The 2020s thus far have forced many companies to transform. The knock-on effects of a pandemic that continues to linger have shifted the goalposts of so many industries almost overnight. Some of the changes were long in the making and have merely had their importance emphasised by the pandemic, whereas other transformations have occurred primarily out of a need to survive but also to thrive during a time where traditional business models haven’t necessarily served companies well.
This article, the 4th in our JMW Consultants sponsored Three Leaders series, will spotlight three heads of companies who are overseeing transformation projects that show disruptive innovation at its best: John Donahoe CEO of Nike, Lie Jun CEO of Xiaomi and Stefan Ferber CEO of Bosch. These individuals provide vivid examples of the heart of leadership – making a decisive impact in the world of business by thinking, designing and delivering beyond the constraints of today’s accepted business realities.
John Donahoe: Leading the Charge to Digital, Direct-to-Consumer Commerce
Like many brands, Nike has had to bump up timelines on digital transformation in the wake of the pandemic. With physical retail store sales declining, Nike has ramped up its shift toward direct-to-consumer e-commerce sales. However, Nike’s strategy differs from the one-dimensional “abandon physical, push digital” approach that so many other fashion brands are employing. In fact, Nike is planning to open several more physical locations.
While this may seem like a counterintuitive move, it signals not just a shift in how their products are consumed but also a fundamental business model change. New CEO John Donahoe (a technology specialist of eBay fame) has decided that the traditional Manufacturer > Wholesaler > Retailer model is no longer fit for purpose. Wafer-thin margins and the huge and rising administration costs associated with the traditional wholesale market means that Nike’s move to direct-to-consumer (DTC) could not have come sooner. The pandemic sent the transformation into overdrive.
As mentioned, John Donahoe doesn’t see this move as the end of physical Nike stores. Quite the opposite, he sees stores as becoming digital hubs for consumers to collect their online orders, meet fellow Nike fans and interact via an ever-increasing number of Nike-developed apps. These smaller stores nicknamed “Nike Live” will be situated in suburban locations. By contrast, their substantial flagship city-centre stores will take on a new role providing digital experiences (they’ve been dubbed “Houses of Innovation”). “Nike Rise,” which is currently on trial in Guangzhou, China, is another big-box store concept that allows visitors to use their Nike app once inside the space to sign up for activities such as local football and running clubs.
What Donahoe is doing is creating a digital ‘hybrid’ community around the Nike brand that allows customers to pay for and enjoy unique experiences that extend far beyond shoes and clothing. While apparel will remain important, subscription payments and advertising space sold on their apps will enable them to diversify revenue streams in their digital ecosystem.
It’s a strategy that is already paying off. From June to August 2020, when most physical stores had already reopened, online sales increased by 82%, which significantly beats industry average increases of 30-40%. If current trends continue, over 50% of Nike’s total revenue will come from digital sales within a couple of years. The previous target was 30% by 2023, which was actually hit in mid-2020, almost three years ahead of schedule and only 6 months into Donahue’s tenure at Nike. He’s since hit the ground running and has taken advantage of Nike’s scale and secured a favourable first-mover position in the coming age of digital, omnichannel sports brands. As he says himself, “Nike’s digital transformation strategy is not easily replicated. Simply put, scale matters and Nike leads.”
Lei Jun: The Steve Jobs of China?
Some of you may be unfamiliar with the Chinese smartphone and IoT company Xiaomi, but chances are it won’t stay that way for long. The company has already broken the top 20 list for the world’s most valuable tech brands and is hot on Chinese market leader Huawei’s heels. Led by the charismatic founder and CEO Lei Jun, the company is set to finally leave the throes of the Chinese market (where rival brands such as Oppo and Vivo are starting to hack away at market share), and head West.
What makes Jun unusual in Chinese entrepreneurship is the way that he happily engages with consumers and his wider audience. While their low-key profiles usually characterise executives in Chinese tech companies, Jun launches himself into connecting with his target market.
Last year he set up an official channel on Bilibili, a long video site popular with Chinese youngsters and also held live streaming sessions on short-video app Douyin to get close to the consumers and to sell more of Xiaomi’s products. Even though he has a mere five uploaded videos, his Bilibili account has gained more than 1.2 million fans, making him one of the site’s top bloggers. Meanwhile, his maiden live stream on Douyin broke the app’s sales record. It’s this kind of sway and ability to develop a rabid following (along with his very similar played-down dress sense) that has so many commentators comparing him to Steve Jobs.
But persona can only get you so far. This year could be when Xiaomi finally garners the Western world’s attention by releasing ground-breaking technology that could fundamentally improve our relationship with our mobile devices. Lun hopes to use a new wireless charging innovation to take the world by storm by the end of 2021.
The wireless charging technology we’re talking about here comes in the form of a white box. Its job is to charge nearby devices, totally wirelessly. Soon, we won’t need to be anywhere near a plug socket to charge our phones. Most of us still physically plug a cable into our phones, or at the very least use a wireless charging stand but this technology would allow you to play on your phone to your heart’s content anywhere within range of this white box without ever having to plug your phone into a charger
The application of this technology goes much deeper than simply charging your phone. The Mi Air Charge technology works by sending “beams” of power at devices that are received via antennas on Xiaomi smartphones, which can then be transferred to all kinds of technology including televisions, lamps, computers and speakers to name but a few. In essence, Jun aims to create a genuinely wireless home. Lei Jun is envisaging a world where you don’t need to plug in any of your electronic devices – a reality which is not far away for Xiaomi.
If he manages to pull it off, it will be one of the biggest technology coups in history. Not just because of its groundbreaking potential, but because it’s something that world-leader Apple has also tried, and failed, to achieve.
Stefan Ferber: Leading Bosch’s Charge into IoT and AI
Bosch is transforming its traditional consumer goods business into the world’s leading authority on next-generation Internet of Things (IoT) technology. Soon, Bosch won’t just have their fridges or washing machines in the homes of customers. They will provide the technology and software upon which all devices can “talk” to each other, regardless of manufacturer.
This charge is being headed by Stefan Ferber who’s not quite a Bosch “lifer” (he previously worked at DaimlerChrysler); however, he has been at the company for over twenty years and is the new head of Bosch.IO. This new subsidiary was created by combining the former Bosch Software Innovations division with other specialised IoT and digital teams at Bosch. The teams working here comprise hardware and software developers, cloud specialists, solution architects, project managers, UX designers, business model innovators and trainers.
Their mission is to “bring the internet of things to everything from roads and factory floors to homes and fields.” Under Ferber’s leadership, they’ve certainly wasted no time. Thus far, Bosch has developed a myriad of world firsts during Ferber’s 2 years in charge including the IoT-connected Bosch security cameras that are helping in the battle against coronavirus.
These IoT cameras with built-in AI make it possible to execute commands on a wide array of customer-specific applications. For instance, a new Bosch camera solution with integrated intelligent video analysis measures body temperature contactlessly, anonymously and with a high degree of precision (maximum deviation of half a degree). When paired with a software solution for the open-source camera platform of the Bosch startup Security and Safety Things, these cameras can detect whether the number of people in a shop complies with the prevailing national or local coronavirus restrictions. This platform was designated a 2021 CES® Innovation Award Honoree, making it just one of four Bosch solutions singled out this year. A truly remarkable achievement.
However, Ferber is most passionate about utilising IoT (and AI) to provide solutions for our future’s greatest threat, climate change. As part of the “Sustainable #LikeaBosch” campaign, Ferber and his Bosch colleagues have used sites like their Homburg plant in the Saarland region to show what IoT connectivity is capable of when it comes to reducing energy consumption. Employing over 10,000 measuring points and sensors, the plant has spared the world around 5,000 metric tons of carbon dioxide in the past two years and more than 23,000 tons since 2007.
Associates at this Bosch factory can track, control and optimise each individual machine’s power consumption. Technical solutions implemented with the help of the Bosch.IO team also include ventilation of manufacturing shops on an as-required basis, utilisation of waste heat from various machining processes, and smart consumption management for machinery. Bosch has thus demonstrated that manufacturing can, and will, be much greener in the future.
Finally, the efforts across the IoT and AI spectrum have helped Bosch to reach carbon neutral (net-zero emissions) status as a company. They are the first globally operating industrial enterprise (they have over 400 locations worldwide) to achieve this monumental feat, and it’s by no accident that they’ve hit this milestone just two years after promoting Ferber to head of Bosch Software Innovations (now Bosch.IO). Soon, they’ll be helping the rest of the business world do the same.
Haig Barrett is partnering with JMW Consultants for our Spotlight on Leadership series: Shaping the Future™. JMW are expert in developing leaders and teams fit for transformation and this collaborative series has been compiled to provide valuable insights and strategy for business growth and accelerated performance.