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.

Three Facts That Business Leaders Refuse to Accept

Leave a reply

Three Facts That Business Leaders Refuse to Accept

GUEST POST from Greg Satell

In the late 90s Fortune magazine named Enron the most innovative company for six consecutive years, right up until the company collapsed in scandal. GE’s strategy of stack ranking was seen as a model to be emulated by other firms, even though there was no evidence it worked. McKinsey advised companies to fight a war for talent.

Today, we know better. It’s obvious that Enron was incredibly dysfunctional, that stack ranking undermines a high-performance culture and that talent is something that you build through upskilling, not something you “win” in a metaphorical war. It’s mind boggling to think of all the damage that was done before those ideas were exposed.

Yet if we accept all that we need to ask ourselves which ideas are widely accepted today that don’t hold water. Every era has its own fictions, things that are accepted because they are repeated, but lack any serious foundation. They become memes replicating themselves throughout the zeitgeist, rarely being questioned. Here are three truths that will surprise you.

1. Bigger Organizations Are More Innovative

We tend to think of innovation as something startups do. Big organizations, with their bloated bureaucracies and cumbersome decision making, are less nimble. Yet a recent book, Corporate Explorer, by Stanford professor Charles O’Reilly, Harvard Professor ​​Paul Lawrence and consultant Andrew Binns finds that larger firms have more resources, talent and ideas.

This may seem surprising, but there is ample evidence supporting the principle that larger enterprises innovate more effectively. A 1969 study of local health departments found that the larger ones serving larger communities were more innovative. A 1986 analysis of footwear manufacturers found that the bigger ones had more technical specialists and adopted more radical innovation. Same thing when researchers looked at German banks’ adoption of telecommunication services.

Clearly startups have advantages. They tend to be less bureaucratic and can make decisions faster. They are also less invested in incumbent systems and technologies, which makes change easier. Yet innovation isn’t just about speed, it’s also about commitment to solving important problems and larger enterprises have more resources and scope to do that.

That’s why when you look at the most cutting edge technologies, like quantum computing, artificial intelligence, materials science, synthetic biology and others, you tend to find large organizations at the core. Don’t get me wrong, not every big company can innovate, but the ones that can come up with new ideas and execute them consistently, year after year and decade after decade, are enterprises with scale.

2. Levels Of Bureaucracy And Hierarchy Are Increasing, Not Decreasing

About a decade ago, the management guru Gary Hamel wrote a highly cited article in Harvard Business Review entitled First, Let’s Fire All the Managers. He analyzed the success of Morningstar, a leading manufacturer of tomato products that operates with a flat management structure and called for other corporations to follow its lead.

“A hierarchy of managers exacts a hefty tax on any organization,” he wrote. “This levy comes in several forms. First, managers add overhead, and as an organization grows, the costs of management rise in both absolute and relative terms.” The article was very influential and helped bolster other flat models, such as Holacracy.

For a while now, management gurus have been advocating for flatter organizations, yet there is little evidence that eliminating managers is a viable model. In fact, when Wharton Professor Ronnie Lee took a close look at game software developers, he found that the number of levels of bureaucracy increased significantly, not decreased, over the last 50 years.

Certainly, the “flat organization” idea hasn’t caught on. “Since 1983, the size of the bureaucratic class—the number of managers and administrators in the US workforce—has more than doubled, while employment in other categories has grown by only 40%,” Hamil recently wrote.

The inescapable conclusion is that we’ve failed to do away with bureaucracies and hierarchies because they serve a useful purpose. While flatter structures can inspire creativity, we need hierarchies to execute complex operations well. That might not play well when your trying to sell consulting projects or on the keynote stage, but it’s the truth.

3. Markets Are Becoming Less Competitive, not More (At least in the US)

Today it’s become an article of faith that everything moves faster. Business pundits tell us that we’re living in a VUCA world (Volatile, Uncertain, Complex and Ambiguous). These are taken as basic truths that are beyond questioning or reproach. Yet are things actually moving any faster than in earlier eras? The evidence is surprisingly scarce.

The data, however, tell a very different story. A report from the OECD found that markets, especially in the United States, have become more concentrated and less competitive, with less churn among industry leaders. The number of young firms have decreased markedly as well, falling from roughly half of the total number of companies in 1982 to one third in 2013.

A comprehensive 2019 study from the National Bureau of Economic Research found two correlated, but countervailing trends: the rise of “superstar” firms and the fall of labor’s share of GDP. Essentially, the typical industry has fewer, but larger players. Their increased bargaining power leads to more profits, but lower wages.

The truth is that we don’t really disrupt industries anymore. We disrupt people. Economic data shows that for most Americans, real wages have hardly budged since 1964. Income and wealth inequality remain at historic highs. Anxiety and depression, already at epidemic levels, worsened during the Covid-19 pandemic.

What You See Is How You’ll Act

When ideas are repeated often enough, we begin to take them as self-evident and don’t even question them. People take it for granted that small organizations are more innovative than larger ones, that flatter organizations outperform those with high levels of bureaucracy and that business is more competitive today than in earlier eras.

If you believe all that, then you would avoid getting involved with a large organization if you want to innovate, you would try to eliminate levels of hierarchy and create a high sense of urgency about everything you do. Yet when you examine the evidence it becomes clear that none of these things are factual.

The truth is that size has little to do with innovation. As we saw during Covid, the most pathbreaking advances came from collaborations between organizations, public and private, large and small. The levels of hierarchy in an organization aren’t nearly as important as its networks. Pushing too many initiatives is more likely to result in a high level of change fatigue and diminished mental health than lead to genuine results.

When we look back at earlier eras, it’s easy to see the errors in the zeitgeist. It seems obvious that the robber barons undermined society, that excessive tariffs during the depression would impoverished society and that Enron was a fraud. Yet we need to look with the same skeptical eye at prevalent beliefs today.

As Richard Dawkins has explained, memes are selfish. They propagate themselves for their own benefit, not necessarily for ours. We need to learn to be fiercer advocates for our fates.

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

Subscribe to Human-Centered Change & Innovation WeeklySign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

You Need a Strategy Not a Slogan to Overcome Resistance to Change

Leave a reply

You Need a Strategy Not a Slogan to Overcome Resistance to Change

GUEST POST from Greg Satell

When we’re passionate about an idea, we want others to see it the same way we do, with all its beautiful complexity and nuance. We want to believe that if others can just understand it, they will embrace it. That’s why most change management practices focus on persuasion, explaining the need for change and creating a sense of urgency.

But consider recent research that finds that we can’t even agree on simple concepts such as what a penguin is and it becomes clear that for any given initiative, people are bound to see it differently. The simple truth is that change doesn’t fail on its own, it fails because people resist it. If we are to bring about genuine change, our first job is to overcome that resistance.

We need to internalize that humans form attachments to people, ideas and other things and, when those attachments are threatened, we act in ways that don’t reflect our best selves. Every change strategy has to begin with that. Clever gimmicks or snappy slogans won’t bring about true transformation. We have to build a strategy to overcome resistance from the start.

First, Follow The Energy

There’s something about human nature that, when we’re really excited about an idea, makes us want to go convince the skeptics. That’s almost always a bad idea. A much better strategy is to start with people who are enthusiastic about your change, who want it to succeed. They can help you strengthen it and spread it to others, who can spread it further still.

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 built up too much support to ignore.

In a similar vein, a massive effort to implement lean manufacturing methods at Wyeth Pharmaceuticals began with a single 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, effective 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.

“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.”

Identify Shared Values

Humans naturally form tribes. In a study of adults that were randomly assigned to “leopards” and “tigers,” fMRI studies noted hostility to out-group members. Similar results were found in a study involving five year-old children and even in infants. Evolutionary psychologists attribute this tendency to kin selection, which explains how groups favor those who share their attributes in the hopes that those attributes will be propagated.

So it’s natural that when we feel passionately about an idea, we want to focus on how it’s different, to create our own tribe. For example, the Agile Manifesto has inspired fierce devotion and helped build a vibrant community around Agile product development. So it shouldn’t be surprising that when evangelists try to attract others to the movement, it’s the Agile Manifesto that they want to emphasize.

Yet for those outside the Agile development community, its principles can seem strange and impractical. It emphasizes adaptability over planning which can appear to be chaotic for those who are used to a more traditional approach. If you want to bring in new people, it’s better to focus on shared values, such as the ability to produce better quality projects faster and cheaper.

One of the biggest challenges in driving transformation is that while differentiating values make people excited about an idea, it is shared values that help build genuine and widespread support. That doesn’t mean you abandon or water down your beliefs. It just means that you need to meet people where they are, not where you wish them to be.

Design A Dilemma Action

Unfortunately, building a shared purpose isn’t always possible. Whenever we set out to make a significant impact you are bound to get pushback, not for any rational logic, necessarily but because, for whatever reason, but because for whatever reason, it offends some people’s dignity, their identity, their sense of self. A simple truth is that we all form irrational attachments and when those are threatened, we tend to act out in ways that don’t reflect our best selves.

When that happens — and it always does eventually — we can get sucked into a conflict, which will likely take us off course and discredit what we’re trying to achieve. Yet, here too, developing empathy skills to identify shared values can be extremely helpful. They can help us to design a dilemma action, which puts the opponents into an impossible position.

Dilemma actions have only recently become an active area of research, but have been used by practitioners for at least a century — famous examples include Gandhi’s Salt March, King’s Birmingham Campaign and Alice Paul’s Silent Sentinels. They are just as effective in an organizational context, using an opponent’s resistance against them.

One of the great things about dilemma actions is that you approach them exactly the same way you approach building allies — by identifying a shared purpose. Once you do that, you can design a constructive act rooted in that shared purpose that advances your agenda. Your opponent then has a choice: they can disrupt the act and violate the shared value or they can let it go forward and let change progress.

For example, I was once leading a transformation project that was being impeded by a sales director hogging accounts. Although it was agreed that she would distribute her clients, she never got around to it, so I set up a meeting with a key account and one of our salespeople. When she tried to disrupt the meeting, she violated the shared value we had established, was dismissed from her position and everything fell into place after that.

Planning To Survive Victory

Many change leaders assume that once they win an initial victory that everything will get easier after that. They work for months — and sometimes years — to get a project off the ground. Yet just when they think they’re turning the corner, when they’ve won executive sponsorship, signed up key partners and procured enough financing to have a realistic budget, all the sudden things seem to get mired down.

That’s no accident. Just because you’ve won a few early battles doesn’t mean opposition to your idea melts away. On the contrary, faced with the fact that change may actually succeed, those who oppose it have probably just begun to redouble their efforts to undermine it. These efforts are often not overt, but they are there and can easily derail an initiative.

As Saul Alinsky once put it, every revolution inspires its own counterrevolution. That’s why every change effort must plan from the beginning to survive victory. You need to anticipate resistance, think about where you’re vulnerable and how you’ll mitigate those attacks by leveraging shared values.

The truth is that change is always a journey, never a particular destination, which is why lasting change is always built on the common ground of shared values. 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. A leader’s role is not necessarily to plan and direct action, but to inspire and empower belief.

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

Subscribe to Human-Centered Change & Innovation WeeklySign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

Why Are What We Know and What We Do Often So Different?

Leave a reply

Why Are What We Know and What We Do Often So Different?

GUEST POST from Greg Satell

In 1988, a young management student named John Krafcik published an article in MIT’s Sloan Management Review entitled, Triumph of the Lean Production System. Based on his study of 90 manufacturing plants in 20 countries, it argued that manufacturing could be made vastly more productive, while improving quality at the same time.

These methods would grow into the lean manufacturing movement and their effectiveness has been well documented. Krafcik himself went on to have a successful career in the auto industry, taking over Google’s self-driving division, Waymo, in 2016. There is an amazingly strong case for manufacturers to adopt lean methods.

Yet surprisingly few do. In fact, a recent survey found that less than 15% of manufacturers have adopted lean methods. This dilemma is much more common than you’d think. We’ve been conditioned to believe that a good idea, once proven out, will prevail in the marketplace, but that’s not really true. There is often a large gap between what we know and what we do.

A New World Of Work

Clearly the world of work has changed. When I began professional life in the mid-90s, laptops were still new and few people had access to the Internet. Work was something you did in your office. We largely communicated by phone and memos typed up by secretaries. Data analysis was something you did with a pencil, paper and a desk calculator.

Today, on the other hand, work is largely something we do with each other. We are increasingly collaborating in teams and our work has become more social and less cognitive. For example, the journal Nature noted that the average scientific paper today has four times as many authors as one did in 1950 and the work they are doing is far more interdisciplinary.

The truth is that we spend most of our time in meetings, collaborating with colleagues to solve problems, rather than working alone in our offices to execute tasks. Perhaps not surprisingly, there has been no shortage of concepts developed, such as psychological safety, agile development and diversity & inclusion policies, designed to help us succeed and prosper in this new world of work.

Yet much like with lean manufacturing, the reality of most workplaces rarely reflects the pundits’ rhetoric. The reason for this is simple. The status quo has inertia on its side and that is an incredibly powerful force. Change takes effort and is often disruptive. The costs are clear and present while the benefits can seem distant and remote.

The New, New Economy

In 1982, when Steve Jobs was trying to lure John Sculley from Pepsi to Apple, he asked him, “Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?” The ploy worked and Sculley became the first CEO of a major conventional company to join a Silicon Valley startup.

Yet since then, besides for a relatively short period between 1996 and 2004, labor productivity has remained depressed, except during recessions when businesses cut workers. At the same time, income inequality has increased and business has become less dynamic, with fewer startups and less churn among market leaders. I don’t think those are the changes Jobs was talking about.

It seems amazing that given all of the technological progress, including mobile and cloud computing, artificial intelligence and Industry 4.0 manufacturing technologies, that so little has been accomplished, but in their recent book, Power and Progress, economists Daron Acemoglu and Simon Johnson argue that market and technological forces, if left to their own devices, tend to favor elites rather than society as a whole.

We can’t simply leave our fates to the impersonal whims of market and technological forces. The historical record shows that innovations that displace workers do not necessarily make us better off. In fact, we have strong reasons to suspect that many of these technologies impoverish our society and corrode our culture.

Technology and markets were created by humans to serve people. That is their purpose and should be, by any reasonable analysis, the measure of their value. We need to take a hard look at the last 30 years and ask how we’re better off, how we’re worse off, what we need to do differently and how we can forge a better path.

The End Of History?

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. His actual argument was far more nuanced and insightful. After explaining the arguments of philosophers like Hegel and Kojeve, 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.

Humans tend to build stories that support our notions of who we think we are. If you work hard at your job, new ideas about lean manufacturing or agile development can seem like an affront. In much the same way, entrepreneurs like to think that their businesses have social value and the denizens of the tech universe like to think that their code changes the world.

If you believe that the forces of history are on your side, pursuing your path seems like a calling and an obligation. The benefits you receive are just more proof that you are headed in the right direction and whatever costs that are incurred by others may seem like mere table stakes to be paid for the price of progress.

That’s why tech billionaires write silly manifestos and politicians are able to fleece them for outrageous amounts of money. It is not enough to earn a good living and live in comfort. People have a need to be recognized and they will cling to the the identity they have built for themselves. Asking them to change can often seem more than a simple shift in behavior, but an affront to who they are.

Dismantling the Cult of Inevitability

We’d like to think that if something is a good idea, can be proven to work, improve performance and make people’s lives better, that market and technological forces will somehow make it inevitable. Unfortunately, the history of the last half century makes it clear that’s not true. Most people in developed countries are worse off than a generation ago.

Yes it’s true that our TV’s have gotten better and we have infinitely more channels. We carry supercomputers around in our pockets that give us unprecedented access to information and emerging services like ChatGPT give us almost superhuman powers to process it. Yet the cost of basics, such as housing, healthcare and education have impoverished us.

This wasn’t inevitable. Consider that in the US per capita GDP has nearly doubled since 1985 but median household income has risen only 27% and you begin to see the problem. In my work with organizational transformation it is clear that similar forces are at work in the corporate world. For all the talk about disruption and change, the status quo usually prevails.

We need to be more cognizant of the stories we tell ourselves. We have a primal need to be the heroes in our own narratives, to tell ourselves that we are on the right path while others are just fooling themselves, to look for information that confirms our choices and neglect evidence to the contrary. It is not a character flaw, but a reality of human nature.

Ironically, it is through awareness of our failings that can help us overcome them. Decades of research show that shifts in knowledge and attitudes don’t necessarily result in changes in behavior. Once we know that we can be more vigilant and hold ourselves to a higher standard. What we know and what we do are two different things, but with effort we can narrow the gap.

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

Subscribe to Human-Centered Change & Innovation WeeklySign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

Don’t Underestimate the Power of Identity

Leave a reply

Don't Underestimate the Power of Identity

GUEST POST from Greg Satell

In the 1990s, western-style liberal democracy was triumphant. The Berlin Wall had fallen and the Cold War had been won. Teams of diplomats and consultants rushed to spread the Washington Consensus, an agreed upon set of reforms that poor countries were pressured to undertake by their richer brethren.

Francis Fukuyama noted at the time that we had reached an endpoint in history, when one model had achieved dominance over all others. Yet even as he laid out the rational case, he invoked the ancient Greek concept of thymos, or “spiritedness,” to warn that even at the end of history, there would be some who would insist on going their own way, no matter the consequences.

That’s why any change, even if provably good, noble and just, will inevitably incur resistance. It’s a simple truth that humans form attachments to people, ideas and other things and, when those attachments are threatened, we see it as an outright attack on our identity and lash out. That’s why identity needs to be at the center of any change strategy, if it is to succeed.

Triggering Resistance

Imagine this scene. You are in a meeting to discuss a proposal. There is an active discussion and, over the course of an hour, the group steadily moves toward a consensus. Then, as you’re moving on to discuss next steps and close the meeting, somebody who hadn’t spoken up during the entire hour suddenly has a hissy fit and melts down in the middle of the conference room.

Let’s think about what happened underneath the surface. When the idea was initially proposed, that person had such a visceral reaction to it that they couldn’t even articulate why they were so against it. Nevertheless, being such a disastrous idea in their eyes, they were sure it would get derailed along the way. When that didn‘t happen, it triggered an explosion.

There’s a couple of things that we can take away from this. The first is that it was the initial success of moving to next steps that triggered them and their inappropriate reaction pretty much assured that the proposal would move forward. So one way of dealing with resistance is to quietly build traction. If you can resist the urge to engage or attack your opposition directly, they will eventually feel the need to lash out and discredit themselves.

Another important point to consider is that people rarely melt down in conference rooms. Usually, they hold their composure and then go quietly sabotaging the idea in the hallways. Your most active opposition are usually not the ones voicing concerns. Most often, they find more surreptitious ways of undermining an initiative.

Shifting Identities

Just because people build attachments doesn’t mean that they need to be permanent aspects of their identity. In Immunity to Change, Harvard’s Robert Kegan and Lisa Lahey, discuss their decades of research into how people build competing commitments based on how they see themselves. Their work shows that greater self awareness can break the spell.

For example, “David” was a senior leader who had taken on greater responsibility and desperately needed to delegate. As much as he saw how important it was for him to hand off projects and give more autonomy to his people, he just couldn’t bring himself to do it. It was almost as if he was actively sabotaging his own objective.

As it turned out, David had a somewhat hardscrabble upbringing and identified himself as a “hands on” manager. It was important for him to do “real work” and not just be “overhead.” So every time he tried to delegate, it felt like he was getting away from his hardworking roots and becoming something he didn’t want to be.

The problem was solved once David saw that the change he needed to undertake involved his own identity. He began to see another role for himself, that of an enabler and a coach, empowering his people. He was able to see their accomplishments as his own. It didn’t happen automatically—it took real work—but it can be done.

Designing A Dilemma

I once had a six-month assignment to restructure the sales and marketing operations of a troubled media company and the sales director was a real stumbling block. She never overtly objected, but would just nod her head and then quietly sabotage progress. For example, she promised to hand over the clients she worked directly with to her staff, but never seemed to get around to it.

It was obvious that she intended to slow-walk everything until the six months were over and then return everything back to the way it was. As a longtime senior employee, she had considerable political capital within the organization and, because she was never directly insubordinate, creating a direct confrontation with her would be risky and unwise.

So rather than create a conflict, I designed a dilemma. I arranged with the CEO of a media buying agency for one of the salespeople to meet with a senior buyer and take over the account. The sales director had two choices. She could either let the meeting go ahead and lose her grip on the department or try to derail the meeting. She chose the latter and was fired for cause. Once she was gone, her mismanagement became obvious and sales shot up.

Dilemma actions have been around for at least a century. One early example was Alice Paul’s Silent Sentinels, who picketed the Woodrow Wilson’s White House with his own quotes in 1917. More recently, the tactic has been the subject of increasing academic interest. What’s becoming clear is that these actions share clear design principles that can be replicated in almost any context.

Key to the success of a dilemma action is that it is seen as a constructive act rooted in a shared value. In the case of the Sales Director, she had agreed to give up her accounts and setting up the meeting was aligned with that agreement. That’s what created the dilemma. She had to choose between violating the shared value or giving up her resistance.

Creating A Larger, Integrated Identity

Our identity and sense of self drives a lot of what we see and do, yet we rarely examine these things because we spend most of our time with people who are a lot like us, who live in similar places and experience similar things. Our innate perceptions and beliefs seem normal and those of outsiders strange, because our social networks shape us that way.

That’s why we often see so much resistance to change. People get invested in the status quo. They work within it, follow its rules and achieve some things. Those achievements become part of their identity and to reject the means in which their present self arose is, in some sense, to reject a part of themselves.

Yet our identities aren’t fixed. They grow and evolve over time. We routinely choose to add facets to our identity, while shedding others, changing jobs, moving neighborhoods, breaking off some associations as we take on others. “Identity can be used to divide, but it can and has also been used to integrate,” Francis Fukuyama wrote in his book on the subject.

It is at this nexus of identity and purpose that creativity and innovation reside, because when we learn to collaborate with others who possess knowledge, skills and perspectives that we don’t, new possibilities emerge to achieve greater things. To make that possible, however, we need to support the identities of those around us, so that we can build the shared purpose upon which we can build a shared future.

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

Subscribe to Human-Centered Change & Innovation WeeklySign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

Storytelling Determines the Change We Can Achieve

Leave a reply

Storytelling Determines the Change We Can Achieve

GUEST POST from Greg Satell

At some level, change is always about the stories we tell. We like to think that we humans are objective arbiters of the facts, but that’s not really true. We think in narratives. In one study, juries considered experts that shared stories far more credible than those that merely offered an analysis of the relevant facts.

Every organization tells stories, some deliberate, some not. General Electric was able to tell successful stories for decades, yet it was a false narrative and, when the facts caught up, the firm collapsed. On the other hand, Satya Nadella was able to change the narrative at Microsoft even though, objectively, the company was already doing well.

Hollywood mogul Peter Guber describes stories as “emotional transport” and that’s why we need to be purposeful about the ones we tell if we are to bring about genuine transformation. Stakeholders need to be able to see themselves as heroes in the stories we tell, working within shared values to achieve a common purpose. Our story needs to be their story.

What Makes A Story?

The first element of any story is its exposition, which is the world you build around the story and includes the setting, the characters and other background information. This often comes at the beginning of the story, but it doesn’t have to. Sometimes, elements of the setting or details about the characters are leaked out as the plot develops.

The most important aspect of any story is the tension or conflict to be resolved. That’s what keeps the audience’s interest. Will the hero survive? Does the boy end up with the girl? Will justice prevail? It is the uncertainty surrounding the tension that makes a story interesting. A preordained story is a bore.

Another way to look at a story is an intention or ambition and an obstacle. If you can identify an ambition that people actually have—even if they aren’t aware of their intention—and then show that you can overcome the obstacles preventing them from achieving that ambition, you have a powerful narrative. Steve Jobs was a master at telling those kinds of stories (and then adding “one more thing.”)

There are, essentially, two ways to start a story. The first and less effective way is with the exposition, laying out the setting and characters, like when your mom tells the tale of meeting someone at the drug store and 10 minutes later you’re still hearing about their grandchildren. The other is to start with the tension, like when a James Bond movie begins with him hanging off a helicopter and you only find out why only later.

Start with the tension. Identify a problem to be solved. Learning how the obstacles to solving the problem will be overcome is what makes a story interesting.

The Hero’s Journey

One of the most common narrative devices is the “hero’s journey“, which involves different variations of a departure, an initiation, and a return. For example, in the Star Wars trilogy, we met Luke Skywalker as a restless boy on Tatooine. The hologram he unlocked in R2D2 kicked off his departure on a journey, in which he learned about “The Force.”

In a hero’s journey, the primary struggle is internal and the righteousness of your cause is your salvation. In order for Luke to prevail against Darth Vader and the evil empire, he first needed to conquer himself. Once he was able to do that, victory became, in some sense, inevitable.

We often like to think about change in this way because, in some sense, it’s easy. After all, who can oppose us when we are so diligently working for the greater good? If we are just good and pure and true, then success should become inevitable. We just need to keep the faith, endure any hardship that comes our way and we will be rewarded in the end.

Unfortunately, like Star Wars, this story is a fantasy and the stubborn belief in it will almost guarantee failure. Some people mistakenly see nobility in this type of defeat, because they can tell themselves that they fought “the good fight” and the deck was simply stacked against them. That way, they can blame everyone else instead of their “heroic” selves.

Change As A Strategic Conflict

The true story of change is that of strategic conflict between a future vision and the status quo. There are sources of power keeping the status quo in place and that’s where the battle lies. If you can remove—or even mitigate—those sources of power the status quo cannot survive and transformation can take place. As long as they remain, nothing will change.

Once you understand this story, you can begin to build an effective strategy. Power always lies in institutions and you can begin to identify which ones support the status quo, which support the future vision and which are on the fence. Those institutional targets will determine how you develop tactics.

Notice how differently the two stories affect actions. If you believe that you’re on a hero’s journey, then your primary goal is to communicate your virtue. You assume that once everyone understands your idea, they will embrace it. So you spend your time coming up with slogans, convinced that the right message will help others see the light.

When you begin to internalize the story of change as a strategic conflict it becomes clear that it’s more important to make a difference than to make a point. Demonstrating the righteousness of your cause is not nearly as important as letting others see their place in your story, how they too can be heroes in it and how they will be better off for it.

Creating A Shared Journey

Change always begins with a grievance. There’s something people don’t like and they want it to be different. We like to see ourselves as heroes fighting for everything that’s right and we question the motivations of those who oppose our cause. When we believe in something passionately, it’s hard to see how anyone, in good conscience, can see it another way.

Yet consider recent research that finds our conceptions of even something so simple as a penguin vary so widely that the mention of the word evokes very different associations in all of us. Clearly, more emotionally-laden content, such as a policy issue or a business strategy is going to spark vigorous debates.

The stories we tell need to create a sense of safety around transformation, to emphasize a shared future. Yet all too often we begin our stories with silly talk about “disruption” or burning platforms. The storytellers seek to ennoble themselves as champions and demonize others who see things differently.

Yet if we truly care about change, we need to hold ourselves accountable to be effective messengers. That’s why the narratives we build about change need to focus on shared values and establish common ground upon which we can build a shared future.

The stories we tell are important. We need to choose them wisely and tell them well.

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

Subscribe to Human-Centered Change & Innovation WeeklySign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

Why So Much Bullshit?

Leave a reply

Why So Much Bullshit?

GUEST POST from Greg Satell

Pretty much everywhere you look, you’ll find bullshit. We are constantly bombarded with politicians and “experts “on TV, at conferences and on social media, spouting bullshit. An economist would tell you that it is simply impossible for so much bullshit to exist, because the market values truth, but of course that’s bullshit.

One possible reason that there is so much bullshit in the world is that there are so many bullshitters. Yet that explanation has a critical flaw. People spouting bullshit are, in most cases, completely sincere. They believe that they are truth tellers, uncovering and sharing critical wisdoms that add value and meaning to our lives.

In his famous essay, On Bullshit, philosopher Harry Frankfurt makes the case that “bullshit is a greater enemy of the truth than lies are,” because liars need to actually ascertain the truth to misrepresent it. Bullshitters, on the other hand, show complete disregard for facts. I would argue, however, that’s only half the story. We bullshit because it serves a crucial purpose.

What Do We Really Think?

In February 2015, Cecilia Bleasdale, took a photograph of a black and blue dress she intended to wear at her daughter Grace’s wedding. Yet when she sent a photo of it, her daughter told her that the dress was white and gold. Unable to come to an agreement, Grace posted the dress on Facebook and it became an Internet sensation. The world split into two camps: black & blue vs. white & gold. Each side sure the other side was crazy!

We like to think that we see things how they really are, but that’s not really true. Our senses react to stimuli, such as light refracting off of objects like a computer screen, and our brains augment those perceptions to form full images, based on our past experiences. As we accumulate more experiences, pathways in our brains, called synapses, begin to form.

As we add new experiences, our synaptic pathways strengthen and shape our perceptions. A painter, for example, will perceive a flower very differently than a botanist and both will notice things that most of us would not. A recent study found that even for a concept as simple as a penguin, we all have very different ideas in our heads.

On rare occasions, like the explosion of the dress meme, we become alerted to the fact that we are all walking around with very different ideas in our heads. Most of the time, however, we just go about our business and assume that everybody else sees what we see and hears what we hear. It is possible to have entire conversations with people we know well and then walk away with completely different notions of what was said, without ever realizing it.

Cogito Ergo Sum

As an accomplished mathematician, René Descartes had a hard time accepting the fact that our perceptions are so malleable. He pointed out that when you see a stick half submerged in a glass of water, it appears to be bent, but outside it becomes clear that it is not. So which is really true? Maddening!

That’s what set Descartes on his rationalist project to build a base of knowledge purely on logic, without need to rely on perceptions. The first principle he came up with was cogito ergo sum, or “I think, therefore I am.” He intended that to be the foundation of a much more elaborate structure, but was never actually able to establish anything of importance without some reference to perceptions, which we know are faulty.

Still, the basic notion that our identity is wrapped up in our ideas gets to the core of who we are as humans. That’s why when we first meet people they are likely to tell us things they think, because they want us to know who they are. It is also why the dress became such a huge Internet sensation. Black & blue vs. white & gold became more than our perceptions of a photo, but part of our identities. You were either on one team or the other.

Once we understand the link between identity and ideas, we can begin to see where all the bullshit starts. Given how big, messy and confusing the world is, we know comparatively little about most subjects. Yet we we need to think something in order to project an identity. So we grab explanations where we can, often developed from past perceptions whether those are relevant and valid or not.

Group Identity, Polarization And Purity Spirals

In The Righteous Mind, social psychologist Jonathan Haidt describes our rational mind as kind of an internal PR department. Once our brains pick up bullshit, we feel compelled to build a narrative around it, telling ourselves that we arrived at our conclusions by an objective weighing of the evidence. We also look to others to confirm our beliefs.

So we go out in search of people who believe the same bullshit that we do. We read the same stuff, attend the same conferences and socialize in the same places, making sure our internal PR departments are coordinating and updating the story so that it stays coherent. We begin to identify not only with the views, but also with the fellow travelers that also hold them.

Decades of research has shown that we will conform to the opinions of those around us and that the effect extends to three degrees of social distance. So it is not only those we know well, but even the friends of our friend’s friends—people we don’t even know—have a deep and pervasive effect on the bullshit we believe.

More recent research at MIT looked into how we share our bullshit with others. What they found was that when we’re surrounded by people who think like us, we share bullshit more freely because we don’t expect to be rebuked. We’re also less likely to check our facts, because we know that those we are sharing with will be less likely to inspect it themselves.

In How Minds Change, science reporter David McRaney explains that when people leave of a religious cult or conspiracy theory group, it is usually preceded by a change in social networks. As it turns out, to free ourselves from a particular brand of bullshit, we need to break free of that particular brand of bullshitters.

What Do You Think You Know And Why Do You Think You Know It?

We all bullshit. And not just occasionally, either, but constantly. The simple fact is that it takes enormous time, energy and focus to attain a significant level of expertise in even a narrow field. So most of the things we encounter we know relatively little about. We either abstain from participating in the discussion or bullshit our way through it.

We’re willing to accept a certain amount of bullshit in our lives. Scientific frameworks like The elaboration likelihood model (ELM) and the heuristic-systematic model (HSM) explain that for low involvement areas, we actually prefer low information arguments with emotive content over more detailed explanations.

Most of all though, we bullshit to protect our identities, both individual and collective. It is through our beliefs that we connect with others, build communities and engage in shared purpose. It’s an equation that, for the most part, works very well. We engage in bullshit, so that we can do things together that matter, that make a difference in our lives and in others’.

Yet every once in a while we need to take a more disciplined approach. A natural disaster occurs, a pandemic arises or a crisis erupts in a far off place that we know little about and we need to show more humility about what we think we know and why we think we know it.

David McRaney suggests we can do this by giving a level of certainty—from 1-10—to ideas that we believe and ask ourselves why that level isn’t higher or lower. It’s an effective practice. Try it.

Because sometimes we get to a point where all the bullshit just has to stop.

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

Subscribe to Human-Centered Change & Innovation WeeklySign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

4 Simple Rules That Make You Exponentially More Effective and Productive

Leave a reply

4 Simple Rules That Make You Exponentially More Effective and Productive

GUEST POST from Greg Satell

Shortly after I first arrived at college, my wrestling coach told my teammates and me that we would all be attending a freshman technique camp. It turned out to be something quite different than what I had expected. He didn’t teach us any advanced or esoteric method, but instead demonstrated the basics.

It was incredibly humbling. The fact that we were there in the first place, competing for a Division 1 program, meant that we had all demonstrated outstanding accomplishment. And now we were supposed to revisit the stuff we learned in peewee programs? It seemed insulting at first, but turned out to be one of the best lessons I’ve ever learned.

The truth is that in any endeavor, you are only as good as your fundamentals. While it’s easy to get enamored with grand strategies and fancy tactics, whether you succeed or fail is far more likely to depend on doing simple, basic things consistently well. In much the same way, I’ve found that simple rules can, if applied sensibly, help make you incredibly effective.

1. Play, “Hey Jude”

Paul McCartney wrote hundreds of songs in his career. Many were hits, but others were more obscure. One that was sure to please crowds was the classic “Hey Jude.” He first wrote the song in 1968, to comfort five-year old Julian Lennon during his parent’s divorce and I’m sure that over the years the former Beatle got tired of singing it. But he continued to perform it because he knew that’s what his fans wanted.

Clients often ask me whether I can create a new keynote or a workshop for them. Michael Port, a top coach in the speaking industry, explains why that is almost always a bad idea. Would you like a doctor to perform the same surgery on you that she has successfully done hundreds of times before, or try something different this time?

One of the things that has amazed me over the years, in myself and in others, is our urge to do something different for difference’s sake. Doing the same old thing time and time again gets boring, which is why as successful high school wrestlers we wanted to learn fancier techniques and didn’t focus on our fundamentals as we should have.

We need to learn to play our own personal “Hey Jude’s.” It may seem old and tired, but it’s what we’re good at and, if it does the job we need it to, we should keep at it. That doesn’t mean we don’t continue to experiment and learn new things. But we have to remember to always play the hits.

2. Talent Is Overrated

One of the most common questions I get asked by senior managers is “How can we find more innovative people?” I know the type they have in mind. Someone energetic and dynamic, full of ideas and able to present them powerfully. It seems like everybody these days is looking for an early version of Steve Jobs.

Yet the truth is that today’s high value work is not done by individuals, but teams. It wasn’t always this way. The journal Nature noted that until the 1920’s most scientific papers only had a single author, but by the 1950s that co-authorship became the norm and now the average paper has four times as many authors as it did back then.

To solve the kind of complex problems that it takes to drive genuine transformation, you don’t need the best people, you need the best teams. That’s why traditional job descriptions lead us astray. They tend to focus on task-driven skills rather than collaboration and human skills. We need to change how we evaluate, recruit, manage and train talent.

Talent isn’t something you hire or win in a war, it’s something you empower. It depends less on the innate skills of individuals than how people are supported and led. As workplace expert David Burkus puts it, “talent doesn’t make the team. The team makes the talent.” Skills and teamwork are developed over time.

So if you’re disappointed with the level and talent in your organization, the questions you need to ask are: “How can I better empower people to do their best work?” “What do I reward and what do I punish?” “Am I asking people to do what I want or inspiring them to want what I want?”

3. Find A “Hair on Fire” Use Case

Good operational managers learn to identify large addressable markets. Bigger markets help you scale your business, drive revenues and allow you to invest back into operations to create more efficiency. Greater efficiencies lead to fatter profit margins, which allow you to invest even more on improvements, creating a virtuous cycle.

Yet when you are doing something new and different, trying to scale too fast can kill your business even before it’s really gotten started. A truly revolutionary product is unpredictable because, by its very nature, it’s not well understood. Charging boldly into the unknown is a sure way to run into unanticipated problems that are expensive to fix at scale.

A better strategy is to identify a hair on fire use case — someone who needs a problem fixed so badly that they are willing to overlook the inevitable glitches. They will help you identify shortcomings early and correct them. Once you get things ironed out, you can begin to scale for more ordinary use cases.

For example, developing a self-driving car is a risky proposition with a dizzying amount of variables you can’t account for. However, a remote mine in Western Australia, where drivers are scarce and traffic nonexistent, is an ideal place to test and improve the technology. In a similar vein, Google Glass failed utterly as a mass product, but is getting a second life as an industrial tool. Sometimes it’s better to build for the few than the many.

4. Anticipate Failure

Starting a new venture or initiative is always exciting. Pregnant with possibility and hope, the sky seems like the limit and the last thing you want to think about is things going wrong. Yet neglecting to anticipate failure is one sure way to decrease your chances of success.

That’s why when we first start working with a team on an organizational transformation, we ask them to imagine someone possessed by an evil demon. How would such a person try to derail the initiative? What dirty tricks might they pull? What would they lie about? We ask this not because we think that there’s actually people possessed by evil demons, but because it helps executives imagine things that could go wrong

There is, in fact, no shortage of tools that can help to uncover flaws in your plans. Pre-mortems force you to imagine specific ways a project could fail. Red Teams set up a parallel group specifically to look for flaws. Howard Tiersky, CEO of the digital transformation agency From Digital and author of the Wall Street Journal bestseller Winning Digital Customers, often uses de Bono’s Six Thinking Hats to help the team take different perspectives.

When we deconstruct failed initiatives, the problem is rarely one of ambition, energy, hard work or even acumen, but rather a lack of imagination. You can evaluate and analyze all you want, but chances are what kills your venture or initiative will be something that you didn’t see coming and didn’t account for.

For any significant endeavor, learning to anticipate failure is a key success skill. Or, as Andy Grove put it: “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.”

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

Subscribe to Human-Centered Change & Innovation WeeklySign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

Take an Evidence-Based Approach for Transformation and Change

Leave a reply

Take an Evidence-Based Approach for Transformation and Change

GUEST POST from Greg Satell

In The Knowing Doing Gap by Jeffrey Pfeffer and Bob Sutton, the two Stanford professors show, in painstaking detail, that most enterprises fail to act on what they know. They point out that many are set up to reinforce the status quo, because mastering conventional wisdom is key to advancement.

There is a similar gap when it comes to transformation and change, but for somewhat different reasons. Decades of research and insights are largely ignored. Transformational initiatives are seen as exercises in persuasion, with practitioners designing slogans to “create a sense of urgency around change” and shift attitudes, assuming that will change behaviors.

Today we are in a change crisis. Businesses need to internalize new technologies like AI and adapt to new realities like hybrid work, but still struggle to adopt decades old skills related to lean manufacturing, agile development and cultural competency. If we are going to drive the transformations we need to compete, we need to take an evidence based approach.

The Diffusion Of Innovations

In 1962, Everett Rogers published the first edition of his now-famous book, The Diffusion of Innovations, which contained hundreds of studies of how change spreads. These ranged from the seminal study of the adoption of hybrid corn and the spread of hate crime laws in the US, to the doctors use of the antibiotic tetracycline and the uptake of mobile phones in Europe.

In some instances the same subject was studied in a number of different places. The spread of family planning methods was researched in a number of developing nations, including Taiwan, Korea and Egypt, among others. In others, the same effect was observed in very different contexts, like the importance of social ties in both recruiting civil rights activists during “Freedom Summer” and the spread of air conditioners in the 1950s.

The difference between this type of research and the case studies that underlie much change management thinking is that they are much more rigorous and transparent. In a typical case study, researchers interview a limited number of participants and interpret what they see and hear. These sometimes lead to genuine insights, but people often interpret events differently.

In the diffusion studies, there are typically hundreds of people surveyed, sometimes over a number of years. The questionnaires and data are published along with the findings, so that others can re-examine conclusions. Studies can be compared side by side. In some cases, such as this one, data from earlier work is made available to colleagues to see if they can come up with alternative insights.

There is a remarkable consensus on the basic principles of diffusion. Overwhelmingly, these studies find that new ideas come from outside the community and incur resistance; that there is a common and persistent KAP-gap, in which a shift in knowledge and attitudes do not result in changes in practice; that change follows an s-curve pattern (meaning it starts slow, hits a tipping point and accelerates) and ideas are transmitted socially.

Clearly, any change program needs to take these principles into account.

Changing Societies As Well As Organizations

In the early 1960s, around the time that Rogers began publishing his writings about the diffusion of innovations, Gene Sharp began to formulate his theories about changing societies. Sharp saw change as a strategic conflict in which the weapons weren’t military, but psychological, social, economic and political.

Sharp’s key insight was that the status quo isn’t monolithic, but derives its power from specific sources, such as legitimacy, popular support and institutional support. If you can undermine those sources of power, he reasoned, you can bring change about. To do that, however, you need focus strategically on bringing down what supports the current regime.

While there’s no evidence that Sharp and Rogers ever met or were aware of each other’s work, there are striking similarities. For example, the Spectrum of Allies framework that is central to nonviolent conflict is eerily similar to the adoption groups in Rogers’ diffusion curve. Like Rogers, Sharp found that change was transmitted through social bonds.

The main difference is that Sharp and his revolutionary disciples focus, perhaps not surprisingly, on overcoming resistance, which isn’t emphasized in the diffusion research. For example, the global activist Srdja Popović developed the concept of a dilemma action, which has been the subject of increasing interest by researchers.

While Sharp’s legacy doesn’t have the intense academic rigor of the diffusion research, it has proven itself through the work of practitioners. Movements such as the color revolutions in Eastern Europe and the Arab Spring in the Middle East were based on Sharp’s work and his ideas continue to be developed at his Albert Einstein Institution as well as the Centre for Applied Nonviolent Action and Strategies (CANVAS).

A Network Mechanism For Spreading Change

In the late 1990s, a young graduate student named Duncan Watts began to study coupled oscillation, how certain things, such as crickets, pacemaker cells in our hearts and electrical power grids can, under certain conditions, synchronize their collective behavior. That work led to his discovery of small world networks, a concept so important that in 2018 the prestigious journal Nature published a 20-year retrospective on it.

Where Rogers and Sharp both found that change spreads through social ties, Watts discovered the mechanism through which an idea travels. Many assumed that there were special “opinion leaders” that propagated change. Yet Watts found that it was the structure of the network that determined how far an idea could travel. In effect, it is small groups, loosely connected and united by a shared purpose that drive transformational change.

We know that people tend to conform to the opinions of those around them. The best indicator of what we think and do is what the people around us think and do. This effect extends out to three degrees of influence, so it’s not just people we know personally, but the friends of our friends’ friends that shape how we see things.

Practically speaking, the emergence of small-world networks means that change leaders need to focus more on shaping networks than shaping opinions. It is by empowering small groups, helping them to connect with and inspiring them with a sense of common endeavor that you can bring a change initiative to the exponential part of the s-curve and break out.

Acting On What We Know

The biggest misconception about change is that once people understand it, they will embrace it. That’s almost never true. If you intend to influence an entire organization, you have to assume the deck is stacked against you. The status quo always has inertia on its side and never yields its power gracefully.

The good news is that we have over a half-century of research and practice that can inform our efforts. Yet to be effective, we have to put that learning to work. It makes no sense, for example, to “create a sense of urgency” around change when we know that transformation follows an s-shaped curve, starting slowly and then accelerating after a tipping point. Doing so is more likely to trigger resistance than to move things forward.

In much the same way, if we know that shifts in knowledge and attitudes don’t necessarily result in changes in practice and that ideas about change are transmitted socially, we should focus our efforts on empowering enthusiasts rather than wordsmithing and broadcasting slogans. People tend to adopt the ideas and actions of those around them.

We need to think about change as a strategic conflict between the present state and an alternative vision. The truth is that change isn’t about persuasion, but power. To bring about transformation we need to undermine the sources of power that underlie the present state while strengthening the forces that favor a different future.

— Article courtesy of the Digital Tonto blog
— Image credit: 1 of 1,300+ FREE quotes available for presentations from http://misterinnovation.com

Subscribe to Human-Centered Change & Innovation WeeklySign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

Why VUCA is a Myth

Leave a reply

Why VUCA is a Myth

GUEST POST from Greg Satell

“Imagine, if you will, a factory as clean, spacious and continuously operating as a hydroelectric plant. The production floor is barren of men,” Fortune magazine declared in its November 1946 issue. Soon the world entered a new world of mass production and mass retail. Then came a green revolution, a space race, genomics, computers, the Internet and now artificial intelligence.

Today it’s become an article of faith that everything moves faster. Business pundits tell us that we’re living in a VUCA world (Volatile, Uncertain, Complex and Ambiguous). These are taken as basic truths that are beyond questioning or reproach. Yet are things actually moving any faster than in earlier eras? The evidence is surprisingly scarce.

The inescapable truth is that some things move faster today and others move slower. We don’t have—nor should we want—more change today than before. We need to be more thoughtful about change, more deliberate about the ones we undertake and more tenacious in our pursuit of them. We should aim to have less disruption and more progress.

An Era of Industrial Stability

Since Jack Welch took over GE in the 1980s, the management ethos has been taken over by a cult of disruption. Pundits say we must “innovate or die.” Managers feel pressure to launch new initiatives, to pivot and then pivot again, because the competition has become so rabid that “only the paranoid survive.”

The data, however, tell a very different story. A report from the OECD found that markets, especially in the United States, have become more concentrated and less competitive, with less churn among industry leaders. The number of young firms have decreased markedly as well, falling from roughly half of the total number of companies in 1982 to one third in 2013.

A comprehensive 2019 study from the National Bureau of Economic Research found two correlated, but countervailing trends: the rise of “superstar” firms and the fall of labor’s share of GDP. Essentially, the typical industry has fewer, but larger players. Their increased bargaining power leads to more profits, but lower wages.

With all of the hype around things like artificial intelligence, this may seem hard to believe. However, once you start to think about where you actually spend your money, food, shelter healthcare, travel and so on the reality sets in that most of the economy involves atoms and not bits and, if you do a bit more research, you’ll find that those industries are, for the most part, less competitive.

The truth is that we don’t really disrupt industries anymore. We disrupt people. Economic data shows that for most Americans, real wages have hardly budged since 1964. Income and wealth inequality remain at historic highs. Anxiety and depression, already at epidemic levels, worsened during the Covid-19 pandemic.

The Limits Of Digital Dominance

Over the past several decades, innovation has become largely synonymous with digital technology. When the topic of innovation comes up, somebody usually points to a company like Apple, Google or Facebook rather than, say, a car company, a hotel or a restaurant. Today, seven out of the ten most valuable companies in the world are digital firms.

This is largely because of two forces converging. The first is Moore’s Law, the exponential doubling of the number of transistors we have been able to cram onto a silicon wafer. Yet our ability to do that is coming up against the constraints of physics. Advancement in conventional chips has already slowed and, at some point, it will stop altogether.

The other force driving the digital economy has been increasing returns. As the economist W. Brian Arthur explained in a 1996 article in Harvard Business Review, certain conditions, such as high upfront investment, negligible marginal costs and network effects, lead to “winner take all markets where the fastest firm reaps incredible benefits.

Yet consider that information and communication technologies only make up about 6% of GDP value added in advanced economies and you begin to see the problem. The Silicon Valley model simply doesn’t work outside of software and consumer gadgets. In industries that have a low tolerance for failure, such as manufacturing and healthcare, you can’t simply move fast and break things because you’ll likely break something important.

Moving Slow To Go Fast

When Covid hit in the winter of 2020, it was a mysterious disease with no known cure. Yet in a mere matter of months vaccines were developed and being tested. By the end of the year two firms, Pfizer and Moderna received emergency authorization and people started getting their shots. Given that before Covid it took more than a decade to develop and test a vaccine, this was almost unheard of speed.

Yet look a little closer and it becomes clear that the real story is somewhat different. Katalin Karikó, published her first paper on the mRNA technology used to make the vaccines in 1990. She wasn’t able to win grants to fund her work and, in 1995, was told that she could either direct her energies in a different way, or be demoted. She took the demotion, worked through it and, a decade later, began to see some success.

Today, of course, mRNA technology is moving very quickly. Funding is flooding into labs to potentially cure or prevent a wide range of diseases, from cancer to malaria, vastly more efficiently than anything we’ve ever seen before. There are similar slow moving revolutions underway in quantum computing, drug and materials discovery and other things.

There’s nothing usual about any of this. It’s long been known that technology follows an s-curve pattern, starting slowly, then hitting an exponential phase in which it moves very quickly before leveling off again. For example, after penicillin became commercially available in 1945, we entered a golden age of antibiotics and scientists quickly uncovered dozens of compounds that could fight infection, before things slowed to a crawl.

At any given time, there are many s-curves going on at once. Some are just beginning to crawl, others speeding up and still others slowing down. Pointing out the ones that are speeding up and ignoring everything else that’s going on may be exciting, but it’s not the way to get the best results.

Rethinking The Change Gospel

It’s no accident that VUCA is a military term. The ever-present mantra that we are living in a time of volatility, uncertainty, complexity and ambiguity makes corporate executives feel like swashbuckling heroes. The truth is that there is very little evidence that is the case and a veritable mountain to the contrary.

There is also evidence that all the hype around change is doing real damage. Leaders conjure up dramatic images of “burning platforms” to justify launching ambitious initiatives, which rarely succeed. These failures then are given as confirmation for how dire the need for change really is and more initiatives are launched with similar results.

That is the change gospel. Transformation has, all too often, become an end in itself rather than a means to an end. We end up pivoting so much that we end up right where we started. The problem with cheerleading change is that it puts the cart before the horse. People don’t embrace change because you came up with a fancy slogan, they adopt what they find meaningful, that creates genuine value to their lives and their work.

We need to have more reverence for the mundane and ordinary. When you look at previous eras in which more genuine transformation took place and far more economic value was produced, there was much less talk about disruption and much more focus on improving the human condition.

The truth is that we’re not really disrupting industries anymore as much as we are disrupting ourselves and fairy tales and living in a VUCA era will not change those basic facts. We need to think less about disruption and more about tackling grand challenges that will impact the world in significant ways. Innovation should serve people, not the other way around.

— Article courtesy of the Digital Tonto blog
— Image credit: Wikimedia Commons

Subscribe to Human-Centered Change & Innovation WeeklySign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.

What Defines a Good Strategy?

Leave a reply

What Defines a Good Strategy?

GUEST POST from Greg Satell

One of the most frustrating statements I come across is that “we had a good strategy, but just couldn’t execute it.” That’s nonsense. Obviously, if you couldn’t execute, there were some important factors that you didn’t take into account. You miscalculated in some significant way. So how was that a good strategy?

This raises an important question: What makes a strategy good? The concept of strategy gets thrown around so much and so incompetently, few stop to define the term. Strategy often becomes self-referential, a consensus-driven story that no one dares to question, but everyone is duty bound to carry out, for better or worse.

One helpful concept is the German military principle of Schwerpunkt, which roughly translates to “focal point.” You need to pick the battles that will prove decisive, the ones that matter and which you can win. Or, as Richard Rumelt has put it, good strategy puts relative strength against relative weakness. Figuring that out is what makes the difference.

Choosing The Right Battles, Fighting With The Right Weapons

Che Guevara was, in many ways, the prototypical revolutionary. Charismatic and brilliant, he was a master at guerilla warfare, launching revolutions against authoritarian regimes across Africa and South America. Yet although he may have won some battles, he lost the wars and, in the end, was executed for his actions.

That’s not unusual. Violent uprisings almost always fail and studies have shown that nonviolent revolutions do much, much better. In the early 1960s a political scientist named Gene Sharp began to figure out why. Governments have significant advantages in the use of violence. Successful revolutionaires, he found, use alternate weapons rooted in psychology, sociology and economics, where they can build strength and regimes are vulnerable.

In much the same way, innovative firms are often poorly served by trying to identify the largest addressable market for a new product or service. Those are the customers incumbents have been serving for years, where they have vastly superior knowledge, experience and relationships. Competing for that business will inevitably be an uphill battle.

A better strategy is to identify a hair on fire use case — a customer who needs a problem fixed so badly that they are willing to overlook the inevitable glitches in a new product or service. They will help identify shortcomings early and collaborate to correct them. As things get ironed out you can gain traction and compete for bigger markets.

For example, Tesla didn’t try to sell electric cars to everyone, at least not at first. Instead it sold high performance, environmentally friendly roadsters to Silicon Valley millionaires. Rather that compete with the big automakers head on, it pursued a market they couldn’t. A good strategy is specific. It doesn’t apply to everyone, but rather to a particular context.

Undermining Sources Of Power

During the civil rights movement, activists faced an uphill battle in the deep south, where the segregationists enjoyed a monopoly on state power, controlling not only legislatures, but police departments and the courts. Black citizens were terrorized and had absolutely no legal recourse. In many cases, it was the law enforcement officers who were doing the terrorizing.

But what if the activists weren’t poor, black and vulnerable, but elite, white and connected? That was essentially the strategy of the Freedom Summer Project, which recruited students from prestigious schools to spend the summer in Mississippi working to register voters and educate poor black children.

Almost immediately three of the activists disappeared and a national crisis ensued. President Johnson sent an army of FBI agents to investigate and the media descended onto the state. Terrified parents, whose children remained in Mississippi, sent urgent letters to their representatives in Congress. Local media in upscale white communities in the north closely covered events as they unfolded.

Of course, given that blacks were killed and tortured with complete disregard for decades, this sudden torrent of concern only underlined the inherent racism of the system. Yet still, that’s what made the strategy work. Civil rights leaders were able to put the strength of the national media and federal government, as well as the clout of industry, against the relative weakness of what passed for power in Mississippi.

The Freedom Summer’s exposure of Jim Crow would have significant ripple effects throughout the 1960s. It would help lead to the 1965 Voting Rights Act the very next year and many of the activists would go on to lead movements for women’s equality, for workers’ rights and against the Vietnam war. The country would be forever changed.

Creating A Dilemma Instead Of A Conflict

I once had a six-month assignment to restructure the operations of a troubled media company and the sales director was a real stumbling block. She never overtly objected. but was quietly sabotage progress. For example, she promised to hand over the clients she worked directly with to her staff, but never seemed to get around to it.

It was obvious that she intended to slow-walk everything until the six months were over and then return everything back to the way it was. As a longtime senior employee, she had considerable political capital within the organization and, because she was never directly insubordinate, creating a direct confrontation with her would be risky and unwise.

So rather than create a conflict, I designed a dilemma. I arranged with the CEO of a media buying agency for one of the salespeople to meet with a senior buyer and take over the account. The Sales Director had two choices. She could either let the meeting go ahead and lose her grip on the situation or try to derail the meeting. She chose the latter and was fired for cause. Once she was gone, her mismanagement became obvious and sales shot up.

Key to the success of a dilemma action is that it is seen as a constructive act rooted in a shared value. In the case of the Sales Director, she had agreed to give up her accounts and setting up the meeting was aligned with that agreement. That’s what created the dilemma. She had to choose between violating the shared value or giving up her resistance.

When you respond to an attack, you are fighting a battle in a time, place and context that your opposition has chosen. When you design a dilemma, on the other hand, you are setting the parameters, which allows you to bring relative strength to bear against relative weakness.

Mastering Strategic Conflict

We tend to think of change as a journey to bring about some alternative future state, but that’s only half of the story. The truth is that future state is in a strategic conflict with the status quo, which has inertia on its side and never yields its power gracefully. You can never bring about the desired future state until you address the status quo.

The key to doing that is to define the focal point of your efforts—the Schwerpunkt—where you can bring relative strength to bear against relative weakness. However Schwerpunkt is a dynamic, not a static, concept. As your actions impact the context, the focal point will necessarily change, requiring you to adjust with strategic agility.

In How Big Things Get Done, Bent Flyvbjerg argues that any planning big project requires experimentation and testing. You don’t start with answers, but questions. Planning consists of a series of low-cost virtual experiments in which you are exploring possibilities, identifying opportunities and exposing problems. We want to fail in planning, where it’s cheap, so we minimize failure in the real world, where it costs us dearly.

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. Good strategy isn’t a master plan, but a process of discovery. It is, most of all, an iterative set of choices made about how to address meaningful challenges.

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

Subscribe to Human-Centered Change & Innovation WeeklySign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.