Transformation – John Hagel

06
Aug 24
0

From Curiosity to Exploration

Category:Connections,Edges,Emotions,Exploration,Fear,Growth,Learning,Opportunity,Passion,Potential,Transformation

I’ve written a lot about the growing importance of curiosity in the Big Shift world that is evolving around us. While curiosity is an essential core capability that we all need to cultivate, it is far from enough. Today, I want to move one step forward and make the case that curiosity without exploration is far from sufficient.

The role of curiosity

In a rapidly changing world, curiosity becomes more and more essential. Curiosity has many different dimensions, but it essentially involves asking a lot of questions as we become intrigued by what we do not know.

The strong desire to ask more questions can be a valuable way to launch us on our journey to learn more, but it is hardly sufficient.

The need for exploration

Exploration is about action, action beyond questions. How do we learn from the questions that we ask? Well, here we need to make a key distinction that has become central to a lot of my work.

There are two forms of learning – learning in the form of sharing existing knowledge and practices and learning in the form of creating new knowledge and practices.

If we’re focused on learning in the form of sharing existing knowledge and practices, there are many ways we can learn from the questions that we ask. We can do a lot of reading. We can attend classes and take careful notes. We can follow instructions to practice in ways that will help us develop important skills that other people already have. Those actions can be very useful when we are learning in the form of sharing existing knowledge and practices.

But, what about learning in the form of creating new knowledge and practices? In a rapidly changing world, existing knowledge and practices are becoming obsolete at an accelerating rate. Success in the Big Shift world hinges on shifting our focus to learning in the form of creating new knowledge and practices. That requires a very different set of actions. Now, we are venturing out into unknown territory.

This is where exploration becomes central to success. To learn in an unknown territory, we need to travel through the territory that no one has seen before and carefully inspect, search, experiment and analyze what we encounter. This is a very different form of action compared to learning in the form of sharing existing knowledge and practices.

Exploration becomes even more successful if we come together with others who share our curiosity about unknown territories. No matter how smart or intelligent we are, we will learn a lot more from exploration if we can connect with others who bring different perspectives and experiences to help assess what we are encountering.

Without exploration, curiosity becomes a dead-end. We have so many questions, but no answers.

But there’s more

This is where the passion of the explorer becomes key to unlocking the value of curiosity. I’ve done a lot of research on this very specific form of passion and written about it extensively, including in my most recent book, The Journey Beyond Fear.

In brief, people with this form of passion are excited about a long-term commitment to achieving increasing impact in a specific domain. They are excited when confronted with unexpected challenges and their first instinct when confronted with an unexpected challenge is to find ways to connect with others who can help them come up with better answers faster.

The passion of the explorer helps to focus us on the domains that are the most exciting to us. Those domains differ, depending on who we are – they could be anything from gardening to space exploration. Whatever the domain is, people with the passion of the explorer will be driven to find the edges of the domain that have not yet been explored because that is where the greatest impact can be achieved by learning in the form of creating new knowledge and practices.

We all have the passion of the explorer within us, waiting to be discovered, but very few of us have found this passion, much less pursued it. We unfortunately live in societies and cultures where this form of passion is deeply suspect and often discouraged. Our schools, families and institutions encourage us to focus on pursuing careers that will pay a good income and to not let passion distract us.

The focus that we achieve with the passion of the explorer is essential to accelerating learning in the form of creating new knowledge and practices. Without this passion, curiosity and exploration can be overwhelming. There’s so much that we don’t know and could explore that we are very much at risk of spreading ourselves way too thinly across too many domains. That would significantly limit our ability to learn faster. But, if we are excited and focused, we will be driven to learn faster and achieve more and more impact in the domains that matter to us.

The bottom line

Curiosity is a critical capability that we all need to develop in a rapidly changing world, but it is of little value, and can become a distraction, if we don’t combine it with action through exploration that is focused by our passion of the explorer. The passion of the explorer is fundamental – if we find and cultivate that passion, we will be driven to cultivate curiosity and pursue exploration with the goal of achieving more and more impact that is meaningful to us and to others.

17
Mar 24
1

Diving Deeper Into Digital Transformation

Category:Collaboration,Community,Context,Edges,Emotions,Exploration,Fear,Future,Growth,Institutional Innovation,Leadership,Learning,Opportunity,Passion,Potential,Small moves,Strategy,Transformation

Digital transformation has become a business buzzword. Everyone is talking about it, but there is a significant missed opportunity. To understand the missed opportunity, we first need to understand the context of the world we live in.

The Big Shift

Long-term forces are re-shaping our global economy and society in profound ways. I have done a lot of research on the Big Shift. It has many dimensions – one of them is the creation of exponentially expanding opportunities. We can create far more value with far less resources and far more quickly than would have been imaginable a few decades. But to do this, we will need to embrace broad business transformation.

From digital transformation to business transformation

Here’s the first problem. Virtually every large, traditional organization has a digital transformation program, but when you probe into what the program is doing, it turns out that virtually all of these programs are focused on applying digital technology so that the organization can do what it has always done, but just faster and cheaper.

Increased business efficiency may be helpful, but it is not business transformation. Business transformation starts with asking the most basic question of all – what fundamentally different business should we be seeking to become?

To answer this question, I strongly recommend that leaders adopt a very different approach to strategy, something I call the Zoom Out/Zoom In approach to strategy. This approach has many benefits, but one of them is that it takes leadership out of their comfort zone, and forces them to look for small moves, smartly made that they can pursue in the short-term to begin their journey to much more profound business transformation.

If we’re serious about pursuing exponentially expanding opportunities, everything in the business will need to change. We’ll need to shift from an institutional model of scalable efficiency to scalable learning. We’ll need to redefine work for everyone in the organization so that people are no longer performing tightly specified, highly standardized tasks and instead are focused on addressing unseen opportunities and problems to create more value. We’ll need to redesign our work environments so that they can support this new form of work. We’ll need to adopt different approaches to growth – rather than focusing on make versus buy as the two key growth options, we’ll need to embrace leveraged growth where the focus is on connecting our customers with a broader range of third parties that can help to address their unmet needs.

That’s profound change in all aspects of our current businesses. What are the barriers and obstacles to overcome? Based on my experience in helping leaders to pursue business transformation, I have only one piece of advice – never, ever under-estimate the power of the immune system and antibodies that exist in every large, traditional organization and which will mobilize at the slightest indication of change to resist that change.

These people are not evil people. They are very well-intentioned, but they are driven by the emotion of fear. They have become very risk averse and believe that the best way to succeed is to continue doing what has always been done to create value.

From business transformation to emotional transformation

To address this barrier and obstacle to business transformation, we need to dive deeper into another level of transformation – emotional transformation. How do we move beyond the emotion of fear to cultivate other emotions that will help us to have more impact that is meaningful to us? That’s the focus of my latest book – The Journey Beyond Fear. I wrote the book because I saw fear becoming more and more prevalent as an emotion around the world.

A key reason for the spread of fear is mounting performance pressure that is also generated by the Big Shift – competition intensifying on a global scale, pace of change accelerating and extreme, disruptive events emerging more frequently. While understandable, this emotion is also very limiting – people who are driven by fear can’t even see the exponential opportunities emerging in the future, much less have the motivation to pursue them.

How do we overcome this fear? We need to find and draw out a very specific form of passion – the passion of the explorer – that resides within all of us and is waiting to be drawn out.

It turns out that the Zoom Out/Zoom In approach to strategy can be very powerful in moving us beyond fear. It focuses people on a really big and inspiring opportunity 10-20 years from now and quickly provides evidence of progress towards that opportunity in the next 6-12 months to help overcome skepticism.

To make the journey beyond fear we also need to cultivate new leadership models – shifting from an expert model where the leader has the answer to all the questions to the explorer model where the leader is focused on sharing inspiring questions and asking for help in coming up with answers.

We also need to adopt different approaches to transformation. Rather than pursuing top down, big bang approaches that draw out the immune system, we should focus on scaling an edge that can become the new core of the business and will embrace all the changes required to pursue exponential opportunities.

Bottom line

Digital technology is a significant catalyst for the need for transformation, but we need to avoid becoming focused too narrowly on digital transformation. Instead, we need to dive deeper into business transformation and then recognize that will require an even deeper dive to a third level – emotional transformation.

This is a huge opportunity. It can help us to move from mounting performance pressure to exponentially expanding opportunity. It’s not just an opportunity – it’s an imperative given the rapidly changing world around us.

I am an optimist. I believe that we can and will move beyond the caterpillars that we are today, focused on just finding ways to move faster. Instead, we will all become butterflies in a thriving world.

10
May 23
0

Cultivating and Connecting Capabilities

Category:Collaboration,Connections,Edges,Exploration,Growth,Institutional Innovation,Learning,Opportunity,Passion,Transformation

I’ve long been a contrarian regarding our current view of learning in our work environments. I’ve come to believe that it is a growing barrier to progress. If we’re going to prosper and flourish, we need to embrace a very different approach to learning, one that is much more consistent with our humanity.

Skills versus capabilities

When I talk to leaders about learning, their focus is on learning “new” skills. They are concerned that, in a rapidly changing world, many skills are becoming obsolete. If workers are going to continue to be productive, they need to learn “new” skills. These skills aren’t really new, they’re just skills that most workers haven’t yet acquired. They need to be taught the skills.

Here’s where I start to be a contrarian. I challenge our narrow focus on skills and believe we need to expand our focus in learning to include capabilities. What’s the distinction? Skills are very valuable in a specific context – for example, how to operate a machine or how to use certain applications on a computer. Capabilities, in contrast, are valuable in all contexts – examples include curiosity, imagination and creativity. I’ve written extensively about this distinction here (pdf).

Connecting capabilities to support a new form of learning

Of course, some leaders are beginning to pay attention to capabilities, but they tend to approach them in isolation. We’ve all seen creativity workshops or imagination exercises. What’s missing is the need to connect capabilities. While each capability has some value on its own, the real potential comes when capabilities are combined.

Think about it. Curiosity is about exploration, venturing out into areas that have yet to be understood. But curiosity alone has only limited value. We need to cultivate connection and empathy so that we can form deeper and broader relationships with others. Exploring in isolation is much less rewarding than exploration with others. As we explore, we need imagination to come up with new ideas regarding how to create more value from the areas we are exploring. And ideas alone are not that helpful. We need creativity to help us develop and deploy approaches to help us to actually create the value that our imagination suggested we could pursue.

Done right, connecting these capabilities can unleash a virtuous cycle of learning. As we develop and deploy approaches to creating value with our creativity, our curiosity will gain come into play as we explore the impact that we have achieved. We can come together to imagine even more promising approaches and create even more value.

But this learning is very different from the learning that consumes the attention of most leaders today. When leaders talk about learning, they almost without exception are talking about learning in the form of sharing existing knowledge. This learning occurs in training rooms or through online video courses.

While not dismissing that form of learning, I again want to be a contrarian and suggest there’s a very different form of learning that is becoming much more necessary and valuable. It’s learning in the form of creating entirely new knowledge that never existed before. That form of learning occurs in the workplace, pursued by people who come together and take action as they cultivate the capabilities just described and address previously unseen opportunities to create more value.

While most leaders would acknowledge that this form of learning is important, they tend to confine it to small parts of the organization – research departments and/or innovation centers.

Cultivating capabilities

So, if capabilities are so important, how do we cultivate them? Here’s the good news. These capabilities are all innate within us. You don’t believe me? Let’s go to a playground and look at children 5 or 6 years old. Show me one that doesn’t have these capabilities as they play.

Unfortunately, our schools and our work environments have sought to crush these capabilities. We are taught to simply follow detailed instructions, reliably and efficiently, without asking too many questions or deviating from the assigned tasks. This is the key to success in the scalable efficiency institutions that dominate our world today.

Those capabilities may be hidden for many of us, but they are still there, waiting to be drawn out. How can we draw them out? It will be challenging because it will require very different work environments. We need work environments that will cultivate a very specific form of passion – the passion of the explorer (pdf).

The passion of the explorer has three components. People with this passion are committed to, and excited about, achieving more and more impact that is meaningful in a specific domain. When confronted with unexpected challenges, they become excited about the opportunity to achieve even greater impact. Finally, their first instinct when confronted with an unexpected challenge is how to connect with others who can help them get to a better answer faster.

People with this passion are driven to draw out and cultivate the capabilities I discussed earlier. They are excited about the opportunity to learn in the form of creating new knowledge. Curiosity, connection, imagination and creativity are essential for this kind of learning and they deeply value all these capabilities. They understand that these capabilities are deeply connected and should not be viewed in isolation.

But, here’s the problem. Our work environments today are deeply suspicious of people with the passion of the explorer. These people ask too many questions, they take too many risks, and they deviate from the process manual. That’s why, based on my research (pdf), only about 14% of US workers have this form of passion in their work.

Unleashing passion and capabilities

So, how do we change this? It won’t be easy. It will require us to transform the institutional models that shape all large institutions around the world. As I’ve written about here (pdf), the prevailing institutional model is scalable efficiency where the key to success to do things faster and cheaper at scale. This model has driven the growth of large institutions over the past century but, in the Big Shift, the paradox is that scalable efficiency is becoming less and less efficient because it has a hard time dealing with the accelerating pace of change.

We need to make a shift from the institutional model of scalable efficiency to a model of scalable learning. As already discussed, the focus of this new institutional model is on learning in the form of creating new knowledge by mobilizing people throughout an organization to come together and address unseen problems and opportunities to create more value. These models can scale even further by building networks of relationships among people that extend far beyond a single institution.

The scalable learning model focuses on cultivating the capabilities already discussed and recognizes that the passion of the explorer is the most powerful motivator for people to draw out and exercise these capabilities. It encourages everyone to find and pursue their passion of the explorer.

The scalable learning model challenges virtually all the beliefs and practices that prevail in our existing scalable efficiency models. For this reason, it will be very challenging for existing large institutions to make the transition. As I’ve written about here (pdf), the most effective way for large institutions to transition will be to scale the edge, rather than pursuing “big bang” top-down change programs that seek transform the core of the institution.

As challenging as it might be, the transition will be deeply rewarding. At its best, the scalable efficiency model is a diminishing returns model – the more efficient we become, the longer and harder we have to work to achieve the next increment of efficiency. In contrast, the scalable learning model is an increasing returns model where value can grow exponentially as learning expands its horizons and accelerates.

Bottom line

We live in a rapidly changing world where the most valuable and necessary learning for everyone is learning in the form of creating new knowledge. This form of learning requires a combination of uniquely human capabilities – curiosity, connection, imagination and creativity. People who find and pursue the passion of the explorer are powerfully motivated to develop these capabilities. If we all are going to embrace the passion of the explorer, we need to transform our institutions. It won’t be easy, but the rewards will be enormous. Let’s get started.

28
Apr 23
2

What Does Strategy Really Mean?

Category:Collaboration,Emotions,Future,Growth,Institutional Innovation,Leadership,Learning,Opportunity,Strategy,Transformation

Strategy is a commonly used word, but it’s rarely defined. I’ve become concerned that we are using the term “strategy” much too loosely in our business world. We can gain considerable insight by making an effort to define the term and reflecting on what makes it so valuable in a rapidly changing world.

What does strategy mean today?

Again, business strategy is rarely defined by those using the term. When I search for a definition of the term, I get many examples like the following

a plan of action or policy designed to achieve a major or overall aim
a plan of actions that fit together to reach a clear destination

Stepping back, I find it hard to differentiate between this meaning of strategy and an operating plan. Is that all it is? An operating plan?

I have to say that, when I talk with leaders about their strategy, I’m often directed to their five-year plan. That’s their strategy. Yet, when I read through the five year plan, it very much seems like an operating plan. It specifies goals to be achieved and the actions that will need to be taken to achieve the goals.

This approach to strategy is very consistent with the institutional model of “scalable efficiency” that I’ve written about here. It certainly gives people a sense of direction and specifies the actions required to become more efficient at scale. But is this really a strategy?

We certainly need operating plans but, in my view, strategy provides a context for developing these operating plans – it’s not the operating plan itself.

What will strategy need to become?

We live in a world of intensifying competition and accelerating change, something that I call the Big Shift. In this kind of world, strategy needs to evolve into something very different. Strategy will be about anticipating growing unmet needs of people outside the organization and developing approaches that can deliver more and more distinctive impact over time by addressing those needs.

Successful strategies will

Anticipate growing unmet needs of people outside the organization
Develop rewarding approaches that
can deliver more and more impact over time with fewer and fewer resources
are fundamentally different from any other provider
are very difficult to replicate
Evolve those approaches in response to a rapidly changing environment

Anticipating growing unmet needs

In a rapidly changing world, we need to look ahead and try to anticipate emerging opportunities that can create enormous value with relatively modest effort. Rather than focusing on the five year time horizon of the five year “strategy” plans that are so prevalent today, we should seek to look ahead 10 – 20 years since that will encourage us to see the most significant changes ahead. I have called this the Zoom Out/Zoom In approach to strategy.

In looking ahead, we need to start by anticipating the growing unmet needs of the people our organization will be seeking to serve. We should start by asking whether these will be the same people we are serving today or whether there will be others that we might want to, or need to, serve 10-20 years from now.

We then need to explore how the unmet needs of these people are likely to evolve. Why are these needs evolving? What are the trends that are shaping these needs? What unmet needs are likely to be most meaningful to these people?

In this context, we need to move beyond the material world and make a concerted effort to understand the evolving emotions of the people we are seeking to serve. To what extent is fear shaping their choices and actions? What would really excite them and motivate them to achieve much greater impact? These emotions will shape how meaningful the unmet needs are.

Developing approaches that create value for the providers as well as people being served

Anticipating meaningful unmet needs of people provides an important foundation for successful strategies, but it’s just the beginning. Strategy requires developing ways of meeting those unmet needs in ways that will create growing value for the provider as well as for the people being served.

In our Big Shift world, successful strategies will focus on leveraged growth. This means discovering ways to deliver more and more value with fewer and fewer resources. It stands in sharp contrast with the approaches of large institutions today which focus on scalable efficiency – how to provide the same products and services faster and cheaper using internal resources.

Leveraged growth shifts the focus from cost to value delivered. It seeks to rapidly expand the value being delivered by orchestrating larger and larger networks of third-party providers who can help to address the unmet needs of the people being served. By doing this, the provider will restructure the broader market and industry, pursuing what I have described as a “shaping strategy.” Rather than simply taking existing industry structures for granted, shaping strategies recognize that, in a rapidly changing world, we have far greater ability to restructure entire industries to our advantage.

The value being delivered from these growing networks needs to be very different from the value that other providers are delivering. It needs to be value that is carefully tailored to meet the unmet needs of the people being served in much more effective ways than any other provider is delivering.

Equally importantly, the value needs to be very difficult for other providers to replicate. Once other providers see how powerful this value is in attracting a growing number of people to the provider offering it, they will make significant efforts to replicate it. Winning strategies deploy approaches that are very challenging, if not impossible, to replicate.

It’s important to emphasize that these approaches are not yet operating plans. They are high level efforts to frame ways of delivering more and more distinctive value. These approaches then provide a foundation for much more detailed operating plans that focus on how to deliver this value.

Rapidly evolving approaches to delivering value

In a rapidly changing world, any strategy, no matter how effective at the outset, will need to evolve quickly to anticipate changing needs and resources. That’s why successful strategies in the future will ultimately need to be learning strategies driven by leaders with a learning mindset.

Leaders need to pursue their strategies with a desire to learn on two fronts. First, what impact are they achieving with their current approach? Where are they achieving more impact than they expected and why? And where are they achieving less impact than expected and why? This is learning through action and can be very powerful especially given the increasing ability to unleash richer and more real-time feedback loops.

To pursue learning through action, leaders will need to make a fundamental shift from the current institutional models of scalable efficiency to institutional models that seek scalable learning. In this context, it’s important to emphasize that the most necessary form of learning is learning in the form of creating new knowledge, not just sharing existing knowledge. To scale this form of learning, it needs to spread beyond necessary research centers or innovation centers – it should be an imperative for all participants in the organization. It should also not be limited to participants within the provider’s organization – the provider should seek to pursue this form of learning among all participants within the growing ecosystem of providers that it orchestrates in pursuit of leveraged growth.

Second, the learning should not just be about reacting to the impact achieved from action already undertaken. The learning should also result from relentlessly tracking the trends that led the leadership to believe that specific and significant unmet needs are emerging among the people being served. Are those trends evolving as expected? Are there other trends that will also play a significant role in shaping those unmet needs? In what ways could these evolving trends help to anticipate even more significant unmet needs?

Learning in the form of creating new knowledge by acting together with others requires cultivating a set of capabilities among all participants – curiosity, connection, imagination, and creativity. That’s curiosity in exploring what’s changing, connecting with others to explore how the world is changing, imagination in seeing how the world and new opportunities are evolving, creativity in developing approaches that can deliver more and more value to the customers.

These capabilities are often highly suspect within existing organizations where the focus is on doing the assigned tasks without asking questions or deviating from the script. As a result, these capabilities, if they exist, are siloed in research labs or innovation centers.

This is one reason that successful strategies will be so difficult to replicate. They’re not a fixed target. They will be continually evolving as leaders learn how to deliver even more distinctive value.

Bottom line

Strategy is an evolving approach on how to achieve greater impact over time that is meaningful to the participants with the least amount of effort (and that is very difficult for other providers to replicate). It’s very difficult for existing organizations to pursue, which is why the five year plan has become the default strategy for most organizations. It may be difficult to pursue, but it will be increasingly necessary for success in a rapidly changing world.

26
Feb 23
0

Evolving Boards Into Springboards

Category:Collaboration,Connections,Emotions,Fear,Future,Leadership,Opportunity,Transformation

In a rapidly changing world, Boards of Directors (or Trustees) can play a significant role in becoming a catalyst for change within large, traditional companies and other institutions. Unfortunately, this role is still an untapped opportunity in most institutions.

What’s the need?

As I’ve written about extensively, we are in the early stages of a Big Shift that will transform our global economy and society. The paradox of the Big Shift is that it creates mounting performance pressure and exponentially expanding opportunities at the same time.

Mounting performance pressure takes many different forms – intensifying competition, accelerating pace of change and extreme, disruptive events. That pressure creates an imperative for change – if we continue to do what we’ve always done, we’ll become increasingly marginalized and ultimately be wiped out.

But the good news is that the same long-term forces are creating exponentially expanding opportunities – we can create far more value with far less resources and far more quickly than ever before. These are not just opportunities – they are imperatives. In the Big Shift world, only those who see and address these exponentially expanding opportunities will navigate successfully through the mounting performance pressure.

Re-imagining the role of boards

Boards today are generally viewed as fiduciaries for shareholders in the institution. Unfortunately, this role is generally defined too narrowly in today’s world. Board members are expected to represent the interests of shareholders as they currently express those interests. The problem is that shareholders are increasingly focused on maximizing short-term returns. “Short-termism” reigns supreme.

If the shareholders truly understood the exponentially expanding opportunities being created by the Big Shift, their interests would shift from maximizing short-term returns to unleashing the exponential returns that can be generated in the Big Shift. So, the challenge for Board members is whether they should continue to pursue the current short-term interests of shareholders or become catalysts to help shareholders (and management) see the much bigger opportunities that could generate far greater returns over time.

Catalysts for change

Boards are uniquely positioned to become catalysts for change in large, traditional institutions. While boards typically include some leaders from within the organization, they also bring together a group of individuals from outside the organization who represent diverse backgrounds. These individuals are uniquely positioned to provide an “outside-in” perspective for the management of the institutions who tend to become consumed by “inside-out” perspectives as they embrace scalable efficiency institutional models.

But to harness the potential of this “outside-in” perspective, board members must be willing and able to become provocateurs, challenging the implicit assumptions held by the internal management of the organization. They must invest time in exploring how the world outside the organization is changing and they are uniquely positioned to do this, given their backgrounds and experience outside the organization. They can not only rely on their own experience – they can also be proactive in inviting more outsiders to engage with them and the leadership of the organization regarding the trends that are re-shaping the environment of the organization.

These perspectives can help to build greater awareness of the large, emerging unmet needs of customers and other stakeholders of the organization (e.g., business partners and suppliers). They can also increase understanding of the potential to mobilize a broader set of resources to address those unmet needs and create much more value, with far less resources, and far more quickly than ever before.

These emerging perspectives can be catalysts for change at two levels. They can engage the internal management of the organization. At the same time, they can engage the external investors who are likely still pursuing narrow, short-term returns.

From provocation to excitement

Board members should never under-estimate the challenge of shifting the perspectives of the internal management or the external investors. To shift these perspectives, board members need to move beyond provocation. They need to frame exciting opportunities for creating much more value and focus on identifying the trends that are making these opportunities more and more feasible. Where possible, they should provide explicit examples of organizations that are already starting to address these opportunities and the impact that they have achieved. If those examples are not yet available, they should focus on identifying some short-term initiatives that the organization can pursue in addressing these opportunities and demonstrate tangible progress with relatively modest effort.

Those who have followed my writing will recognize that I am suggesting that board members should embrace a version of the “zoom out/zoom in” approach that can help to drive change by helping to overcome the fear and skepticism that often makes people resistant to change.

While the primary focus should always be on the exciting opportunities that can overcome fear and skepticism, board members can also be helpful in broadening the perception of risk among management and investors. Most risk management discussions focus on the risks associated with new initiatives. Very rarely is there any discussion of the risks associated with continuing on the current course. In the Big Shift world, continuing on the current course is often the highest risk option of all, yet few leaders or investors understand those risks.

The key is to understand that just focusing on the risk of the current path will only strengthen the fear that will increase resistance to change. If Board members want to become catalysts for change, they need to focus on framing exciting opportunities that can motivate management and investors to abandon their current beliefs and embrace new approaches that can deliver much greater rewards.

Bottom line

Board members are uniquely positioned to become catalysts for change, creating a springboard for the delivery of much greater impact and value in a rapidly changing world. To harness this potential, board members need to leverage their position as outsiders and help both management and investors to see exciting opportunities that are not yet on their radar screen. The key is to help both management and investors move beyond fear and cultivate intense excitement about exponentially expanding opportunities.

By playing this role, board members will become true fiduciaries for investors, helping them to significantly increase the return on their investment, while at the same time helping management to achieve much greater impact.

11
Aug 22
0

Shaping Markets and Shaping Psychology

Category:Collaboration,Emotions,Fear,Future,Leadership,Opportunity,Paradox,Passion,Strategy,Transformation,Trust

Dee Hock, the founder of Visa, recently passed away. It’s been a catalyst for me to reflect on the role he played in expanding my horizon beyond strategy to explore the role of psychology in shaping our impact. This post will take one of my approaches to strategy – shaping strategy – and focus on its ability to shape our psychology.

Shaping strategies

I’ve written extensively about the untapped potential of shaping strategies, including here and here. In a world of accelerating change, business leaders have been embracing approaches like agility that focus on rapidly and flexibly responding to the events of the moment. The goal is to react to whatever is happening at the moment.

As a contrarian, I have challenged that view. In times of accelerating change and increasing uncertainty, we have more degrees of freedom to shape the markets and environments around us to create more value for ourselves and for other participants. But we have to see that opportunity and pursue it. And, to do that, we need to escape the reactive mindset that shrinks our time horizons.

Three elements of shaping strategies

Shaping strategies focus on addressing this opportunity. They rely on three elements: a shaping view, a shaping platform, and shaping actions and assets. The shaping view is the foundation of these strategies – it looks ahead and describes how a future market or industry might be structured in a very different way to create and capture much more value for its participants. Shaping platforms then provide a way for more and more participants to join in the effort – they help to reduce the effort and cost of participation while bringing quicker and larger returns. Finally, shaping actions and assets are ways that the shaper can overcome skepticism of potential participants that the shaping opportunity is achievable.

Even though we are in a world where shaping strategies are becoming more and more viable, very few companies or other institutions have pursued these strategies. Some of the most successful shapers have been Dee Hock (Visa), Malcolm McLean (containerized shipping), Victor Fung (Li & Fung), Bill Gates (Microsoft), and Marc Benioff (Salesforce.com). I discuss their approaches and the lessons that can be learned in my book, The Power of Pull.

Shaping psychology

So, how does this shaping strategy approach connect with shaping psychology? All three elements of a shaping strategy can be very effective in shaping the emotions of the participants.

Let’s start with the shaping view. When I developed this approach to strategy, I focused on the role of shaping views in framing an opportunity that would increase our perception of rewards and reduce our perception of risk. When I was talking with Dee Hock about this, he interrupted me and said “you’ve got it all wrong. It’s not about risk and reward, it’s about fear and hope. That’s ultimately what motivates people to act.”

That was a wake-up call to me. I had been thinking in narrow business terms, when the real need was to focus on the emotions that shape our actions. I began to realize that the most effective shaping views seek to overcome the fear holding back many participants and cultivate hope and excitement about an opportunity that could be achieved if they all came together. After all, it’s fear that is holding us back from seeing big opportunities in the future and focusing us on simply reacting to whatever is going on at the moment.

Shaping platforms also help to shape the emotions of participants. By reducing the effort required to participate and creating more rewards for participation, these platforms make it easier to participate, even if participants still have some fear. They also help participants to overcome fear and build hope when they see more rapid rewards and connect with others who are enjoying similar rewards. These platforms would be even more effective if they were explicitly designed to address these emotions and help participants to make the journey beyond fear.

Shaping actions and assets provide a way for the shapers to demonstrate their commitment to the shaping opportunity. This can be a powerful way to overcome the lack of trust that comes with fear. For example, the shaper could make a large investment that would be viewed as a “bet the company” investment to demonstrate its commitment. If it is a smaller, entrepreneurial company, the shaper could also develop some early partnerships with larger and more influential companies that would increase the perception that the shaping strategy will succeed. These actions and assets help to strengthen hope and excitement that the shaping opportunity is real and will be accomplished.

Bottom line

I have written before about the paradox that we confront in the Big Shift that is transforming our global economy and society. On the one side, the Big Shift is creating mounting performance pressure – global competition is intensifying, the pace of change is accelerating and extreme, disruptive events come in out of nowhere. At the same time, the Big Shift is creating exponentially expanding opportunity – we can create far more value, far more quickly with far less resource than would have been imaginable a couple of decades ago. Shaping strategies are a powerful approach to help many of us to move from giving in to the mounting performance pressure and instead seeing and addressing the exponentially expanding opportunities.

23
May 22
0

Improving Return on Attention in the Idea Business

Category:Connections,Context,Emotions,Learning,Opportunity,Transformation

I recently participated in an interesting discussion with prolific authors who were becoming concerned about the future of books as a way to communicate ideas and as a source of income. It prompted me to return to a theme that has engaged me for quite some time. Everyone focuses on “return on assets” as a key measure of performance in business, but I’ve come to believe that a different form of ROA will become increasingly critical as a performance measure – “return on attention.”

Return on attention

What do I mean by this? I’m talking here about the return that customers receive when they allocate their attention to something. It certainly doesn’t have to be a financial return (even though for some reason we talk about “paying” attention), but it has to be the value they perceive they are receiving when they spend time paying attention to something. I’ve been writing about this for over 15 years, including in these two blog posts here and here from 2015.

Why is this form of ROA becoming increasingly important? It’s one of many outcomes of the Big Shift that is transforming our global economy and society. The Big Shift has many dimensions but one key trend is the expanding array of options that are competing for our attention, which is a limited resource – limited by 24 hours in the day. Because our attention is a limited resource, we as customers are becoming more and more powerful and demanding. It’s becoming more and more challenging to attract and retain the attention of customers given the growing options that are competing for our attention.

The shift in return on attention

How do we choose to allocate our attention in the realm of ideas? We understandably want to earn a return on that attention. Over the past couple of decades, this has taken the form of scalable efficiency. Customers have been seeking faster and cheaper ways to access ideas. The result has been the decline of longer formats like books and lengthy papers that require a significant investment of our time. Instead, we have been drawn to social media where we can quickly access ideas for free. Our approach to increasing return on attention is to reduce the time and money we spend, rather than focusing on maximizing the value we are receiving.

I believe that’s about to change. In a world of mounting performance pressure, the quest for efficiency yields diminishing returns. The faster and cheaper our quest for ideas becomes, the harder it becomes to get that next increment of efficiency improvement. More importantly, we are under increasing pressure to achieve greater impact that is meaningful in our lives.

As a result, I believe we as customers are going to become increasingly focused on the impact that we achieve when we allocate our attention, rather than narrowly focusing on the time spent or the money spent. What are the implications for those of us who are in the “idea business”?

Implications for idea providers

We’re going to need to expand our focus beyond the ideas themselves. In the recent past, we’ve focused on how novel and interesting our ideas are and whether we can present the ideas in an entertaining and engaging way. It’s all about the ideas themselves. And, of course, we’ve become increasingly focused on how much time is required to present the ideas, so that we can attract a bigger audience when we find shorter and more concise ways of presenting our ideas.

As customers focus more on value received from the ideas, those developing and presenting the ideas are going to have to shift their focus as well. Success in the idea business will increasingly hinge on the extent to which we’re able to move beyond simply attracting attention. We’ll need to find ways to help the recipients of our ideas to act on those ideas and to achieve impact that is meaningful to them. Even better, we’ll need to find ways to help the recipients of our ideas to learn from the action they take and the impact they achieve, so that they can achieve increasing impact over time.

So, how can we do this? It starts with explicitly framing some compelling calls to action as part of the presentation of an idea. What should the audience do differently as a result of this idea and what kind of impact could be achieved from that action? It would be even better if we can provide some advice on how to act in ways that will be most likely to yield the impact that is being sought. Of course, there’s also the opportunity to cultivate trainers and coaches who could help the audience to take action that yields greater impact. By clarifying what kind of impact might be achieved as a result of this action, we can help people to focus on assessing how much impact has been achieved and reflecting on how to achieve even more impact, so that they can learn how to achieve even more impact over time.

That’s a powerful way to increase the return on attention of the audience we’re trying to reach. It has the potential to significantly increase the size of the audience we reach as word spreads about the growing impact that’s being achieved. Of course, we want to make this approach as efficient as possible as well, starting with how much time it takes to access and absorb our ideas and extending out into the time and effort required to action, impact and learning. But the key is shifting beyond time spent to focus on impact achieved as the key component of return on attention.

This isn’t just a theoretical perspective from me. I’m living it. Many of you know that I published my 8^th book last year – The Journey Beyond Fear. I’m not just stopping with book. My plan is to create a new Center that will offer programs based on the book and help people to take action that can significantly increase impact that is meaningful to them. I want to significantly increase their return on attention. If this sounds interesting, you can see more here.

Early indicators of the shift ahead in return on attention

What are some early indicators of the shift ahead in return on attention? Well, one interesting indicator is the growth of coaching businesses across a broad spectrum of impact, ranging from physical performance improvement to overcoming emotional obstacles. Customers are increasingly seeking help in achieving more impact that is meaningful to them – of course, it starts with ideas, but the focus is on action, impact and learning.

Another indicator is the “Great Resignation” that we’re seeing as the global pandemic continues to unfold. More and more people are realizing that they spend a significant amount of their time and attention at work but that they’re not achieving enough impact that’s meaningful to them. The result is that they’re seeking new work that will offer them a significant increase in their return on attention.

Bottom line

If you’re in the idea business, you need to focus on the return on attention that you’re delivering to the people you are trying to reach. Rather than narrowly focusing on how much time people need to spend in accessing your ideas, expand your focus on how to help your audience achieve greater impact from your ideas through action and learning. In a world of mounting performance pressure, the ideas that can lead to more and more impact that is meaningful to people will be the ideas that prevail. Those are the ideas that will generate the greatest return for the idea providers. In short, if you want to improve your return on assets, find ways to increase the return on attention of the people you are seeking to reach.

01
Mar 22
0

The Imperative for Two Dimensions of Transformation

Category:Collaboration,Edges,Institutional Innovation,Learning,Opportunity,Passion,Strategy,Transformation

Now, more than ever, we live in a world of massive change. Not surprisingly, “transformation” has become a buzzword throughout our economy and society.

Transformation has been a focus of my work for decades and I’ve learned many lessons along the way. In this post, I want to explore two distinct transformation imperatives as we scale the edge.

Scaling the edge

Those who have been following my work know that I’ve become a strong champion of scaling the edge as a way to drive transformation in large, traditional institutions. This approach is in stark contrast to the more conventional “top down, big bang” approaches that are used to drive change. By seeking to transform the entire core of the institution, these efforts require a lot of money and they will take a long time – you can’t turn around a battleship overnight. As a result, these approaches have a high failure rate because they under-estimate the significant power of the immune system and antibodies that exist in all large institutions. The immune system and antibodies will mobilize aggressively to crush efforts at massive change, especially those that will require a lot of money and take a lot of time.

Scaling the edge can reduce the risk of immune system attack because it doesn’t seek to transform the core of the institution. Instead, it focuses on finding an edge to the existing institution that, given the forces at work in the broader economy and society, has the potential to scale very rapidly to the point where it will become the new core of the institution. To be clear, this is not just an “experiment” or a diversification or growth initiative – the commitment is to make it the new core of the institution and, in the process, drive the transformation that will be required to thrive in a rapidly changing economy and society. I’ve written a lot more about the design principles for successful edge scaling initiatives here.

The two transformation imperatives

But what does transformation really mean? Virtually every large institution today has a “digital transformation” program, but the focus of these programs is to apply digital technology so that existing tasks can be done faster and cheaper. That’s not transformation from my perspective. I use the metaphor of the caterpillar to the butterfly to describe transformation – it has to produce something completely different from before. If we’re just helping the caterpillar to walk faster, that may be helpful to the caterpillar, but please let’s not describe that as transformation.

So, what is transformation in the context of our existing institutions? I believe it will have to occur on two dimensions given the Big Shift that is transforming our global economy and society.

The first dimension involves re-thinking at a fundamental level the value that will be delivered to customers and other stakeholders. The nature of the value being delivered will change at a very basic level.

The second dimension involves re-thinking at a fundamental level what is required to deliver that value to customers and other stakeholders. The approach to delivering value must be redesigned from the ground up.

Let’s explore both of these dimensions more deeply.

Transforming the value delivered

We live in a world of exponential change. In that kind of world, there is a natural tendency to shrink our time horizons and just focus on today’s needs.

That tendency needs to be resisted. Instead, we need to look ahead, far ahead, to anticipate emerging needs that are fundamentally different from the needs we are addressing today. That’s certainly challenging in a rapidly changing world.

That’s why I’ve become a strong champion of a very different approach to strategy that I call “zoom out/zoom in.” I’ve written about that approach extensively here. This approach calls on leadership of institutions to move beyond their comfort zone and to look ahead 10-20 years. The two key questions to address are: What will our relevant market or environment look like 10-20 years from now? What will be the biggest unmet needs of our customers and stakeholders that will provide an opportunity to build an institution that is far bigger and more successful than the one we have now?

If we truly understand the nature of exponential change, we need to be prepared to embrace the fact that the value we are delivering today will become obsolete and that we need to embrace very different forms of value that will address emerging needs and become a key to success in the future.

What would be an example? Take the example of a large fossil fuel company today. Given the changes that are occurring in the energy industry, there may be a need to leverage some of the expertise that this company has developed and focus it in a very different direction. For instance, one of these companies might decide to leverage its expertise in resource extraction to provide extraction services in a wide range of industries that rely on natural resources. Another possibility would be to focus on its expertise in building and managing large-scale distribution networks to provide these services to a wide range of industries. Whatever path these companies take, they are likely to be serving a very different set of customers and delivering a very different form of value.

The zoom out/zoom in approach to strategy has many benefits, but one key benefit is that it can help the leadership of an institution to select an edge to their existing institution that has the potential to scale rapidly to the point where it becomes the new core. And they won’t just select the edge, they will commit to scaling it because it represents a much bigger opportunity than anything they have addressed in the past.

Transforming the delivery of value

But transformation doesn’t stop there. There’s another dimension of transformation that needs to be understood and addressed. This is transformation in how the value is created and delivered to customers and other stakeholders.

What do I mean by this? Large institutions around the world have been pursuing a scalable efficiency model for the past century. For them, the key to success has been becoming more and more efficient at scale – finding ways to do their activities faster and cheaper. They have determined that the best way to do this is to tightly specify every activity that needs to be performed, highly standardize those activities so they are done the same efficient way throughout the organization and tightly integrate those activities, removing all inefficient buffers.

This approach has been highly successful around the world for the past century. The challenge is that the world is rapidly changing and this approach to efficiency is paradoxically becoming more and more inefficient. Workers are confronting more and more “exceptions” – unexpected situations that cannot be addressed by the process manual. They are scrambling inefficiently to find ways to address these unexpected situations.

In this rapidly changing world, we need another dimension of transformation – institutional transformation. We need to shift from a scalable efficiency institutional model to a scalable learning institutional model where the focus is on helping everyone in the organization to learn faster together. This is especially challenging because the learning that is increasingly required is not learning in the form of sharing existing knowledge in training programs but instead learning in the form of creating new knowledge. That doesn’t occur in a training room – it occurs in the workplace when people act together to address new situations and reflect on the impact that they are achieving so that they can evolve their actions to achieve even more impact. I have written about this institutional transformation extensively here.

If we take this seriously, it will require challenging and changing virtually every aspect of how institutions organize and operate today. We’ll need to move from hierarchical, command and control organizations to networked organizations that organize around small, front-line groups of 3-15 workers – I call them impact groups. We’ll need to move from a focus on business process re-engineering to business practice redesign, cultivating practices within the impact groups that help all participants to learn faster. We’ll also have to redesign our work environments to provide all the participants with the tools they need to learn faster. One key objective is to help draw out and cultivate the passion of the explorer in all workers so that they become excited, and truly motivated, by the opportunity to learn faster together.

This dimension of transformation will need to be pursued in parallel with the other dimension of transformation.

Bottom line

If we’re going to unleash the exponential opportunities that are being created by the Big Shift, we need to commit to drive transformation on two intersecting paths – transforming the value that we are delivering to our stakeholders and transforming how that value gets delivered to the stakeholders. This is certainly very challenging – it’s why I urge leaders to focus on scaling the edge as the most effective way to drive transformation. Significant opportunities await those who see the need for both dimensions of transformation and aggressively pursue them on the edge of existing institutions.

Category Archives: Transformation

Aug 24

0

From Curiosity to Exploration

Mar 24

1

Diving Deeper Into Digital Transformation

May 23

0

Cultivating and Connecting Capabilities

Apr 23

2

What Does Strategy Really Mean?

Feb 23

0

Evolving Boards Into Springboards

Aug 22

0

Shaping Markets and Shaping Psychology

May 22

0

Improving Return on Attention in the Idea Business

Mar 22

0

The Imperative for Two Dimensions of Transformation

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