FightBack NOW: Leveraging your assets to shape the new normal

PREFACE

We wrote this second version of FightBack, Leverage your Assets to Master the New Normal, because we believe humanity is currently punching far below its weight. We have created incredible technologies that are at our everyday disposal. Yet we’ve also come to realize, sometimes painfully, just how interdependent our systems are and how much we struggle to respond to crises in a coordinated, united way.

This book is being written in early summer 2020, in the middle of the Covid-19 crisis. At this time, people around the world are still speculating about what will happen next. There probably won’t be a safe vaccine ready for mass use before 2022, and we foresee that global growth will be stunted for several years to come. But we believe we have formidable tools at our disposal – not just to cope with this situation, but to recreate our world so we come out of this stronger and more inventive. We will need that, because humanity is probably going to be encountering more Covid-like disasters in the very near future.

As entrepreneurs, we are passionate about solving challenges through continuous experimentation, in search of the solutions that will define and shape the new normal. As human beings, we are well aware that a 10% change in our behaviour will not lead to the results we all need. Here, we’ve set out to describe how corporate venture building, a new asset class, can help us become more systematic in leveraging existing assets through digital technologies and aligning the inventive forces of entrepreneurs and corporations around a big, hairy, audacious common goal.

The previous edition of FightBack was written by Felix Staeritz and Simon Torrance and published at the end of 2019. It looked at the power and capabilities of platforms and new business models and explored the potential of a new approach to creating new businesses that could be adopted by large organizations wishing to inject digital know-how and entrepreneurial flair into their innovation efforts. In the few months that have passed since its publication, the world has changed abruptly, with the Covid-19 crisis highlighting, more than ever, the need for both government and business to respond creatively and energetically to the threats and challenges facing us. However painful, it has been a learning opportunity – and we feel our recent experience, alongside the feedback we have received from our readers, has given us many new and important insights that amply justify the effort of writing a new edition, with a special emphasis on the urgent global issues of health and climate change.

As before, some readers may feel our title, FightBack, is either too belligerent or too emotional. We don’t think it is. We are facing serious problems that are very complex, because they include a lot of scientific uncertainty, that require humans to change their behaviour and that are rooted in deeply regulated markets with massive market failures. This is well outside the comfort zone of any normal start-up.

There is a need to respond with a strong sense of urgency, because we really are in a race against time – as Covid-19 has already made clear. As entrepreneurs, we see opportunities in every crisis. This one is an opportunity to learn a lot about our systems’ shortcomings and to define the new normal. But let’s not see ourselves as victims. Let’s take constructive action together, with concerted efforts to work hard for the changes we, as the human race, need, if we are to survive and thrive. We believe that everything we’ve written so far was already true, long before the pandemic hit us. But the coronavirus has certainly accelerated many key trends and made them more palpable.

At its core, this book is about the shared experiences of many business leaders, academics and entrepreneurs around how corporations can most effectively build new digital models to make the most of their existing assets. But you will probably be surprised to see that we talk about seemingly unrelated topics, such as the macro challenges society is facing, the different mindsets of innovators and the potential of today’s new platform business models. We know some of the connections aren’t immediately obvious, but we are confident that you will come round to seeing these issues as relevant and connected, if you don’t see them that way already.

This new edition of FightBack is needed because of the new realities we are facing. It is largely focused on the urgent problems of health and climate, which may seem, at first glance, to be far removed from your industry. But you may want to think again about that. These two areas are particularly suited to the corporate venture building approach and offer many profitable business opportunities, as well as being vitally important for our children’s future.

This is not a scientific dissertation. It is provocative, because it needs to be. It is a call to arms for all of us as we move into a time of unprecedented challenges. If, after this, you feel engaged, wanting to do something concrete that’s within your reach, then we’ll know that the long nights spent writing this book were well worth the effort.

INTRODUCTION

COVID-19 IS THE ALARM CALL WE’VE BEEN DREADING

How many new friendships have you made as a result of social distancing? For us, living in Berlin and Vienna, local WhatsApp groups have rekindled the kind of neighbourhood spirit you would normally see in much smaller towns. Through online dinners, we have met friends of friends from all over the world – people we would probably not have got to know quite so easily under other circumstances. When we spoke to Mark Cliffe, global head of the New Horizons Hub at ING, he invited us to try an interesting thought experiment: imagine how you would have experienced this crisis without Zoom and WhatsApp calls, the internet, streaming, online shops and all the rest of the connections that have kept us in touch with each other.

Video chat’s explosive growth during Covid-19

STATISTA, 2020

Our technologies saved us from a cataclysmic collapse in society. Without mobiles, computers and the internet, we would have fared much worse, he said.

But there is a massive gap between our technological capabilities and what we made of them in our efforts to cope with this crisis. This gap is the result of inertia, of inefficiencies in the ways we orchestrate progress, and it is a factor in the human tragedies that are unfolding now.

This new coronavirus has held a mirror up to our lives, showing them up in pitiless detail. It’s a mirror we can’t resist gazing at – and it’s one that has highlighted parts of ourselves we’ve chosen to ignore for far too long. At the same time, though, it has revealed positive aspects of ourselves that we had almost stopped believing in.

Covid-19 has brought tragedy to many of us. Some have lost loved ones. Others have lost jobs or had to fire their staff just to give their companies a chance of survival. We’ve heard people call this pandemic ‘World War C’. And who knows what is to come? This may just be the beginning. Peering forward from mid-2020, we cannot begin to guess what this world will look like even six months ahead.

By and large, this deadly virus found us poorly prepared, despite many prior warnings. Hospitals and governments quickly ran out of personal protective equipment and testing kits. We saw pictures of Italian doctors wearing diving masks and Spanish medics taping bin bags round their necks to try to cut the risk of infection. People hoarded flour, paracetamol tablets and toilet paper. When national governments geared up their efforts and began purchasing millions of items of protective equipment, missing shipments and counterfeiting scams made daily headlines.

There was a terrible sense of helplessness, coupled with a great deal of finger-pointing – ‘external attribution’, as the psychologists call it. The problem was blamed on some other nations’ bad faith, or on government inertia, or on society’s attitudes. For many months we didn’t even know the most basic facts, like how many people had been infected.

HOW DID IT COME TO THIS?

For most countries, the lack of preparedness should be a cause for concern. What had happened to them? Their grandparents rebuilt great cities and strong economies from the rubble of World War II. They introduced high levels of social welfare and collaborated to bring age-old enemies together in a unique union of diverse nations, with high productivity and a leading role in global innovation. And yet, compared with other regions of the world, they seemed to have settled into comfortable complacency and lost their drive to keep up with the moment. Many have been happily coasting in ‘innovation limbo’, doing what was just good enough to stay relevant, rather than pushing the boundaries of what’s possible.

Europe’s companies still account for one-quarter of the world’s industrial R&D, but they lacked the ability to quickly produce simple face masks or Covid-testing components at scale. They were missing data measurement and interoperability standards to ensure swift responses where help was needed most. It took a while until we saw dedicated responses by leaders in the public and private sectors. As a result, we witnessed a free-for-all, rather than compassionate mutual support. Apparently, it takes a shock like the Covid pandemic, a classic example of scholar Nassim Nicholas Taleb’s theory of Black Swans (high-impact, once-in-a-lifetime events) to test a society’s agility.

Even before the arrival of the new coronavirus, though, we were among those warning traditional businesses of the need to wake up and respond to a more predictable series of revolutionary changes in business and society.

As our friends at the World Economic Forum have been highlighting for several years, we are in the early stages of a digital revolution – what the WEF calls the Fourth Industrial Revolution – that will be far-reaching in its implications and disruptive in its impact on existing businesses, societies and structures. This Fourth Industrial Revolution is a change that will transform the way our companies, governments, utilities and even transport and healthcare systems operate, whether we like it or not. But there will be tremendous opportunities alongside the threats, and we need to focus on how we can make the most of them.

There is this myth, especially in the corporate world, that governments are not agile, that they are too slow, too bureaucratic. But I also know how corporates work, and I’ve worked with a lot of big corporates over the last few years. All big organizations tend to have the same issues. It doesn’t really matter whether you are a private company or a government agency.

LARS ZIMMERMANN

MANAGING DIRECTOR AT PUBLIC,

A GOVTECH VC/ACCELERATOR

For the world’s richer countries, at least, this is not just a matter of overcoming the forces of habit, convention and inertia. It is primarily a moral imperative that insists that every nation should use its capabilities and assets, earned over centuries of industrialization, to find new ways to meet the needs of humanity and our planet and create a prosperous and enjoyable future we can all share. Eva Kaili, a Greek member of the European Parliament, stresses the need for political leadership: The current crisis is giving us new impulses for action and to gain the trust of society. But we must not focus narrowly on individual problems. I think the Green Deal and sustainability, in general, are crucial for us. They will affect the air we breathe, the food we eat and the employment we have — all of which touch our lives in meaningful ways. We have to look at this holistically.

These are the immediate challenges we should be concerned about. On a grander scale, as Covid-19 has viciously reminded us, there are bigger issues to confront, issues that demand the full-scale mobilization of all the forces we can bring to bear – from governments to businesses and from NGOs to citizens’ initiatives.

We may have been temporarily distracted, but even when the coronavirus crisis is behind us, we are going to have to orchestrate immediate, forceful and determined international action to prevent the imminent catastrophe of climate breakdown. One of the few obvious bonuses of this horrifying pandemic is the stark reminder it has provided that the most urgent and deadly problems cannot be contained within national borders or tackled without global cooperation.

Covid-19 has shone an uncomfortable light on the Western nations’ weaknesses. Have they become complacent? Have they lost their resilience, their ingenuity and their ability to improvise and innovate quickly? Have they been taking their heritage of peace, freedom, education, social security and health for granted?

The West has a long history of inventiveness and creativity. Europe, for example, has many world-leading companies that are seldom recognized outside the niche markets in which they operate. These hidden champions, however, have often been biased towards the more traditional industry sectors – towards hardware, rather than software, and traditional pharmaceuticals, rather than biotechnology – and they’ve been slow to respond to the next generation of frontier technologies. They have fine scientists and good public sector research, but they have fallen behind in key areas such as artificial intelligence, quantum computing, synthetic biology and genomics.

World-leading expertise

ADAPTED FROM SIMON KUCHER AND PARTNERS

There is a lot of catching up to do, but there is not too much time for finger-pointing. As we’ll discuss, leaders around the world, including in Africa, Latin America, Oceania and practically every other part of the globe, will need to make their contributions to pre-empting and solving the problems facing humanity.

As Ivanka Visnjic of Spain’s ESADE Business School, a ‘Top 40 Under 40’ professor, warns: We absolutely need radical innovation that does not just solve individual customer needs, but attacks deeply rooted systemic problems. This crisis has shown up a lot of challenges to the healthcare ecosystem that we need to address. We can also use this as a thought experiment about what a climate crisis would look like.

WE NEED A SENSE OF URGENCY

What surprises me in the webinars I give now to business leaders, Linda Hill of Harvard Business School told us recently, is that many people start by asking me ‘Do you think innovation matters now?’ This is a curious question. It suggests that people often think that innovation is something extra, something special, not what you do when you’re trying to survive. Yet it is precisely within this unprecedented challenge that we need new kinds of solutions. This means that we need to gather new teams and operate in ways that will allow us to come up with those new solutions.

Every industry, bar none, is ripe for disruption. It’s just a matter of time. Every society is being affected by the digital revolution, in countless large and small ways.

Successful companies and resilient societies have two things in common: the ability to recognize changes in demand and the opportunities they bring, and the ability to spot and address threats. Until recently, most business leaders saw their role largely in relation to their own industries – their markets, their supply chains and their competitors.

Covid-19 has made us look up and see the larger picture, showing us all too clearly how powerful forces outside the market can be, and that aggressive start-ups don’t have a monopoly on disruption. We live in an interconnected and potentially dangerous world, capable of changing at breakneck speed, in which every organization and every individual needs to become more agile and inventive.

We need to think fast and act quickly. Corporate and government leaders need to find ways to co-opt the tech entrepreneurs and digital disrupters and get them on their side, working with them, rather than against them. We all need a new asset class to overcome our inertia and fight back.

The coronavirus tragedy may at least restore our sense of urgency. For most of us in the affluent West, life has been comfortable. But we never had any right to be complacent. We have had too many people with preventable diseases, and access to care has been uneven and inequitable. We’re unacceptably wasteful on all fronts and we are clearly putting at risk the resilience of our nations and, ultimately, our planet. This is not only about creating happier, healthier families and societies. This is about the health and survival of our entire ecosystem, our entire world.

The good news is that we already have everything we need to respond to today’s challenges.

In the midst of fear and occasional chaos, we have seen many generous acts of kindness. We have seen German hospitals accepting Italian patients and Polish health professionals treating British citizens. We’ve seen private companies donating protective gear to healthcare workers. We have seen small entrepreneurs react spontaneously to solve problems as they’ve arisen, setting up neighbourhood community services to help those in need. We have seen governments and investors supporting research and scientists around the globe collaborating to develop tests, treatments and vaccines. In our conversation with Thomas Ogilvie, a management board member at Deutsche Post AG, he called this the rediscovery of humanity in a mixture of mindfulness and decisiveness.

Innovation has accelerated at a remarkable rate. Luxury perfume and vodka producers have turned their hands to making sanitizing gel. Carmakers and fashion houses have switched to producing masks. We’ve seen impressive resourcefulness in response to the imminent threat of Covid-19. But it does beg the question of why we can’t summon the same energy and creativity when facing an Ebola outbreak, or when we are trying to fight leukaemia or the monstrous global threat of climate breakdown.

As Martina Larkin of the World Economic Forum puts it: "Rather than going back to old economic models that we have seen in the past, this is actually a huge chance to rethink economic models, business models and the way we operate, in a fundamental