Embracing Uncertainty

Janka Krings-Klebe


European industry is under threat from massively growing uncertainty. Trade tariffs, technological disruptions and fast-moving competitors on digital steroids cut deeply into predictions about business development. German managers report that their decisions can’t keep up with the pace of change in their business environment; they feel as if they have lost control. Uncertainty is so pervasive that it turns their former strengths, namely meticulously planning, organizing and controlling resources for highly efficient value creation, into a fundamental weakness.

Mainstream management practices aimed at intensifying the levels of planning and control don’t work in conditions of high uncertainty. In fact, they often lead to analysis paralysis, making the situation worse while the business environment accelerates away. In today’s dynamic markets, they appear as outdated as Soviet-type economic planning.

If managers cannot overcome their predisposition for detailed planning and control, this habit will kill European businesses more reliably than anything competitors or customers might do. In the face of the kind of uncertainty businesses experience today, established best-practice management has no answers. Budgeting, accounting, resource allocation and reporting practices still work in yearly cycles, rendering rapid reallocation of resources to emerging business opportunities next to impossible. Current governance norms rule out engaging with risks that appear to be unpredictable. Together, these practices make it impossible to adapt to new customer needs fast enough, spelling death for innovation. We need to reinvent them for the more dynamic and uncertain world opened up by business ecosystems.

Companies like Haier and Amazon have already demonstrated that it can be done, developing new management and governance practices aimed at creating highly dynamic structures inside their companies. This approach has transformed their companies step by step into open ecosystems where market-based structures fluidly balance available resources and capabilities with customer needs. Now their internal dynamism is so great that structures and business operations can rapidly adapt to emergent customer and market needs.

Business ecosystems such as theirs are built on principles of local autonomy, redundancy, diversity and constant experimentation. They use management and governance practices very different from those of mainstream management. Comparing their decision-making processes illustrates the differences.

In business ecosystems, the majority of decisions are made at the edges, at the point with the biggest impact, usually very close to customers – especially in uncertain or new situations. Governance models ensure that decisions in these ecosystems can and are always made as close to the edges as possible.

This is very different from today’s management mainstream, in which all but the most trivial decisions are concentrated at the top of hierarchies, far removed from customers. Only top management is permitted to take decisions involving risk. Unfortunately, in dynamic situations such as those we increasingly experience today, this course simply leads to paralysis.

Business leaders cannot hope to compete in and with dynamic ecosystems unless they take steps to make their own companies much more adaptive. The secret is to give up control at the edges, and to learn from constant experimentation how to make the most of each new challenge and opportunity.

This article is one in the Drucker Forum “shape the debate” series relating to the 11th Global Peter Drucker Forum, under the theme “The Power of Ecosystems”, taking place on November 21-22, 2019 in Vienna, Austria #GPDF19 #ecosystems
It was first published on the GPDF Blog

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Herd-like Behavior Breaks Banks, Not Tech

Joerg Schreiner


In a spectacular display of herd-like behavior, the banking sector is rushing into a technological arms race, with the exception of one remarkable company. Unlike others, this bank does not believe that closing technological gaps or possessing superior technology will give them the necessary competitive edge to survive in an increasingly digital world. It learned one lesson more than their peers from the example of tech-driven digital disruptors like AirBnB, Uber, Amazon and Apple. What most other banks learned is that digital technology can raise their efficiency, and contribute to defend against future threats.

Tech sure is important for the future of banks, but it might not be the most important factor deciding about survival in the long term. The real threat for banks would be to loose their dominant position as intermediary of financial transactions. Judging by their actions, the majority of banks are either unaware of this threat, or they have no clear idea how to deal with it. So they play it safe, or at least they think so. If other banks invest into technological capabilities, then they do, too. Playing the game in the same way at least keeps them in the game. Each nervously eyeing their peers, and imitating each others moves, they focus on an age-old survival strategy: In a herd, the strongest ones can save themselves, while the weakest ones are most likely to fall prey to predators.

Becoming the strongest among peers seems the best bet for survival. In the case of banking, it is not. If banks can not defend their strategic position as intermediary of financial transactions, then they all will disappear sooner or later.

Think Like a Predator, Not Like Prey

Except for banks like Monzo, who know how to make themselves irreplaceable. London-based bank Monzo focuses on creating new value propositions for customers. And judging by their numbers, quite successfully. In march 2016, Monzo’s crowdfunding campaign raised one million pounds in record-breaking 96 seconds. One year later, their next campaign raised another 2.5 million pounds from loyal followers. VC investors start lining up with money bags, similar to ten thousands of Monzo’s clients to get a piece of the company: A prepaid debit card, coupled with a smartphone app. Wait a minute; clients queuing up for old-fashioned technology like this? It appears to be ludicrous. Other banks and fintechs have been aggressively marketing similar, more feature-packing mobile apps and multi-channel services for more than five years. Yet within merely 1.5 years, Monzo has succeeded to grow a significantly larger fan base than comparable fintechs: More than 400.000 clients.

Monzo knows how to create customers. They focus on solving their problems. Customers don’t need shiny, elaborately complex technological products if these don’t solve any of their problems. For example, what kind of customer problem do all the banking-led blockchain start-ups solve? Or self-service portals that place the main burden of interaction on their users? In short: None. Monzo, on the other hand, continues to grow because they make dealing with financial aspects of life much easier for their clients. And that is how they defend their position as intermediary for financial transactions: Their clients want Monzo to be in this role.

For example, many of Monzo’s current clients are young adults with limited financial budgets. For them, maintaining control of their spendings is a real issue. Delays of several days until purchases appear in their bank account statements make them nervous. They need fast confirmation that their account still is balanced, before daring to continue their shopping spree. Monzo’s card is widely popular for these young adults because it gives them immediate financial control about their budgets: The smartphone app registers and shows every transaction done through the Monzo card within minutes, together with the current balance. In addition, the app automatically categorizes purchases and allows users to put monthly limits on each category, thereby warning users from overspending for non-essentials, e.g. drinks or shopping.

Customer Journeys Start in Life, Not in Business

For most banks, customer journeys usually start when their clients want to transfer money. For Monzo, they already start when their clients’ needs are likely to involve financial transactions. And aren’t there a lot of financial transactions in our lives? How about playing intermediary for most or even all of them? This is the opportunity that I see Monzo preparing to grab. It explains how the company might be able to obtain one billion customers five years from now — you read correctly; one billion, not one million! — as recently claimed by their CEO Tom Blomfield. Debit cards are  just Monzo’s entry point into a much larger market. Much larger than traditional banking.

Monzo already announced how they aim to incorporate their app into many more customer journeys. For example, they want to offer services to switch their clients to less costly providers of gas or electricity automatically, thereby reducing monthly bills. Similarly, they plan smart software to auto-switch their clients’ saving accounts to providers offering higher interest rates. Open banking regulations like PSD2 make it possible to easily integrate services from many other industries into financial customer journeys. Monzo’s CEO even talked about making their clients aware of the best deals for shopping grocery. I imagine the list of announcements could easily extend to the integration of services from insurance or mobility providers. From the perspective of these industries, it would mean that Monzo would become the new go-to platform to easily acquire new customers. It would turn Monzo from a bank to a business intermediary for many types of professional services.

Dumb Use of Smart Technology Won’t Save You

The banking sector is one, but by far not the only industry that has fallen into a common trap of digital technology. Obsession with much-hyped, technologically challenging end products is currently blinding entire industries to the more immediate strategic threats and opportunities in the digital age: To smartly and swiftly combine proven technology with new services into irresistible value for customers.


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Book Announcement: Future Legends – Business in Hyper-Dynamic Markets

Janka Krings-Klebe


We are proud to announce our upcoming book Future Legends – Business in Hyper-Dynamic Markets.

Future markets will become hyper-dynamic – fueled by digital technology deeply intruding into the life of consumers and businesses. Hyper-dynamic markets challenge businesses to become radically more adaptable and innovative than they are today. This book gives business leaders a strategic blueprint to survive and profit in these times. It describes how to turn businesses into future legends.

The book will be available internationally in June 2017 as eBook, hardcover and paperback.
For an excerpt, please contact us at


Praise for Future Legends

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