GUEST POST from Greg Satell
When I first went overseas to Poland in 1997, I thought I knew how the media business worked. I had some experience selling national radio time in New York and thought I could teach the Poles who, after 50 years of communism, hadn’t had much opportunity to learn how a modern ad market functioned. I was soon disappointed.
Whenever I would explain a simple principle, they would ask me, “why?” I was at a loss for an answer, because these were thought to be so obvious that nobody ever questioned them. When I thought about it though, many of the things I had learned as immutable laws were merely conventions that had built up over time.
As I traveled to more countries I found that even basic market functions, such as TV buying, varied enormously from place to place. I would come to realize that there wasn’t one “right” way to run a business but innumerable ways things could work. It was then that I began to understand the power of unlearning. It is, in fact, a key skill for the next era of innovation.
The One “True” Way To Innovate?
Innovation has become like a religion in business today, with “innovate or die” as its mantra. Much like televangelists preaching the prosperity gospel to gullible rubes, there’s no shortage of innovation gurus that claim to have discovered the secret to breakthrough innovation and are willing to share it with you, for an exorbitant fee, of course.
What I learned researching my book Mapping Innovation, however, is that there is no one “true” path to innovation. In fact, if you look at companies like IBM, Google and Amazon, although they are all world-class innovators, each goes about it very differently. IBM focuses on grand challenges that can take decades to solve, Google integrates a portfolio of innovation strategies and Amazon has embedded a customer obsession deep within its culture and practice.
What I found most interesting was that most people defined innovation in terms of how they’d been successful in the past, or in the case of self-described gurus, what they’d seen and heard to be successful. By pointing to case studies, they could “prove” that their way was indeed the “right” way. In effect, they believed that what they experienced was all there is.
Yet as I’ve explained in Harvard Business Review, innovation is really about finding novel solutions to important problems and there are as many ways to innovate as there are different types of problems to solve. Many organizations expect the next problem they need to solve to be like the last one. Inevitably, they end up spinning their wheels.
The Survival Of The Fittest?
The survival of the fittest is a thoroughly misunderstood concept. Although it arose out of Darwin’s work, it did not originate from him. It was coined by Herbert Spencer to connect Darwin’s work to his own ideas. Darwin’s theory was so novel and powerful at the time, it was difficult to articulate it clearly, and the phrase caught on.
All too often, people assume that Darwin’s theories predicted some sort of teleological end state in which one optimized form will dominate. If that were true, then the optimal strategy for every organism, as well as every business model and every organization, would be to strive to achieve that optimal state and dominate the competition.
Yet that’s not what Darwin meant at all. In fact, his theory rested on three pillars, limited resources, changing environments and super-fecundity, which is the tendency of organisms to produce more offspring that can survive. “Fittest” refers to a temporary state, not a permanent advantage. What is “fit” for one environment may be detrimental in another.
Eastern Europe was, for me, similar to the Galápagos Islands where Darwin first formed his famous theory. Seeing different business environments, in close proximity, give rise to so many different business models opened my eyes to new possibilities. Once I unlearned what I thought I knew, I was able to learn more than I could have imagined.
Turning The Page On Welchism
At the beginning of this century, Fortune magazine proclaimed Jack Welch to be the optimal manager of the last one. American industry had grown sclerotic and bureaucratic. It was in great need of some trimming down and Welch was truly an optimized fit for the environment.
Nicknamed “Neutron Jack” for his penchant of getting rid of all the people and only leaving the buildings standing, he voraciously cut through GE’s red tape. Profits soared, Welch became something of a prophet and “Welchism” a religion. Corporate boards heavily recruited GE executives as CEOs to replicate Welchism at their companies.
Yet as David Gelles explains in his book about Welch’s tenure at GE, The Man Who Broke Capitalism, not all was as it seemed. Yes, Welch made GE more efficient and profitable, but he also increased risk through “financializing” the industrial company, undermined engineering and innovation by moving manufacturing facilities overseas and cooked the books to make profits seem much smoother than they were.
GE would eventually implode, but the damage went much further and deeper than one company. Because Welchism was seen as the “one best way” to run a business, many other firms replicated its methods. The results have been alarming. In fact, a 2020 report by the Federal Reserve found that business dynamism in America has steadily declined since Jack Welch took the helm at GE in 1981.
Clearly we have some unlearning to do.
Moving Boldly Into An Uncertain Future
I’ve thought for some time that the 2020s would look a lot like the 1920s. That was the last time that we had such a convergence of technological, demographic and political forces at one time (and a pandemic as well!). Yet historical analogies can often be misleading. History is long and, if you look enough, you can find an analogy for almost anything.
It is certainly true that history seems to converge and cascade on particular moments and we seem to be at one of these moments now. We will need to unlearn much of what we thought we knew about shareholder value and other things as well. Yet correcting the mistakes of the past is never enough. We need to create anew.
The recently passed CHIPS Act is a good model for how to do this. Much of the $280 billion bill goes to tried and true programs that we under-invested in recent years, such as science programs at the NSF and the DOE as well as programs that support manufacturing and, of course, subsidies to support semiconductors. We know these things work.
Yet other programs are experiments. Some, such as a new Technology Directorate at the NSF are controversial. Others, such as $10 billion that will be spent on regional technology hubs and $1 billion that will go to a RECOMPETE pilot program to empower distressed communities, are new and innovative. We can almost guarantee that there will be hiccups and outright failures along the way.
It is tautologically true that the well-trod path will take us nowhere new. We need to unlearn the past if we are to learn how to build a new future.
— Article courtesy of the Digital Tonto blog
— Image credit: Unsplash
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