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.

People Will Be Competent and Hardworking – If We Let Them

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People Will Be Competent and Hardworking - If We Let Them

GUEST POST from Greg Satell

Go to just about any business conference these days and you’re likely to see some pundit on stage telling a story about a company — often Blockbuster, Kodak or Xerox — that got blindsided by nascent trends. Apparently, the leaders who rose to the top of the corporate ladder were so foolish they just weren’t paying attention.

These stories are good for a laugh, but they usually aren’t true. People who lead successful companies are, for the most part, competent, hardworking and ambitious. That’s how they got their jobs in the first place. There are, of course, exceptions. People who have a talent for self-promotion can get to the top too.

Still it’s much better to assume competence. That’s how we learn. The truth is that we all get disrupted sooner or later. It doesn’t only happen to silly people. Every square-peg business eventually meets its round-hole world. Smart, competent people fail all the time and, if we want to have a chance at avoiding their fate, we need to understand how that happens.

Mismanagement Myths

During Apple’s rise, Microsoft was considered to be big, slow and incompetent. Its CEO, Steve Ballmer, had foolishly dismissed the iPhone and the company never seemed to gain traction in the mobile world. It launched weak products, such as the Zune music player and the Windows phone. Its failed acquisition of Nokia just seemed to add insult to injury.

Yet still even accounting for Ballmer’s mobile missteps, Microsoft’s business continued to perform well, growing its revenues at double digit rates and maintaining high margins. How can that be? Most of Microsoft’s revenues don’t come from the consumer categories that business journalists tend to cover, but in selling B2B products and services to CIOs. While everyone was focused on gadgets, it was building a monster business in the cloud.

When you look more closely, the clever pundits often miss the real story. Blockbuster didn’t ignore Netflix, but executed a viable strategy and still failed. Kodak didn’t ignore the market for digital cameras, in fact its EasyShare line were top sellers. Unfortunately, selling digital cameras couldn’t replace the profits from developing film. Yes, Xerox PARC failed to successfully market the PC, but its invention of the laser printer saved the company.

The reason why pundits tell the caricatures rather than the real stories is that imagining CEOs to be fools makes us feel better about ourselves. After all, if only foolish people get disrupted, then we—assuming we are not fools—should be okay. Unfortunately, that’s not how the world works. Being smart and working hard won’t save you.

Why Do Smart, Competent People Fail?

There are many reasons why smart, competent people fail. A very common one is a category error. For example, Steve Ballmer didn’t think anyone would pay $500 for a phone, but the iPhone wasn’t just a phone, it was an entirely new business model and ecosystem. People would not only pay for it differently (through their mobile plan), they would also use it very differently than earlier phones.

That opens up a very different set of issues. How do we know if we’re making a category error? We put things into categories for a reason, to understand their relations to other things. For example, a plate is something that goes on a table. But sometimes, such as the case with a commemorative plate, they go on a wall. So when does a plate become commemorative?

Other famous failures ran into similarly thorny issues. The CEO at Blockbuster, John Antioco, developed a viable strategy and executed well, but failed to gain alignment among important stakeholders. Kodak marketed digital cameras, but they weren’t nearly profitable enough to replace developing film. Xerox PARC was designed to build the “office of the future,” not to market consumer products like the Macintosh.

What at first might seem like CEOs asleep at the wheel actually exposes some very thorny issues. How much alignment do we need before pushing an important strategy forward? What do you do when your cash cow dies? When you shoot for the moon, how should you hedge your bets?

These are tough problems with no obvious solutions. But notice that when we assume that the leaders were competent, it forces us to think about them much more seriously and, hopefully, learn something useful.

Seeing Competence All Around Us

I was recently talking to my friend Bob Burg, co-author of the Go-Giver series, and something he said reminded me of a short Borges essay I’ve long admired, called Borges and I, in which the acclaimed author writes about the challenges of balancing a public persona with a private one. I brought it up during our conversation and promised to send it to him.

The whole essay is just two short paragraphs of Borges comparing himself, who drinks coffee and walks the streets of Buenos Aires, to the famous author who will live on in posterity. “Little by little, I am giving over everything to him, though I am quite aware of his perverse custom of falsifying and magnifying things,” he wrote.

Unfortunately, in sending Bob the essay, I screwed up. Because it was so short, I didn’t send a link but copy-pasted the text into the body of the email and, carelessly, didn’t include the title or the author’s name, which made the whole thing impossible to understand. Most people would have just written it off as something stupid. Bob did something different.

Instead of imagining me a fool, he humbly wrote me back, apologized for his inability to understand the essay and asked if I could explain it to him, which gave me the opportunity to correct my mistake. In doing so he did both of us a service. He got the small benefit of reading an interesting essay and I got the enormous gift of being able to redeem myself.

When we assume those around us are competent—not stupid or lazy—we do far more than give them the opportunity to be their best selves. People who feel validated actually tend to perform better too.

We Are Always Wrong

We all like to imagine ourselves as heroes in our own story. Unlike others, we are witnesses to our internal process and get to observe our logic develop. So our thoughts makes perfect sense to us and it can be incredibly frustrating when others don’t see it as we do. Our inclination is to imagine them to be fools, simply incapable of grasping basic concepts.

That’s why pundits tend to tell such facile stories. Blockbuster wasn’t paying attention to Netflix. Kodak ignored digital photography. Xerox PARC invented breakthrough products, but neglected to market them. None of these stories are accurate, but it’s far easier to portray a failure as a silly blunder, than admit to ourselves how easily it could happen to us.

The hard truth is that we’re always wrong. Sometimes we’re off by a little and sometimes we’re off by a lot, but we’re always wrong. We succeed not by coming up with the “right” idea from the start, but by taking a Bayesian approach and becoming less wrong over time.

The best way to do that is to assume other people are smart, competent and hardworking. Lazy fools will make themselves obvious soon enough. But by seeking out intelligence and virtue, we are not only much more likely to find it, but also to identify and correct deficiencies in ourselves and our thinking.

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

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Getting Back to Measuring What Matters

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Getting Back to Measuring What Matters

GUEST POST from Greg Satell

“Not everything that can be counted counts and not everything that counts can be counted,” is a quote often attributed to Albert Einstein, which I think aptly sums up the past 40 years. Since the 80s, we’ve been laser-focused on numbers and missed the underlying math. We’ve become finance-obsessed but lost track of economics.

Consider Jack Welch, who Fortune magazine named “Manager of the Century.” In the article explaining why he deserved such an honor, it lauded the CEO’s ability to increase the stock price and deliver consistent earnings growth, but nowhere did it refer to a breakthrough product or impact on society.

There’s a good reason for that. As NY Times columnist David Gelles explains in, The Man Who Broke Capitalism, Welch increased profits largely by firing workers, cutting investment and ‘financializing’ the firm. During his 20 year reign, innovation faltered and the company produced less, not more. Clearly, we need to reevaluate what we consider valuable.

What’s The Purpose Of A Company?

In a famous 1937 paper, Ronald Coase argued that the economic function of a firm was to minimize transaction costs, especially information costs. For example, it makes sense to keep employees on staff, even if you might not need them today, so that you don’t need to search for people tomorrow when important work needs to be done..

In 1976, Michael Jensen and William Meckling built on Coase’s work in their groundbreaking paper entitled The Theory of The Firm, which asserted that the purpose of the firm was to make money for its owners. They further argued that there is a fundamental principal-agency problem between managers and owners because their interests are not perfectly aligned.

These were brilliant works of economic theory, but as reflections of reality they are somewhat absurd. People start businesses for all sorts of reasons, profits being just one motivation. That’s why we have public benefit corporations and socially responsible investment funds. Heirs such as Abigail Disney have spoken out strongly against corporate greed.

There is simply no basis for the notion that owners of businesses care only about profits, much less the stock price over a given period. Yet during the 1970s and 1980s there was a growing conservative intellectual movement that argued that managers had a moral responsibility to increase shareholder value at the expense of pretty much everything else.

Today, many portray the conservative movement behind the nation of shareholder value as evil and greedy. Most of the evidence indicates that its leaders thought they were doing the right thing. It seems that there were more fundamental errors at play.

Management By Algorithm

In the 1920s , a group of intellectuals in Berlin and Vienna, became enamored by an idea that came to be known as logical positivism, that human affairs should be subjected to the same logical rigor as physical sciences. It failed miserably and, when Kurt Gödel published his incompleteness theorems in 1931, it was completely discredited.

Yet the strain of thought that arose in the 1970s that gave rise to Jack Welch’s brand of capitalism was essentially the same thing. It was, in effect, management by algorithm, in which human agency was eschewed and decisions were boiled down to a single variable to be optimized. Pretty much everything else could be blissfully ignored.

Does a particular action further the mission of the enterprise? It doesn’t matter as long as the stock price goes up. Will a merger of two companies undermine market forces and restrain trade? Unless regulators can prove that prices will go up, they have no right to step in. What should govern relations between nations? They should simply pursue their interests.

These ideas failed for the same reason that the original theory of logical positivism did. The world is a messy place, with lots going on. You can’t simply boil complex problems down to a single variable—or even a limited set—and not lose important information in the process. The notion that you could was naive and reckless.

The Cost Of Carelessness

To understand why the Welch era went so badly, let’s look at one common practice that took hold in the 1980s and 90s: Offshoring. From a shareholder value perspective, it has an intuitive logic. You move your factory from high wage countries such as the US to low wage countries such as China and pocket the savings. You lower costs and increase profits, at least in the short-term.

Yet that analysis omits some important factors. First of all, it undermines trust among employees, suppliers and other partners when relationships are treated as purely transactions. Also, a Harvard study found that moving the factory floor thousands of miles away from R&D reduces knowledge transfer and has a negative effect on innovation.

Looking back, it’s easy to see how this played out at GE. The company became more profitable, but less productive. For decades, it failed to innovate. Its last major invention was the CT scanner, which came out in the 1970s, before Jack Welch took the helm. Today the company is worth about $60 billion, roughly the same as back in the 90s.

The results for society are just as clear. Our economy has become markedly less productive, less competitive and less dynamic. Purchasing power for most people has stagnated. Life expectancy in the US has decreased in a number of years over the past decade. Anxiety and depression, which have been rising for a while, accelerated during the pandemic.

Creating Mission-Driven Organizations

The statistician George Box famously said, “All models are wrong, but some are useful” and that’s especially true of economic models. When Ronald Coase argued that the “nature of a firm” was to reduce transaction costs, he didn’t mean that was the only purpose of an enterprise. To argue that there is a principal-agent problem between owners and managers should not imply that it only applies to profits.

In fact, as Andrew Winston and Paul Polman explain in their book Net Positive, many practices that aren’t sustainable depress profits in the long run. Running an enterprise that dismisses the interests of customers, partners and communities is destined for trouble. Sooner or later, there will be a reckoning.

In the final analysis, the purpose of an enterprise is its mission. When we think of great founders such as Henry Ford, Sam Walton and Steve Jobs, they had vastly different purposes in mind, but it was fulfilling that purpose that drove profits. Ford was passionate about the power of transportation. Walton was fanatical about serving the customer. Can you imagine what Steve Jobs would have said about an ugly product that could make him a lot of money?

That’s what we’ve gotten wrong over the last 50 years. We’ve been counting the wrong things. Economics should serve people, not the other way around. The success of a society needs to be measured by the well-being of those who live in it. If companies profit, but our people are impoverished, our air and water are more polluted, our children less educated, we live unhappy lives and die deaths of despair, what have we really gained?

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

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You Must Learn the Change Lifecycle

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You Must Learn the Change Lifecycle

GUEST POST from Greg Satell

When a transformational initiative fails, it’s often said that it was because people don’t like change. That’s not really true. Everywhere I go in the world, no matter what type of group I’m speaking to, people are enthusiastic about some kind of change. It’s other people’s ideas for change that they aren’t so crazy about.

Senior leaders love to tell me about their inspired visions for their enterprise, but complain that they can’t get the rank-and-file to go along. Middle managers complain that they are bursting with ideas, but can’t get the bosses to go along. As failed initiatives pile up, people talk past each other and change fatigue sets in.

It doesn’t have to be this way. There are natural laws that govern change and these laws can be learned and applied by anyone. The problem is that managers don’t study change the same way they study finance, or marketing, or strategy. Business schools don’t teach it as a discipline. But change has a lifecycle that we can learn to manage and exploit.

Identifying A Problem That Needs Solving

As a young man, Mohandas Gandhi wasn’t the type of person anyone would notice. Impulsive and undisciplined, he was also so shy as a young lawyer that he could hardly bring himself to speak in open court. With his law career failing, he accepted an offer to represent the cousin of a wealthy Muslim merchant in South Africa.

Upon his arrival, Gandhi was subjected to humiliation on a train and it changed him. His sense of dignity offended, he decided to fight back. He found his voice, built the almost superhuman discipline he became famous for and successfully campaigned for the rights of Indians in South Africa. He returned to India 21 years later as the “Mahatma,” or “holy man.”

Revolutions don’t begin with a slogan, they begin with a cause. Martin Luther King Jr., as eloquent as he was, didn’t start with words. It was his personal experiences with racism that helped him find his words. His devotion to the cause that gave those words meaning, not the other way around.

Steve Jobs didn’t look for ideas, but for products that sucked. Computers sucked. Music players sucked. Mobile phones sucked. His passion was to make them “insanely great.” Every breakthrough product or invention, a laser printer, a quantum computer or even a life-saving cure like cancer immunotherapy, always starts out with a problem that needs to be solved.

Painful Failure

In 1998, five friends met in a cafe in Belgrade. Although still in their 20s, they were already experienced activists. In 1992, they had taken part in student protests to protest the war in Bosnia. In 1996, they took to the streets to support Zajedno, a coalition of opposition parties aligned against Slobodan Milošević. Both efforts, for very different reasons, failed.

This isn’t unusual. Gandhi had his Himalayan miscalculation. The first march on Washington, for women’s suffrage in 1913, was a disaster. Martin Luther King’s Albany campaign proved to be a big waste of time. Many modern movements, such as #Occupy, Turkey’s Gezi Park protests and the Arab Spring, achieved little, if anything at all.

It’s not just political movements either. Good ideas fail all the time. Even important, revolutionary scientific breakthroughs, such as cancer immunotherapy and sanitary practices in hospitals were rejected outright at first. Legendary entrepreneurs, such as IBM’s Thomas Watson at IBM and Apple’s Steve Jobs had miserable, heart wrenching failures.

The problem is that every idea has flaws. No plan survives first contact with the enemy because every plan, no matter how carefully considered or how righteous the cause, is wrong. Sometimes it’s off by just a little and sometimes it’s off by a lot, but it’s always wrong. You need to be prepared to take a few hits along the way, pick yourself up and apply what you’ve learned from the experience to do better next time.

Finding Focus

Successful change efforts are not, as many assume, all-out efforts. Rather, they learn to focus their own relative strengths against an opponent’s relative weaknesses. They focus resources at a particular opportunity at a time and place of their choosing. Military strategists call this principle Schwerpunkt, the delivery of overwhelming force at a specific point of attack.

In that cafe in Belgrade in 1998, the young activists took a hard look at what had worked and what didn’t. They knew that they could get people to the polls and they knew that if people went to the polls they could win the Presidential election coming up in 2000. They also knew, from bitter experience, that if Milošević lost the election he would try to steal it.

That, they decided, would be their focal point. They created a movement called Otpor that was steeped in patriotic imagery from the World War II resistance. It grew slowly at first, amounting to only a few hundred members after a year. But by the time the elections came around in 2000, Otpor’s ranks swelled to 70,000 and had grown into a potent political force.

When Milošević tried to falsify the election results massive protests, now known as the Bulldozer Revolution broke out. This time Otpor was able to enforce unity among the opposition parties and the Serbian strongman was forced to give in. He would later be extradited to The Hague and die in his prison cell.

Surviving Victory

One of the most surprising things that I’ve learned about change is that the victory phase is often the most dangerous. When you think you’ve won, that’s when you take your eye off the ball. But the people who oppose your idea don’t just melt away and go home because you won an early battle. In fact, now that they see change is possible, they’ll likely redouble their efforts to undermine what you’re trying to achieve.

The Otpor activists knew this from experience. When the Zajedno coalition won an electoral victory in 1996, it was pulled apart from the inside as a result of some deft political maneuvers by the regime. After the overthrow of Milošević, they quickly moved to head off any such efforts. The day the new government took power, billboards went up all over Belgrade that read, “Now We’re Watching You!”

The billboards, however, were merely a tactic. The real work started months before. The activists had learned from the earlier failures and anticipated officials straying from the cause. So they made a plan to survive victory and forced each opposition politician to sign a “contract with the people,” so they couldn’t backtrack after victory was won.

We do a similar exercise with our transformation clients. We ask questions like, “How would someone possessed by an an evil demon undermine the change you seek? Where are you most vulnerable to an attack? How can you leverage shared values to mitigate those efforts? You can’t prevent bad things from happening, but a little preparation goes a long way.

Perhaps most importantly, we need to remind ourselves that transformation is a journey, not a destination. Change has a lifecycle. Whatever impact you seek to make is far more likely to be a marathon than a sprint. No defeat or victory is final. The road is long and, to travel it effectively, you need to learn to recognize and anticipate the various twists and turns.

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

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Values Determine Your Competitiveness

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Values Determine Your Competitiveness

GUEST POST from Greg Satell

When Lou Gerstner was chosen to lead IBM in 1993, he was an unlikely revolutionary. A McKinsey consultant and then the successful CEO of RJR Nabisco, he was considered to be a pillar of the establishment. He would, however, turn out to be as subversive as any activist, transforming the company and saving it from near-death.

Yet there was more to what he achieved than simply turning red ink to black. “The Gerstner revolution wasn’t about technology or strategy, it was about transforming our values and our culture to be in greater harmony with the market,” Irving Wladawsky-Berger, one of his chief lieutenants, told me.

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.

Values Incur Costs And Constraints

At his very first press conference, Gerstner famously declared: “the last thing IBM needs right now is a vision.” It was an odd, even shocking statement for a new CEO charged with turning around a historic company. But what he understood, and few others did, was that unless he changed the culture to honor the values its success was built on, no strategy could succeed.

“At IBM we had lost sight of our values,” Wladawsky-Berger would later tell me. “For example, there was a long tradition of IBM executives dressing formally in a suit and tie. Yet that wasn’t a value, it was an early manifestation of a value. In the early days, many of IBM’s customers were banks, so IBM’s salespeople dressed to reflect their customers. So the value was to be close to customers.”

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.

The truth is that if you’re not willing to incur costs and constraints, it’s not a value. It’s a platitude. “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.

Values Signal Trust And Credibility

In South Africa, the Congress of The People was held in June, 1955. The gathering, which included blacks, mixed race, Indians and liberal whites, convened to draft and adopt the Freedom Charter, much like the Continental Congress gathered to produce the Declaration of Independence in America. The idea was to come up with a common and inclusive vision.

However, the Freedom Charter was anything but moderate. It was a “revolutionary document precisely because the changes it envisioned could not be achieved without radically altering the economic and political structure of South Africa… In South Africa, to merely achieve fairness, one had to destroy apartheid itself, for it was the very embodiment of injustice,” Nelson Mandela would later write.

Yet despite its seemingly radical aims, the Freedom Charter spoke to common values, such as equal rights and equal protection under the law—not just among the signatories, but for anyone living in a free society. It was powerful because of how it signaled to outside stakeholders, such as international institutions, governments and corporations that they shared more with the anti-apartheid movement than they did with the regime.

It was because of those values that activists were able to successfully boycott firms, such as Barclays Bank and Shell Oil, that did business in South Africa. When those companies pulled their investments out, the dominoes began to fall. International sanctions and political pressure increased markedly and Apartheid became politically untenable.

Here again, values would play a crucial role. Much like Gerstner’s willingness to lose revenue on every sale to keep his commitment to IBM customers, Mandela’s commitment to the Freedom Charter, even during 27 years in prison, signaled to stakeholders—inside and outside of South Africa—that supporting his cause was the right thing to do.

Shared Values Drive Collaboration

In the 1960s and 70s, Route 128 outside of Boston was the center of technology, but by the 1990s Silicon Valley had taken over and never looked back. As AnnaLee Saxenian explained in her classic, Regional Advantage, the key difference had less to do with strategy, technology and tactics than it did with values and how the firms saw themselves.

Dominant Boston firms such as DEC, Data General and Wang Laboratories saw themselves as warring fiefdoms. The west coast startups, however, saw themselves as part of the same ecosystem and tended to band together and socialize. “Everybody worked for the same company — Silicon Valley,” Saxenian would later tell me.

This difference in values translated directly into differences in operational practice. For example, in Silicon Valley if you left your employer to start a company of your own, you were still considered part of the family. Many new entrepreneurs became suppliers or customers to their former employers and still socialized actively with their former colleagues. In Boston, if you left your firm you were treated as a pariah and an outcast.

When technology began to shift in the 80s and 90s, the Boston firms had little, if any, connection to the new ecosystems that were evolving. In Silicon Valley, however, connections to former employees acted as an antenna network, providing early market intelligence that helped those companies adapt.

When you value competition above all else, everyone is a potential enemy. However, when you are willing to forsake absolute fealty in the service of collaboration, you can leverage the assets of an entire ecosystem. Those may not show up on a strategic plan or a balance sheet, but they are just as important as any other asset.

Moving From Hierarchies to Networks

The truth is that IBM was not devoid of values when Gerstner arrived. It’s just that they’d gone awry. “IBM had always valued competitiveness, but we had started to compete with each other internally rather than working together to beat the competition,” Wladawsky-Berger remembers. Certainly it valued technology and profits, just not customers.

What Gerstner did was, as noted above, bring the company’s culture and values back into “harmony with the market.” The company no longer wielded monopoly-like power. It had to collaborate with a wide array of stakeholders. It was this realization that led it to become the first major technology company to embrace open source software and support Linux.

Traditionally we’ve seen the world as driven by hierarchies. Kings and queens ruled the world through aristocracies that carried out their orders. Corporate CEO’s outlined strategies that underlings would have to execute. Discipline was enforced through a system of punishments and rewards. Power was valued above all else.

Yet as Moisés Naím pointed out in The End of Power, “Power is easier to get, but harder to use or keep.” Therefore, the ability to attract has become more important than the power to compel or coerce. That’s why today, strategy has less to do with increasing efficiencies and acquiring resources and more to do with widening and deepening networks of connections.

Power no longer lies at the top of hierarchies, but emanates from the center of networks. What determines whether we will get there or not is our values.

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

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Create Dilemmas Not Conflicts for Successful Change

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Create Dilemmas Not Conflicts for Successful Change

GUEST POST from Greg Satell

In the summer of 1982, Poland was under strict martial law. The leaders of the revolutionary Solidarity movement were either in jail or in hiding. As the regime tightened its grip, any kind of protest risked arrest. People were demoralized, forced to sit in their homes with nothing to do but watch propaganda-laden “news” and old movies.

Yet the resident’s of Świdnik, a small city in central Poland, refused to take it sitting down. Instead, they walked. Every night at 7:30, when the evening news program began to spew the regime’s lies, they went for a walk and, just to put a fine point on the matter, some took their TV sets with them, in wheelbarrows and baby carriages.

It was fun—and funny. Similar “walking protests” soon spread virally to cities across Poland, which put the regime in a bind, they either had to shut the protests down or let people thumb their nose at the regime. This is what’s known as a dilemma action, a brilliant strategy that allows you to avoid conflict while at the same time putting your opposition into a bad spot.

Starting With A Shared Value Or Widely Held Belief

When we first start working with a team on a change initiative, they want to focus on what they’re passionate about, what differentiates their effort from the status quo. It’s something we all do. When we feel fervently about an idea, we want others to see it the same way we do, with all its beautiful complexity and nuance.

Yet to bring others in, we need to switch from differentiating values—what we love about an idea—to more widely shared values. For example, when we work with teams looking to move their organizations toward agile development, they often want to focus on the agile manifesto, because that’s what they’re passionate about. It rarely resonates with people outside the agile community, however.

Once they begin to focus on shared values, like better quality projects done faster and cheaper, it’s much easier to get people to come along. After all, who could argue with better results? That doesn’t mean that agile teams are abandoning the manifesto or hiding it in any way, they’re just not leading with it.

Shared values are also part of what made the Świdnik walking protests so powerful. As one of the protesters put it, “If the resistance is done by underground activists, it’s not you or me. But if you see your neighbors taking their TV for a walk, it makes you feel part of something. An aim of the dictatorship is to make you feel isolated.”

Designing A Constructive Act

Some years ago, I was brought in to rebuild a sales and marketing operation. It immediately became clear that the sales director was a big part of the problem. Not only was she still calling on clients herself and competing with her own salespeople, she was accounting for 90% of the revenues! Clearly, this wasn’t because of superhuman ability, but because she was assigning the best clients to herself.

It was obvious that if I was ever going to get things going in the right direction, I was going to have to get rid of the sales director, but that would be difficult. She was politically savvy, well liked and, because she accounted for so much revenue, was seen as critical to the viability of the company.

She had agreed to distribute her clients among the team and focus on managing instead of selling, but never seemed to get around to it. Put simply, she was sandbagging me. So I set up a sales call for one of the staff and a key client, which put the sales director in a position. She couldn’t object—it was what she agreed to—but if she acceded it would break her hold on the business.

It was similar to the action in Świdnik. Who could object to taking an evening stroll? When an action is seen to be constructive, it takes on the power of legitimacy. One of the mistakes changemakers often make is that in their anger they do something that is seen as destructive and lose credibility. That’s always a mistake.

Forcing A Decision

What makes a dilemma action so powerful is that it forces your opposition to make a choice. In Poland, the walking protests quickly spread beyond Świdnik to cities throughout the country. The communist regime had to decide whether to let them continue or to put a stop to them. If the protests continued, the the apparatchiks would look impotent, but if they took action against people going out for a simple evening stroll, they would look ridiculous.

My situation with the sales director was difficult because the onus was on me. I had to decide whether to continue to let her sandbag or to fire her without a clear cause. Designing a dilemma action got me out of that bind because it shifted the decision to her. She either had to give up the client (and then others) or to take a deliberately insubordinate action.

We often oppose change not because of any rational logic but because, for whatever reason, it offends our dignity, our identity and our sense of self. The response to a dilemma action is far more likely to be governed by emotion than a deliberate thought process. People are prone to lash out and overreach.

That’s what make a dilemma actions so effective. It calls a bluff. The opposition can no longer wait it out, but are forced to act and, because of how the action is designed, any action they take will hurt their cause and push change forward.

How Transformational Change Really Happens

One of the biggest misconceptions about change is that it comes about when those who oppose it are somehow persuaded. That almost never happens. Look back at any major transformation throughout history and the tide turned when those who opposed it discredited themselves by taking action that was widely judged to be objectionable.

In Gandhi’s Salt March, the British discredited themselves when they violently attacked peaceful protestors. In Birmingham, Bull Connor discredited himself (and Jim Crow laws) when he confronted children with snarling dogs and fire hoses. California’s Proposition 8 was seen as so discriminatory that it aided the cause of same-sex marriage.

We see the same type of thing in our work with organizations. Everybody has been in a meeting in which, after an hour or so of moving slowly to a consensus, someone who hadn’t said a word the whole time suddenly throws a hissy fit in the conference room. This type of behavior doesn’t come from any rational place, but is triggered by an offense to identity.

Dilemma actions give us clear design principles to induce opponents of change to discredit themselves, which they will not only do willingly, but with enthusiasm. The British in India, Bull Connor in Birmingham and anti-gay activists in California wanted to show the world who they were, they merely had to be given the opportunity.

When confronted with fervent, irrational resistance to change the optimal strategy is never to create conflict, but rather a dilemma for your opposition.

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

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Putting Human Agency at the Center of Decision-Making

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Putting Human Agency at the Center of Decision-Making

GUEST POST from Greg Satell

We live in an automated age. From the news we read and the items we shop for, to who we date and what companies we choose to work for, algorithms help drive every facet of modern life. Such rapid technological advancement has led some to predict that we’re headed for a jobless future, where there is no more need for humans.

Yet in their recent book Radically Human, Accenture’s Paul Daugherty and H. James Wilson argue exactly the opposite. In their work guiding technology strategy for many of the world’s top corporations, they have found that, in many cases, the robots need us more than we need them. Automation is no panacea.

For over a century, pundits have been trying to apply an engineering mindset to human affairs with the hope of taking a more “scientific approach.” So far, those efforts have failed. In reality, these ideas have less to do with science than denying the value of human agency and limiting the impact of human judgment. We need to stop making the same mistake.

The Myth Of Shareholder Value

In 1970, the economist Milton Friedman proposed a radical idea. He argued that corporate CEOs should not take into account the interests of the communities they serve, but that their only social responsibility was to increase shareholder value. While ridiculed by many at the time, by the 1980s Friedman’s idea became accepted doctrine.

In particular, what irked Friedman was that managers would exercise judgment with respect to the objectives of the organization. “the key point is that, in his capacity as a corporate executive, the manager is the agent of the individuals who own the corporation … and his primary responsibility is to them,” he wrote.

The problem is that boiling down the success of an enterprise to the single variable of shareholder value avoids important questions. What do we mean by “value?” Is short term value more important than long-term value? Do owners value only share price or do they also value other things, like technological progress and a healthy environment?

Avoiding tough questions leaves significant problems unsolved, which may be one reason that, since Friedman’s essay, our well-being has declined significantly. Our economy has become markedly less productive, less competitive and less dynamic. Purchasing power for most people has stagnated. By just about every metric, we’re worse off.

How The Consumer Welfare Standard Undermines Consumer Welfare

In 1978, the legal scholar Robert Bork published the Antitrust Paradox in which he argued against the rule of reason standard for antitrust cases that required judges to use their discretion when deciding what constitutes a practice that “unreasonably” restricts trade. In its place, he suggested a consumer welfare standard, which would only take into account whether the consumer was harmed by higher prices.

Much like Friedman, Bork didn’t like the idea of depending on subjective human judgment. How could we trust judges to decide what is “reasonable” without a clear and objective standard? If the government is going to block business activity, he argued, it should have to prove, through stringent economic analysis, that harm is being done.

Yet as Lina Kahn pointed out in a now-famous paper titled Amazon’s Antitrust Paradox, consumers can be harmed even as prices are lowered. If Amazon is allowed to control the online retail infrastructure, including logistics, hosting, marketing, etc., then trade is restricted, free markets are undermined and the consumer will be harmed.

To understand why, you only need to look at the recent baby formula shortage, in which only three firms dominate the market and, the leader, Abbott, is the exclusive supplier in many markets. Not only is it highly likely that the lack of competition contributed to lax quality standards at Abbott’s plant in Sturgis, Michigan, but once it went offline because of contamination, there weren’t enough suppliers to fill the gap.

These aren’t isolated examples, but indicative of a much larger and growing crisis. An article in Harvard Business Review details how the vast majority of industries are concentrated in just a few dominant players. A more extensive analysis by the Federal Reserve bank shows how the lack of competition leads to lower business dynamism and less productivity.

“Great Power” Politics

In early March, the prominent political scientist John Mearsheimer gave an interview to The New Yorker in which he argued that the United States had erred greatly in its support of Ukraine. According to his theory, we should recognize Russia’s role as a great power and its right to dictate certain things to its smaller and weaker neighbor.

Today, the idea that America should have left Ukraine at the mercy of Russia seems not only morally questionable, but patently absurd. Not only has the brutality of the Russian forces horrified the world, their incompetence has laid bare the fecklessness of the the Putin regime. How could such a respected expert of foreign affairs get things so wrong?

Once again, the failure to recognize human agency is a key culprit. In Mearsheimer’s view, which he calls, “realism,” only “great powers” have a say in world affairs and they will work to further their interests. He believes that by not recognizing Russia’s desire to subjugate other nations in its orbit, America and its allies are being silly and impractical.

Hopefully, we can learn some lessons from the war in Ukraine. Strategy is not a game of chess, in which we move inert pieces around a board. People have the power to make choices. Ukraine chose to undertake tough reforms and arm itself. Russia chose an autocracy which rewarded loyalty over competence. That, more than anything else, has driven events.
The Real World Isn’t An Algorithm

A joke began circulating in the late 1970s, often attributed to management consultant Warren Bennis, that the factory of the future will have only two employees, a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment. Today, even with offshoring, about 10% of Americans work in factories.

When you scratch below the surface, the joke has less to do with technological advancement than it does with derision and control. Bennis wasn’t just any business consultant, but a renowned expert on leadership, who wrote books, published articles in top journals and even advised presidents. That he would promote the view, even as a joke, that leaders should deny agency to employees is as troubling as it is telling.

If you believe that human judgment is a liability rather than an asset, you manage accordingly. You treat employees as cogs in a machine rather than partners in a shared enterprise. You invest in offshoring rather than up-skilling, schedule shifts without regard to people’s lives, deny benefits such as parental leave. We’ve seen where that’s gotten us—lower productivity, worsening mental health and a society that is more unequal and less just.

We need to get back to the business of being human. Our economy should serve our people, not the other way around. The success of a society needs to be measured by the well-being of those who live in it. If we increase GDP, but our air and water are more polluted, our children less educated, we live unhappy lives and die deaths of despair, what have we really gained?

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

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Effective Change Tactic Design Starts with Viable Targets

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Effective Change Tactic Design Starts with Viable Targets

GUEST POST from Greg Satell

When we’re passionate about something, we want to take action. We want to launch an initiative, start a business, hit the streets, get stuff done. Yet our bias for action can be a trap that undermines—or even completely derail—our efforts. No matter what our intentions, actions without a sound strategy are doomed to fail.

Corporate change initiatives often start with a big kick-off campaign. These rarely convince anybody of anything, but can trigger opposition and kill the effort before it ever really gets started. People who feel strongly about social change often start by organizing a march. Yet marches are a very flawed tactic, vulnerable to sabotage and rarely achieve anything substantial.

Effective transformation strategy always involves mobilizing people to influence institutions. That’s where you start. Once you’ve determined what your strategy needs to be targeted at, you can begin to design potent tactics. There are time-tested tools that have proven out over decades that can help you do this. If you’re serious about change, you should learn them.

Mobilizing Constituencies

Much like a General maps the terrain upon which a military battle will be fought, the first step in designing effective tactics for a transformation initiative is to map the terrain upon which the battle for change will be fought. The tool that will help you do this is called the Spectrum of Allies, which provides a framework for classifying support and opposition.

Mobilizing Constituencies

In concept, mapping the Spectrum of Allies is a simple exercise. You merely classify who is most likely to be your most active allies, who will be supportive but more passive, who will be neutral, passively opposed and actively opposed. However, there are some nuances that take a little bit of effort to master.

First, it’s important to remember that these are targets for mobilization. In other words, they are groups of people that you want to get on board to actively work to influence institutions. Second, these are not individuals, but more like marketing personas. For example, in an educational initiative, parents, teachers and students are all groups you’ll want to mobilize.

There are a number of ways you can go about recruiting supporters. Many initiatives start simply by feeling people out in private conversations. An announcement in social media can sometimes be helpful as well. One strategy that we’ve seen be enormously effective in organizational initiatives is to hold workshops and see who stays behind after the session.

Every change effort is unique. We have found that even in similar initiatives in similar organizations that there were vast differences in the Spectrum of Allies. Here’s an example from a digital transformation initiative:

Spectrum of Allies

Once you’ve mapped the Spectrum of Allies and understand who are your targets for mobilization, you’re ready to move on to identifying your targets for influence.

Identifying Institutional Targets

While mobilizing people to your cause is important and necessary, it is far from sufficient. Just because an idea is popular, doesn’t mean that it will be implemented. In fact, it’s not uncommon for popular ideas to languish for years or even decades. To bring real change about you need to influence institutions that actually have power to enact change.

Think about an all powerful dictator, like Vladimir Putin or Kim Jong-un. They don’t need to pay much attention to popular opinion because they control all of the institutional power. If they were to lose control of those institutions, however, we could expect a huge change in the status quo! The tool we use to identify institutional targets is called the Pillars of Support.

Pillars of Support

In the pillar charts above, we can see three very different examples. Notice how the first, taken from our digital transformation initiative, could really apply to any type of organizational change. It is very context specific. The other two, focused on education and political change, are more generic, but would still vary slightly from case to case.

But look at each one for a minute. Think about how much change you could bring about in education if you could influence all of those institutions? Or how you could change a society if you could impact each one of those political pillars. Even in the organizational example, which is very specific, would be somewhat effective in many cases.

Evaluating Institutional Support

Once you’ve identified the institutional pillars that are relevant for your change effort, you will need to analyze each of them in terms of approachability and influence. Below is an example related to the same digital transformation initiative described above, where approachability and influence are rated on a five-point scale.

Evaluating Institutional Support

Once you begin to analyze the institutional pillars it becomes very clear that there are vast differences. HR leadership, for example, is very enthusiastic about digital transformation, while technology and product leadership are much more skeptical. Industry associations and media are enthusiastic, but not very influential. Customers and partners are fairly neutral.

These differences become even more clear once we chart them on a matrix.

Change Targets

Now that we have a good understanding of our targets, we are much better equipped to design tactics that are specifically designed for the people we need to mobilize and the institutions we need to influence.

Designing Tactics

When designing tactics, context is always key. That’s why we analyze the Spectrum of Allies and the Pillars of Support, so that we can understand the people involved and the forces at play. The annotated version of the Pillar Analysis Matrix below shows how we can use that understanding to guide our actions.

Pillar Analysis Matrix

In the upper right, “Leaders” quadrant, there are institutions that are both influential and approachable. We’ll want to design tactics that leverage their influence. The “Collaborators” in the lower-right quadrant don’t have as much influence as the “Leaders,” but may have resources we can leverage

On the left side of the matrix the institutions are less approachable. We’ll want to leverage shared values to help bring the influential “Blockers” into a more neutral position. We won’t really need to focus too much on the less influential “Holdouts,” but it may be worthwhile to address their fears in the hope that they will be less disruptive.

To see how this all works out, let’s return to our digital transformation example:

Digital Transformation Example

The first action is a hackathon, which is designed to mobilize the Yammer Group members to influence HR and product leadership. Because HR leadership is already supportive, we may want to work with that team exclusively until we can show some success and then leverage those results to win support (or at least neutrality) from product leadership.

The industry associations in our example aren’t super influential, but they are supportive, so it shouldn’t be too difficult to arrange a speaking slot for an executive sponsor which, if successful, could influence all stakeholders. Some best practice exchanges with customers and partners could help move the needle as well.

In practice, this analysis should be updated on a regular cadence (e.g. monthly or quarterly) and combined with OKR’s or KPI’s to track progress. Successful initiatives will often shift the terrain and open up new possibilities even as they render certain tactics less effective. We need to continually adapt to changing contexts.

One thing that I hope is clear by now is how much more effective it is to start with targets rather than tactics. We also find that the process goes much more smoothly when everyone involved has a common language and understanding of the terrain upon which the battle for change will be fought.

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

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Purpose Has Transformative Power

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Purpose Has Transformative Power

GUEST POST from Greg Satell

Wherever I go in the world to speak and advise organizations, I always get the same question: “How can I get people to listen to my ideas?” The truth is that no one wants to listen to your ideas unless they solve a problem that is meaningful to them. So many initiatives fail because leaders get so focused on their passion for an idea that they fail to communicate it effectively.

People already have enough going on in their lives with their own responsibilities, ambitions and dreams. They have families to take care of, friends that they want to spend time with and their own ideas that they want to pursue. The status quo always has inertia on its side and never yields its power gracefully.

The truth is that good ideas fail all the time. In the two decades I have been researching and advising leaders about transformation, what I have found is that few have trouble coming up with new concepts. The hard part is to get others to buy in and work together towards a common purpose. That can only be done in the context of shared sense of values and mission.

Why Occupy Not Only Failed, But Could Never Succeed

On September 17, 2011, #Occupy Wall Street took over Zuccotti Park, in the heart of the financial district in Lower Manhattan. Declaring, “We are the 99%,” they captured the attention of the nation and then the world, eventually growing to encompass protests in 951 cities across 82 countries.

The protesters were angry and rightly so. A global economic elite had bilked us out of trillions and then gotten off scot-free. However, despite all of the self-righteous indignation, they offered no alternate vision of how they wanted things to be. There were no proposals for legislation, alternative business models or anything else really, just anger and frustration.

As Joe Nocera noted in the New York Times, the Occupy movement “had plenty of grievances, aimed mainly at the ‘oppressive’ power of corporations,” but “never got beyond their own slogans.” It’s never enough to merely point out what you don’t like — you need to put forward a clear idea of what you want instead.

When General Stanley McChrystal sought to transform military operations in Iraq, his mantra was “it takes a network to defeat a network” and he built his strategy for change around that one basic principle. Lou Gerstner pulled off one of the most extraordinary turnarounds in history by refocusing his organization from its proprietary “stack” of products to its customers’ “stack” of business processes.

A sense of grievance is never enough to bring change about. You need to put forward an affirmative vision of tomorrow.

How the Mission Drives Your Strategy

We usually think of strategy as a rational, analytic activity, with teams of MBA’s poring over spreadsheets. We often forget that strategy has to have a purpose and that purpose is almost always personal and emotive. Great strategy starts, not with analysis, but from defining and committing to a mission.

Strategy is never created on an empty canvas. While we can make rational assessments about whether we want to pursue a strategy based on low costs, differentiation or an attractive niche. We can, through investments and divestments, fill in missing pieces on a PowerPoint chart, but the fate of a strategy ultimately hinges on personality and ambition.

The success of Apple can’t be separated from Steve Jobs’ ambition to weave technology and design into products that were “insanely great.” Southwest’s dominance in the travel industry is a direct consequence of Herb Kelleher’s mission of being “THE low cost airline,” which drove everything he did from the planes he bought to which routes he competed on.

As Adam Michnik, one of the key intellectual leaders behind the Solidarity movement in Poland, put it, “Start doing the things you think should be done, and start being what you think society should become. Do you believe in free speech? Then speak freely. Do you love the truth? Then tell it. Do you believe in an open society? Then act in the open. Do you believe in a decent and humane society? Then behave decently and humanely.”

Any vision for the future needs to be rooted in desire and desires are essentially personal. They are deeply entrenched in our sense of self.

The Value of Values

The 2008 financial crisis posed serious challenges for every business. With sales taking a nosedive, companies had to make painful cuts to rein in costs. In the vast majority of cases, that meant layoffs and millions lost their jobs. It’s one of those understandable misfortunes.e No one likes it, but few see alternatives.

The steel giant Nucor, however, had pledged never to lay off employees and it cost it dearly. In 2009, the company lost $294 million dollars. At the time, many saw the move as quixotic and impractical. Yet the results speak for themselves. Today the company is valued more than 30% higher than its closest rival ArcelorMittal S.A., with significantly higher profit margins and twice the return on equity.

In The Good Jobs Strategy MIT’s Zeynep Ton tells a similar story about Mercadona, Spain’s leading discount retailer, when it needed to cut costs in 2008. Rather than cut wages or reduce staff, it asked its employees to contribute ideas. The result was that it managed to reduce prices by 10% and increased its market share from 15% in 2008 to 20% in 2012.

Values are how an enterprise honors its purpose. Yet living up to them involves certain costs. You can’t say you value employees and then lay them off at the first sign of trouble, just like you can’t say you value innovation and obsess about quarterly earnings. You can’t commit to a purpose without making hard choices.

We Need to Start Asking Different Questions

When the Business Roundtable issued a statement in 2019 that discarded the old notion that the sole purpose of a business is to provide value to shareholders, many were dismayed. Some thought it was just another example of misguided altruism by “elites.” Others saw it as a cynical and disingenuous ploy.

The truth is that the whole idea of shareholder capitalism was a cop-out. It gave leaders an excuse for not making choices because it implied that whatever the stock market valued was somehow more relevant than human agency. The anonymous collective of the market was primary, while individual choice was considered to be less consequential.

The ascendant concept of “stakeholder capitalism,” unfortunately, isn’t much better. Surely we can’t value all stakeholders equally. So which communities should we choose to serve? Which consumers do we value over others? Which partners do we choose to get in bed with? What standards should we insist that our suppliers meet?

None of these are easy questions. If for instance, we stop working with suppliers who don’t meet certain environmental or governance standards, we take away jobs from certain communities and run the risk of diminishing our ability to serve our customers. So we need to be thoughtful and offer intelligent standards making tough and uncertain choices

The reason so many organizations find themselves unable to pursue a purpose isn’t because they don’t want to, but because it is hard. Purpose doesn’t begin with a single step, but with a diverging path. We must choose one direction at the expense of another, or stay mired and lost, unable to move forward.

— Article courtesy of the Digital Tonto blog
— Image credits: Dall-E

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Revolutions Never Begin with a Slogan

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Revolutions Never Begin with a Slogan

GUEST POST from Greg Satell

Ukrainian President Volodomyr Zelenski has been compared to great orators like Winston Churchill. He vowed to the English House of Commons to fight “in the forests, in the fields, on the shores, in the streets.” In a speech to the US Congress he told President Biden, “Being the leader of the world means to be the leader of peace.”

While new to politics, Zelensky is no neophyte when it comes to delivering a line. A longtime actor and comic who was the voice of “Paddington” in the Ukrainian adaptations of the hit movie, his production company Kvartal 95 produced a series of hits. It would be easy to boil his effectiveness down to his communication skills.

That would be a mistake. Zelenski’s eloquence derives its power from the plight of his people, their passion for freedom and their unwillingness to return to an often troubled past. One reason why change so often fails is that we spend so much time focusing on wordsmithing that we neglect why the need for change arose in the first place. That is where we must start.

Gandhi’s Satyagraha

As a young man, Mohandis Gandhi wasn’t the type of person you would notice. Impulsive and undisciplined, he was also so shy as a young lawyer that he could hardly bring himself to speak in open court. With his law career failing, he accepted an offer to represent the cousin of a wealthy muslim merchant in South Africa.

Upon his arrival, Gandhi was subjected to humiliation on a train and it changed him. His sense of dignity offended, he decided to fight back. Yet he would do so not by attacking his enemies, but by targeting his own weaknesses. The aim, as he put it, was “the vindication of truth not by affliction of suffering on the opponent, but on one’s self.”

His method of Satyagraha was not passive resistance as commonly understood, which he considered a “weapon of the weak.” In fact, it was extremely strategic. Its aim was to undermine his opponents legitimacy and, in doing so, their freedom of action. 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.

At its core, Satyagraha is intended to be a quest for truth. The aim is to get your opponents to confront themselves. As the South African leader Jan Smuts would 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.”

Stalin’s Gift That Just Kept Giving

One of the first things a visitor to Warsaw will notice is the Palace of Culture. When arrived in the country in 1997, it dominated the skyline. A replica of the Seven Sisters buildings in Moscow, it was forced upon the Polish people by Stalin in 1955 and for decades it served as a reminder of Soviet domination.

I remember attending a business meeting there where my host pointed out that it had the best view in Warsaw, because it was the only place where you couldn’t see the Palace of Culture. Its tower had the feel of Sauron, the evil force in J. R. R. Tolkien’s Lord of the Rings series. It was more than just a foreign presence at the heart of the capital city. It was an all-watching eye, a reminder that Poles’ lives were not fully their own.

We remember the Solidarity movement in Poland as a struggle for labor against communism and economics were certainly part of it. But the larger grievance was encapsulated in the Palace of Culture, the feeling of being completely subjugated by another nation. Poles felt it deeply and never truly accepted Soviet rule.

Much like Gandhi on the train, it was that emotional sense of injury that pushed the Polish people to be passionate about change and it is similar forces that propel the Ukrainians now. Vladimir Putin, much like Stalin before him, has unwittingly empowered his own opposition by failing to recognize their identity and attempting to subjugate their identity,

Today, the Palace of Culture still stands, albeit enfeebled by the modern skyscrapers bustling with commercial activity, that surround and obscure it.

Steve Jobs and the Products That Sucked

Steve Jobs didn’t believe in market research. He once explained, “Our job is to figure out what they’re going to want before they do. I think Henry Ford once said, ‘If I’d ask customers what they wanted, they would’ve told me a faster horse.’ People don’t know what they want until you show it to them.” That’s why he didn’t start out with a product idea, but something that “sucked”

Computers sucked. They were ugly and hard to use. That’s what drove him to create the Macintosh. Music players sucked. He wanted something that would put 1000 songs in his pocket. That’s what drove him to create the iPod. Phones sucked. That’s what drove him to create the iPhone. Much like Gandhi’s humiliation and the Palace of culture, these things offended his sensibilities.

If you want to create change in this world, you need to identify a grievance that people care about. Because if people don’t see a problem, they’re not going to care about your solution. It doesn’t matter if it’s in your team, your organization, your industry or throughout society as a whole. Change isn’t about ideas, it’s about solving meaningful problems.

When we begin to work with a leadership team on a transformational initiative, we always start out asking about what problem they are trying to solve. Often, they don’t know. There are so many wonderful things to adopt that it’s easy to fall into the trap of identifying a solution before you’ve actually defined a problem.

Don’t Let Talking About Change Undermine Your Ability to Achieve It

Every leader wants to be seen at the vanguard of change. The truth is, it’s relatively easy to announce a change initiative, hire vendors to implement new technologies and then bring in change consultants to hone messaging and arrange training, but these things are unlikely to bring about successful transformation.

In fact, evidence suggests that all of the talk about change may be undermining our ability to achieve it. One survey found that 44% of employees say they don’t understand the change they’re being asked to make, and 38% say they don’t agree with it. A clear majority, 65% of respondents complained of “change fatigue.”

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, 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?

When we look at transformational leaders who achieved great things, the first thing we tend to notice is their words, not the cause that compelled them to act. The words are easy to replicate. Anyone can speak them. But If you want to create change in this world, you need to identify a grievance that people care about. Because if people don’t see a problem, they’re not going to care about your solution.

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

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Don’t Get Fooled by Hucksters, Gurus and Consultants

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Don't Get Fooled by Hucksters, Gurus And Consultants

GUEST POST from Greg Satell

When I lived in Poland, it was common to say that “life is cruel, and full of traps.” From an American perspective, the aphorism can be a bit of a culture shock. We’re raised to believe in the power of positivity, the American dream and the can-do spirit. Negativity can be seen as something worse than a weakness, both an indulgence and a privation at the same time.

Over the years, however, I came to respect the Poles’ innate suspicion. The truth is that we are far too easily fooled and taken in by those prey on the glitches in our cognitive machinery. Sometimes the ones peddling bunk have fooled also themselves. Their claims seem to be supported by logic and evidence, but their promises never quite pan out.

We’re taken in because we want their claims to be true. We’d like to think that there is a secret we’re missing, that there’s a black magic that we’re not privy to and, if we prove our worth and obtain access to a few simple truths, we’ll capture the success that eludes us. Yet these frauds follow common patterns and there are telltale signs we can learn to spot.

1. The Survivorship Bias Trick

In 2005 W. Chan Kim and Renée Mauborgne, both distinguished professors at INSEAD, published Blue Ocean Strategy. In their study of 108 companies the authors found that “blue ocean” launches, those in new categories without competition, far outperformed the shark-infested “red ocean” line extensions that are the norm in the corporate world. It 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 and it is a trick that hucksters, gurus and consultants regularly employ to falsely establish dubious claims. It’s 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 the ones that survived.

Can you imagine a medical researcher failing to include the results of patients that died? Or an airplane designer forgetting to mention the prototypes that crashed? Yet hucksters, gurus and consultants get away with it all the time.

2. Dressing Up Social Proof As “Research”

Another trick hucksters, gurus and consultants use is to dress up social proof as research in order to increase their credibility as experts and establish a need for their services. They say, for example, that they find company profitability is strongly correlated with a customer focus or that culture has a statistically powerful effect on performance.

At first glance, these claims seem reasonable, but as Phil Rosenzweig explained in The Halo Effect, it’s all part of a subtle bait and switch. What is being “researched” is not really “customer focus” or “culture,” but perceptions about those things in responses to a survey. So it is highly likely that successful companies are merely being perceived as having these traits.

For example, in 2000, before the dotcom crash, Cisco was flying high. A profile in Fortune reported it to have an unparalleled culture with highly motivated employees. But just one year later, when the market tanked, the very same publication described it as “cocksure” and “naive.” Did the “culture” really change that much in a year, with the same leadership?

Some might say that it’s “obvious” that a strong culture and customer focus contribute to performance, but then why go through the whole kabuki dance of “research?” Why not just say, “if you believe these things are important, we can help you with them?” It’s hard to avoid the conclusion that their is either an intent to deceive or just pure incompetence.

You don’t have to look far to see that this is an ongoing con. A few quick Google searches led me to major consulting firms currently selling halo effects as causal relationships to trusting customers here and here.

3. The VUCA World

Today it’s become an article of faith that we live in a VUCA world (Volatile, Uncertain, Complex and Ambiguous). Business pundits tell us that we must “innovate or die.” These are taken as basic truths that are beyond questioning or reproach. Those who doubt the need for change risk being dismissed as out of touch.

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.

So why do hucksters, gurus and consultants insist that industries are under constant threat of disruption?

4. The Allure Of Pseudoscience

In Richard Feynman’s 1974 commencement speech at Cal-Tech, he recounted going to a new-age resort where people were learning reflexology. A man was sitting in a hot tub rubbing a woman’s big toe and asking the instructor, “Is this the pituitary?” Unable to contain himself, the great physicist blurted out, “You’re a hell of a long way from the pituitary, man!”

His point was that it’s relatively easy to make something appear “scientific” by, for example, having people wear white coats or present charts and tables, but that doesn’t really make it science. True science is testable and falsifiable. We can’t merely state what you believe to be true, but must give others a means to test it and prove us wrong.

This is important because it’s very easy for things to look like the truth, but actually be false. That’s why we need to be careful, especially when it’s something we already believe in. The burden is even greater when it’s an idea that we want to be true. That’s when we need to redouble our efforts, dig in and make sure we verify our facts.

Hucksters, gurus and consultants love to prey on our weakness for authority by saying that “the science says…” The truth is that science doesn’t “say”anything, it merely produces hypotheses that haven’t been disproven yet. Some, like Darwin’s theory of natural selection, have been around a long time, so we’re pretty sure that they’re true, but even in that case a large part of it was debunked within months. The ‘theory” as we know it now is what survived.

There are no absolute answers. There is, as Sam Arbesman has put it, a half life of facts. We can only make decisions on higher or lower levels of confidence. In the real world, there are no “sure things,” and don’t let hucksters, gurus and consultants tell you any different.

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

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