Profile: Dr Kjell Nordstrom, Funky Business: Talent Makes Capital Dance
A keynote speaker at the recent
SAS Premier Business Leadership
Series in London, bestselling author
and visionary business guru Dr Kjell
Nordstrom, took time out to meet
with Risk editor Mark Phillips.
Dr Kjell Nordstrom is a guru of the new world of business. The 2007 Thinkers
50, the foremost ranking of management thinkers, listed Nordstrom at num
ber 13 in the world. His international bestseller Funky Business: Talent Makes
Capital Dance, co-authored with Dr Jonas Ridderstrale, is a manifesto for
what our time requires from business firms and their leaders and has been translated
into 31 languages.
The duo’s latest book, Karaoke Capitalism: Management for Mankind, has been pub
lished in 23 languages and teaches how to successfully compete on competencies, create
capitalism with character, and have a great life while also making a living.
Nordstrom holds an Economic Licentiate degree and a doctoral degree from the
Stockholm School of Economics and is an assistant professor at the Institute of Inter
national Business at the Stockholm School of Economics. He answered these questions
for Risk magazine.
Could you offer some insight into the thought process
that led to Funky Business? Was it something you had
been thinking about writing and planning for some time,
or was it a more spontaneous work?
I was writing a dissertation on multinational companies –
a process of five-to-six years in the end, because I actu
ally wrote two dissertations on various aspects of the multi
national company – and realised something that was very
disturbing. The asset value of the companies, in account
ing terms, was going down but their market value was
going up.
That was one observation, but there were also several
others that made Jonas and I, over a glass of wine, won
der what was going on. I mean, if there are no assets in
accounting terms, what is value in our time? That was
around 15 or 20 years ago, and it opened up a huge land
scape of concepts such as intellectual property, brands,
and what have you – concepts that were not mainstream
at the time.
Then came a second insight, namely that if intellectual
property is that important, then competitive advantage is
essentially you and me – we are the competitive advan
tage, potential unleashed, or whatever. For us that was
the eye-opener, that so much was changing in companies
to the point that they could not explain to us in a proper
way what their real assets were. And that started a search
for explanations.
When Funky Busiess was released in 1999 it would have
been up against a plethora of other business books. Were
you surprised – or simply delighted – that it became an
international bestseller?
I was first and foremost surprised. It was written for the
Scandinavian market and although we were not house
hold names we were pretty well known in Scandinavia.
But we decided to write it in English because that is the lin
gua franca in business and economics. The fact it is now
translated into so many languages is unbelievable. It con
tinues to travel alone out there and into new markets.
Authors are often reluctant to analyse their own work,
but in your view what was it about Funky Business
that generated almost unprecedented interest in the
business world?
With the benefit of hindsight – hindsight is so good! –
number one, I think, was the title. You should never under
estimate the power of a good title. ‘Funky’ and ‘business’
don’t usually go together. They are, as you say in English,
an oxymoron.
I was married to a singer at the time and she used the
word ‘funky’ whenever she wanted to underline some
thing as being different. She used to say ‘funky restaurant’,
‘funky food’, ‘funky this and funky that’, and one day I
thought, ‘funky business’. It was apt because the first wave
of IT companies was emerging. Yahoo and others were
born at the time and they were all a little bit funky. So the
title matters.
Number two, I used to say that our way of thinking
and writing is a little like Apple economics. You can under
stand it intuitively. You do not have to be a trained econ
omist to understand Funky Business, even though most
of the things we write about are based on very solid, tra
ditional research. The intention was to create something
that anyone could read, understand, and intuitively draw
some conclusions from.
Number three, if it was a piece of art you would say it
was post-modern. It freely combines and recombines estab
lished knowledge. I mean, as you know, we take bits and
pieces from Karl Marx. Combining that with frontline
research from Stanford University on the service economy
really is post-modernistic.
And the post-modern hypothesis is basically how all
major breakthroughs are done. For example, iPod is old
technology but packaged in a different way. The actual
technology was developed in Germany at Frauenhoff Insti
tute more than 15 years ago when they created memory
with massive capacity, but no one really knew what to use
it for. Eventually one guy presented the technology to Steve
Jobs, who was able to see an application and package it
in that context.
Jobs is very post-modernistic in his way of working by
combining design and technology. Of course, our research is
not Nobel Prize material in the sense that Jobs came out
with something that is completely astonishing. But Funky
Business is in that tradition by combining things in a way that
is a little bit unexpected, much as Apple did with the iPod.
Karaoke Capitalism proved that Funky
Business was not a one-off bestseller. Was
it more difficult to write Karaoke in wake
of the success of Funky Business? Market
expectations must have been very high.
They were way out there, enormous. Basi
cally you need a therapist, someone to talk
to. If you’re a musician it’s easier with the
first record. If you’re a painter it’s easier
with your first exhibition. We were strug
gling with number two. It took us much
longer to write and it was much harder
work. What was fun when we wrote Funky
Business became sweat and suffering.
All the time we said, ‘This is not as good
as in Funky’, and all of a sudden I under
stood why rock stars trash hotel rooms and
drink 10 bottles of whiskey. It’s because
the pressure on them to come out with a
second record after the first success is unbe
lievable. I didn’t trash any hotel rooms, but
I certainly came to understand the kind of
pressures they live under.
Since the publication of the two books,
much has changed on the economic stage
in a very short period of time. What, in your
view, will be the final upshot of all this?
Apart perhaps from 1989 when the (Berlin)
Wall fell, during my 24 years in business
and economics it has never been as inter
esting as it is today. The Wall was prima
rily political, but what is happening now
is of the same significance. It will have ram
ifications right through our societies, and I
do not think those repercussions are tem
porary in any way. They’re here to stay.
The leveraged lifestyle of companies as well
as private citizens has probably come to an
end, full stop. We won’t do that again for
a very, very long period of time.
There was a time, 15 or 20 years ago,
when we thought we could control the risk.
Today we know we did not, and we can
see the social, political and economic impli
cations of that. Young people here in Lon
don have borrowed huge amounts of
money – unbelievable amounts of money in
relation to their earning power – and what
they are spending it on is not guaranteed to
accumulate in value anymore. We now
understand that there is a risk and the mar
ket here can fall. Prices can go down. Five
years ago most people would have said the
Central London property market could not go down. It is
now down 30 per cent.
People said Silicon Valley could not fail. Las Vegas could
not fail. Look where they are now. In Dubai it is the same.
So the magic is gone. The underlying assumption of eter
nal growth is gone. All resources are limited, basic laws of
supply and demand still work in a very brutal way and all
this, I think, will provide insights for our politicians. We will
also see how the nation-state will step in and be much more
firm on setting a framework for business – not only in
finance, but many other areas as well.
The (former British Prime Minister) Thatcher ideas
of 30 years ago are slowly but surely coming to an end
and we will see the rebirth of the strong nation-state.
Isn’t that (the antithesis of what the free market aspired
to) ironic?
I don’t think we will go all the way back and history
will not repeat itself, but there will absolutely be moder
ation. As I said in my address, I think the life of James
Bond illustrates this. He has gone from a bipolar, rather
simple world in the first film, with Dr No a very well
defined villain, into a state (2008’s Quantum of Solace)
where Bond, in the end, hardly knows what’s going on.
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