Category Archives: Trust

  • 1

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.


  • 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.


  • 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.


  • 3

Exploring the Pyramid of Trust

Category:Collaboration,Community,Connections,Creation Spaces,Emotions,Passion,Trust

 

Trust is eroding in all our institutions around the world. Most people are aware of the many surveys documenting this, but few have really explored why this trust is eroding, much less what we need to do to restore trust. We can easily get caught up in the headlines of the moment that offer graphic evidence of lack of trust, but we need to move beyond the headlines and probe deeper into what is going on across all institutions and all societies.

I’m going to suggest that we need to recognize that the foundations of trust are shifting and that we need to focus on building a new pyramid of trust. That pyramid of trust can help us to come together in ways that will enable all of us to flourish.

I’ve been writing about trust for quite a while. Almost 10 years ago, I came back to the topic in my blog “Resolving the Trust Paradox” and more recently I wrote a blog post on “Re-Building Trust in Our Institutions.” I won’t re-visit all of that here.

Setting some context

Let me start here with several observations from my earlier work that provide context for the trust framework that I’m going to share here.

Institutional disconnect. First, in the Big Shift that has been transforming our global economy for decades, it’s becoming increasingly apparent that there’s a growing disconnect between the way our institutions are run and the way our world is evolving. That’s a key driver of the erosion of trust – we intuitively see that growing disconnect and recognize that our institutions are less and less fit for the world they operate in.

Feeling fear. Second, as we see that growing disconnect, we understandably feel more fear. The institutions that we thought we could rely on are falling short in terms of addressing our needs. That feeds the fear, especially in a world of mounting performance pressure. And the more fear we feel, the less willing we become to trust others, which makes us even more fearful, setting into motion of vicious cycle of growing fear and loss of trust.

From skill to will. Third, the foundations of trust are shifting. In earlier days, trust was established by looking at the past. Trust was about demonstrated skill. Do the people have the right credentials and have they been able to reliably deliver as promised? In a more stable world, that was enough to build and maintain trust. The past was a reasonable indicator of future results.

No more. In a more rapidly changing and uncertain world, performance in the past is no longer a reliable indicator of performance in the future. Skills are becoming obsolete at an accelerating rate and, with new and unexpected situations emerging on a regular basis, new and very different outcomes may be required in the future.

In a rapidly changing and uncertain world, the basis of trust shifts from skill to will. Rather than looking to the past, we’re increasingly looking ahead to determine whether we can trust people and institutions. Do they have the will required to confront unexpected situations and find ways to deliver impact that matters to us, regardless of the unforeseen obstacles and barriers standing in their way? They may not have the necessary skills, expertise and resources today to address these obstacles and barriers, but we can be assured that they will do whatever is required to deliver the impact that matters to us.

That’s a high bar for trust. To meet that bar, we’ll need to focus on building a pyramid of trust. Let me explain.

To build deep trust with others, we’re going to have cultivate multiple layers of trust, with each layer building on the layer(s) underneath it.

The layers of the pyramid

Humility. At the base of the trust pyramid is humility. It’s the acknowledgement by the person or institution that they will never have all the skills and resources required to address an expanding array of unanticipated challenges and obstacles. This humility means that the person or institution will more quickly recognize when they are encountering something beyond their current capacity and be more willing to ask for help from others in addressing challenges and obstacles. If we encounter people who present themselves as having the capacity to address any and all challenges, we know one of two things: either they’re clueless about the range of challenges they will face or they’re lying. In either case, we would do well not to trust them.

Values and integrity. The next level of the pyramid focuses on intentions and values. Looking ahead, does the person or institution have a core set of values that will provide appropriate guard-rails for its actions, ensuring that it will act with integrity and a commitment to avoiding harm to others, regardless of the unexpected situations that emerge? This isn’t about speeches and mission statements; it’s about actions. Are their actions consistent with their values?

Commitment to impact. That leads to the next level of the pyramid – is the person or institution committed to delivering impact that matters to me? That commitment has multiple dimensions. Since my needs and aspirations are unique to me – is there a commitment to understanding what my individual needs and aspirations really are? Equally important, since we live in a rapidly changing world, is there a commitment to anticipating how my individual needs and aspirations are likely to evolve? Finally, does this all translate into a commitment to deliver impact that matters to me? Is there a commitment to action and results, and not just understanding who I am and what I need and want? Integrity matters, but ultimately it is impact that matters. (In this context, see an article I recently wrote for Harvard Business Review on the untapped opportunity to deliver more value back to customers based on the data that businesses receive from their customers,)

Excitement about impact. Commitment is important, but it’s not sufficient. We all know people who were committed to achieving something, but then failed to deliver. They ran into unforeseen obstacles and became frustrated and overwhelmed, and finally gave up. To really trust someone or some group in terms of their ability to deliver impact that matters to us, it’s important to reach the next level of the trust pyramid – we need to see genuine excitement about addressing unexpected challenges in delivering the impact that matters to us. That excitement will help to ensure that, whatever the obstacles, the person or institution will find a way to overcome them and not give up.

This level of the pyramid takes us beyond mindset and into heartset. The best intentions and the most genuine commitment are helpful, but ultimately it’s emotions that will determine outcomes in a world where we confront unexpected challenges and obstacles. If we give into fear, we are far more likely to fall short of delivering the impact that matters to others. On the other hand, if we’re genuinely excited by unexpected challenges and obstacles, we’ll end up doing whatever is necessary to deliver the impact that matters. We should never overlook the emotions that are driving the actions of others.

Those who have followed me in the past will realize that I’m now talking about a very specific form of passion – the passion of the explorer. We can trust those who have this passion because they have a questing disposition – they’re constantly seeking out new challenges and opportunities and driven to deliver more and more impact that matters in the domain they have chosen.

The other dimension of the trust pyramid

So far, I’ve been exploring the layers of the pyramid. But let me be clear. This isn’t a trust triangle, it’s a trust pyramid. Triangles are two-dimensional, but pyramids add a critical third dimension. What’s on that dimension? People.

Here’s the thing. Trust is about people – and the more people the better. Sure, we can have trust between two individuals. Think about the relationship you might have with your significant other.

But, as deep as the trust might become between two individuals, it’s likely to grow even deeper when the trust extends across more individuals. Think about it.

No matter how well-intentioned, committed and excited an individual might be, that person is likely to achieve much greater impact when she/he is collaborating in deep, trust-based relationships with a broader group of people who share those same intentions, commitment and excitement. Looking ahead, I’m much more likely to trust a group of individuals who have deep, trust-based relationships with each other than I would trust any one individual.

But the key is that these individuals need to have built deep, trust-based relationships with each other. They’re not just coming together because their employer told them to or because they have a contractual relationship with each other. As I’ve written elsewhere, there are limits to the size that these impact groups can attain – typically, these deep, trust-based relationships begin to become less deep if the group expands beyond about 15 people.

These small impact groups can increase their potential for impact by coming together into broader networks (a specific form of network that I call “creation spaces”) so that they can more readily access the skills, expertise and resources of more people. The existence of these broader networks can also help to strengthen the trust that I might have in any particular impact group.

Implications for institutions

So, how does this connect back to our trust in institutions, rather than individuals or small impact groups? Increasingly, trust in a rapidly changing world hinges on trust at the level of individuals. The challenge for institutions is to find ways to connect people in deep, trust-based relationships, both within their institutions and with a broader set of stakeholders, including customers. If the individuals trust each other, they will begin to trust the institutions that helped to bring them together and build deep, trust-based relationships with each other.

This is in sharp contrast to a general trend by our institutions, driven by scalable efficiency, to automate transactions and eliminate people from the equation wherever possible. While it’s certainly OK to automate specific transactions, the opportunity is to find ways to build long-term relationships that will connect people and help to build deeper trust. Part of the erosion of trust in institutions is that we are having less and less personal contact with the institutions that matter to us.

An inverted pyramid?

I like the pyramid image, but I’m concerned that it visually gives more space to the lower levels of the pyramid, while reducing the space for the higher levels of the pyramid. In one sense, this works – the lower levels are foundational and, without them, there’s no opportunity to cultivate the higher levels of the pyramid.

On the other hand, as I reflect on the pyramid of trust, I’ve become convinced that the higher levels of the pyramid are ultimately much more powerful in building deep trust that can motivate people to build enduring relationships. I’ll resist the temptation to invert the pyramid since that might give the impression of instability.

Just recognize that, at least for me, the higher levels of the pyramid are ultimately where the winners and the losers will be determined in terms of who is able to re-build trust.

Bottom line

Rebuilding trust in our institutions is an imperative. To succeed in this challenge, we need to address trust holistically. We need to recognize that the foundations of trust are shifting and that many layers of trust will need to be cultivated. We also need to address the opportunity to strengthen trust by connecting people into impact groups, so that they can become even more excited about the opportunity to deliver impact that matters to others. It’s ultimately all about people, finding ways to move beyond short-term transactions and instead build deeper and enduring relationships that can help all to achieve more of their potential.


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Connections and Context

Category:Connections,Context,Creation Spaces,Flow,Learning,Narratives,Trust

As we sit in physical isolation, what better time to reflect on what helps to nurture deep connections with others? This is a natural sequel to my earlier blog post on viral flows.

Building deep trust-based relationships

As you probably know, I’ve long been a champion of flows that will help all of us to learn faster and to achieve more of our potential. The richest flows are those that occur among people as they interact with each other and build deeper relationships.

This is because the most valuable knowledge is tacit knowledge – new knowledge that we have acquired as we act in our specific contexts and that we have a hard time articulating for ourselves, much less for anyone else. As my colleague, John Seely Brown, likes to say, tacit knowledge is very “sticky” – it doesn’t flow easily because it’s challenging to share. The most effective way of accessing tacit knowledge is by forming deep, trust-based relationships that allow us to work closely together and watch each other in action.

Context matters

So, what’s required to build these deep, trust-based relationships? Well, of course, many things, but let me start by focusing on context. People trust each other only if they believe that the other person really understands who they are. And understanding who someone is involves the ability to read their context. None of us live in complete isolation, even in these trying times. We have a rich social and economic context that shapes our emotions, beliefs and actions.

Who are the people who matter to us and why? What are the economic pressures and opportunities that can motivate us to act? What is it in our environment that inspires us or, alternatively, fills us with fear? What are we trying to improve in our environment and why? Alternatively, what obstacles or barriers are we confronting in our environment that are limiting our ability to have the impact that matters to us?

The more we can show that we understand the context of the people we’re connecting with, and what they’re trying to achieve in that context, the more likely those people will be to trust us. And here’s the catch – contexts are fractal. Each context resides within a broader context.

For example, someone’s immediate context may be their nuclear family, their home and their job. But that context is shaped by a broader context of their extended family, their neighborhood and the department they work in. And that context in turn is shaped by a broader network of relationships, the town or city that the neighborhood is located in and the institution that the department resides in. I could go on, but you get the point.

We need to make an effort to understand those broader contexts for all the people we’re connecting with so that we have a rich understanding of the many factors that may be shaping their emotions, beliefs and actions.

And it becomes even more challenging. No context is static. In a rapidly changing world, the contexts we live in are rapidly evolving. We need to try to understand the dynamics that are shaping the context of others. The most powerful way to build trust is to anticipate how someone’s context is evolving and how their needs and aspirations might evolve as a result.

Create shared context

Building deep relationships is not just about reading context. It’s also about creating new context. How do we do that?

There are many ways, but one powerful approach is to frame an inspiring opportunity and powerful questions that need to be answered in order to address the opportunity. If we can frame an opportunity that can motivate us to come together and collaborate on shared goals, we’re much more likely to trust each other than if we see ourselves as operating in separate contexts with independent goals.

This leads me into my work on opportunity-based narratives. As I’ve written before, I make an important distinction between stories and narratives, even though most people use these terms as synonyms.

For me, a story is self-contained – it has a beginning, a middle and an end. Stories are about the story teller or some other people, they’re not about you, the people in the audience. In contrast, for me, a narrative is open-ended – it focuses on an opportunity or threat out in the future. It isn’t yet clear whether the opportunity or threat will be successfully addressed. The resolution of the narrative ultimately depends on you, in the audience – your choices and actions will determine how the narrative resolves. Narratives thus represent a powerful call to action.

For reasons I’ve discussed elsewhere, I believe opportunity-based narratives are particularly powerful in a time of mounting pressure when more and more of us are experiencing the emotion of fear. They can help us to overcome that fear because we’re coming together to achieve something that is exciting and inspiring.

Opportunity-based narratives can provide a context for framing powerful questions. What are the questions that need to be answered before the opportunity can be realized? Once again, these questions are a call to action, but they’re much more.

They provide an opportunity to express vulnerability – to openly acknowledge that we don’t yet have the answers we need and that we need help. Willingness to express vulnerability builds trust and that builds much deeper relationships. These questions also provide a very tangible context for our relationships with others – we’re coming together with the goal of answering challenging questions that can provide the key to unlocking big opportunities.

Deepening and scaling connections

Here’s a challenge. Really deep relationships don’t scale. This is why I’ve become a champion of creation spaces which I’ve explored in greater depth here. The basic building block of creation spaces is a small group of 5-15 people who come together very frequently (often several times each week) and who are committed to acting in effort to achieve a shared outcome. Their interactions focus on framing the actions that can have the greatest impact and reflecting on the impact that has already been achieved in a continuing effort to accelerate impact. By coming together in this way, the participants in each small group develop deep trust-based relationships with each other.

But how do these connections scale? These small groups come together into networks that provide a way for participants to connect more broadly in their quest to scale impact. They are connecting because they are inspired by the same long-term opportunity and driven to answer the questions that stand in the way of achieving the opportunity. These networks provide a context for collaboration in the quest to address a shared opportunity.

Bottom line

Context matters for cultivating connections. But don’t just take context as a given that needs to be seen and understood. That’s just the beginning. The most powerful way to cultivate connections at scale is to shape a new shared context that can bring more and more people together and encourage them to build deeper relationships with each other. Shaping shared context can help all participants to learn at an accelerating rate and recognize that they can accomplish a lot more together than they could ever achieve on their own.


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