Kjell Nordström Interview

2011 Ranking: #36

Kjell Nordström is a strking figure. Even in a fashionable Stockholm restaurant where he is well known heads turn on his entry. Tall, shaven-headed, dressed in black and with an array of jewellery, Nordström more closely resembles a rock star than the university academic he actually is.

He and his work reached a wider audience through the success of the book Funky Business (FT.com 2000) which he co-authored with his colleague Jonas Ridderstrãle. The book helped seal Nordström’s reputation as one of Europe’s leading business gurus and he now travels the world preaching his funky message. His seminars are sell-outs. Along the way, the academic has been turned into an entertainer as well as an educator. He talked in his minimalist Stockholm home.

You talk a lot about differentiation, but how should companies differentiate themselves?

The starting point must be a neat niche, a funky few, a global tribe. You need to understand your particular tribe better than anyone else. You must know what makes them tick, what scares them, what gets them out of bed in the morning, what turns them on. The tribe is the basic unit of business. If you don’t know who your tribe is or anything about them, you are not going to stand out from the crowd.

The good news is that there a lot of tribes out there – and some are enormous. It’s just a question of identifying them, understanding them and meeting their needs better than anyone else. We recently came upon a great example of this in financial services. The American Steve Dunlap was refused a loan to build a resort for homosexuals. So he decided to establish the G&L Internet Bank. G stands for gay and L for lesbian. The basic idea is to target the 21 million or so American gays and lesbians – a group with a combined annual budget of some $800 billion.

Tribes come in a variety of shapes and forms. Pilgrims create tribes. Every year, 75,000 Chevrolet Suburban vans are sold in Saudi Arabia as the pilgrims who visit Mecca are only allowed to enter the city in a vehicle with specific measurements. The only car that fits the specs happens to be the Chevrolet Suburban.

So what’s the message?

If you focus your energy on creating and then exploiting an extremely narrow niche you can make a lot of money. The tribe may consist of one-legged, homosexual, dentists. It may be lawyers who race pigeons. But if you manage to capture these customers globally, you can make a lot of money. There are riches in niches.

You also talk of tribes within organisations. Isn’t there a thin line between organisational tribes and brainwashing?

Tribes are filled with people who believe in what they’re doing. For better or worse, loathe it or hate it, that’s what they believe in. Brainwashing is about forcing people to believe something. So, the similarities are limited to non-existent.

But it is true that tribes require strong cultures. Or, as someone once said of Nike: “It is like a cult – but it’s a nice cult.” In a tribe people get energy from one another. The Zulu’s have a word for it: “ubuntu”. This can be translated as a person is a person because of other persons. Or as Jung put it: “I need we to be fully I.” Tribal behaviour has to come from within.

For all the technology at our disposal there is still the feeling that the results are impersonal and robotic. How do you move beyond that?

You have to make every interaction with consumers personal and highly human. Think emotional capital. Stir emotions in your consumers

To do so, you must focus on the extended experience. Try to look and think beyond the atoms, bits or search engines involved. As someone remarked, sushi is really cold, dead fish, but that isn’t what the customer buys or how it should be marketed. The trouble is many companies still persist in selling cold, dead fish to consumers who are much more interested in sushi.

This reasoning applies to all products. What do we really buy when we come home with a Nokia mobile phone, a pair of GAP khakis, or a Sony Walkman?

The morale is that what companies sell and what their customers buy are two different things. Therefore, every once in a while it is wise to place yourself in the shoes of your customers and ask the question: What are they really buying? The answer, 99 times out of 100, is not what you think you are selling. Then put yourself in their shoes once more and examine their interaction with you and your company. How does it strike their emotions? If it doesn’t, think again.

You recommend that you recruit people who already have the right values, but how do you actually do this?

You’re right. Our argument is that while there is a lot of mystification surrounding the subject of values, the simplest way to get people to share your values is to recruit people who already do. Herb Kelleher of SouthWest Airlines professes to hire attitudes rather than aptitudes. The logic is that you can make positive people into good pilots, but turning great pilots with attitude problems into charming servers of customers is close to impossible. Consequently, smart companies recruit people with the right attitude, then train them in the necessary skills – rather than the reverse. Just imagine Hell’s Angels recruiting for skills instead of attitude. Lenin was right. Find the revolutionaries. Do not try to change people.

How you do it is not that hard. When you place ads, select people, interview people or whatever you do to recruit them, out questions about values to the top of the agenda. You can usually train people to do a job; but you can’t change their minds so easily.

Aren’t the mavericks you call on companies to recruit very difficult to manage?

Of course. In our gigs we use a picture of Richard Branson in a wedding dress. Too many companies are still turning down applications from Richard Branson types. They can’t cope with difference. Some can’t even contemplate difference.

If you want to find great people you’ve got to look in unusual places. Recruiting only from Harvard Business School or INSEAD, will result in a pretty homogeneous crowd. Cisco, for example, tries to find people at the Boston Marathon and the Mountain View International Microbrewery Festival. Mavericks rule. If you can’t manage them, your competitors will.

What’s going to happen to those who still aren’t convinced by the advantages of technology?

Let’s be absolutely clear about something: the global market economy of our times is neither good nor bad, right nor wrong – it just is. Market capitalism is a machine. But a machine does not have a soul. We have to develop this one together as we go along.

In order to get rid of that human shadow called poverty, we have to make up our minds as to what a good life is. Technology without ideology and values, does not produce much value. As noted by Charles Handy, the market is not a substitute for responsibility – merely a mechanism for sorting the efficient from the inefficient.

The so called digital divide is not a consequence of the technology as such, but rather of our inability to create a world where more people are given an opportunity to develop their talents. Never before in the history of mankind have we had so many potent tools that potentially enable us to build a better world and companies that are actually fun to work for, but it is up to us to create this future.