How to protect your business against Domesticated White Elephants
As I scrolled through my news feed I came across Virgin Hyperloop’s new video documenting their first-ever Hyperloop passenger test. According to their website they traveled 500 meters at 48 m/s (172 km/h) using electric propulsion and magnetic levitation in a near-vacuum environment.
All I could think was: They are still taking care of this domesticated white elephant? Aww, bless them!
Rare animals: White Elephants
The history of white elephants is actually quite interesting. The original white elephants were kept by rulers and kings in Southeast Asia to show their wealth and power. The animals were considered sacred and they were protected by law from doing any kind of labor. So they were a very expensive thing to signify the owners status, but literally useless in any practical sense.
These days a white elephant describes:
An object, project, scheme or business venture that is considered expensive, yet without any use or value.
So it’s usually a very expensive business venture that failed spectacularly to provide any kind of benefit. Like the Ciudad Real airport in Spain (just one of 48 regional commercial airports built recently despite only 11 being commercially viable), the Ryugyong hotel in Pyongyang (a 105-storey, 3.000 room hotel for a country with about as many tourists per year), bridges that lead nowhere or cities like Nay Pyi Daw (with 6x the footprint of New York, including 20 lane highways, for around 1 million citizens).
We know these. They are weird, sad and sometimes, with the power of hindsight, maybe a little bit humorous. But usually people meant well.
Even rarer animals: Domesticated White Elephants
Back to historic Southeast Asia. Imagine somebody gifting you a white elephant. This indeed happened and the gift of such an animal was seen as something very precious and a glorious and happy sign. It was also a curse.
You just got an amazing and rare status symbol, but you also needed to feed, take care and provide infrastructure & handlers for the thing. Remember: Mistreating a white elephant was against the law (and considered a very bad sign). And elephants can eat a lot and live a quite long time.
Imagine someone taking the modern definition of a white elephant and gifting it to other people. You get something like the following:
An existing or fictional business endeavor without use or value but the sole purpose to impress & bind competitor or investor resources.
In other words: You take a white elephant and weaponize it. You convince everybody (especially your competition) that a specific (technology) trend is relevant to their business and maybe even essential to their organizations survival and then make them waste resources on it.
In 2011 Elon Musk (the Grand Vizier of domesticated white elephants) pulled an amazing case study for this. He took the old concept of vacuum trains described in 1910 by Robert H. Goddard (or arguably George Medhurst’s idea patented in 1799), gave it a new catchy name (“Hyperloop!!!“), announced “This is easy, it’ just a tube with an air hockey table” and got standing ovations for “open sourcing” the concept.
Almost 10 years and billions in investments later we got to the video above: 2 people travelling 500 meters at 172 km/h in a controlled environment. Wow, what a majestic beast it is. Look how big it is!
- Something that you can easily explain (“You know a tube and you know an air hockey table, right?!”)
- You are able to slap together a proof of concept in a controlled environment in a reasonable time frame (as seen in the video, but also all the Hyperloop contests)
- And it pays into a strong vision of the future (“Wow! Sci-fi tunnel trains!”)
The problems mount when you try to scale those concepts into production. You know, like building and operating hundreds of Kilometers of near-vacuum tubes in any location. The complexities (and thus cost) compared to way simpler alternatives are the reason why the idea has been largely ignored since Goddard / Medhurst described it.
So there is Elon Musk gifting the industry a domesticated white elephant and people started embracing, adopting and feeding it.
Actual reasons why you may want to adopt or engage with a Domesticated White Elephant
Interestingly there might be valid reasons for you to engage with such endeavors. Let’s look at another one by our Grad Vizier:
“I feel very confident predicting that there will be autonomous robotaxis from Tesla next year.”
That was Elon Musk at the Tesla investor event on April 22, 2019. Obviously that didn’t happen. Not because of 2020, but because the base technology required for autonomous vehicles in open / non-controlled environments (such as streets) does not exist right now. Same thing:
- Easy to explain: “It’s just cameras and some AI, right?”
- Clear roadmap to a PoC: “I can show a PoC with a robot in a controlled environment”
- Strong future vision: “I saw this on TV ages ago!”
But true level 5 automation is just not possible with the current set of AI technologies. Let alone the social & infrastructure challenges. Cue the Benicio del Toro.
So why engage in autonomous cars right now?
One application is basic research: The search to find and perfect new paradigms in AI and other technologies that will eventually enable level 5 is a valuable business strategy. Somebody needs to eventually do it, right? Think universities, research centers and big companies that want to position themselves in this space. They are aware that they are not working on an upcoming product — this is an R&D program with a completely different (read: more realistic, long-term, decades) time horizon, aiming at patents.
Another way is to think of it as an accelerant. Domesticated white elephants are usually accompanied by a lot of attention, press and thus resources. Shouting anything around “Autopilot! AI!” makes Tesla’s stock price go BOOM, so of course Uber starts talking about autonomous rides, there are rumors of an Apple car and Google is acquiring adjacent companies left and right. If your company is even vaguely related to automotive or technology it would almost be stupid not to claim to have a group “looking into it” (even if it’s just this years cohort of interns) just to give yourself a nice stock bump.
It’s the difference between a normal company and a story stock and if you can ride the wave for long enough you might be fine. It’s also a good attractor for new talent because your company just got the “innovator” tag in the next issue of WIRED. But again, be aware that your are not working on an upcoming product — this is essentially a highly integrated marketing campaign (looking at you, TSLA).
Most importantly though, a domesticated white elephant can be used to familiarize yourself and your stakeholders (customers, influencers, the public, ..) with a concept.
A company can use the public attention to frame a narrative, for example: “Let’s start talking about the (social, technical, political, ..) implications of autonomous vehicles”. Then have actual meaningful exchanges around issues like safety, inclusiveness, infrastructure and urbanization . Try to identify who will be affected, their future needs and opportunities. Dive into potential futures to understand what this means for your business and how you need to adapt. Publicly position yourself as a though leader in this area, driving the conversation, public opinion and the crown jewel: Legislation. You’re still not working on an upcoming product — this is essentially pre-emptive lobbying to build soft-power (looking at you UBER).
That said, you will have a problem if you engage with a domesticated white elephant, thinking that you are working on an actual upcoming, near-term product. If you don’t believe me, look up how often Hyperloop and autonomous cars have been touted as “coming next year”.
How to tame and integrate Domesticated White Elephants in your overall business
All the sarcasm above aside: Faster and cheaper train-like transportation makes sense. Autonomous mobile assets make sense. Don’t forget that there are groups actively doing research & development to eventually turn the white elephant into a real one — at which point it might totally disrupt your business. And of course they might create relevant insights & products along the way. So even if the actual elephant is still years and decades away — even if it will never show up — it will very likely lead to something that impacts your business at some point.
In other words:
The only thing worse than trying to turn domesticated white elephants into an actual near-term product is to ignore them.
So the questions are: How do you know how far out the elephant is? How do you know what impact it might have once it’s here? And how do you assess second order effects it might have along the way?
The solution is relatively simple: Build and maintain a multi-horizon understanding within your organization.
Described in the book “The Alchemy of Growth”, McKinsey popularized this concept with their “Three Horizons Framework” in 2009. The framework describes a “structure for companies to assess potential opportunities for growth without neglecting performance in the present”.
Today there are many similar frameworks that additionally combine different aspects — business, technology, social and so on. Oversimplified they all allow you to:
- Understand your NOW: What is your core business and how do you make money right now? What are you building upon and where do you focus incremental improvements of your current organizations’ abilities?
- Understand your SOON: How will your core business change in the near future? What do you need to learn / introduce into your organization that will become part of your core business? What is the urgency of this and how to derive a roadmap to get there?
- Understand your FUTURE: How will fundamental future shifts affect your business, for example significantly better substitutes for your core offerings, based on completely new, non-transferable abilities? What will eventually be out there and how can you prepare?
Usually you look at any business program as a function of “How long will it take vs. how much value will it generate?”. Now you might want to slice the elephant and look at the time when specific scenarios might happen vs. their impact or their disruptive potential. You don’t have to define the horizons as a function of time at all and instead look at your capabilities and ability to change, the risk or uncertainty or even other factors like society or politics.
All this allows you to have a clearer view how white elephants apply to your business specifically. In which horizon are they? Are they relevant right now? Soon? At some point in the future? Maybe even never? What do we need to know to be prepared? What need to change? And where?
To be fair, these assessments might change over time, so it’s fine to constantly re-align (like Daimler around self-driving cars). And it might also be different for respective parts of your business (again, Daimler having different urgencies for self-driving cars vs. trucks). The important part is that you do it and keep doing it.
The magic ingredient to pull this off is internal people in charge of this exercise. This needs to be a core part of your business strategy, a fundamental layer of your portfolio management — you need the capability to collect (see: trend and technology management), assess (see: impact assessment) and manage (see: portfolio, product and change management) your horizons internally.
Investing in internal people that help to understand and wield the future in your context is the best way to counter this specific form of disinformation.
Sure, you can (and have to, depending on your organizations size) use external help to do for example research, field studies, reports, assessments and all that. But there needs to be an internal group that understands the impact of trends (some of which will be white elephants), removes all the “utopia-gibberish”, translates it into the specific language of your organization and then creates recommendations so that your entire leadership can make informed decisions around the future strategy of the organization.
These are as much forward looking as they are experts in your current industry as well as the ins-and-outs of your specific organization. They are translators. Decyphers. “Go-betweens”. They will tell you not to get distracted by that huge, sometimes loud animal that is paraded up and down your street. Or at least help you understand that it’s meant for entertainment and that, yes, you take a picture with it. Maybe even take a fun ride on it. But they will make you think twice before you invite it into your house.
Because you better have a damn good reason to spend billions on a contraption that lets four people travel 500 meters somewhat rapidly under questionable circumstances.