Are you ready?

The customer of the future is, in a word, demanding. When it comes to serving her needs and meeting her expectations, the bar has never been higher. Earning her brand preference and creating a bond of loyalty will be especially challenging in a time when everything is effortlessly automated, perfectly personalized and seamlessly connected.

Brands will take one of two paths.

Picture Path A: The invisible commodity. The customer of the future doesn’t rely on brand as an abstract marker of quality. She has validated ratings — crowdsourced and synthesized and delivered right when she needs them. In fact, the customer of the future often doesn’t even pick which brand she buys. She gives her intelligent, Internet of Things connected agent (think: Alexa with a Master’s Degree) certain purchasing filters and lifestyle goals, and the agent buys on her behalf. Google picks the flight, Siri picks the restaurant, Watson picks the doctor, and the car picks its own motor oil. Thus, brands must appeal to smart AI assistants before they even reach end customers. In this world, many brands disappear or, at best, claw their way to relevance with increased spend. Their traditional role, acting as a marker to simplify and aid decision-making, simply becomes less valuable.

Now picture Path B: The essential tribe. The customer of the future has never been more connected to companies and what they stand for, sharing her life to get personalized products and experiences that are more fulfilling than anything she ever pulled off a shelf. She lives openly and expects transparency in return, and this intimacy leads to an emotional bond. She uses her social platform to broadcast her association with and belief in brands she loves. Brand becomes more than a value proposition or signifier — it’s an emotionally rich, connected community that feeds her needs and helps her thrive.

It’s a tale of two futures. For some brands, it will be the best of times. For others, the worst. What can be done today to put a brand on the path to enduring customer relationships?

1) Build the brand around the problems you solve, not the products you sell.
The customer of the future doesn’t care about products; she wants solutions. From becoming healthy to getting paid to staying connected, she will bond with brands because they resolve a challenge in a way that saves time and money and makes life incrementally easier, more enjoyable and productive. To succeed and stay relevant in an increasingly fluid and changing world, brands built around purpose can transcend categories, expanding the definition of the problems they solve and focusing more explicitly on the customer in her entirety. Traditional industry boundaries are blurring, giving brands the opportunity to connect with customers in new ways. Is Snapchat a software company? Media? Telecommunications? Whatever it’s called, it sells and delivers engagement. Is GE a manufacturing and equipment company? Or a technology and software provider? At the end of the day, it sells and delivers productivity.

Brands must stand for something bigger so that they can flex their relevance and inspire attachment. Dawn sees few boundaries for the brands she loves, giving them license to do more and play a greater role in her life. The brands that “click” with customers will define themselves by solving a broader set of problems, encompassing a purpose-led array of solutions for efficiency, entertainment, community, security or accomplishment.

To do: Examine your brand’s mission and purpose. Does it encompass the problems that customers will most need solving?

2) Build emotional connection through relevance and intimacy.
In the future, a brand’s power comes largely from its ability to provide the perfect experience to a segment of one. Personalization depends on transparency, which means a brand’s power comes from the data it is given. You can’t even get started on meeting this higher bar for relevance if you haven’t already established the confidence and intimacy necessary for customers to trust you with their data. In the future, every brand is a tech brand, and they’re built from the dynamic exchange of data. The strongest brands become intermediaries, enabling customers to connect with other members of a tribe. So Nike becomes less about clothes and more about data-driven fitness motivation, recommendations and crowdsourcing to create value among people with shared interests. And John Deere becomes less about machines and more about the intelligent application of farming productivity data.

To do: Make your customer relationships a two-way exchange and apply customers’ data to achieve added relevance and intimacy.

3) Embed the brand deeply in the company and culture.
To stay nimble in this age of accelerations, brand must become indistinguishable from mission, that is, deeply embedded in beliefs, values and actions. In a world of radical transparency and immediate exposure, the brand’s values need to be embedded in the very fabric of the company, in every small decision and daily behavior. Unconstrained by their current boundaries, leading businesses will have agile brand portfolios that cover defined segments and create new ones — expanding their scope by creating new avenues of growth and making the corporate brand more powerful. A deeply embedded brand enables innovation around the core, as IBM has shown with Watson, Amazon with Alexa and Goldman Sachs with Marcus — all provocative new brands grounded in deep–seated customer needs (whether it’s making the most of man/machine collaboration at IBM, making the most of your day through Amazon, or making the most of your money at Goldman Sachs).

To do: Look at your company culture. Is the customer “problem to solve” deeply embedded?

With two potential futures — invisible commodities or essential tribes — brand has never been more important. By putting brand at the top of the to-do list, by making it more encompassing and deeply embedded, companies can become more proficient at creating new sources of value and catalyzing a stronger sense of belonging among customers whose needs and expectations are only rising.

The future promises profound change, and perhaps the most pressing challenge for brands is keeping up with customers’ expectations for immediacy, new models of collaborative decision-making, heightened demands for personalization, and the other myriad ways technological and societal changes are raising the bar. To capture the customer of the future’s attention, companies need to be expansively ambitious, deeply personal, inextricably connected and relentlessly experimental.

One thing is for sure: If even a few of the tech transformations predicted for the next 10 years come to pass, the IoTs, Li-Fi’s, VRs, ARs and AIs, there sure is a lot to be invented. It’s challenging to keep pace with the initialisms let alone the implications for building and sustaining successful businesses.

Our trackable, data-fueled, AI-powered future lives will be served by qualitatively different offerings powered by new-to-the-world business models. Intelligent hubs will manage our daily finances dynamically and proactively, putting the service levels of yesterday’s private banker at everyone’s fingertips. Personal digital shopping agents, acting on preference data that knows us better than we know ourselves, will redefine much of the $22.6 trillion retail business. Comprehensive data will reshape the very nature of insurance; actuarial tables are less relevant when risk can be assessed and priced on an individual level. Genomics and moment-by-moment health monitoring are just a few of the forces likely to transform the $7.2 trillion health business.

But the degree of change needed to seize this opportunity is hard to manage. Faced with a simple question — “Is your business changing at the same rate as your customer?” — for most, the answer is no.

It is extremely complex to manage a large organization to stay on the edge of this change. Yes, the new call for innovative cultures and methods must be heard, but success with the customer of the future will be anchored in discipline and focus, just of a different kind.  Based on our research and experience, meeting the four challenges outlined below will help leaders drive change rather than respond to it.

1. Master the shifts that matter.
Not all of these big shifts are created equal — some offer threats, and others opportunities. Does the shift impact your current product or your core customer groups? Does the shift challenge established assumptions of how value is created? The shifts that matter most are those that significantly challenge your current profit formula, or open up vast new markets that don’t yet exist.

Different shifts affect businesses differently. Companies with margins highly dependent on asymmetric information and high transactions costs (e.g., much of financial services and communications) will see profits eroded by transparent existence, but those in the flow of customer data will see this trend as a boon for new sources of profit and customer access. In service-intensive businesses, exponential intelligence raises fundamental questions about the role of people and the right cost structure, as value moves from people to algorithm (Airbnb has created about $12 million of shareholder value per employee versus Marriott’s $200,000). And most product businesses face questions about ownership versus access raised by a life in flow (even stalwart Gillette feels the bite from subscription model upstart Dollar Shave Club). Identify the shifts that matter, examine them through the lenses of multiple perspectives, and scenario plan how various changes might unfold and interact, always remaining mindful of “unknown unknowns” that will disrupt tidy plans.

2. Deeply understand the enduring “jobs” that customers are trying to accomplish.
Here’s the surprising and comforting truth in the face of all this change: Customer needs are relatively stable, they are just actualized in a different way. Carrier pigeons, telegraphs, telephones, fax machines, email, text messages and Snapchat all help people communicate with distant contacts. The job of sharing information persists even as the technology morphs. We still have a need for status, but with our “life in flow” it may be actualized more through the sharing app that enables our social sphere to experience our amazing vacation in Paris, than via the Mercedes in the drive of the McMansion.

And so many needs have yet to find commercial solutions; the real gold lies in unearthing nonconsumption that creates whole new markets.

We don’t find these markets by yesterday’s planning assessments of sizes, shares and growth rates. Because they don’t exist yet. We find them through much deeper human understanding: the 20 hours of deep inquiry with six customers, not the 20-minute survey sent to 6,000. We find them through seeking out anomalies, unexpected behaviors, curious compensating routines. We find them by entirely unshackling ourselves from the constraints of “what we do.” In the words of Clay Christensen,“success means falling in love with the problem, not the product.”

3. Pursue two distinct tracks of innovation efforts, and don’t mix them up. Perhaps the most critical decision is understanding which shifts call for steady improvement in your existing business, and which call for wholesale creation of new businesses. Both will be needed. But the management skills, profit expectations, funding approaches and risk culture needed by the core are diametrically opposed to those demanded by new models. It will always be more efficient, in risk-adjusted terms, to invest in incremental tweaks to the established offering rather than creating an unproven future. If all investments are judged by a single set of criteria, sustaining the past will always beat creating the future. Consequently, fledgling growth enterprises need separation from the pressures of the core, patience and support to iterate and pivot, and access to the large-scale resources when there’s opportunity to go big.

Create, not merely defend against, discontinuous change. Just as TCP/IP brought about the entirely new business models of Facebook, Netflix and Amazon, the same will continue to happen. New technologies like IoT and AI won’t just make services smarter and objects more intelligent, they will create agent and platform models that change the way profit is earned. As businesses become more digital, the marginal cost of launching entirely new value propositions, targeted to a unique segment, goes down significantly. And this calls for a healthy dose of new business design creation. The brands that put their energies into incubating new business designs, often based on very different economics and assumptions, will create and capture the future. Success with the customer of the future depends on a degree of ambidexterity and paranoia – encouraging part of your organization to sustain your established business model while simultaneously empowering independent teams to replace it. Senior executive engagement with both models proves indispensable.

4. Experiment actively, improve continuously, play daily. Business strategy processes of the past were rooted in comprehensive, data-driven dispassionate analysis. There is still a place for this work. But business design in a digital age is not the province of the business planner or financial analyst. It is largely a creative and imaginative endeavor, one which begins with a new canvas upon which the company paints its future. Curiosity, iteration, experimentation and ongoing learning will do more to find new value spaces than rigorous analyzing, screening and modeling.

Practice emergent strategy, where your goal is to learn as much as you can as quickly and as cheaply as you can, so that rapid cycle innovation allows you to experiment your way to success without sinking big costs or delays into extended planning processes. Ask impossible questions to challenge unquestioned assumptions and shake off the ‘expert’s mind.’ “What if retail margins go to zero?” (Costco). “What if the price of a plane ticket is ‘free?’” (Ryanair). Strategy is about making trade-offs and innovation is about resolving trade-offs. What historic customer trade-offs will you resolve next?

For all the marvels of technology and progress, the world is rife with complexity and nonconsumption and big problems that need solving. Successful innovators will remove the barriers to consumption to expand existing markets and create new ones. Growth leaders will use technology to remove complexity, waste and anxiety from customers’ lives. Creating the future remains a bold act with no guarantees, but meet these four challenges to position yourself for success.

How can a company be run that knows enough, moves fast enough, invents enough to keep up with the customer of the future, AND that outsmarts the ever-growing list of companies vying to displace it in their affections?

That’s the question every leadership team is pondering right now. They’re all scrambling to avoid becoming the next Blockbuster, Yellow Cab or Sears — and trying to do to other industries what Netflix, Uber and Amazon did to theirs. This is a particular concern for large, traditional corporations; but even for companies birthed in the digital age, the fear of falling afoul of natural selection is an everyday reality.

Although one can argue that change has always been a constant, and that companies have always had to evolve, let’s agree that there’s something about change today, this change, that’s uniquely confounding. It’s not only faster than ever before, it’s multidimensional. Technology is constantly moving the boundaries of products, services, attitudes, behaviors, politics, laws, regulations and economics. Not just in some markets, but in every market. Traditional command-and-control models designed to mitigate risks and drive efficiencies are proving to be ineffective. This change is different, and it’s either terrifying or tremendously exciting, depending on one’s mindset.

A lot has been said about what leaders have to do to survive in a world in which technology has permeated every aspect of life. But this article is different. It’s not about what the leader has to be. It’s about who the leader has to be and, more specifically, how the leader has to think. Because the transformation of an organization with tens even hundreds of thousands of employees starts with a few brave leaders ready to make a mindset shift.

The Creator’s Mindset

This mindset isn’t about what the leader does, it’s about what the company is about. We’ve studied and worked with myriad companies who are thriving today — some Old Economy household names like GE and Goldman Sachs, some aggressive digital upstarts like LinkedIn — and we’ve found that they share a distinct mindset that has propelled them to leadership positions in their respective sectors.

We call this way of being the Creator’s Mindset. It’s a culture code that ensures they will be delivering value for customers for generations to come. They embrace it as a way of leading, a way of managing teams, and a way of running programs. Because of it they will thrive through, not succumb to, the immutable law of natural selection.

The Creator’s Mindset has three very specific characteristics focused on the creation of value for the customer of the future.

1. Fuel innovation through open sensing
To innovate and create new value, sensing and solving problems in an environment where opinions and information are readily solicited and shared is key. Companies that facilitate open sensing are driven by data and learning. They embrace transparency and new information. They use integrated systems to put operational and performance information at managers’ disposal via mobile apps. To be great at sensing, they ensure teams are truly open in terms of a perpetual ability to absorb influences and input from diverse sources. They appreciate diversity as the wellspring of creativity and new value.

GE did this when it migrated 300,000 employees to Colab, a global collaboration platform designed, among other things, to put material innovations discovered by aerospace engineers into the hands of people in its appliances business. The platform opens up internal conversations to suppliers and customers so that the company can be responsive to the needs of the market. In this way, customer data becomes vital to business decisions, not a measure of success. Southwest Airlines does the same by sharing customer satisfaction scores across its facilities, as does Amazon.

For GE, the result was a transformative platform like Predix, the highly successful, cloud-based platform that helps companies build applications for the Internet of Things. For others, it’s the extraordinarily loyal, forgiving, emotionally engaged clientele who will stick with the company even when it’s not perfect.

2. Galvanize employees with inspiring ambition
To galvanize people in this time of rapid change, leaders have to provide clarity and purpose.

They need to explain why their enterprise exists and why people should care to join and stay. This is both an old skill, with great communication being statistically the most appreciated aspect of a beloved manager, and a newly important one. Best of luck to any company whose millennial workforce doesn’t have a sense of purpose and doesn’t believe in what it’s doing.

An inspiring ambition not only instills confidence, it serves as a touchstone for effectively channeling the energy of an organization into keeping pace with consumers’ ready embrace of the new and disruptive. Again, GE is a great case in point. GE’s managers, rigorously trained at Crotonville, ensure that great leadership is decentralized. As many have discovered, in every industry, the promotion of employees who have only functional or technical expertise is a recipe for silo thinking and the disenfranchisement of talent. GE’s managerial excellence helps its people stay focused on the mission ahead even as the company shifts into uncharted territory.

3. Make adaptive co-creation part of the company’s DNA

Iteration has clearly won out over perfectionism. Compressed launch cycles, expedited piloting and rapid prototyping require teams to become highly fluid and committed to learning by forming to solve a problem, sharing lessons from their successes and failures, then disbanding. MIT Media Lab says it best: “Demo or die.” The fastest way to great is through multiple rounds of “good enough.”

Adaptive co-creation taps into an organization’s collective intelligence and encourages a willingness to embrace vulnerability and accept mistakes. To achieve this, groups should be project focused and interdisciplinary, using design thinking to attack tasks from every angle.

Groups should also be supported by cloud-based systems, content and tools that are fully integrated to support anytime, anywhere co-creation.

Leaders and managers that adopt the Creator’s Mindset aren’t afraid to fail. They anticipate rather than react to customers’ needs. They swap silos for fluid, interdisciplinary problem-solving. They prefer transparency to secrecy, however vulnerable that may make them feel. They energize and empower tomorrow’s teams — full-timers, part-timers, gig workers and crowds — to envision solutions to problems whose outlines are not yet in focus.

For companies and leaders, sparking a human ambition and the capacity to continually create new sources of value will be the defining characteristic of successful leadership — and a Creator’s Mindset — in the decades to come.