Systems Leadership for Disruptors and Incumbents - The a16z Show Recap
Podcast: The a16z Show
Published: 2021-07-24
Duration: 2880
Guests: Jeffrey Immelt, Jeff Jordan, Robert Siegel
What Happened
In this episode, Robert Siegel discusses the false dichotomy between digital and physical capabilities in business. He argues that successful companies blend both to navigate the complexities of today's ecosystems. This theme is central to his new book, 'The Brains and Brawn Company: How Leading Organizations Blend the Best of Digital and Physical.'
Jeffrey Immelt, former CEO of GE, and Jeff Jordan from a16z join the discussion, providing insights into how companies can assert power within an ecosystem. They delve into examples from companies like Instacart, which operates a complex four-sided market involving grocery stores, customers, shoppers, and CPG companies. Instacart has thrived by influencing logistics rather than controlling them directly.
The episode highlights how companies like Apple and Google manage their ecosystems differently. Apple maintains control over more aspects of its ecosystem by designing products in California while relying on global fulfillment. Google, on the other hand, manages the Android ecosystem, involving handset makers, carriers, and developers, which requires strategic oversight.
The participants stress the importance of timing and adaptability, using Webvan's failure as an example of poor timing due to a lack of smartphones. In contrast, Stripe's success is attributed to its ease of integration, enabling developers to set up merchant accounts in minutes.
Jeff Immelt regrets not spending time in Silicon Valley before becoming CEO of GE, which he believes impacted his understanding of the tech landscape. The episode also covers challenges big companies face with innovation, often due to structural issues rather than awareness.
The discussion touches on how legacy companies like Disney have successfully transitioned to new models, such as streaming with Disney Plus, inspired by pioneers like Netflix. Leaders are encouraged to use influence maps and stress the importance of understanding industry dynamics and stress points.
The episode concludes with the idea that great leaders prepare to take advantage of opportunities rather than predict the future. Katrina Lake of Stitch Fix exemplifies this by asking her staff if they would hire themselves for their current jobs, ensuring they stay current with industry demands.
Key Insights
- Robert Siegel identifies a false dichotomy between digital and physical capabilities in businesses. He argues that blending both is crucial for navigating complex ecosystems.
- Instacart's business model exemplifies a four-sided market involving grocery stores, customers, shoppers, and CPG companies. Its success stems from influencing logistics rather than directly controlling them.
- Stripe's ease of use for developers transformed the payment landscape, reducing the time for setting up merchant accounts from a month to five minutes. This accessibility was key to its widespread adoption.
- Legacy companies like Disney have successfully adapted to streaming by following the lead of disruptors like Netflix. This shift highlights the importance of incumbents embracing new business models.