Beyond the hype

Mixed up

Sixty years ago, LEGO cracked the code for their iconic bricks: acrylonitrile butadiene styrene. It's a mouthful, and all you need to know here is that it's made from fossil fuels. But it works. It gives those bricks their satisfying 'click'.

Now, here's a number that might make you wince: it takes 2kg of petroleum to make 1kg of bricks. Sounds terrible, right?

Maybe, if you think plastic toy bricks actually matter in the grand vision for environmental sustainability. So here’s the first problem. In all of LEGO’s history, they’ve used 4 million metric tons of petroleum. But this year alone, the world will consume 4 billion metric tons of crude oil. LEGO’s entire 60 year consumption is just 0.1% of global oil consumption in one year.

So, put yourself in LEGO’s shoes. Should they even keep trying?

They are. But then they hit the second problem. For six years, LEGO has been on a quest for a non-fossil fuel alternative. They've tested 600 options. The frontrunner? Recycled PET (think water bottles). But it needed extra ingredients for durability and more energy to process. The result? A higher carbon footprint.

So, now we encounter LEGO’s third problem.

The figured the answer wasn’t ONE alternative but several: a blend or what they call a 'mass balance' of 30% bio-based and recycled materials across their product line. What’s the problem with that?

Here's the rub: Recycling isn't created equal. Mechanical recycling is straightforward: sort, wash and shred waste into pellets. Chemical recycling? It's an energy-hungry beast that melts plastics back to their chemical building blocks. When LEGO buys 'mass balance certified' materials, they're essentially getting a black box. What's really in there? Their guess is only slightly better than mine or yours.

But here's the real kicker, and the lesson for all of us: LEGO isn't hiding any of this. I can write about this because they're laying it all out - the failures, the frustrations, the counterintuitive outcomes. They're maintaining trust by being brutally honest about their journey, warts and all.

Question: What are you honestly disclosing about your sustainability efforts?

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The Mirage of Technological Leaps

Last week, a video of Tesla's Optimus humanoid robot interacting with a crowd caught my attention.

As someone who's followed robotics development, I was initially impressed by its seemingly natural language abilities and fluid movements.

But quickly my skepticism kicked in, leading me to discover that while the Optimus robot is real, this particular demonstration was not AI-driven but remotely controlled by humans. And, it got me thinking: What a perfect metaphor for the challenges we face in evaluating technological progress.

The allure of groundbreaking technology is nothing new. In 1770, Wolfgang von Kempelen's 'Mechanical Turk' - a chess-playing automaton that famously defeated Napoleon and Benjamin Franklin - captivated the public imagination for decades before being exposed as a clever illusion.

Fast forward to today, and we find ourselves in a similar position with AI. We're tantalisingly close to passing the Turing Test - the benchmark for machine intelligence indistinguishable from human interaction.

But are we there yet?

The key for strategists and leaders is to maintain a balance: to be aspirational about technology's potential while remaining grounded in reality.

And that’s easy to say, but harder to do.

Remember the dot-com bubble of the late 1990s? CEOs and investors, lacking a clear understanding of the promise of the internet, poured money into any company with a ".com" suffix. While the internet did transform our world, it didn't happen overnight or in the ways many had predicted.

So, what should we do, when faced with something that might be a Mechanical Turk, or a Musk-like “not there yet” promise?

• Separate hype from reality: Treat skeptically the flashy demos and bold claims.

• Understand the technology: Know the underlying principles so you ask the right questions.

• Focus on practical applications: Work backwards from real business problems that you want the tech to solve.

• Consider realistic adoption timelines: Revolutionary change usually happens more slowly, and more piecemeal, than we expect.

Question: In your industry, what's a technology or trend that seems revolutionary but could be more smoke and mirrors than substance?

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Strategic Portfolio Management: Cutting Through the Clutter

Picture this: a household name non-profit service provider juggling 17 distinct service lines. Revenue sources? Varied. Customers? Mostly different. Scale? Ranging from behemoths ($20m+) to minnows (sub-$1m).

Their multi-million-dollar question: How to strategically dissect this diverse portfolio so they know what to nurture, what to axe, and what to super-charge?

It turns out they’re very attached to ALL of these services, so here's the game plan we rolled out. Firstly, we plotted each service on a 3D matrix:

1. Y-axis: 'Mission criticality' (how much it aligns with the non-profit's purpose)

2. X-axis: Revenue contribution

3. Bubble size: Profit contribution (Yes, "non-profit" doesn't mean "no profit" - we need fuel for reinvestment)

The result? The revealing landscape below.

The quadrant breakdown shows us:

1. Top Right (The Golden Quadrant): Their heavy hitters. High on all counts and born from in-house innovation. These gems have organic growth potential as well as bolt-on acquisitions and are ripe for scaling models like quasi-franchising.

2. Top Left: The scaling candidates. Aligned with the mission but the leftmost certainly need a revenue boost.

3. Bottom Right: The cash cows. Keep milking them for margin.

4. Bottom Left: The potential divestment zone. Tread carefully.

This gave management the fortitude to dig beneath some long-held assumptions about what was valuable, and to challenge some ‘hype’ around long-established services, led by long-serving people. The process above helped us work with those people to determine the following strategy:

• Quadrant 1: Amplify impact

• Quadrant 2: Scale deliberately

• Quadrant 3: Protect margins

• Quadrant 4: Consider divestment

Our next steps were to get the direct managers of each ‘bubble’ dive deeper to determine specific impact amplification, scaling, or preservation strategies, and it’s a task that was easier because of the early cut-through we’d achieved.

Question: What percentage of your current portfolio is lighting up the coveted upper right quadrant?

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Let me know that today’s 5MSM hasn’t been (purely) hype by clicking the ‘heart’. And, I always love hearing from you - so please drop a comment in here, or write to me directly if you prefer.

Enjoy cutting through the BS in the world around you, or at least perceiving it (!), and I’ll see you next Friday.

Andrew