Leadership Journey (LJ): What trends will determine the picture of Ukrainian marketing in the future?
The entire world has already learned the theory of games and understands that you need to earn on growth, and not to fight for reducing margins
Andrei Dligach (A.D.): First, I would not divide marketing into Ukrainian and global. The whole world has already learned the theory of games and understands that you need to earn on growth, and not to fight for the reduction of margins. Therefore, a partnership is the main trend: building clusters, cooperation between competitors. This will allow reducing costs and achieving better market position due to economies of scale.
Secondly, since 2017, personification is a trend: craft beer, Ukrainian MustHave stores and “made in Ukraine” clothes instead of H&M. This trend will evolve because digitalization allows you to contact a specific client, based on his psychological characteristics, motives, and selection criteria. In China, big brands like Henkel sell customized shampoos. The same will be with food, animal feed, and many services. There are already services like Uber Food, eda.ua and zakaz.ua, which take the ready food for you to any part of the city.
The situation in which a purchase is made is more important than the segment a customer belongs to
The situational approach is another trend. Meaning, the situation in which a purchase is made is more important than what segment a customer belongs to. To adapt to a situation, you need to collect data, which analysis allows to predict the behavior of customers in both b2b and b2c cases. Moreover, this very division is gradually becoming a thing of the past, because marketing migrates into ‘human to human’ or even ‘human with human’ models of relationships. For example, if you supply a farmer with plant protection products, it means that you are working together to increase yield and EBITDA. And you both earn on the growth of these indicators. Doing joint projects and making a profit is more beneficial for both.
We have two options for the development of events: the first is, we stop lying and play fair, the second – we (humans) pass over decision-making to artificial intelligence
LJ: How will marketing change with the development of artificial intelligence?
A.D.: Sellers acquire predictive systems to forecast customers’ behavior. But most customers also have algorithms to understand that a supplier is cheating. As a result, we have two options for the development of events: the first one is to stop lying and play fair; the second one is to shift decision-making to artificial intelligence. For example, a bank has to make a decision on giving you a loan based on the certificates you provide. The bank officer understands that you are cheating: your accountant reports incorrect salary figures; you report incorrect expenses. But the bank has to issue loans in order to earn money. Therefore, in Ukraine, 50% of loans are no return loans. At the same time in Hong Kong and China, there are already startups that can assess the reliability of borrowers based on the references in Google or Facebook profile. However people seeking loans also have tools to select the best solution: cash, or a loan, or a mortgage, a bank credit, or money from a pawnshop. So what is in store for us in the future? Either these issues will be managed by a niche uniting the buyer and the seller, or there will be a war of artificial bits of intelligence, which we expect in 2019–2020.
Virtualization is another trend. VR (Virtual Reality — Ed) is no longer a toy, but a full-fledged tool that companies use for promotion and sales. You do not need to go around to look at dozens of apartments offered by realtors: you can see them on dom.ria. Soon, I think, a new employee will walk around the office with a smartphone and read where things are. Predictive technologies will change many sectors of the economy: first, it will affect medical and law companies and service centers. Medical startups are built on the analysis of big data: billions of photos, tens of millions of case histories, which allows the artificial intelligence (AI) to diagnose a disease by early signs, even before the appearance of symptoms. AI can already create treatment protocols that are more effective than protocols created by humans. Data is the gold of 2020. Anyone, who will now collect data and learn to use it, will be the winner in 2020.
A new approach initially implies flexibility, a constant search for ideas. For people who are used to working from 9 am to 5 pm, it is scary
LJ: Will there be significant changes in management too?
A.D.: Of course, the issue is not even that management will become more flexible. There are many simultaneous trends. For example, business management through relationships, and not through hierarchical systems. Not through KPI, but through shared goals. Not through carrot and stick system, but through engagement, impression.
Previously, a project required strict time limits, resources, and goals. In recent years, fewer projects are implemented, that is, lead to a result. In the course of fulfillment, it turns out that resources are scarce, or the team is not motivated, or most frequently, there is a more interesting solution. Then the project is stopped and a new one is started.
A new approach initially implies flexibility, a constant search for ideas. For people who are used to working from 9 am to 5 pm, this is scary. So far, there is almost no system of free workplace jobs, where a person comes to his workplace, as to a co-working area, takes a seat where he is comfortable (not just an open space, which is rather demotivating), and teams up with colleagues in separate project groups. But fixed workplaces and a strict organizational structure will gradually disappear. True, all these processes will take some 5-10 years.
LJ: What will be the leader of the future? Given the digitalization, should a leader be a jack-of-all-trades?
A.D.: Leadership will be very diverse. For each team and situation, there will be a different type of a leader. Again, I am talking about the perspective of 5–10 years, because in Ukraine most of the companies are built on norms and rules. Such systems demand not ideas but strict tasks fulfillment. They are very difficult, sometimes even impossible to reform. It is easier to build organizations that are more flexible and to transfer resources, brands, and people there. Therefore, the old type of leadership will remain, as in a joke, where everyone follows the biggest sheep because they think that he knows where to go. But in fact, he goes away from the flock to where the grass is not trampled. However, there will be a new leader. Not the one who says, “I know where to go,” and not even like Elon Musk, who says, “I am going, and you, if you like, may join”. This will be an agile leader, who organizes space for generating ideas and searching. Rigid structures will become outdated. There will be no organization goals, no company goals, and no project plan.
Our medium-sized business has become extremely inefficient and has to look for new solutions
LJ: Will this also affect Ukraine?
A.D.: Ukraine is one of the drivers of such changes because our medium-sized business has become extremely inefficient and has to look for new solutions. A large business can afford itself to stay in functional models. But even large enterprises launch new projects with innovative approaches. For example, the Advanter Group is currently working on about 50 projects, and large retail chains implement the agile approach too. One trade network uses a service automation system, another – SCRUM. Mature structures like H&M start to lose to young companies, to crafting solutions, to uniqueness. Therefore, such giants as Google and Amazon introduce new management technologies.
LJ: What will be an effective employee of the future?
A.D.: First, you need to understand that your profession is obsolete. Second, since the profession has disappeared, then it is no longer a life sentence. You must constantly wonder what you want to become and to master new competencies. Third, the most interesting opportunities will appear at the junction of old professions. Over time, narrow specialists will not be needed anymore. There is still a need for those who understand accounting or can fix a crane. However, eventually, their work will be automated, and they will fly out of the labor market, no matter how cool they are. Already nowadays, robots do some ophthalmologic operations, and a surgeon is present at the operation for an emergency intervention. However, what is the point in human labor, when the accuracy of machines exceeds the human? Therefore, narrow hard skills will quickly lose their price. However, the ability to learn, to understand the technologies, to look for opportunities at the junctions of different spheres will be in great demand. The same applies to the ability to solve nonstandard tasks, to think critically, not to follow a pattern path.
OVER TIME, NARROW SPECIALISTS WILL NO LONGER BE NEEDED
LJ: According to experts, soon business will be engaged in education, and universities will focus on scientific breakthroughs.
A.D.: I strongly disagree. Business will not educate anyone to its needs. Loyalty to companies has already become history. Employees will easily change companies and jobs. Most likely, in the short term, we will get an analog of dual education. I hope that Ukrainian companies will learn to unite efforts and create vocation secondary schools at a new level.
Business will shape the rules of the game. It will set the requirements for a person in a certain position. The task of a person is to get these competencies through online courses, an open university, training, books, and universities of the old format. You acquire knowledge, undergo an internship, take exams and get access to a certain position.
However, temporary corporate universities will be an attempt of companies to meet another challenge. The new generation is open-minded and thinks globally, which means it easily moves to Poland, Germany, and from there to the Scandinavian countries. Ukraine is losing professionals. So corporate universities are not a development system, but a means to patch holes. Yes, a business can provide internships, employ people in joint teams, do on-the-job teaching. But the main task of business is to unite and set requirements, and not to engage in education.
THE MAIN TASK OF BUSINESS IS TO UNITE AND SET REQUIREMENTS, AND NOT TO ENGAGE IN EDUCATION
LJ: You once said that if some companies were not able to restructure, they could outsource their management functions. What will this market be like?
A.D.: Outsourcing makes a company flexible, able to test, try, and enter the market. To avoid outsourcing in principle only makes sense when you need 100% control or super high level of security. Even nowadays two large companies can agree on mutual services, even if they are competitors. For example, Apple and Samsung are partners in the production of phones. But in Ukraine, we mistrust each other so much that we cheat even before an agreement. Building trust circles, an ability to create a reputation are the most important qualities of a new manager and leader.
People come from the outside and try to sell services they do not know how to provide. But this is a temporary phenomenon
A temporary trend is that companies, on the contrary, take unusual functions. Obviously, for a supermarket to process meat is less profitable than for a corporation that produces chicken meat. What to do with the waste is an issue. A manufacturer can process all this or send for export. And what should a supermarket do? As a result, the store is organizing its own meat-processing unit, achieves improved quality control, and better financial performance. But a desire to do everything and at once is an anti-trend that will become a thing of the past.
What is an obstacle for outsourcing now? The fact that outsourcing is developing really fast, but quality and competence are lagging behind. People come from outside and try to sell services they do not know how to provide. But this is also a temporary phenomenon.
LJ: Many people are afraid to transfer the management’s levers to unfamiliar managers.
A.D.: Not exactly. Owners are no longer afraid to have specialists on the board of directors. They are less worried about a possible leak of information because they understand that we live in an open world. Anyway, this information can be bought, sold and you cannot hide it: to develop faster is the only escape. To find people you feel comfortable with and who can contribute and make your project stronger is an issue. Now boards are very quickly formed by members of a certain community to solve specific tasks. There is a whole community of mentors; there is a CEO club, which works out the technology. The process has begun.
LJ: How are business models changing?
A.D.: The situation is very similar to the one that develops with the professions: there are more frames and the main breakthroughs appear at the junction of various spheres. For example, Uber is not just a taxi. It involves data management and a special system of customer involvement. Banks cease to be just entities to store and transfer money and become more of financial advisers. Medical institutions transform from centers of (medical service and) expertise into healthy life space formation centers.
PEOPLE, COMPANIES, AND BANKS DO HAVE MONEY, BUT NOBODY KNOWS WHAT TO DO WITH IT
And yes, business models will now be built on three rationales. The first is the “consumer” approach. Businesses will focus not on an abstract client, but on a specific person. A business chain must satisfy a consumer need the moment it arises. An “idea initiated” approach is the second rationale. A business model is not adjusting itself to a consumer but rather forms the consumer need in accordance with a business idea. Take Uber, for instance, which has taught us to call a taxi differently. The third rationale is the answer to the question about money. People, companies, banks do have money, but no one knows what to do with it. There is huge excess liquidity. The task is not to utilize this liquidity, but to repack it, and afterward, new financial and economic models will appear, something that will create a different reality. We already see this happening in computer games and the crypto products market, in social networks, where the status on Instagram can mean more than in the real world.
Only when such categories as “idea, co-creativity, breakthrough, development” will start to be valued in our country, we will fully become a country of the modern world
LJ: Where, in your opinion, is Ukraine’s place in the new global world?
A.D.: I have an absolutely clear answer. There is a world of roads and a world of borders. The Ancient Roman Empire, Egypt, Nazi Germany, the Soviet Union, and present-day China belong to the world of borders. This world values a territory, a resource. This world is built on capture and wars. And the opposite world — the world of roads — values trade and integration. This is the path chosen by the western countries.
Ukraine is just on the watershed between these worlds. Partially we are pulled to the imperial part because the dominant values of welfare and justice relate to the world of borders. At the same time, we are facing the Euro choice and are trying to get into the world of modernity and success. Only when such categories as “idea, co-creativity, breakthrough, development” will start to be valued in our country, we will fully become a country of the modern world.
The trend to erase borders and the transit our life to a global level – on the Internet – is another issue. Therefore, not the country’s place is so important but the opportunities for a particular Ukrainian or a businessman from Ukraine. In this respect, I do not see anything tragic. We do have brains, we are rapidly developing, which means we will gradually learn to commercialize ideas. The trouble is that those who have educated are moving to Europe and Silicon Valley. When Ukraine will become a safer country and start to value innovation, then many people will come back. To create such conditions is the main and the last task of the state. The state must establish a system for observing rights and freedoms, and die.