As Alibaba and Tencent approach their twentieth birthdays will they be dislodged by the new generation of internet start-ups in China? Perhaps ride-hailing app Didi Chuxing, smartphone maker Xiomi or Meituan Dianping, which delivers food and other services may knock them of their perch.
As Chairman of Walpole Capital I am always looking at start-ups and given my nearly two decades of experience in China it seems a natural fit for me to look there as well. When I was last in China I was talking with some of the players there to see if there really was anyone that could take on the Big Two in China. And I came back with a fervent no to the question of the Big Two being knocked off their perch. So why is this? Well I believe there are three main reasons:
First, Tencent and Alibaba have assiduously invested in the next generation of technology companies: Tencent alone has a portfolio of more than 600 stakes and holdings across a range of sectors and industries. For Example with Didi Chuxing, the company that virtually kicked Uber out of China, has the Big Two both as shareholders.
Second, the giants have built not just conglomerates but ecosystems. Whether your app is selling music or restaurant reviews, you need traffic, which means plenty of start-ups are perfectly happy to work on their platforms. This symbiotic relationship is important to keeping start-ups on side, and turning them into revenue-spinners and investments. Ultimately, Alibaba and Tencent want to keep users on their platforms as long as possible – and the more entertaining apps they have, the easier that is to achieve. The power of the platforms can also be seen if they don’t support you. One of the reasons that Uber failed in China was that the Tencent platform didn’t effectively support it and lent it support instead to Didi – its own portfolio company.
Third is political. Beijing prefers to regulate a few big players rather than shoals of unruly ones. Peer-to-Peer lending, for example, offers a graphic illustration of what can happen when multiple players are unleashed: the sector has been hit by Ponzi schemes, evaporating funds angry investors. Hence, the People’s Bank of China continues to clamp down on the Fintech sector, moving last week to require balances held in customers’ electronic wallets to be lodged in a central custody account. Moreover Beijing also prefers a tight band of champions so that the country can forge ahead in areas prioritized by the state, such as artificial intelligence.
But one never knows – A wild card may still emerge! Having said that I am sure the duo look sufficiently entrenched to celebrate a few more birthdays as leaders of the Chinese internet!
China – The People’s Republic of Tech!
Fifteen Chinese startups reached unicorn status last year alone; effectively 30% of the world’s new billion dollar companies were created in China in 2017. While the world was focused on the Orange Muppet and Brexit, China was focused on what is most likely to prove the most significant shift of this century. What I mean here is the transfer of global power from the west to China. China is busy re-shaping the world around economics and technology and placing itself at the centre of the debate in these issues. China is not focused on exporting its politics and ideology. It prefers to build, innovate and prevail through economics. It is building its ascendance through prodigious mercantile and technological change and influence. Whilst the West is dealing is with its decaying infrastructure and political systems China is using its one party system to plan projects that can be barely fathomed in the West. Just look at the Belt and Road Initiative. Even if they achieve half of what they say this will be one of the largest projects on earth.
China’s Long Term strategy coupled with its huge population means that it has a natural advantage in tech. It will lead the world in machine learning with its ambitious roadmap for AI published last year. It just has so much more information than anywhere else on earth and it has more people online (and mobile!) than anywhere else so will have much more data for the machines to learn from! It is focused on Blockchain which plays to China’s significant geopolitical advantages. And finally it will lead the world in electric vehicles. Just look at Didi alone that raised a further $4 billion to plough into AI, Electric vehicles and International Expansion. Didi today is also the world’s most valuable start up. Not only did it kick Uber out of China it also knocked it off the pedestal on the world stage by taking its title of the World’s most valuable private company. China used to be accused, rightly so, of stealing technology and building me too companies. Those days are over! China now is focusing on innovation rather than imitation! And having worked in China for nearly two decades let me tell you when they focus on something – they get it done! Anyhow I am looking at Chinese tech startups for Walpole Capital so watch this space for more interesting information!
Buying Stuff? That’s so last century
This whole idea of, like, every time you want something, having to spend money, I mean, that’s kind of like an old-school idea. As a futurist, I’m of the mindset that you won’t really buy anything, and people won’t own anything and that’s just how the world will work.
Buying stuff? It’s so last century. The internet has made distribution so cheap and convenient, and made it accessible for so many more customers, that it has opened the way for models that sell access rather than products. Aaron Perzanowski, a professor at a University in Ohio and author of The End of Ownership, said: “There’s no doubt the notion of ownership is in decline, and we’re likely to see this trend continue.”
These forces have been at work for years. What has changed is that the psychological barriers that have long held them back — the fixation with ownership — have begun to crumble. This is partly due to companies simply getting better at offering compelling services. It is also about demographics. The biggest section of our Z Tyre subscription programme are customers are aged between 25 and 45 — Generation X and Millennials.
Meanwhile, economic needs have become more acute as the proliferation of smartphones has accelerated the death of old models. Why buy a morning paper if you can scroll through the news before you get out of bed? The question is, how widely those dynamics can be applied and how quickly they will take hold. Well let’s look at the entertainment industry which was transformed by the file-sharing phenomenon Napster. Spotify this summer announced that more than 60m people pay a monthly fee for access to its library of 30m songs. That surge has coincided with the revival of the industry. This year is set to be the first since 1999 — when Napster burst on to the scene — that the industry will actually record consecutive years of revenue growth. Netflix launched its film streaming subscription operation 10 years ago, and this summer it surpassed 100m subscribers.
Technology’s ability to bend the concept of ownership is seeping into other, unexpected corners of life — such as cars. The typical automobile sits idle 95% of the time, yet most people would rather it stayed parked in the garage than hand the keys to a stranger. Turo was founded to change that. The San Francisco company connects people looking for cars to rent with owners willing to lend. Nearly 180,000 people have put their cars up for hire on the site, up from the fewer than 5,000 it had lured in 2012, the first year of nationwide operation. Chief executive Andre Haddad said shared ownership helped to alleviate the cost of buying and maintaining a car. “We can make the car an asset for the first time,” he said. Last month, Daimler led a $90m financing round in the company — its bet on the future of car sharing. You have also many major car manufacturers, like Porsche and Hyundai offering subscription services for cars. And now not just cars but even tyres can be subscribed for with Z-Tyre’s world first tyre subscription service.
As technology becomes more deeply ingrained into products, the very notion of what a product is, and where its value lies, gets muddied. When Hurricane Irma was bearing down on Florida last month, Tesla made a striking move. It remotely lifted the battery-charging constraints on some of its cheaper models to help people who were desperately trying to get out of town before the hurricane hit. The cars all had the same physical batteries. What that showed is what’s important isn’t the product, it’s the code, and it also demonstrated that Tesla can do the exact opposite. If you haven’t paid your bill, maybe they cut back your battery capacity. Even with these things in our possession, we don’t have control in the way we might expect.
So if buying stuff is over then one has to wonder what Amazon, the biggest seller of stuff on the planet is doing about this. The answer – PRIME!! I see Amazon bundling more and more into Prime. The opportunity for Amazon is to get hundreds of millions of people, or even a billion people, paying $10 a month for a bundle of services and effectively controlling more and more touch points. And you know if Amazon is getting into it then it really is the future!
Zenises is the first tyre company in the world to accept Bitcoin for all transactions
Harjeev Kandhari, CEO of the Zenises Group, announced today another world first by Zenises – the company behind the Guinness World Record breaking most expensive tyre in the world.
Zenises is going to be the first tyre company in the world to accept Bitcoin for all its transactions both off line and online. Zenises has been working to develop the technology at its newly launched technology centre in Madrid and working with several experts in the Blockchain world.
Harjeev Kandhari stated that “Blockchain technology and Cryptocurrencies are the way forward in the world today. We believe that being a customer centric company we must move with the times and offer our customers more options than just fiat currency payments. Moreover this lowers the cost of transactions for all parties involved and provides more value to our customers. We have already received our first payment in Bitcoin and all systems are go! We are now working on the platforms to accept other cryptocurrencies in the near future.”
Customer Loyalty in the Digital World
Recently I have been spending a lot of time in our Tech Centre in Madrid and been thinking about digital marketing. I thought I would share some of my thoughts with you.
I think that the most important part of any marketing, especially digital marketing campaign, is the ability to build and maintain customer loyalty. But in the age of digital marketing achieving that has become much harder. What does customer loyalty even mean in the digital world and how does one go about achieving it?
I think that the most important way to build loyalty is to focus on gratitude. From a psychological perspective this is the emotion in most humans that is the best indication of whether loyalty is present. How do you get to gratitude? This needs to come through reciprocity. You need to give things first to your customers for them build this sense of reciprocity. And this is not just free things but something that recognizes their value to you. So for example if you have 24950 air miles and to achieve the next tier you need 50 miles. The airline should just give it to you and not make you buy it. If they make you buy it then you will never be loyal. But if they gave it to you they make you feel valuable and you reciprocate through a sense of gratitude. Now once you achieve that sense of gratitude you need to ensure you get advocacy which is the final step in achieving loyalty. You need these grateful customers to go out there and advocate for your products. So how do you get the customers to advocate for you? The way to do this is to bring consumers into your ORBIT.
What is the ORBIT?
This is where the digital world is changing the way people transact. Old school marketers focused on the transaction and the BUY. We need to change this. We need to not focus only on the BUY but the entire relationship with the customer both before and after the BUY. Infact, especially with subscription businesses, the customer is not so interested in the BUY. The focal point for the customer is the entire experience. We have to focus on the entire customer journey and ensure that we keep the customer engaged throughout the journey. More importantly we need create a long term relationship with the customer and embed the transaction within the relationship. It is these relationships that drive the transactions and not the other way around.
Creating the long term relationship is also recognizing that the internet has changed the way marketing is done. In the past marketing was one way with the usual customer segmentation and targeting customers and sending them the message. Digital communication has changed that forever. Firstly through social media the audience now starts to talk back. Secondly they are also the co-creators of content (think of sites like YELP and Opentable reviews). So now the job of a brand is to empower and enable that connection and collaboration where people talk back and then are part of the process with you.
All these thoughts that I think of when I am sitting on these long flights are great but perhaps a bit theoretical – although I like the ORBIT one as it is very appropriate for when I am on the plane. So I think that for our ‘round, black and boring’ industry we need some practical applications for these thoughts. So what do we need to do with this information?
We need to build a sense of community through a shared purpose that has to be aligned with our brand DNA. We need to ensure that we have continuous engagement with this community and this is particularly important in the case of a subscription model where a lot of people only focus on the renewal. Finally we need to create a social currency that we can offer to our community to further bind it together.
So if you want to build a community the best way is to align it around a purpose. But in the digital world we have to ensure that it is the right kind of purpose; one that is built with our customers. We have to try and achieve this purpose together with our customers and use it to connect disparate groups of people together. In our case what aligns best with our DNA is the Zenises foundation. We need to build a community of like-minded people who see the value in a company that not only wants to change the world but also the way tyres are consumed. Secondly we are an automotive company and we need to engage a community around people who love their cars and want to engage more with others who share that passion. We have a lot of knowledge and passion about both subjects and could easily curate communities around those purposes.
We need to ensure that we are with them through the customer journey providing content, content and content on a regular basis that is outside the transaction but focused on the customer need. This is ensuring that the relevant content is provided both for the demographic as well as the time. So we need to provide specialized focused content for different demographics such as women, millennials, and Gen Z. Then we also need to provide content that is time relevant. This is ensuring that before the summer we provide relevant content for people who may be taking long drives. Or in the Christmas period we provide more relevant content to holiday makers or perhaps people going skiing. With regards to the content on the Foundation we need ways to provide people relevant content which may allow them to connect with the children directly. This could be interviews with the children or more details on the homes that we build. Also we need to provide them ways to get involved should they want to.
This currency is valuable to build engagement within the community and also provide a sense of gratitude. All companies today have big data on their clients. Using that big data to provide little data to customers costs little to the companies but could be of value to the consumer. For example a large electricity company started providing its customers with data on neighborhood consumption patterns in the customer bill. This helped many customers understand how much their bills varied from the average and then to take actions to rectify this. Whilst this cost the company nothing it built a sense of loyalty with the customers. We need to look at the big data we generate and see what we can offer the consumer throughout the relationship that will enhance his experience. The other great thing about social currency is that consumers should be able to freely share it. As such we need to provide the customer with things that he can easily share online with his friends and community. This allows him to feel more part of the community and also bring more of his network into our orbit.
All the theories here are fine but it really boils down to treat your customer with the same level of respect and dignity you want to be treated with and ensure that you are there with the customer for the long term for the good and the bad! At the end of the day relationships are relationships – online or offline!
Tyres and the Electric Car Revolution
With a loud Bavarian fanfare at the Frankfurt Motor Show this year, BMW pledged to build 25 – yes 25!!! – new electric models by 2025. Raising the bar amongst the traditional car manufacturers, BMW also plans to launch the third model in its electric ‘i’ series at Frankfurt. But it’s not just the Germans pushing ahead with electric transformation. Indian-owned Jaguar Land Rover has announced that all its vehicles will be in some way electric by 2020 and Chinese-owned Volvo will launch five new electric models between 2019 and 2021. So why does this matter to us in the tyre industry – these cars will still require tyres – right? So why can’t we just carry on with our steady evolution, making black, round things?
Well first of all that means we will again remain oblivious to the rapid technological advances happening around us! With electric cars there is a whole different design process that we, at Zenises, are now working diligently with many manufacturers. There is much to consider. Due to the large battery capacity, electric cars will need to carry more weight and be more evenly balanced than conventional cars – they are typically 20-30% heavier. Tyres for electric cars will also need much better handling characteristics due to increased torque and acceleration power. And finally (for now), rolling resistance will become even more important. Due to limitations on battery life, extending fuel economy (even in small increments) will be really important.
To match the requirements of the electric car driver, unique tyres will be needed for specific electric car models. For example in our conversations with the folks at Tesla, they want it all! I’ve already mentioned that smaller electric cars mostly care about rolling resistance to extend their journey range, but Tesla wants that PLUS good handling and grip PLUS low noise. But the Tesla is heavy, so you can’t just take a tyre off the shelf and expect it to handle the same. You have to reconfigure it to be able to absorb all those forces. So Tesla is demanding unique tyre requirements in sizes like 265/50R19. And it’s not just Tesla – the BMW i3 rides on 155/70R19 (a dimension that sounds rather strange to more traditional tyre people). In addition, for European tyre labels, the very top rating of ‘A’ wet grip and ‘A’ rolling resistance will become pretty much standard for electric cars.
But there is still one key element missing for our discussion that could add rocket fuel to the electric car revolution – CHINA! The world’s fastest growing and potentially largest automotive market has woken up to the potential of electric cars. Rumours abound that China is considering a total ban on petrol and diesel vehicles in the near future. Impossible you say – even crazy! But China always dreams big. And it’s now not just dreams, but action that could catapult China to the forefront of determining the industry’s future. Not only could electric cars help solve the chronic pollution in some of its major cities, but a determined focus on electric will allow Chinese car companies to leap forward over the inertia that old technology can entrench. What better way to take on the current global leaders – not on the battle ground set by petrol engines but in the new revamped arena that electric cars could require. And if this happens then the massive Chinese tyre industry will also start focusing on the needs of electric car consumers, largely ignoring the legacy strategies of petrol that the traditional European and American automotive giants have to still support.
This is such an exciting chapter in our industry’s history. There’s still so much to play for, but for sure it will be those in the tyre industry who embrace the technological potential and possibilities that electric cars will bring who will reap the commercial benefits for the decades to come. Simply making and selling conventional radial tyres is no longer the only future path for the tyre business. To stay ahead of the pack, you have to be nimble and aware of opportunities that our changing world will bring. Like BMW’s head of R&D said “We have become a tech company. Where once we were employing mechanical engineers, it is now about the software”. Maybe tyre companies need to start becoming tech/software companies too!
‘How Do You Get Anything Done In China’?
“I just don’t get China!”, “As a foreigner, how do you get anything done in that country?”, “How can you trust the Chinese?!!?” Having worked with China for nearly two decades now I get many of these questions from friends and colleagues. They realise the need to do business with China and are having some trouble navigating the choppy waters. So here are some of my thoughts – in the hope I don’t offend any of my Chinese friends!
Conventional wisdom and cross-cultural management studies often emphasise the collectivist nature of Chinese society. However, I’ve always maintained that the Chinese have the most individualist of behaviours. Chinese society is collectivist in that individuals identify with an “in-group” consisting of family, clan, and friends. Within this, co-operation is the norm. Outside, zero-sum competition is common. As a result, self-organised (as opposed to hierarchically imposed) co-operation can be difficult to achieve. In addition, zero-sum competition means that your Chinese counterpart may not believe in so-called ‘win-win’ solutions. One can observe this, for instance, in the tendency to re-open negotiations just as everything seems settled, especially if one seemed too ready to agree with the negotiated terms; one’s Chinese counterpart may interpret this as an indication that he or she has not bargained hard enough.
It is certainly difficult to gain trust in China. The Chinese tend not to trust until there is enough evidence of trustworthiness. Unlike in the West, the creation of personal friendship is a prerequisite of doing business. Building friendship takes time, which is another reason to avoid rushing into things. There are numerous invitations to events; I was once the chief guest at the wedding of the chairman of a tyre factory’s godson. The poor kid must still be wondering who the big guy is in the turban in his wedding photos! One major element in building trust is the long dinners during which everything but business is discussed. In these, alcohol plays an important role. Fortunately for me, my religion does not allow me to drink. This has saved me many times in China but also some people have refused to do business with me because they could not ‘trust’ someone who doesn’t drink with them. Their loss!
Company decisions are typically reached in a top-down manner, with only the very top of the pyramid involved in decision-making. Mistrust puts limits on delegation, and supervisory control at each level is high. Mid-level managers typically have little power to make decisions of consequence, and their main role is to pass on orders from the top and ensure execution. Be aware in negotiations that the decision is ultimately made at the very top. If your counterpart is not part of that group, he is typically not authorised to make major decisions but must report back to the top for instructions. Also, make sure your representative matches the status of his or her counterpart. Important dimensions of status are formal position, age, and education.
The Chinese are an extremely proud people. I’ve never known a person in China in my many years of experience to ever be wrong! The Chinese that I’ve dealt with do believe that they are a superior people (much like the rest of us!). One needs to recognize those sentiments and then ensure one defers to them if you want to get things done in China. For example, when I’m in China, I always wear a pin on my lapel with a Chinese flag and it’s always noticed and appreciated. In fact, one senior government official even told me that “You are wearing my heart on your jacket!” That meeting certainly went very differently after that comment.
Conventional wisdom holds that China’s governmental structure is highly centralised, with all key decisions made in Beijing. In reality, Beijing directs little of what happens throughout the country, especially in far-flung regions. To be sure, if Beijing truly wants something to happen, it will. At the same time, Beijing recognises that decentralisation of power plays an important role in taking economic reforms forward. By running things in a slightly different way, the thousands of localities throughout China constitute a large population of local experiments, collecting information about what works. From these experiments, the central government can select suitable future policies. Expect conditions to vary by province. In addition, to the extent you need to negotiate with government, it’s crucial to involve local government. Even if you have agreement from Beijing, if the local government wants to thwart you, it will.
There are so many more aspects about doing business in China which I would have to write a whole book to cover. All the usual statements like “In China you always have to have the long term vision”, or “Change is the only constant” or “The Chinese never say no directly and will always use the indirect route”. But the one piece of advice I want to leave you with is the one I find the most important about doing business in China. Nothing happens in China if you aren’t there! If you want to get anything sorted, get your ass on a plane and just go there!
WE NEED NEW LEADERS IN THE TYRE INDUSTRY!
Geopolitical turmoil, cyber hacks, Brexit and Donald Trump—many recent disruptive events have taken our industry by surprise. What is for sure more now than ever is that change is coming and it is coming fast. As such our industry needs to have new leaders, at all levels of the food chain, that can replace old thinking with new ways to innovate and manage that change. The old ways are going! The old channels are going! The old managers have already gone!
So what do our new industry leaders need? What does the industry need from our leaders?
We need leaders that can anticipate and drive change. This does not mean simply extrapolating today’s pace of change into the future. It means boldly imagining new possibilities—and understanding they will come sooner than expected. Leaders will have to get equally comfortable with what can be known and with exploring what is unknown. Today our leaders see future events as a new version of past events, presuming the pace of change will move in a straight line. In reality, growth is exponential and new variables—unforeseen technologies, for example—always enter the fray. In most organizations, the future is primarily projected through spreadsheets reinforcing a perspective that the world is an extension of what we know today. The problem is that the future is anything but that! Our new leaders need to get comfortable asking open-ended questions about unspoken assumptions to see new possibilities. They need to be curious about the future and blend imaginative practices of strategic foresight and science fiction design. But most importantly they need to ensure that this mindset permeates through their organisations.
In addition to imagining a range of new futures, our new leaders must also act as disruptors, discovering new ideas through open dialogue with all stakeholders and then ensuring a constant iteration of those ideas. Most leaders today are still primarily focusing on getting existing products to be better, faster or cheaper. But our leaders need to focus on the new breed of customer and invest in designing and developing new products and services to satisfy the emerging customer’s needs. They need to use human-centered processes, such as observation and questioning, to collect insights; and they need to embrace a growth mindset to test and gather evidence on what they’ve learned. Great leaders in our industry will do this continually, iterating over and over to uncover opportunities obscured by the fog of uncertainty.
As technology innovation accelerates, leaders have to understand which technologies will directly impact our industry and which will affect adjacent industries. Our leaders need to figure out fast how they can digitize, demonetize and democratize our products. Once we figure out how to digitize our products we can become an information-based technology and move to an exponential growth curve. Something digitized can be replicated and transmitted for a near-zero marginal cost. Once we have successfully digitized our products then we need to figure out how to demonetize them and eventually democratize them. In terms of demonetization one needs only to look at digital photography as an example of an industry that has demonetized. The first 0.01 megapixel Kodak camera is now generating a 10 megapixel image. The result of which is the complete demonetization of film photography. As products and services demonetize they become available to billions of users across the planet and this is the democratization of the product. This democratization now allows us a market size of not just one or several countries but the entire three billion people connected to the internet now and the seven billion potentially connected by 2026.
Now how do you digitize a physical product such as a tyre? We are not music or film that can be easily converted to zeros and ones. Well we can start by digitizing as many of the processes with the tyre as possible. Uber did not digitize the car – but it did digitize the taxi industry. Perhaps we have leaders in our industry who can figure this out. I am working on it with our teams both in the industry and in our venture capital fund. Honestly we have not figured it out yet but I can tell you we are having a lot of fun trying!
How Can We Update the Education Model for the 21st Century?
One of my recent articles, ‘How do we prepare our children better for the future?’, inspired lots of comments and questions, which I’d like to thank each and every one of you for. The main question that I was asked was how can we utilise the latest technologies in order to make the education process a personalised twenty-first century experience? How can we use robotics and AI to engage our children and inspire a sense of curiosity, passion and perseverance, those essential components of learning that are often somehow lost through the artisanal approach to the education process?
Having done some research on the subject and through conversations that I’ve had with some of the leading technological minds over in Silicon Valley, it’s clear that AI, virtual reality and 3D printing have a crucial role to play in the future of education. Tablets and laptops now sit on every student’s desk and have become as ubiquitous a part of the education process as the humble pen and paper. But if students also had 3D printers sat alongside their tablets and laptops, this would allow them to immerse themselves in subjects such as tech, science and engineering in a way that simply hasn’t been possible before. Just imagine the possibilities! Instead of simply reading or learning through a visual presentation, kids will be able to literally print out an object and study it in its physical form, thus making education a truly engaging and immersive experience.
Research shows that human beings learn best through action and simulation. The current education system still relies on visual and audio learning, so when we consider that we only remember 20% of what we hear and 30% of what we see, it’s of little wonder that many students are left feeling disengaged and under-stimulated in the classroom. But we remember up to 90% of what we do or simulate, which is why virtual reality is one of the most effective technologies for engaging our kids in the learning process.
Sure, hearing about the very depths of the Pacific Ocean and imagining what it might be like is interesting but imagine if, through virtual reality, teachers could simulate actually being there! So rather than learning about the respiratory system through words and images, students could take a virtual tour around the human body and experience the world as if they were a blood itself on its journey to becoming oxygenated. Combine virtual reality with augmented reality and suddenly the student becomes an active participator in the learning process, rather than a passive observer.
The other great thing about machine learning is that it can be adapted and personalised to appeal directly to each individual student, no matter what his or her learning style or educational background. AI teachers for example, unlike their human counterparts, will be able to use global networks and sensors to share and access unlimited information and intellectual resources such as interactive video content at lightning-fast speeds. They will be able to monitor our kids for signs of frustration or boredom and will adapt the model accordingly to ensure that every child gets a personalised, immersive learning experience that takes them far beyond the confines of textbooks and stuffy classrooms. So in a very real sense, such technologies could serve as a much-needed equaliser, creating a system where every child has equal access to education and therefore equal chance of unlocking their full potential.
However, from what I see happening across Europe and the Middle East, whilst such technologies are undoubtedly crucial to updating the education model for the twenty-first century, what seems to be missing both in education and in business is a tolerance for failure. So what we really need is a mind-set shift and we only need to look to Silicon Valley for inspiration. Because here, failure isn’t only expected but welcomed and embraced because they recognise it as being a critical aspect of the learning process. In fact, many investors won’t fund your business unless it’s experienced some kind of failure. This is a difficult lesson to learn and a difficult lesson to teach. But in some ways, helping our kids develop a tolerance for failure is even more important than ensuring that they have access to all the latest technologies.
We only have to look at the Millennial generation to see that the current approach to education is in desperate need of updating. Because it seems that rather than raising a generation who are adaptable and resilient, we have coddled them to the point that many now have such a strong fear of making mistakes and of being perceived to ‘fail’ that they have been crippled into complete inactivity.
The fact is that our kids need to be able to deal with criticism. So the best way to prepare our children for the inevitable changes to come is by teaching them that learning is by its very nature a process of trial and error and that being able to recognise the value of failing is a crucial ability, in life as well as in education. Because this is the only way that they will learn, grow and ultimately survive in what is becoming an increasingly competitive world.
Will Passenger Drones & Flying Cars Disrupt the Tyre Industry?
So I have to start with a big ‘thank you’ to everyone for your comments and questions on my article, ‘Who Will Disrupt the Tyre Industry?’. Most of the questions and comments were focused around drone technology and flying cars. Since I was asked by many of you to write further on this topic I thought I would oblige and write an article on some of the developments in this emerging technology. Now, to the main question that you all asked me – will drones and flying cars disrupt the tyre industry out of existence?
Well simply put – I don’t think so! Although I think that this emerging technology will undoubtedly bring massive incremental changes, these changes will be innovative rather than disruptive. And to understand why it won’t be the disruptive force that many people imagine, we first need to look at the technology itself.
If you happened to have read some of the recent headlines in the world’s media, you’d be forgiven for thinking that we’re all going to be travelling about in flying cars and that the skies are going to be full of passenger drones by this time next year! In the US, we read that Uber have just hired an engineer from NASA to lead their flying car project, while in the Middle East, The Roads and Transport Authority in Dubai in collaboration with the Chinese company Ehang, are due to launch an autonomous passenger drone in Dubai this coming summer. And let’s not forget Airbus who aim to have their flying car prototype ready by the end of the year. So there is clearly a lot of innovation happening within our industry and companies looking to collaborate with one another, but such stories can be misleading in the sense that they can make it appear as though this emerging technology is much further along in development than it actually is.
To get a more realistic sense of both the strengths and limitations of this technology, we need look no further than the recent collaboration between Matternet and Mercedes-Benz, who have utilised both drone and van technology create the Vision Van. So “M and M” have equipped self-driving vans with drone delivery systems, so the van does most of the journey and the drone acts as a ‘last-mile solution’. Whilst this is rather innovative it also serves to highlight the biggest problem currently facing the drone industry. Because although drones are brilliant for getting to inaccessible areas, they simply don’t have the power capacity to travel across long distances without running out of charge and dropping right out of the sky, which is a pretty major drawback! So “M and M” have created an elegant workaround to a problem but not really disrupted anything. When they solve the battery problem, that’s when things will get interesting!
The other important factor to consider is regulation. Implementing safety regulations and building flying car and passenger drone transportation routes in the sky isn’t one of those things that simply happens overnight. The logistics of creating a system that is safe and efficient enough to convince people to abandon their traditional cars in favour of a flying equivalent is complex to say the very least. In fact Elon Musk is worried about people not maintaining their flying cars well and hub caps falling out of the sky and killing people. So that futuristic ‘Jetson’s-like’ world of drones and flying cars that many of us have been envisioning is unlikely to become a reality for a while now, by which time we may have discovered an even better way to travel.
How can I be certain of this? I know that we’re not even close to seeing drones and flying cars become the everyday norm because of what I see happening in the tech startups that we invest in through our venture capital fund, Walpole Capital. Whilst I see great innovation happening, we are nowhere near close to solving the battery problem or implementing the regulations and safety measures that are necessary to make this technology a dominant commercial force within our industry. In fact, even the engineers from NASA are yet to find a solution to these problems! Although the way things are today with the NASA bureaucracy it will be that 14 year old I mentioned in my last article that will beat them to it!
So tyres aren’t going anywhere soon! But this doesn’t mean that we shouldn’t keep abreast of all the developments in flying car and drone technology so that we know who to partner and collaborate with. Because as we’ve seen from the partnership between “M and M” progressive incremental changes within our industry are inevitable and happening as we speak. And by collaborating with other companies, we can be involved in defining those changes rather than risk being left behind by them, and ultimately in the long-term our industry can only gain and be bolstered by this. We need to stop this fear in our industry of change and see new technology as the opportunity for progression and innovation that it is. And who knows the more we innovate perhaps the less we are likely to get disrupted!
How do we prepare our children better for the future?
At the Zenises Foundation we believe that education is the future for children especially if they have to break the cycle of poverty. With the advancements in Artificial Intelligence (“AI”) and Robotics I was concerned whether the education that the Foundation provides to children will really prepare them for the future. In my recent trip to Silicon Valley I met with many tech insiders and posed them this question – how do we educate our children for a world where by 2035 years 40% of the jobs that will exist are not even conceived yet? Fewer workers will be needed for the jobs we have now, so children must be prepared for the jobs we cannot imagine. My basic conclusion after a week of discussions and interviews was simple. In the future there will be two types of jobs: people who tell computers what to do, and people who are told what to do by computers. So now how do I ensure that our children are the in the former half?!?
If we want our children to ‘rule the machines’ we really need to focus what makes our children individuals. We need to move on from a 19th-century, artisanal model of education — where knowledge resides with each classroom teacher — to a 21st-century personalised experience that technology can replicate on a global scale. The new model should focus on skills, not knowledge you can Google, and abilities that will be needed, whatever the workplace. So what are these abilities?
I believe that the most important things we need our children to focus on are around curiosity, passion and persistence. Rote learning needs to be done with — computers can now do this. Children need to have the interpersonal skills to work in groups, to communicate well, be creative, arrive at an answer in many different ways.
Curiosity is something innate in our children, yet something lost by most adults during the course of their life. Perhaps because we “educate” the curiosity out of our children making them “learn” things they don’t need. In a world of Google, robotics and AI, raising a child that is constantly asking questions and running “A/B Tests” can be extremely valuable. In an age of machine learning, massive data and the Internet of Things, it will be the quality of their questions that will be most important.
One of the most valuable resources our children have is an imaginative and passionate human mind. We need to ensure that we don’t “socialise” that out of them as they grow up. Children are the some of the most imaginative people on the planet. We need to help them find a passion or purpose that is uniquely theirs. Once they do that then they can imagine the world they want to live in. Their passionate mind will then help them create that world. I imagine a relatively near-term future in which robotics and AI will allow any of us, from ages 8 to 108, to easily and quickly find answers, create products or accomplish tasks, all simply by being passionate about what we imagine.
Teaching our children not to give up and to keep trying new ideas for something that they are truly passionate about achieving is extremely critical. Acceptance of failure as an integral part of this process is also key for us to inculcate in our children. I do believe that persistence is one of the most important predictors of and contributors to success. I always joke with my son about how many nights it took for Zenises to become the “overnight” success that people claim it is.
Once our children have the curiosity to ask the right questions, the passion and imagination to be able to drive them and the persistence to keep going there will be nothing that will stop them from ‘ruling the machines’. Einstein once said, “I have no special talent. I am only passionately curious.” And look what he achieved – and that was without the help of AI and Robotics. God Bless our Children – Our Future!
Who will disrupt the Tyre Industry?
People always confuse disruption with innovation. Innovation is evolution, whereas disruption is revolution. Innovation makes the old ways better, whereas disruption makes the old ways obsolete! But most importantly in business, innovation allows you a 10% growth while disruption allows you a 10X growth.
We’ve already seen two technological revolutions in our lifetime that have caused major disruption – the internet and the smartphone. And thanks to the digital revolution, disruption is now happening more frequently and at a faster pace than ever before. So we’re going to experience more disruption than previous generations ever did – disruption that will revolutionise business models and industries in ways that we can’t yet imagine. So who will disrupt the automotive/tyre industry?
In our industry, the last major disruption was the introduction of the motor car in the early 1900s. How many horse and carts do we see on the streets today? Clearly, the car disrupted the horse and cart out of commercial existence. So now our old school, white, male-dominated industry is ripe for disruption and trust me (from the startups that I see as a venture capitalist), it is coming sooner than we think! And moreover, I can tell you that it will not happen as a result of the legacy manufacturers making better tyres, improving distribution systems or selling tyres on the internet. Like in every other industry, disruption in our industry will come from the outside.
Look at the mobile phone industry – Nokia were undoubtedly one of the most innovative companies and arguably the industry leaders in this technology, yet in the space of just a few years, Nokia’s reign was well and truly ended. And this happened because of one reason – disruption, which Nokia just didn’t see coming. Because while Nokia had their eyes on their competitors, Apple came and ate their lunch! Let’s look at the medical industry for another example – CRISPR/CAS9 – (the genome editing tool that will enable scientists to weaponise human cells against cancer) could potentially be a cure for cancer and would ultimately disrupt the medical field. Where did this come from? You guessed it – from outside the medical field. Every industry has such examples!
So who will disrupt our industry? Some industry observers say that Zenises (along with Alzura) is well on its way to disrupting the industry, being the first company in the world to offer tyres as a service across the internet. To those people I argue that what Zenises has done is definitely innovative but not disruptive. To understand disruption in our industry, we really need to understand not just what we do but why we do it. What we do is sell tyres and if we see our industry from that narrow perspective then Zenises is disrupting it. But if we understand the reason why we do what we do, which is to provide mobility, then we can see that we are merely a small fragment of a much larger industry. From this position, we can see that there are many more companies and individuals that have the potential to disrupt our industry. So disruption in the industry could come from the company making flying cars – if that ‘takes off’ and we end up living in a world like ‘The Jetsons’, tyres would become obsolete. Or disruption could happen as a result of tech companies taking virtual reality technology to a level that it negates the need for travel. Perhaps the companies creating personalised drone transport could disrupt the industry, or maybe it will be a company that works with a combination of these technologies or different technologies altogether. Such companies may sound futuristic but they already exist, and two of them have even received investments from our venture capital fund.
My idea here is simply to get my colleagues to start ‘thinking outside the box’ and seeing beyond our industry, as this would perhaps enable them to come up with their own ideas for disrupting it. So what will the Apple or CRISPR for the tyre industry be and how will it work? I don’t know, but you can count on it that there’s a 14 year old kid somewhere outside the industry figuring it out (hopefully one whose company I have already invested in)!
The Rise of Automated Vehicle Technology
The digital revolution has affected the auto industry in many ways, but perhaps one of the most exciting and potentially cataclysmic changes currently taking place is the development of automated vehicle technology. Up until the late 1970s, automated cars, or ‘robo-cars’ as they are otherwise known, only existed within the realms of science fiction. Fast forward to today and some serious advances have been made in perfecting the technology. In fact, during a recent visit to Silicon Valley I was lucky enough to see a Google autonomous car driving right beside me, so it won’t be long before they become a familiar sight on the roads of the world’s major cities.
Volvo for example, have stated that they aim to have 100 automated cars on the roads of Gothenburg by as early as next year, while Tesla have already released their auto-pilot software and plan to offer their customers the full self-driving experience by 2018. And let’s not forget Ford, who have recently tripled their investment in semi-automated systems in order to compete with technology behemoths such as Google ( who just spun out its self driving unit into a separate company called Waymo ) and Apple (who recently confirmed that they are working on an electric iCar to rival Tesla). However, there’s a good argument to suggest that the current leaders in the car industry are Daimler, who have been implementing a similar autopilot technology to that of Tesla in high traffic situations for quite some time. But fundamentally the issue boils down to are the car companies going to build a better car or are the computer companies going to build a better computer and put it on wheels. From what I have seen in the Valley my view is that that the computer companies will win this battle!
Companies such as Uber are also getting involved, having recently completed their first successful 120-mile delivery using a self-driving truck – it was 50,000 cans of Beer just in case you are wondering what they delivered! Industry experts such as Brad Templeton argue that as automated vehicles become more common, car sharing will increasingly start to become the norm. So although Uber may be behind in terms of the technology when you compare them to companies such as Google, they are undoubtedly the innovators when it comes to capitalising on the concept of car sharing. They have already started picking up passengers in Pittsburgh with their self-driving cars – although there is a driver sitting in the car so that the customers feel more comfortable!
So it’s clear that robo-cars are no longer confined to the realms of science fiction, they are very much a tangible reality. Astro Teller, director of ‘X’ (formally ‘Google X’) recently posed the following question “Is there a scenario in the future that doesn’t involve self-driving cars? No. So let’s just do it”, and I’m inclined to agree with him. So, if car/tyre companies wish to survive in an increasingly competitive marketplace, then such technology needs to be embraced and utilised because progression in this area isn’t going to stop to allow those who aren’t already doing so to ‘catch up’.
There are also many benefits to using automated vehicles. Firstly, energy consumption and CO2 emissions will be reduced dramatically, which would have a significant impact on the environment and would perhaps even contribute towards slowing down climate change. Robo-cars would also provide a safer and more efficient driving experience because unlike human drivers, self-driving systems aren’t affected by distractions or ill health, and most significantly of all, robots don’t drink alcohol, which is one of the leading causes of road traffic accidents. In fact, statistics suggest that on average around 3,000 people are killed or seriously injured each year in drink drive collisions in the UK alone, and such accidents could be all but eradicated when robo-cars start to outnumber human drivers.
This technology is equally positive for the tyre industry because put simply, automated cars will increase mobility. Whilst there will be less cars in parking lots there will be more cars around as demand for mobility will increase. As such demand for tyres will increase but it does beg the question who will be the new customer for the tyres? Just imagine a world where driving on demand was accessible to everyone, where you could use your phone to order any car of your choice that perfectly suited your needs in that moment, all in a matter of mere seconds. This is a concept that appeals directly to the younger generations whose attitude towards ownership is completely different to that of their parents’. They don’t think about what car might suit their needs tomorrow, they only think what car will suit their needs today.
Of course, there are some drawbacks; In 2015, hackers worked out how to cut the transmission of a Jeep being driven at speed miles away — sparking a recall of 1.4 million cars. Autonomous vehicles will need a high level of connectivity in order to detect each other: vehicle-to-vehicle communication which — if hacked by terrorists — could cause carnage. Cyber experts routinely talk of “ransomware” attacks in which driverless cars will be hijacked, with a ransom demanded to avert disaster. But I for one think that the pros far outweigh the cons, and what’s truly exciting is that we aren’t even close to unlocking this technology’s full potential.
Using Social Media to Increase Our Social Impact
Social media is a medium that is used by a vast number of people each and every day. Not only does it provide a global platform from which we can highlight important political issues and social concerns, but it also allows us to work and connect with people on the other side of the world in a matter of moments. However, whilst the considerable technological advancements that have been made over recent years have undoubtedly brought many benefits, there are those who think that it has also had other less desirable effects. Some argue that rather than bringing people together, it is actually driving communities and families further apart, as the younger generation especially appear to become increasingly consumed in their digital lives.
Although such concerns are understandable, I think that they are also somewhat short-sighted. Because social media, if embraced and used responsibly, is one of the most powerful tools that we have at our disposal for connecting with our children, uniting the communities in which we live and most importantly increasing our level of social impact.
Social media sites like Facebook and Twitter and messenger apps such as WhatsApp have allowed us to considerably increase our social impact. They enable my wife and I to connect with the children that we ‘adopt and educate’ through the Zenises Foundation in ways that wouldn’t have been possible even a decade ago. Through social media, we are able to communicate directly with these children at any time and from any place in the world. It gives us an invaluable insight into how they think, feel and relate to the world around them. And it is this insight that enables us to support and guide them more effectively on a real time basis.
This increased level of global connectivity enables them to develop their skills and confidence because they know that they can reach out to us at any time and that we will respond. Through the simple act of following my wife and I on social media, these children now feel as much a part of our lives as we do theirs. These are children who could not even speak English a few years ago, and yet through the power of social media, they are now able to ‘friend’ us and ‘poke’ us on Facebook! So it’s clear that this innate desire to connect has only served to fuel their education further.
More importantly, it also allows these children to communicate amongst themselves and build their own communities and support networks. Recently when we were in India meeting with the children, we found that the older children had taken the initiative to set up a Facebook group to interact and keep each other abreast of developments in their schools and personal lives. Even more pertinently, they also used this network to inform each other of the various job opportunities and training available. We couldn’t help but feel overwhelmingly proud to see this network effect of social media that the children themselves had come up with in order to provide support to one other.
Another way in which social media benefits communities is that it enables businesses to spread the message about the philanthropic work that they’re doing. In doing this, companies can inspire others to increase their own efforts, and thus the actions of one business creates a stronger incentive for all businesses to adopt more socially responsible business practices. And just as importantly, businesses can harness the power of social networking to unite with other like-minded companies and organisations, which allows them to increase their social impact even further.
I recently had some first-hand experience of this when I happened to see a post on Facebook and discovered that an acquaintance of mine was working in India helping to provide education to disadvantaged children, in an initiative that seemed to share similar objectives to the Zenises Foundation. What I saw was that they were using innovative applications of technology to further reduce the cost of education in rural India. Upon learning of this fact, I decided to use this as an opportunity to connect with them through social media, and together, we helped to implement some of their educational programmes and introduce new and innovative technology into the existing curriculum. So, if a small company like Zenises can utilise social media to inspire others and affect positive societal change through initiatives such as Z Aspire and T OutReach, then why aren’t more companies doing the same?
A recent article in the New York Times described social media as being a “public space of seemingly limitless potential in which we can find common ground with total strangers and our closest friends, making progress towards solutions to our world’s crises”, and I am inclined to agree. I see the prevalence of social media as being representative of the absolute hunger that people have to connect with each other. Therefore, by choosing to embrace this most revolutionary of technologies, we are choosing to connect with other businesses, our children, our communities and the world at large on a purposeful and meaningful level. And in becoming more connected with those around us, we can achieve greater social impact on an individual, local and global scale.
Does ‘Peak Car’ Spell the End of the Road for Tyre Businesses?
Digital technology has revolutionised almost every aspect of modern life, and the world of the motor business is no exception. The internet has led to the rise of an online ‘sharing economy’ that allows people to rent and share physical and intellectual resources. This cataclysmic change in consumer buying habits has implications for us all, but the effect is particularly significant for the automobile industry.
Some industry experts and social commentators argue that the biggest threat currently facing the European motor industry is a phenomenon known as ‘peak car’, which suggests that the number of cars (and tyres) in circulation will hardly rise any further. There is now a tendency among the younger generations to focus on gadgets and technology rather than being seduced by their first car as a teenager. And as the sharing culture of Airbnb and Uber lead inextricably towards carpooling and ‘on demand’ driving, what does this mean for the future of tyre companies? One thing is for certain – it’s no longer going to be ‘business as usual’. In fact, according to Automotive News, in June 2016 the growth of European car sales had slowed to just 6.5 percent.
The Practicalities of Car Ownership
One of the main issues appears to be that a significant number of Millennials, particularly graduates, currently live in urban areas so car ownership isn’t a priority for many, and for a great many more, owning a car simply isn’t financially viable. Like owning your own home, for the younger generation, car ownership seems very much out of reach. It’s clear therefore, that the auto-industry needs to adapt. But what changes need to be made, and how exactly are brands to appeal to a generation whose interest in car ownership is seemingly at an all-time low?
What we need to remember is that although Millennials aren’t necessarily investing in cars now, they will in the future as their lifestyles inevitably change. When they have swapped urban life for the suburbs and have children that need to be driven to and from school, sports practice and music lessons etc., renting/sharing a car will no longer be practical. Having a family means that your priorities change – this is no less true for Millennials than it was for previous generations. The struggle of trying to balance family life with work and other commitments is a difficult enough task in itself, but as Millennials are now starting to realise, it’s even more difficult when you don’t own your own car.
It is then perhaps of little surprise that recent statistics suggest that Millennial demand for cars is actually rising much faster than anyone anticipated. According to global market researchers, J.D. Power, Generation Y are in fact, buying more cars than the previous generation, with sales rocketing to 27 percent in 2014, from 18 percent in 2010. While it’s worth noting that Millennials do significantly outnumber Generation X by 15 to 20 million people, these statistics demonstrate that the need and desire for car ownership still very much exists, and that it’s a consumer-market that’s just waiting to be tapped into.
Further proof of this is the fact that the growth of car sales isn’t just rising in the European market, growth has also risen exponentially in China and shows no sign of slowing anytime soon. In fact, the growth of car sales in China is still growing so considerably that in Beijing it is difficult to get new number plates allocated to you, even for those who can afford to buy a car. In Qingdao, which is a second tier city in China, they are now considering implementing the odd/even number plate system, which prohibits motorists from using specific thoroughfares on certain days of the week, due to there being such a large number of cars on the roads. So there can be little doubt that car ownership is still clearly growing and forecast to continue doing so – and statistically speaking it’s the Millennial generation who are driving this growth.
Adapting to Meet Changing Consumer Needs
Therefore, it’s more imperative than ever that automobile and tyre businesses focus on building a strong consumer-brand relationship with Millennials to establish themselves as Generation Y’s brand of choice, so that when they are ready to buy, they’ve already decided exactly which brand they’re going to buy from. Generation Y won’t make any purchase unless they can see an immediate and tangible benefit – and more importantly than that, they want to invest in a company with whom they can create a purposeful connection. Therefore, brands need to show that they share the same social concerns as Millennials by focusing on purpose as well as profit, to ensure that they appeal to a generation whose purchase power is still yet to reach its peak.
Indeed, The Deloitte Millennial Survey 2016 found that “Most young professionals choose organizations that share their personal values”. Therefore, brands need to be aspirational by ensuring that their products are at the forefront of technological innovation, but they also need to show that their working practices are economically and environmentally sustainable. They need to show that cars are as necessary, desirable and more importantly, as attainable for Millennials as they were for the generations that preceded them.
Forward-thinking companies such as Zenises in partnership with Alzura have already responded to this change in consumer needs by introducing the Flat Rate Tyre Subscription via the internet. Both innovative and unique to the industry, from just 2.99 euros a month, it is designed to cover all new tyre-related costs, and allows the customer to fit or upgrade tyres without having to worry about expensive on-the-spot payments. It is in essence offering a style of contract that has been popularised by companies such as ‘Netflix’. This concept is of huge appeal to the younger generations because it provides a short-term, cost-based solution to the issues that new motorists encounter, such as the high cost of making initial distress purchases.
Another fast-emerging trend that we are seeing within the auto-industry is that an increasing number of companies are now focusing on developing more environmentally friendly or ‘green’ tyres. Of course, this trend can largely be attributed to brands trying to appeal to the socially conscious value system of Generation Y. However, the introduction of EU labelling legislation in 2012 has also meant that tyre brands have had to focus on developing better quality tyres in a more efficient way, hence the rise of industry 4.0 tyre manufacturing factories. Otherwise known as ‘smart factories’, they are designed to utilise cyber-physical systems and technologies to make the manufacturing process more efficient and environmentally sustainable.
This ‘green’ trend can only be a good thing for the industry and consumers alike, as it means that brands are now creating tyres that have higher fuel efficiency and lower rolling resistance grades than ever before. This not only helps to reduce fuel consumption and CO2 emissions, but also helps to improve the motorist’s entire driving experience due to increased energy performance, which is exactly what Millennials are looking for from the brands that they buy from.
Generation Y will arguably be the most influential consumers in the market. In building this connection with Generation Y through changing business models and appealing to Generation Y values, a company can maximise its chances of longevity and give themselves a huge advantage in an increasingly competitive market.
Redefining Wealth, Success & Ownership in an Ever-Changing World
In a recent interview with Larry King, world-renowned theoretical physicist Stephen Hawking, argued that the biggest threat to humanity isn’t nuclear war or the rise of artificial intelligence, it’s human greed and stupidity:
“Humanity needs to collaborate and change our assumptions of wealth and possessions if it is to tackle challenges like climate change, disease, food production and overpopulation.”
These words are disconcerting to say the least and serve as a rather shocking and worrying indictment of the direction in which humanity may be currently headed. However, thankfully there is one generation who appear to not only share his concerns, but are actively trying to find a solution to a problem that, if ignored, could have catastrophic implications for us all.
Millennials & The Culture of Sharing
Success used to be defined by the house that you lived in, the car that you had on your driveway and the money that you had in your pocket. However, Millennials, having seen the financial achievements of the Baby Boomer generation, have realised that monetary success alone isn’t the answer. As this quote from Forbes demonstrates, “Money is important and they [Millennials] do enjoy making it, however, they long to be part of something bigger than themselves”, Generation Y recognise that there must be a more meaningful and purposeful motivator for success than wealth and possessions alone.
Indeed, the concept of ownership has changed dramatically over the last decade, with an increasing number of young people now choosing to take advantage of the internet’s ‘sharing economy’. This digital economy allows them to rent or borrow physical resources such as cars, electrical appliances and/or recreational goods, and frees them from the ‘burdens’ of ownership. Daniel Arthurson, founder and CEO of Xercion observes that, “Gone are the days of self-serving ownership — community sharing and mass enjoyment are the “now” trends.”
It is perhaps unsurprising then that Hawking, one of the world’s leading thinkers, should also choose to comment on people’s changing attitudes towards ownership in his recent interview:
“People are starting to question the value of pure wealth … is knowledge or experience more important than money? Can possessions stand in the way of fulfilment? Can we truly own anything, or are we just transient custodians?”
In longing to be part of something bigger than themselves, Generation Y are daring to ask the same questions – if money and possessions aren’t the key to happiness and fulfilment then what exactly is? It appears that by being more socially conscious and responsible than any generation that has gone before, Millennials may be one step closer to finding an answer to this question. They understand that if they wish to be the instigators of positive change, then this can only be achieved by holding themselves and others accountable. Ghandi once said that we ‘should be the change that we wish to see in the world’ – Generation Y are embracing this philosophy, and they are inspiring the innovators, leading thinkers and entrepreneurs of our time, as well as the next generation, to do the same.
Focusing on People as well as Profit
Perhaps it could be attributed to the wisdom of youth, but Millennials recognise that money is and can be used as a powerful force for good, and that it can be utilised to create real positive change in society. However, when businesses work with the singular objective of maximising their profit margins and fail to consider their social impact, the pursuit of money becomes blind and the highest of ideals can all-too-quickly descend into greed and avarice.
As the gap between rich and poor only seems to grow wider, the need to find an ‘antidote’ to the insidious nature of greed has never been greater. Generation Y understand that we must start taking a top-down approach to business, in order to create a world where the monetary success of a company will no longer be of benefit to the few rather than the many. Of course those at the top should be able to enjoy the fruits of their hard work and effort, but so too should the employees working within the company, the community in which it was founded and society as a whole.
In other words, big business should be expected to reinvest in the social infrastructure of the communities that made them, and to set up charitable initiatives that benefit the most vulnerable and disadvantaged in our societies. Over time, this will create a ‘drip-down’ or ‘domino’ effect that will ultimately enable individuals and communities to thrive. Millennials don’t only expect, but they demand that this Utopian vision, which many dismiss as being the folly of youth and naivety, become a tangible reality.
Because while those belonging to the older generation may have little belief that our society can ever change, Generation Y refuse to compromise their ideals. They know that if we change our attitudes towards wealth, hold each other accountable and resolve to conduct business in an ethical and socially responsible way, then we can, and more importantly must, create a better and fairer world for everyone.
Zenises and the future of the tyre industry
I’ve been thinking about how the world of tyres might change in the coming ten years or so. That’s not to think about which brands or sizes might be doing better or worse than they are today – except that Zenises and our Z-Tyre will of course be in the ascendant.
It’s more about changes in the way we do business. Tyres made in China are getting better. Today there is still a large gap in price but a much smaller gap in technology performance compared with ‘legacy’ brands (those tyre brands which first established themselves in the Western tyre markets decades ago). That big price gap is no longer justified by the small differences in technology. And the technology gap is shrinking fast. Even today many of our tyre brands can compete on equal performance terms with legacy brands. In a year or two, I expect the difference between ours and legacy brands to be indistinguishable.
On pure performance abilities, we should be charging the same price. The market is probably not ready for that yet, but we can bring that day closer by helping people understand what they could be paying for when they buy a legacy tyre. Just the name – nothing more.
It’s not just happening in car tyres. It is the same story around the world in truck tyres and also in the tyres used on bikes, agricultural vehicles; mining trucks and every other type of vehicle.
Where does that leave the legacy brands?
We’ll be offering great tyres that are largely indistinguishable from legacy brands, except for the name on the side of the tyre. Our prices will be better and our dealer margins will be better. So legacy brands are going to have to find a different way to do business if they want to compete with us.
There are some recent innovations. In the commercial tyre sector we have seen the move to price per kilometre (ppk) contracts where the fleet manager pays a fixed monthly fee depending on the type of vehicles, distances travelled and so on. Already tyre makers are talking to the suppliers of the telematics boxes. Those are the instruments that measure speed, location distance and can help a fleet manager to minimise costs while maximising up-time for the trucks and drivers. Michelin recently purchased the biggest such company in Brazil.
Here there’s a strategy emerging: Michelin has the Michelin Solutions business; Goodyear has the FleetOnlineSolutions. Bridgestone has its Total Tyre Care programme. Each of these is designed to meet the need for fleets to outsource various services.
In business, we focus more and more on the customer and try to out-source the tasks where we cannot add value through our customer-facing activities.
These fleet management solutions aim to meet that need by providing services to the fleets. Truck tyres are only a small part of the total service package.
If the low-cost, high-performance tyres coming out of China are eroding the legacy brands’ margins, then those legacy brands have to find a way to extract more money from their customers. In the business-to-business world, that means selling more services to help make the customer’s business more efficient.
In the car tyre business, it’s a bit different. In Germany, in conjunction with our partner Alzura, we have already announced our Z Tyre Flat Rate program whereby customers can pay EUR4.99 per month and we’ll provide them with brand new tyres as a service and even replace them if the tyre gets a puncture. It’s a great service and meets a need and we’re currently the only tyre company in the world to offer a flat rate for tyres.
It might take a while to convert the whole market to this model, but it’s a start. In car tyres, however, I see the legacy tyre makers adopting two key defensive strategies. The first is freezing out the importers by gaining control of the wholesale and distribution and retail system. They originally tried to disrupt new quality brands from China by lobbying for new regulations such as tyre labelling but this backfired. So now they’re now trying to block market access to new entrants by using their considerable financial muscle to buy the market away. The second is controlling the marketing message and using new technology to by-pass the distributors and eventually the retailers that aren’t part of their platform.
The legacy tyre makers know that dealers in many cases receive more profit by selling one of our tyres. They know that most people who walk into a tyre store will buy the tyre recommended by the dealer. They know that long term, this is bad for their business.
Their short- to mid-term strategy is to buy up the distribution and retail companies: Bandvulc and BlackCircles have already been swallowed in the UK; Allopneus in France; Ihle, Meyer- Lissendorf and others in Germany. Following Bridgestone’s acquisition of Speedy there is barely a single independent retail chain left in France. It’s not just Europe – we saw Bridgestone bidding hard to win the Pep Boys chain in the US.
Longer-term, they want to try to change the basis of the consumer’s purchasing decision. Today the purchasing decision is often based on a combination of dealer recommendation; magazine test results as well as availability and the overall price-performance package. That works in favour of a competitive multi-brand environment and against a legacy brand monopoly.
A mid- to long-term response is an increasing online participation with social media, webstores, competitions, games, surveys and other infotainment designed to trigger mass sharing and forwarding. Legacy brands are setting up portals to inform consumers about tyres; about what to look for; magazine test results; their ‘green’ credentials and the rest. They are using games and Tweets and infotainment to build a relationship with the customer. They are watching which parts of the site are visited most and which pages contribute to the buying decision.
And then they place a big, bright ‘BUY NOW’ button that encourages the customer to hand over credit card details with no need to visit a dealer.
They believe this approach will make it more difficult for consumers to learn about the alternatives to their brands.
They want to gain control of the communication channels and the message and then to understand the fine-grained needs of the consumer and meet those needs with an outstanding service offer.
That offer includes a mobile fitment van that will visit your place of work, or a street address; it includes a time-slot booking option and it includes feedback like you get on Amazon or TripAdvisor, so that consumers are given confidence that they will get great service as well as great tyres.
If we are to respond, then we need to offer not only great products at great prices, but improve service as well.
Over the shorter term, the battleground is moving to the distribution and retail chains. I think that it will be difficult for importers to compete on that front as they are effectively removed from the distribution channels. But I am convinced that in the longer term as the battleground moves to dominate the social media and internet channels we will be able to compete more effectively and the legacy brands know this.
Making a business succeed is hard enough on its own. So now you want entrepreneurs to also add in aspirations of social impact and other niceties that are ancillary and not directly tied to Profit? Nobel laureate Milton Friedman argued that “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits.” Maximizing profits and shareholder value has become conventional wisdom ever since.
But with the global economy brought to its knees by short-term profit maximization Millennials, who are our future, are getting more and more turned off by companies who focus only on profit. Saddled with student debt, they are unable to find work at twice the rate of those over 30 years old; twice as many live in poverty as in the 70s. The unstable nature of the world they are inheriting – and the knowledge that many of them will not share the opportunities their parents had – has led them towards an existential crisis. In the UK, millennials’ average disposable income is just a third of that of pensioners, with home ownership a distant dream.
As a result, millennials are making explicit their universal hunger and innate desire to contribute to something bigger than themselves. The most socially and environmentally conscious generation ever, they have become humanity’s conscience and self-correcting mechanism. They insist on a purposeful connection with companies they buy from, work for and invest in. They want to know why a business exists, what it does, how it treats people and the planet.
Nine out of ten believe that success should be measured by more than financial performance. For them, the idea of going to work with the singular goal of maximizing profits and shareholder value is pointless and abhorrent. They’re willing to put their money where their mouth is: more than half of millennials have ruled out working for an organization because of its values or standard of conduct. More than half have “chosen not to undertake a task at work because it went against their personal values or ethics”, according to a 2016 Deloitte survey. This is something to sit and take notice of as they’ve surpassed the baby boomer generation in size and are expected to own $41 trillion in transferred wealth.
It would be easy to dismiss this as the naivety of youth, were it not for the fact that many of the world’s most successful, admired and enduring companies are purpose-driven. Contrary to conventional wisdom that purpose is a tax on the bottom line, companies such as Patagonia, Virgin, Zenises, Starbucks and Southwest Airlines are demonstrating that purpose-driven enterprises have an inherent market and profit advantage giving them staying power.
The best entrepreneurs I know are the world’s greatest change agents precisely because they share a belief that the fundamental purpose of business is purpose. They view profit as essential oxygen to a company’s ability to survive and thrive, and the fuel that maximizes their impact. As Kickstarter co-founder and CEO Yancey Strickler puts it, “That’s so obvious, it’s not even a thought. It’s how you find long-term success.”
I also want to have considerable social impact and make money. These two goals are clearly complimentary. Social Impact and Purpose lead to greater value creation and that leads to more profit than trying to maximize profit as an endgame. Profit and purpose are force multipliers that reinforce each other. It’s strange that people see them as a dichotomy. I say, It’s best if you have both. It would never be satisfying to me to build something that was successful in either of those dimensions, but not both. Profit allows you to reinvest in purpose.
Great companies aren’t great just because they make lots of money. They make lots of money precisely because they’re great. Imagine a world that understands that purpose and profit are complementary. Imagine a world that unlocks our creativity because we are working toward a higher purpose that is worthy of our life effort. Imagine a world where businesses compete on being best for the world, and where that is precisely what makes them the best in the world.
New Anti-Dumping Duties will Limit Job Growth
With news on anti-dumping investigations making industry headlines, we have subsequently seen more countries considering anti-dumping duties (ADD) against China. The US has had tariffs in place on some types of Chinese tyres since 2008, while even more duties have been legislated over the past year. Recently, the Indian government has announced that it is also looking at putting similar legislation in place. Investigating a demand from the rubber industry body, India are currently looking at creating similar ADDs and increasing the cost of many imported Chinese tyres.
The ultimate reason for these tariffs is that China has been very successful at reducing production costs and manufacturing large numbers of quality tyres. As someone familiar with the tyre industry, I have to say that low-cost, high-quality products are only going to benefit the world market. The demand for tyres is increasing and will continue to do so. With emerging markets like India and Africa just coming into the picture, there’s a real need for these Chinese-manufactured products.
Of course, this is a complex situation that can be examined from many different angles, but here at Zenises, our customers’ point of view always comes first. We distribute tyres at a global level, with a presence in close to thirty countries. Zenises is dedicated to offering premium tyres at the best possible value and we will work with manufacturers that produce this type of product, regardless of where they happen to be located.
There are a number of misconceptions regarding these duties, so let’s take a closer look at the specifics of the case. The anti-dumping duty (ADD) in question is the method the World Trade Organisation (WTO) has chosen to regulate sale and production costs in different countries. The intended goal of the policy is to ensure that exporting countries don’t have an unfair advantage over internal manufacturers when it comes to product pricing. A country that suspects dumping, in this case India, can launch an investigation into production in another country, such as China, to ascertain if there is indeed a valid case for the accusation. Independent researchers need to find data showing that the cost of tyre production in China does actually exceed the price at which these tyres are being sold in India. In other words, the country must prove that the low cost is due to government subsidies rather than fair market factors.
When China entered the WTO in 2001, it exhibited a sincere commitment to reforming the economy and creating an open market that was favourable to foreign investment. Nevertheless, some suspicions, from the US especially, led China to accept considerably harsher conditions than most developing countries do upon entry. China has yet to be granted full Market Economy Status (MES) within the WTO, in spite of internal reforms that reduce government subsidy and support foreign investors. China’s lack of MES means that countries interested in adding an ADD to Chinese exports can use statistics provided by a third party rather than China’s own internal manufacturing statistics.
Government support may have helped to initiate tyre development in China, but currently the industry is thriving on product advancement and state of the art facilities. At Zenises, we are happy to count a number of excellent Chinese brands among our products, including the world famous Westlake tyres, and Z Tyre (famous for selling the most expensive tyres in the world as certified by the Guinness Book of World Records). I obviously can’t speak for every Chinese tyre; examples of poor quality manufacturing can be found in every country around the world, but this shouldn’t make us deny the merits of factories like Zhongce Rubber, one of the top ten tyre manufacturers in the world, which has been producing quality rubber products for years.
If the Indian government chooses to add a new tariff, this will punish both Chinese manufacturers and Indian consumers. The rubber industry in China will see a production decline; at the same time, Indian drivers will be forced to purchase tyres at a higher price. India’s government will be ignoring the immense advantages a competitive neighbour like China can bring.
We have to ask ourselves why the trade deficit between India and China is currently around 50 billion. Why have Indian exports to China increased by only 22 per cent over the past ten years, while Chinese exports to India have grown by 500 per cent? The middle class in China is expanding almost exponentially, so the market for imported consumer products inside the country should more than offset Chinese exports. Perhaps a campaign aimed at reducing this trade deficit with China would do more to support Indian rubber manufacturers than a tariff on imported tyres.
The bigger picture here, I believe, is how governments are approaching trade with China. At present, many countries seem to see the Chinese manufacturing capacity as a threat, yet at the same time these countries have not found a way to satisfy their own internal consumer demand or adequately support their own manufacturers.
When we advocate a free global market, we should support manufacturers around the world who work hard to offer quality products at low prices. This is what the Chinese have accomplished in the tyre industry, leading to an increase in jobs and affluence in China. By adding unfair ADD’s, we are limiting the scope of China’s success, and in the process we are also curbing worldwide progress and job growth. It seems countries would do better to follow China’s lead and increase manufacturing efficiency so that all these new emerging markets can be an opportunity for growth.
Corporate social responsibility is no longer optional
Through the Zenises Group’s work as a global tyre distributor, we have helped to turn the slogan “made in China” from an outdated slur, to an assurance of quality. With a number of large, internationally recognised brands under our care, the company has grown exponentially since its launch in 2014 and now has a presence in 20 countries. However, Zenises is fundamentally different to other multinationals. With a deeply ingrained ethos of ‘doing what is right’, at Zenises we have become well-known for our successful philanthropic enterprises.
Over the years, witnessing numerous countries achieve industry transformations, I have become more determined that this economic growth should not bypass the local people. Africa and the Indian subcontinent are just two examples of continents which have experienced tremendous recent growth but where great financial disparity remains. In expanding The Zenises Foundation, we sought to create educational opportunities and improve the quality of life for the multiple impoverished communities that are in urgent need of investment.
The Zenises Foundation charitable organisation was created before the Zenises Group manufacturing company even came into existence; it is the core philosophy and fundamental axis of the business. Zenises emphasises the importance of sustainable long term relationships rather than concentrating solely on profits. Money should really be treated as a vehicle; the true value of a company is in the benefit that it brings to those who really need it. Many businesses need to re-prioritise and recognise the difference between “need” and “want”, ensuring their ambitions and goals for the business are beneficial to the wider community.
The Zenises Foundation’s primary focus is to work with the local communities where Zenises Group operations are based, and potentially plant the seeds for community development across these countries as a whole. The Zenises Foundation aims to ensure children have a better future by providing access to a solid education to support their aspirations. Z Aspire, a branch of the Zenises Foundation based in the Indian sub-continent, works with underprivileged children of all ages – from primary school to university – ensuring that they receive not only an education but mentors to help them make the most of their opportunities. These mentors help students to realise their true potential and develop their skills, thus boosting their confidence in the process. The Zenises Foundation runs programmes through India and Europe supporting children and young adults to help them reach their maximum potential.
While many businesses are investing heavily in charitable causes, I would urge them to re-examine the effectiveness of their activities and to avoid taking a simplistic approach to their work with impoverished communities and developing nations; a starving man’s needs are not met by one meal and writing a cheque does not always guarantee an impact. Our counterparts must instead offer support to help individuals escape from the poverty trap by providing tailored and circumstantially tailored opportunities.
All too often, the specific situations of individuals are not considered. While paying tuition fees, for example, is a generous gesture, it is one which will have a limited impact if further support is not forthcoming. Circumstances often occur which prevent recipients from taking full advantage of any schemes which are put in place for them. A key example of this can be seen in the work we have been doing within Z Aspire. Meeting with a number of our mentees to catch up on the progress they were making, in conversation it emerged that one student was struggling due to a lack of light at home whilst others were having difficulties with entrance exams. By having this one-to-one conversation we could better understand the real issues that our mentees faced and also take immediate action to provide these students with the resources they needed. I have also arranged to receive regular WhatsApp messages regarding the progress of Z Aspire students; monitoring their marks and academic development enables me to spot changes and flag up any problems which our students may be having. Providing extra tuition, installing working lights and keeping an eye on marks are small gestures, but are integral to the success of our mentees.
By adapting our approach to the needs of the individuals and communities with whom we are working, the Zenises Foundation are able to deal with issues hands on, immediately making improvements and ultimately maximising the project’s impact.
Seen by many companies as nothing more than a marketing strategy, corporate social responsibility runs the risk of simply becoming another business buzzword. Corporate responsibility is the ethos of leading by example. The responsible CEO aims to expand business not by seeing corporate social responsibility simply as an obligations or another box to tick, but by embracing a sustainable approach to business; by taking into account not only the environmental impact of their activities, but the true societal impact upon local communities.
The work of the Zenises foundation is fundamentally about helping improve lives. By taking a proactive interest in all of our projects across the Z Aspire, T OutReach and Westlake Wishes initiatives, we are able to avoid a “one-size fits all” approach. I would call upon other companies to do likewise by looking beyond the obvious and try to truly understand the communities they seek to help.
How Do I Manage My Path After University?
As a founder and lead sponsor of the Careers Society at St Peter’s College, University of Oxford I wrote this article for the budding entrepreneurs, and emerging superstars that always ask me what they should do to manage their path.
GO TO THE GYM!
In business it’s not enough to be great at what you do, you have to get lucky! – but the harder you work the luckier you get! When people are right out of school, they tend to prioritize the company first, then the job, and then the industry. In fact I think this is the other way around. The right industry is paramount because while you will likely switch companies several times in your career, it is much harder to switch industries. Think of the industry as the gym and the companies as the equipment you use. To get fit you can change the equipment you use but you still need the gym – and you always want to be in the gym with the latest and best equipment.
If you choose the wrong company or you have bad luck with an aggressive boss who drops in on your first treadmill run, you’ll still have a great experience if you’re in a gym with the latest cross trainers. Conversely, if you choose the wrong industry early in your career, then growth opportunities within your company will be limited. Your boss won’t move, and you’ll be stuck without much leverage as there just will not be that many cross-trainers for you to use.
Fortunately, the forces driving the Tech era mean that a lot of industries are great places to ‘get fit’. It’s not just the Tech companies that have a huge upside, but also energy, pharmaceuticals, high-tech manufacturing, media, and entertainment. The most interesting industries are those where product cycle times are fast, because this creates more chances for disruption and so more opportunities for fresh talent. But even businesses like energy and pharmaceuticals, where product cycle times are long, are ripe for massive transformation and opportunity.
From a compensation standpoint, stock options and other forms of equity are quite limited early in your career, so it’s more lucrative to develop expertise in the right industry than to bet on a particular company. As you get industry experience more companies want you and will be willing to compensate you with more equity.
PICK THE COMPANY THAT “GETS TECH”!
After you pick the industry, then it’s time to pick the company. All companies in the future will have to be technology driven at most levels. So you need to look at companies where the people really have an understanding of how technology will drive their company and their industry. These people will ensure that when their companies are disrupted by technology they will be ahead of the curve. These are the genius-level creatives who see, before the rest of us, where technology is going and how it will transform industries. Bill Gates and Paul Allen saw that chips and computers were getting cheap and that software would be the key to the future of computing, so they started Microsoft. Chad Hurley saw that cheap video cameras, bandwidth, and storage would transform how video entertainment is created and consumed, so he cofounded YouTube. Steve Jobs foresaw computers as consumer accessories and it took over two decades for the technology and market to catch up to him.
PLAN TO DEVELOP!
Career development takes effort and forethought-you need to plan it. This is such an obvious point, yet it’s astonishing how many people who I have helped over time have failed to do it. Here are some simple steps to creating a plan:
Think about your ideal job, not today but five years from now. It may not be a job but your own business. But the questions are the same. Where do you want to be? What do you want to do? How much do you want to make? Write down the job description or a business plan. Now fast forward four or five years and assume you are in that job or business. What is the path you took from now to then to get to your position?
Keep thinking about that ideal job or business, and assess your strengths and weaknesses in light of it. What do you need to improve to get there? This step requires external input, so talk to your manager or peers and get their view on it. Finally, how will you get there? What training do you need? What work experience?
By the way, if your conclusion is that you are ready for your ideal job today, then you aren’t thinking big enough. Start over and make that ideal job a stretch.
DATA IS SEXY!
Data is Sexy! Numbers are Sexy! We are in the era of Big Data, and big data needs statisticians to make sense of it. The democratization of data means that those who can analyze it well will win. Data is the Future!
For those who don’t consider themselves well versed with numbers there is still some hope. Asking the question and interpreting the answers is as important a skill as coming up with the answers themselves. No matter your business, learn how the right data, delivered the right way, will help you make better decisions. Learn which questions to ask the people who are good with numbers and how to make the best use of their replies. Even if you aren’t a numbers person, you can learn how to use the numbers to get smarter.
As you get along the organizational path you will need to start hiring and managing teams. Most people hire those that they let them stay in their comfort zone or don’t challenge their authority. But the only way to move up the career ladder is to ensure that you hire people who are smarter and more knowledgeable than you are. They will challenge you to be a better you. Hire people who will get things done. Don’t hire people who just think about problems as they bring a negative energy to the workplace. Hire people who are well rounded, with unique interests and talents. Don’t hire people who live only to work – frankly they are just dull and also bring a negative energy to the workplace. Finally and most importantly though hire only when you’ve found a great candidate. Don’t settle for anything less!
Businesses are only getting more Global – So GET GLOBAL! Business, regardless of size of scope, is forever, permanently global, while humans are naturally provincial. It may have been said many times but travel really does broaden one’s horizons. And today doing business in many cultures is a necessity not a luxury. Go live and work somewhere else. If you’re at a big company, seek the international assignments. You will be a much more valuable employee as a result and frankly a more interesting person!
If working overseas isn’t an option, then travel for business whenever you can. If that is not possible then take as much of your vacation time to travel. When you are out and about don’t forget to see the world as your customers do. If you’re in retail, walk through a store or two and observe, if you’re in media, pick up a paper or turn on the local TV. It’s amazing how often people come back from business trips to foreign lands with insights gleaned solely from their conversation with the taxi driver who took them from the airport to the hotel. If those drivers only knew how much power they have in shaping global business strategy!
FIND YOUR PASSION!
Finding your passion is a luxury: not that it’s expensive, but just rare. It’s something that many people either can’t work out – how many people truly know their passion at the outset of their careers? That’s why this is my last career point and not my first. Finding your passion isn’t always simple. Perhaps when you were starting out you were just happy to find a job, regardless of your passion. Then as your career progresses you find that it’s not what you expected it to be. You could drop everything and start over – buy that small bed and breakfast in Paris! Or you could take a more deliberate approach. Find Passion in the things that you do. I am in the tyre industry but have a passion for luxury travel and marketing. So as part of my job I decided to focus on building a brand. This was a successful brand because I lived and breathed it. I didn’t leave my industry but found my passion within it. When it came to luxury travel I decided as part of my brand building strategy to be the brand in the industry that provides luxury travel to its customers as part of our B2B Marketing. Even as CEO I personally planned every detail of these trips and my passion for this was enthused in every trip. These trips allowed us to cement our relationships beyond the norm which eventually flowed through to the business. It is this simple act of enthusing passion in what you do that has helped people turn around their careers instead of leaving to start a small bed and breakfast in Paris!
Is Your Business Measured in Social Entrepreneurship?
In this day and age, it is the responsibility of all businesses to impact the world in a positive way. Success should be measured not by profit, but by commitment to social impact. To do this, we need to completely transform the business conversation — a business’s commitment to social impact should not change based on how it is profiting. If we give out of convenience, rather than a deep commitment to service at our core, then we fail ourselves and our communities.
At Zenises, we are committed to infusing social impact within the culture of our organization. Even in periods with lower profit margins, we make social entrepreneurship a priority. An endowment we recently gave to Oxford University was so significant that it was directly affecting our bottom line. But profit was not the priority; we were more concerned with the emphasis on our social impact. We could always make more money the following year, but we had an opportunity — a commitment — to give back in the moment, and that is what we chose to do. As far as I know, we are the only company thinking this way. It might go against the grain of conventional thinking, but in my opinion conventional thinking is wrong. Our social impact shouldn’t change just because we didn’t meet a certain profit margin as a company—they are separate issues. One should not depend on the other.
Most companies don’t run this way. They see social impact as something for which they should be praised, a bonus or a positive PR move. This has gone to such extremes that even charitable organizations are adopting operating models that are closer to those of corporations rather than philanthropic foundations. Take, for example, the 200,000 registered charities in the UK that raise and spend £80 billion annually. Altogether, they employ about one million in staff. On average, those charities make 13 billion every year, but a small portion of that actually goes toward supporting their mission. In England and Wales alone there are 1,939 active children’s foundations. But after deducting the administrative fees, executive salaries, and office rent, the percentage that actually goes to any child is grossly undercut by the operating costs.
Compare this to Zenises. Though not a registered charity, we have adopted a philanthropic business model that is, quite frankly, more charitable than “official” charitable initiatives. We’ve created The Zenises Foundation, an authentic fusion of philanthropy and business, which gives an unheard of 100% of profits directly to those it aids. This occurs through several initiatives: Z Aspire cultivates creativity by working with underprivileged children, helping to ensure learning from primary through to Masters degree level education. To that end, Z Aspire currently runs an in-house programme that provides an educational adoption for disadvantaged children. OuTreach motivates local and international communities where Zenises operates to educate and mentor college students in those areas. Westlake Wishes provides nourishing four course meals to 125,000 people per day; and the Pot Drop provided porridge for underfed children at the Kiddies’ Paradise School in Rosettenville, Johannesburg, in conjunction with Please in 2015.
It’s a different way of thinking about business success. Our goal isn’t to become the biggest tyre distributor, it’s to have the greatest social impact. If by way of that effort we become the biggest tyre distributor, that’s a different story. We are so dedicated to this mentality that we hire with it in mind. Everyone, from the CEO to the most junior employee, is involved with our social impact initiatives—and they are deeply connected to these efforts in their own rights. Every year I do a Christmas weekend for my employees and this year we are all going to Oxford to follow up on the philanthropic effort I mentioned earlier. We will get to meet with the faculty, staff, and students at Oxford to witness the efforts of our social responsibility commitment first hand. Everyone at Zenises really cares about this initiative, which is what makes it work. Everybody in the business needs to get behind this philosophy.
Of course, we are just one organization. In order to create this change on a widespread basis we need to redefine what success looks like for businesses based on how they are giving and not just how they are profiting.
We also need to redefine how businesses are run. As a business owner I have been given the opportunity to find success, but beyond that I should be expected to use that success to make a difference in someone else’s life. That is the definition of social responsibility. It has to be connected to how you run your business in order to work, which why we are constantly making an effort to do good in the places we are doing business.
Lastly, and perhaps most importantly, we need to fuse philanthropy and social impact efforts with business motives. When you are fighting for that extra two percent of margin, the social impact of that effort should be seen front and center, as a direct correlation. You know that that two percent is doing something bigger—not just financing your new car, but feeding those who wouldn’t be able to eat without it.
Social entrepreneurship is here for the long term, it is not a fad but an idea that should and will continue to have a profound effect on how business is done and should be done.