from their core competencies—forgetting what has made them successful in the first place. On the positive side, this envy can be channeled into motivation and a drive to improve, become more competitive, and earn the same attention their competitor seems to be getting.

  Like many of our non-obvious trend predictions over the years, Innovation Envy is itself neither a positive nor a negative trend. It is how you end up using it that matters most.

  How To Use This Trend

  Play offense with innovation–If you try to innovate from a defensive, survival-driven mindset, you will struggle to succeed. Instead, one of the things we often do when leading innovation workshops is help groups focus on the positive and adopt a growth mindset. One effective way to do this is to start by uncovering unique strengths and talents, while positioning your your legacy first. Then you can build new approaches and an innovation program based upon a shared understanding of what it is you do best, and the understanding that a core component of the strategy must incorporate this and never leave it behind.

  Assess your innovation readiness–Are you asking the right questions to get your organization ready to innovate from a positive place, instead of starting by looking at someone else? To help you ask those questions, my team and I put together an assessment of Innovation Readiness. You can download this assessment from the online resources center, along with some useful tips on how to use it. You can download it here: www.nonobviousbook.com/2019/resources.

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  Robot Renaissance

  What’s the Trend?

  As robots adopt more human-like interfaces and micro-personalities,they are raising new questionsand issues about how werelate to technology.

  The European Renaissance was a time of rapid evolution in human thought and culture in which people started to reevaluate long-held beliefs about the way the world worked and their own place in it. Today, the world is at a similar inflection point. It would be easy to credit technology, or even the Internet, with the pace of this shift, yet they alone have not caused widespread introspection about humanity’s place in the world.

  Until recently. The evolution of robots beyond the factory and into our workplaces and homes is creating a new age of global self-reflection. The more innovation we see in the use of robots, the more we see a corresponding rise in questions about how we, as humans, will relate to these robots, how humanlike they will be, and what sorts of ethical questions this might raise around our master-servant relationship to robots over the short and long term. The technology revolution of what robots can do for us is driving an important corresponding debate about whether they should be enlisted to take those actions, and what moral consequences might result.

  This reevaluation is a trend we first introduced in 2016, and originally called the Robot Renaissance: a way to describe how our growing reliance on robots to do the things we cannot or will not do is leading to a new period of enlightenment about our relationship to technology, how much control to cede to it, and what that might mean for organizations, corporations, and our own humanity.

  This year, we have seen so many more stories and evolved uses of this technology that many of the questions we first identified three years ago have become more commonplace—and more urgent, as well. Seeing this provided the motivation for us to bring back this trend in our 2019 report, and to revisit its implications for the future.

  Robot Explorers & Builders

  The original mission of the Star Trek science fiction series was enshrined in its optimistic challenge to “boldly go where no one has gone before.” Today, we have robots to do this for us.

  Robots like Boeing’s Unmanned Undersea Vehicle (UUV),
a 51-foot long hybrid-charging craft with a 7,500 mile range that can stay underwater for up to six months. The UUV is the largest such device ever built, and works autonomously, without a human crew to do everything from providing maritime surveillance to surveying the ocean floor.

  On space missions to Mars, NASA is using a series of autonomous robot-controlled landers to collect samples from the surface of the Red Planet. The future of space exploration relies heavily on robotic explorers that can work and survive in conditions that would be far more difficult, and sometimes even impossible, for humans.

  Here on Earth, the Japanese brand Komatsu is leading the adoption of autonomous construction equipment, thanks to a unique confluence of factors in Japan creating the necessity for autonomous building far more quickly than anywhere else in the world. Over the past few years, parts of Japan, and particularly Tokyo, have experienced a short-term boom in the need for new construction leading up to the 2020 Olympics. At the same time, there is a serious labor shortage in Japan due to the country’s aging population and the relative scarcity of young people left to support the economy.

  As the second largest construction company in the world, Komatsu is uniquely positioned to solve this problem solution involves “Smart Construction,” the brand’s tagline to describe its increasing range of robotic heavy machinery, controlled aerially by a fleet of drones that create 3D maps of the area and track construction progress.

  If you consider these examples from NASA, Boeing, and Komatsu together, there is a clear pattern of reliance on robotic technology to make exploration and construction projects easier in space, on earth, and beneath the ocean. These uses, in turn, are already widening our understanding of what robots can do, and offering a necessity-driven use case for them to get smarter and more autonomous as they become our explorers and adventurers: to places we could not otherwise go, to help make discoveries we otherwise could not make.