Survival of the misfit in a winner-take-all world
Modern business cannot rely for its prosperity on physical or technological advantages, but must depend on the intellect of staff, according to a visiting Scandinavian management academic. But, Kjell Nordstrom told the Australian Human Resources Institute national convention this fortnight, the problem is that a business can never own this resource – and employees are more mobile than ever.
Dr Nordstrom, from the Institute of International Business at the Stockholm School of Economics, pointed out that competing businesses increasingly have access to the same technology – and that this yields only a temporary advantage anyway.
Winner-take-all
And there are fewer and fewer rewards for being second or third in modern business, which has followed high-level sport to a winner-take-all dynamic. “Number one in entertainment, number one in tennis, number one in formula one, number one in the furniture industry … takes it all. Numbers two, three, four and five get almost nothing. “We’ve accepted it in sport but now the same thing is happening in business,” Dr Nordstrom, the coauthor of Funky Business, added.
As vindication, Dr Nordstrom asked which was the number two company in computer software after Microsoft? Or, from his adopted country (Nordstrom was born in Finland), the number two company in furniture after Ikea? “Ikea has been around 60 years this year. Ever heard of number two? And Microsoft. Completely dominant in its industry, worldwide. There is no number two.”
The spread of the winnertake- all principle has implications for the way people think and live that may trouble some, but should be accepted, Dr Nordstrom notes. “I have two children aged three and 11 and they are likely to come to me in the next few years and say, ‘Father, I have decided to be a pop star’. Or whatever. I have decided the answer is, ‘Yes, of course, but see to it that you are number one’. “I don’t say this is good, neither is it bad. It is what it is and we have to live with it.”
Intellectual work
According to Dr Nordstrom, in most modern corporations, more than 85 per cent of the work one is intellectual work. Information is received, there is some sort of transformation, and there is an output of some description – a design, a sales pitch, a report to management. He says a typical day for most workers goes something like this: “You come to the office, you check your e-mail, you answer some – not all, but a few – and then make some phone calls. Then you have a meeting with colleagues to discuss a ‘concept’. And then you go back to your desk, make some more hone calls and answer some more email - it’s intellectual work.” Because so much of modern work is intellectual in nature, a problem of ownership arises: if the most important business assets are not plant and equipment but ideas, it is no longer possible to own the most important business assets.
“ This is truly a new economic landscape for those of us who want to see it – there are many who don’t want to see it.” Dr Nordstrom says there is a conflict in most modern corporations between shareholders and employees over rewards – how much for us and how much for you. The claims of employees on the rewards of companies will only grow as their importance is recognised and their scarcity appreciated.
Survival of the misfit
Some of the companies that have achieved the most success have been “misfits” that have radically transformed their activities, according to Dr Nordstrom.
As an example of successful business transformation,
he cited the Finnish telecommunications company
Nokia. Born
in Finland
himself, Mr Nordstrom recalls that in his childhood,
Nokia was the company that made his rubber boots.
Even then, Nokia held design in high esteem, making
boots in bright colours instead of just the prevailing
black.
The iconic
company best known for mobile phones started life
making paper and timber before merging with a rubber
goods
manufacturer and a cable company. It radically
transformed its activities
to survive as new opportunities presented. Dr Nordstrom
believes Nokia’s history illustrates two conflicting forces shaping
modern business and forming an antithesis: Darwin’s survival
of the fittest, but also the survival of the misfit. In other
words, the modern multi-national business must have world-class
technology, management and infrastructure as a “necessary,
but insufficient” condition - almost like
toilets - for functioning.
The internet is joining this “must have but insufficient for success” category, Dr Nordstrom says. “Any company must have water, electricity and sewerage - and the internet.” But outstanding success is increasingly achieved by being different to anyone or anything else – a misfit in the prevailing industry landscape. This differentiation is becoming the only source of competitive advantage.