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TRBEueuhrvseoiinepewesasn Leading in an Age of Disruption September - October 2021 Veins and Wires: Reflections on europeanbusinessreview.com UrbanTech Transformation Improving the Emotional Mix of Buying Luxury Uncovering the path to our dreams: CoachHub’s coaching program points the way DATA PROTECTION: LIGHTENING THE LOAD OF COMPLIANCE INTERVIEW WITH THE DPO CENTRE CEO AND FOUNDER ROB MASSON empowering communication globally























































































exclusive technology to having pref- at play. However, whatever attractors against new entrants and the absorp- erential access to strategic resources a dynamic system is driven to by its tion of exogenous disturbances, such or economies of scale. According to internal forces, these are defined in as innovations, they benefit from Porter’s famous analysis, the state of such a way that promotes neither preserving the overall stability of the competition in an industry is artic- social good nor competitiveness.2 system. ulated around five basic Recent industry forces: the bargaining Recent industry disruptions have disruptions have warned power of suppliers, us that the barbarians that of consumers, the warned us that the barbarians are at are at the gate, and if threat of new entrants, the gate, and if you do not let them you do not let them in, the threat of substitute in, they will tear the castle down. they will tear the castle products or services, down. Airbnb provides an and competitive rivalry.1 edifying example of such Without rejecting the a phenomenon. It built a relevance of this schema, we recom- Once constituted as an oligopoly, business model orthogonal to most of mend taking on new perspectives to a small number of large actors the hospitality sector’s KPIs, and more meet the changes that have occurred still have an incentive to compete resilient due to lower capital needs. in the markets since the 1980s. between themselves to gain market Following its recent IPO, the company Porter’s representation is founded share against each other. However, is now valued as high as the three on a kind of conservative ethics, they have a stronger interest in biggest hotel groups globally. Revolut which assumes the maintenance of protecting the system to which they is another example of a company an equilibrium between the forces are well adapted. With rising barriers that is challenging well-established Daniel Krason / Shutterstock.com www.europeanbusinessreview.com 45

BUSINESS MODEL The source: techcrunch.com Image Credits: Revolut institutions with its innovative busi- also to explore the possibilities for favourable entrance for themselves ness model. Entirely data-driven, their implementation. into a market they have designed the six-year-old fintech company Only the dominant players have according to their strengths and their provides 12 million users with access something to lose with a change competitors’ weaknesses. By shut- to a quality of services that cannot be of system. This is why most actors ting the market down, they also cut replicated by retail banks. would not expect them to dig their the ground from under their compet- When disruption is the norm, own graves. However, a company itors’ and potential new entrants’ every system is in crisis and should be distinguished from the feet. This market shift would conse- stability can only refer to the speed market it operates in. Instead of quently reduce the relevance of their of the system’s degenera- ongoing innovation projects. tion. A market’s growth does First, it [Uber] disrupted Uber have demonstrated an not tend towards its matu- example of this process. First, it rity but its death, a reality the taxi market, then it disrupted the taxi market, then that CEOs should expect, changed the fundamen- it changed the fundamentals of prepare for, and even accel- tals of this new market by this new market by introducing erate. Accepting that your options for self-driving cars and company may fail, as Jeff introducing options for self- planes. The key challenge consists Bezos has recently claimed driving cars and planes. of convincing customers to move, Amazon may, is a positive but not just from one product to insufficient first step. From another, but from one market to a this perspective, new entrants only tracking the next move on the new one. In contrast to the conserva- represent a threat if you are not market, players should prepare the tive aspect present in Porter’s schema, planning to be the next one out. next market to move on, leveraging this evolutionary approach could help Post-mortem analyses should thus their strength on the closing market companies progress towards more be used not only to investigate the to bring customers into the opening customer-oriented and ethically extent of the lethal options, but one. By doing so, they ensure a driven markets. 46 THE EUROPEAN BUSINESS REVIEW SEPTEMBER - OCTOBER 2021

Customers have gained an important collective power through three main channels: RESPOND TO ACTIVIST 1 a rise in supply, increasing In light of the immense challenges CONSUMERS WITH AN the number of substitutes and of our times, consumers have ETHICAL COMPETITIVE dragging prices down also changed their consumption ADVANTAGE behaviour. As famously theorised 2 better access to informa- by Thorstein Veblen,3 a purchase Porter’s model relates to an equilib- tion through consumer watch, always claims two ends: one prac- rium of forces which have significantly aggregation and comparison tical, associated with the function of changed over the past decades. The platforms, and information the product, and one socio-ontolog- increase in competition has nega- access facilitators (e.g., Yuka) ical, defining the buyer. The more tively impacted suppliers’ power while numerous the options, the more multiplying the substitutive options. 3 world-scale platforms gath- decisive the choice. The new gener- Consumers have greatly benefited ering users by affinity and ation of customers associates this from this evolution and now occupy enabling them to trigger and second function more directly with the centre of the competitive rivalry. coordinate collective actions a contribution to a political cause. Activist consumers now take ethical Audio und werbung / Shutterstock.com www.europeanbusinessreview.com 47

BUSINESS MODEL considerations into account in their also receive indirect pressure from to deal with justice systems. Unlike consumption choices, voting with brand ambassadors supporting their a lawsuit, which can be delayed over their wallets for companies engaged marketing campaigns. These ambas- years and a fine provisioned for, a in fair trade, supporting short circuit sadors often use their influence to public scandal leads to immediate production, or paying particular support causes. As social influencers, sanctions, directly impacting the attention to animal welfare.4 they also have their own brand image company’s revenue and stock price Consumer pressures have already to manage, thereby incentivising and constituting a negative goodwill forced industries to enact over the long term. drastic changes. These pres- Companies need to turn away from Given that the socio- sures have been used to ontological function of advocate for ending child business pseudo-neutrality, pick consumption has become labour in the sportswear up a fight, and explicitly define a first-choice criterion market, banning the use of strong values they aim to support. for customers choosing fur from haute couture, or between a vast number shifting towards more envi- of options, companies ronmentally responsible should respond to this practices. Until recently, with the Wall them to stay away from potential demand. Larry Fink acknowledged Street Boys’ raid on GameStop’s stock, company scandals. The French foot- this new imperative in his letter to a professional trader would never ball player Antoine Griezmann the CEOs of BlackRock portfolio have expected that taking a short- recently broke his contract with companies, encouraging them to be selling position against a company Huawei because the firm is suspected explicit about their firms’ ‘purpose’.5 could trigger a worldwide collective of supporting China’s repression of Today’s employees and customers backlash costing billions of dollars to the Uighurs. Avoiding scandals is do not solely want to avoid having a some of the largest investment funds. essential for companies, but their guilty conscience when working for In addition to the pressure directly actions in this regard may differ or buying from companies that are exercised by consumers, companies from those they might take in order abiding by the law and respecting 48 THE EUROPEAN BUSINESS REVIEW SEPTEMBER - OCTOBER 2021

some ethical standards. They also while developing a trust relationship the company’s ethics: how much do want to leverage their work and to increase their engagement. It is customers appreciate the project that consumption power as an entry key to necessary to foster their purchasing the company supports for the future a community of people, engaged in a potential for profitability and of humanity? Ability would reflect collective adventure and supporting a ensure their continuous loyalty, the customers’ ease when supporting certain vision of the future. thereby hedging against any poten- the company’s project with their Addressing this demand calls for a tial scandals. It is also essential to purchasing power (i.e., depending on greater effort than merely advertising collect their data to understand the product’s quality, price and distri- the company’s good practices and the evolution of the market and bution coverage). When combined and managing scandals via Consumption behaviours demon- projected on to a graph, traditional crisis commu- these two parameters nication. Companies strated by favouring certain branded define an ethical competi- products over others increasingly tive advantage that allows need to turn away from tend to be interpreted through the comparisons between companies in the market. business pseudo-neu- trality, pick up a fight, and explicitly define prism of Ernest Renan’s definition of The x-coordinates can be strong values they aim a nation as a ‘plebiscite of everyday’. captured by aggregating to support. They should proxies such as prices also respond to consumer and quality scores among demands for emotional engagement of consumer expectations. Such a set of substitutable goods. The y-co- with brands, setting up multidirec- knowledge is crucial to best prepare ordinate may then be determined as tional communication with effective for the opening of the next market the spread between the theoretical feedback loops to develop trust and and convince consumers to follow a indifference curve of the parameters increase engagement. Beyond a firm’s future shift in direction. aggregated in x and the empirical culture or identity, companies need The classic SWOT matrix does not distribution of purchased goods per to embrace a specific vision for the allow comparisons between compa- class of consumers based on their future of society and back their plans nies on such grounds. Instead, we purchasing capacity. Employer with a viable public relations political suggest adapting Fogg’s behaviour appeal may also be integrated into philosophy, as originally theorised by model for persuasive design to busi- the graph in a third axis leveraging Edward Bernays.6 Although his moti- ness strategy.8 It is based on two axes: employees’ satisfaction surveys, vations were ethically questionable, ability and motivation. Motivation employers’ rankings, or the compen- Bernays’s analysis was correct, as he would refer here to the appeal of sation elasticity of job demand. understood that American women would not buy cigarettes without a FIGURE 1 The ethical competitive advantage reason, unless smoking was asso- ciated with political activism and supported a certain conception of high In this illustration, the green society. Consumption behaviours company has a competitive demonstrated by favouring certain MOTIVATION advantage over the blue and branded products over others increas- the red companies. It offers ingly tend to be interpreted through the best trade-off between the prism of Ernest Renan’s definition the appeal of the compa- of a nation as a ‘plebiscite of everyday’.7 ny’s project and the effective It is becoming vital for B2C busi- low ABILITY easy capacity for consumers to nesses to attract a community of hard engage with it. consumers to a common project www.europeanbusinessreview.com 49

BUSINESS MODEL COMPETING IN THE AGE behaviours and expectations in order The second issue of complexity OF COMPLEXITY REQUIRES to be successful. Data sciences are relates to accessing a deeper layer A CROSS-DISCIPLINARY being increasingly used to this end, of abstraction in order to produce PERSPECTIVE so it has become crucial to secure a information that can help advance trust relationship with consumers to the sophistication of products and allow freely consented data collec- services. This challenge requires Advertisers have been using the mech- tion. Data analysts can then process social scientists to leverage philo- anisms of mirror neurons and the and evaluate a large amount of data sophical, sociological, psychological mimetic desire theory9 to trigger or anthropological theories to tailored consumption desires The age of business interpret the structured data for decades. Digital platforms and give it meaning. The age are now leveraging persuasive complexity thus calls for both of business complexity thus design and computer-generated data scientists to analyse the calls for both data scientists cues to profitably shape user data and social scientists to to analyse the data and social experiences. When buying a understand it. Most companies scientists to understand it. plane ticket, it is nearly impos- Most companies will prob- sible to make an online booking will probably not hire social ably not hire social scientists, from a platform not supported scientists, but those that do but those that do are best posi- by machine learning algo- may have the opportunity to tioned to lead their market rithms that use behavioural through groundbreaking economics to recommend lead their market through insights. Social scientists prices based on dynamic groundbreaking insights. will be valuable not only for pricing strategies. As products supporting the analysis of and services become increas- consumer behaviours (e.g., ingly sophisticated, companies need to detect relevant market signals identifying psychological patterns, to navigate new challenges and find in order to support strategic deci- anticipating concerns, or explaining creative ways to lead the market. sion-making. However, this shift in cultural differences between Although differing in their product approach only deals with the first regions), but also for building and service offers, B2C companies all issue of complexity, in reference to effective communication between need to better understand consumer the technical sense of the word. brands and consumers to ensure 50 THE EUROPEAN BUSINESS REVIEW SEPTEMBER - OCTOBER 2021