Funking it up
Funky Business author, Kjell Nordström tells Peter Wilson why women will prove to be a greater global force than China
Peter Wilson: It’s been about five years since you last came to the AHRI National Convention, what has changed in your thinking about the key challenges for people in business?
Kjell Nordström: Funky Business was written in 1999 and we can now see, with the benefit of hindsight, that we underestimated a number of things: namely the power of the internet and mobile telephony. We also underestimated the power of markets. I’m not just talking about financial markets, but any kind of market.
The key challenge is to understand that we have a third state of being. Before the internet revolution we had two states: being alone and being together. Now there is a third state, which you could call ‘being alone together’. For example, you can be playing computer games alone but online with many people.
Another example is Facebook where you engage alone but at the same time you interact with others. This introduces a number of challenges, opportunities and possibilities for business communities.
PW: What are the challenges of serving an audience or customers that are alone but together?
KN: At first Facebook and Twitter were seen as just toys that adults play with but now they have opened up a completely new space for doing business, for relating to customers and potential employees. This all has to be managed in a company.
Companies knew they had to enter this space and start to experiment but they also had to be prepared for outright revolutions among their customers. As the situation in the Middle East has shown us you can trash a dictator in a couple of days with social media; customers can also trash a company in the same period.
There are signs that business is starting to understand the medium now, but I think it’s quite clear that it will require much more experimentation by trial and error, because the technology develops far too quickly for business to have a handle on it. There is no way you can have a one- or two-year plan.
PW: Is this concept part of the new book you and Jonas Ridderstråle are working on now? KN: Yes, but we are also looking at other massive forces for change in business. For example everyone talks about China, which is indeed a massive
force, but there is another force that is significantly bigger than China and that is basically, women and the role of women globally.
PW: Why are you saying that women are bigger than China?
KN: Women make up 52 per cent of the world’s population. Female numbers at universities make up 55 to 65 per cent of undergraduate and graduate students. They are a force that you can see at work in China, in Poland, in India, in Australia, in Scandinavia, in Germany – wherever you go. The pictures coming out of the Middle East show women participating in the protests in Libya, Egypt, Bahrain, and all those countries where women were not supposed to participate in anything, but they’re out protesting with men. So, it is a massive force and things are changing at a rate that would have been difficult to foresee just four or five years ago.
If you translate this force into money, you can see that 1300 million Chinese is definitely important and should not be underestimated, but this [demographic change] is bigger and it seems to be happening faster everywhere. This will have implications for marketing, distribution and how we recruit and retain talent.
PW: In your most recently published book Funky Business Forever you mentioned that your claim, in the first edition of Funky Business, that ‘Karl Marx was right’ curtailed book sales and interest in the US compared with other countries. With hindsight would you have changed that original reference?
KN: We have reflected a lot on this. We were already running into problems on the very first day the book was introduced to the American market. They didn’t understand the references to Karl Marx. They immediately started to yell and scream about communism. The book didn’t sell well; it didn’t enter any of those top 10 or top 20 lists because I think it was considered too politically incorrect.
It was also the examples that we used. We addressed the growth of the porn industry, which didn’t go down well, and we also referred to Osama bin Laden as an ultramodern form of terrorist in 1999, well before 9/11. We were thinking about writing an American version of the book. We thought, this is weird. The world is now one and the same for all of us. That means that we cannot have four or five different versions of the book. We have one message and it’s the same message for China and the US.
PW: What does that reaction tell us about America – both then and today?
KN: Before 2001 the US was a very ethnocentric place. It was the only superpower; 70 per cent of the population didn’t even have a passport. If you read USA Today, it was mostly local coverage; very little on the rest of the world. All this has changed over the last 10 to 12 years because of terrorism, China and latterly, because of the problems with the global financial crisis. It’s a different place.
PW: In an interview on YouTube you say that empires die when they turn inward and don’t take fresh blood and fresh ideas from outside. Is the US in danger of going this way?
KN: I’m quite optimistic that the US will be back within four to five years. They will change their systems and reinvent themselves. They have done that before. Right after 9/11 they closed themselves off, but they are now paying a price for that. And I think that the US, as well as Canada and Australia, are aware of the power of immigration because it’s the immigrants that have built these countries. And it’s omnipresent in the US; people know they have to keep the country open. We have to keep our universities open and have a continued flow of gifted people from all over the world to study and start up companies. Without those people they will lose their competitiveness. The shadow of 9/11 is slowly but surely fading away, even in the US.
But I think there are quite a lot of signs that people really want change. And I think that was one of the main reasons for why Obama came to power. There are a lot of indications that there’s a reason to be optimistic today.
PW: Google sets aside one working day in five for its people to work on something innovative. That’s a great way to send a signal about innovation. Isn’t that foreshadowing that innovation will be a continuous part of our daily lives at work and home?
KN: I’m a little bit sceptical when it comes to the Google model because Google has the monopoly – for today. When you have that you can do whatever you like because you’re so profitable. I don’t think we can learn very much from Google for that simple reason.
PW: But Google was innovative. Isn’t that the way forward for all companies?
KN: Industrialised countries only have innovation left to compete with. The Chinese, the Indians, and the Vietnamese can do everything else plus they’re cheaper and better. That seems to be the domain that is left for us. We have to understand that domain, master it and build companies that can produce innovation in a continuous flow. And that is easy to say and difficult to do because companies are built for exploitation and a little bit of innovation.
Many of the big pharmaceutical companies are struggling because they are good at clinical testing, distribution, after sales service but they are outright exploitation houses, used to having a leap every 10 or 15 years with a blockbuster drug such as Viagra or Prozac.
The problem now is that there are no blockbusters coming out of these big pharmaceutical companies anymore. They are intensifying the research and investing more and more money in research and development. But there are limited economies of scale in research and development. You don’t do better research because you have 10,000 people. It seems that the intensive research is done in organisations that are 25, 50, 70, up to 100 people.
One response might be to focus on exploitation and buy innovation or form partnerships with small innovative companies.
PW: You talk of the midget multinationals, what can we learn from them?
KN: Germany was a parking place in 1946. And it went to being one of the richest countries in the world again in 45, 50 years. It was hit by the crisis like everybody else two years ago and then came back surprisingly quickly. The German industry structure is very different from other countries in that the most significant role is played by mid-size companies.
Ten years ago it was said that being mid-sized is the worst, because you will be hit by the small companies from below and the bigger companies from above.
The German example shows that seems not to be the case.
PW: What is a successful leader and how should HR be playing a role in creating them and supporting them?
KN: I’m going to Iceland to meet a company that’s coaching leaders all around the world. Coaching is a very fast-growing business which is a good indicator of what is going on. Today leaders work with people and understand what makes them mad, sad and glad. There’s little ‘commanding’ involved for the simple reason that that style of leadership doesn’t work, particularly with companies involved in intangible assets, as many companies are today.
If I were to generate one hypothesis on this, it would be that the coach will slowly but surely take over as leader. We are in a transition period but in the future it will be a coaching type of personality that runs companies.
PW: AHRI research shows a current generation is emerging that seeks a more flexible workplace. Where are we going to see the biggest challenges in the changes that are still to take place in business and organisational life?
KN: We were talking about the flexible workplace back in 1991. People were interested but they thought it was a little utopian and that there needed to be a workplace. Look where we are now. You see companies of 1000 people where half the desks are empty.
PW: Are we are going to see more and more organisational change at work then? Is this just going to be a trend that will continue to the point where there won’t be that many people in a conventional office anymore?
KN: That’s right, which means that we will behave more like a tribe. A tribe still share something even though they are apart out in the jungle. They still have some sort of value system that enables them to identify with each other and it’s not physical proximity that defines them. That’s what companies will increasingly have to develop.
About Kjell Nordstrom
Swedish economics professor Kjell Nordström wrote Funky Business in the
late 1990s with colleague Jonas Ridderstråle to explore a new way of thinking
about the business world. The self-described ‘#1 funkster’ holds a doctoral
degree from the Stockholm School of Economics. He is presently associate
professor at the Institute of International Business at the Stockholm School of
Economics. His research and consulting focus is on the areas of corporate
strategy, multinational corporations and globalisation. He has been
responsible for the International Business course at the Stockholm School of
Economics and is one of the founders of the school’s Advanced Management
Program, a five-week top-management program that attracts the elite of
Scandinavian executives. He is also on the board of directors of several
companies. With Ridderstråle he went on to write Karaoke Capitalism and the
updated Funky Business Forever. The pair are working on their next tome,
provisionally titled Alone but Together which explores the challenges the
internet has brought to business.
Kjell Nordström will be speaking at AHRI’s June National Convention. For more details go to www.convention.ahri.com.au
Source: HR Monthly
, April 2011, pp. 10-13
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