Why self-awareness is a necessary skill to do business in the 21st century.

April 3, 2018, was the big debut of Spotify (SPOT) at the New York Exchange. Back then, its stock was fluctuating from $135 to $169. Those were good numbers for one of the most expected tech IPOs of that year. Nevertheless, critics have pointed out potential flaws in the Spotify business, being the strongest point in the company’s inability to decrease expenses while increasing the number of customers served. It means that, whether Spotify has 100,000 customers or 1,000,000 customers, the cost per customer will continue to be the same. One of the most significant cost triggers is the royalty fees that the company must pay to musicians.   

Corporate executives and entrepreneurs understand that there is a necessary investment to get the business started and potential capital to grow it. Nevertheless, the income should eventually offset investments and costs. In Spotify’s case, what would be the plan to change this scenario of continuous losses?

Companies must wake up every day looking for new ways to improve their products and processes that will enable them to grow in revenue while diminishing costs. It requires a “corporate self-awareness” that many companies are ignoring today. For example, imagine if USPS had thought about creating the email system – from letter to email; or the social network to keep in touch with friends and family. The company’s line of business was very much aligned to incorporate these ideas; however, its executives failed to understand what was going on around them and how they could better serve their customers.    

We are living in the information era, where technology can cause a significant disruption in any business. It is just a matter of observing what people really want and creating a new “how” to get what they want. This is the “corporate self-awareness,” which benefits the company because it decreases its costs in the medium- and long-term, and the customer, because it is easier to get what they want. Netflix understood all we wanted was not to go to the video store but watch a movie and optimized the process to access movies. Uber observed that we wanted someone to drive us from point A to B as soon as possible, so it proposed a new approach to using idle vehicles. Airbnb figured we wanted an affordable place to sleep wherever we are, connecting us to owners with idle properties.

Jaime Casap says: “Don’t ask kids what they want to be when they grow up, but what problems they want to solve. This changes the conversation from ‘who do I want to work for’ to ‘what do I need to learn to be able to do that.’”

To get students ready for this world, we need to understand its ultimate goal: to enable students to solve real-world problems and make the world a better place to live. It is precisely what I discuss in my new book, Becoming Einstein’s Teacher: Awakening the Genius in Your Students. Have you got yours yet?