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Shaping Our Lives

We live in trying times. Pressure is mounting and we’re increasingly confronting things that we never expected, like the current pandemic. But it goes well beyond the pandemic. For decades, we’ve been facing intensifying competition, accelerating change and encounters with extreme, disruptive events. For individuals, the competition involves workers from lower wage, developing economies as well as artificial intelligence and robotics which are increasingly taking over work that was previously done by humans. The work we thought we could count on looks increasingly precarious.

In this kind of environment, we naturally tend to fall into a reactive mindset and mode of behavior. We become consumed by the latest events and overwhelmed by how much we need to respond to; by the constant push and pull that has become daily life. We lose any sense of focus or prioritization.

The paradox

But, there’s an interesting paradox. Our current pandemic is creating all kinds of new challenges, but it’s also becoming a catalyst for reflection. I’m struck by the number of people in my network of acquaintances who have told me that the pandemic has prompted them to step back and reflect on what is really important and meaningful to them. For many, they are realizing that their work hours are consumed by routine tasks and endless meetings that produce very little impact. And their work hours are crowding out time that they could be spending with friends and family or use for volunteering on projects that really excite them. As they’ve reflected, they’ve come to realize that they’ve been consumed by activities that are not meaningful. It has been an “a-ha!” moment for many.

A pivotal moment in time

In this moment, there’s no better time to evolve our personal narratives so that we can make our lives more meaningful and increase our impact on things that matter.

Those of you who have been following me for some time know that I have a very distinctive view of personal narratives – something that I’ve written about here and here.

Briefly, I believe our personal narratives answer two key questions about our lives:

1. First, looking ahead, am I primarily motivated by a perception of future threat or opportunity?
2. Second, what is my call to action to others in helping me to address that threat or opportunity?

Our answers to those two questions shape our lives in profound ways.

We all have a personal narrative, but here’s the thing. Few of us have made the effort to make that personal narrative explicit to ourselves, much less reflect on whether the personal narrative really is one that can help us to achieve more of our potential and achieve impact that really matters to us.

For decades, I lived my life adhering to a personal narrative that had been shaped by my childhood experiences. Like most of us, I had not articulated that narrative to myself. It wasn’t until I was almost 50 that I finally attempted to articulate the narrative that had been driving my life.

It was challenging but it changed my life. It helped me to evolve the narrative so that I could focus on needs that were deep inside me and shape a future that was much more fulfilling. It was an awakening that I found richly rewarding on so many levels.

Turn your pandemic pause into pandemic progress

What better time than now to step back and reflect on our personal narrative? This is why I have accepted the invitation from Trisha Stezzi and her Significance Learning Center to develop a complete 9-week virtual live-taught program on this exact topic called:  Harnessing Your Personal Narrative. You can watch my free master class there as well.

If you’re interested, please sign up here. As a Charter Member of the Course, you’ll receive a 15% discount.

In closing, I firmly believe that now is the time for all of us to come together and find ways to evolve much more meaningful and impactful connections with one another and work on securing a more fruitful future.  To make some of the “a-ha!” moments from above the new normal. Understanding what your personal narrative is and learning how to use it to change your trajectory – all of our trajectories – is the critical first step. That is my mission in this course – to challenge and inspire you to shape your lives through the evolution of your personal narrative.  I truly look forward to the one-one-one interaction and personal support I’ll be able to offer you throughout the 9-weeks of this course, exclusively hosted at Significance Learning Center.

Trust and Learning

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

The need for learning

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

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

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

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

The need for trust

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

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

The erosion of trust

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

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

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

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

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

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

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

Small moves to re-build trust among individuals

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

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

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

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

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

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

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

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

Small moves to re-build trust in institutions

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

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

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

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

Bottom line

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

Moving on

I want to let all the loyal subscribers who have subscribed to my blog posts here at Typepad know that I have decided to move my blog posts to my personal website – they can be accessed here https://www.johnhagel.com/blog/  Please subscribe there, so that you can receive notification of future blog posts.

There are several new blog posts already there, including some new poetry – Pandemic Paradox – and a perspective on Viral Flows. I look forward to continuing to share my perspectives with you there.

The Pandemic Paradox

We’re surrounded by sickness

Hiding from a hideous bug

While flowers bloom

And Spring spreads its wings.

Crises can narrow our vision

But crises can also be a catalyst

For reflection and learning.

Crises can push us

To hold on to old ways,

But they can also pull us

To explore new ways.

Crises can isolate us,

But they can also

Bring us together.

Crises can make us risk averse,

But they can also

Motivate us to be bold

And take more risk.

Let’s not just

Settle for bouncing back.

Instead, let’s view crises

As a launchpad

So we can spring together

To new levels of achievement.

On the Edge of a New Decade

We’re heading into a new decade today. It’s not just a new year, but a new decade.* It’s a turning point, a historic moment, and provides us an opportunity to reflect on where we’ve been and where we’re headed.

It’s all in the numbers

I believe in the power of numbers. I don’t think it’s an accident that the year launching a new decade has special characteristics. First, it repeats numbers – this is the first decade in over a millennium (remember 1010?) that does that, and the next one will not come for another millennium. That in itself is an important sign.

Second, the number it repeats – 20 – has special significance in the field of numerology. The number 2 is viewed as a symbol of collaboration, duality and partnerships. The number 0 is viewed to be the symbol of infinity and wholeness – it suggests the potential to achieve exponential growth in potential. The key message of the two numbers together – 20 – is that we can achieve exponential growth in potential by coming together, and not trying to do it alone or as part of a small, isolated group. And repeating this pair of numbers underscores the power of the opportunity.

And, finally, let’s not forget 20/20 vision. Perhaps this is the decade that will enable us to see everything much more clearly than we have before.

The decade we’re emerging from

This last decade, the 2010’s, has been a challenging one. Significant advances in human well-being have occurred across the globe, but the paradox is that few people choose to focus on, or even know about, these advances.

Instead, we’ve become consumed by the emotion of fear, something that I have written about here. The emotion of fear is completely understandable given the paradox of the Big Shift, creating exponentially expanding opportunity while at the same time creating mounting performance pressure in the form of intensifying competition and the accelerating pace of change.

Fear manifests in many ways. We live in cultures that generally view fear as a sign of weakness, so few of us are willing to publicly acknowledge our fear. Instead, we tend to express other emotions, like anger, anxiety or loneliness. But if we look underneath, we’ll often see that fear is the driving emotion, shaping these other emotions.

Fear can help to explain some of the dominant trends in the past decade. For example, surveys around the world are confirming the continuing erosion of trust in all our institutions – not just companies, but also governments, schools and NGOs. When we’re afraid, we find it very difficult to trust anyone.

This natural trend is amplified by a more fundamental issue – as I’ve written about here, our institutions are driven by an institutional model that focuses on efficiency and, in a world of mounting performance pressure, focuses less and less on delivering value to their stakeholders. We’re becoming increasingly aware that our institutions are designed to serve their own interests, rather than our interests. Erosion of trust is a natural outcome.

There’s a second dominant trend of the past decade – growing polarization. Across the world, we’re finding ourselves in opposition – often violent opposition with each other. Again, when driven by fear, we have a natural tendency to separate from those who are different and seek the comfort and support of those whom we perceive as sharing our interests. This natural tendency is reinforced by the growing reliance of all our political leaders on threat-based narratives – our enemies are coming to get us, we’re all about to die and we need to mobilize now to resist these enemies.

Underneath all this is a trend that isn’t unique to this decade, but has been playing out for the past three decades – it’s the trend of growing global connectivity, driven by the exponential improvement in price/performance of digital devices that can be used by individuals and the networks that enhance the ability to connect, especially the Internet. We can now connect to far more resources and people than would have ever been imaginable a few decades ago.

It’s that trend that helped spawn the paradox of the Big Shift mentioned earlier – exponentially expanding opportunity and mounting performance pressure. And it’s all that connectivity that has spawned all that fear. Connectivity can be overwhelming if we don’t know how to harness it to our advantage. The 2010’s will increasingly be known as the decade of fear.

The decade we’re heading into

So, what’s next? As we move into a new decade, we have an opportunity to move in a new direction, one that can help us make the transition from fear to the passion of the explorer. And that in turn can help all of us to achieve far more of our potential.
What would be required to make this transition? It certainly won’t be easy. Fear is a very strong emotion and can be very challenging to overcome. The mounting performance pressure catalyzing this fear isn’t going away – if anything, it will increase even more in the decade ahead.

Opportunity-based narratives. So, what do we do? First, we need to acknowledge the fear – too many of us are still in denial. After all, if fear is widely viewed as a sign of weakness who wants to look weak in a time of increasing pressure?

We’ll be much more willing to acknowledge our fear if we realize that it’s a key barrier preventing us from addressing the exponentially expanding opportunities that are also on the horizon. We need to shift our focus from the threat-based narratives that dominate our discourse today to opportunity-based narratives that can inspire us to act in spite of our fear.

As an optimist, I believe this new decade will finally see the rise of opportunity-based narratives that can help all of us to make the journey from fear to the passion of the explorer. The exponentially expanding opportunities are simply becoming so attainable with far less effort and far more quickly that we’ll find it harder and harder to avoid seeing them. And, when we see them and become inspired by the opportunities ahead, we’ll see that our fear is holding us back from acting more boldly.

Small groups focused on impact. But opportunity-based narratives will not be enough. We’re going to need to come together in small groups where we can build deep trust with each other, enough trust so that we can feel comfortable expressing our fear and asking for help from others.

These small groups will help us to find ways to begin making an impact as we come together, inspired by the opportunities ahead. As we begin to make impact, it will give us more confidence that we can make a difference and that we need to overcome our fear to move forward.

We’ll never eliminate the fear, after all we will be venturing into territories that have not yet been explored. But we’ll find that the passion of the explorer motivates us to act in spite of the fear, because we are so excited by the opportunities ahead and because we have the support of others on the journey.

Networks. These small groups will be the key units to help us all begin the journey, but networks will help us to scale impact and inspire even more passion as we see the progress we’re making go exponential. We’ll finally find a way to harness all the connectivity that has shaped our recent decades so that it can help us address the true potential of the opportunity-based narratives that inspire us.

The opportunity-based narratives that will have the greatest impact in the decade ahead are ones that frame huge opportunities – e.g., integrating the marginalized into our expanding economies, producing more value with less resources and far less impact on our environment, harnessing the diversity that defines humanity to produce even more creative products and services, and fostering wellness so that we significantly increase the longevity of everyone.

The risk with such big opportunities is that they can quickly be dismissed as fantasies that are simply unattainable. Even if small groups can achieve some impact in their local context, the opportunities inspiring this action can seem overwhelming relative to the impact that is being achieved.

The key to inspiring even more commitment and bold action is to be able to quickly show accelerating impact. That’s where networks become key. We’ve all heard of network effects – the power of the network is that it can unleash exponentially expanding value and impact. And, guess what? The digital infrastructures we have been deploying and enhancing over the past several decades can provide connectivity on a global scale in ways that are accessible to a growing majority of the world population.

These networks will be explicitly designed to help small action-oriented groups learn faster by connecting them with each other. They will be key to addressing the big opportunities framed by opportunity-based narratives. They will help to reinforce our belief that we can accomplish far more when we come together. They will nurture the passion of the explorer that will help all of us to overcome our fear and take bold action because of the motivation to find ways to increase impact.

Movements. For those of you who have followed me, you’ll recognize that I’m talking about the emergence and growth of movements. I believe all of this will unfold in the decade ahead. I believe we are being inexorably pulled from the Fear Decade into the Launch Decade, a decade when we will launch ourselves into exponentially expanding opportunity for everyone.

Bottom line

This isn’t just a new year, it is the beginning of a new decade. It is truly an opportunity to reflect and reassess and, most importantly, to act in new ways that will help all of us to achieve more of our potential. Let’s come together and launch movements that will change the course of human history, for the benefit of all.

* Yes, I’m fully aware that technically the next decade doesn’t begin until 2021 but, come on, everyone believes that the new decade begins in 2020. This gives us an opportunity to drive change one year earlier – what could be wrong with that?

The Paradox of Leadership

I love paradox. Today I’m going explore not just one, but two, paradoxes. Both are related to the role of leadership in our changing world.

The first paradox: in a world of mounting performance pressure, we seek “strong” leaders with all the answers, when what we need are leaders with powerful questions.

The second paradox: those who have become disillusioned with the status quo are becoming champions of highly decentralized, leaderless “organizations,” when in fact we need leaders more than ever to help us accelerate our progress.

Response to mounting performance pressure

There’s yet another paradox underlying the two above. It’s the paradox of the Big Shift that I’ve written about extensively, including here. The paradox of the Big Shift is that it is creating exponentially expanding opportunity while at the same time creating mounting performance pressure

Most of us experience the mounting performance pressure first and foremost because we reside in institutions and communities that were designed for an earlier era. As competitive pressure mounts and the pace of change accelerates, we struggle to stay afloat, riding on boats that were designed for calmer seas.

In those rough seas, it’s very natural to feel fear and seek stability wherever we can. That makes us vulnerable to leaders who claim that they know what needs to be done and have all the answers required to weather the storm. It’s not an accident that we are seeing the rise of authoritarian leaders around the world.

The challenge of course is that, in a rapidly changing world of mounting performance pressure, no one has all the answers. The paradox is that the leaders we are initially drawn to are exactly the kinds of leaders that we need to avoid. They provide a false sense of security and leave us vulnerable to the changes ahead.

Instead, what we need are leaders who understand that we are facing new questions that we don’t yet have the answers for, but that could unlock the exponentially expanding opportunities arising in the Big Shift. We need leaders who can frame the questions in ways that inspire us, by highlighting the opportunities that the answers could unleash.

By framing these questions, these leaders could also inspire us to come together and express our need for help in ways that help us to build deeper trust and overcome the fear that holds us back. These questions could become particularly inspiring if they are crafted as part of opportunity-based narratives that represent a call to action, motivating us to come together in a quest to find answers for the questions.

While we are naturally drawn to the first type of leader in times of mounting performance pressures and growing fear, these leaders feed the fear, emphasizing the threats that we face and underscoring our need to “follow the leader.” At the same time, we all have a hunger for hope, and I believe we will ultimately realize that we need a very different kind of leader, one who motivates us to take initiative together to address growing opportunities.

Crafting new forms of institutional leadership

As we seek to re-build our institutions to address exponentially expanding opportunities and thrive in the Big Shift, we need to be careful to address the second paradox. Here, I am going to focus on institutional leaders, but I have also explored the implications for systems leaders as part of my work leading a World Economic Forum Council (our white paper is available as a pdf here).

It is natural, as we become disillusioned with the traditional institutional models that have dominated our society over the past century (I call them the “scalable efficiency” models), that we are tempted to throw out the baby with the bathwater. In our reaction to the dysfunctions of these traditional institutional models driven by the “strong leader” who has all the answers, there will be a natural temptation to try to do away with leaders altogether.

We are seeing this in many of the efforts to embrace distributed and decentralized organizational models that basically seek to eliminate leaders and rely entirely on local initiative. While very understandable, the paradox is that we need leaders more than ever in the Big Shift era, just a very different kind of leader to help focus and motivate participants in our institutions as they seek to move from mounting performance pressure to exponentially expanding opportunity.

Our institutional models will need to be re-built, moving from our existing “scalable efficiency” models to “scalable learning” models (an effort that I describe as institutional innovation). These scalable learning models will be fundamentally different from our current institutional models and they will require much more distributed initiative among the participants. But they will still require leaders.

What will be the role of leaders in scalable learning institutions? Their first role will be to focus participants by framing a powerful, long-term opportunity to create far more value than anything that has been achieved in the past. In a world of rapid change, there’s a natural tendency to fall into a reactive approach to the world, sensing and responding as quickly as possible to whatever is happening at the moment. We lose all sense of focus and spread ourselves too thinly across too many activities.

The role of leaders in a scalable learning institution is to pull everyone out of their narrow contexts and comfort zones and focus them on a very big opportunity that will challenge their current assumptions and behaviors. They are adept at framing opportunity-based narratives that are a call to action.

But there’s more. As suggested before, leaders in a scalable learning institution will frame inspiring questions related to the powerful, long-term opportunity. Since the opportunity is typically very different from anything that has been accomplished in the past, it is to be expected that we don’t yet know how to address this opportunity.

The role of the leader is to inspire all the participants by framing questions regarding the best approaches to address the opportunity and actively inviting everyone to come together in helping to evolve the most effective approaches. These questions also play a focusing role, but their key role is to inspire and motivate participants to act, making it clear that the opportunity won’t be addressed without significant effort, driven by a desire to learn.

The greatest value of these questions is to inspire a specific form of passion, that I've come to call the “passion of the explorer.” Based on our research, people with this form of passion are driven to learn faster and to achieve more and more impact in the domain that defines their passion. By drawing out this form of passion, leaders can move participants from inspiration to aspiration.

The goal isn't simply to make progress towards the opportunity by addressing the questions framed by leaders, it is to accelerate progress to the point where it goes exponential. That’s the aspiration of participants who have developed this form of passion. Leaders can reinforce this aspiration by focusing on the trajectory of performance improvement and encouraging everyone to evolve approaches that can accelerate impact.

That leads to yet another role for leaders. They can play a key role in designing environments that help to accelerate learning and performance improvement. Many participants may develop an aspiration to accelerate impact but find themselves in environments that hold them back rather than helping them to progress even faster.

While the goal for scalable learning institutions is to empower participants to design their own environments as they seek to accelerate their learning and performance improvement, leaders can certainly play a meaningful role in the early stages by highlighting the primary design goal – accelerating learning – and challenging all aspects of the institutional environments that are obstacles to that goal.

So, in short, institutional leaders still have a prominent role to play in the institutions of the future – creating focus, providing inspiration, cultivating aspiration and designing supportive environments. Without this new form of leadership, institutions are unlikely to be able to address the exponentially expanding opportunities that await us.

Bottom line

To navigate successfully through the Big Shift, we need to acknowledge and address two paradoxes of leadership. Leaders can still play a vital role in helping us to achieve more of our potential as individuals and as a society. In fact, one might even argue that we need these leaders more than ever. But they will be very different leaders from the ones we are accustomed to today in virtually all our large institutions. Cultivating these new forms of leadership will be very challenging for institutions and for the leaders themselves, but the rewards will be enormous. The key is to recognize the need and begin the journey.

The Quest of Questions

Questions are powerful.
Especially the ones
That don’t yet have an answer.
They can inspire us
To leave our comfort zone
And launch us on a quest,
A journey,
One with many obstacles
But also many rewards.
They can motivate us
To come together
In a shared quest.
They cultivate humility
And curiosity,
Giving us the strength
To overcome our fear
And venture out to the edge
Together
Where new insights await
Those who are bold enough
To explore.
We can achieve so much more
Of our potential
And accelerate our progress
If we embrace the questions.
Because, behind every question,
There are many more questions
Waiting to be seen.
The quest is never-ending.

The Quest for Capabilities

At the Center for the Edge, we’re launching a new research effort and we would welcome suggestions and ideas.

Redefining work

This research effort is an extension of our most recent research on the untapped opportunity that all institutions have to redefine work and deliver far more value to their stakeholders and the institution itself. At a high level, we encouraged institutions to move all workers in their organization from work that involves tightly specified and highly standardized tasks to work that involves addressing unseen problems and opportunities to create more value. This move becomes much more feasible now because technology is increasingly demonstrating the capability to take over routine tasks, freeing up worker capacity. This research has generated great interest because it is addressing a white space in the crowded topic of the future of work – a white space that has significant value creation potential.

Cultivating capabilities

One of the questions that we encountered when we shared our perspective on redefining work was: what do workers need to pursue this new form of work? This has led us to develop a contrarian view regarding another topic that is running rampant in future of work discussions. Everyone is talking about the need for re-skilling workers. The unstated assumption behind this discussion is that, if we don’t reduce the workforce as routine tasks get taken over by machines, we need to re-skill them so that they can move into other parts of the institution and perform a different set of tightly specified and highly standardized tasks.

We've come to believe that there’s another missed opportunity: to expand our horizons beyond skills and to focus in addition on human capabilities. So, what’s the distinction? Well, it’s ultimately about semantics, but I'll share what we mean by these two terms.

For us, skills are practices that are valuable in specific contexts, like how to operate a certain kind of machine in a particular environment or how to process certain types of paperwork in a particular business process. In contrast, human capabilities are practices that are valuable in any context – practices like curiosity, imagination, creativity, emotional intelligence and social intelligence.

There’s a further distinction that can be made. Some human capabilities are innate – all children display them. These include the capabilities I just mentioned. For these capabilities, we use the metaphor of the human muscle. We all have muscles as humans. If we don’t exercise our muscles, they tend to atrophy, but we still have them. Once we begin to exercise, the muscles grow again.
But there’s another set of capabilities that need to be developed – we don’t all have them at the outset. Capabilities in this category include practices like critical thinking and leadership.

Once again, these capabilities – whether innate or developed – are valuable in all contexts. They are also very valuable in terms of helping people acquire necessary skills more quickly and more effectively. People who have exercised innate capabilities and acquired developed capabilities will be much better positioned to acquire whatever skills they need to be successful.

While institutions are relentlessly focused on skill-building and re-skilling in a world of accelerating technological change, few institutions are paying any attention to capabilities (with the narrow exception of leadership capabilities – the assumption being that capabilities are really only relevant to leaders).

We believe this is another significant untapped opportunity – to expand our horizon beyond skills and to pay more attention to cultivating capabilities.

The quest for case studies

Once we've identified an opportunity like this, our research methodology focuses on developing case studies. We look for institutions that have already begun to address the opportunity and study the approach they pursued, the impact they achieved and the lessons that they learned along the way. Our experience from past research efforts is that, even with very new and largely unaddressed opportunities, we can generally find a few institutions that are “on the edge” and already starting to address the opportunities.

Even though we're based in Silicon Valley and the heart of the tech industry, we're also careful to expand our search beyond the usual suspects. We try to find examples of institutions in a broad range of more traditional industries and a variety of countries to persuade institutional leaders that this is an opportunity for everyone.

The questions shaping our research

So, here’s the ask:

• What does everyone think about the distinction between skills and capabilities?
  • Is it a useful distinction?
  • What needs to be clarified?
  • What do you disagree with, or where would you need more evidence to be convinced?
• Are there examples of institutions that are tracking capabilities within their workforce?
  • How are they measuring capabilities?
  • Are they seeking to measure the impact of capabilities on performance?
• Are there examples of institutions that are actively seeking to cultivate capabilities within their workforce, especially their frontline workers, and not just their managers and top executives?
  • What are they doing to cultivate capabilities?
  • How much of the effort involves programs designed to do this and how much of the effort focuses on simply creating work environments that encourage workers to exercise their capabilities more actively in their day to day jobs?
  • Are they explicitly measuring the rate of capability cultivation?
• Are there examples of institutions that are explicitly seeking to find candidates with certain capabilities in their recruiting programs?
  • If so, how are they assessing capabilities among their candidates?

Bottom line

We believe that institutions that make more focused efforts to cultivate capabilities among their entire workforce will be much better equipped to manage the big shift from routine task work to work that addresses unseen problems and opportunities to create more value. We believe those institutions will ultimately overcome the diminishing returns that's the natural result of a focus on scalable efficiency and routine tasks. They will ultimately be the institutions that thrive in a rapidly changing world by focusing on scalable learning that can create exponentially expanding value for the stakeholders and the institution itself. We’re in the early stages of this big shift but we believe that there are already some institutions that are beginning to address this opportunity. We urgently need to learn from them.

Expanding Our Horizons

I’ve written about the paradox of the Big Shift – the forces reshaping our global economy are simultaneously creating exponentially expanding opportunity and mounting performance pressure.

Here’s the challenge. In a world of mounting performance pressure, we have a natural human tendency to shrink our horizons. We focus only on the short-term. We focus only on ourselves. We focus only on external events that threaten us. Our horizons become narrower and narrower – as individuals, as institutions and as a society. While understandable, these tendencies also can generate a vicious cycle – the more we shrink our horizons, the more pressure we experience, which leads us to shrink our horizons even more.

How do we escape this vicious cycle and move from pressure to opportunity? We have to start by expanding our horizons – looking ahead, looking around and looking inside. I’m going to focus here on what this means for our institutions, but a similar imperative exists for us as individuals and as a society.

Look ahead

As institutions face increasing pressure, they begin to move away from long-term strategies and embrace flexibility and agility. The key is to sense and respond to whatever is happening in the moment – that’s a winning strategy.

I’ve become a strong proponent of an alternative approach to strategy that I call zoom out/zoom in, something that I learned by working with some of the most successful tech companies in Silicon Valley. This approach to strategy starts by zooming out 10-20 years and challenging leadership to develop a shared view of what their relevant markets or industries might look like then and what the implications would be for the kind of company they will need to be in order to be successful in that market or industry.

The zoom in side seeks to build alignment and commitment within the leadership regarding the 2-3 initiatives they could pursue in the next 6-12 months that would have the greatest impact in accelerating movement towards the longer-term destination. The goal is to ensure that a critical mass of resources are committed to these short-term initiatives.

By looking ahead to identify the really big opportunities that could be targeted given the exponential changes playing out in our global economy, this approach pulls leaders out of the short-termism that drives our institutions and helps them to see beyond the short-term pressures that consumes their attention.

Look around

That leads to a second opportunity to expand our horizons – rather than just focusing on ourselves, we need to focus on others around us and explore the potential to come together to achieve things that we could never accomplish on our own.

This requires understanding the unmet needs and motivations of others. In the zoom out effort that I mentioned before, institutions too often stay focused on their own needs and capabilities rather than starting with the unmet needs of the customers and other stakeholders they are serving. The really big opportunities out in the future start with unmet needs of others. Look around while looking ahead.

Then, as we start to focus on addressing those unmet needs, we need to look around to see who could help us have even greater impact more quickly in addressing those unmet needs. In the exponential world we are entering, leverage is a key driver of success – learning how to achieve greater impact with fewer resources. We need to put ourselves in their place and understand what would motivate them to join forces with us.

And, don’t just focus on economic motivation of others. It was Dee Hock, the founder of Visa, who challenged me one day when I was talking about risk and rewards as motivators and said that the real need was to focus on fear and hope. Emotions (or heartset) ultimately are much more powerful motivators.

And, as we look around, let’s avoid a transactional view of others and instead focus on how we can build long-term, trust-based relationships. These trust-based relationships will be key to unlocking the potential to learn faster together by addressing significant performance challenges that require collaborative effort to solve. If we can unlock that scalable learning potential, we can drive even greater motivation to collaborate over an extended period of time.

If done right, looking around can unleash a powerful third form of growth. Most institutions today think of growth in terms of two options – make or buy – either grow organically or do a major acquisition. As I’ve written elsewhere, there’s a third path to growth that’s not yet on the agenda, but needs to be – leveraged growth. How can we connect with and mobilize a growing number of third parties to add value to our customers and stakeholders while capturing some of that value for ourselves?

By looking around, we can also pursue shaping strategies that restructure entire markets or industries, rather than remaining content with simply anticipating and adapting to whatever changes are coming.

Look inside

This is the most challenging approach to expanding horizons. In times of mounting performance pressure, we understandably begin to be driven by fear. Since fear is generally viewed as a sign of weakness, we tend to want to avoid acknowledging the fear. We hide from our emotions, and focus on the avalanche of short-term events and the flood of external data that can distract us from what is going on within us.

But, if we don’t understand the emotions that are shaping our thoughts and actions, we will have little hope of achieving the kind of impact that will be needed to thrive in an exponentially changing world. We need to look within and explore the emotions that are driving us. We need to feel the fear.

Rather than living in denial, we need to accept and understand those emotions. Then we need to find ways to evolve those emotions so that we can move from fear to hope and excitement. The real goal here is find the passion of the explorer that I believe resides within all of us and is waiting to be discovered and cultivated.

Let me be clear. I don’t believe we’ll ever eliminate fear as an emotion within us. Again, it is a natural and understandable emotion in a world of mounting performance pressure. Instead, we need to cultivate other emotions that will help us to move forward in spite of that fear. Those who have the passion of the explorer definitely feel fear – they are attempting things that have never been done before where there is a high risk of failure. But they are driven by the excitement of achieving greater impact and that helps them to move forward despite the fear that lurks within.

In this context, we need to understand how expanding horizons on other dimensions can also help us to address the fear that may be holding us back. By looking ahead, we can begin to see inspiring opportunities that we might never have imagined possible. Those opportunities can help to draw out hope and excitement.

By looking around, we can begin to see others who are similarly motivated to address those opportunities. We’re not alone. We can draw support and energy from others, especially if we focus on building deep, trust-based relationships where we can feel comfortable sharing our emotions and be more willing to rely on others as we embark on this journey together.

Bottom line

We need to find ways to overcome mounting performance pressure and harness the exponentially expanding opportunities created by the Big Shift. The only way to do that is by expanding our horizons. We need to look ahead, look around and look within. And we can’t just do one of those. We need to do all three together.

And we can’t just look. We need to act on all three dimensions, because the most powerful way to learn is through action.
And we shouldn’t just do this at the level of our institutions. We need to do this as individuals and as a society. The biggest rewards will come when we expand our horizons on all three levels – individuals, institutions and society.

And the rewards will be monumental. We have an opportunity to achieve far more of our potential as we begin to see how, by coming together, we can address opportunities that would have been unimaginable a few decades ago.

Business Models and Trust

Three years ago I sketched out three dimensions of business model evolution in response to the mounting performance pressure of the Big Shift. In this blog post, I want to highlight the role of this business model evolution in restoring trust in our corporations.
A growing number of surveys around the world highlight the continuing erosion of trust in all our institutions. While this is a widely recognized trend, relatively little effort has been made to explore why this erosion of trust is occurring and what can be done to restore that trust.

There are many factors at work here, given that the erosion of trust is occurring in all our institutions, and it's something that I've written about before in "Re-Building Trust In Our Institutions."  In this blog post, I’m going to focus on how business model evolution can and will help to overcome the trust challenge for corporations. It will also highlight the growing risk of remaining wedded to existing business models that are contributing to the erosion of trust.

Payment

For those who haven’t seen my previous blog post on business model evolution, I started by focusing on the dimension of payment. Traditional business models have largely been built on the expectation that customers will pay upfront for a product or service. I suggested that we’re increasingly moving to business models where payment is based on usage – we pay based on our usage of the product or service with little, if any, payment up front. Looking ahead, I anticipated that payment models would further evolve to payment based on impact achieved, not just usage.

The more explicitly we can tie payment to impact achieved, the more successful we will be in restoring trust. In this model, the customer will not have to pay unless the promised impact has been achieved. Today’s upfront payment business models tend to foster a short-term transactional mindset in companies – make the sale, collect the cash and move on.

If we start to focus on impact, companies will need to evolve a longer-term view of customer benefit. Now, the “sale” will just be the catalyst for developing a much deeper relationship where the vendor is committed to working with the customer to achieve the promised impact. That mutual commitment to impact will help to re-build the trust of the customers that the vendor’s interests are aligned with their own interests.

Of course, there will be many challenges in evolving to this impact-based business model, but we're now developing the technology that will make it possible to vendors and customers to interact in a much richer, real-time way that can help both sides to focus on impact achieved.

Data

The second dimension of business model evolution involves the increasing revenue potential from providing insights from data back to the customer. As technology evolves to provide greater visibility into how products and services are being used by customers, vendors have an opportunity to harness the value of the data for the customers, creating helpful feedback loops for customers.

They can start by providing data-driven services to give customers more insight into the current context in which they are using products and services. As data technology evolves, there’s an opportunity for vendors to provide customers with the ability to anticipate problems and opportunities that might arise as they use the vendors’ products and services. Given further evolution, vendors can harness data to provide more prescriptive value to customers, not just helping them to anticipate future events, but providing valuable advice in terms of the best ways to respond to these future events, so that customers can receive even more value.

This is in sharp contrast to how most data about customers is used today. Vendors generally use customer data today to improve the efficiency of their internal operations and to help them more efficiently target customers from a marketing viewpoint. Customers increasingly realize that the data about them that is being captured by the vendors is being used by the vendors to create more value for themselves, rather than for the customers. The result? Trust erodes.

As business models evolve on the data dimension, companies have an opportunity to re-build trust. Now they become focused on providing more and more value back to the customer based on the data that is being accessed. As customers begin to see the value of these insights offered by vendors, they are likely to be more and more willing to pay for the insights generated from the data they have provided. They are also likely to be willing to provide vendors with access to even more data about themselves because they can now see the tangible value they are receiving in return. Trust will be restored as they see that the vendors are committed to helping customers get even more value from the products and services they are offering.

Participants

In today’s business models, the ideal outcome for the vendor is a one to one relationship with the customer. This is the nirvana of push-based marketing.

That’s going to change. As customers become more powerful and demanding, they are going to seek out vendors who can connect them with a broader range of products and services from third parties. Initially, vendor business models will focus on building platforms that can scale and provide access to more and more third parties. Over time, technology infrastructures and tools will evolve to the point where vendors are able to connect customers to relevant third parties wherever they reside, whether or not they are on a specific platform.

Vendors who help customers to connect with a broader range of products and services from third parties will be able to capture some of that value for themselves by charging customers for this service. Rather than trying to isolate and insulate customers from everyone else, vendors will see that there’s an untapped opportunity to deliver more value to customers and, in the process, capture some of that value for themselves. The key is that the customers need to pay for this service, rather than having third-party vendors pay commissions. If it is a commission-based model, customers will likely suspect that the needs of third-party vendors are being served, rather than their own needs.

If customers pay for this service, they will begin to see that vendors have their interests in mind and are becoming more and more helpful in connecting them with the resources and expertise that are most valuable to them. Rather than seeing vendors as trying to “capture” them, they will see vendors as trusted agents who are providing them with more and more value by connecting them with a broader range of resources.

Tying it all together

My earlier blog explicitly cautioned that I was not suggesting that business models for all vendors would evolve to the same extent across all three dimensions. These are simply three paths for evolution and vendors will need to determine which position on these three dimensions is optimal for them. Nevertheless, I did indicate that I believed there would be significant evolution on these three dimensions given the growing power of customers and the evolution of technology capabilities that would make it increasingly feasible to evolve on these three dimensions.

As business models evolve on these three dimensions, there will be an opportunity to deepen the alignment of the long-term interests of vendors and customers. Rather than pursuing short-term transactional models, vendors will find themselves building much deeper, trust-based relationships with customers.

I should note, as I did in my original blog, that I have explicitly not included any discussion of advertising- based business models. This is because I don’t believe advertising-based business models will be sustainable in the Big Shift. Push based advertising is going to prove to be a less and less effective way to reach and engage with ever more powerful customers.

Instead, we are likely to see pull based marketing approaches prevail. As a result, vendors will need to find ways to deliver more and more value to customers in ways that will make customers more willing to pay for that value themselves. In the process, customers will develop more trust in vendors because they will be paying the bills, rather than advertisers, so the interests of the vendors are likely to be more clearly aligned with the customers.

Bottom line

Erosion of trust in companies is a growing challenge that all companies will need to address. One powerful way to do this is to evolve business models in ways that move companies from a short-term transaction mindset to a mindset that focuses on building long-term, trust-based relationships. Companies that remain wedded to our current business models are likely to find themselves increasingly marginalized as more and more powerful customers seek out vendors who are willing and able to embrace business models that more effectively align the interests of customers and vendors.

This shift in business models will be one important dimension in the broader shift in institutional models from scalable efficiency models to scalable learning models. This institutional innovation will be deeply challenging, but the rewards will likely make the journey very worthwhile. Rather than just focusing on the diminishing returns of internal efficiency, companies will find that they are able to create and deliver far more value to their customers as they embrace business models that drive them to learn more about the value that is most meaningful to their customers.