From Shareholder to Stakeholder Market Economies

  • 0

From Shareholder to Stakeholder Market Economies

Category:Collaboration,Community,Connections,Context,Institutional Innovation,Learning,Opportunity,Passion,Potential,Trust

What better day than Labor Day in the U.S. to address the growing discussion about shareholders and stakeholders in market economies?

In recent years, there’s been more and more discussion about the need to expand corporate horizons beyond just serving shareholders to serving a broader range of “stakeholders.” While at one level this is long overdue, I fear the need is being expressed too narrowly.

It’s often framed as a choice – do we serve shareholders or serve other stakeholders, like employees, customers, business partners and community members? I’d like to suggest that it’s not an either/or choice but a both/and. Given the way the world is changing, the best way to generate expanding returns for shareholders is to find more creative ways of serving the evolving needs of all stakeholders. Those who continue to focus narrowly on shareholder interests will be increasingly marginalized and prove to be a deep disappointment to their shareholders.

Why is this true? Let’s look at how the world is changing, building on some of the perspectives that I outlined in my book The Power of Pull.

Diminishing returns from current approaches

For over a century, we’ve lived in a global industrial economy where the key to economic success was achieving economies of scale in asset intensive businesses. Those asset intensive businesses required massive investment and shareholders were increasingly demanding short-term returns on their investments.

This led to the emergence and growth of the scalable efficiency institutional model that has ruled the business world. The key to economic success was to become more and more efficient at scale, with a relentless focus on cost reduction and delivering short-term quarterly returns to shareholders.

But here’s the problem. The world is changing. What was efficient and successful in the past is becoming less and less successful over time. Need some evidence for this assertion? Check out the work I have done on return on asset trends for all public companies in the US. It turns out that from 1965 until today, return on assets for all public companies has declined by 75%, it has been a long and sustained erosion. (I know the link I provided only showed results up to 2015 but we have recently updated this to 2019 – the trend continues, and I will be writing more about this soon.)

Now, I will point out that return on assets is not the same as return to shareholders. It turns out that over this time, return to shareholders has also declined, but the decline has been cushioned by a series of financial engineering measures designed to serve the needs of shareholders – adding debt to the balance sheet, and increasing dividends and stock buybacks. Companies are remaining focused on serving the shareholder, but this is not a sustainable approach in a world of decreasing return on assets. There’s only so much debt that can be added to the balance sheet and less cash available to increase dividends and stock buybacks.

The scalable efficiency model

This erosion in return on assets is particularly ironic because we increasingly live in a global economy where much more value can be created with far less resources and far more quickly than was ever imaginable a few decades ago. What’s preventing us from harnessing this opportunity? It’s the scalable efficiency model.

Scalable efficiency encourages us to squeeze all other stakeholders in our never-ending quest to become more efficient. Employees? Keep their salaries as low as possible while increasing their production quotas. Business partners? Seek to get as much from them while paying them as little as possible. Customers? Raise your prices wherever possible and find ways to lower the production costs, even if quality may suffer. Community members? They’re a distraction – stay focused on the means of production.

But here’s the problem. Scalable efficiency is a diminishing returns proposition. The more efficient we become, the longer and harder we have to work to get the next increment of efficiency. The paradox is that, the more we focus on delivering short-term returns to shareholders through scalable efficiency, the lower those returns will be over time.

This approach diverts our attention from the opportunity to create more value – all our attention is focused on cutting costs. In a world of exponentially expanding opportunity, that’s a big loss. Here’s another paradox: the more we focus on delivering exponentially expanding value to shareholders, the more we will need to commit to address the needs of all stakeholders. Why is that?

Addressing the context of all stakeholders

Value depends on a deep understanding of context – the context of all stakeholders. It’s a key reason that I’ve suggested we’re moving from the Industrial Age to the Contextual Age.

It starts with the customer. Customers are becoming more and more powerful and increasingly insisting on products and services that are tailored to their specific and rapidly evolving needs. Understanding and anticipating those needs requires a rich understanding of the context of our customers. The most successful companies will be those who don’t just wait for customers to tell them what they need, but who instead invest the time and effort to anticipate those needs – and who understand the needs that are most fundamental and rapidly expanding.

But, that’s just the beginning. The companies that will be most successful will harness the potential for expanding leverage – creating more much more value with far less resources of their own. They will deliver much greater returns to shareholders. But the focus on leverage requires a deep understanding of the context of an expanding array of potential business partners. Understanding the context of business partners helps to identify their needs and what would motivate them to devote more time and effort to delivering more value to you and your customers. You will be much more successful in harnessing the power of pull and expanding your ecosystem of business partners if you understand and serve their needs.

And, of course, there are your employees. In a rapidly changing world, it has become a truism that employees are going to have to commit to lifelong learning. The learning that is most valuable is learning in the form of creating new knowledge through action together with others. The institutions that succeed in the future will be those who make the journey from scalable efficiency to scalable learning.

But few people are asking what’s the motivation to learn. The unstated assumption is that it’s fear – if you don’t learn faster, you’ll lose your job. While fear can motivate some learning, it’s a very limited motivator, especially when the learning involves risk-taking and working closely with others. As I’ve discussed elsewhere, the passion of the explorer is a much more powerful motivator for learning.

The challenge is that very few workers today have that kind of passion for their work, as some of my recent research demonstrated. If we are really committed to cultivating that passion in our workforce, we need to develop a much deeper understanding of the personal context of our employees and what kind of impact has the most value and meaning for them. If we’re not addressing this value and meaning for our employees, we will not be successful in motivating them to learn faster and find ways to deliver more and more value to their colleagues, business partners and customers. We will not pull out of them more and more of their potential.

And, if we’re serious about serving the needs and delivering more and more value to our customers, business partners and employees, that inevitably leads to addressing another set of stakeholders – members of the communities we live and operate in. Our communities are a key element of the context for all of our stakeholders. If our communities are not thriving, then our other stakeholders will find it much more challenging to achieve the potential and impact that is most meaningful to them. The companies that understand the needs of their communities and actively contribute to their flourishing will be much more successful in creating value for their other stakeholders.

Bottom line

To harness the exponentially expanding opportunities that are emerging in our Big Shift world, we need to become much more aggressive in creating and delivering value for all our stakeholders. Shareholders will receive far more value from companies that find ways to expand leverage and accelerate learning. Those are the companies that will create much more value with far less resources and far more quickly than other companies. But leverage and learning require a deep commitment to all stakeholders – understanding their context and the value that is most meaningful to them and committing to deliver value to them. By addressing the needs of all stakeholders, companies will unleash the network effects that can create exponentially expanding value for shareholders, and for all stakeholders.


  • 5

Loss Can Be Growth

Category:Crisis,Emotions,Learning,Loss,Opportunity

Flowers blossoming in Death Valley

This is a period of loss

For many of us.

Loss is hard to take.

Something or someone

Meaningful to us

Is gone,

Perhaps forever.

It fills us

With sadness and regret.

There’s an emptiness

That seeks to be filled.

Let’s view loss as an opportunity.

Take the time to reflect –

What was it that was so meaningful,

That is no longer there?

What we lost was unique,

But the meaning

May be found elsewhere.

We just need to know

What to look for.

A deeper understanding of meaning

And why our loss was so meaningful

Could help us in our journey ahead.

We would be more aware

Of the meaning that matters

And be more focused

In seeking it out.

Growth is about

Finding more meaning.

Loss can give us much more insight

Into the meaning

That will help us to

Grow and flourish

Far beyond

Where we are today.

If we prepare fertile ground,

Flowers will blossom,

And our lives will be a lot richer

And, it’s even possible that

What we have lost

May return,

But with much more richness.


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A Deep Dive Into the Passion of the Explorer

Category:Collaboration,Crisis,Emotions,Exploration,Learning,Passion,Potential

During the current pandemic, I’m struck by the number of people who have told me that this crisis has been a catalyst for them to reflect on what’s really important to them. Through reflection, they’ve come to realize that most of their time has been spent on activities that have little, if any, meaning for them.

As an optimist, I’d like to believe that is one positive outcome of the pandemic – it will be a catalyst for us to reflect on what really matters to us – what are we really passionate about? The challenge is that most of us have not yet found the passion that can provide us with a living. In fact, a survey that I recently completed of the US workforce indicates that, at most, only about 14% of US workers are passionate about the work they are doing.

There are many reasons for this. In part, we live in a society that tells us from an early age to focus on a career that will pay us well and that passion is something to be pursued after hours, as a hobby. We also work in institutions that are deeply suspicious of passion – passionate people tend to take risks and often deviate from their assigned tasks.

But the paradox is that we live in a world of mounting performance pressure where passion becomes the key to turning pressure into opportunity. To be clear, I’m talking about a very specific form of passion – the passion of the explorer – that emerged from my research into arenas where participants deliver sustained extreme performance improvement. This form of passion has three components:

  • A long-term commitment to achieving increasing impact in a specific domain
  • A questing disposition that seeks out new challenges
  • A connecting disposition that seeks to connect with others when addressing new challenges to achieve greater impact

People with this form of passion are motivated to learn faster and will be the most successful in a rapidly changing world. If you’re not passionate about the work you’re doing, you’ll fall further and further behind as you compete with people who are passionate. And, of course, you won’t find much meaning in your work to give you a sense of fulfillment.

I’m hopeful that this pandemic will drive more and more of us to embark on a quest to find and nurture our passion, and to find a way to make a living by pursuing our passion. In the new book that I’m writing, I focus on the lessons that I’ve learned on my journey to uncover my passion and integrate it with my profession.

On the side, I’ve been collaborating with Tracey Grose, who is putting together a program where I can share some of these lessons with others who are on a similar journey. Those who participate in this program will get a preview, and a deeper dive, into some of the approaches that I will be covering in this new book.

In this program, Catalyzing Impact, we’ll start by explaining why the passion of the explorer is becoming more and more central to success. It will help to reinforce the growing awareness that passion is not just a “nice to have,” but a “must have” if we are going to thrive in an increasingly challenging world.

But the bulk of the program will focus on the approaches that can help us to find and cultivate our passion of the explorer and then integrate it with our work. I will challenge everyone to find this passion within themselves, driven by a belief that we all, as human beings, have a capacity for, and hunger for, the passion of the explorer.

Part of this involves reflection on our past, but it also requires us to look ahead and reflect on what our view of the future is and how it shapes our actions today. It also will involve looking around and looking for patterns in people who inspire us and who give us energy.

We will also look at the work that consumes much of our lives and focus on the activities, if any, that generate excitement within us. While many of us will not find ways to cultivate passion in the work that we are currently pursuing, there are sometimes opportunities to evolve our current work in ways that are more aligned with the passion of the explorer that we are uncovering.

More likely than not, we’ll find many elements that could be indicators of the passion that resides within us. Part of our effort will be to weave these elements together as we begin to see underlying patterns that connect what at first appear to be diverse elements. While some will be struck with a sudden revelation of the passion within themselves, for many this will be the beginning of a longer journey of exploration.

Part of the program will be designed to help participants pursue their exploration beyond the program. In this context, I will highlight the role that impact groups can play in our journey. My experience is that journeys become a lot more enriching and enlightening when made together with others.

I’ve become a strong proponent of participation in small impact groups – they typically involve 3-15 people. The participants in these impact groups share a commitment to a quest – in this case, it is the effort to find and cultivate a passion of the explorer. They meet on a regular basis – usually weekly, if not more frequently – and they build deep, trust-based relationships with each other as they pursue their journey together. They challenge each other to make more progress, but they also encourage and support each other when they run into unexpected obstacles or challenges.

This program will help participants to understand the value of these impact groups. It will provide guidance on how to bring these impact groups together and how to manage these impact groups so that participants can get the most value from their interactions.

The intent is for the program to be a catalyst for discovery and to motivate people to pursue a journey that is designed to help them discover and cultivate their passion of the explorer and to find ways to integrate that passion with their work so that they can increase their impact in a meaningful way in all dimensions of their lives. I hope you will be able to join Tracey and me in this program – please sign up here.


  • 23

Beyond Our Edge

Category:Collaboration,Creation Spaces,Edges,Emotions,Exploration,Institutional Innovation,Learning,Movements,Narratives,Opportunity,Passion,Potential,Trust

I’ve got some exciting news. I’ve opened up a new company – Beyond Our Edge, LLC.  Its goal is to motivate more and more people to come together and move beyond our edge so that we can achieve more of our potential together. Many of us are already drawn to our edge, but we’ll be much more likely to move beyond our edge if we come together on the journey. I’ve always been inspired by the African proverb: “If you want to go fast, go alone; but if you want to go far, go together.”

This move has been made possible by my retirement from Deloitte, even though I have no intention of “retiring.” I’m now free to venture beyond my edge and I’ll want to connect with others who share my passion for exploration and driving meaningful change.

My next book

In that context, my first priority is to finish writing my next book – its working title is “From Pressure to Passion.” Two triggers motivated me to write this book. First, even though my business career has been largely focused on business strategy, I’ve come to believe that achieving impact depends less on strategy and more on psychology – if we don’t see and understand the emotions that are driving our choices and actions, we’ll never achieve what we really need and want. Second, as I’ve traveled around the world over the past several years (well before the current pandemic), the dominant emotion that I encountered everywhere is fear – at the highest levels of organizations, on the front lines and out in the community.

While that fear is understandable – there are many reasons to be afraid – it’s also potentially very dysfunctional. We need to acknowledge the fear but, equally importantly, we need to find ways to cultivate hope and excitement that will motivate us to move forward in spite of our fear. My new book is partly about my personal journey from fear to hope and excitement, but it draws on that experience to outline approaches that we all can use to make that journey.

While my book focuses on helping people to make this personal journey, it also highlights the need to drive fundamental change in the environments that we live in. We’re in a world that’s rapidly evolving. It’s a paradoxical world – it provides exponentially expanding opportunity as well as mounting performance pressure.

Bringing movements together

Right now, most of us are experiencing mounting performance pressure, in part because all our institutions were designed for an earlier, more stable world. The institutions that provided stability in the past are increasingly proving ill-equipped for the rapidly changing world around us. We all see this. It’s a key reason that trust in all our institutions is eroding around the world. It’s also feeding our fear – the institutions that we thought we could rely on are increasingly failing us.

Our institutions have become significant barriers to our efforts to harness the exponentially expanding opportunity that’s now becoming available to us. So, even if we find ways to overcome our fear and take more bold moves to pursue opportunities, we’ll find our existing institutions standing in our way and limiting our potential for impact.

That’s why we need to drive change on two fronts – individual change and institutional change. For decades, we’ve had two movements proceeding in parallel – the human potential movement and social change movements. The challenge is that there’s very little interaction between these two movements – it’s either all about helping individuals to overcome their internal obstacles or driving change in the broader society or economy. Unless we can drive change on both fronts, we’ll never create the conditions that will enable all of us to achieve much more of our potential by harnessing exponentially expanding opportunity. We need to find ways to bring these two movements together.

Impact groups inspired by narratives

It will come as no surprise to those who’ve been following me to hear that I believe the key to bringing these two movements together is to focus on organizing small impact groups that can then connect and scale their efforts through broader networks and platforms.

Let me be clear – to harness exponentially expanding opportunities, we need to come together. If we act alone, we’ll only achieve a small fraction of the potential available to us. By coming together, we’ll be much more likely to overcome our fear and find the courage to move beyond our edges and achieve much more of our potential.

What will it take to bring us together? I’ve become a strong proponent of opportunity-based narratives that frame really big, inspiring opportunities in the future and that represent a call to action to all of us today, emphasizing that those opportunities will not be achieved unless we act together. Imagine what amazing things we could accomplish if we all came together?

Understanding edges

As we come together, we need to find ways to help each other move beyond our edge. In this context, edges have many meanings. At one level, edges are defined by areas of expertise – for example, marketing, economics or equipment maintenance. At another level, edges are defined by our comfort zones – where do we start to become uncomfortable when confronted with new experiences?

For many of us, edges create the image of a cliff where we need to be very careful or we’ll slip and slide into oblivion. I prefer to view edges as walls – they’re the boundaries that limit our ability to explore and discover more of our potential. And we can’t just look beyond the walls, we need to climb over the walls and explore the territory that’s been hidden from us.

Sure, venturing beyond these walls can be scary and make us very uncomfortable because we’re venturing into unknown territory, but we’re much more likely to make the journey if we’re joined by others whom we trust and who will provide us with support and encouragement. We’re also likely to learn more if we go together, rather than heading out alone. No matter how smart any of us are, we’ll learn a lot faster if we’re sharing experiences with others and learning through action together.

Bottom line

I’m hoping that my new book will become a catalyst to motivate more of us to venture beyond our edge together. Over the next several months, I’ll be looking to connect with others who share my conviction that there’s exponentially expanding opportunity available to all of us if we choose to address the root causes that are holding us back – the emotion of fear within all of us and the institutions that are increasingly serving as barriers to progress. It’s an unprecedented opportunity, but we need to act now, together, and venture beyond our edge.


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Direction, Not Destination

Category:Learning,Opportunity,Poem,Potential

We’re all on a journey.

Or we should be.

Many of us have stopped,

And remain stuck,

Afraid of what

Might lie ahead.

Some of us are on a journey

Dictated by others,

In an effort to please.

As we embrace our own journey

Avoid the advice

To pick a destination.

Our journey is without end.

There is no destination.

But let’s not wander aimlessly.

We need to find a direction

So that we can make progress

And keep looking ahead.

That direction

Needs to be our own direction,

Not someone else’s.

It’s the direction

That fills us with excitement

And drives us

To keep moving forward.

When we find that direction,

We’ll be unstoppable

And make great progress.

Our journey will be without end

Because there’s so much to explore

And experience.

We’ll savor what we see,

But we’ll always be drawn

Beyond the horizon.


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Far Beyond Fear

Category:Collaboration,Community,Connections,Emotions,Opportunity,Poem

Look far to overcome fear

And go far.

Fear shrinks our horizons,

Both in time and distance.

We become consumed

By the moment

And by what’s near us.

We lose perspective on

What’s ahead

And what’s in the world

Around us.

We need to

Expand our horizons.

If we look far enough ahead

We will see really big opportunities

If we look far enough around,

We will see many people who can help us

Achieve those opportunities

We’re not alone.

To look far

We need to look within.

Within, we will find

What we need.

We all have

A hunger for impact.

We all want to make a difference,

A big difference.

That will drive us to look far

And move far beyond our fear.


  • 10

From the Gig Economy to the Guild Economy

Category:Collaboration,Community,Connections,Creation Spaces,Flow,Institutional Innovation,Learning,Opportunity,Trust,Workgroups

More and more people are talking about the future of work. In those conversations, something that’s getting quite a bit of attention is the “gig economy,” where more and more work is being done by independent contractors and not by full-time employees. While that’s certainly an interesting trend, I prefer to look ahead and anticipate what’s next. In that context, I’d suggest that we’re going to evolve from a “gig economy” to a “guild economy.”

Forces at work

The growth of the gig economy is a result of many forces coming together. A core driver of the gig economy is the evolution of the scalable efficiency model that drives most of our large institutions. As I’ve written about elsewhere, the scalable efficiency model has shaped our large institutions around the world for at least the past century.

This model is driven by the belief that the key to success is to do things faster and cheaper at scale. Enormous wealth and institutional success have been the result, which is why institutional leaders are so wedded to this model.

But there’s a problem – actually, many problems. Efficiency is a diminishing returns proposition. The more efficient we become, the longer and harder we need to work to get the next increment of efficiency. Diminishing returns is a problem on its own, but it’s compounded by the fact that we live in a Big Shift world of mounting performance pressure – competition is intensifying, change is accelerating, and extreme disruptive events occur with increasing frequency.

The early growth of the gig economy

Rather than questioning the continuing value of scalable efficiency models, institutional leaders have a natural tendency to want to squeeze harder. One approach to cost-cutting that has gained increasing traction in the past several decades is the shift from full-time employees to contract labor. If the work to be done is variable, rather than constant, why pay a full-time employee when we could turn a fixed labor cost into a variable labor cost and simply hire a contract worker when a task needs to be done?

Even better, there’s an opportunity to save on labor costs because the employer doesn’t have to pay all those expensive employee benefits like health care insurance. When the work can be done remotely, the company can save even more money by finding contract workers in parts of the world where lower wages are the norm.

These are some of the reasons why gig work has grown rapidly over the past several decades. There’s also another reason which should be a bit of a red flag. I haven’t seen any statistics on this, but anecdotally I am seeing a growing number of workers leaving large institutions and striking out on their own because they are frustrated with the worker experience in large institutions. They’re driven by a desire to learn faster. They report to me that they’re developing their capabilities much more rapidly as an independent contractor than they ever could when they were stuck within one institution.

But, while there are some exceptions, most of the “gig work” being done today is done by individuals working on a transactional, project basis. They’re on their own. That’s what’s going to change.

The Big Shift and the imperative to learn faster

As I’ve already mentioned, the Big Shift is creating mounting performance pressure on all individuals and institutions. But, at the same time, the paradox is that the Big Shift is also creating exponentially expanding opportunity – we can create far more value with far less resource and far more quickly than would have been possible a few decades ago.

As we confront the paradox of the Big Shift, the imperative is to learn faster – that’s the most effective way to respond to mounting performance pressure, while at the same time addressing exponentially expanding opportunity. By learning faster, I mean creating new knowledge through action and reflection on impact achieved. Those who master the ability to learn faster will achieve much higher impact in a rapidly changing world.

But, here’s the challenge, the scalable efficiency model of our institutions is fundamentally hostile to this form of learning. It requires taking risk and improvising when the scalable efficiency model insists on tightly specifying and highly standardizing all tasks to be performed. It also insists that everyone deliver their results predictably and reliably without failure.

The impact on the gig economy

The gig economy, as it’s currently structured, also limits the potential to learn faster. Gig workers typically work as individuals and they are very transactionally driven. While gig workers can certainly learn by engaging as individuals in project work, that’s not the optimal way to learn. If we’re serious about accelerating learning and performance improvement, we need to come together in small groups (what I call “impact groups”) of 3-15 people who develop deep, trust-based relationships with each other based on a shared commitment to increasing impact.

We’re already starting to see some of that start to happen in the gig economy. Individual workers are discovering that there are others who share their passion and coming together so that they can work on projects as a group, rather than individuals.

I anticipate this is just the beginning. As gig workers begin to realize the need to accelerate their learning and performance improvement, they’re going to be driven to come together into small groups and offer their services as a group, rather than as individuals.

On the other side, institutions are going to begin to see that the real value of contract workers is the diversity of experience and expertise that they bring to the work. These contract workers can help the institution’s employees to learn faster by exposing them to different perspectives and approaches to addressing work. These institutions will begin to expand their focus beyond just cost savings and see gig workers as an opportunity to learn faster. While some of that may be accomplished in a “one-off” project with individual contractors, there will be even greater potential for learning if enduring, trust-based relationships are developed with specific gig groups over time.

The role of guilds

That sets the stage for a new way of organizing the gig economy. We’re going to begin to see impact groups forming and coming together into broader networks that will help them to learn even faster.

That’s where guilds come in. In Medieval times, guilds were a prominent way of organizing in urban areas to bring people together who were seeking to earn a living from a particular craft or trade. These guilds had many different roles, but a key one was to help their participants become better at their craft or trade. They were powerful learning organizations where participants learned through practice, rather than sitting in classrooms.

As independent workers become more aware of the imperative for accelerating learning, they will tend to affiliate into guilds that will help to connect them with others who might become part of their impact group and, more broadly, with other impact groups that share their passion for increasing impact in a particular set of activities. These guilds can help to knit together larger and larger networks of impact groups, generating something that I call “creation spaces,” to help scale and accelerate learning. For example, think of a guild that will help graphic designers to come together and learn from each other.

These guilds can play many different roles over time. One major role would be to provide the participants in their guilds with access to a variety of benefit programs like health care and life insurance that would be much more difficult to obtain as individuals. These guilds can also help to define and manage reputation systems that will help their participants to build a broader range of trust-based relationships. They can become rich environments for mutual aid among participants.

Beyond the gig economy, there’s another area that will see the re-emergence of guilds. That’s in product and service businesses that will increasingly fragment as customers demand more and more tailored products and services to serve their specific needs (see more about fragmentation trends in the economy here). The participants in these small, but very profitable, product and service businesses will see value in connecting with others in their particular domains so that they can all learn faster and create even more value with less resource. For example, think of a guild for craft chocolate companies that are serving very specific customer niches.

The potential limitations of guilds

In Medieval times, guilds had a mixed role. In part, they helped their members to learn faster together but, in another part, they often served as barriers to entry for others who wanted to practice the craft or trade. Often acting in collaboration with city governments, they would impose severe restrictions on those who could participate in a certain craft or trade. They often became very protectionist, limiting competition. (As you can see from the picture above, many of them excluded women)

The next generation of guilds needs to avoid the temptation to erect barriers. Rather than focusing on protecting existing stocks of knowledge, they need to be committed to enhancing and scaling flows of knowledge so that everyone can learn faster.

To address the opportunity to help participants to learn faster, these guilds need to find a way to move beyond fear of competition and foster the excitement that can come from addressing the exponentially expanding opportunities created by the Big Shift. Rather than embracing a scarcity mindset, these guilds need to cultivate an abundance mindset. They need to recognize that, the more people that come together, driven by a commitment to learn faster, the more opportunity there will be for value creation. It’s a very different heartset and mindset from the ones generated by the fear that is engulfing more and more of the world’s population.

The bottom line

The imperative to learn faster is going to motivate individuals to come together in very different ways. In at least one dimension, our future may represent a return to the past, when we see the re-emergence of guilds. Rather than isolated individuals driven by fear as they confront mounting performance pressures, we are likely to see people coming together, excited about the opportunity to learn faster and embrace exponentially expanding opportunity.


  • 0

Data Is the New Solar

Category:Creation Spaces,Data,Flow,Institutional Innovation,Learning,Trust

In our digital economy, we’ve become increasingly captivated by data. The new meme that many in the tech world hear is that “data is the new oil.” I cringe every time I hear that, because it uses a metaphor that significantly under-estimates the value of data on so many dimensions. I prefer to say that “data is the new solar” – let me explain.

I completely understand why many are using the phrase that “data is the new oil” – it’s been used for over a decade and has captured the imagination of many people.  The intentions of those using this phrase are good. They want to communicate the growing role of data as a source of energy as we move from an industrial economy to a digital economy. We needed energy sources like oil to power our factories and all the logistics required to move physical products to where they will ultimately be consumed. But our digital economy is fueled by data

So, what’s wrong with this metaphor? Why do I prefer the metaphor of “data is the new solar”? Where do I begin?

Scarcity versus renewable

Let’s start at the source. Oil is a natural resource that is inherently limited in supply and can be rapidly depleted. Once extracted from the ground, the remaining supply shrinks (of course, new oil can form, but that takes thousands of years).

Solar energy has limits, of course – there’s only one sun and it’s only capable of producing so much energy. But we are so far from encountering those limits that we might as well view it as an unlimited energy source. More importantly, solar energy is constantly renewing, the sun is at work every minute of the day, generating more energy.

So, if we look at data as an energy source, is it more like oil or solar? Data is constantly renewing and has the potential for infinite expansion – the supply of data is unlimited. We significantly under-estimate the power of data if we view it as a depleting energy source.

Production costs

But, there’s more. Because it is a scarce and depleting resource, the production cost of each barrel of oil that we pull out of the ground tends to go up – we have to drill deeper and go to more remote areas to keep our global economy going. In sharp contrast, the production cost of each unit of electricity produced from solar energy is declining (at an accelerating pace, as my friend Ramez Naam continually reminds us). When we look at the production cost of data, guess what? It’s declining at an accelerating pace, driven by the exponential price/performance improvement of digital technology.

Metaphors matter

Why does this matter? The metaphors we use play a big role in shaping our actions regarding the objects being described. If we view a source of value as a depleting resource with increasing costs of production, we’ll work hard to capture it and hold it for ourselves, but there are limits to the effort we’ll put into it because it’s a limited resource, after all. We tend to adopt a scarcity mindset.

If we view a source of value as essentially without limits and with rapidly diminishing costs of production, we’re much more likely to be energized to invest a lot more effort in harnessing that source of value. With an abundance mindset, we see that the rewards are unlimited and that’s very exciting.

From abundance to expanding abundance

So, if it comes to a choice between oil and solar as a metaphor to describe the role of data in the digital economy, I definitely favor viewing data as the new solar.

But even that metaphor can be limiting. Data has so much more potential than solar. Used in the right way, data has the potential to fuel ever-expanding value creation. The key is to shift our mindset from data as the fuel for existing activities and impact to data as a catalyst for learning to help us find ways to generate more and more impact with less and less effort.

Yes, that requires a profound shift in how we approach data. As I’ve written elsewhere, we’re on the cusp of a big shift in institutional models from scalable efficiency to scalable learning. In the scalable efficiency model, the role of data is to help us do what we’ve always done faster and cheaper. The focus is on efficiency.

In the scalable learning model, the focus shifts to harnessing the potential to create more and more value for stakeholders, starting with customers, and accelerating our ability to expand the value that we provide. I hasten to add here that, when I’m talking about value, I’m not narrowly talking about economic value. I’m talking about a much broader form of value in terms of addressing the needs and aspirations of the people we’re addressing – starting with customers, but also including employees, business partners, community members and, yes, shareholders as well. I remain convinced that those who adopt this broader view of value will be the ones to create rapidly expanding economic value.

Data is a key fuel for learning and therefore for expanding value creation. That’s something that not even solar can do.

Implications of expanding abundance

Here’s the thing. To unleash this expanding abundance, we’ll need to find more effective ways to come together to share the data we have. If we adopt the scarcity mindset, we’ll hoard the data we have and prevent anyone else from gaining access to it. But that limits our ability to learn from the data.

We’ll learn a lot faster if we invite a more diverse group of participants to come together to generate new insights and ideas from the data. So, the ability to generate expanding value from data hinges on our willingness and ability to come together, driven by a desire to learn how to create more value. That requires an abundance mindset.

An abundance mindset helps to build trust. If I believe that we have more than enough resources to create value for everyone, I’m much more likely to trust others. If I believe that we have scarce resources, my trust rapidly erodes – you may seem like a nice person but, at the end of the day, I want to be sure that I’m the one who can get those resources.

As I’ve written elsewhere, trust is a prerequisite for learning, especially learning in the form of creating new knowledge which requires taking risk and working with others. The more willing we are to trust each other, the faster we’re going to learn. And, if we come together in expanding learning networks (something I call creation spaces), we have the potential to unleash an exponential growth in learning by harnessing network effects.

But, is data all there is?

In focusing on data, we need to be careful about not limiting our vision. Sure, data is valuable, but it’s just the beginning. It provides us with a window to better understand the context that we all live in. But let’s not stop there.

We need go beyond the data and the context to understand the emotions and the motivations that drive us. That’s where the value ultimately lies. If we don’t understand the emotional and spiritual needs and aspirations of those we are trying to serve, we’re never going to provide the most meaningful value. As I’ve written elsewhere, we need to focus on heartset and spiritset, not just mindset.

The challenges ahead

If we’re going to unleash the full potential of data as a fuel, we need to recognize there are significant challenges ahead. Our institutions will need to be fundamentally re-designed to shift them from scalable efficiency models to scalable learning models. That will require very different approaches to leadership.

It will also require us to go to the most basic question of all: what is the value that matters? We will need to broaden our horizons from short-term shareholder returns to longer-term stakeholder value that in turn will generate unprecedented longer-term economic value. There will be a lot of resistance to this change on multiple levels, but those who address and overcome these roadblocks will find that data is a more powerful fuel than anything we have ever seen before.

Bottom line

So, data is an extraordinarily powerful fuel, far more powerful than oil and even more powerful than solar. Used in the right way, it can help unleash exponentially expanding value creation. What’s the right metaphor to capture the unprecedented potential of data as a fuel for our economy and society? For the moment, let’s at least view data as the new solar.


  • 10

Independence Day Poems

Category:Independence,Poem

I’ve never written a haiku before, but July 4th – Independence Day in the US – inspired me to write my first one:

Seek inspiration

See the caterpillar crawl

Watch butterflies fly

But, of course I couldn’t stop there. That haiku inspired me to write a longer poem:

The road ahead

Offers so much potential

But we must choose that road

And not allow others

To define it for us.

We must declare our independence,

Removing the constraints

And roadblocks

Imposed by others.

But here’s the paradox.

We’ll increase our potential

If we invite others on our journey

Rather than seeking to go it alone.

With the right partners

We might even be able

To evolve from caterpillars

To Butterflies.

Independence and interdependence

Are intimately linked,

But it starts with declaring independence.

What better day than today?

I’m looking forward

To the journey ahead!


  • 3

Trust and Learning

Category:Uncategorized

Two key themes in my work have been trust and learning. Trust and learning are intimately connected. The challenge we face is that the erosion of trust is undermining our ability to learn and, in a world of accelerating change, the ability to learn will be the key to success.

The need for learning

We’re in the early stages of a Big Shift that’s transforming our global economy and society. The Big Shift creates mounting performance pressure and exponentially expanding opportunity. The only way to move from pressure to opportunity is to find ways to learn faster.

But, let me be clear, when I talk about learning, I’m not talking about training programs that are focused on sharing existing knowledge. I’m talking about learning in the form of creating new knowledge through action and reflection on impact. This form of learning is key to accelerating performance improvement.

But this form of learning also requires taking risks and improvising as one addresses unseen problems or opportunities to create more value. It’s scary – we’re treading on ground where no one has been before.

We can certainly engage in this form of learning on our own as individuals. But, no matter how smart we are, we’re going to learn a lot faster if we come together in small groups that are committed to achieving higher and higher levels of impact – I call these “impact groups.” These impact groups can then accelerate their learning by connecting into broader impact networks that bring together a growing number of impact groups.

The need for trust

But, here’s the rub. Coming together in a quest to create new knowledge requires trust. This form of learning requires much deeper trust than more conventional learning in the form of training programs. If we’re taking a training program, it helps to trust the teachers – do they really have the expertise required to transmit the knowledge? But we don’t really need to trust the others in the training program. And training programs are usually short with a defined end.

To create new knowledge together requires acknowledging to ourselves and to others that there are many things we don’t know and it requires us to be willing to ask for help and to take risk together as we pursue action in unknown territory. That requires deep trust sustained over a long period of time – the learning journey is endless.

The erosion of trust

But, here’s the challenge. Trust is eroding in our institutions and society globally. We’re much less willing to trust each other.

Everyone seems to acknowledge this fact of life, but few appear to want to explore why this is happening and, more importantly, what to do about it. I’ve been exploring this for many years, with my most recent contribution in my last blog post, The Pyramid of Trust.

To really understand the erosion of trust, we need to address it at two levels: the institutional level and the individual level.

At the institutional level, trust is eroding because we increasingly see that there is a growing disconnect between the way that our world is evolving and the way that all our institutions have been designed and operate. The scalable efficiency institutional model that was so successful for more than a century is becoming increasingly dysfunctional. Scalable efficiency is also very inward focused, and we are increasingly realizing that these institutions are not really focused on the interests of those of us who are outside the institution. The institutions that we thought we could rely on are failing us.

At the individual level, trust is also eroding. We’re increasingly feeling isolated and having a harder time building trust with others around us. This is a natural human reaction to mounting performance pressure, a fundamental force in the Big Shift. While this is completely understandable, it’s also increasingly dysfunctional.

At its roots, this erosion of trust among individuals is driven by fear. When we feel fear, we’re much less willing to trust others – it’s too risky. There’s a vicious cycle at work here. The more we feel fear, the less willing we are to trust others, and the less willing we are to trust others, the more fear we are likely to feel . . .

And there’s another level of vicious cycle at play as well. The less we trust each other, the more challenging it will become for each of us to learn faster. The less rapidly we learn, the more pressure we will feel and the more fear we will feel and the less trust we will have in each other . . .

Small moves to re-build trust among individuals

Escaping this vicious cycle will not be easy, but it can be done. It requires embracing an approach that I have been advocating for years: small moves, smartly made, can set big things in motion. Let’s start at the level of the individual.

Re-building trust can’t be done overnight, but it can be done quickly with small moves. Start by reflecting on what really excites you – is there a really big opportunity out in the future that has the potential to motivate you to learn faster?

Then work on finding 2 or 3 others who appear to share your excitement about that opportunity. Bring them together and focus the conversation on what you can do together to achieve more impact in addressing that opportunity. In evaluating initiatives you could take, focus on which initiatives have the most potential for meaningful impact, but also which of those initiatives could deliver tangible impact quickly (yes, it’s a two by two matrix). Seek agreement on the most relevant metrics for impact and then embark on efforts together in a quest to achieve that impact and learn through action.

Give each other encouragement and support as you run into the inevitable unexpected obstacles or roadblocks along the way. Make it clear that you’re in this together and that you’re going to stay together to find ways to overcome the challenges. That will help to deepen trust and to overcome fear – we’re in this together and we can count on each other to be there.

As you begin to achieve tangible impact together, trust in your collaborators will grow. The trust will become even deeper as you begin to reflect on the impact achieved and challenge each other explore ways to achieve even greater impact. It will become clear that you’re committed to a long-term quest shaped by an inspiring opportunity, and not just participating in a short-term sprint.

Stage your way into more and more challenging learning initiatives as your trust deepens. Begin to reach out to others whom your group feels share your commitment to learning and accelerating impact relative to the long-term opportunity that has brought you together. Invite them to join your group.

Chances are these people will be inspired by the trust they see within the core group already there. But the key is to challenge these new members to demonstrate quickly their commitment to impact and learning with others.

As the group reaches its limit of 15 participants, spin out other impact groups and find ways to connect the groups so that they can learn from each other.

Small moves to re-build trust in institutions

The small moves approach also works at the level of institutions, even very large institutions. In fact, the larger the institution, the more important the small moves become as a way to overcome the resistance to change that will inevitably be encountered within the institution (driven by people who are afraid).

As I’ve written about elsewhere, start with data that you already have about your customers and find ways to deliver meaningful value back to customers based on that data. As customers start to see the tangible value you are delivering back to them, they will begin to trust the institution more and be more willing to share more data about themselves. A virtuous cycle can be unleashed by pursuing a “staircase of trust” with small moves at the outset, but a commitment to rapidly increase value delivered over time.

While I’ve framed this in terms of re-building trust with customers, this same approach can be used with all stakeholders of an institution, whether they are commercial enterprises or other types of institutions.

But what does customer trust or stakeholder trust have to do with learning? Ultimately, the success of any institution hinges upon delivering more and more value to these customers and stakeholders. The most powerful way to do that is to engage with customers and other stakeholders to build a deeper understanding of their unmet needs and the approaches that are most effective in addressing those needs. To gain deeper insight into those unmet needs and the most effective approaches, we need to have access to more information about these stakeholders and ultimately engage with them in co-creating the value that can have the greatest impact – and that requires deeper trust.

Bottom line

We live in a world that will require accelerating learning in the form of creating new knowledge, not just sharing existing knowledge. That kind of learning is intimately linked to trust. That’s a challenge because we live in a world where trust is rapidly eroding. The best way to address this challenge is through small moves, smartly made, that can set big things in motion. As individuals and as institutions, we need to craft the small moves that will help us to build trust and learn faster together. If we get this right, we’ll unleash exponential learning and accelerating performance improvement. Let’s get started.


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