June 2007 - Funky Philosophy

Business guru, academic and “Funky Business” co-author Dr. Jonas Ridderstråle discusses today’s corporate culture, how the Internet makes for tighter competition and how differentiation is the true key to long-term success.

By Vitisia Paynich

“Innovation is the only route to success in business,” author Dr. Jonas Ridderstråle says ardently. However, his definition isn’t merely confined to the nuts and bolts of technological advancement, but something on a much wider scale and with a broader reach. “I firmly believe the only way to create a better world for large masses of people is to have a lot of organizations do a lot of innovative work over time, and that wealth will begin to spread,” he continues.

This principle of combining mass collaboration with innovative thinking is just one of many tenets found in Ridderstråle’s manifesto for the new world of business. In the late 1990s, Ridderstråle along with his business colleague and fellow academic, Dr. Kjell Nordström, penned their first book “Funky Business-Talent Makes Capital Dance,” a self-help tool that invites people to contemplate the changes that are currently reshaping our societies, industries, companies, careers and even personal lives.

Ridderstråle is considered to be one of the most forward-thinking business gurus today-ranked No. 9 in the world and No. 1 in Europe by the world’s top-ranked management thinkers. In addition, this Swedish academic finds himself in high demand as a speaker, traveling around the globe to share this funky business perspective.

Electronic Retailer spoke with Ridderstråle to discuss his views on today’s corporate climate, how changes in the web have affected big business and why talent will enable individuals to be unique and, ultimately, successful.

When “Funky Business” debuted in the late 1990s,
co-authors Dr. Jonas Ridderstråle and Dr. Kjell Nordström received rave reviews throughout much of the global community.

So, what exactly is funky business? Within their book, Nordström and Ridderstråle attempt to enlighten people about the “opportunities for leading a richer life, creating companies that are inspiring to work for and societies in which more people have a genuine chance of realizing their dreams….”

This, some might argue, goes against the grain of most market capitalist societies, where corporations and their management teams fixate on destroying the competition by simply striving to be better, as opposed to being exceptional.

Ridderstråle says that if you are solely “focused on being better than the competition, you’re basically betting on the fact that your competitors are [simple-minded]. But, if you focus on being different, there is a chance that you can create a temporary monopoly.”

In their book, Ridderstråle and Nordström argue that people “need to realize that technological developments necessitate changes in our institutions and in our values. If there are no such changes, technological progress will not produce the financial, emotional and human value we anticipated.”

Thus, the authors contend that the digital divide is not the consequence of the technology, but instead it represents our inability to create a world where more people are granted the opportunity to develop their talents. Furthermore, they assert that true competitiveness must be built around emotions and imagination.

They cite Apple Computers as a prime example. When the company released its MAC OS X operating system, someone asked Steve Jobs what makes it so great. He replied, “We made the buttons on the screen look so good, you’ll want to lick them.” Not once did Jobs mention the system’s technical features. Instead, he appealed to consumers’ emotions.

This begs the question: Do most companies today love-not like, but genuinely love-their products, colleagues and customers? And equally important, is the feeling mutual?

When “Funky Business” debuted, it received accolades from many throughout the global community. Praised for their provocative ideas and modern business philosophy, the authors’ work was translated into 25 different languages. However, Ridderstråle confesses that part of the message expressed in the book did not translate well in certain areas of the globe. And it, in certain instances, outraged some readers.

“In America, where we did not get as much attention, the fact that we were saying in the beginning of the book that Karl Marx was right, was not necessarily good from a marketing point of view,” he notes. “Marx was right because he argued that the workers of the world should own the major assets of society, and now we do. The most critical resource is our brain.” Ridderstråle and Nordström in the book, clearly dispel the notion that they are communists.

As Ridderstråle elaborates, “We own our brains individually, of course-not collectively as Marx once claimed.” Put simply: Knowledge is power and power equals freedom. Ridderstråle warns that freedom isn’t just handed to us, but it’s something that individuals dominate. Today, power resides in one’s ability to control “the scarcest of resources: human intelligence,” as stated in the book. The more unique, the better the company will perform.

If knowledge is power, then Ridderstråle believes that leadership and management serve a critical purpose in organizing and harnessing the knowledge that each employee possesses, in order to maintain a competitive edge. “How you attract, retain and motivate your people [or associates] is more important than technology,” Ridderstråle and Nordström write in the book. “How you treat your customers and suppliers [is also] more important than technology.”

The way in which a company is managed and how a company is guided are critical differentiators, according to the funksters. They can produce sustainable distinctiveness. But at the same time as management and leadership both evolve into forceful, competitive weapons, their very nature changes.

Gone are the days when managers can get away with claiming they are all-knowing. And no longer is it acceptable for management to instill fear in its employees. “If management is people,” according to the authors, “management must become humanagement.”

How has the burst of the dot-com bubble in the late 1990s affected change in the new business world? Ridderstråle notes a couple of lessons learned.

“I think the first lesson learned is that vanilla ice cream doesn’t become unique or different just because you sell it over the web,” he says. “There was too much of the belief in technology providing you with a sustainable competitive advantage.”

He concedes, though, that in very extreme and rare cases, technology can provide you with some kind of sustainable competitive advantage today. “Thus, sustainable then means maybe 10, five, two years, depending on how fast people will copy you. I think sustainability today is much more related to your business model, and how you can manage that model, and it’s the kind of moods you can produce that will addict your customer to this emotional experience.”

The second lesson learned, according to Ridderstråle, is that just because something is important doesn’t mean that you can make a whole lot of money from it. “The Internet for sure is very important, but from the point of view of an economist, the Internet is probably enemy No. 1 to profits,” he points out.

He cites examples such as people’s ability to surf the web to do comparison shopping, which makes it more challenging for companies to sell product right away. “Window shopping is a picnic today, compared to what it was 10 or 15 years ago,” Ridderstråle states, “and the window is no longer the local window-it’s a global window.

“From that point of view, the Internet over time, I believe, will have the tendency to make it more difficult for companies in general to make money, because it’s something that is much more beneficial long-term-wise to customers.”

With Web 2.0 now upon us, Ridderstråle brings up other obstacles companies must face coming down the pike. He says, “I think the most interesting development we’ve seen so far, and that will prove a true challenge to a lot of organizations, is that this network technology actually opens up the possibility for an economy in which financial capital completely loses its value. And if you consider MySpace or YouTube, it’s part of a non-monetary organizational forum-at least in its origin.”

He adds that these types of sites have established a barter-based organizational forum, where people have as their basic currency their ability to produce something that is interesting or helpful to others, rather than something with a dollar-value attached to it. This takes away from companies’ profits.

“I think we’ll see more people organize themselves as producers and as consumers without having to resort to any kind of financial transaction,” says Ridderstråle. “They will swap things, which will prove a challenge to a lot of corporations.”

What significant changes will occur in business down the road? According to Ridderstråle, “I think it boils down to how we define talent. For quite some time, we’ve defined talent as something that basically equals intellectual capital.”

For years, U.S. and European companies relied heavily on the technologically savvy or “techies” to think up new product solutions, putting them ahead of their global competitors. Ridderstråle believes intellectual capital will still matter; however, that knowledge accessed in North America and Europe is now becoming the same knowledge being accessed in India and Shanghai.

Thus, he contends that today, while intellectual capital is about to become necessary, it will no longer be sufficient, because it’s becoming a commodity. “Long-term-wise, the roots of competitiveness rest with your ability to manage your intellectual capital, psychological capital and social capital,” he suggests. “And I think those three types of capital are related not in an additive sense, but in a multiplicative sense. So, any drop in a particular type of capital will have a tremendous impact on our long-term ability to develop sustainable competitive advantages.”

As the head of your own company, Ridderstråle says, you’re faced with the challenge of leading the vision of your employees, their feelings and the faith that they have in you and in what you’re trying to accomplish. As he puts it, “I’m not sure if one leader is fit to do all three things. Therefore, leadership, as I see it, is more a process that will necessitate a lot of teamwork.”

Dr. Jonas Ridderstråle will be speaking at the ERA European Conference in Monte Carlo, Monaco, on June 18.


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