Michael Mueller:


051 – A Failure to Communicate: How the Absence of Common Language Risks Your Digital Future with Michael Mueller

Michael Mueller:


051 – A Failure to Communicate: How the Absence of Common Language Risks Your Digital Future with Michael Mueller

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In this episode, we are joined by Michael Mueller, partner and co-founder of Acrea, an innovative management consultancy which focuses on helping companies thrive in the digital age. Michael started his career at McKinsey after which he went on to hold a number of senior IT management roles within the banking industry.  More recently he has developed his entrepreneurial career by founding a startup B2B travel company.

  • The three most typical ways businesses are being impacted by digitization – through the creation of entirely new business models, by establishing new customer experiences, and via transforming the delivery of whole parts the operations of a business via technology
  • The challenge established businesses face in dealing with their technology ‘debt’ in contrast to startups who can build their infrastructures from scratch at a fraction of the cost
  • How a “failure to communicate” still exists between the IT and management groups of businesses – even as the importance of technology to operations continues to grow
  • The reality of customer acquisition costs for startups compared to the established client bases of existing businesses

Key Takeaways and Learnings

  • The need for organizations to think long term when it comes to managing their technology costs
  • The importance for startups to understand their intended customer base and to face the reality of customer acquisition costs
  • The need for IT and management to adopt a common language to gain better understanding of how technology impacts their business, what it can do, how much it costs

References and Resources

  • Acrea – Independent Management Consulting for the Digital Revolution
  • Follow Acrea on Twitter – @acreatweet
  • Nezasa – Technology Solutions for the Travel Trade
  • Follow Michael Mueller on Twitter

This episode is sponsored by Evalueserve.

Summary

In this episode, we are joined by Michael Mueller, partner and co-founder of Acrea, an innovative management consultancy which focuses on helping companies thrive in the digital age. Michael started his career at McKinsey after which he went on to hold a number of senior IT management roles within the banking industry.  More recently he has developed his entrepreneurial career by founding a startup B2B travel company.

Michael Mueller

Michael Müller is an experienced digital business consultant, IT architect, security expert and entrepreneur. At Acrea, he has been leading various complex and innovative online business and digitalization projects. Furthermore, Michael has a proven track record in managing business-critical solutions and leading large-scale IT implementation programs. In one of his previous jobs Michael was part of the IT senior management of a large global bank. He knows about business and IT processes in large enterprises and how those companies can benefit from digital startup best practices.

What Was Covered

  • The three most typical ways businesses are being impacted by digitization – through the creation of entirely new business models, by establishing new customer experiences, and via transforming the delivery of whole parts the operations of a business via technology
  • The challenge established businesses face in dealing with their technology ‘debt’ in contrast to startups who can build their infrastructures from scratch at a fraction of the cost
  • How a “failure to communicate” still exists between the IT and management groups of businesses – even as the importance of technology to operations continues to grow
  • The reality of customer acquisition costs for startups compared to the established client bases of existing businesses

Key Takeaways and Learnings

  • The need for organizations to think long term when it comes to managing their technology costs
  • The importance for startups to understand their intended customer base and to face the reality of customer acquisition costs
  • The need for IT and management to adopt a common language to gain better understanding of how technology impacts their business, what it can do, how much it costs

References and Resources

  • Acrea – Independent Management Consulting for the Digital Revolution
  • Follow Acrea on Twitter – @acreatweet
  • Nezasa – Technology Solutions for the Travel Trade
  • Follow Michael Mueller on Twitter

This episode is sponsored by Evalueserve.

Welcome back to The Innovation Ecosystem. With me today is Michael Mueller who is a Digital Business consultant, an IT architect, a security expert, and an entrepreneur, and Michael started his career with McKinsey, then over time became part of senior IT management with a large Swiss bank, has founded a travel startup and most recently founded Acrea, which is a company helping large and small businesses build digital futures. So, welcome to the show, Michael.

Hi, Mark. Thanks a lot for the invitation.

Well, Michael, it’s great to have you on the show. So what does it mean when you say you help small companies build digital futures – what does that actually mean?

Yeah, that’s a good question and I think first of all we should ask what does digital mean? I think in the last three years digital was already a bit over-hyped and if I ask my clients what digital really means typically they don’t really know, so I think there are three aspects to it basically. It’s creating new business models, so really creating a totally new business with new clients, segments; that is one aspect. Another aspect that’s quite trendy at the moment is creating new customer experiences, so really focusing on very simple interfaces and great support and so on, and the third part, I think, is the aspect of improving the way you deliver and operate your IT and also your whole organization and do the improvements by means of technology and I think these three aspects are totally different and so we cover all three aspects but the first is the most difficult one, the creation of new business models and that is typically a very business driven aspect of digitalization and in that respect, what we do there, we challenge our clients, help them come up with new ideas, but this is something that is very difficult for executives, to really look at the market and totally think in a different way.

It’s interesting because a previous guest was from a large Swiss bank who was Head of Innovation and he talked a lot about some of his new business models but ultimately the reason they struggled was that the existing business was so strong and so profitable and had so much resource continually being invested into it that it was very hard to really move the needle on some of these projects. Is that one of the reasons why it’s so hard for executives to get their mind around these new business models, in terms of what actually they need to do to make them happen?

Yeah, exactly, and I think often the new business is not a priority as it’s not generating bonuses so this is only going to happen in the future so therefore, the new business will always lapse, it will always be second priority unless really those executives think ahead in a timeframe of 10 years or more and I think that’s also one of the big differences between large organizations that are traded in the stock market and entrepreneurial organizations where the entrepreneur is the CEO, because it’s his own money, and if you don’t think of the future in 10 years, you’re not going to succeed and you lose everything so I think that’s also a big difference that I often see in those large companies, and nowadays it’s quite trendy to create those innovation labs, and I like that approach and I think it’s very important to have this free thinking, come up with new business ideas but sometimes I also feel that it’s really just something you have to do nowadays. In the end it’s not creating so much a new business – and one aspect I think is also very important is this aspect of cultural change and whenever we talk about change management we come up with an important statement that I learned from one of my MBA professors and he said, ‘Whenever something new collides with something old, the old tends to win.’ So I think it’s extremely important that you have those innovation labs separated and those ideas, they have to bloom outside the existing traditional organization or otherwise it’s not going to happen and not going to succeed.

And you touched on a lot of that. As it happens I’ve got the latest letter from Jeff Bezos to the Amazon shareholders in front of me which talks about what day two looks like on the basis that his business has been going for some time. He attaches – they constantly refer to the 1997 shareholder letter which talks about ‘we’re a startup, we’re going to take long-term perspective, we’re attracting investors who are not interested in the short but who are with us in the long term’, and it’s fascinating because this is a startup, they’re heavily invested, even though it’s been around for some time, in their success and they don’t have the weight of the incumbent infrastructure, and shareholders, and profit drivers, that a lot of your clients, I guess, are wrestling with, right?

Yeah, exactly, and I think one of the issues in that area in terms of digitalization is, of course, the technical debt that you build up and maybe you’ve heard of that term, and many of the large organizations, let’s say, a large Swiss bank, they build up their technology side over, let’s say, 20 years or so and they always have to create a lot of revenues and profits, and often they are not interested in removing the technical debt how we call it, so the technical debt gets bigger and bigger and you pay interest on that debt and but there’s no investment upcoming to remove the debt and I think unless you add some kind of interest into your balance sheets that you have to pay all this technology legacy, unless you do that it won’t impact your results directly and you won’t change and you won’t invest in removing that debt, and I think that’s an extremely important aspect nowadays. I mean, look at those large companies that pay a lot of dividends, also to their shareholders. Now you have to explain to the shareholder you’ve removed the dividend in order to invest into removing technical debt, removing debt is nothing really fancy, so why should you do that?

Well particularly the time horizons I guess are different for – the decision makers, the governance of these companies, it tends to be in the hands of people who are perhaps towards the end of their career whereas the long-term sustainability is threatened by making the right investments that won’t yield in the short or medium term but will yield over the longer term.

Exactly and I’ve looked at many strategies, how you get rid of this legacy IT and how you get more HR as a large corporation and – how would you say that – there’s no silver bullet actually, it’s very hard, it’s really, really hard and if you don’t do it over, let’s say, 10 years with a very strong strategy and with people really pushing for removing legacy then it won’t happen, and what happens is you invest money for one to two years but nothing really changes and then you lose all their money and you end up with the same mess as before and this is really – I think this gets to the heart of digitalization of large corporations. It’s often you have those architects in IT that tell you about the long term strategy of IT, long-term moves that you have to do, but it’s still a cost and these people are not really used to talking about business benefits and that is very difficult. So often money doesn’t flow into that and you’d rather invest the money into new cool front ends. It’s like you take a car of 1980 and you just repaint it so it looks nice but it won’t compete with a Tesla, of course.

Having said that, you’ve lived in this environment for a large Swiss bank for many years and now your business that you’ve founded is specifically to help companies do this and I think also, Michael, the reason we got to know each other is through a referral from Marc Vollenweider, and you work with his company and you’re known in the industry as someone who gets stuff done. So you’ve talked about some of the challenges, the hurdles if you like, but what do you do specifically to overcome some of these hurdles and to create value and to justify your fees for your clients? What are the two to three things that really make the difference based on your experience?

Yes, thanks for mentioning this and I think this is extremely important to really think of concepts and approaches that large organizations could do in order to overcome those challenges and I think one very important aspect is that, if you talk about digital, digital is about IT basically but nowadays you don’t talk about IT. You mention digital and because Information Technology is a little bit old style and slow – but I think one of the key aspects of bringing change into those organizations is really collaboration between these IT departments and the business side and even by saying that, I’m assuming that there are separate units called business units and IT units and I think we have to overcome that, and if, for example, if I work in startups and I created my own startups too, there’s no business or IT, it’s just a team of analysts, of architects, of developers that know what they want to do and they work with the product owner to really deliver a product for example a large set up in a, let’s say, a bank or insurance company, some of my clients – it’s really hard you know, business side things of new products, they think of how to satisfy clients and then they come up with some concepts and they throw it over to IT and IT comes up with estimates that are way too high and then this gets back and then the blaming starts. I think that’s really the biggest thing that needs to be overcome in the future. We have to have common teams of business people and IT people otherwise it’s not going to work.

What is it – when you started your career, when I started my career, there was IT, there was a support function and more and more today digitalization is right at the heart of – it’s on the agenda of a lot of large multinational companies for the first time in history because they recognize that it’s needed to survive and needed to thrive. What is – is it just a complexity, the language? What is it that makes this so difficult because it’s not – is it because it’s a young discipline compared with marketing or compared with advertising? I’m just curious as to what do you see because, as I say, when you started your career I guess the world looked very, very different as it did for me but today digitalization is everywhere. Can you put your finger on what’s so hard for boards and for senior managers to get their minds around this if they’re in a legacy company?

Yeah, I think we still have to establish a common language between IT and the business side and that has not happened yet and often IT people also love when they can be unearthed, let’s say, and they have some technical terms they can use and then tell the business, ‘Oh you don’t understand, this is complex’, and so on, and I think that’s not the way it should work, and in order to overcome this I think also some business executives need to learn about some technical aspects. They need to understand what a program is. They don’t need to be a programmer but they need to understand how a difficult architecture, a distributed architecture in a large organization works, what an API is. It’s the same with law and legal. As a business executive you need to know the basic laws that you operate in and you need to know the environment, and digital and technology is so important, you need to talk the language.

Yeah, so language is one, getting the right people in the room from different functions and speaking the same language. Any other things that really make a difference that you use – strategies or tactics that you use Michael to make things happen in these client situations?

Yeah, one important aspect is of course, my experience, because I’ve seen what works and that’s why I am also sharing this today and as I said, one important aspect is to bring these technical guys and the business guys together and then often a little underestimated aspect is the collaboration aspect and the hierarchies. I think you need to get rid of these hierarchies, in many ways, that often exist in large companies because I used to work at McKinsey and there we created those slides and we just lived for PowerPoint slides and that’s not how it works in such a, let’s say, a more agile digital setup. In such a setup, you don’t have strict hierarchies with a presentation in front of the board and then it trickles down and someone takes it up and implements it – no it’s much different. It’s really very much a collaboration with modern tools, let’s say, everyone knows JIRA and Confluence nowadays but in large organizations, it’s often not really used in a way, let’s say, someone puts down an idea, someone else comes to it and then you iterate on the ideas – this is really not happening in many cases. Often it’s a PowerPoint slide and then someone reviews it, then you have an order iteration and it goes up one hierarchy level and I think that’s OK for a basic strategy discussion but as soon as it gets to getting things done in a more agile way, that’s not going to work. It needs to be an agile collaboration and I think that’s what I want to bring in to in those large organizations, really using those tools to collaborate.

And Michael, you said you work for both startups and some of the largest organizations here in Switzerland and indeed in Europe. There’s a lot of talk about what you can learn from startups and bring that into large organizations. What are some of the things that are done well in large organizations that nonetheless you feel that some of these startups can learn from? And maybe you can touch on your experience because you’ve had a startup for some time in the travel industry which is a mature industry undergoing all sorts of changes as well, but is there best practice that can go from large companies to smaller companies? And maybe then we can just talk a little bit about your experience starting up your travel business.

Yeah, exactly. That’s a difficult question. Often we talk about the other way round, what goes from a startup to large companies and nowadays people know about this but the other way round, it’s difficult. I think one aspect that is very important, of course, is the power of the large organizations and they know their customers so I think that’s important. They know their business, they know why they are profitable, they know what customers want in many cases, and I think that is something that startups have to learn, that all these marketing aspects, segmentation, understanding that is something where they can really learn from those big organisations.

It’s interesting because I’ve got to grab this note again from Jeff Bezos because it’s really very powerful and he talks about this company that is almost 20 years old now, right, but he says, ‘There are many ways to centre a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused and there are more but in my view, obsessive customer focus is by far the most protective of day one vitality’, which is what this book, which is what this article’s about, so the fact you landed on customer focus is very, very insightful for me because that is, at the end of the day, what a large company that’s been in business for many years has as its core asset is understanding its customers better, certainly better than a new entrant could ever do.

Yeah, exactly, and I think there’s another quote, I don’t know where it’s from exactly but it says, ‘Customers will not come to you just because you built it’, and I think you should always tell that to engineers that create a new startup. And I also struggled with a lack of understanding of the customer and I also struggled because we lacked some marketing skills in our travel startup. It was really, really hard. We created a travel startup, it’s called [inaudible what is the name of the startup?  If we don’t know then remove the reference altogether] Basically we created it because we felt that one large travel organization that was our client in consulting, they didn’t really understand how to do this and we knew how to create a product, we knew about digital, we knew about software, so we just did it. So we created the products, how to better serve clients in a B2C model for very complex individual travel, and I think we did a great concept, we came up with a great architecture, we really modelled everything perfectly and then we went out and thought, ‘Oh now, customers they’ll just come to us’, and as I said initially we did a B2C model but we didn’t know anything about how to advertise, we didn’t know what the customers really wanted so this was really hard and we invested a lot of money into that exploration and that is something I’ve learned from all my startup experiences, that you really have to look at the customer acquisition cost and ,for example, I also analyse some FinTech startups recently and I often feel that these companies, those startups, underestimate a little bit the B2C model and the customer acquisition cost because, for example, in banking, what you see in FinTech especially when you invest at least $200 dollars in order to get or to acquire a new client and nowadays often the clients expect to have free services, free products, so how are you going to get the money that you need to acquire those customers? And I think that’s still a big open question in FinTech for example and I’m really looking forward to learning more about this in the future, which FinTechs are going to make it and which not so, yeah, let’s see.

And your specific example around your travel company, is it fair to say that you moved from business to consumer model – did you get to a B2B model as a result of these acquisition costs and the lack of – finish that story because it sounds like it was a painful lesson. How did you convert that lesson into something else if you like?

Yeah, exactly. You often hear about pivoting in startups and that’s what we did. We moved from a B2C model to a B2B model and the main reason was that over a year or two, we invested a lot of time and money into really optimizing the conversion, into optimizing searchability, you know, when you type the name in Google or you search for travel that you end up at the first site, that’s also called SEO, Search Engine Optimization, and we also invested a lot into understanding how Google works, how the advertisement works, but we could not really get to that level where we could find a scalable and profitable business model, we thought, so we moved to B2B and of course in B2B, you can use your networking skills and you can approach customers directly so it was a bit easier for us because we already have those skills, but still it’s a hard business. Travel is a red ocean market as you call it, margins are very low and there are a lot of competitors out there so we really hope that we now have found a niche and can now satisfy the needs of our client. We’re still finding out at the moment.

So I’m glad you mentioned that because here in Switzerland there are some big companies that have been around for many, many years. We’ve got Nestle which is a 150 years old, we’ve got big travel companies, we’ve got big banks, big insurance companies, and many of them have got leading positions in their industries and they have been around for many, many years and we had a previous guest, I don’t know whether you’ve met him, a guy called James Breiding, who wrote a great book about innovation in Switzerland and how is it that these companies can – how is it a country of 8 million people has given birth to such a broad range of high performing or industry leaders across so many different industries? So from your point of view, Michael, how optimistic are you that these incumbents in these very, very competitive industries that are under threat from changing consumer demands, changing regulatory environments, with lots of new entrants coming in, how agile do you feel these businesses are or are they dinosaurs just waiting to expire and be taken over by the next startup on the West Coast of the US for example?

No I think, for example, in banking I think the existing banks, the incumbents are quite well protected by regulation still because I also looked at building my own bank and it’s very difficult and there’s so much regulation, so much compliance. If you need a banking license in Switzerland, it’s not easy at all. So I think there’s a lot of protection in what happens and you also see that in the market that those large incumbents, they collaborate with the startups so I think that’s going to happen too in the futures of many of these FinTechs. They will collaborate with these banks and then those banks are customers of those startups so yeah, of course, there’s still disruption but it’s another disruption, so these startups help the incumbents to change as well and will not destroy them, so I think that’s – in terms of what happens to banking, and it’s a bit similar to the insurance industry, they are stiff because policies are long living and money flows in over many years but still there I see a little bit more pressure and disruption will happen because insurance models will change, but still I think it’s going to take many years until there’s really, really disruption where a US player comes in and destroys some Swiss banks and insurance companies, for example.

Interesting. So you’re reasonably optimistic in the medium term but I suppose longer term – well it depends on how you define long term – but as you say, banks are protected by regulation that sounds like, well it’s probably what a New York taxi driver who owned one of those licenses, or a San Francisco taxi driver felt – they had the license to run their taxis and they were protected by the regulators but that clearly didn’t work out but you see it different in the banking world?

Yeah, I think it’s different and also as I mentioned, also clients, for example, in the banking world, clients want trust and they don’t easily move to new startups because it’s about your money and you don’t put your money somewhere where you don’t know whether it will exist in a year or two so you rather leave it where it is and pay a bit more. But yeah, there will be a lot of pressure on the costs, that’s going to happen for sure. I mean nowadays these levels of IT costs, for example, at the large banks, they’re not sustainable. There are several billions a year that the large Swiss banks spend on IT costs for running the business and I think that’s not – if you build it from scratch, this will be a tenth or less of the cost but of course, nobody takes the risk of building it from scratch at these existing companies.

Yeah, and what about travel because you know that industry reasonably well as well.

Yeah, travel, there was already a lot of change so, for example, here in Switzerland there was this big player, Kuoni, that was very well known, they do not really exist anymore, or parts of it were sold, so travel is already quite far in terms of digitalization. I think in travel disintermediation started around 2000 and I think this is also something that could happen to other industries so disintermediation means that – and the players focus in on some parts of the value change and then directly go to the end clients so, for example, there’s one company that sells activities, so before, you had to go to the travel agency to book a trip to Barcelona and see the city, nowadays you just go to the internet and book it and I think that’s a trend that will also happen to other industries. Also in banking, for example, you already see that in order to, let’s say, to get some asset management, fairly good asset management and cheap one, you can directly go to a robo-advisor, and invest your money there, you don’t have to go through your client advisor, and yeah, this whole disintermediation will happen to other industries I think.

Yeah, and can we switch a little bit from, you know, you talked on robo-advisors just then and there’s a lot in the media about white collar jobs disappearing as a result of AI coming into the marketplace in a far more explicit way than it is at the moment. I’m curious, what kinds of leaders do you see as having the greatest impact in some of your client organizations today versus might have been the case when you started out? My hypothesis is that because we’re living in this sort of VUCA world – volatile, uncertain, complex and ambiguous – that this requires a different way of showing up at work as a leader. I’m just curious what your perspective is on that? Do you see a difference between people who are getting things done and people who are struggling to get things done from a leadership perspective in some of your clients?

Yeah, I think – I’m not totally sure if I fully understand your question but in terms of the robo aspect yeah-

Well, let me put it differently. If you were setting out, starting out in a large bank, for instance, responsible for – with an innovation agenda, what today at the beginning of your career, what skills would you think would be the most important? I mean back in the day it was probably producing good PowerPoints and doing the basic analysis which is at the heart of your training and your background when you started out I think, but what are the real, the fun, the leadership behaviors that really make a difference, make an impact today? Is it similar to what you talked about earlier on and being able to speak a common language, bridge a language between the technology folks and the business folks? Just interested in your perspective on that, Michael.

Yeah, I think it’s similar to that but I always come back to the three aspects of digitalization. I think if you talk about improving your processes and automate them, it’s a totally different skill that you need. It’s a lot about organizational change, cultural change, and really getting things done. You all know about Kotter’s points, what you should avoid when doing an organizational change, programs, I think it’s nothing new –

Can you maybe just remind people, I’m not sure I’m familiar with that – what are his points?

Yeah, Kotter, the famous professor, he came up with some points that you should avoid when you do organizational change projects. One aspect is, for example, really the first point is creating a sense of urgency so I think if you really want to do the change in terms of optimization cost savings, then there needs to be a business leader that stands up and really goes forward with the flag in their hand and wants to do that change and creates that sense of urgency. I think that’s the most important part of such a change effort, and also bringing in the people that know how to do it in the future, let’s say, they’ve done it before, they know what automation is, and you have to bring in those middle managers to make it happen. This is nothing specific to digitalization. I think, again, what is specific to digitalization is this common language and the understanding of what technology is, what it can do, why it costs so much, that you need to have, but other than that it’s just organizational change. But when we talk about really creating new business models then it’s a totally different animal because there it’s really about business innovation and that is difficult to achieve and there I think, when you do that, you have to separate it from your traditional business, you have to – I mean there’s these design thinking initiatives, you also have to bring in people maybe from the startup world. I think one good example in Switzerland and also I know some of the guys in that lab, it’s the Swiss Life Lab, for example, they created a lab, innovation lab, and they hired, for example, the co-founder of Doodle, the famous scheduler, and they also hired other startup founders, successful founders, and they let them run that innovation lab, and what they do, they really use their innovation network, they use their entrepreneurial experience to come up with good ideas and I think that’s a model that can be successful when you want to invent new business models.

It’s fascinating because I think there’s, as you said earlier on, there’s a lot of hype around, ‘How do you do this?’, and it goes way beyond just going out and visiting Silicon Valley to see what Google are doing, and it sounds like what’s going on at Swiss Lab, they’ve got a different formula and a fresh formula which is getting some results. So, Michael, I’m just beginning to wrap this up now. So I sent you through a few questions earlier on at the end of last week preparing for this. First question – what have you changed your mind about recently?

Yeah, when we talk about digitalization there’s one important aspect I underestimated a little bit in the past and this is the importance of client data and analytics, and I recently had a project at a bank and there we analyzed the value basically of client data and how to use it for future business models, and this was really very interesting also for me to see you what you can do with the data, so I’ll give an example. We analyzed the value of the data and went out to, for example, to merchants, and analyzed how much they were willing to pay for banks’ client data. I’m not saying that banks really want to sell that data but we just had that conversation and it was really, really interesting and it was mind opening to me how much these merchants were willing to pay so-

What, because they were willing to pay far more than you expected?

Yeah, exactly, and also what you could do with that client data – I don’t agree with an approach where bank sells that client data to merchants and earns a lot of money but I think once the client agrees to sell some data and the client also gets benefits from it then I think it could be OK, so benefits could be large discounts for some products or could also be much more targeted products, receiving them, and I think that is interesting and that is something – it was recently that I was aware how much potential is there in client analytics still.

Well I guess if you think about some of these huge valuations that these startups have got which are revenue generating but pre-profit, a lot of it is because the hypothesis is they’re generating enormous datasets that they’ll be able to use at some point in the future and your point, I guess, is – and having done this, your experience, the scars on your back with your startup around the costs of acquiring a client let alone getting that data, that suggests that the incumbents do have enormous value in their datasets which are probably not being accounted for correctly on their balance sheets or are being taken full advantage of by their executives.

Yeah exactly, I think that’s exactly the point because as you said startups are valued at high levels exactly for this, for all this client data they want to collect, but the point is all these incumbents have the data but they don’t know what to do with it and often they lack the processes and also the skills to really get the value out of it and there I see a huge potential. I’m really looking forward to looking at this in more detail and coming up with some concepts there.

It sounds like you might have another startup idea in mind, is that the case or not?

Yeah, that could be a startup. The problem is that data is owned by the banks or the large incumbents so they need to be willing to work together on this because you cannot get the data easily.

Sure. So OK, so that’s the first question. Second question – do you have a personal work habit or practice you can share with our audience that’s really made you more effective?

Yeah, I’m also one of these guys that look at my mobile phone at least two hundred times a day so when I really need to get things done I got into this habit of avoiding multitasking, and what I do is I put calendar entries for each work item in my calendar that I really have to do so I really block that like a meeting and then during that time, let’s say, two hours, I work on this client presentation or do some analysis then I won’t work on other stuff during that and then I really treat it like a meeting but just a meeting with myself and my brain basically.

And what have you found in terms of – has that given you an increase in productivity? Has that changed the outputs of your working day?

Yeah, tremendously because before I often had my calendar and then during some free time in the calendar I thought, ‘Oh now I should do this and do this’, but now it’s really – I put in two hours for one task, or three hours, and then I know during that time I only do this and then it’s done, and before, I had to invest much more time in finding out what exactly I do in that time and then I thought of this and this and now I just focus on one topic, and I fully agree with those people saying this multi-tasking of today, and always checking emails and so on, is really not good for productivity.

Yeah, there’s a fantastic book, I’m hoping to get him on the show but he doesn’t do many podcasts, a guy called Cal Newport wrote a book called Deep Work, and he sort of says there are a handful of people on the planet who can multitask but the vast majority of people can’t do it and you’re efficacy plummets, but if you’re able to do what you’re doing, Michael, and actually carve out time and do deep work in a really consistent way, it’s a huge source of competitive advantage for exactly the reason you mention because most people are spending their time trying to multitask and looking at their phone two-hundred times a day so it’s ironic but the reality is, in this digital world, to be able to unplug and really carve out that space to do deep work as Newport talks about it, is a hugely important concept.

Yeah, for me it’s good. Actually, that’s what I tell my brain, so if I’m not able to do the deep work my value decreases, so it’s good that I can do that.

You’re in good company. And finally, a difficult question – what’s your most significant failure and what have you learned from it, and how do you apply that learning today?

I prepared this last question because you sent it to me beforehand and it was exactly that point about the B2C business model that I mentioned, that this whole customer acquisition cost aspect and I repeat that quote that customers will not come just because you built it but you really have to attract them. That is something where I’ve failed, and I see failure still in many startups and in my own activities too sometimes. I forget the customer and I forget that a great product still needs to have the client. The thing is it’s so simple but still, you often forget about it, especially the digital world. You know as a startup founder you feel like a great engineer, you have those ideas and you do your product, you know exactly what you want but then, in the end, you go out and nobody comes, nobody basically buys your product. It’s really frustrating, but I’ve seen that failure, I’ve done it and I try to avoid it in the future.

Well, I’ve done it as well. I think one of the challenges is, if you come out from a large organization as indeed I have, most of the time you’ve got your customers, you’ve got your embedded customer base and you’re not having to think, you might be acquiring new customers but you’ve got your existing customer base which keeps the business running but with a startup with no customers, everything goes back to zero and it’s a very tough – it’s a simple lesson to learn but it’s a tough lesson to learn and we’re learning it, we’re relearning it several times. But it sounds like that experience for you has translated into how you work with clients now and particularly in the startups where I’d imagine you spend a lot of time with them really making sure they understand their customers and what the customers want versus making assumptions that when you build something they’ll line up with their checkbooks, right?

Yeah exactly, that’s what I bring in when I coach startups. On the other hand I think it’s also important that a startup founder has a clear vision of what he thinks that clients want, and he needs, or she needs, to be stubborn from time to time and so there needs to be a compromise because it’s easy as a startup coach, you say, ‘You should understand your clients’, but sometimes you just need to try and be visionary and do it. I mean that’s what we’ve done too. There’s sometimes success, sometimes failure, but still I’m a bit more sceptical initially and really try to understand, is there really a need or is it just a cool product with great engineers? That’s of course, what I changed, and I also look at the KPI very clearly when I want to invest in a startup. I look at the KPI’s of how much they spend for a new customer and is the business model really scalable.

Yeah, it sounds like these are all – you’ve learned many of these lessons in the trenches and that’s beginning to yield results now in terms of giving you that level of focus if you are going to invest in a project or in a new business.

Yeah exactly.

So Michael, let’s wrap this up now. Where can people get in touch with you?

It’s easiest to get to send me an e-mail or go to our website, it’s www.acrea.com, and then just write me an e-mail.

OK, and we’ll put that on and we’ll put in the other links you got in there on social media and into the show notes at the end of this. It’s been a great pleasure to have you on the show, Michael. As I say, your experience starting out as a consultant then working in a large organization, now actually advising companies in a very, very relevant and challenging topic for a lot of large organizations, so a very rich experience and thank you for sharing that with our audience today, and we’ll look forward to keeping in touch but many thanks for your time.

Yeah, thank you, Mark, and thanks for the opportunity to be on the show. I once had an advisor, a marketing advisor for Acrea, and he told us, and I really have to tell this, I think it concludes this interview very well – you know, we, as Acrea, we are engineers basically, and we want to do digital business and consulting in that area and it’s really difficult as a very good engineer, I think. I’m not talking about myself but my colleagues, to get out and get to those clients because often it’s a lot about show and new trends and fancy new things and we really focus on doing good engineering and bringing our experience to the people so this consultant, this marketing consultant told us that on an engineering or consulting skills level we’re quite high up, but basically on a marketing, let’s say, going out, approaching client’s level, we’re basically at zero so I really liked the opportunity of talking to you.

Well, not at all. As you say that, I think – what was it Drucker said, there are only two functions of any organization, one is to innovate which it sounds you’re doing, you’ve done in your career and you’re doing for your clients, and the other is to market, and you can’t do one – there’s an exponential effect, if you get good at both of those things you have cumulative results which are far greater than if you are just good at one thing, so hopefully we’re getting your story out into our ecosystem. As I say there are lots of people listening who have digital projects on their agendas or who are wrestling with them or overseeing them and I think your insights and your experience will have been value for them and I really appreciate your time, Michael, and until next time have a good week.

Yeah, thanks a lot, Mark, you too.

OK, thanks.

Thanks a lot.

Bye.

Thanks. Bye.

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