Early in my career, I had a mentor who was a wonderful human being. He used to tell me: "Do what you love, follow your dreams and never think of money and recognition. They will follow". I never quite believed in him. Now after more than a decade and (hopefully) wiser, I do see what he meant. All top performers in any field, be it movie actors, athletes or any other profession - they all do exactly that. They never stop to think whether they are earning enough or are they getting more followers in social media or some such superficial metrics. They are in a flow. As I write this, Roger Federer at almost 36 wins his 19th Grand Slam!
There is a reason I started with this tangential story. I think we are seeing a similar mindset playing out in the business world today at an unprecedented scale. Today's young business leaders and Investors who are digital natives and have grown up in the Information Age build their ventures with a singular passion to solve real world problems. They hardly think of Return on Investment. Everyone knows that if you are trying to become an entrepreneur to be rich, you are choosing the most awful way for that. There are other better ways to be rich.
Right from the digital leaders like Google, Amazon, Facebook to the upstarts, they all think in the same way - "solve real problems - profits will follow. Just make your users happy". When I first read this piece on Uber, I wondered how a company disrupted the stable and profitable cab hailing market with a business model that lost a ton of money. Could this business model have passed 30-40 years back, I doubt! To me, it is evident that this is the new mindset that will rule the next few decades in business. If we look at the Unicorn list today, most of them are not making money but they are trying to make the world a better place. Profits will follow some day!!
I see traditional companies trying to compete in this fiercely Digital Age will also stop thinking (OK! that's difficult - I meant think less) about RoI for every initiative. They will replace their "RoI" cap with the "VoI" cap - Value on Investment. Leaders will ask only questions like "is this set of digital initiatives going to be super valuable to my customers? Are my customers' lives going to be easier? Will the frictions reduce?" If the answers are yes, yes and yes, well then move ahead. Don't waste time in sharpening an Excel model to calculate profits. Profits and margins will follow if you make customers happy.
The term VoI was coined by Gartner in 2001 and it is only now that I think it is playing out to its full potential. We are all excited to see the amount of innovation that is going on in every field today with a singular focus to solve difficult problems to make our lives easier and more comfortable. We are living in an age where top investors are pouring in funds for projects which will provide the greatest value for the consumers. This is truly the age of consumer surplus as we read in Econ 101!
There is a reason I started with this tangential story. I think we are seeing a similar mindset playing out in the business world today at an unprecedented scale. Today's young business leaders and Investors who are digital natives and have grown up in the Information Age build their ventures with a singular passion to solve real world problems. They hardly think of Return on Investment. Everyone knows that if you are trying to become an entrepreneur to be rich, you are choosing the most awful way for that. There are other better ways to be rich.
Right from the digital leaders like Google, Amazon, Facebook to the upstarts, they all think in the same way - "solve real problems - profits will follow. Just make your users happy". When I first read this piece on Uber, I wondered how a company disrupted the stable and profitable cab hailing market with a business model that lost a ton of money. Could this business model have passed 30-40 years back, I doubt! To me, it is evident that this is the new mindset that will rule the next few decades in business. If we look at the Unicorn list today, most of them are not making money but they are trying to make the world a better place. Profits will follow some day!!
I see traditional companies trying to compete in this fiercely Digital Age will also stop thinking (OK! that's difficult - I meant think less) about RoI for every initiative. They will replace their "RoI" cap with the "VoI" cap - Value on Investment. Leaders will ask only questions like "is this set of digital initiatives going to be super valuable to my customers? Are my customers' lives going to be easier? Will the frictions reduce?" If the answers are yes, yes and yes, well then move ahead. Don't waste time in sharpening an Excel model to calculate profits. Profits and margins will follow if you make customers happy.
The term VoI was coined by Gartner in 2001 and it is only now that I think it is playing out to its full potential. We are all excited to see the amount of innovation that is going on in every field today with a singular focus to solve difficult problems to make our lives easier and more comfortable. We are living in an age where top investors are pouring in funds for projects which will provide the greatest value for the consumers. This is truly the age of consumer surplus as we read in Econ 101!
Excellent writeup Abhijay... Loved it
ReplyDeleteSatya