In an increasingly divided world, businesses need to forget about the middle and instead look to the margins for their survival.
“The average is always wrong,” Avon CEO Jan Zijderveld urged a Hamilton audience. The trick, he said, when it comes to data is to look for the peaks and troughs.
He was the keynote speaker at a day-long Future of Work conference organised by the University of Waikato’s Management School in April.
With polarisation a crucial feature of the global economy, in business there are two models of success, he told an audience of about 200 during a bracing, hour-long presentation with a global perspective.
They are to go super-premium or super-value. “If you think about any market and you go for the middle, you are dead.”
That plays out, for instance, in the food and nutrition sector.
“Look at food. We have one billion people that are overweight, we also have one billion people that are still struggling. So they need food and need nutrition and both are business opportunities, but they are actually the opposites.”
Zijderveld, a Distinguished Alumnus of Waikato University who graduated with a Bachelor of Management Studies in 1987, referred also to a “new debate” concerning the educated and the uneducated.
“Seventy percent of the graduates in Scandinavia are women. And we are going to have a whole generation of angry young men. They are the soccer hooligans, they vote for the parties that are protest parties because they have no future. They see no future for themselves, and they are a huge political challenge.”
Globalisation had given a lot, taking half a billion people out of poverty, but was under threat, being played out in Brexit and US President Donald Trump’s desire to build a border wall.
Zijderveld said the “silver economy” represented another area of polarisation, with a “big group” of wealthy older people, who have no need to economise when it came to spending, and a younger population that was “probably going to be on less.”
“So you get a real polarisation. The average age in Europe is mid-40s – well, that’s exactly the wrong age to target. It’s actually the old people you should target or the younger people. So again you need to de-average and the problems and solutions and opportunities for both are very, very different.
“So the big message I wanted to leave is de-average. Whatever data pool you look at, de-average. The opportunities are not in the averages.”
Zijderveld, who was president of Unilever’s $14 billion European business before taking up the Avon position in February last year, also covered environmental challenges and technological change in his address, which was followed by a panel discussion and workshops.
The second “big thought” was that the planet is under stress. That came with a challenge: “We’ve got to think about our responsibilities as citizens but also as business people. What do you do: are you part of the problem or are you part of the solution?”
The energy transition to a low carbon future is key. “If we solve the energy issue we solve many of the other problems.”
Almost all leading organisations in Europe had made a commitment to be carbon neutral or better, he said, citing Shell as investing “massively” in the transition.
Apart from climate change, access to clean water was also a major problem, as was plastic pollution, while the planet was being “used up” at three times the rate it could sustain.
The world couldn’t continue in the same way. However, he also saw grounds for optimism.
“The good thing, and I really believe, is that the world is waking up. I think it was a milestone moment when most of the countries around the world signed up to the 17 sustainable development goals.
“I’ve seen a lot of boardrooms, I’ve seen a lot of senior management, and it’s on every big business’s agenda to really drive the sustainable development goals.
“Increasingly, even investors, pension funds, big mutual funds are starting to say, hey, what is your company doing? Because they realise that if your business model is based on the old world of destroying and using up this world, it is not a great investment. Your company is not going to be around in 10 or 20 years’ time.”
Zijderveld said the third big shift is technology.
The pace of change faced by businesses and workers came not from a single factor, but from a combination of data, computing power, AI and connectivity.
“It’s not one thing that creates the fourth industrial revolution, it’s the exponential effect of these four forces all coming together.
“This is a super-exciting development but it changes literally everything that we do.”
He was an optimist about the changes, citing early transformations in the nature of work, from rural to factories and then to offices, each of them unimaginable at the time. “The question is how do you transition to the next economic model to make it fair. It will be a more open economy. It will be a more gig economy.”
Being big is no protection in itself, he said. “I like the word ‘relevance’. Am I still relevant as a company?”
Profound questions were raised, including whether the economic model was still working and how it could be evolved. For young people, he said, the search for meaning becomes important. The change is from success to significance, with Goldman Sachs representing the former and Tesla and Patagonia the latter.
“The world we live in, it’s an exciting world, it’s a challenging world, it’s a scary world, but it’s also a world full of opportunities and if you ride the waves well it can be very, very exciting,” he said.