Friday, March 10, 2017

Killing the Golden Goose to Stay on the Yellow Brick Road

Whether you like him or loath him, you got to hand it to Donald Trump for his genius for creating great talking points. Whenever Mr. Trump’s fingers hover above the tweet button, the world’s journalist start to salivate. Mr. Trump has made “Old Media” sexy again. The “dying” newspaper has had a fresh lease of life and television is booming. By being “politically incorrect,” Mr. Trump manages to stir passions on a whole range of issues like sexism, racism, immigration, taxes and so on.

Despite the obvious signs of chaos and incompetence from the White House, Mr. Trump’s supporters continue to love him. In fairness to Mr. Trump, the reason is obvious, he’s trying to keep his promises. He’s actively tried to bully companies into keeping the old-fashioned manufacturing jobs in America and he’s actively removed bits and pieces of environmental legislation to get oil pipelines 
moving through whenever they were supposed to go to – damn the environmental consequences.

 Mr. Trump’s supporters are thankful to their man for trying to restore things to how they used to be.
Unfortunately, Mr. Trump’s supporters have forgotten one basic point in life – namely the fact that change is inevitable and industries will get disrupted. In each instance of disruption people get thrown out of work as old industries die but many more people get employed in better paying jobs as new industries take their place. Think of what happened when we moved to the motor car from the horse drawn carriage. People lost jobs as grooms, stage coach makers and so on but many more people got employed in car factories.

Anyone who is gone past primary school would realise that disruption and change are part of life. Businesses and people that acknowledge disruption have a way of hanging around and thriving for a very long time.

I think of my own little nation of Singapore. We were built by a leader who was able to handle disruption. Mr. Lee Kuan Yew, our founding Prime Minister, started out as a loyal colonial subject. He took pride in the fact that he didn’t speak Chinese and spoke English of the English as opposed to this bastardised thing called Singlish. Mr. Lee was educated in the finest of English schools and was destined to be a glorious and grateful servant of the colonial master. However, he grew up in a time when people of colour didn’t want to be ruled by the colonial power and, more importantly, Mr. Lee quickly found out that it was not his people, the prim and proper English educated that moved things. It was the rough and ready Chinese speaking that caused revolutions. What did Mr. Lee do? He and his band learnt how to speak Mandarin and Hokkien, the language of the streets in a mere 6-months. Harry Lee became Lee Kuan Yew and the rest is history. Mr. Lee didn’t fight disruption – where possible, he tried to anticipate and prepare for it. He went into China, anticipating China’s rise and he even checked his own emails until his final days.

Singapore has thrived because we had a leader who understood that disruption was a fact of life. There are other examples.

The two examples that come to mind are Shell, one of the largest oil companies in the world and Phillip Morris International, the largest cigarette company in the world Both Shell and Phillip Morris are global giants. Both are leaders in their fields, which contain vast pools of money. While oil prices took a tumble in 2014, “big oil” remains just that – “Big.” The same for Phillip Morris. The tobacco industry remains buoyant despite the vast taxes levied against cigarettes and the various limitations placed on the industry anytime soon.

Nobody would imagine oil or cigarettes going out of business anytime soon. Yet, Shell isn’t sitting in a shell. If anything, Shell has decided to prepare for the future. On 15 May 2015. Shell announced that it was setting up a “Green Energy Division” to invest in low carbon and renewable energies like wind. Nobody imagines oil going out of business anytime within the decade. Yet, here you have one of the major oil companies, a company that has a turn over comparable with the GDP of many countries, setting up a business that many imagine to be the antithesis of its core business.

Phillip Morris has also done something similar. In its newly relaunched website, the world’s largest tobacco company declares, “Designing a smoke-free future” and asks the provocative question of “How long will the world’s leading cigarette business be in the cigarette business?” The world’s largest cigarette company, which owns the top brands in its market, has decided to find ways to kill its golden goose to create its future.

Both international giants are trying to behave like the start-ups of Silicon Valley. How successful will they be? What Shell puts into its renewable energy business is still a drop in the ocean in its overall turnover. The cynics, which include many government officials, remain skeptical about Phillip Morris’s claim that is researching ways to make its products less harmful.

However, the fact that the international giants are trying to anticipate and prepare for disruption to their very core industries is a sign that they want to continue thriving for a very long time. Shell wants to prove they can be a player without oil. Phillip Morris is promoting a future where is doesn’t need its golden goose.

Giants take a long time to adapt because the need to do so doesn’t happen until it’s too late. However, here you have an example of two giants trying to disrupt themselves before the forces of economics do it for them. These are giants that have the foresight to acknowledge reality and prepare for it.
If huge corporate giants with huge bureaucracies can make the effort to anticipate the end of the golden goose, surely someone on an individual scale should be able to do the same. Focusing and preparing for a future without your golden goose is surely a better activity than listening to the likes of Mr. Trump and their promises of restoring a past that wasn’t quite there.


No comments: