Author Archives: Greg Satell

About Greg Satell

Greg Satell is a popular speaker and consultant. His latest book, Cascades: How to Create a Movement That Drives Transformational Change, is available now. Follow his blog at Digital Tonto or on Twitter @Digital Tonto.

Ideas Are Validated Forwards Not Backwards

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Ideas Are Validated Forwards Not Backwards

GUEST POST from Greg Satell

In 2007, our media company in Ukraine completed its IPO and would soon be valued at $100 million. For a rough and tumble organization that, just a few years before, was a relatively small business, it was exhilarating. We had big plans and were eager to execute them. It was a “damn the torpedoes, full speed ahead” moment.

We also had an innovative strategy that we thought was a clear winner — a bet on Ukrainian language media. Although the Russian language was dominant at the time, we thoroughly researched the idea and found that a large part of the market said they preferred Ukrainian. To grab the opportunity, we launched three major brands in a year.

It was a disaster. Although the first launch was cause for concern, we were moving so fast the other two were too far along to stop. Then the 2008 global financial crisis hit and we were soon struggling to stave off bankruptcy. It was a brutal lesson. You can research an idea, but you never really know what you have until you’ve actually tested it in the marketplace.

The Rule Following Paradox

The Philosopher Ludwig Wittgenstein famously wrote, “no course of action could be determined by a rule, because every course of action can be made out to accord with the rule.” He meant that every rule is subject to some interpretation and, given varying contexts, interpretations are bound to vary.

That’s essentially what happened to us. We did our research and combed through all the evidence. Television and advertising was, by law, in Ukrainian and not Russian. Consumer surveys consistently showed that a significant portion of the Ukrainian public preferred Ukrainian language media. There were plenty of signs that we were on to something.

Given that analysis, our course seemed clear. We should not only launch Ukrainian language products, we should proceed at a rapid pace so that we could move out ahead of the pack. Surely, once competitors saw how big the opportunity was, they would pounce and our opportunity would be squandered.

Except that there was no opportunity. We weren’t acting on facts, but our interpretation of them and that interpretation was horribly, drastically wrong. To make matters worse, all this was happening as the Ukrainian media market was hitting its peak and the world was about to head off a cliff into the worst financial crisis since the Great Depression.

Survivorship Bias

Business school professors and consultants gain fame—not to mention large fees—when they are able to define a novel concept or success factor. If you are able to isolate one thing that organizations should do differently, you have a powerful product to sell. A single powerful insight can make an entire career, which is probably why so many cut corners.

For example, in their study of 108 companies, distinguished INSEAD professors W. Chan Kim and Renée Mauborgne found that “blue ocean” products, those in new categories without competition, far outperform those in the more competitive “red ocean” markets. Their book, Blue Ocean Strategy, was an immediate hit, selling over 3.5 million copies.

Bain consultants Chris Zook and James Allen’ book, Profit from the Core, boasted even more extensive research encompassing 200 case studies, a database of 1,854 companies, 100 interviews of senior executives and an “extensive review” of existing literature. They found that firms that focused on their ”core” far outperformed those who strayed.

It doesn’t take too much thinking to start seeing problems. How can you both “focus on your core” and seek out “blue oceans”? It betrays logic that both strategies could outperform one another. Also, how do you define “core?” Core markets? Core capabilities? Core customers? While it’s true that “blue ocean” markets lack competitors, they don’t have any customers either. Who do you sell to?

Yet there is an even bigger, more insidious problem called survivorship bias. Notice how “research” doesn’t include firms that went out of business because there were no customers in those “blue oceans” or because they failed to diversify outside of their “core.” The data only pertains to those that survived.

The Problem With Case Studies

The gold standard for research is randomized, double blind trials in which some of the subjects receive some sort of intervention, a control group gets a placebo and no one, not even those conducting the study, know which subjects are in which group. This design minimizes the chance of bias affecting results.

Yet this type of design is impractical for studying real businesses that are competing in the marketplace. So researchers largely depend on case studies in which participants are interviewed after the fact. These can be helpful in that they offer first-person perspectives of events and their context, but have obvious problems.

First, much like in Wittgenstein’s rule-following paradox, a lot is left up to interpretation. There are rarely more than a half-dozen people interviewed and they tend to be insiders. We almost never hear from competitors, customers or lower level employees. Then the researchers themselves bring their own biases to what they see and hear.

There are also issues with survivorship bias. Clearly, key players will be much more forthcoming about successes than failures. So we tend to hear about strategies that worked when, for all we know, those same strategies may have failed in other organizations and other contexts. There’s simply no real way for us to know.

Incidentally, researchers did a series of case studies on our company and I was struck by how much they depended on who was interviewed. While there wasn’t anything factually wrong, a different sample of perspectives would have led to very different interpretations.

Adopting A Bayesian Strategy

Traditionally, strategy has been seen as a game of chess. Wise leaders survey the board of play, plan their moves carefully and execute flawlessly. That’s always been a fantasy, but it was close enough to reality to be helpful. Organizations could build up sustainable competitive advantage by painstakingly building up bargaining power within the value chain.

Yet as Mike Tyson pointed out, “everybody has a plan until they get hit.” We can research and plan all we want, but the real world is a messy place. The facts, as we see them, are really just interpretations of the data we have available to us. Invariably, there are other data we’re not seeing and, even that which we have in front of us, can be interpreted in multiple ways.

That’s why we need to take a more Bayesian approach to strategy, in which we don’t pretend that we have the “right strategy,” but endeavor to make it less wrong over time. As Rita Gunther McGrath has put it, it’s no longer as important to “learn to plan” as it is to “plan to learn.” We need to be more iterative, see what works and change course as needed.

Today, instead of thinking about strategy as a game of chess, we’d do better to envision an online role-playing game, in which you bring certain capabilities and assets and connect with others to go on quests and discover new things along the way. Unlike chess, where everyone knows that their objective is to capture the opponent’s king, we need to expect the rules to change over time and adapt accordingly.

— Article courtesy of the Digital Tonto blog
— Image credit: Unsplash

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Five Elements of the Changemaker Mindset

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Five Elements of the Changemaker Mindset

GUEST POST from Greg Satell

Chances are, you work in a square-peg business, because that’s the best way to make money. You work diligently to improve the pegs and to get them to where they need to go better, faster and cheaper. It is through quality and consistency that you can best serve your customers, beat your competition and win in the marketplace.

The problem comes when your square-peg business meets a round-hole world. When that happens, following traditional best practices will only result in getting better and better at doing things people care about less and less. Round holes don’t concern themselves how good your square pegs are or how efficiently you can produce them.

Make no mistake. Eventually, every business eventually finds itself in a round-hole world. That’s why good companies fail. Not because they become stupid and lazy, but because the world changes and they lose relevance. Clearly, in the midst of disruption the only viable strategy is to adapt and shift from a traditional manager mindset to a changemaker mindset.

1. Don’t Look For A Great Idea, Identify A Good Problem

“Build a better mousetrap and the world will beat a path to your door,” Ralph Waldo Emerson is said to have written and since that time thousands of mousetraps have been patented. Still, despite all that creative energy and all those ideas, the original “snap trap,” invented by William Hooker in 1894, remains the most popular.

We’ve come to glorify ideas, thinking that more of them will lead to better results. This cult of ideas has led to a cottage industry of consultants that offer workshops to exercise our creative capabilities. They walk us through exercises like Brainstorming and SWOT analysis. We are, to a large extent, still chasing better mousetraps with predictably poor results.

The truth is that every great change leader starts out with a problem they just couldn’t look away from. Change doesn’t begin with an idea. It starts with identifying a meaningful problem. That’s why it’s so important that before you start an initiative you ask questions like, “What problem are we trying to solve? Is there a general consensus that it’s a problem we need to solve? How would solving it impact our business?

Make no mistake. Change isn’t about ideas. It’s about solving meaningful problems that people care about.

2. Anticipate Resistance

The biggest misconception about change is that if everyone just understood it, they would embrace it. That’s almost never true. Make no mistake, if you intend to create genuine impact, you will get pushback. Some people will hate it with every fiber of their being. Not for any rational logic, necessarily, just because for whatever reason, it offends their dignity, their identity, their sense of self.

In Rules for Radicals, the legendary activist Saul Alinsky observed that every revolution inspires a counterrevolution. That is the physics of change.

Every action provokes a reaction because, if an idea is important, it threatens the status quo, which never yields its power gracefully. Clearly, if you intend to influence an entire organization, you have to assume the deck is stacked against you and anticipate resistance.

A simple truth is that humans form attachments to people, ideas and other things and, when those attachments are threatened we tend to lash out in ways that don’t reflect our best selves. As much as we may hate to admit it, we all do it from time to time. Anyone who has ever been married or part of a family knows that.

That’s why anytime you ask people to change what they think or what they do, there will always be those who will work to undermine what you are trying to achieve in ways that are dishonest, underhanded and deceptive. Once you are able to internalize that, you can begin to move forward.

3. Identify A Keystone Change

Every change effort begins with some kind of grievance: Costs need to be cut, customers better served, or employees more engaged. Wise managers transform that grievance into a “vision for tomorrow” that will not only address the grievance but also move the organization forward and create a better future.

This vision, however, is rarely achievable all at once. Tough and significant problems have interconnected root causes, so trying to achieve an ambitious vision all at once is more likely to devolve into a long march to failure than it is to achieve results. That’s why it’s crucial to start with a Keystone Change, which represents a clear and tangible goal, involves multiple stakeholders, and paves the way for bigger changes down the road.

​​For example, when Paul O’Neill set out to turnaround Alcoa in the 1980s, he started by improving workplace safety, which also paved the way to improvements in operational excellence. At Experian, when CIO Barry Libenson set out to move his company to the cloud, he started with internal APIs. In both cases, the stakeholders who were won over in achieving the keystone change also played a part in bringing about the larger vision.

Focusing on a keystone change allows you to get out of the business of selling an idea and into the business of selling a success. When people see that something is working, even at a small scale, they want to be involved. They can bring in others who can bring in others still. That’s how you can grow your initiative to create the critical mass that moves the system toward widespread change.

4. Mobilize People To Influence Institutions

In the early 1990s, writer and activist Jeffrey Ballinger published a series of investigations about Nike’s use of sweatshops in Asia. People were shocked by the horrible conditions that workers—many of them children—were subjected to. In most cases, the owners lived outside the countries where the factories were located and had little contact with their employees.

At first, Nike’s CEO, Phil Knight, was defiant. “I often reacted with self-righteousness, petulance, anger. On some level I knew my reaction was toxic, counterproductive, but I couldn’t stop myself,” he would later write in his memoir, Shoe Dog. He pointed out that his company didn’t own the factories, that he’d worked with the owners to improve conditions and that the stories, as gruesome as they were, were exceptions.

The simple truth is that change rarely, if ever, starts at the top because it is people with power that create the status quo. They are attached to what they’ve built and take pride in their accomplishments, just like the rest of us. That’s why, to bring about genuine change—change that lasts—you need to mobilize people to influence institutions (or those, like Knight, who yield institutional power).

Eventually, that’s what happened at Nike. The protests took their toll. “We had to admit,” Knight remembered, “We could do better.” Going beyond its own factories, the company established the Fair Trade Labor Association and published a comprehensive report of its own factories. Today, the company’s track record may not be perfect, but it’s become more a part of the solution than a part of the problem.

If you want to create change in your organization, think about the institutions—both internal and external—that can bring it about. Which departments have budgets that can be deployed in service of change? Which external organizations, whether those are partners, suppliers, customers, industry organizations or regulators that could impact your change environment? Then think about who you can mobilize to influence those institutions.

5. Shift Your Mindset

Most of the time, we operate with a manager mindset and that works fine. We build consensus and execute with predictable outcomes. Our colleagues are motivated, customers are satisfied and everybody is happy. However, in an era of disruption it’s only a matter of time until we need to adapt and drive transformation. That’s never easy.

To pull it off we need to shift from a manager mindset to a changemaker mindset in which we no longer assume an environment of predictability, but explore unknowns in an atmosphere of uncertainty. Not everybody will be willing to make the journey with us, so rather than relying on a consensus, we will need to build a coalition and leave some people behind.

We start not by trying to convince skeptics, but by going to where there is already energy in favor of change. Once we identify those who are already enthusiastic about change, we can empower them to succeed and build on that success until we hit a tipping point (about 10%-25% of the organization) and the transformation becomes self-sustaining.

What makes our current era so challenging is that we often need to operate with both mindsets simultaneously. We can’t afford to put everything on hold while changes are underway, so we need to approach some things as managers and some as changemakers. It can be difficult and stressful, but it’s what needs to be done.

Perhaps most of all, we need to internalize the reality, proven time and time again, that transformation is not only possible, but that it does not have to come from the top. Anyone, anywhere can achieve enormous change. But first, you need to adopt a changemaker mindset.

— Article courtesy of the Digital Tonto blog
— Image credit: Unsplash

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Misunderstanding Big Ideas is Very Dangerous

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Misunderstanding Big Ideas is Very Dangerous

GUEST POST from Greg Satell

In 1989, just before the fall of the Berlin Wall, Francis Fukuyama published an essay in the journal The National Interest titled The End of History, which led to a bestselling book. Many took his argument to mean that, with the defeat of communism, US-style liberal democracy had emerged as the only viable way of organizing a society.

He was misunderstood. Fukuyama pointed out that even if we had reached an endpoint in the debate about ideologies, there would still be conflict because of people’s need to express their identity. What many thought to be a justification, was actually a warning to expect people to rebel against an order imposed on them.

If you believe history is on your side, you’re likely to throw caution to the wind, get mixed up in things you shouldn’t and, eventually, you’ll pay a price. That’s the problem with big ideas, their nuance is often lost on those who hear them third or fourth hand and the high-stakes game of broken telephone tends to end badly. We need to approach ideas with more care.

The Global Village

Marshal McLuhan’s book Understanding Media, was one of the most influential works of the 20th century. In it, he described media as “extensions of man” and predicted that electronic media would eventually lead to a global village. Communities would no longer be tied to a single, isolated physical space but connect and interact with others on a world stage.

To many, the rise of the Internet confirmed McLuhan’s prophecy and, after the fall of the Berlin Wall, digital entrepreneurs saw their work elevated to a sacred mission. In Facebook’s IPO filing, Mark Zuckerberg wrote, “Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected.

Yet, importantly, McLuhan did not see the global village as a peaceful place. In fact, he predicted it would lead to a new form of tribalism and result in a “release of human power and aggressive violence” greater than ever in human history, as long separated—and emotionally charged—cultural norms would now constantly intermingle, clash and explode.

For many, if not most, people on earth, the world is often a dark and dangerous place. For predators, “open” is less of an opportunity to connect than it is a vulnerability to exploit. Things can look fundamentally different from the vantage point of, say, a tech company in Menlo Park, California then it does from, say, a secured facility in St. Petersburg.

Context matters. Our most lethal failures are less often those of planning, logic or execution than they are that of imagination. Chances are, most of the world does not see things the way we do. We need to avoid strategic solipsism and constantly question our own assumptions.

The Paradigm Shift

The term paradigm shift has become so common that we scarcely stop to think about where it came from. When Thomas Kuhn first introduced the concept in his 1962 classic The Structure of Scientific Revolutions, he described not just an event, but a process that he noticed had pervaded the history of science.

It starts with an established model, the kind we learn in school or during initial training for a career. Models become established because they are effective and the more proficient we become at applying a good model, the better we perform. We then rise through the ranks and become successful.

Yet no model is perfect and eventually anomalies show up. Initially, these are regarded as “special cases” and are worked around. However, as the number of special cases proliferate, the model becomes increasingly untenable and a crisis ensues. At this point, a fundamental change in assumptions needs to take place if things are to move forward.

However, as Kuhn noted, the shift in thinking almost never goes smoothly. Most experts cling to the old model, because that’s what made them successful in the first place. The physicist Max Planck, who helped shift a number of paradigms himself, pointed out that “a new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”

The idea of paradigms shifting seems so hopeful and romantic that we often forget how hard it is for people’s mental models to change. The simple fact is that any time you set out to make a significant impact there will be people who won’t like it and will work to undermine you in ways that are dishonest, underhanded and deceptive.

Disruptive Innovation

In the 1990s, a newly minted professor at Harvard Business School named Clayton Christensen began studying why good companies fail. What he found was surprising. They weren’t failing because they lost their way, but rather because they were following time-honored principles taught at his institution, such as listening to their customers, investing in R&D and improving their products.

As he researched further he realized that, under certain circumstances, a market becomes over-served, the basis of competition changes and firms become vulnerable to a new type of competitor. In his 1997 book, The Innovator’s Dilemma, he coined the term disruptive technology to describe what he saw.

It was an idea whose time had come. The book became a major bestseller and Christensen the world’s top business guru. Yet many began to see disruption as more than a special case, but a mantra; an end in itself rather than a means to an end. This wasn’t, to be fair, what he envisioned, but things took on a life of themselves.

The results of all this disruption have been, by just about every measure, awful. Despite the hype, productivity growth has been depressed for most of the last 30 years. Our economy has become markedly less productive, less competitive and less dynamic, Income inequality is at levels not seen for a century and most American families are worse off.

Beware Of The Cult Of Inevitability

Big ideas are powerful because they encapsulate an essential truth. When Fukuyama wrote about “the end of history,” it really did mark a turning point in human affairs, just as Marshall McLuhan’s concept of a “global village” identified a shift in communications, Kuhn’s model of a paradigm shift helped us understand how scientific breakthroughs occur and Christensen’s ideas about disruptive innovation alerted us to dangers and opportunities we weren’t aware of.

Yet these ideas were important precisely because they described complex things. Once they rise to the level of a meme, we tend to discard the complex core and focus only on the candy shell. The concept becomes a caricature of itself, repeated so often that few stop to think about its implications and limitations, where it applies and where it does not.

The problem with big ideas is that they can seem so inevitable that we ignore human agency. If we are truly at an “end of history,” then decisions don’t really matter. A “global village” can seem like such a nice place that we ignore dangers from bad actors. If we believe we are on the right side of a “paradigm shift,” we may not notice those who are working to undermine what we are trying to achieve. “Disruption” can seem so cool we forget about the disrupted.

As Warren Berger explains in A More Beautiful Question, questions are more valuable than answers because, while answers tend to close a discussion, questions help us open new doors and can lead to genuine breakthroughs. That’s the value of big ideas. They can help us ask better questions.

But once we start looking to big ideas for answers, we stop exploring the world around us, our world constricts and, ultimately, we find that we are lost.

— Article courtesy of the Digital Tonto blog
— Image credit: Google Gemini

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Why Networks Can Outperform Hierarchies

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(And Vice Versa)

Why Networks Can Outperform Hierarchies

GUEST POST from Greg Satell

I still remember the bright autumn day in 2014 when I turned off of the main road in Exton, Pennsylvania onto a remote path. I was going to meet Brian J. Robertson, the creator of a hot new “flat” management approach called Holacracy. I was skeptical, because it seemed to be a cumbersome way to go about governance, but I was open to learning about it.

Many companies, most famously Zappos, were enthusiastically adopting it and there was no shortage of hype among the punditry about abolishing hierarchies. Brian, for his part, was gracious and patient with me, explaining how and why everything worked. Still, I had my doubts and remained unconvinced.

Recently, Stanford’s Bob Sutton pointed to Ronnie Lee’s research that confirmed my (and his) suspicions. While flatter structures can promote creativity, we need hierarchies to execute well. The truth is that hierarchies form naturally and, rather than trying to ignore that basic fact, we need to design enterprises with hierarchical networks in mind.

Evolution, Religion and Leadership

It’s become common today for many, especially in the academic world, to dismiss religion as the product of ancient superstition. Yet in The Righteous Mind, social psychologist Jonathan Haidt makes a powerful case that it plays an important evolutionary role. “There is now a great deal of evidence that religions do in fact help groups to cohere, solve free rider problems and win the competition for group-level survival,” he wrote.

So while many pundits often portray bureaucratic hierarchies as an anachronistic byproduct of the industrial revolution, it seems significant that religions tend to have hierarchical structures. Even religious activities that can be done individually, such as Buddhist meditation, are often led by someone who has an elevated group status.

So it stands to reason that hierarchy plays a similar governance role in organizations, helping to coordinate group activity by setting priorities, establishing basic rules and norms and, when needed, providing impetus to change direction and adapt to external events. Clearly, these are essential governance functions in any enterprise.

Many would say that, in an increasingly digital environment that helps us communicate and coordinate across boundaries of time and space, we simply don’t need the same levels of bureaucratic governance that we used to. However, what Professor Lee found in the startups he researched was that the levels of hierarchy increased significantly over the last 50 years, most probably due to the greater levels of complexity involved in work.

It’s important to note that, even after years of hype, it’s hard to find examples of successful non-hierarchical organizations. Even the rare exceptions, such as the Orpheus Chamber Orchestra, aren’t quite as flat in how they organize work as it would first seem. Zappos would eventually back away from Holacracy as would other early adopters, such as Medium.

Hierarchies Are Networks

The term “network” is often misconstrued. In management circles, it is often used to mean an organic, unfathomable, amorphous structure, but really a network is just any system of nodes connected by links. So, in that sense, any conceivable organizational structure is a network, even a typically hierarchical organizational chart.

The important question is what kind of networks do we want our organizations to be? If we look at the evidence from thousands of years of human civilization, we’d have to conclude that some sort of command and control mechanism is needed. At the same time, as our competitive environment becomes more complex, we want information to be able to go to where it is needed without getting stuck in leadership bottlenecks.

A bit of network science can be helpful here. For functional purposes, networks have two salient characteristics: clustering and path length. Clustering refers to the degree to which a network is made up of tightly knit groups while path length is a measure of social distance—the average number of links separating any two nodes in the network.

Ideally our organizational networks would have a high degree of clustering—to promote close collaboration and teamwork—as well as short path lengths so that information can get from one part of the enterprise to any other part with speed and efficiency. Intuitively, it seems like those two priorities are in conflict. However, thanks to some breakthroughs in network science in the late 90s, we know that such “small world” networks are not only achievable, but common.

What’s really important isn’t how your organizational chart is constructed, but how you design for connection and there are some common sense ways to do that.

Understanding Formal And Informal Structures

Every organization has both formal and informal structures. For example, while ostensibly open source communities have little formal organization, in practice they are very hierarchical, with high-status individuals driving the direction of the project. At the same time, even in a formal organization, there are informal relationships as when, say, you work in sales and your brother-in-law works in logistics in a very different part of the company.

Network scientists call people who link disparate networks in an organization boundary spanners and they are crucial for maintaining culture as an organization grows. Once you understand the importance of boundary spanners, you can start redesigning programs and platforms to optimize for connection.

There are a number of ways to network your organization by optimizing organizational platforms for connection. Facebook’s Engineering Bootcamp found that “bootcampers tend to form bonds with their classmates who joined near the same time and those bonds persist even after each has joined different teams.” At Experian, leadership found that a biking club led to boundary spanning collaborations at work, so they helped more clubs to get organized.

One striking example of how even small tweaks can improve connectivity is a project done at a bank’s call center. When it was found that a third of variation in productivity could be attributed to informal communication outside of meetings, the bank arranged for groups to go on coffee break together, increasing productivity by as much as 20% while improving employee satisfaction at the same time.

Perhaps most famously, Steve Jobs designed the headquarters both at Apple and Pixar to encourage random collisions among employees. It seems we’ve been asking the wrong question. The problem isn’t how we dismantle hierarchies, but how we connect them.

Leading Hierarchical Networks

For decades we’ve been hearing that we need to eliminate bureaucracy and break down silos. Yet there is little evidence of any success. In fact, when management guru Gary Hamel, who has been leading the call to “bust bureaucracy,” surveyed readers at Harvard Business Review he found that levels of organization had increased, not decreased.

The inescapable conclusion is that we’ve failed to do away with hierarchies because they serve a useful purpose. We need them. In much the same way, the much maligned “silos” form around centers of capability as a result of close collaboration. These are good things. We don’t want to eliminate them, we want to support and empower them.

So instead of trying to break down silos, we need to connect them. Network science tells us that it takes just a small amount of boundary spanning “random connections,” in order to bring social distance crashing down. We can’t just look at organizational charts, but need to focus on how meaningful relationships form in the real world.

The role of leadership in organizations has changed. It is no longer merely to plan and direct work, but to inspire meaning and empower belief. As I wrote in Cascades, the key to transformational change is small groups, loosely connected by united by a shared purpose. The job of leaders today is to help those groups connect and forge a common purpose.

If we are to lead effectively in an increasingly ecosystem-driven world, we need to empower networked hierarchies.

— Article courtesy of the Digital Tonto blog
— Image credit: Google Gemini

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Change Starts with Empathy

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(Even for Your Enemies)

Change Starts With Empathy

GUEST POST from Greg Satell

On September 17th, 2011, protesters began to stream into Zuccotti Park in Lower Manhattan and the #Occupy movement had begun. “We are the 99%,” they declared and as far as they were concerned, it was time for the reign of the “1%” to end. The protests soon spread like wildfire to 951 cities across 82 countries.

It failed miserably. Today, a decade later, it’s hard to find any real objective that was achieved except some vague assertions about “building awareness” and Bernie Sanders’ two failed presidential campaigns. Taking into the count the billions of dollars worth of resources expended in terms of time and effort, that is abysmal performance.

As I explained in Cascades, there were myriad reasons for #Occupy’s failure. One of the gravest errors, however, was the insistence on ideological purity and the lack of any effort to understand those who had different ideas from their own. If you expect to bring change about, you need to attract, rather than overpower. Empathy is a good place to start.

Finding Your Tribe

In 1901, before he became employed by the patent office, a young Albert Einstein put out an advertisement offering tutoring services in math and physics. Maurice Solovine, a Romanian philosophy student, responded to the ad but, after a brief discussion, Einstein told him that he didn’t need lessons. Still, he invited Solovine to come and visit him whenever he wished.

The two began meeting regularly and were soon joined by another friend of Einstein’s, a young Swiss mathematician named Conrad Habicht, and the three would discuss their own work as well as that of luminaries such as Ernst Mach, David Hume and Henri Poincaré. Eventually, these little gatherings acquired a name, The Olympia Academy.

Einstein had found his tribe and it became a key factor in the development of his “miracle year” papers that would turn the world of physics on its head in a few years later. It gave him a safe space to let his mind wander over the great questions of the day, formulate his ideas and get feedback from people that he trusted and respected.

This is a common pattern. Similar tribes, such as, the Vienna Circle, the Bloomsbury Group and the “Martians” of Fasori have, if anything, led to even greater achievement. So it’s easy to understand how those protesters descending on Zuccotti Park, finding themselves amongst so many who saw things as they did, felt as if they were on the brink of a historic moment.

They weren’t. And that’s what’s dangerous about tribes. Although they can lend support to a fledgling idea that needs to be nurtured, they can also blind us to hard truths that need to be examined.

Developing A Private Language

A tribe is a closed network that, almost by definition, is an echo chamber designed to develop its own practices, customs and culture. Perhaps not surprisingly, it is common for these networks to develop their own vocabulary to describe these unique aspects of the tribal experience and to make distinctions between members of the tribe and outsiders.

Consider what happened when Congressman John Lewis, the civil rights legend, showed up at an #Occupy rally in Atlanta. The protesters refused to let him speak. He left quietly and issued a polite statement, but an opportunity was lost and real damage was done to the movement and its cause. If John Lewis wasn’t welcome, what about the rest of us?

Later, the man who led the charge to prevent Congressman Lewis from speaking explained his reasons. He cited his suspicion of Lewis as part of the “two-party system,” which he felt had betrayed the country. Yet even more tellingly, he also explained that his main objection was due to the “form” of the event, which he felt was being violated.

It is common for tribes to fall into this kind of private language trap. The function of communication is inherently social and, if the customs and vernacular that you develop becomes so archaic and obscure that it is unable to perform that function, you have undermined the fundamental purpose of the activity.

Clearly, in any dialogue both the speaker and the listener have a responsibility to each other. However, if you consistently find that your message is not resonating outside your tribe, you probably want to rethink how you’re expressing it.

Shifting From Differentiating Value To Shared Values

Once you start separating yourself off and creating a private language for your adherents, it’s easy to fall into a form of solipsism in which the only meaningful reality is that of the shared experience of the tribe. Many aspiring revolutionaries seek to highlight this feeling by emphasizing difference in order to gin-up enthusiasm among their most loyal supporters.

That was certainly true of LGBTQ activists, who marched through city streets shouting slogans like “We’re here, we’re queer and we’d like to say hello.” They led a different lifestyle and wanted to demand that their dignity be recognized. More recently, Black Lives Matter activists made calls to “defund the police,” which many found to be shocking and anarchistic.

Corporate change agents tend to fall into a similar trap. They rant on about “radical” innovation and “disruption,” ignoring the fact that few like to be radicalized or disrupted. Proponents of agile development methods often tout their manifesto, oblivious to the reality that many outside the agile community find the whole thing a bit weird and unsettling.

While emphasizing difference may excite people who are already on board, it is through shared values that you bring people in. So it shouldn’t be a surprise that the fight for LGBTQ rights began to gain traction when activists started focusing on family values. Innovation doesn’t succeed because it’s “radical,” but when it solves a meaningful problem. The value of Agile methods isn’t a manifesto, but the fact that they can improve performance.

You Never Have To Compromise On Common Ground

One of the things that sticks in my head about my experiences during and after the Orange Revolution in Ukraine was an interview with Viktor Pinchuk. who is not only one of the country’s richest oligarch’s, but also the son-in-law of the former President and, at the time, a member of the Rada, the Ukrainian Parliament.

He was, by any definition, a full-fledged member of the “1%” that #Occupy took to the streets to protest. Before reading the article I would’ve expected him to be bitter about the abrupt shift in power. Yet he wasn’t. In fact, he explained that his biggest concern during the protests was that his own children were in the streets, and he feared for their safety.

The insight underlines one of the fundamental fallacies of failed change efforts like #Occupy and others, both in the streets and in the corporate world. They imagine change as a Manichean struggle between two countervailing forces in which we must either prevail or accept defeat and compromise. That is a false choice.

The truth is that any change we win by vanquishing our opponents is bound to be fleeting. Every revolution inspires its own counter-revolution. Lasting change is always built on common ground. The best place to start is by building empathy for your most ardent adversaries, not to give in to them, but to help you identify shared values.

After the Orange Revolution was over, we would learn that Pinchuk’s father-in-law, Leonid Kuchma, who was still in power, ordered the most reactionary forces in his regime to stand down. As it turned out, there were some places that even the famously corrupt leader would not go. In the end, he understood that his legacy, and therefore his interests, lay with the protesters in the streets.

— Article courtesy of the Digital Tonto blog
— Image credit: Google Gemini

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Four Things I Have Learned About Ideas

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Four Things I Have Learned About Ideas

GUEST POST from Greg Satell

I’ve always been inspired by ideas. Some, like Aristotle’s logic, shape the world for millennia. Others, like Einstein’s relativity, completely change our conceptions of what is possible. Still others, like mRNA vaccines, seem to emerge at just the right time. Ideas are what have marked humanity’s progress from living in caves to civilizations.

Yet bad ideas can destroy just as completely as good ideas can create. Fascism led Europe to effectively wipe itself out in little more than a decade. Communism relegated hundreds of millions of people to poverty and struggle. Corporate debacles like like Enron, WeWork and Theranos, have shown us that the wrong idea can cost billions.

We need to handle ideas with care, being open enough to new ones so that we don’t miss out on opportunities, but skeptical enough that we don’t get taken in by ones that do harm. What I’ve learned researching innovation and change is that creating, parsing and evaluating ideas is a skill that must be practiced and honed over time. Here are 4 things to keep in mind.

1. Ideas Can Come From Anywhere

Albert Einstein was an outcast in the world of physics when he unleashed four papers on the world that would change the field forever. When Jim Allison discovered cancer immunotherapy, it took him three years to find anyone who would invest in it. Katalin Karikó was told to abandon her research into mRNA vaccines or be demoted.

In The Structure of Scientific Revolutions, science historian Thomas Kuhn explained why breakthroughs so often happen this way. As the world changes and evolves, flaws in existing models become more evident, eventually becoming untenable. That’s what sets the stage for a paradigm shift. “Failure of existing rules is the prelude to a search for new ones,” he wrote.

Yet new paradigms almost always need to be championed by outsiders or newcomers rather than acknowledged experts. As the physicist Max Planck put it “a new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”

In Mapping Innovation, I showed how data and real-world experience bear this out. On the innovation platform Innocentive (now Wazoku Crowd), problems tend not to be solved within the domain in which they arose, but by a practitioner in an adjacent field. In fact, a study analyzing 17.9 million papers found the most highly cited work tended to come from highly specialized experts partnering with an outsider.

2. Ideas Need To Develop Over Time

In 1891, Dr. William Coley had an unusual idea. Inspired by an obscure case, in which a man who had contracted a severe infection was cured of cancer, the young doctor purposely infected a tumor on his patient’s neck with a heavy dose of bacteria. Miraculously, the tumor vanished and the patient remained cancer free even five years later.

It was a breakthrough, of sorts, but for more than a 100 years Coley’s work was viewed with skepticism and, in truth, there were serious problems with it. Coley couldn’t explain the underlying mechanism by which an infection could cure cancer and he couldn’t replicate his results with any consistency. When radiation therapy began showing success, most people forgot about Coley’s and his work.

Yet a small cadre of supporters kept the faith alive. His daughter, Helen Coley Nauts, would establish the Cancer Research Institute in 1953 to support immune-based approaches to cancer treatment. Over the next four decades, glimmers of hope would appear from time to time, but no one could make Dr. Coley’s idea work.

Then, in 1995 there was a breakthrough. Following a hunch, Jim Allison figured that maybe the problem wasn’t that our bodies couldn’t identify and fight cancer cells, but that something was switching the immune response off. If we could switch it back on, we would have a completely new tool to fight cancer. Allison would win the Nobel Prize for his work on the development of the first cancer immunotherapy drug in 2018.

Dr. Coley had the right idea from the start, but it wasn’t enough. It would take over a century to develop better understanding of cancer, genomics, as well as tools like recombinant DNA to make it work. Literally thousands of researchers worked around the globe for decades to make good on an initial insight.

3. Ideas Need Ecosystems

When Jim Allison was finishing up graduate school in the early 1970s, they had just discovered T cells and he was fascinated. He would later tell me how he was amazed about how all these things could be flying around our bodies killing things and somehow not hurt us. He decided to focus his career on figuring out how it all worked.

Over the next decade, Jim and his colleagues started piecing together a larger picture of how the immune system worked through a vast array of signals and receptors that regulate our immune response, triggering it to increase activity and to shut down once the threat has dissolved. A colleague had noticed that one of these molecules inhibited tumor growth.

Dr. Coley and Jim Allison occupied world’s. To Coley, the immune system was like an on/off switch and, triggering the immune system should lead directly to an immune response to fight cancer. Yet Allison was part of a much larger ecosystem that led to a different understanding that allowed him to target a specific receptor in the regulation system. That opened the floodgates and now cancer immunotherapy is a major field of its own.

The simple fact is that ideas need ecosystems. Look at any major technology and it’s not the initial invention that creates the impact, but the secondary and tertiary technologies. Electricity needed appliances to change the world. The internal combustion engine needed vehicles. Computers needed software and the Internet.

We can’t just look at nodes, but must consider networks. It’s through those connections that we create the combinations that can help us solve important problems.

4. You Need To Let The Muse Know You’re Serious

One of the toughest things about ideas is that they can only be validated forward, never backward. You never know if you have the right idea until it’s been tested in the real world and, even then, there could be some confounding factor you may be missing. As Kevin Ashton put it, “Creation is a long journey, where most turns are wrong and most ends are dead.”

That’s tough work. You can’t just expect lightning to strike. Truly creative people know you have to work at it every day. Sometimes it goes easier and sometimes it’s a bit tougher. There are constant disappointments and true epiphanies are rare. But if you keep with it you’ll find that most days you can come up with something, even if it’s something small.

Somebody told me once that you have to let the muse know that you’re serious. Producing ideas leads to more ideas, which allows you to start creating connections between them. The more you produce, the better the chances are that some of those connections will be novel and lead to something important. That’s how you produce an idea that matters.

But even then the work isn’t over, because the world your idea enters into keeps evolving and changing. That’s why you need to share it and encourage others to build on it so that it can grow and reach its true potential. Ideas must combine and recombine so that they can memetically evolve. For our ideas to succeed, we need to serve them well.

As Daniel Dennett put it, “A scholar is just a library’s way of making another library.”

— Article courtesy of the Digital Tonto blog
— Image credit: Google Gemini

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Innovation Should Always Serve the People

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Innovation Should Always Serve the People

GUEST POST from Greg Satell

The global activist Srdja Popović once told me that the goal of a revolution should be to become mainstream, to be mundane and ordinary. If you are successful it should be difficult to explain what was won because the previous order seems so unbelievable. That’s what true transformation looks like.

Yet many leaders approach innovation and change as if they were swashbuckling heroes in their own action movie. Companies like Theranos, WeWork and Uber squandered billions of dollars on business models that never made any sense. People post their latest ChatGPT prompts on social media while Elon Musk trolls Twitter.

These days, innovation has become, far too often, solipsistic and self-referential, pursued for the glory of the innovators themselves rather than for the benefit of everyone else and there is increasing evidence the venture-funded entrepreneurship model is crowding out more productive investments. We need to move away from hype and focus on impact.

The Eureka Moment Myth

In 1928, Alexander Fleming, a brilliant but sometimes careless scientist, arrived at his lab after a summer holiday to find that a mysterious mold had contaminated his Petri dishes and was eradicating the bacteria colonies he was trying to grow. Intrigued, he decided to study the mold. That’s how Fleming came to be known as the discoverer of penicillin.

Fleming’s story is one that is told and retold because it reinforces so much about what we love about innovation. A brilliant mind meets a pivotal moment of epiphany and—Eureka!— the world is forever changed. Unfortunately, that’s not really how things work. It wasn’t true in Fleming’s case and it won’t work for you.

The truth is that when Fleming published his results in 1929, few took notice. It wasn’t until 1939, a decade later, that Howard Florey and Ernst Chain came across Fleming’s long forgotten paper, understood its significance and undertook the hard work to transform it into a viable treatment that could actually help people.

Yet even then, to make a significant impact on the world, penicillin had to be produced in massive quantities, something that was far out of the reach of two research chemists. Florey reached out to the Rockefeller Foundation for help and moved to the US to work with American labs. In 1943 the U.S.’s War Production Board enlisted 21 companies to produce supplies for the war effort, saving countless lives and ushering in the new age of antibiotics.

The truth is that innovation is never a single event and is rarely achieved by a single person or organization. Rather, it is a process of discovery, engineering and transformation that typically takes decades to complete.

The Rise Of So-So Innovations

It’s been clear for some time now that we’ve been in the midst of a second productivity paradox. The first one, which lasted from the early 1970s to the mid 1990s, saw diminished productivity gains amid increased investment in information technology and prompted economist Robert Solow to note, “You can see the computer age everywhere but in the productivity statistics.”

In 1996, with the rise of the Internet, productivity growth began to boom again but then disappeared just as abruptly in 2004 and hasn’t returned since. Despite the hype surrounding things such as Web 2.0, the mobile Internet and, most recently, artificial intelligence, productivity growth continues to slump.

Part of the answer may have to do with what economists Daron Acemoglu and Pascual Restrepo refer to as so-so technologies, such as automated customer service, which produce meager productivity gains but displace workers nonetheless. In effect, they give the appearance of progress but don’t really improve our lives.

Consider an airport bar where ordering has been automated through the use of touchscreens. It’s hard to see how, given the high rent, food preparation and other costs, this technology would have a dramatic effect on productivity akin to, say, replacing a horse with a tractor in an agricultural economy. In fact, given that the technology hasn’t been widely deployed outside airports, the major effect seems to be inconveniencing patrons.

Acemoglu and Restrepo argue that a large-scale version of this phenomenon has been occurring since the late 80s. Digital technologies, to a large extent, have displaced labor, but have not had the same offsetting productivity impact as earlier technologies so the overall effect is to decrease wages rather than to raise living standards.
What Innovation Really Looks Like

Katalin Karikó, published her first paper on mRNA-based therapy way back in 1990. Unfortunately, she wasn’t able to win grants to fund her work and, by 1995, things came to a head. She was told that she could either direct her energies in a different way, or be demoted. Katalan chose to stick with it and, if the Covid pandemic had never hit, her name might very well be lost to history.

This type of thing is not unusual. Jim Allison, who won the Nobel Prize for his work on cancer immunotherapy, had a very similar experience when he had his breakthrough, despite having already become a prominent leader in the field. “It was depressing,” he told me. “I knew this discovery could make a difference, but nobody wanted to invest in it.”

The truth is that the next big thing always starts out looking like nothing at all. Things that really change the world always arrive out of context for the simple reason that the world hasn’t changed yet. Kevin Ashton, who himself first came up with the idea for RFID chips, wrote in his book, How to Fly A Horse, “Creation is a long journey, where most turns are wrong and most ends are dead.”

Because digital technology has become so pervasive, offering a substantial architecture that lends itself to tweaking, we’ve lost the plot. Innovation isn’t about Silicon Valley billionaires peacocking around on social media, but solving important problems. We need to shift our focus from disrupting industries to tackling grand challenges.

Building Collaborative Networks And To Tackle Grand Challenges

While researching my book Mapping Innovation, I had the opportunity to interview dozens of great innovators, from world-class scientists to super-successful entrepreneurs and top executives at some of the world’s largest corporations. I was surprised to find that, in almost every case, they were some of the most thoughtful, generous people I’d ever met.

The truth is that, for innovation, generosity is often a competitive advantage. By actively sharing their ideas, innovators build up larger networks of people willing to share with them. That makes it that much more likely that they will come across that random piece of information and insight that will help them crack a really tough problem.

The digital revolution has been, if anything, a huge disappointment and Silicon Valley’s tendency to be solipsistic and self-referential probably has a lot to do with that. The simple fact is that the developers banging away at their laptops can achieve little on their own. To tackle our most significant challenges, such as curing cancer, climate change and global hunger, they need to work effectively with specialists with different skills and perspectives.

What we need today is to build collaborative networks to solve grand challenges. The recent CHIPS Bill is a good start. It not only significantly increases our investment in basic research and development, but also allocates billions of dollars of investments into building regional ecosystems and advanced manufacturing.

Yet the most important thing we need to change is our mindset. We need to focus less on disruption and more on creation and, to create for the world we need to focus on what it means to live in it. We can no longer measure progress in terms of how many billionaires a technology creates. We need to focus on making a meaningful impact on people’s lives.

— Article courtesy of the Digital Tonto blog
— Image credit: Google Gemini

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Why Change Doesn’t Have to Start at the Top

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Why Change Doesn't Have to Start at the Top

GUEST POST from Greg Satell

In 2004 I found myself running a major news organization during the Orange Revolution in Ukraine. It was one of those moments when the universe opens up, reveals a bit of itself and you realize the world doesn’t work the way you thought it did. What struck me at the time was that nobody with any conventional form of power had any ability to shape events at all.

One of the myths that is constantly repeated is that change needs to start at the top. Clearly that is not true. It wasn’t true of the Color Revolutions that spread across Eastern Europe. Nor was it true of social movements like the fight for LGBT rights. Despite what you may have heard, it doesn’t hold true for organizations either.

What is true is that if you are going to bring about genuine change you need to influence institutions and that means you need, at some point, to involve senior leaders, but it rarely starts with them. The myth that change has to start at the top is a copout — a reason to do nothing when you can do something. Make no mistake. Change can come from anywhere.

Weaving Webs of Influence

Movements, as the name implies, are kinetic. They start somewhere and they end up somewhere else. That’s one reason why why so many successful change efforts become misunderstood. People look back at an event like the 1963 March on Washington and think that’s what made the civil rights movement successful. Nothing could be further from the truth. That wasn’t what built the movement, it was part of the end game.

Consider that the first “March on Washington,” the Woman Suffrage Procession of 1913, was a disaster. None of the others since 1963 did much either. The civil rights march came after nearly a decade of boycotts, sit-ins, Freedom Rides and other tactics that built the movement before it finally found its moment. Still, it’s the moment that people remember.

In much the same way, whenever we see a successful transformation we look to the actions of leaders. We see a CEO who gave a speech, a marketer who came up with a big product idea or an engineer who took a project in a new direction. These events are real, but they rarely, if ever, appear out of nowhere. They are products of webs of influence.

When we look more closely, we inevitably find that the CEO was inspired to give the pivotal speech from a conversation he had with his daughter. The marketer got the initial idea for the campaign from a junior team member. Or the engineer changed the direction of the project after a fateful encounter he had in the cafeteria.

Our decisions are the product of complex systems. Anything can start anywhere. Don’t let anyone tell you differently.

Going to Where the Energy Is

Transformations, in retrospect, often seem inevitable, even obvious. Yet they don’t start out that way. The truth is that it is small groups, loosely connected, but united by a common purpose that drives transformation. So the first thing you want to do is identify your apostles — people who are already excited about the possibilities for change.

For example, in his efforts to reform the Pentagon, Colonel John Boyd began every initiative by briefing a group of collaborators he called the “Acolytes,” who would help hone and sharpen the ideas. He then moved on to congressional staffers, elected officials and the media. By the time general officers were aware of what he was doing, he had too much support to ignore.

In a similar vein, a massive effort to implement lean manufacturing methods at Wyeth Pharmaceuticals began with one team at one factory, but grew to encompass 17,000 employees across 25 sites worldwide and cut manufacturing costs by 25%. The campaign that overthrew Serbian dictator Slobodan Milošević started with just 5 kids in a coffee shop.

One advantage to starting small is that you can identify your apostles informally, even through casual conversations. In skills-based transformations, change leaders often start with workshops and see who seems enthusiastic or comes up after the session. Your apostles don’t need to have senior positions or special skills, they just have to be passionate.

There’s something about human nature that, when we’re passionate about an idea, makes us want to go convince the skeptics. Don’t do that. Start with people who want your idea to succeed. If you feel the urge to convince or persuade, that’s a sign that you either have the wrong idea or the wrong people.

“You have to go where the energy is,” John Gadsby, who built a movement for process improvement inside Procter & Gamble that has grown to encompass 60,000 employees, told me. “We’ll choose energy and excitement and enthusiasm over the right position, or the person at the right leadership level, or the person whose job it is supposed to be to do that.”

Mobilizing People To Influence Institutions

In the early 1990s, writer and activist Jeffrey Ballinger published a series of investigations about Nike’s use of sweatshops in Asia. People were shocked by the horrible conditions that workers — many of them children — were subjected to. In most cases, the owners lived outside the countries where the factories were located and had little contact with their employees.

At first, Nike’s CEO, Phil Knight, was defiant. “I often reacted with self-righteousness, petulance, anger. On some level I knew my reaction was toxic, counterproductive, but I couldn’t stop myself,” he would later write in his memoir, Shoe Dog. He pointed out that his company didn’t own the factories, that he’d worked with the owners to improve conditions and that the stories, as gruesome as they were, were exceptions.

The simple truth is that change rarely, if ever, starts at the top because it is people with power that create the status quo. They are attached to what they’ve built and take pride in their accomplishments, just like the rest of us. That’s why, to bring about genuine change — change that lasts — you need to mobilize people to influence institutions (or those, like Knight, who yield institutional power).

Eventually, that’s what happened at Nike. The protests took their toll. “We had to admit,” Knight remembered, “We could do better.” Going beyond its own factories, the company established the Fair Trade Labor Association and published a comprehensive report of its own factories. Today, the company’s track record may not be perfect, but it’s become more a part of the solution than a part of the problem.

Change Is Never Top-Down Or Bottom-Up

At a pivotal moment during the height of the civil rights movement, Robert Kennedy, Attorney General of the United States and brother to the President, would turn to the activist John Lewis and say, “’John, the people, the young people of the SNCC, have educated me. You have changed me. Now I understand.”

Lewis, just a young kid in his twenties at the time, was himself the product of webs of influence. He was shaped by mentors like Jim Lawson and Keller Miller Smith, as well as by peers such as Diane Nash, Bernard Lafayette and James Bevel. They, in turn, influenced others to get out, protest and shape the minds of people like Robert Kennedy.

As I explain in Cascades, transformation isn’t top-down or bottom-up, but happens from side-to-side. You can find the entire spectrum — from active support to active resistance — at every level. The answer doesn’t lie in any specific strategy or initiative, but in how people are able to internalize the need for change and transfer ideas through social bonds.

Change never happens all at once and can’t simply be willed into existence. The best way to do that is to empower those who already believe in change to bring in those around them. That’s what’s key to successful transformations. A leader’s role is not to plan and direct action, but to inspire and empower belief.

— Article courtesy of the Digital Tonto blog
— Image credit: Unsplash

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Values Always Cost You Something

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That’s What Makes Them Different From Platitudes

Values Always Cost You Something

GUEST POST from Greg Satell

When I was in Panama a couple of years ago for a keynote I had the opportunity to speak with Erika Mouynes, the country’s former Foreign Minister, about the war in Ukraine. Her ministry had strayed from its traditionally neutral stance by calling for “respect for the sovereignty, political independence and territorial integrity of Ukraine based on international law.”

She told me that when she later met with Russia’s Foreign Minister, Sergey Lavrov, he asked her why she cared about a country thousands of miles away where Panama has no tangible interests. What did she expect to gain? She told him that sometimes you need to make decisions based on values that are important to you.

Her position was not without risk. Panama depends on broad international support for its canal. Yet many of the executives at the event told me how proud they were of her support for sovereignty, an issue that Panama has sometimes struggled with in its history. The truth is that, to mean something, values always cost you something. Otherwise they’re just platitudes.

Gandhi’s Ahimsa

Today, many dismiss Mohandas Gandhi as guileless and quixotic. He himself once said, “Men say that I am a saint losing myself in politics. The fact is I am a politician trying my hardest to be a saint.” He was, in truth, a master strategist, luring opponents into a dilemma that would put them in an impossible position of choosing either surrender or damnation.

One of the first principles of his philosophy of Satyagraha was ahimsa, or nonviolence, which was rooted in the quest for truth. If no one could claim to have absolute knowledge of the truth, then it followed that using violence—or any other means for that matter—to compel people to accede to your will would be to undermine, rather than support truth.

To the modern ear, Gandhi’s views seem idealistic at best, if not completely naive, yet there was much more to his philosophy than met the eye. His aim was to undermine his opponents’ legitimacy. He sought to back them into a corner in which both action and inaction would yield essentially the same result —an upending of the existing order.

As General Jan Smuts, Gandhi’s chief adversary in South Africa, put it, “It was my fate to be the antagonist of a man for whom even then I had the highest respect… For me—the defender of law and order—there was the usual trying situation, the odium of carrying out the law, which had not strong popular support.” Smuts had not only been defeated; he had been won over and lost any rationale to keep fighting.

Gerstner’s Devotion To The Customer

When Lou Gerstner took over as CEO of IBM in 1993, the company was near bankruptcy. Many thought it should be broken up. Yet Gerstner saw that its customers needed the firm to help them run their mission-critical systems and the death of IBM was the last thing they wanted. He knew that to save the company, he would have to start with its values.

“At IBM we had lost sight of our values,” Irving Wladawsky-Berger, one of Gerstner’s chief lieutenants, told me. “IBM had always valued competitiveness, but we had started to compete with each other internally rather than working together to beat the competition. Lou put a stop to that and even let go some senior executives who were known for infighting.”

Gerstner had been a customer and knew that IBM did not always treat him well. At one point the company threatened to pull service from an entire data center because a single piece of competitive equipment was installed. So as CEO, he vowed to shift the focus from IBM’s “own “proprietary stack of technologies” to its customers’ “stack of business processes.”

Yet he did something else as well. He made it clear that he was willing to forego revenue on every sale to do what was right for the customer and he showed that he meant it. Over the years I’ve spoken to dozens of IBM executives from that period and virtually all of them have pointed this out. Not one seems to think IBM would still be in business today without it.

“Lou refocused us all on customers and listening to what they wanted and he did it by example,” Wladawsky-Berger, remembers. “We started listening to customers more because he listened to customers.”

The World’s Debt To Katalin Karikó

In the early ’90s, Katalin Karikó was trying to solve a tough problem. A young researcher at the University of Pennsylvania, she had been working on an idea to hijack the protein manufacturing machinery in our cells (called ribosomes) to directly produce things that could help our bodies fight disease. Yet despite her best efforts, she was making little progress.

To understand the problem, imagine you want to hijack someone else’s factory to make your own product. Because the factory is automated, it is just a matter of installing software at the factory, but to do that you need to get past security. Replace “software” with genetic instructions and “security” our body’s immune system and, in a nutshell, that is what Katalin had to overcome.

By 1995, things came to a head. Unable to secure grants to fund her work, the university told her that she could either direct her energies in a different way, or be demoted. “I thought of going somewhere else, or doing something else,” Katalin would later recall. “I also thought maybe I’m not good enough, not smart enough. I tried to imagine: Everything is here, and I just have to do better experiments.”

She decided to stick it out and eventually struck up a partnership with Drew Weissman, an immunologist who had some ideas about how to slip the genetic instructions past the cell’s natural defenses. Their work led to a breakthrough and, when the Covid pandemic broke out in 2020, the mRNA technology they invented led to life saving vaccines in record time.

Today, mRNA is being used to develop a number of therapies beyond vaccines, including cures for cancer and other diseases. Sticking to her values certainly cost Katalin Karikó, but the rest of us benefited enormously.

Values Are How An Organization Honors Its Mission

Values are essential to how an enterprise honors its mission. They represent choices of what an organization will and will not do, what it rewards and what it punishes and how it defines success and failure. Perhaps most importantly, values will determine an enterprise’s relationships with other stakeholders, how it collaborates and what it can achieve.

When we sit down with executive teams to help them drive transformation and change, one of the first things we ask them is to define their values. Usually, they can easily rattle off a list such as, “the customer,” “excellence,” “integrity,” and so on. Then we ask them what those values cost them and we get blank stares.

The problem is that values are often confused with beliefs. When you’re sitting around a conference table, it’s easy to build a consensus about broad virtues such as excellence, integrity and customer service. True values, on the other hand, are idiosyncratic. They represent choices that are directly related to a particular mission.

Make no mistake. Real values always cost you something. They are what guides you when you need to make hard calls instead of taking the easy path. They are what makes the difference between looking back with pride or regret. Perhaps most importantly, they are what allows others to trust you.

Without genuine commitment values there can be no trust. Without trust, there can be no shared purpose.

— Article courtesy of the Digital Tonto blog
— Image credit: Unsplash

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Your Feelings Are Often Triggers That Mislead You

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Your Feelings Are Often Triggers That Mislead You

GUEST POST from Greg Satell

The social psychologist Jonathan Haidt developed the metaphor of the Elephant and the Rider to describe the relationship between our emotional and cognitive brains. While the rider (representing our cognitive brain) may feel in control, it is the elephant (our emotions) that is more likely to determine which direction we will go.

That’s why it feels so good to act on our emotions. Rather than struggling with the reins to get the elephant to go where we want it to, we can just give in and race with abandon towards our destination. It’s usually not until we’ve run off a cliff that we realize that we should have exercised more restraint. By that time, it’s often too late to undo the damage.

The truth is that our brains are wired for survival, not to make rational decisions for a modern, industrialized economy. That’s why we shouldn’t blindly trust our feelings. We should see them as warning signs to proceed with caution because, while they can alert us to unseen dangers, they can also be triggers that others use to manipulate us.

The Thrill Of The Shift & Pivot

As Eric Ries explained in The Startup Way, when General Electric CEO Jeffrey Immelt wanted to implement a more entrepreneurial approach he asked Ries to help him implement “Lean Startup” methods at the company. The resulting program, called Fastworks, trained 80 coaches and launched a hundred projects in its first year. Pretty soon, Immelt was calling his company a 124 year-old startup.

A key ambition was the development of Predix, an industrial software platform. No longer would GE be a boring old manufacturing company, but would make a “pivot” to the digital age. It did not go well. During Immelt’s tenure, the company’s value would fall by 30%, while the broader maker more than doubled. Eventually the firm would collapse altogether.

Pundits love to tout the change gospel, but there’s little evidence that “pivots” are necessarily a good idea. Look at the world’s most valuable companies, Apple still makes most of its money on iPhones, Microsoft’s success is still rooted in business software, Alphabet’s profits come from search and so on. There are exceptions, of course, but most organizations become and stay successful by deepening their capabilities in a few key areas.

But that’s boring. Journalists rarely write cover stories about it. Business school professors don’t get tenure for writing case studies about how Procter & Gamble stuck with soap for more than a century or how Coke continues to make money off of sugary water. “Pivots,” on the other hand, are thrilling and fun. They get people talking. They feel good. That’s why they’re so popular.

The Eden Myth

Watch pundits on cable news or on stage at conferences and you may begin to notice a familiar pattern. They tell us that once there was a period when everything was pure and good, but then we—or the organization we work for—were corrupted in some way and cast out. So to return to the good times, we need to eliminate that corrupting influence.

This Eden myth is as old as history itself and it continues to thrive because it works so well.. We’re constantly inundated with scapegoats— the government, big business, tech giants, the “billionaire” class, immigrants, “woke” society—to blame for our fall from grace. The story feeds our anger and, much like the “thrill of the pivot,” makes us want to act.

Perhaps most importantly, the Eden myth makes us feel good. The outrage it triggers stimulates the release of the neurotransmitter dopamine which affects the pleasure centers in our brain. Our adrenal glands then begin to produce cortisol, which initiates a “fight or flight” response. Our senses get heightened. We feel motivated and alive.

Who wouldn’t want to feel like that? That’s why we can become addicted to the outrage-dopamine response machine and continually look for new opportunities to get our fix. We begin to need it and tune in every night, doom scroll on social media and seek out social connections that promote it. Ultimately, we’re going to want to act on it.

People who seek to manipulate us know all about this and design their approach to trigger an emotional response.

Creating An Echo Chamber

Once our neurons are primed and our senses are tuned to respond to specific stimuli, we will begin to frame what we experience in terms that reinforce those biases. Psychologists have found that we tend to overweight information that is most easily accessible and then look for information to confirm those early impressions and ignore evidence to the contrary.

These effects are multiplied by tribal tendencies. We form group identities easily, and groups tend to develop into echo chambers, which amplify common beliefs and minimize contrary information. We also tend to share more actively with people who agree with us and, without fear of questioning or rebuke, we are less likely to check that information for accuracy.

We are highly affected by what those around us think. In fact, a series of famous experiments first performed in the 1950’s, and confirmed many times since then, showed that we will conform to the opinions of those around us even if they are obviously wrong. More recent research has found that the effect extends to three degrees of social distance.

It’s likely that some version of this is what doomed Jeffrey Immelt at General Electric. When he took over as CEO in 2001, Silicon Valley was in a process of renewal after the dotcom crash. As the startup boom gathered steam, it captured the imagination of business journalists. He brought in Ries to “cast out” the old ways of plodding, industrial firms and surrounded himself with people who believed similar things. Everything must have felt right.

The elephant was in full control and the rider just went along—all the way off the cliff.

Don’t Believe Everything You Feel

The neuroscientist Antonio Damasio believes we encode experiences in our bodies as somatic markers and that our emotions often alert us to things that our brains aren’t aware of. Another researcher, Joseph Ledoux, had similar findings. He pointed out that our body reacts much faster than our mind, such as when we jump out of the way of an oncoming object and only seconds later realize what happened.

Nobel Laureate Daniel Kahneman suggests that we have two modes of thinking. The first is emotive, intuitive and fast. The second is rational, deliberative and slow. Our bodies evolved to make decisions quickly in life or death situations. Our rational minds came much later and don’t automatically engage. It takes effort to bring in the second system.

There are some contexts in which we should favor system one over system two. Certain professions, such as surgeons and pilots, train for years to hone their instincts so that they will be able to react quickly and appropriately in an emergency. When we have a bad feeling about a situation, we should take it seriously and proceed with caution.

However, our feelings need to be interrogated, especially in areas for which we do not have specific training or relevant expertise. We need to gain insight into what exactly our feelings are alerting us to and that requires us to engage our rational brain.

Yes, feelings should be taken seriously. They are often telling us that something is amiss. But they are much more reliable when they are alerting us to danger than when they are pushing us to overlook pertinent facts and proceed with a course of action. When we go with our gut, we need to make sure it’s not just because we had a bad lunch.

— Article courtesy of the Digital Tonto blog
— Image credit: Pixabay

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