Marriott International, the world largest hotelier with over 6,500 hotels in 127 countries with luxury brands such as JW Marriott, The Ritz-Carlton, St. Regis, W Hotel, Westin and Le Meridien, sent out a seemingly routine survey to its loyalty members in the early January of 2018. Even counting over 100 million guests as its Marriott Rewards loyal members, sending out a survey should have been a simple walk in the park for the employee tasked with that role. However, nothing could be further from the truth.
With that clicked of the button “send,” the 91-year-old hotel, which began as a nine-seat A&W root beer stand to over 600,000 associates in 2017 (Marriott recognizes its employees as associates drawing upon its people first culture), went into crisis mode with the world’s biggest market today, China.
Whether intentional or not, the survey had asked its members for their countries of residence, listed Tibet, Taiwan, Hong Kong, and Macau as countries. Before long, the Chinese netizens spotted the survey, and in a market of 1.386 billion people, it went viral within hours drawing in a storm of criticism. Now Marriott is being accused of supporting “separatist movement” in a sovereign country while at the drawing profits from it. The Shanghai office of China’s cyberspace administration, the Internet regulator, posted online that by listing Taiwan as a country, Marriott had “seriously violated national laws and hurt the feelings of the Chinese people.”
Meanwhile, President and CEO of Marriott International, Inc., Arne Sorenson was waking up half the world away to a nasty political crisis, and to “hurt the feelings of the Chinese people” was the last thing that he had wanted to do. China is an increasingly important market for him and with 240 hotels and counting, Marriott, in Sorenson’s own words in an industry conference six months earlier, was “opening in excess of one [hotel] a week in China.”And to top it up, China represents the single most important market outside of the U.S., bringing in an increase of 8.4 percent in revenue per available room, a key industry business metric. Comparatively, North America was able to muster a mere 1.5 percent rise while the rest of the world was clocking a 2.6 percent.
Sorenson was quick with his public apologies, totaling five in all, but that had failed to lighten the perfect storm. With words like “deeply sorry” and “reiterate our usual stand in respecting China’s sovereignty and territorial integrity”, the hotelier still couldn’t see the light at the end of the tunnel. The virality of the social media in this case WeChat was fast and furious.
To further add to his woe, in the later part of the same week, an employee or associate had used the Marriott Twitter account to “Like” a post shared by Friends of Tibet, which campaigns for Tibet’s independence. Again this was picked up by Netizens and the outcry this time led to another round of apology from Sorensen, and Marriott was ordered to take down its website and to perform a thorough revamp and correction by the Cyberspace Administration of China.
After un-liking the Tweet, Sorensen issued a stronger and targeted apology, saying that,
We don’t support anyone who subverts the sovereignty and territorial integrity of China and we do not intend in any way to encourage or incite any such people of groups. We recognize the severity of the situation and sincerely apologize.
In the aftermath, many international companies such as ZARA, Medtronic, Qantas, and Delta Air were also caught in the eye of the storm for having listed Taiwan and Macau as countries. These companies subsequently made public apologies on their websites.
Who would have thought a simple “Like” or “Share” could have brought so much controversies which could potentially affect a multi-million dollar business. A scene like the one mentioned earlier would not have happened a short 10 years ago when the Internet was at its infancy and “social media” was not a word to be found in anyone’s vocabulary. In fact, Fortune 500 from the 20th century may see the aforementioned a little far-fetched if someone brought up the risk of running a social media account.
Nonetheless, the world today has changed and is imperative for Fortune 500 to make the corresponding changes to thrive in today’s world of information and social media. Heraclitus of Ephesus, the Greek scholar, had said it aptly “change is the only constant.”
“HELLO, WORLD!”
As of December 31st, 2017, there were 4.1 billion Internet users, a 54.4 percent penetration rate per the global population today of slightly more than 7 billion people. The penetration rate in North America and Europe stood at a staggering 95 percent and 85.2 percent, respectively. In other words, access to information online and connectivity between any individuals are as simple as a mouse click or an enter button on an app. Information now travels fast and furious, crossing borders and time zones in milliseconds. This trend will only continue to grow exponentially.
The growth rate of Internet users for the past 18 years since 2000, is at a 1,052 percent and there is no indication at all that it will slow down as more and more devices are made available to access the Internet. What started as a Personal Computer as the only hardware to access to the Internet, the past 10 to 15 years had seen mobile devices such as the smartphones, tablets to watches having ability to do so. Many more devices with the concept of Internet of Things (IoT) will be created bringing information to any individuals wherever and whenever they are.
If Alexander Graham Bell’s first words of “Mr. Watson, come here, I need to see you.” over his creation, the telephone, set the wave of connectivity which changed not only how individuals and companies shared information in the past century, Sir Tim Berners-Lee would be the father of modern communication for inventing the World Wide Web or better known as the Internet. What started as a simple idea of information sharing without every physicist having to use the same hardware and software at CERN, the European Organization for Nuclear Research where Sir Tim Berners-Lee worked, has transformed into a continually evolving information sharing organism which has changed not just lives but also societies and ruling powers.
The fateful innovation went live on August 6, 1991 via the WorldWideWeb browser also developed by Sir Tim Berners-Lee, and the subsequent decision by CERN in 1993 to make the Internet available free of charge and completely open, had brought about tremendous change to our everyday lives.
The Web or Internet is now accessible almost any seconds of our day, providing information and connectivity at the tip of our fingertips. They are now like the breath that we take. It’s constantly there although you don’t see it. In major cities, you can see what’s the arriving time of your next bus down to the minute via an app on your phone; you can rent a bicycle via an app on your phone and in most cities especially in China, even the beggar is accepting offerings on a mobile payment app.
While the speed of information has changed how consumers receive and perceive the information that they have received, connectivity influences how they trust and decide on the information that keeps on streaming into their devices. Having received information from a connected source via social media such as Facebook, Instagram, Twitter or LinkedIn, one would tend to trust the information more. This “trust” was something only achievable by branding in the last century whereby people trust a Fortune 500 brand. Today that is no longer the case. Big brands can bring a product to a certain level of trust but not to bring the consumer to the final lap of buying. This role has now been taken by what would be typically known as Influencers, Bloggers, YouTubers, Facebook and Amazon commenters or in general Netizens.
Without a doubt, social media is the catalyst to this new phenomenon of how consumers perceive and make their buying decisions or which political party or leader they should be voting for. The information from a trusted source, from a source that talks and thinks like you, from a source which faces the same problem as you and from a source with the same aspirations as you are highly influential.
As you read the previous paragraph, which is slightly under 1 minute, about 300 hours of video had been uploaded to YouTube, and by the end of your day, as you retire to bed, roughly 5 billion videos on YouTube have been viewed by people in all corners of the world.
Facebook has 1.15 billion mobile users daily, and the Like and Share buttons are viewed across 10 million websites per day. By the time you finish reading this sentence, five new profiles would have been created on Facebook. And currently, worldwide, there are 2.2 billion active Facebook users in a month.
Fortune 500 customers now have access to not just the advertisement or commercial branding, but information and sharing of the experiences of other trusted consumers of the products or services. And in many cases, the sharing of experience starts from unboxing the product to finally reviewing the products from a YouTuber’s point of view.
A classic example would be the “unboxing or unveiling of an iPhone”. Just by typing “unboxing iPhone X”, YouTube returns a result of over 6 million videos with the top video having been viewed 11 million times. The YouTube is not an official video from Apple but from a YouTuber who has over 6 million subscribers, a trusted connected source. That single “Apple iPhone X Unboxing” has also generated 23,000 comments mainly questions and sharing amongst the YouTube viewers. What we are seeing here is genuine, authentic and uncorroborated information and content sharing of a product. Many potential consumers would have taken this into account before deciding if they want an iPhone or an Android phone. Trust is being built around the YouTuber and his or her followers’ comments and no longer just the brand alone.
A new reality has dawned on the Marketing Department of any Fortune 500. The control that marketing has on consumers via traditional media such as television, newspaper, and magazines are fast eroding. Consumers no longer depend wholly on such marketing efforts to decide on their purchasing needs. Marketing needs to acknowledge this reality and find complementary roles within social media.
Needless to say, the senior leadership of any Fortune 500 can ill afford to ignore that a significant portion of the power of branding and marketing is now in the hands of its consumers and it is now time to adapt to this new dynamic by executing changes from within.
The Rise of the Machine
Machine learning or artificial intelligence is now seen as one of the important components in the push for the 4th Industrial Revolution. This analysis is also consistent with the prediction by Sir Tim Berners-Lee on where will the Web go in the future. He had coined the word “The Semantic Web” and described it as “A web of data that can be processed directly and indirectly by machines.” The Semantic Web will see metadata becomes an integral part of the Internet experience whereby the data is designed to be read by machines and for machines to “automatically create new meaning from all the information out there.” (TheNextWeb 2011).
However, artificial intelligence was not something discovered yesterday. During the early days of World War II, the Germans were winning the Battle of the Atlantic and to defeat them, the British needed to break their coded communications. German’s encrypted messages were generated by Enigma, a cipher machine that had proven to be beyond the reach of the British until Alan Turing joined the Government Code and Cypher School (GC&CS) at Bletchley Park, Britain’s codebreaking center.
Not only was Alan Turing able to decipher the German’s coded messages, but he also went above and beyond by creating a machine, later known as the Turing machine, an electromechanical machine that could find the settings for the Enigma! Alan Turing had built a machine that’s capable of learning from past messages or data, alluding to what would be known as Artificial Intelligence today. The Admiralty estimated that this new machine had shortened the war in Europe by more than two years and had saved over 14 million lives. Undoubtedly, Alan Turing is widely known as the Father of Artificial Intelligence or Machine Learning.
Artificial Intelligence or better known as AI today, has become an integral part of the technology that’s being brought forward mainly by startups. AI is the new black, and the startup scene is lapping up this new technology as a foundation of their business offerings. It’s not uncommon to hear about AI in Human Resources and Talent Selection, AI in Banking, AI in Healthcare, AI in Automobiles and much more. AI can be deployed in any industry whereby there is a need to process a large amount of data, decipher the pattern of these data and then to proceed to predict to a specified accuracy the outcome of a query posted to these data. And the more “training” that you provide to the machine or neural networks, the more accurate the machine becomes.
To illustrate the aforementioned, imagine if you are a HR Director looking for the best engineers who would fit into your organization’s business needs. Apart from objective assessment such as personality or behavioral questionnaires, assessment centers, AI can calculate a matching ratio based on predictive analysis by analyzing data such as resumes of over a million engineers and compare them with data of engineers who had excel in your organization. This scenario is, of course, made based on several assumptions such as your organization had already identified a competency framework to measure how and what you would define as a successful engineer. The reliability or the authenticity of the data would have also been assumed to be accurate to a certain degree.
The same principle applies in the driverless car explained in the earlier chapter. Through machine learning, the vehicle equipped with the AI is taught to process and define data such as terrain, moving vehicles and at what angle to turn the wheel dependent on the angle of the curve of the corner and more.
The question is why AI is emerging only now? The reason is rather apparent. It’s the accumulation of data due to the connectivity provided by the Internet, and when enough data has been gathered, it passes an arbitrary threshold and becomes “Big Data”. AI thrives by interpreting Big Data. As recent as the turn of the century, no one could have neither fathomed the amount of data that could be accumulated on the Internet nor guessed that people would share data so freely on the Internet. It is estimated that between Google, Amazon, Microsoft, and Facebook, they hold at least “1,200 petabytes which is 1.2 million terabytes whereby one terabyte is 1,000 gigabytes.” (Science Focus 2017).
In 2011, Martin Hilbert, professor of communications at the University of California, Davis, attempted to visualize the amount of data on the Internet then, by calculating it to the number of CD-ROMS required. His finding shows that by 2007, the world’s digital information, if stored on CD-ROM, would overshoot the moon, stretching 280,707.5 miles or 451,755 kilometers, where the distance to the moon from Earth is only 238,900 miles or 384,400 kilometers. (LiveScience.com 2016).
With such a vast amount of data and the maturing technology of AI or machine learning, industries are being disrupted at an unprecedented pace. In an article titled “5 Industries A.I. will Disrupt in the Next 10 years” (Inc.com August 2017), James Paine the author, predicted that healthcare, transportation, finance, lifestyles marketing would face disruption. To quote an example on marketing, AI would be able to drive marketing efforts toward more personalization. Much in the likes of how Amazon, would be able to make recommendations based on the books that one had browsed or purchased in the past. Or in healthcare, AI would be able to help predict the next bout of influenza, the number of patients to be expected worldwide and correspondingly the number of vaccines to be manufactured.
The potential of AI, massively outweighs the negatives that may come with it and it’s a technology that is steamrolling through our century much like the steam engine which brought about the modern world in the First Industrial Revolution. Fortune 500 can ill afford to let startups leapfrog them with the help of AI.
GOOGLE IT!
When Larry Page and Sergei Brin founded Google in 1998 while they were PhD students at Stanford University, the furthest thing in their mind would be for their startup to one day made it to the Oxford English and Merriam-Webster Collegiate Dictionary as a verb. According to the entry in these dictionaries, “google” denotes the use of Google search engine to obtain information on the Internet. And search you can for the world’s knowledge and the information is at a snap of your finger when you use Google search.
As the Internet began to grow, more and more web pages and data was created on it, rendering search for information to be rather tedious. The only way then was for someone to send you their specific URL or website address if you want to read their web content. Plus the downside is that you won’t be able to see what else is out there in the vast Internet or who else is creating content and data that might be of interest to you. Search engines were and still are the solution to the previous problem.
The way the search engine works is to allow anyone to make a query with just keywords and to return relevant web pages and in today’s social media digital world, any Tweets, Instagram or Facebook Likes that are made public. With an estimated 1.8 billion websites on the Internet today, the growth has been phenomenal since the publication of first webpage info.cern.ch by Sir Tim Berners-Lee on August 6, 1991. It’s almost impossible to go through that amount of data without a search engine to look for relevancy in the information that you need. Needless to say, Google has become a dominant search engine for all Internet users, and in every one second, 68,148 Google searches (Source: Internetlivesstats.com)
are being queried.
A keyword Google search of “Archimedes,” the Greek mathematician famously acquainted with his cry of “Eureka!, Eureka!” when he discovered the principle of buoyancy, or simply known as the Principle of Archimedes, returns 14 million relevant pages in 0.32 seconds! From the top three relevant pages, not only that you’ll know who Archimedes was but also where he was born, when was he born, whom he married to and of course the Principle of Archimedes. For those of us who are non-mathematicians, Google it and discover the mathematician in you. Not only was Google able to rank the relevant pages for you, Google also collates all the questions that had been queried by other Internet users, showing you the top few which would have been asked the most. The information one received is just endless. To add on to that, if you do a search on YouTube which is now part of the Google, you would see videos explaining Archimedes and a whole list of suggested videos on Archimedes, which you can view for free.
In other words, information, knowledge, and news are abundantly available for not just the consumers but also the other stakeholders in any organizations especially those of Fortune 500. Any form of news, tweets or information of any company, be it bad or good, fake or not, can be Googled and if the enquirer sets in the specification, more information relevant to the initial search will be pushed to him or her.
On the one hand, Fortune 500 might feel vulnerable as information could be created and shared openly by just about anyone on the Internet, but it also gives them direct access to their customers and shareholders. Companies are now able to disseminate information vital to their branding without having to wait for an intermediary media. Information such as the good sustainable projects that organizations are running in the community where they make their profits; Corporate Social Responsibility (CSR) projects, Philanthropy drive in business investments, Diversity and Inclusion practice or Ethical Sourcing initiatives which shows the positive impact any company is making to create a better future, speaks volume as compared to a well crafted Public Relationships (PR) program. Not to mention that such programs also bring about higher profits when it is made known to the world.
A quick Google search leads to an article on Fortune (2016) titled, “How Fortune’s ‘Change the World’ Companies Profit From Doing Good” GlaxoSmithKline (GSK), a fourth-century Fortune 500 company, with a whopping US $37 billion revenue, had adopted a philanthropic business strategy of selling products with slim margins to the developing world such as India. The result is obvious, GSK made a cool profit of nearly US $16 billion in 2015 and CEO, Andrew Witty in his own words, while quoting the India market as an example, “business has gotten bigger and bigger and bigger. It makes more and more profit. And more people have access to fantastic medicines”. Thus, as a consumer, one would probably gravitate to GSK’s product given if a product from a rival pharmaceutical has the same efficacy because GSK is “doing good”. This is especially true for the millennials, the generation born after 1980. The millennials are a growing market force, with 80 million millennials in America alone, representing a fourth of the entire population with almost US $200 billion annual purchasing power in 2015 (Forbes 2015). Some are estimating that, while this book is being written, the spending power of the millennials has surpassed all generations. And 75 percent of millennials would be loyal to companies which give back to society.
This emerging trend is also the reason as to why Fortune 500 is struggling, as the old, tried and tested way of advertisement as brand-building is not working with this group of consumers.
The openness of the Internet, easy access to information and connectivity had also disrupted many industries. Traditional industry such as hotels and taxi are two of the most obvious example, and it is of no coincidence that it is happening only now. UBER, the car-hailing startup, valued at US $72 billion today, disrupted the taxi industry globally without owning a single vehicle. In most countries, taxis are owned by large corporations which would lease the taxi back to the taxi drivers on a daily basis. Taxi drivers would have to use the first 8 to 10 fares to pay the lease before generating income for themselves. With UBER, anyone with a vehicle can make an earning without having to fork out additional cost to rent a taxi, and UBER will only make their share of income if the driver collects a fare. In a nutshell, UBER’s stand is that we are in this together.
With the Internet and connectivity, hailing an UBER or for UBER to respond to a fare had also become very easy as the app enables anyone to see the proximity of the UBER car and how long it takes to get to the passengers. And once both parties had agreed on the app, the fare is guaranteed, unlike taxis whereby theirs could be down to chance.
In the case of UBER, which started in 2009, by leveraging on the Internet, information or data, it had not only disrupted a traditional industry but also built itself from a startup to billion-dollar valuation company.
Labor of Love
The onset of information superhighway had also changed the way Fortune 500’s employees perceived about the company they work for and the work they are doing there. In the past, all communications even from the CEO would be first be vetted through by corporate communications to ensure hygiene factor to draw satisfaction and motivation amongst employees. Today, employees and would-be employees’ access to corporate information is not only through the official channels but also independent information from consumers, Netizens, bloggers, YouTubers and much more. In a nutshell, Fortune 500 can’t control the type of information that would grace the screen of their employees.
Again, while the fear of #FAKENEWS a la President Donald Trump is real, the situation also presents an opportunity for Fortune 500 to bring meaning back to work for every single employee from the senior management to the production workers on the shop floor.
Meaning of work which attests to a sense of higher purpose, whereby every employee sees their work making a difference in their community, country, and the world. If this could be done, then each employee would be able to see how their sense of purpose can be achieved by doing the work that they have been assigned to. The positive effects of achieving this would lead to engaged employees who are keen to go above and beyond the contractual terms of their jobs plus employees are who keen on developing themselves.
However, the current situation in most Fortune 500 remains much to be desired. Although every single Fortune 500 would have spelled out a vision, mission and purpose statement, these statements remain hollow to the rank and file. With 70 percent employees unable to neither remember nor recite their company’s vision (Forbes 2013), it is only logical that employees are unable to relate to these “words or wordings.” In their mind, these are “empty words” paid to highly expensive consultants for the purpose of branding or marketing, resulting in disengaged employees who will not perform to their potential.
What causes such disengagement when Fortune 500 today are already spending billions of dollars to train, motivate and engage their talent pool to bring about the desired business outcome for the company. We identified some of the key factors and potential mitigation possibilities:
- A conventional economic culture approach to engaging employees.
As in most business schools or management courses, employer and employees are deemed to be in a “principal-agent” relationship whereby the terms are transactional. Herein lies the problem. From this standard economic model, the agent or the employee is always deemed to be “effort-averse” as the relationship is governed in the form of a work contract. Thus for an agreed remuneration, the agent will provide a certain amount of labor, and no more. Since effort is personally costly, the agent would be unlikely to over-perform unless the principal put in more incentive or exert more control.
Thus, to overcome the stagnation and to inspire employees to have ownership, Fortune 500 have to intersect authentic higher purpose or meaning into their business strategy and decision making whilst helping employees connect their purpose within the company. Today, employees down to frontline staff such as the production staff are able to identify the impact that they are making through the product they produce. For instance, in the past, it’s near impossible for a pharmaceutical production technician to frame the asthma inhaler he or she is making into a visual greater good contribution. The production staff would only be able to see the KPI that had been handed down to him; to produce a certain amount of steroids for a certain amount of inhalers. However, today, just a search on the YouTube will allow the production technician to see the exact inhaler that he or she had produced, bringing relief to an asthma patient. These are real life videos made by actual patients, and the production team can also interact with the patients via the comments section thus bringing meaning to their daily work.
Fortune 500 should and must capitalize on the power of the digital world to help employees “connect to their purpose.”
- Authenticity
Authenticity is merely “walking the talk.” Many a time, senior management would advocate a certain purpose but if they are not behaving or perceived to be behaving accordingly, the company’s vision, mission or purpose statements will ring hollow. The “principal-agent” assumption applies to senior management as well. After all, even the CEO is on a transactional relationship with the company.
So the first part is to “walk the talk,” and no amount of technologies can help with that. However, the second part, to share the message and purpose with their employees, customers, shareholders, and other stakeholders, the Internet and social media provides an unparalleled platform of which CEOs of the past would envy.
One such platform is LinkedIn, a networking platform for professionals, with over 500 million users as of 2018 and of which, 40 percent of these users are active on a daily basis. What’s unique about LinkedIn is that it also allows companies to create their own LinkedIn profiles and it’s able to show an enquirer, who in his or her network, is working for that particular company. Thus, CEOs are able to connect with their employees via the LinkedIn platform and also potentially alumni of the company.
In the past, CEOs are hard to meet with in-person, let alone to engage them in dialogues. Via LinkedIn, CEOs are able to share not only their vision and purpose for the company but also their passion and aspirations. An example would be Sir Richard Branson of the Virgin group. He has 14 million followers, who would receive notifications of any postings or articles that he might upload to his account including those postings that he likes. Via his postings, one could see what Sir Richard cares about, and anyone can engage with him by making comments on his posting or even private messaging him. In a recent post made on his LinkedIn profile, Sir Richard shared a tree planting activity while opening the 100 Sparks of Hope Peace Park in memory of Nelson Mandela. One can infer what he cares about and how he is doing greater good via Virgin Airlines, his flagship company in South Africa.
On the same token, millennials also expect to engage with brands over social media. The key here is engagement and not just having a presence in social media. 62 percent of millennials expect engagement with brands as a basis to build loyalty and trust, and with a further 42 percent expect the engagement to lead to co-production of products for them.
Fortune 500 and the senior leadership who represents the face of the company must continuously show authenticity and in the same breath, live those values, mission, and purpose with integrity to inspire their employees to do the same.
In conclusion, to thrive in today’s demand for fast, transparent and the virality of social media, Fortune 500 needs to effect a transformative organizational cultural change which incorporates the startup culture. Thus, we, the authors believe that this could be achieved by the establishment of a Department of Startup (DOS).