Introduction: Change Is the Only Constant

When we thought we had all the answers, all of a sudden, all the questions changed.

—Mario Benedetti, Uruguayan journalist, novelist, and poet (1920–2009)

It is not news that change is inevitable. Indeed, we know from the sixth‐century BC Greek philosopher Heraclitus that “the only constant in life is change.” However, the speed, depth, and breadth of the transformation triggered by digital technology, accelerated by the pandemic, and exacerbated by the volatility of the macroeconomic context qualifies as an undeniable paradigm shift. The business community has long used the acronym VUCA—volatile, uncertain, complex, and ambiguous—to describe the state of flux that has replaced the sense of certainty, stability, and familiarity that people had previously been used to.1 However, another acronym more aptly captures the times we live in today—BANI: brittle, anxious, nonlinear, and incomprehensible—coined in 2016 by Jamais Cascio, an American anthropologist, futurist, and author. The term BANI emphasizes even more the folly of relying on the concept of stability. In the words of Cascio: “It is a framework to articulate the increasingly commonplace situations in which simple volatility or complexity are insufficient lenses through which to understand what's taking place. Situations in which conditions aren't simply unstable, they're chaotic. In which outcomes aren't simply hard to foresee, they're completely unpredictable. Or, to use the particular language of these frameworks, situations where what happens isn't simply ambiguous, it's incomprehensible.”2 De facto, the future is no longer a marginal optimization of the past; instead, it's a constantly changing scenario evolving at an unprecedented speed. Case in point: in 2022 the editors of the Collins English Dictionary chose as their word of the year permacrisis, defined as an “an extended period of instability and insecurity.”3

This scenario poses a critical threat to private and public organizations and undermines their ability to plan their own future. Macroeconomic assumptions and geopolitical certainties that have held for decades have all been dramatically shaken. We can no longer maintain that borders should be inviolable, rough material will be available at reasonable cost, manufacturing can be delocalized in most convenient parts of the world, supply chains will be stable, energy supply is granted, inflation will be contained, and global GDP will be sustained by emerging economies. In The Age of Discontinuity: Guidelines to Our Changing Society, Peter F. Drucker—unanimously celebrated as the father of management—was among the first authors to call attention to the impossibility of predicting the future in a context where the forward projection of current trends risks taking us nowhere or, even worse, to the wrong place.4

In such an unpredictable scenario, how can managers share with shareholders an accurate forecast, deliver predictable results, and meet customers' needs better than the competition? The short answer is they can't. Or at least they can't if they use the same playbook they've always relied on. The problem is that no one currently at the helm of an organization or leading a team has been trained for instability. Actually, the opposite is true. Managers are trained to achieve economies of scale, scope, and learning in a relatively stable context that allows maximal profit margin and return on investment. Most training courses don't teach how to deal with extreme volatility. The only solution is to do what the new normal requires: develop a flexible approach, learn by doing, and follow new guiding principles that are natively designed for this world and thus are inherently adaptive. Paraphrasing Drucker, the only way to decode this complexity is to understand the profound nature of its underlining discontinuities.

Retail: A Different Perspective

Starting from when Mesopotamian tribes invented the practice of bartering in 6000 BC, the logic at the basis of commerce has been a value exchange between two counterparts. The buyer can be either the end‐user of the product or an intermediary that will resell to a third party. We typically refer to these two scenarios as B2C (Business to Customer) and B2B (Business to Business), and retailing is unequivocally associated to the former. In fact, the term “retail” refers to the sale of goods, services, or experiences from individuals or businesses to end users. Retailers are in the business of acquiring goods from wholesalers, manufacturers, or other retailers and then selling them to final consumers for a profit. As a consequence, B2C and B2B companies have historically adopted very different operating models and organizational structures. B2B players didn't directly interact with consumers and didn't need to have stores—so, rather than having to maintain large sales and marketing budgets, they were able to focus on sourcing, production, and logistics. B2C players, on the other hand, needed to excel in crafting customer experience, since the ability to increase the perceived quality of what people buy determines success—so they focused on branding, customer service, marketing communications, and promotions. Consumer companies like Coca‐Cola, Estée Lauder, Procter & Gamble, or Unilever have traditionally operated as a sort of hybrid—functioning in both the B2B realm by utilizing distributors and retailers to reach end consumers, and embracing a strong B2C orientation through their marketing efforts.

However, the digital transformation we experienced during the two consecutive waves that we refer to as Retail 3.0 and Retail 4.0 (more on both soon) challenged this dichotomy and role of all players involved in the process. For 8,000 years—with the exception of mail order—to be a retailer one needed to physically interact with a customer, whether in a traditional market, in the street, or in a brick‐and‐mortar location. But when Amazon and eBay were founded, in 1994 and 1995, respectively, the world of commerce changed. Presence and localization were unbundled for the first time—one doesn't need to go somewhere to effectively be there. From that moment onward, a retailer could be also a pure digital player or even a “consumer” who decides to trade with their peers. And in the following two decades, the exponential acceleration of technology amplified this opportunity for newcomers so much that it posed strategic challenges to the established companies. The ubiquity of commerce—combined with the unprecedented possibility for potentially the vast majority of the world's population accessing products and services, regardless of location—redefined the competitive landscape. For the first time it was possible for manufacturers and any B2B firms to explore the market on their own—bypassing all intermediaries and interacting directly with the final consumers. We refer to this shift as B2Cization. A process through which a business or organization that traditionally operates in a B2B context borrows strategies commonly associated with B2C interactions. This can involve incorporating customer‐centric approaches, building or reinforcing a marketing department, investing in customer‐relationship management, public relations, and other forms of direct engagement with end users, similar to how B2C companies interact with consumers.

An immediate application of this new possibility is a strategy called D2C (Direct to Consumer), a business model in which a company (e.g., a manufacturer) sells its output directly to consumers without intermediaries such as retailers or wholesalers. Although this approach allows companies to acquire first‐party data and insights and have more control over their brand, customer experience, and distribution, it is a double‐edged sword, as we will discuss later in the book. Though it has great potential, it also disrupts the existing dynamic of the market and poses critical threats to established business practices, calling for different operations, more structured marketing efforts—essentially, all the variables of a different business model. What is relevant at this juncture is the fact that a huge number of companies not engineered to manage relationships with end‐users were forced to restructure their organization and develop new skills. How can you sell something to an empowered and connected customer if you don't improve your brand image, have at least an e‐commerce website, customer service, and a social media presence? And even if you decide not to sell but only to nurture your brand and perhaps build a community on a social media platform, how can you manage the interactions with a broader audience (compared to the sole industry professionals) if you don't develop specific B2C capabilities?

Ultimately, businesses need to contend with the fact that in a connected world—where digital channels are pervasive, and customers are tech‐savvy and empowered—the line between B2B and B2C is inexorably blurring.

This is a critical point, since it calls even more conservative B2B players to develop an entirely new skillset rather than counting on intermediaries to manage the interaction with the final user. Since the Internet enables any consumer to publicly call into question any company, we clearly need to rewrite the definitions of “retail” and...