Dutch serial entrepreneur Jurgen Appelo, who currently lives with his partner in Brussels, advocates continuous experimentation. In his opinion, it is nothing unusual that nine out of ten start-ups fail in the first few years. If the percentage of their survival will be higher, it would simply mean that they did not sufficiently test their ideas and entirely focus on the customer's needs. The founder of Agility Scales, which helps organisations achieve agility, will talk at the forthcoming SEMPL conference about how to develop an innovative idea and scale it up.
You are also known as a ‘creative networker’. How do you see this role?
What I always try to do is to learn a lot from books, articles, conferences and other people and use the knowledge to develop new ideas for professional or personal improvement, and for networking. I always try things out to see if they work. You improve the most when you run experiments all the time. For me, creativity is always trying things out to improve your company and your work. Nowadays, companies need to operate more as networks rather than hierarchies. The traditional term “worker” has to be changed to “networker”.
In one of your interviews, you stated that in the near future people would be replaced by robots, which do the job more reliable and cheaper, while people will get more creative jobs. What does the future bring from the management perspective? In your view, how does the manager of the future or the manager 3.0 that you wrote about in your book Management 3.0, look like? How can a manager, who is not best known for his emotional intelligence, become more sensitive to the needs of his employees?
I think some of the most important things for a manager are empathy, understanding what motivates people to do their work, what inspires them to do the best they possibly can and what kind of purpose they need. Computers and artificial intelligence cannot do that at this moment. AI-enabled machines don’ t understand that I woke up feeling a little bit grumpy and I needed some time to get better this morning. The machine cannot pick up this kind of thing. This is what managers are for. It is all about people management. We will be able to delegate checking for targets and performance management to computers that will figure out how to measure people’s performance and provide feedback. Knowing what makes the person tick, why someone is unhappy or what would increase their happiness, so they can become more productive, is an important part of a manager’s job.
You can train any skill. I must say that I am bad at it as well and all my friends know that I’m not really a very empathic person. Nowadays, I pride myself on the moments when I do notice someone is not feeling comfortable or needs a bit of attention. Then I give that person attention and I give myself a pat on the back because I did a good job on something that does not come naturally to me. I am still trying to learn how to do that, but it takes time.
Besides the book about Management 3.0 you have also written another book about management, Managing for Happiness. Is it even possible to make employees happy all the time? How can business leaders contribute to happier working environment?
There is a lot of confusion about the term. Some people think that happiness means that you smile all day long. That is absolutely not the intention. You cannot force people to be happy and to smile every minute of the day. Happiness is a deeper feeling. I feel very happy about my job, my partner and my career, but there are plenty times each day when I could feel grumpy or mad about something and then vent my frustration on Facebook. Every now and then even happy people need some stress release. I think that people who are deeply happy about themselves, their career and their personal lives are much more able to deal with the setbacks during the day in their professional or private lives. Of course, you can be grumpy or mad every now and then, but very quickly you are back to normal and you start to feel good again.
In your TED talk in Lille, France, you stressed that the world needs meaningful products and services. Is this even possible in the world flooded with so many cheap products?
I think there is a trend towards more meaningful products and services because costumers have more and more time to care about not just the price but also how the products are made and what kind of companies are behind them. The more people earn and the better the economy is around the world the less people care about how cheap things are. So, they care more about other attributes of products and services. The same applies to employees who do not want to work for a company that produces products at the lowest possible price. That is not inspiring and does not motivate the most important employees. Anyone who is talented and has great skills wants to work at the company that is trying to do a great job at something. This means that as a company you have to attract the best talent. There is a huge talent war always going on globally, so in order to attract these talents you have to figure out how to change from just producing cheap things to something that is a bit more meaningful for the employees and customers. For some of them that can be hard because they would have to change the product. There are plenty of companies still producing stress balls that you get at conferences and have absolutely no value what so ever. The visitors throw them away as soon as they leave the venue. I think that nobody wants to make these kinds of products. We will work on that in the next couple of decades because people care more and more about the environment and sustainability. That means that these products will slowly fade away.
We hear a lot about the need to have organisations with a clear purpose; not just because customers are more inclined to buy products from such companies, but also to attract younger generations of employees. Why does the fact that they work in a company with meaningful products mean much more to younger than older generations?
I think that there is a difference because the younger generation started at that point. They already use the new technologies in ways that are perfectly natural to them. There is no need to explain to them how to use a smartphone or an application. The earlier generations had to learn to do that and it took them a bit more time. I see that many of them can adapt to the new reality quite fast. I think it is the same with an attitude. It is true that my generation had more focus on career and making money because that was important. The younger generations have less focus on just moneymaking because they want something meaningful. That does not mean that the older generations don’t want that, but it means that they have to change their mindset. They were used to just seeing companies or employers as ways to make money. Now it is becoming more normal to see your employer as a way to get a fulfilling life and to do a job that you really love. This is new for older generations, but the younger already expect that.
One of the issues that you are going to address at the SEMPL conference is how to stay agile when you’re growing fast, which is a true challenge for many start-ups. What would be your advice to them?
That is a struggle for many companies. I did a lot of interviews around the world for my new book “Startup, Scaleup, Screwup” and I noticed at Spotify, Booking.com and many other companies the same patterns of how they organise things. Many of them have common sense, agile practices that they apply at a team level, but the same patterns also show in the way they structure themselves with the innovation funnels. The teams have the same ideas about how to structure the organisation.
What is the common denominator of all these companies you interviewed?
They have a lot of things in common. A characteristic that stands out is their relentless experimentation. They are not afraid to fail but they keep all failures very small, so they can survive each and every one. The idea is not to prevent failure. You want to fail as often as possible because this is how you learn. Every failure should be small and survivable.
Secondly, their common denominator is also their customer focus through customer journey mapping, A/B split testing, product visions, lean personas. My new book is going to be full of examples of practices that good companies use to be more customer-centric. The most successful scale-ups are focused identifying the customers’ problems and how they can be solved.
The statistics are merciless. 90 percent of start-ups fail in the first few years. What are they doing wrong?
That is completely normal because everyone can have an idea, but 9 out of 10 are bad. You do not know in advance which of the ideas are bad. That is why we gave an innovation funnel. It is best is to start with every idea and then figure out along the way which are the bad ones. One by one they will drop off. The ones remaining are the great ideas with the great teams behind them.
In our ecosystem, there is a lot of experimentation and there is nothing bad about 90 percent of start-ups failing. If the percentage of succeeding would be higher, we are not experimenting enough.
You said that building a start-up company has become a lot more complex than it was two decades ago. Why is that?
It is more complex because there are so many more options. I had a start-up twenty years ago and at that time I had just a couple of options for funding – angel investors, venture capitalists and the bank. Nowadays, there is crowdfunding, crowdlending, government grants, accelerators and incubators. There are also many more technologies nowadays to pick and choose from, like blockchain or machine learning. They did not exist twenty years ago. That makes the whole ecosystem quite complex to operate in, but it also means that there are a lot more opportunities to experiment, but it also takes a bit more effort to learn what all the possibilities are.
There was a real hype about cryptocurrencies and blockchain technology in the last couple of years and a lot of start-ups emerged but quickly failed too. Was it really just hype or do you think that these new technologies can have far reaching effects?
I think it is a nice example of a technology in search of a business model. Many of the new companies that started using blockchain technologies had absolutely no idea what the business model was supposed to be. That is a part of the experimentation. It is fine that 9 out of 10 experiments fail because we are trying to figure out what is going to work. The technology people sometimes think that the market is going to want their product, but that is often not the case. It all starts with the user’s problem. The basic questions you have to ask yourself are who is a customer, what kind of need or a problem they have and what can you do to satisfy their need that might make use of blockchain.
I have a start-up right now and we foresee the possibility of using the blockchain technology in the future, but we are not doing anything at this point. Our focus is now on identifying customer needs. In the future, we will figure out if what the customer wants requires some kind of a blockchain technology. You always have to start from the customer’s perspective. It is the same with the ICOs. Nearly all of them failed because people started buying coins, but there was no market for them. In the past, money was invented after there was already a market, so people were already trading animals and food with each other. Because it was really inconvenient to trade a chicken for a loaf of bread, they invented money. That facilitated the market that was already there and it has to be the same with blockchain and cryptocurrencies. When the market already exists, you can figure out how to introduce the blockchain and the cryptocurrencies to make it more efficient.