Category Archives: Strategy

  • 6

Emotion as the Foundation of Strategy

Category:Collaboration,Connections,Context,Emotions,Leadership,Learning,Narratives,Opportunity,Strategy,Trust

Credit to CuriousArtLab

As we head further into the new decade, we need to reflect on how the world is changing on so many levels. Given all these changes, it’s perhaps time to reassess our approach to strategy. At the risk of being viewed as a heretic, let me suggest that the successful strategies going forward will be strongly rooted in addressing the emotions of participants, rather than simply relying on facts and figures.

The Big Shift in the world

We are in the early stages of a Big Shift that is transforming our global economy, something that I have written about a lot, including here and here. This Big Shift is creating exponentially expanding opportunity – we can create far more value with far less resources far more quickly. The paradox is that, at the same time, the Big Shift is creating mounting performance pressure, making it more and more challenging to sustain the performance we’ve enjoyed in the past.

How do we resolve this paradox and make the journey from mounting performance pressure to exponentially expanding opportunity? We need to re-think strategy at a fundamental level and focus much more on the emotions of all participants so that we can truly unleash the power of pull.

The opportunity for strategy

The opportunity for strategy in the next decade and beyond is to unleash ways to deliver more and more value with fewer and fewer resources. If we’re going to succeed at that, we need to be able to anticipate the rapidly evolving unmet needs of the people we are trying to reach. We then need to be able to find ways to increase leverage, mobilizing the resources of others. We also need to find ways to accelerate learning – not learning in the form of training programs sharing existing knowledge, but learning in the form of action with others in ways that can rapidly increase impact over time by creating new knowledge in a rapidly changing world.

In the industrial age that brought us to where we are today, unmet needs were largely defined in material terms – what products and services could address our material needs, whether it involved our physical needs for food, or our broader needs to be comfortable in the physical world, like homes and cars. Meeting those material needs has been more and more successful, despite temporary setbacks like financial crises or pandemics.

Certainly, there are still large segments of the population with significant material needs, especially in trying times like this pandemic. But the mounting performance pressure of the Big Shift is also generating unmet needs at the emotional level. More and more of us are becoming consumed with the emotion of fear – and given the long-term forces shaping our world today, that fear is likely to intensify. While fear is certainly understandable, we as humans don’t want to live in fear – we have a deep hunger for hope and excitement. The institutions that understand and act to address that unmet emotional need will create enormous value for their stakeholders. Now, tell me, when was the last time you sat through a strategy discussion that began with an effort to understand the emotional needs of the participants being served by your institution?

Focusing on unmet emotional needs

The successful strategies of the next decade will begin with cultivating a deep understanding of these unmet emotional needs and then developing unique approaches that are effective in addressing these emotional needs. In this context, I have written extensively about institutional narratives, including here and here, which I believe can become a powerful instrument to build much deeper relationships with stakeholders by addressing their unmet emotional needs. I hasten to add that these new strategies will not be focused on manipulating the emotions of participants, but instead deeply understanding these emotional needs, why they exist, and how they can be addressed.

In this context, we need to be careful to “Zoom Out and Zoom In.” Don’t just look at the emotions around you today. Look ahead and anticipate how long-term forces will generate much deeper unmet emotional needs and then look for the highest impact steps you can take today to begin address those unmet needs.

Increasing leverage

But this is just the beginning. To harness the exponential opportunities that are being created by the Big Shift, all institutions will need to be much more aggressive in seeking leverage. The key to successful strategies will be to deliver significant value with as few of your own resources as possible. The global connectivity that is being fostered by the Big Shift makes it far easier to connect with a broader range of third-party resources.

But the ability to connect makes it even more important to understand what will be required to motivate third parties to invest the time and resources required to amplify the impact of your own products and services. Once again, this involves delving deeply into the emotions of the third parties that can be most helpful to you. Sure, you can and will have to offer them material rewards for collaborating with you, but you’re going to get much greater value from them if you can find ways to build trust and excite them about the longer-term opportunities for impact that can be created by coming together.

Accelerating learning

This is particularly powerful because of another strategic lever that is becoming more and more important in the Big Shift. In a rapidly changing world, the ability to learn faster becomes key to success. To be clear, I’m not talking about learning in the form of going to classes and getting credentials. I’m talking about the most powerful form of learning which is creating new knowledge through action. And, no matter how smart we are as individuals or individual institutions, we will learn a lot faster if we act together with others and challenge each other to find more creative ways to deliver more impact. In this Big Shift world, this form of learning becomes The Only Sustainable Edge.

This takes leverage to another level. When they talk about leverage, most strategists focus on transactions to access existing expertise and resources from third parties. While that is certainly helpful, the most powerful form of leverage is learning leverage, where participants come together to learn faster together.

But what’s required to motivate participants to learn faster together? My experience suggests that participants learn much faster together if they are excited by an opportunity to create more impact that is meaningful to them. Once again, though, this requires a deep understanding of the emotions of the participants. We need to understand where there’s fear and how that fear can be overcome by cultivating excitement.

Learning in the form of creating new knowledge can generate a lot of fear. After all, it’s risky. It’s never been done before. It could fail. But those who are excited about an opportunity that’s never been achieved before are driven to learn faster. They actively seek out opportunities to learn and are challenging themselves and others to find ways to achieve even greater impact. They are restless when they are not learning.

Loyalty and the pull it generates

In the end, all of this comes together in a powerful way. If we are able to excite participants about a meaningful opportunity that can bring people together and help them to learn faster together, what happens? We develop deep loyalty. This is no longer about short-term transactions that can be measured in material terms. This is about building deep and lasting trust-based relationships where we can see impact that matters to all the participants.

In a more connected world, loyalty matters. With all the connectivity we’ve created, it has become far easier to leave someone who is not meeting our needs and connect with someone else. This is a growing challenge for all institutions, especially in a world of eroding trust. Loyalty will be a powerful source of strategic advantage because it unleashes a virtuous cycle of more rapid learning with greater and greater impact.

But, it’s not just about loyalty. It’s about the Power of Pull. If we’re addressing significant unmet emotional needs of participants, word of mouth will spread and more and more participants will seek us out and want to find ways to build deeper relationships with us. Network effects will take hold and we’ll begin to see exponentially expanding impact and this in turn will unleash another virtuous cycle that will  pull more and more participants together.

I should hasten to add that this exponential opportunity will not be available for all businesses. As I’ve written elsewhere, businesses will face a painful choice in the decades ahead in terms of defining more clearly what business they are in. While all businesses will benefit by shifting to strategies that are focused on the emotions of participants, the exponential opportunity will be largely reserved for businesses that choose to become “trusted advisors.” That’s a largely untapped business opportunity today, even though everyone claims to be a “trusted advisor” to their customers.

The Big Shift in strategy

Looking back over decades, the focus of strategy has shifted in a profound way. Certainly the early days of business strategy focused on analyzing the structure of markets and industries to identify positions that could create sustainable strategic advantage.

In the past couple of decades, we’ve seen a shift away from strategies of structure to strategies of movement. Given the accelerating pace of change, the emphasis in strategy has been on how to move faster – agility has become the buzzword.

I believe we’re now on the cusp of another shift in strategy from movement to emotion. The strategies that will succeed in the future are those that focus on the emotions of the participants and find ways to cultivate deep, long-term, and trust-based relationships among a growing array of participants by meeting their deepest emotional needs. To be clear, structure and movement are still relevant, but only in the context of a deep understanding of the emotional environment. That’s a dimension that’s been largely ignored by the previous schools of strategy.

The bottom line

Strategy is ultimately about how to deliver greater impact and value with less resources in a way that is sustainable and rewarding to the provider. It’s all about doing more with less over the long-term. The strategies that generated success in the past are proving less and less effective in a rapidly changing world. To succeed in the future, we will need to evolve strategies that are shaped by a deep understanding of the emotional context and focused on addressing the unmet emotional needs of the participants. Those who do this well will succeed in tapping into the exponentially expanding opportunities created by the Big Shift.

While this post has focused on strategies for institutions, I would suggest that this shift in strategy also applies to us as individuals. But that’s a topic for another blog post


  • 1

Strategies for the Launch Decade

Category:Crisis,Launch Decade,Opportunity,Strategy

Several months ago, I wrote a blog post celebrating the beginning of a new decade – I called it the Launch Decade. This was just as the current COVID-19 pandemic was beginning to surface in Wuhan, China. As an optimist, I view global crises like this one as a launchpad to drive significant positive change.

But that certainly won’t happen on its own. We need to adopt approaches that will help us to navigate through these trying times and target the significant opportunities that lie ahead. For a long time, I’ve been a proponent of three approaches that become even more compelling in times of great change – zoom out/zoom in strategies, shaping strategies and leveraged growth.

Zoom out/zoom in strategies

This is an approach to strategy that has been pursued by some of the most successful tech companies in Silicon Valley, as I have written about here. This strategy focuses on two time horizons.

The Zoom Out time horizon is 10-20 years and the two questions on this horizon are: What will relevant markets or industries look like 10-20 years from now? What are the implications for the kind of business or company we will need to become in order to thrive in this market or industry?

The Zoom In time horizon is very different – it’s 6-12 months. On this time horizon the key questions are: What are the 2-3 initiatives (no more) that we could pursue in the next 6-12 months that would have the greatest ability to accelerate our movement towards the longer-term opportunity we have identified? Do we have a critical mass of resources committed in the next 6-12 months to these 2-3 initiatives? How would we measure success – what are the metrics that matter?

This approach to strategy becomes even more compelling in times of great pressure like today, where there is a strong urge to shrink our time horizons and just sense and respond as quickly as we can to whatever is going on. While understandable, a reactive approach risks spreading ourselves too thin as we try to sense and respond to everything.

The zoom out/zoom in approach to strategy helps us to focus on a very big, long-term opportunity so that we can prioritize our near-term actions for the greatest long-term impact and avoid the risk that we incrementalize our way into oblivion. At the same time, this approach to strategy also emphasizes the need for aggressive short-term action and the opportunity to learn from that action. At a time when all our institutions are going to be coping with the challenge of limited resources, this approach can help to focus those scarce resources to move quickly and target significant emerging opportunities.

Shaping strategies

Crises like the one we are in can be catalysts for significant restructuring of markets and industries. Those who move forward assuming their market or industry will continue in its current form are likely to be in for a big surprise.

In this environment, there’s a significant opportunity to pursue shaping strategies, which I’ve written about in more depth here. Rather than passively trying to anticipate what the future might look like, shaping strategies seek to restructure markets and industries in ways that put the shaper in a privileged position.

Without going into too much detail here, shaping strategies consist of three components. First, they begin with a long-term shaping vision of what the industry or market could look like 10-20 years from now (note the intersection with zoom out/zoom in strategies) and they frame this vision in a way that highlights significant opportunities for a large number of other participants, and not just for the shaper. The goal here is to motivate many third parties to come together and invest to support the shaping strategy.

Second, shaping strategies deploy a shaping platform with the explicit goal of improving the economics of participation for these third parties. These platforms are designed to reduce the investment required to participate and to accelerate the ability to earn returns on investments made.

Third, shaping strategies involve a set of initiatives designed to overcome the potential skepticism of third parties by demonstrating the commitment of the shaper to the strategy and the ability of the shaper to successfully pursue the strategy. This could involve making a bold move on its own or potentially announcing partnerships with large players that would give the shaper access to key resources.

Shaping strategies are especially powerful in times of crises. Crises tend to challenge our current approaches to markets or industries and make participants more open to new approaches than they might be when the market or industry is doing well. By emphasizing the need to mobilize investment from a large number of third parties, shaping strategies also help the shaper to significantly increase impact, even when faced with the challenge of limited resources in the short-term.

Not all companies will choose to be shapers, but the choice is to shape or be shaped. If we choose not to be shapers, then we need to recognize that, in times of rapid change, other companies will emerge as shapers of our relevant markets or industries. We need to anticipate who those companies might be and find ways to participate effectively in the markets or industries they will restructure.

Leveraged growth

When companies address the need for growth, they tend to focus on two options – make or buy. We can grow either through internal investment and organic growth or by going out and making a major acquisition. In either case, growth requires significant resources – something that can be especially challenging as we come out of an economic downturn.

But the good news is that there’s a third option that is rarely considered, much less actively pursued. It’s what I call leveraged growth, an approach that I’ve written about here. This approach involves connecting with and mobilizing a growing number of third parties who can deliver value to your customers and capturing some of that value for ourselves. This approach to growth has been pioneered by companies in Asia and there’s a lot that Western companies can learn from their experience.

Think about the implications of this approach as we emerge from the current crisis. Companies that can show significant growth without a major commitment of resources are likely to be richly rewarded.

Beyond companies

So far, I’ve been framing these approaches in the context of companies. I hasten to suggest that these approaches are not just relevant for companies. They apply to all our institutions that are wrestling with the challenges of the current crisis – governments, schools, community organizations, NGO’s, etc.

But, there’s more. They also apply to us as individuals. Now, more than ever, we need to zoom out and zoom in to bring more focus into our lives so that we can achieve more impact that’s really meaningful to us. We need to find more creative ways to shape our context so that we can achieve even more impact. And our personal success will hinge on our ability to mobilize others who can provide value to those who matter to us, so that we’re not trying to do it all ourselves.

Bottom line

Crises can be launchpads for significant positive change. But that change will not happen on its own. It’s up to us to overcome our fear and to take action. And we’ll have a lot more impact if we come together with others, inspired by shared opportunities. If we do this right, we have an opportunity to unleash the exponential potential that resides within all of us and that is hungering to be drawn out.


  • 3

Viral Flows

Category:Crisis,Emotions,Flow,Institutional Innovation,Learning,Narratives,Strategy

For over a decade, I’ve been writing about the Big Shift. There are many dimensions to this shift, but our current crisis highlights the role of flows. In this post, I want to explore the paradox of flows – flows can be both a source of exponential growth and a source of severe regression. We need to understand both dimensions of flows if we want to flourish.

What are flows?

Flows take many different forms. My focus has been on the flows of knowledge that feed learning by helping to create new knowledge at an accelerating pace. At their foundation, these flows involve connections across people, including serendipitous connections that weren’t anticipated. Urbanization around the world has been accelerating for decades precisely because we have an intuitive sense that we will learn faster in densely populated areas than we ever could, even with all our digital infrastructures and connectivity, in small towns or rural areas.

The flows of people, and the knowledge we all possess, including tacit knowledge, are augmented by other kinds of flows – data, goods and money. These flows have expanded globally for decades and are supporting the flows of knowledge that help us to accelerate learning. They have been a key driver of increasing global prosperity and the rapid reduction in poverty in more and more countries.

There’s a growing realization that, the more of us who participate in these flows, the faster we will all learn. The more inclusive the flows become, the more we will all prosper, as the learning goes exponential.

Systems that thrive are ones that increase the flows over time – here I have been very much influenced by the work of Adrian Bejan and his Constructal Law:  there is a universal tendency toward design in nature, in the physics of everything, to evolve configurations so that they flow more easily, to create greater access to the currents they move.

The dark side of flows

But not all flows accelerate learning. Some flows become significant barriers to learning. What do I mean?

Let me start with something that has increasingly occupied my attention. Emotions tend to spread virally. If many people are feeling a certain way, other people around them become susceptible to the same feelings.

As I’ve written elsewhere, I am struck by the spread of fear as the dominant emotion globally – and that was before the current crisis! Fear can be contagious – if everyone around me is afraid, I am more likely to become afraid as well.

Emotions tend to cascade on their own, but they spread even more rapidly when amplified by news media that tend to focus on the latest disaster or crisis. When was the last time you heard a good news story (and I’m talking about even before the current crisis)? And, let’s not even mention the spread of fake news designed to amplify fear.

Emotions differ in terms of their impact on learning, but fear is one that has great potential to inhibit learning. If I’m afraid, I shorten my time horizons, I become much more risk averse and I become much less trusting of others. I’m much more likely to block the flows that will help me to learn faster because they increase uncertainty. Instead of flows, I seek stability.

As I’ve suggested elsewhere, fear in turn can become a catalyst for other emotions that become barriers to learning – hatred, anger, stress and loneliness. These can go viral as well. When we experience these emotions, we need to look within to determine whether and how fear might be shaping these emotions. Many of us are unwilling to express fear because it’s viewed as a sign of weakness, so we manifest fear through other emotions.

Of course, there are other flows that can become barriers to learning. Viruses of all types – human and digital – can spread rapidly and block our efforts to learn faster. The more connected we are, the more vulnerable we can become to these viruses. We need to find more effective ways to anticipate the emergence of these viruses, contain their spread and limit the damage they can cause. We need to understand how destructive these viruses can be, not just in the short-term, but also in the longer-term, if we allow them to diminish the flows that support learning.

Crises as a catalyst for change – and progress

Crises can, of course, strengthen the barriers to learning and change, but historical experience also suggests that they can become catalysts for change by providing us with an opportunity to reflect on our experience and explore new approaches that can help us to achieve more. They may provide us with a greater appreciation for the flows that accelerate learning and increase our desire to strengthen the flows that accelerate learning. My hope is that our current crisis will drive us to expand the flows that accelerate learning and find ways to reduce the impact of flows that are obstacles to learning.

Let me offer one example. Over the past several decades, Western companies have increasingly outsourced activities and off-shored them in the quest to reduce costs. We have seen the growth of global supply chains.

But here’s the problem. These global supply chains are exactly what the name implies – rigid connections among a select few participants that are tightly managed to become as efficient as possible. Scalable efficiency at its best!

While very efficient in stable times, these supply chains become vulnerable to disruption when large-scale, unexpected events occur. In rapidly changing times, we need to move from supply chains to supply networks. Rather than a very limited number of suppliers in our supply chain, we need to expand our reach to encompass much larger and more diverse networks of participants so that we can become much more flexible in responding to unanticipated events.

But there’s more. Companies that move in this direction tend to take a very short-term, static view of their network. They need to access a given set of resources or services, so the focus is on how to do the best short-term transactions – buy low, sell high.

The supply networks that will thrive in the future are those that focus on how to cultivate scalable learning over time among all the participants – what kinds of long-term relationships can be built that will accelerate learning and performance improvement among all the participants? These are very different kinds of networks, but they can be very powerful in terms of harnessing network effects and increasing returns. Evolving networks in this direction can be very challenging because they will require fundamentally different business and technology architectures, but the rewards will be significant. And the current crisis could be a powerful catalyst in motivating us to move in this direction.

Broader institutional change

Moving from supply chains to supply networks is just one dimension of much larger institutional change that we will need to drive if we want to strengthen flows that accelerate learning. As I’ve written before, we are in the early stages of a Big Shift that will require profound institutional transformation. Our institutions today are driven by a model of scalable efficiency. In the quest for scalable efficiency, we have tightly specified all activities that need to be performed, highly standardized those activities and tightly integrated all those activities. In other words, we have created institutions that are highly resistant to flows.

In order to thrive in a rapidly changing world, we need to shift our institutional models from scalable efficiency to scalable learning. Scalable learning institutions focus on creating environments that will help all participants – not just those in research labs or innovation centers – to learn faster in the workplace by addressing unseen problems and opportunities to create more value. These institutions seek to expand their participation in a broader range of more diverse flows so that they can accelerate learning.

Dampening the negative effects of flows

To tap into the potential of crises to accelerate learning we’ll also need to find ways to dampen the negative effects of flows – here, I’m referring to the spread of fear as the dominant emotion. What can we do to reverse that?

Those of you who’ve been following me for a while can anticipate my answer – we need to frame inspiring, opportunity-based narratives that can help people to overcome their fear and move forward together. As some of you know, I make a significant distinction between stories and narratives which you can find here.

We very much need people who can frame these opportunity-based narratives and motivate people to take near-term action that can help them to learn faster in their quest to achieve the longer-term opportunities identified by the narratives.

Just as fear can become contagious, the emotions cultivated by opportunity-based narratives – excitement, hope and passion – can become contagious as well, helping others to overcome their fear and join forces in the quest for something inspiring. Rather than becoming barriers to learning, these emotions can become powerful accelerators of learning. People with passion flourish in flows while those without passion can be overwhelmed.

Flows and filters

Flows can become overwhelming if we don’t have a way to focus. This is another powerful role of opportunity-based narratives – they help to focus us together on inspiring opportunities. Rather than becoming overwhelmed by flows and being pulled in a thousand different directions at once, we can begin to apply filters to help us find the flows that will help us to learn faster to address the specific opportunities that have been defined.

In this context, I’ve become a strong proponent of zoom out/zoom in approaches to strategy. These approaches focus on two very different time horizons in parallel – 10-20 years and 6-12 months. On the zoom-out side, the challenge is to align around a view of the longer-term future and the opportunities that will emerge in that future. On the zoom-in side, the challenge is to align around 2-3 initiatives that can be taken in the next 6-12 months that will have the greatest impact in accelerating movement towards the longer-term opportunity.

This approach to strategy is certainly relevant to businesses that have become increasingly consumed by short-term quarterly results and responding to whatever is happening in the moment. But it can also be very valuable for all other institutions and communities and even for each of us as individuals.

This strategy is powerful on many dimensions, but on one key dimension, it helps people to overcome their fear by framing a powerful longer-term opportunity (see the connection with opportunity-based narratives?) and then focusing them on near-term action that can deliver quick impact and build confidence that the longer-term opportunity can be achieved.

Bottom line

Crises can be a catalyst for change. It is up to us whether we choose to harness this potential for change. We have an opportunity to drive change that will significantly expand and enrich the flows that can help all of us to learn faster and achieve far more of our potential. We all have an opportunity to flourish by learning faster together. Let’s find ways to make learning viral.

In this context, I cringe at the use of the word “resilience” in describing how we should respond to this crisis. As I’ve written before, most people use resilience with the intention of “bouncing back” – getting back to where we were is the goal. Why would we want to just get back to where we were? Why not view this as an opportunity to leap forward by learning from our experience and driving the change that will help all of us to get better faster?


NEW BOOK

My new book, The Journey Beyond Fear, will be published by McGraw Hill on May 25. It starts with the observation that fear is becoming the dominant emotion for people around the world. While understandable, fear is also very limiting.

The book explores a variety of approaches we can pursue to cultivate emotions of hope and excitement that will help us to move forward despite fear and achieve more of our potential. It's received some great endorsements! You can pre-order the book at Amazon.

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